EXHIBIT 10.4

                                                                  EXECUTION COPY

          EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 1, 2001
     (the "Effective Date"), between AMERICAN CAPITAL ACCESS SERVICE
     CORPORATION, a Wyoming corporation ("Service"), AMERICAN CAPITAL ACCESS
     HOLDINGS, INCORPORATED, a Wyoming corporation ("Holdings"), ACA FINANCIAL
     GUARANTY CORPORATION, a Maryland corporation ("Financial," and, together
     with Holdings and Service, the "Company") and EDWARD U. GILPIN (the
     "Executive").

          Pursuant to that certain Management Service Agreement, dated September
24, 1997, Service provides a broad range of administrative and business services
to Financial. Financial is in the business of providing financial guaranty
insurance and specialized surety products.

          Service desires to employ the Executive and Financial and Holdings
desire to lease from Service the Executive's services as an officer and
employee, and the Executive desires to accept such employment.

          Accordingly, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are mutually acknowledged, the Company and the Executive agree
as follows:

     1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

          (a) "Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common
control with, the Person specified. Unless the context otherwise requires, the
terms "control" (including the terms "controlling", "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.

          (b) "Base Salary" means the salary provided for in Section 4 or any
increased salary granted to the Executive pursuant to Section 4.

          (c) "Board" means the Board of Directors of Holdings.

          (d) "Cause" means:

               (i) the Executive is convicted of a felony; or

               (ii) the Executive engages in conduct that constitutes gross
neglect or gross misconduct in carrying out his duties under this Agreement,
resulting, in either case, in material economic harm to the Company; provided,
however, that this clause (ii) shall not apply



to any conduct by the Executive if the Executive believed in good faith that
such conduct was in, or not opposed to, the best interests of the Company.

          (e) "Change of Control" means the occurrence of any of the following
events after the Effective Date:

               (i) any Person (other than those Persons in control of Holdings
as of the Effective Date, or other than a trustee or other fiduciary holding
securities under an employee benefit plan of Holdings, or a corporation owned
directly or indirectly by the stockholders of Holdings in substantially the same
proportions as their ownerships of stock of Holdings) becomes the Beneficial
Owner, directly or indirectly, of securities of Holdings representing fifty
percent (50%) or more of the combined voting power of Holding's then outstanding
securities; or

               (ii) during any period of two (2) consecutive years (not
including any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new director, whose
election by Holding's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was so
approved), cease for any reason to constitute a majority thereof; or

               (iii) any Person is or becomes able to elect a majority of the
members of the Board; or

               (iv) the stockholders of Holdings approve: (i) a plan of complete
liquidation of Holdings; (ii) an agreement for the sale or disposition of all or
substantially all of Holding's assets; or (iii) a merger, consolidation, or
reorganization of Holdings with or involving any other corporation, other than a
merger, consolidation, or reorganization that would result in the voting
securities of Holdings outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the combined
voting power of the voting securities of Holdings (or such surviving entity)
outstanding immediately after such merger, consolidation, or reorganization.

However, in no event shall a "Change in Control" be deemed to have occurred,
with respect to the Executive, if Executive is part of a purchasing group that
consummates the Change-in-Control transaction. Executive shall be deemed "part
of a purchasing group" for purposes of the preceding sentence if the Executive
is an equity participant in the purchasing company or group (except for: (i)
passive ownership of less than three percent (3%) of the stock of the purchasing
company; or (ii) ownership of an equity interest in the purchasing company or
group that is otherwise not significant, as determined prior to the Change in
Control by a majority of the non-employee continuing directors of Holdings).

          (f) "Claim" means any claim, demand, request, investigation, dispute,
controversy, threat, discovery request or request for testimony or information.

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          (g) "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a particular section of the Code shall include any provision that
modifies, replaces or supersedes such section.

          (h) "Common Stock" means Common Stock, par value $0.01 per share, of
Holdings.

          (i) "Constructive Termination" means a termination by the Executive of
his employment with the Company on written notice given to the Company within
200 days following the date on which he learns of the occurrence, without his
prior written consent, of any of the following events, if the Company shall have
failed to cure such event within twenty (20) days following receipt of written
notice from the Executive of a request to cure such event:

               (i) a reduction in his then current Base Salary or in his target
bonus opportunity pursuant to Section 5;

               (ii) a failure to timely grant, or timely honor, any equity award
under Section 6(a) of the Agreement or a material breach of the Company's
obligations under this Agreement, the Option Agreement or the Subscription
Agreement;

               (iii) the termination of, or a reduction in, any material
employee benefit or perquisite enjoyed by him (other than as part of an
across-the-board reduction applying to all executive officers of the Company
which has been approved by the Board);

               (iv) the failure to elect or reelect him to any of the positions
described in Section 3 or the removal of him from any such position;

               (v) a material change in the Executive's positions, titles or
responsibilities with the Company (other than as a result of a promotion) as set
forth in Section 3 of this Agreement or any action by the Company which results
in a material diminution in the authority of Executive, excluding for this
purpose, changes to the individuals, groups, positions or divisions which report
to the Executive;

               (vi) the relocation of the Company's principal office, or of his
own office as assigned to him by the Company, to a location outside of
Manhattan, New York;

               (vii) the failure of the Company to obtain the assumption in
writing of its obligation to fully perform this Agreement by any successor to
all or substantially all of the assets of the Company within 15 days after a
merger, consolidation, sale or similar transaction;

               (viii) a material breach by the Company of any or all of the
representations made by the Company herein or in Section 17 of the Option
Agreement;

               (ix) the failure of the Executive to report directly to Michael
E. Satz or his successor as Chief Executive Officer of the Company; or

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               (x) the termination of Michael Satz's employment with the Company
by the Company, without Cause or by Michael Satz as a result of a Constructive
Termination.

          (j) "Disability" means the Executive's inability, due to physical or
mental incapacity, to substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive days as determined by an
approved medical doctor. For this purpose an "approved medical doctor" means a
medical doctor mutually selected by the Executive and the Company. If the
Executive and the Company cannot agree on a medical doctor, each Party shall
select a medical doctor and the two doctors shall select a third who shall be
the approved medical doctor for this purpose.

          (k) "Note" means the promissory note executed by the Executive in
favor of Holdings in connection with the loan by Holdings of $250,000 to the
Executive for the purpose of purchasing Common Stock of Holdings pursuant to the
Subscription Agreement.

          (l) "IPO" means the consummation of an initial public offering of
shares of stock of Holdings, Service or Financial, or shares of stock of any
Person to which the assets of Holdings, Service or Financial are sold, assigned,
conveyed or otherwise transferred for the purposes of consummating such initial
public offering.

          (m) "Option Agreement" means the Option Agreement, dated as of the
date hereof, by and between the Executive and Holdings.

          (n) "Parties" means the Company and the Executive.

          (o) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, estate, board, committee, agency, body,
employee benefit plan or other person or entity.

          (p) "Proceeding" means any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate or
other.

          (q) "Pro-Rata Annual Incentive Award" means an amount equal to the
product obtained by multiplying (i) the Executive's target annual incentive
award set forth in Section 5 for the year during which his employment hereunder
terminates (with such award deemed to be no less than the greater of (x) the
target annual incentive award for such year pursuant to Section 5 or (y) the
actual annual incentive award of the Executive in the prior year of employment
hereunder) times (ii) a fraction, the numerator of which is the number of days
on which the Executive was employed by the Company during such year and the
denominator of which is 365.

          (r) "Subscription Agreement" means the subscription agreement by and
between the Executive and Holdings in connection with the purchase by the
Executive of $250,000 of Common Stock of Holdings.

          (s) "Subsidiary" of any company means any corporation of which such
company beneficially owns, directly or indirectly, more than 50% of the Voting
Stock,

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measured either by number of shares and other voting securities or by number of
votes entitled to be cast.

          (t) "Term of Employment" means the period specified in Section 2.

          (u) "Termination Date" means the date on which the Executive's
employment hereunder terminates in accordance with this Agreement.

          (v) "Voting Stock" means issued and outstanding capital stock or other
securities of any class or classes having general voting power, under ordinary
circumstances in the absence of contingencies, to elect, in the case of a
corporation, the directors of such corporation and, in the case of any other
entity, the corresponding governing Person(s).

