Exhibit 10.71


 


To Be Used With
Employment Agreement


 


Non-Qualified Stock
Option Agreement under

Assured Guaranty Ltd. 2004
Long-Term Incentive Plan


 


THIS AGREEMENT is effective as of the Grant Date, by and between the
Participant and Assured Guaranty Ltd. (the “Company”).


 


WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004
Long-Term Incentive Plan (the “Plan”), and the Participant has
been selected by the committee administering the Plan (the “Committee”) to
receive a Non-Qualified Stock Option Award under the Plan; and


 


NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant, as follows:


 


1.  Terms of Award.  
The following words and phrases used in this
Agreement shall have the meanings set forth in this paragraph 1:


 


(a)                                  The
“Participant” is                                      


 


(b)                                 The
“Grant Date” is February 5, 2009.


 


(c)                                  The
number of “Covered Shares” shall be                               
shares of Stock.


 


(d)                                 The
“Exercise Price” is $                        
per share.


 


Other words and phrases used in this Agreement are
defined pursuant to paragraph 17, elsewhere in this Agreement or the Plan.


 


2.  Non-Qualified Stock Option.  This Agreement specifies the terms of the
option (the “Option”) granted to the Participant to purchase the number of
Covered Shares of Stock at the Exercise Price per share as set forth in
paragraph 1.  The Option is not intended
to constitute an “incentive stock option” as that term is used in Code section
422.


 


3.  Date of Exercise. 
Subject to the limitations of this Agreement,
each Installment of Covered Shares of the Option shall be exercisable on and
after the Vesting Date for such Installment as described in the following
schedule (but only if the Date of Termination has not occurred before the
Vesting Date):


 

















 


	
  INSTALLMENT

  	
   

  	
  VESTING DATE APPLICABLE

  TO INSTALLMENT

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered
  Shares

  	
   

  	
  One year
  anniversary of the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered
  Shares

  	
   

  	
  Two year
  anniversary of the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered
  Shares

  	
   

  	
  Three year
  anniversary of the Grant Date

  



 


Notwithstanding the foregoing provisions of this paragraph 3, the
Option shall become vested and exercisable as follows:


 


(a)                                  The
Option shall become fully exercisable upon the Date of Termination, if the Date
of Termination occurs by reason of the Participant’s death or Disability.


 


(b)                                 The
Option shall become fully exercisable upon a Change in Control that occurs on
or before the Date of Termination.


 


(c)                                  If
the Option is not fully exercisable upon the Participant’s Date of Termination,
and the Participant’s Date of Termination occurs because of Retirement, then,
for purposes of this paragraph 3 and subject to paragraph 17(g), the
Participant shall be treated as though employed by the Company and Subsidiaries
after the Participant’s actual Date of Termination until the Vesting Date has
occurred with respect to all of the Covered Shares.


 


(d)                                 If
the Option is not fully exercisable upon the Participant’s Date of Termination,
and the Participant’s Date of Termination occurs by virtue of a Termination
Without Cause, then for purposes of applying the foregoing vesting schedule,
the Participant shall be treated as though employed by the Company and
Subsidiaries after the Participant’s actual Date of Termination until the
two-year anniversary of the Date of Termination.  The terms “Cause” and “Terminated Without
Cause” shall be defined as set forth in the Employment Agreement.  Notwithstanding the foregoing, if the
Executive’s employment is Terminated without Cause, the provisions of this paragraph
(d) shall apply, and the provisions of paragraph 4(e) with respect to
Retirement shall apply only if the Executive executes and returns to the
Company a general release and waiver of all claims against the Company as
required under the Employment Agreement.


 


Subject to paragraphs (c) and (d) above, the Option may be
exercised on or after the Date of Termination only as to that portion of the
Covered Shares for which it was exercisable immediately prior to (or became
exercisable on) the Date of Termination. 
Notwithstanding the foregoing provisions of this paragraph 3, as of the
Participant’s Date of Termination for Cause, the Option shall be canceled as to
any Covered Shares as to which it has not previously been exercised.


 


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4.  Expiration. 
The Option shall not be exercisable after the Company’s close of
business on the last business day that occurs prior to the Expiration
Date.  The “Expiration Date” shall be the
earliest to occur of:


 


(a)                                  the
ten-year anniversary of the Grant Date;


 


(b)                                 if
the Participant’s Date of Termination occurs by reason of death or Disability,
the two-year anniversary of such Date of Termination;


 


(c)                                  if
the Participant’s Date of Termination occurs for Cause, the Date of Termination;


 


(d)                                 if
the Participant’s Date of Termination occurs because of a Termination Without
Cause, the two-year anniversary of the Date of Termination;


 


(e)                                  if
the Participant’s Date of Termination occurs because of Retirement, the
ten-year anniversary of the Grant Date, subject to paragraph 17(g); or


 


(f)                                    if
the Participant’s Date of Termination occurs for any reason other than those
listed in subparagraph (b), (c), (d), or (e) of this paragraph 4, the 90
day anniversary of such Date of Termination.


 


Notwithstanding the foregoing provisions of this paragraph 4, if a
Change in Control occurs on or before the Participant’s Date of Termination,
the Expiration Date shall be the ten-year anniversary of the Grant Date.


 


5.  Method of Option Exercise.  Subject to this Agreement and the Plan, the
Option may be exercised in whole or in part by filing a written notice with the
Secretary of the Company at its corporate headquarters prior to the Company’s
close of business on the last business day that occurs prior to the Expiration
Date.  Such notice shall specify the
number of shares of Stock which the Participant elects to purchase, and shall
be accompanied by payment of the Exercise Price for such shares of Stock
indicated by the Participant’s election. 
Payment shall be by cash or by check payable to the Company.  Except as otherwise provided by the Committee
before the Option is exercised: (i) all or a portion of the Exercise Price
may be paid by the Participant by delivery of shares of Stock owned by the Participant
and acceptable to the Committee having an aggregate Fair Market Value (valued
as of the date of exercise) that is equal to the amount of cash that would
otherwise be required; and (ii) the Participant may pay the Exercise Price
by authorizing a third party to sell shares of Stock (or a sufficient portion
of the shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price and
any tax withholding resulting from such exercise.  The Option shall not be exercisable if and to
the extent the Company determines that such exercise would violate applicable
state or Federal securities laws or the rules and regulations of any
securities exchange on which the Stock is traded.  If the Company makes such a determination, it
shall use all reasonable efforts to obtain compliance with such laws, rules and
regulations.  In making any determination
hereunder, the Company may rely on the opinion of counsel for the Company.


 


6.  Withholding. 
All deliveries and distributions under this Agreement
are subject to withholding of all applicable taxes.  At the election of the Participant, and
subject to such rules and limitations as may be established by the
Committee from time to time, such withholding 


 


3

















 


obligations may be satisfied through the surrender of
shares of Stock which the Participant already owns, or to which the Participant
is otherwise entitled under the Plan; provided, however, that such shares may
be used to satisfy not more than the Company’s minimum statutory withholding
obligation (based on minimum statutory withholding rates for Federal and state
tax purposes, including payroll taxes, that are applicable to such supplemental
taxable income).


 


7.  Transferability. 
Except as otherwise provided by the Committee, the Option is not
transferable other than as designated by the Participant by will or by the laws
of descent and distribution, and during the Participant’s life, may be exercised
only by the Participant.


 


8.  Cancellation and Rescission of Options.


 


(a)                                  The
Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict
the Option at any time if the Participant engages in any “Detrimental Activity.”


 


(b)                                 Upon
exercise of the Option, the Participant shall certify, to the extent provided
by the Committee, in a manner acceptable to the Committee, that the Participant
is not engaging and has not engaged in any Detrimental Activity.  In the event a Participant has engaged in any
Detrimental Activity prior to, or during the twelve months after, any exercise
of the Option, such exercise may be rescinded by the Committee within two years
thereafter.  In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized as a result of the rescinded exercise, in such manner and on such
terms and conditions as may be required, and the Company shall be entitled to
set-off against the amount of any such gain any amount owed to the Participant
by the Company and/or Subsidiary.


 


9.  Heirs and Successors.  This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company’s assets and business.  If any rights exercisable by the Participant
or benefits deliverable to the Participant under this Agreement
have not been exercised or delivered, respectively, at the time of the
Participant’s death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of this Agreement
and the Plan.  The “Designated Beneficiary”
shall be the beneficiary or beneficiaries designated by the Participant in a
writing filed with the Committee in such form and at such time as the Committee
shall require.  If a deceased Participant
fails to designate a beneficiary, or if the Designated Beneficiary does not
survive the Participant, any rights that would have been exercisable by the
Participant and any benefits distributable to the Participant shall be
exercised by or distributed to the legal representative of the estate of the
Participant.  If a deceased Participant
designates a beneficiary and the Designated Beneficiary survives the
Participant but dies before the Designated Beneficiary’s exercise of all rights
under this Agreement or before the complete distribution of
benefits to the Designated Beneficiary under this Agreement,
then any rights that would have been exercisable by the Designated Beneficiary
shall be exercised by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated Beneficiary shall
be distributed to the legal representative of the estate of the Designated
Beneficiary.


