Exhibit 10.7


 


EXECUTION COPY


 


CUSTODIAL TRUST EXPENSE
REIMBURSEMENT AGREEMENT


 


THIS CUSTODIAL TRUST
EXPENSE REIMBURSEMENT AGREEMENT (this “Agreement”),
dated as of April 8, 2005 is between Assured Guaranty Corp. (“AGC”) and Woodbourne Capital Trust I, a Delaware statutory
trust (the “Custodial Trust”).


 


WHEREAS, AGC and the
Custodial Trust have entered into a Put Agreement (the “Put
Agreement”), dated as of April 8, 2005.


 


WHEREAS, the Custodial
Trust, Woodbourne Pass-Through
Trust (the “Pass-Through Trust”)
and the other Custodial Trusts have entered into a Pass-Through Trust Expense
Reimbursement Agreement (the “Pass-Through Trust Expense
Reimbursement Agreement”), dated as of April 8, 2005 pursuant to
which the Custodial Trust has agreed to reimburse a portion of the expenses of
the Pass-Through Trust.


 


WHEREAS, a condition
precedent for AGC to exercise its right to require the Custodial Trust to
purchase the AGC Preferred Stock (the “Preferred Stock”)
under the Put Agreement is the execution and delivery of a Custodial Trust
Expense Reimbursement Agreement substantially in the form hereof.


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, the
Custodial Trust and AGC agree as follows:


 


ARTICLE 1


 


Section 1.01.  Reimbursement.  Subject to the terms and
conditions set forth herein, AGC hereby irrevocably and unconditionally agrees
to reimburse the Custodial Trust for the Expenses (defined below) of the
Custodial Trust on the first Distribution Payment Date after receiving a notice
of the estimated or actual Expenses for the related Distribution Period from
the Custodial Trust, whichever is earlier, but in no case earlier than the
Distribution Payment Date during such Distribution Period.


 


As used herein, “Expenses” mean all costs, claims, expenses, damages,
liabilities and disbursements (including the reasonable fees and expenses of
counsel) and all obligations of the Custodial Trust, including, without
limitation, (i) any
amounts payable to the Trustee pursuant to Sections 5.01(d) and 12.01(c) of the
Declaration of Trust (as defined in Section 2.05 hereof) to the extent that
such Expenses are imposed upon, or incurred by, the Custodial Trust with
respect to the transactions contemplated by the Declaration of Trust (as defined
in Section 2.05 herein) during any time when the Custodial Trust holds
Preferred Stock and (ii) any amounts
payable to the Pass-Through Trust by the Custodial Trust pursuant to the Pass-Through Trust
Expense Reimbursement Agreement; provided that the term “Expenses” shall not include any obligation 


 


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of the Custodial
Trust to make any payment evidenced by, in respect of or any related right of
payment under, the Flex
Committed Capital Securities (the “CCS Securities”)
issued by the Custodial Trust.  For the
avoidance of doubt, those expenses payable to the Pass-Through Trust under the
Pass-Through Trust Expense Reimbursement Agreement shall be covered by the term
“Expenses.”


 


Section 1.02.  Term of Agreement.  This Agreement shall terminate and be of no
further force and effect upon the later of (a) the date on which full payment
has been made and no amounts are payable (including distributions on the CCS
Securities, whether or not declared) to any holders of the CCS Securities
(whether upon liquidation, redemption or otherwise) and (b) the date on which
there are no Expenses due and payable by the Custodial Trust.


 


Section
1.03.  Waiver of Notice.  AGC
hereby waives presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands,
except as expressly provided herein.


 


Section 1.04.  No
Impairment.  The obligations,
covenants, agreements and duties of AGC under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:


 


(a)          any delay in the
notification of Expenses by the Custodial Trust;


 


(b)         the extension of time for
the payment of all or any portion of the Expenses or for the performance of any
other obligation under, arising out of, or in connection with, the Expenses;
and


 


(c)          the voluntary or
involuntary liquidation, dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Custodial Trust or any of the assets of the
Custodial Trust.


 


Section 1.05.  Subrogation.  AGC shall be subrogated to all (if
any) rights of the Custodial Trust in respect of any amounts directly or
indirectly paid to any person by AGC under this Agreement; provided that
AGC shall not enforce any payment by way of subrogation in the event or to the
extent that such enforcement would have an adverse effect on the CCS Securities
or Pass-Through Trust Securities issued by the Pass-Through Trust.