     2. Term of Employment. The Company agrees to employ the Executive under
this Agreement, and the Executive accepts such employment, for the Term of
Employment. The Term of Employment shall commence on the Effective Date and
shall end on the third anniversary thereof. On the third anniversary of the
Effective Date, and on every successive one year anniversary thereafter, the
Term of Employment shall automatically be renewed for one year unless either
Party provided the other Party with twelve-months' advance written notice of
that Party's desire that the Term of Employment should terminate.
Notwithstanding the foregoing, the Term of Employment may be earlier terminated,
but only in strict accordance with the provisions of Section 9.

     3. Positions, Duties and Responsibilities. (a) During the Term of
Employment, the Executive shall be employed as the Chief Financial Officer and
Executive Vice President of each of Holdings, Service, and Financial, and shall
perform such duties and exercise such powers as are incident to such offices.
The Executive, in carrying out his executive duties under this Agreement, shall
report to the Chief Executive Officer of such companies.

          (b) Notwithstanding anything herein to the contrary, nothing shall
preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations or the boards of a reasonable number of
trade associations and/or charitable organizations, (ii) engaging in charitable
activities and community affairs, including political activities, and (iii)
managing his personal investments and affairs, provided that such activities do
not materially interfere with the proper performance of his duties and
responsibilities as the Company's Chief Financial Officer and Executive Vice
President.

     4. Base Salary. Commencing as of the Effective Date, the Executive shall be
paid an annualized Base Salary of $300,000. Such Base Salary shall be payable at
intervals in accordance with the regular payroll practices of the Company
applicable to senior executives but no less frequently than monthly. The Base
Salary shall be reviewed no less frequently than annually during the Term of
Employment for increases. The Base Salary shall not be decreased at any time, or
for any purpose, during the Term of Employment (including, without limitation,
for the purpose of determining benefits due under Section 9).

     5. Annual Incentive Awards. The Executive shall be eligible for an annual
incentive bonus award from the Company in respect of each calendar year ending
during the Term of Employment. The Executive's target annual incentive bonus
amount for each such

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year shall be an amount equal to one-hundred percent (100%) of his annualized
Base Salary for such year and his actual bonus amount for each such year shall
be determined based on criteria determined by the Company; provided, however,
the Executive's minimum and maximum annual incentive bonus awards for each such
year shall be fifty-percent (50%) and two-hundred percent (200%), respectively,
of such annualized Base Salary; and provided, further, that the Executive's
annual incentive bonus award for 2001 shall be no less than $200,000. The
Executive shall receive his annual incentive award payment in respect of any
year no later than the 60th day following the end of the preceding calendar
year.

     6. Long-Term Incentive Awards; Loan and Common Stock Purchase. (a)
Long-Term Incentive Awards. Simultaneously herewith, Holdings has granted to the
Executive options to acquire 24,580 shares of Common Stock of Holdings (the
"Options"). Such grant of the Options and the terms and conditions of such grant
are set forth in the Option Agreement, and such number of shares is subject to
adjustment as provided in the Option Agreement. The Executive shall be eligible
for other or additional long-term incentives in the discretion of the Board.
Such other or additional incentive awards shall be on a level, and on terms and
conditions, that are commensurate with his positions and responsibilities at the
Company and appropriate in light of corresponding incentive awards to other
senior executives of the Company.

          (b) Loan and Common Stock Purchase. Holdings shall loan the Executive
$250,000 for the purchase of Common Stock of Holdings. The terms and conditions
of such loan are set forth in the Note and the terms and conditions of the
purchase of the Common Stock are forth in the Subscription Agreement.

     7. Other Benefits. (a) Employee Benefits. During the Term of Employment,
the Executive shall participate in all employee benefit plans, programs and
arrangements made available generally to the Company's senior executives or to
its employees, including, without limitation, profit-sharing, savings (qualified
and non-qualified) and other defined contribution retirement plans or programs,
medical, dental, hospitalization, vision, short-term and long-term disability
and life insurance plans or programs, accidental death and dismemberment
protection, travel accident insurance, and any other employee welfare benefit
plans or programs that may be sponsored by the Company from time to time,
including any plans or programs that supplement the above-listed types of plans
or programs, whether funded or unfunded; provided, however, that nothing in this
Agreement shall be construed to require the Company to establish or maintain any
such plans, programs or arrangements, except for family medical, dental and
hospitalization insurance providing coverage, at no cost to the Executive, which
shall be required benefit plans for the Executive.

          (b) Perquisites. During the Term of Employment, the Executive shall
participate in all fringe benefits and perquisites available to senior
executives of the Company at levels, and on terms and conditions, that are
commensurate with his positions and responsibilities at the Company. The
Executive shall also receive such additional fringe benefits and perquisites as
the Company may, in its discretion, from time-to-time provide.

          (c) Vacation. During the Term of Employment, the Executive shall be
entitled to vacation in accordance with the reasonable practices of the Company.

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     8. Reimbursement of Business and Other Expenses. (a) The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall promptly reimburse
him for all such expenses, subject to documentation in accordance with
reasonable policies of the Company.

          (b) The Company shall promptly reimburse the Executive for any and all
reasonable expenses (including, without limitation, attorneys' fees and other
charges of counsel) incurred by him in connection with the negotiation and
documentation of this Agreement and the Executive's other employment
arrangements with the Company (including, without limitation, those arrangements
referred to in Section 6 hereof).

     9. Termination of Employment. (a) Termination Due to Death. In the event
that the Executive's employment hereunder is terminated due to his death, his
estate or his beneficiaries (as the case may be) shall be entitled to the
following:

               (i) Base Salary through the date of his death and for an
additional 90 days thereafter;

               (ii) a Pro-Rata Annual Incentive Award for the year in which his
death occurs, payable in a lump sum promptly after his death;

               (iii) immediate vesting of all Company stock options, with such
options remaining exercisable for the remainder of their stated terms;

               (iv) a lump sum payment in respect of all accrued but unused
vacation days at his Base Salary rate in effect on the Termination Date, payment
of any other amounts earned, accrued or owing to the Executive but not yet paid
and receipt of other benefits in accordance with applicable plans and programs
of the Company (the "Standard Benefit"); and

               (v) continued participation for one year for each of the
Executive's dependents in all medical, dental, hospitalization and other
employee welfare benefit plans, programs and arrangements in which such
dependent was participating as of the date of the Executive's death, on terms
and conditions no less favorable than those applying on such date and with COBRA
benefits commencing thereafter.

          (b) Termination Due to Disability. In the event that the Executive's
employment hereunder is terminated due to Disability, he shall be entitled to
the following:

               (i) continuation of Base Salary until commencement of long-term
disability payments;

               (ii) a Pro-Rata Annual Incentive Award for the year in which his
employment terminates, payable in a lump sum promptly following the Termination
Date;

               (iii) immediate vesting of all Company stock options, with such
options remaining exercisable for the remainder of their stated terms;

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               (iv) the Standard Benefit; and

               (v) continued participation for one year for the Executive and
each of his dependents in all Company medical, dental, hospitalization and life
insurance coverages and in all other Company employee welfare benefit plans,
programs and arrangements.

No termination of the Executive's employment for Disability shall be effective
unless the Party terminating his employment first gives 15 days written notice
of such termination to the other Party.

          (c) Termination by the Company for Cause.

               (i) No termination of the Executive's employment hereunder by the
Company for Cause shall be effective unless the provisions of this Section
9(c)(i) shall have been fully complied with. Prior to any termination by the
Company for Cause, the Executive shall be given written notice by the Board of
the intention to terminate him, such notice (A) to state in detail the
particular circumstances that constitute the grounds on which the proposed
termination for Cause is based and (B) to be given no later than 180 days after
the Board first learns of such circumstances. The Executive shall have 15 days
after receiving such notice in which to cure such grounds, to the extent such
cure is possible. If he fails to cure such grounds, the Executive shall then be
entitled to a hearing before the Board. Such hearing shall be held within 20
days of his receiving such notice, provided that he requests such hearing within
15 days of receiving such notice. If, within five days following such hearing,
the Board gives written notice to the Executive confirming that, in the judgment
of at least two-thirds of the members of the Board, Cause for terminating his
employment on the basis set forth in the original notice exists, his employment
with the Company shall thereupon be terminated for Cause, subject to de novo
review, at the Executive's election, through arbitration in accordance with
Section 15. In the event any such arbitration shall determine that Cause did not
exist for the termination of the Executive's employment, his employment shall be
deemed to have been terminated without Cause for purposes of determining his
rights under this Agreement and any other applicable agreements, but he shall in
no event be entitled to reinstatement of his employment.

               (ii) In the event that the Executive's employment hereunder is
terminated by the Company for Cause in accordance with Section 9(c)(i), he shall
be entitled to the following:

                    (A) Payment of Base Salary through the Termination Date; and

                    (B) the Standard Benefit.

          (d) Termination Without Cause; Constructive Termination by the
Executive. In the event that the Executive's employment hereunder is terminated
by the Company, other than due to Disability in accordance with Section 9(b) or
for Cause in accordance with Section 9(c)(i), or in the event of the Executive's
termination of his employment as a result of a Constructive Termination, the
Executive shall be entitled to:

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               (i) payment of Base Salary through the Termination Date;

               (ii) a Pro-Rata Annual Incentive Award for the year in which the
Executive was terminated, payable in a lump sum promptly following the
Termination Date;

               (iii) subject to Section 9(h), a prompt lump-sum severance
payment equal to the sum of (x) the Executive's annual Base Salary on the
Termination Date, and (y) the Executive's target annual incentive award as set
forth in Section 5 for the year during which his employment hereunder terminates
(with such award deemed to be equal to seventy-five percent (75%) of the
Executive's annual Base Salary at the time of such termination);

               (iv) immediate vesting of all Company stock options, with such
options remaining exercisable in accordance with the terms of the applicable
grant documents;

               (v) Continued participation for the Executive and each of his
dependents in all Company medical, dental, hospitalization and life insurance
coverages and all other Company welfare benefit plans, programs and arrangements
until the earlier of (x) one year from the Termination Date or (y) the date the
Executive receives equivalent coverage and benefits from a subsequent employer;
and

               (vi) the Standard Benefit.

          (e) Voluntary Termination. In the event that the Executive terminates
his employment with the Company on his own initiative, other than by death, for
Disability or by a Constructive Termination, he shall have the same entitlements
hereunder as provided in Section 9(c)(ii) in the case of a termination by the
Company for Cause. A voluntary termination under this Section 9(e) shall be
effective upon written notice to the Company and shall not be deemed a breach of
this Agreement.

          (f) Benefit Plans. In the event that the Executive, or any of his
dependents, is precluded from continuing full participation in any employee
benefit plan, program or arrangement as provided in Sections 9(a)(v), 9(b)(v) or
9(d)(v), the Executive shall be provided with the after-tax economic equivalent
of any benefit or coverage foregone. For this purpose, the economic equivalent
of any benefit or coverage foregone shall be deemed to be the total cost to the
Executive or any of his dependents of obtaining such benefit or coverage by
himself on an individual basis. Payment of such after-tax economic equivalent
shall be made quarterly in advance, without discount.

          (g) No Mitigation or Offset. In the event of any termination of the
Executive's employment with the Company, the Executive shall be under no
obligation to seek other employment or otherwise mitigate the obligations of the
Company under this Agreement, and there shall be no offset against amounts due
the Executive under this Agreement on account of (A) any claim that the Company
or any of its shareholders or Affiliates may have against him or (B) any
remuneration or other benefit earned or received by the Executive after such
termination except as specifically provided in Section 9(d)(v). Any amounts due
under this Section 9 or under Section 10(b) are considered to be reasonable by
the Company and are not in the nature of a penalty.

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          (h) Certain Terminations. The Executive shall not be entitled to
receive the payment specified in Section 9(d)(iii) hereof if the termination of
his employment with the Company constitutes a Run-Off Termination under this
Section 9(h). For purposes hereof, a "Run-Off Termination" shall mean a
termination of the Executive's employment with the Company prior to March 1,
2004, following a vote of the Board to cease ongoing business activities and to
commence winding up the Company's affairs; provided, however, that a termination
of the Executive's employment shall not constitute a Run-Off Termination unless,
in addition, one or more of the following three clauses shall apply:

               (i) the termination of the Executive's employment occurs on or
after March 1, 2002 and prior to March 1, 2003, and Financial was not profitable
on a statutory basis for the fourth fiscal quarter of 2001 (i.e., Financial's
net income for the year ending December 31, 2001 shall not exceed its net income
for the three quarters ending September 30, 2001, as reported in each case on
line 16 (column 1) of its Underwriting and Investment Exhibit Statement of
Income as presented in its Annual Statement and Quarterly Statement,
respectively, filed with the Maryland Insurance Administration); provided,
however, that in determining such profitability, the amounts reflected on such
Statements shall be adjusted to exclude any items attributable to liabilities
incurred prior to the Effective Date;