 


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10.  Administration. 
The authority to manage and control the operation and administration of this
Agreement shall be vested in the Committee, and the Committee
shall have all powers with respect to this Agreement
as it has with respect to the Plan.  Any
interpretation of this Agreement by the Committee and any decision made by it
with respect to this Agreement is final and binding on all persons.  The Committee shall have the authority to
obtain such information from the Participant (including tax return information)
as it determines may be necessary to confirm that the Participant is in compliance
with the requirements applicable to Detrimental Activity, and if the
Participant fails to provide such information, the Committee may conclude that
the Participant is not in compliance with such requirements.


 


11.  Recoupment and Plan Provisions Govern.


 


(a)                                  Notwithstanding anything in this
Agreement to the contrary, the Participant’s rights with respect to the Option
shall be subject to the Assured Guaranty Ltd. Executive Officer
Recoupment Policy as
in effect on the Grant Date, a copy of which policy is set forth in the Company’s
Code of Conduct.


 


(b)                                 Notwithstanding
anything in this Agreement to the contrary, but subject
to paragraph (a) above, this Agreement shall be subject to the terms of
the Plan, a copy of which may be obtained by the Participant from the office of
the Secretary of the Company; and this Agreement
is subject to all interpretations, amendments, rules and regulations
promulgated by the Committee from time to time pursuant to the Plan.


 


12.  Not an Employment Contract.  The Option will not confer on the Participant
any right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate or modify the terms
of such Participant’s employment or other service at any time.


 


13.  Notices. 
Any written notices provided for in this Agreement
or the Plan shall be in writing and shall be deemed sufficiently given if
either hand delivered or if sent by fax or overnight courier, or by postage
paid first class mail.  Notices sent by
mail shall be deemed received three business days after mailing but in no event
later than the date of actual receipt. 
Notices shall be directed, if to the Participant, at the Participant’s
address indicated by the Company’s records, or if to the Company, at the
Company’s principal executive office.


 


14.  Fractional Shares.  In lieu of issuing a fraction of a share upon
any exercise of the Option, resulting from an adjustment of the Option pursuant
to the Plan or otherwise, the Company will be entitled to pay to the
Participant an amount equal to the fair market value of such fractional share.


 


15.  No Rights As Shareholder.  The Participant shall not have any rights of
a shareholder with respect to the shares subject to the Option, until a stock
certificate has been duly issued following exercise of the Option as provided
herein.


 


16.  Amendment. 
This Agreement may be amended in accordance
with the provisions of the Plan, and may otherwise be amended by written
agreement of the Participant and the Company without the consent of any other
person.


 


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17.  Definitions. 
For purposes of this Agreement, words and phrases shall
be defined as follows:


 


(a)                                  Change
in Control.  The term “Change in
Control” shall be defined as set forth in the Plan.


 


(b)                                 Date of Termination.  A Participant’s “Date of Termination” means,
with respect to an employee, the date on which the Participant’s employment
with the Company and Subsidiaries terminates for any reason, and with respect
to a Director, the date immediately following the last day on which the
Participant serves as a Director; provided that a Date of Termination shall not
be deemed to occur by reason of a Participant’s transfer of employment between
the Company and a Subsidiary or between two Subsidiaries; further provided that
a Date of Termination shall not be deemed to occur by reason of a Participant’s
cessation of service as a Director if immediately following such cessation of
service the Participant becomes or continues to be employed by the Company or a
Subsidiary, nor by reason of a Participant’s termination of employment with the
Company or a Subsidiary if immediately following such termination of employment
the Participant becomes or continues to be a Director; and further provided
that a Participant’s employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved
by the Participant’s employer.


 


(c)                                  Detrimental
Activity.  The term “Detrimental
Activity” shall mean (i) a violation of paragraph 11 of the Employment
Agreement (relating to competition) during the period in which such activity is
prohibited under the Employment Agreement; or (ii) a violation of
paragraph 12 of the Employment Agreement (relating to confidentiality).


 


(d)                                 Director.  The term “Director” means a member of the
Board of Directors of Assured Guaranty Ltd., who may or may not be an employee
of the Company or a Subsidiary.