 


Section 1.06.  Actions;
Notification.  The Custodial
Trust shall give prompt written notice to AGC of any litigation, or any
investigation or proceeding by any governmental agency or body or other person
commenced or threatened against the Custodial Trust or any trustee in
connection with which the payment of Expenses may be sought hereunder
(collectively referred to herein as a “Proceeding”), but failure to so notify
AGC shall not relieve AGC from any liability which it may have otherwise under
this Agreement, unless such failure to provide notice has an adverse impact
upon AGC’s ability to avoid or reduce any Expenses.  AGC may, in its sole
discretion, elect to assume the defense of the Custodial Trust for Expenses
hereunder, and if it so elects, AGC shall select counsel to represent the
Custodial Trust (and any others AGC may 


 


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designate) and pay the fees and expenses of such
counsel.  In any Proceeding, the
Custodial Trust shall have the right to retain its own counsel, but the fees
and disbursements of such counsel shall not constitute an Expense under this
Agreement for which AGC is liable unless (i) AGC and the Custodial Trust shall
have mutually agreed to the retention of such counsel or (ii) the named parties
to any such Proceeding (including any impleaded parties) include both AGC and
the Custodial Trust and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them.  For the avoidance of doubt, when
the named parties to any such Proceeding (including any impleaded parties)
include both the Pass-Through Trust and the Custodial Trust and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, AGC shall not be liable for fees
and expenses of (i) more than one counsel (in addition to any local counsel)
for the Custodial Trust and (ii) more than one counsel (in addition to any
local counsel) for the Pass-Through Trust, in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.  In no
event shall AGC be liable for fees and expenses of more than one counsel (in
addition to any local counsel) for the Custodial Trust in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.


 


Section 1.07.  Settlement
without Consent.  The
Custodial Trust may not settle any Proceeding without the consent of AGC.


 


ARTICLE 2


 


Section 2.01.  Binding
Effect.  All agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of AGC and shall inure to the benefit of those
persons to whom Expenses are due and payable by the Custodial Trust, including
the Pass-Through Trust.


 


Section 2.02.  Amendments.  So long as there remain any CCS Securities
outstanding, this Agreement shall not be modified or amended in any manner
adverse to the holders of the CCS Securities without the consent of a majority
of the holders of the outstanding face amount of CCS Securities.


 


Section 2.03.  Notices.  Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail), telex or by registered or certified mail, addressed as
follows (and if so given, shall be deemed given when mailed or upon receipt of
an answer-back, if sent by telex).


 


If to the Custodial
Trust, to:


 


Woodbourne Capital
Trust I


c/o The Bank of
New York  (Delaware).


White Clay Center


 


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Route 273


Newark, Delaware
19711


With a copy to:


 


The Bank of New York


101 Barclay Street, 8th Floor East

New York, New York 10286

Attention:  Dealing and Trading Group 

Telephone No.:  (212) 815-2912


Facsimile No.: 
(212) 815-2830


 


If to AGC, to:


 


1325 Avenue of the
Americas


18th
Floor


New York, NY 10019


Attention:  General Counsel


 


Section 2.04.  Governing
Law.  This Agreement and all
the rights and obligations of the parties shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State.


 


Section 2.05.  Defined
Terms.  Capitalized terms used
but not defined in this Agreement have the meaning ascribed to them in the
Amended and Restated Declaration of Trust (the “Declaration
of Trust”), dated April 8, 2005, by and among Banc of America
Securities LLC, as Sponsor, Blue Ridge Investments, LLC as Tax Matters Partner,
and The Bank of New York (Delaware), as Trustee, creating the Custodial Trust,
as such Declaration of Trust may be amended and restated from time to time.


 


Section 2.06.  Limitation
of Liability.  It is expressly
understood that (i) this Agreement is executed and delivered by The Bank of New
York (Delaware), not individually or personally but solely as Trustee, in the
exercise of the powers and authority conferred and vested in it under the
Declaration of Trust, (ii) each of the representations, undertakings and
agreements herein made on the part of the Custodial Trust is made and intended
not as personal representations, undertakings and agreements by The Bank of New
York (Delaware), but is made and intended for the purpose for binding only the
Custodial Trust and (iii) under no circumstances shall The Bank of New York
(Delaware) be personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Custodial Trust
under this Agreement or the other related documents.


 


Section 2.07.  Third-Party
Beneficiary.  Each of the
Trustee, the Custodian and the Pass-Through Trust is a third-party beneficiary
to this Agreement and is entitled to the rights and benefits hereunder and may
enforce the provisions hereof as if it were a party hereto.


 


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Section 2.08.  Tax Confidentiality Waiver.  Notwithstanding anything to the contrary
contained herein, all persons may disclose to any and all persons, without
limitation of any kind, the U.S. federal, state and local tax treatment of the
Pass-Through Trust Securities, the CCS Securities and the transactions
contemplated herein, any fact relevant to understanding the U.S. federal, state
and local tax treatment of the Pass-Through Trust Securities, the CCS
Securities and the transactions contemplated herein, and all materials of any
kind (including opinions or other tax analyses) relating to such U.S. federal,
state and local tax treatment other than the name of any of the parties
referenced herein or information that would permit identification of any of the
parties referenced herein.


 


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This Agreement is
executed as of the day and year first above written.


 


	
  ASSURED GUARANTY CORP.

  	
  WOODBOURNE CAPITAL TRUST I

  
	
   

  	
   

  
	
   

  	
  By:

  	
  The Bank of New York (Delaware),

  
	
   

  	
   

  	
  not in its individual capacity but

  
	
   

  	
   

  	
  solely as trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title: