Exhibit 10.64


 


EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT was
initially  made and entered
into as of the 28th day of April, 2004 (the “Original Effective
Date”) by and between Assured Guaranty Ltd., a Bermuda corporation, Assured
Guaranty U.S. Holdings, Inc., a  Delaware
corporation,  Assured Guaranty Corp., a
Maryland corporation (collectively referred to as the “Company”), and Dominic
J. Frederico (the “Executive”); and the provisions set forth herein constitute
an amendment, restatement and continuation of this Agreement as in effect
immediately prior to January 1, 2009 (the “Amendment Effective Date”).


 


WHEREAS, the Company desires to offer employment to the Executive under the terms and conditions set forth below; and


 


WHEREAS,
the Executive wishes to accept such employment under
such terms and conditions.


 


NOW,
THEREFORE, in
consideration of the promises and mutual covenants contained herein and for
other good  and  valuable
consideration, the Company and the Executive (the “Parties”) hereby
agree as follows:


 


1. Employment


 


The Company hereby employs the
Executive, and the Executive hereby accepts employment with the Company, for
the term of this Agreement as set forth in Section 2 below, in the
position and with the duties and responsibilities set forth in Section 3
below, and upon such other terms and conditions as are hereinafter stated.


 


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2. Term and
Place of Performance


 


(a) The
term of the Agreement shall commence as of the date of the closing of the
initial public offering of Assured Guaranty Ltd. common shares registered under
the Securities Act of 1933, as amended (the “Commencement Date”) and shall
continue through the close of business on third anniversary of the Commencement
Date, subject to the terms and conditions of this Agreement (“Initial Term”).  This Agreement shall automatically renew for
a one-year term after the Initial Term, and each succeeding twelve months
thereafter, unless either party gives notice in writing at least 30 days prior
to the expiration of the Initial Term or succeeding one year term of its
intention not to renew the Agreement.  
If non-renewal is at the option of Executive, it shall be treated as a
Voluntary Termination.  If non-renewal is
at the option of Company, it shall be treated as a Termination Without Cause as
that term is defined in Section 10(d) herein.


 


(b). The obligations of the Company under
this Agreement shall be contingent upon the issuance of a work permit by the
Government of Bermuda and any other permits required by the Government of
Bermuda. Failure to obtain said permits shall void this Agreement, unless the
Company decides Executive may perform his duties at some other location. In the
event the Agreement is voided under this section, Executive shall be entitled
to the benefits provided for Termination Without Cause under Section 10(d).


 


 Once
obtained, the maintenance of such permits throughout the term of this Agreement
shall be a continuing condition to the Company’s obligations under this
Agreement. However, if despite the Executive’s best efforts to maintain the
permits, they are terminated or revoked by the Government of Bermuda through no
fault of the Executive, then (i) the Company may terminate the employment
of the Executive, and in the event of such termination, the Executive shall be 


 


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entitled
to the benefits provided for Termination Without Cause under Section 10(d),
and (ii) if, as a result of failure to maintain such permits, and the
Company decides Executive may perform his duties at some other location, and
the Executive promptly provides notice that he will not comply with a request
for relocation, and resigns within six months of the Company’s relocation
request, such resignation shall be treated as a Good Reason Resignation.


 


3. Positions,
Duties. and Time Devoted to the Company & Its Affiliates


 


(a) During
the term of the Agreement, the Executive shall be employed as the Chief
Executive Officer of the Company, with such powers and duties normally
attendant to such offices and such other duties as may be assigned to the
Executive.  Executive shall answer to and
be subject to the direction of the Assured Guaranty  Ltd. Board of Directors.


 


(b) The Executive agrees to remain in
the employ of the Company during the term of this Agreement, to devote his full
business time exclusively to the business affairs of the Company, and to
perform his duties faithfully.  Subject
to the demands of his position with the Company, the Executive shall be permitted
to:


 


(i) deliver lectures and
fulfill speaking engagements; and


 


(ii) engage in industry,
charitable and community activities; provided, however, that any expenses, such
as for travel, incurred by the Executive in connection with such activities
shall be for the personal account of the Executive and shall not be reimbursed
by the Company, unless based on managements’ view it is done for the overall
benefit of the Company in forwarding its image, business abilities or quality
of staff.


 


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4. Salary


 


For services
rendered by the Executive to the Company during the term of this Agreement
while he is employed by the Company, the Executive shall be paid a minimum
annual base salary at a rate of $700,000. 
The annual base salary shall be paid on a monthly basis by the
Company.  The companies which comprise
the Company as defined herein will fund the salary specified above in
proportion to the percentage of time executive performs work for each company.


 


5.
Moving Allowance


 


The Company will reimburse the
Executive for reasonable moving expenses for household goods in relocating to
Bermuda.  Subject to termination pursuant
to section 10(a), 10(b) and 10(c), the Company will reimburse the
Executive for reasonable moving expenses actually incurred to move the
Executive’s household goods to the Executive’s original port of departure, or
to another destination (provided that the amount reimbursed for moving to
another destination will not exceed the amount required to be reimbursed if the
Executive returned to the Executive’s original port of departure), provided
that such reimbursement rights apply only during the period ending on the last
day of the second taxable year of the Executive following the year in which the
Executive’s termination of employment occurs. 
If the
Executive has a taxable year that is other than the calendar year, then, to the
extent required by Code section 409A, the term “calendar year” (when used in
this Agreement) shall instead mean the Participant’s taxable year.


 


6.
Annual Performance Incentive Plan


 


Subject to the terms and conditions of this
Agreement, once a year during the Initial Term, Executive shall receive an
annual performance incentive bonus award which will range from 0 to 


 


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200%
of his annual base salary, such amount to be determined by the Compensation
Committee of the Board of Directors and to be based on the performance of the
Company and the Executive. 
Notwithstanding the foregoing, for as long as the Company continues to
participate in the ACE Group short-term incentive program, Executive will be
eligible to participate in such plan, pursuant to its terms, as may be in
effect from time to time .


 


7. Long-Term
Incentive Awards


 


(a) Sign-on Equity Award—  When Assured Guaranty Limited (“AGL”) issues
shares of publicly traded stock, Executive will be granted an award of 250,000
restricted ordinary shares of AGL stock that will vest 25% annually over a four
year period with the first quarter vesting starting one year after the date of
the award .  When AGL issues shares of
publicly traded stock, Executive will also be granted an award of an option to
purchase at the IPO price 500,000 shares of AGL stock.  These shares and options will be subject the
terms and conditions that will be set forth in the AGL Long-Term Incentive Plan
(“LTIP”).   The current projected target
share value for the IPO AGL shares is $20.  
Upon vesting or exercise of stock options, the shares will be registered
in the United States with the SEC and appropriate states and will be freely
tradable.


 


(b) Annual Long-Term Incentive Awards—After AGL issues
shares of publicly traded stock, Executive will participate in the LTIP.  The “target award” for the Initial Term will
be 83,333 restricted shares of AGL stock and an option to purchase 166,667
shares of AGL stock, however the amount of any award made to Executive under
LTIP will be based on the profitability of the AGL and Executive’s performance
and will be subject to the discretion of the Compensation Committee of the AGL’s
Board of Directors.  All Long-Term
Incentive awards will be subject to the terms and conditions of the LTIP.


 


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(c) Retirement—If Executive
retires at age 55 or older from Company and has at least three years of service
with the Company,   any restricted shares
of Company ordinary stock and options to purchase shares of Company stock held
by Executive upon retirement will continue to vest in accordance with the
schedules set forth in the award grants, will be exercisable until the
expiration of their original term, and will otherwise be subject to the
provisions of the applicable Company long-term incentive plan.


 


(d) Other-  Nothing in this Agreement
shall be construed to require the Company or any other person to take steps or
not take steps (including, without limitation, the giving or withholding of
consents) that would result in a Change in Control or an initial public
offering of Company’s securities.  In
addition, restricted stock grant awards and stock option agreements presented
to Executive under the LTIP shall not be inconsistent with the terms of this
Agreement and to the extent that such awards or grants include terms that are
not addressed in this Agreement the terms of said awards and grants shall apply
in full force and effect.


 


8.  Employee
Benefits


 


(a) During the term of his employment,
the Executive shall be entitled to participate in the Company’s retirement
plan, supplemental retirement plan, hospitalization plan, major medical plan,
dental plan, group-term life insurance plan, accidental death and dismemberment
plan, and such other employee benefits programs consistent with such benefits
offered currently to senior executives of ACE, subject to satisfaction of all
eligibility requirements of general applicability and all other terms and
conditions of the plans.