               (ii) the termination of the Executive's employment occurs on or
after March 1, 2003 and prior to March 1, 2004, and Holdings earned a return on
equity of less than 8% for fiscal year 2002, as determined under Generally
Accepted Accounting Principles, but without taking into account any items
attributable to liabilities incurred prior to the Effective Date; or

               (iii) the termination of the Executive's employment occurs within
one hundred twenty (120) days after a downgrade by Standard and Poor's
Corporation of Financial's financial strength rating to below the "A"ratings
category because Standard and Poor's Corporation determined that the Company's
capital was inadequate to maintain the "A" ratings category as a result of the
Company's failure to renew or replace any of the soft capital reinsurance
facilities currently in force with Zurich Reinsurance (North America, Inc.) and
Ace American Insurance Company.

     10. Change of Control. In the event that a Change of Control or an IPO
occurs during the Term of Employment, then (i) all amounts, entitlements and
benefits, including, but not limited to, all Company stock options, shall
thereupon become fully vested and nonforfeitable; and (ii) the Executive shall
have the continued right to exercise each outstanding stock option, including,
without limitation, any portion of the Executive's stock options vesting prior
to or upon such Change of Control or IPO, to the extent permitted by the
applicable plan or, if more favorable to the Executive, grant document. In the
event that holders of Common Stock receive cash, securities or other property in
respect of their Common Stock in connection with a Change of Control
transaction, the Company shall enable the Executive (if he so elects) to
exercise any stock option at a time and in a fashion that will entitle him to
receive in exchange for any shares thus acquired, the same consideration as is
received in such Change of Control transaction by other holders of Common Stock.
Notwithstanding the foregoing, nothing in this Section 10(a) shall in any way
limit the Executive's rights under Section 9 with respect to any stock option
upon a termination of his employment.

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     11. Indemnification. (a) The Company agrees that (i) if the Executive is
made a party, or is threatened to be made a party, to any Proceeding by reason
of the fact that he is or was a director, officer, employee, agent, manager,
consultant or representative of the Company or is or was serving at the request
of the Company or any of its Affiliates as a director, officer, member,
employee, agent, manager, consultant or representative of another Person or (ii)
if any Claim is made, or threatened to be made, that arises out of or relates to
the Executive's service in any of the foregoing capacities, then the Executive
shall promptly be indemnified and held harmless by the Company to the fullest
extent legally permitted or authorized by the Holding's certificate of
incorporation, bylaws or Board resolutions or, if greater, by the laws of the
State of Wyoming, against any and all costs, expenses, liabilities and losses
(including, without limitation, attorney's fees, judgments, interest, expenses
of investigation, penalties, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, member, employee, agent,
manager, consultant or representative of the Company or other Person and shall
inure to the benefit of the Executive's heirs, executors and administrators. The
Company shall advance to the Executive all costs and expenses incurred by him in
connection with any such Proceeding or Claim within 15 days after receiving
written notice requesting such an advance. Such notice shall include, to the
extent required by applicable law, an undertaking by the Executive to repay the
amount advanced if he is ultimately determined not to be entitled to
indemnification against such costs and expenses.

          (b) Neither the failure of the Company (including the Board,
independent legal counsel or stockholders) to have made a determination in
connection with any request for indemnification or advancement under Section
11(a) that the Executive has satisfied any applicable standard of conduct nor a
determination by the Company (including the Board, independent legal counsel or
stockholders) that the Executive has not met any applicable standard of conduct,
shall create a presumption that the Executive has not met an applicable standard
of conduct.

          (c) During the Term of Employment and for a period of six years
thereafter, the Company shall keep in place a directors and officers' liability
insurance policy (or policies) providing comprehensive coverage to the Executive
equal to at least the greater of (i) $5,000,000 per year and (ii) the coverage
that the Company provides for any other present or former senior executive or
director of the Company.

     12. Assignability; Binding Nature. (a) This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors, heirs
(in the case of the Executive) and assigns.

          (b) No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or a sale or liquidation of all or
substantially all of the assets and business of the Company; provided, that the
assignee or transferee is the successor to all or substantially all of the
assets and business of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this

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Agreement, either contractually or as a matter of law. In the event of any sale
of assets and business or liquidation as described in the preceding sentence,
the Company shall use its best efforts to cause such assignee or transferee to
expressly assume the liabilities, obligations and duties of the Company
hereunder and shall cause such assignee or transferee to deliver a legal, valid
and enforceable written instrument in form and substance satisfactory to the
Executive and his counsel to such effect.