 


(e)                                  Disability. 
The Participant shall be considered to have a “Disability” during the
period in which the Participant is unable, by reason of a medically
determinable physical or mental impairment, to engage in any substantial gainful
activity, which condition, in the opinion of a physician selected by the
Committee, is expected to have a duration of not less than 120 days.


 


(f)            Employment Agreement.  “Employment Agreement” shall mean the
agreement between the Participant and the Company as amended and restated as of
January 1, 2009 or any successor agreement thereto.


 


(g)                                 Retirement. 
“Retirement” of a Participant will be determined in accordance with the
following:


 


6

















 


(i)            Retirement shall mean the occurrence
of a Participant’s Date of Termination with the consent of the Participant’s
employer after the Participant has completed three years of service and
attained age 55. (1)


 


(ii)           For purposes of defining “Retirement,”
years of service shall be determined in accordance with rules which may be
established by the Committee, and shall take into account service with the
Company and the Subsidiaries.  If, on or
before the date of the initial public offering of stock of the Company, the Participant
was employed by the Company or its Subsidiaries, years of service shall also
include service with ACE Limited and its subsidiaries occurring prior to such
initial public offering.


 


(iii)          Notwithstanding that the Participant’s
Date of Termination satisfies the requirements of paragraph (i) above, the
Participant will not be considered to have retired (or have terminated by
reason of Retirement) with respect to any unexercised portion of the Option if
the Committee determines that the Participant has provided significant
commercial or business services to any one or more persons or entities on or
before the Option exercise, regardless of whether such entity is owned or
controlled by the Participant; provided that the Participant may devote
reasonable time to the supervision of his personal investments, and activities
involving professional, charitable, community, educational, religious and
similar types of organizations, speaking engagements, membership on the boards
of directors of other organizations, and similar types of activities, to the
extent that the Committee, in its discretion, determines that such activities
are consistent with the Participant’s Retirement.


 


(iv)          At the request of the Committee, and
as a condition of exercising the Option, the Participant shall be required to
provide a listing of the activities engaged in by the Participant following the
Participant’s Date of Termination and prior to such exercise and such other
information that the Committee determines may be necessary from time to time to
establish whether the Participant has acted in a manner that is consistent with
the requirements of paragraph (iii). 
Such listing and information shall be provided promptly by the
Participant, but in no event more than 10 days after written request is
delivered to the Participant.


 


(v)           At the request of the Participant,
the Committee shall determine whether a proposed activity of the Participant
will be consistent with the requirements of paragraph (iii).  Such request shall be accompanied by a
description of the proposed activities, and the Participant shall provide such
additional information as the Committee may determine is necessary to make the
determination.  Such a determination
shall be made promptly, but in no event more than 30 days after the written
request, together with any additional information requested of the Participant,
is delivered to the Committee.


 


(vi)          If, prior to the exercise of the
Option with respect to a portion of the Covered Shares (including the exercise
with respect to all the Covered Shares), the Participant engages in one or more
activities that the Committee determines to be inconsistent with 


 






(1)                                “Retirement”
for Mr. Bailenson, 55 years of age with 5 years of service and the consent
of the Compensation Committee or 60 years of age with 5 years of service.


 


7

















 


Retirement, as set
forth in paragraph (iii) above, the right to exercise the Option with
respect to a portion of the Covered Shares (including the exercise with respect
to all the Covered Shares) as of or after the date the Participant first
engages in such activities may be canceled by the Committee.  If, after the Option has been exercised with
respect to all or any portion of the Covered Shares, the Committee determines
that the Participant engaged in activities prior to such exercise that are
inconsistent with Retirement, as set forth in paragraph (iii) above, such
exercise may be rescinded by the Committee within two years after the
exercise.  In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized as a result of the rescinded exercise, in such manner and on such
terms and conditions as may be required by the Committee, and the Company shall
be entitled to set-off against the amount of any such gain any amount owed to
the Participant by the Company and/or Subsidiary.  For the avoidance of doubt, it is recited
that the cancellation of the right to exercise the Option shall include
cancellation of the right to vest in the Option.


 


(h)                                 Plan Definitions. 
Except where the context clearly implies or indicates the contrary, a
word, term, or phrase used in the Plan is similarly used in this
Agreement.


 


IN WITNESS WHEREOF, the Participant has executed the
Agreement, and the Company has caused these presents to be executed in its name
and on its behalf, all as of the Grant Date.


 


Assured Guaranty Ltd.


 


 





 


	
  By:

  	
  James Michener

  	
   

  
	
  Its:

  	
  General Counsel

  	
   

  



 


Participant


 


8