 


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(b) The Executive shall be entitled to
five weeks of vacation in a full calendar year. 
Unused vacation days shall expire as of the last day of each one year
period and may not be accumulated, carried forward or redeemed for other
compensation.


 


(c)  Notwithstanding
the foregoing, for as long as the Company continues to participate in the
existing employee benefit plans, 
Executive shall continue to be able to participate in such plans,
pursuant to their terms, as may be in effect from time to time .


 


(d) 
The companies which comprise the Company as defined
herein will fund the benefits specified above in proportion to the percentage
of time executive performs work for each company.


 


9.
Business Expense Reimbursement. Accommodation. Other
Perquisites


 


(a) During the term his
employment, the Executive shall be entitled to be reimbursed by Company for all
reasonable out-of-pocket travel and entertainment expenses incurred by him in
performing services under this Agreement, provided that the Executive submits
reasonable documentation with respect to such expenses.


 


(b) During the term of the
Executive’s employment, the Company will reimburse the Executive up to a
maximum of $ 18,000 per month in respect of the cost of suitable living
accommodation in Bermuda. In the event that the Executive chooses to purchase a
residence in Bermuda, the Company will reimburse him only for the fair market
rental value of said residence to a maximum of $18,000 per month, which amount
shall be reviewed from time to time in accordance with authorization from the
Compensation Committee of the Board of Directors.


 


(c) During
the term of the Executive’s employment, the Company will reimburse the
Executive and/or his immediate family for up to a total of sixteen round trip
tourist class airfares 


 


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per year between Bermuda and an
East Coast port of entry to the United States of America upon submission of
reasonable documentation that the fares were incurred.


 


(d) The
Executive shall be entitled to reimbursement for initiation fees and annual
dues at a club of his selection in Bermuda.


 


(e) During
the term of his employment, Executive shall be entitled to reimbursement for
the reasonable cost of any tax preparation service and financial planning.


 


(f) The Executive shall be indemnified by the Company in accordance
with its Articles of Incorporation,


 


(g) The
Executive shall be entitled to reimbursement for any tax consequences arising
specifically by his relocation to Bermuda for employment purposes, any travel
to and from company offices, and any subsequent relocation to the U.S. or
elsewhere as mentioned in Paragraph 5.


 


(h) 
Executive will be eligible to participate in the Executive automobile program.


 


(i)  This
Agreement includes the Gross —Up provisions set forth  in attachment A hereto which are incorporated
herein by reference.


 


(j)  Payment of
reimbursement amounts (including, without limitation, payments under paragraph (f) above
(relating to indemnification) and the provision of in-kind benefits by the
Company under this Agreement that constitute Deferred Compensation shall be
subject to the following:


 


(i)  Such
reimbursements shall be made promptly after the Executive submits reasonable
evidence of having incurred the amounts subject to reimbursement, provided that
the Executive is required to provide such evidence no later than October 31
of the 


 


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calendar year following the
year in which such expenses are incurred (or such earlier date that is
generally applicable, or such later date, established by the Company that is
not later than the end of the calendar year following the year in which such
expenses are incurred), and shall be paid by the Company not later than the
last day of the calendar year following the year in which such expenses are
incurred.


 


(ii)  To
the extent required to avoid accelerated recognition of taxable income or
imposition of additional tax under Code section 409A, the amount of expenses
eligible for reimbursement, or in-kind benefits provided, during the Executive’s
taxable year may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year.


 


(iii)  To the extent that the Executive is eligible
for reimbursement of tax liability with respect to taxes paid by the Executive,
such reimbursement shall be made no later than the end of the calendar year
following the calendar year in which the taxes are remitted to the taxing
authority.


 


(iv)  The
Executive’s right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.


 


10.
Termination of Employment


 


(a) Termination Due to Death.


 


In the event
of the Executive’s death during the term of his employment hereunder, the
estate or other legal representative of the Executive shall be entitled to.


 


(i) continuation of the Executive’s annual base salary provided in
Section 4 above through the last day of the month in which the Executive
dies;


 


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(ii) any rights and benefits available under any employee benefits
plans, policies, and practices of the Company, determined in accordance with
the applicable terms and provisions of such plans, policies, and practices as
in effect on the date of the Executive’s death.