          (c) No rights or obligations of the Executive under this Agreement may
be assigned or transferred by the Executive other than his rights to
compensation and benefits, which may be transferred only by will or operation of
law, except as provided in Section 17(f).

         13. Representations. The Company represents and warrants that: (a) it
is fully authorized by action of the Board of the Company (and of any other
Person or body whose action is required) to enter into this Agreement and to
perform its obligations hereunder and upon the execution and delivery of this
Agreement by the Parties, this Agreement shall be the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.

          (b) Holdings, Service and Financial are corporations, each duly
organized, validly existing and in good standing under the laws of the States of
Wyoming, Wyoming and Maryland, respectively, and each having full corporate
power and authority to conduct its business as such businesses are presently
conducted.

          (c) The execution and delivery by each of Holdings, Service and
Financial of this Agreement and the consummation of the transactions
contemplated hereby will not result in the violation of any law, statute, rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which Holdings, Service or Financial is bound,
or of any provision of the Certificate of Incorporation (as amended) or By-Laws
(as amended) of Holdings, Service or Financial, and will not conflict with, or
result in a breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
agreement, instrument or document to which Holdings, Service or Financial is a
party or by which it is bound or to which any of its properties or assets is
subject, nor result in the creation or imposition of any lien upon any of the
properties or assets of Holdings, Service or Financial.

     14. Covenant Not to Compete; Confidentiality. (a) Covenant Not to Compete.

               (i) The Executive agrees that for so long as the Executive is
employed by the Company, and for a period of six (6) months after the Term of
Employment, the Executive shall not directly or indirectly:

                    (A) enter into or attempt to enter into a Restricted
Business (as defined below) in the United States or other jurisdictions in which
the Company conducts business or is planning to conduct business within the next
one (1) year; provided, however, that this clause (A) shall not apply following
the expiration of the Term of Employment as a result of a notice from the
Company pursuant to Section 2;

                                       12


                    (B) induce or attempt to persuade any former or then-current
employee, agent, manager, consultant or director of the Company to terminate
such employment or other relationship in order to enter into any business
relationship or business combination with the Executive in competition with the
Company's business; or

                    (C) use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or other
intangible property used or useful in connection with the business of the
Company.

               (ii) For the purposes of this Section 14, a "Restricted Business"
shall mean a financial guaranty insurance and/or specialized surety business,
whether existing or to be formed without regard to is claims-paying ability.

               (iii) The covenants of the Executive set forth in this Section 14
shall be null and void and without any force or effect upon the effective date
of any liquidation or dissolution of the Company.

               (iv) The covenants set forth above in this Section 14 shall be
construed as a series of separate covenants, one for each county in each of the
states of the United States or country outside the United States to which such
restriction applies.

               (v) The provisions of this Section 14(a) shall not apply in the
case of any termination of the Executive's employment to which Section 9(h)
applies.

          (b) Confidentiality. The Executive acknowledges that he will develop
and be exposed to information that is or will be proprietary to the Company,
including, but not limited to, customer lists, marketing plans, pricing data,
product development plans and other intangible information. Such information
shall be deemed confidential to the extent such information is not generally
known to the public or in the Company's industry. The Executive agrees to use
such information only in connection with the performances of his duties
hereunder and to maintain such information in confidence; provided, however,
that the Executive may disclose such information when required to by law or by a
court, government agency, legislative body or other Person with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information.

     15. Resolution of Disputes. Any Claim arising out of or relating to this
Agreement, the Executive's employment with the Company or the termination of
such employment shall be resolved by binding confidential arbitration, to be
held in New York, New York, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered by either party in any court having jurisdiction
thereof. The Company shall promptly pay all reasonable costs and expenses,
including without limitation attorneys' fees, incurred by the Executive or his
beneficiaries in resolving any such Claim, other than any Claim brought by the
Executive or his beneficiaries that the arbitrator(s) determine to have been
brought in bad faith. Pending the resolution of any Claim, the Executive (and
his beneficiaries) shall continue to receive all payments and benefits due under
this Agreement.

                                       13


     16. Notices. Any notice, consent, demand, request, or other communication
given to a Person in connection with this Agreement shall be in writing and
shall be deemed to have been given to such Person (a) when delivered personally
to such Person or (b), provided that a written acknowledgment of receipt is
obtained, two days after being sent by prepaid certified or registered mail, or
by a nationally recognized overnight courier, to the address specified below for
such Person (or to such other address as such Person shall have specified by 10
days advance notice given in accordance with this Section 16) or (c) in the case
of the Company only, on the first business day after it is sent by facsimile to
the facsimile number set forth for the Company (or to such other facsimile
number as the Company shall have specified by 10 days advance notice given in
accordance with this Section 16), with a confirmatory copy sent by certified or
registered mail or by overnight courier to the Company in accordance with this
Section 16.

If to the Company to:

American Capital Access Service Corporation
140 Broadway
New York, NY 10005
Attention: General Counsel
Telephone: (212) 375-2000
Facsimile: (212) 375-2100

If to the Executive to:

The Executive's principal residence as shown in the records of the Company

with a copy to:

The Executive at the Company's address

and

Gary L. Schoenbrun, Esq.
Dickstein, Shapiro, Morin & Oshinsky LLP
12 East 49th Street, 30th Floor
New York, NY 10017
Telephone: (212) 299-8600
Facsimile: (212) 299-8686.

If to a beneficiary of the Executive to:

The address most recently specified by the Executive or beneficiary through
notice given in accordance with this Section 16.

     17. Guarantee of Obligations. Financial and Holdings are each a beneficiary
of the services provided by Executive and hereby irrevocably and unconditionally
guarantee the performance of all obligations of Service hereunder.

                                       14


     18. Miscellaneous. (a) Entire Agreement. This Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof and, as of the Effective Date, supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, between the Parties with respect thereto.

          (b) Specific Performance. The parties hereto recognize that it is to
the benefit of the Company and the Executive that this Agreement be carried out;
and for those and other reasons, the Executive and the Company would be
irreparably damaged if this Agreement is not specifically enforced in the event
of a breach hereof. If this Agreement is breached by the Company or the
Executive, the parties hereto hereby agree that remedies at law might be
inadequate and that, therefore, such rights and obligations, and this Agreement,
shall be enforceable by specific performance on the part of the Company or the
Executive, as applicable. The remedy of specific performance shall not be an
exclusive remedy, but shall be cumulative of all other rights and remedies of
the parties hereto at law, in equity or under this Agreement.

          (c) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law so as to achieve the purposes of this Agreement.

          (d) Amendment or Waiver. No provision in this Agreement may be amended
unless such amendment is set forth in a writing signed by the Parties. No waiver
by either Party of any breach of any condition or provision contained in this
Agreement shall be deemed a waiver of any similar or dissimilar condition or
provision at the same or any prior or subsequent time. To be effective, any
waiver must be set forth in a writing signed by the waiving Party.

          (e) Headings. The headings of the Sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.

          (f) Beneficiaries/References. The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executive's death by giving the Company written notice thereof. In the event of
the Executive's death or a judicial determination of his incompetence, reference
in this Agreement to the Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative.

          (g) Survivorship. Except as otherwise set forth in this Agreement, the
respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive's employment hereunder.

                                       15


          (h) Governing Law/Jurisdiction. This Agreement shall be governed,
construed, performed and enforced in accordance with the laws of the State of
New York, without reference to principles of conflicts of laws.

          (i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.

                                               AMERICAN CAPITAL ACCESS
                                               SERVICE CORPORATION


                                               By: /s/  Kathleen G. Cully
                                                  ------------------------------
                                                  Name:    Kathleen G. Cully
                                                  Title:   General Counsel



                                               AMERICAN CAPITAL ACCESS
                                               HOLDINGS, INCORPORATED


                                               By: /s/  Kathleen G. Cully
                                                  ------------------------------
                                                  Name:    Kathleen G. Cully
                                                  Title:   General Counsel



                                               ACA FINANCIAL GUARANTY
                                               CORPORATION


                                               By: /s/  Kathleen G. Cully
                                                  ------------------------------
                                                  Name:    Kathleen G. Cully
                                                  Title:   General Counsel



                                                   /s/ EDWARD U. GILPIN
                                                  ------------------------------
                                                   EDWARD U. GILPIN


                                       16