 


(b) Termination Due to Disability.


 


In the event the Executive’s
employment by the Company is terminated because he is adjudged by the
Compensation Committee to be disabled within the meaning of the Company’s
long-term disability plan, the Executive shall be entitled to:


 


(i) continuation of the annual base salary provided in Section 4
above through the last day of the month in which the Executive’s employment
with the Company terminates due to disability;


 


(ii) any rights and benefits available under any employee  benefits plans, policies, and practices of
the Company, determined in accordance with the applicable terms and provisions of such plans, policies, and
practices as in effect on the date of the Executive’s termination of
employment.


 


(c) Termination by the Company for Cause.


 


(i) The employment of the
Executive under this Agreement may be terminated by the Company for Cause.  For purposes of this Agreement, “Cause” shall
mean;


 


(A) conviction or
admission of guilt by the Executive of a felony involving moral turpitude;


 


(B) violations of Section 11
or 12 of this Agreement; or


 


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(C) the Executive, in
carrying out his duties, has been guilty of (1) a willful, serious, and
continued failure to perform his duties, 
(2) willful and serious misconduct or (3) a willful and
material breach of the Company Code of Conduct; provided, however, that any
act, or failure to act, by the Executive shall not constitute Cause for
purposes of this Section 10(c)(i)(c) if such act or failure to act,
was committed, or omitted, by the Executive in good faith and in a manner he
reasonably believed to be in the best interests of the Company.


 


(ii) In the event of a
termination of the Executive’s employment for Cause under Section 10(c)(i) above,
the Executive shall be entitled only to:


 


(a) continuation
of the annual base salary provided in Section 4 above through the date on
which termination for Cause occurs; and


 


(b) any other rights and benefits, if
any, available under employee benefit plans, policies, and practices of the
Company, determined in accordance with the applicable terms and provisions of
such plans, policies, and practices, as in effect on the date of his
termination of employment.


 


 (d) Termination Without Cause


 


(i) Anything in this
Agreement to the contrary notwithstanding, the Executive’s employment may be
Terminated Without Cause as provided in this Section 10(d).  Termination Without Cause shall mean either (1) a
termination of the Executive’s employment by the Company, (other than a
termination due to death as described in Section 10(a) above,
disability as described in Section 10(b) above, or a Termination For
Cause as described in Section 10(c) above); or (2) a termination
due to Good Reason Resignation as defined as follows:. Good Reason Resignation
shall mean termination of 


 


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employment that is voluntary on the part of
the Executive but is due to:  (i) a
significant reduction of the Executive’s responsibilities, title or status
resulting from a  change in such title or
status, or from the assignment to the Executive of any duties inconsistent with
his title, duties, or responsibilities; or 
(ii) a reduction in the Executive’s salary, bonus potential, or a
material  reduction of benefits; but only
if the conditions described in clause (i) or (ii) constitute a
material negative change to the Executive in the service relationship, as that
phrase is used in Treas. Reg. §1.409A-1(n)(2)(i)..


 


(ii) In the event there is
a Termination Without Cause of the Executive’s employment, the Executive shall
be entitled to:


 


(A) continuation
of the annual base salary provided in Section 4 above until the date which
is twenty-four months after the last day of the month in which such termination
occurs (“Payment Period”); provided, however, that payments pursuant to this Section 10(d)(ii)(A) are
subject to the provisions of Section 13 and provided, however, that any
payments made with respect to any month by the Company under paragraphs 4, 6,
7, 8(b) herein after Executive’s termination of employment will reduce by
an equal amount any payments to be made hereunder as salary continuation for
that month;


 


(B) continuation of coverage under the
employee benefit plans of the Company in which the Executive was participating
at the time of his termination of employment for the period of salary
continuation under Section 10(d)(A) above; provided, however, that (1) except
as required by applicable law, any such continued coverage shall terminate upon
the subsequent full-time employment of the Executive, and (2) if the  company is unable to continue such coverage, 


 


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then
they shall provide the Executive with economically equivalent employee benefits
to the extent such benefits are reasonably available.


 


(iii) At
the discretion of the Compensation Committee, to the extent that amounts
payable under Section 10(d)(ii)(A) are not Deferred Compensation, the
present value of any amounts payable under Section 10(d)(ii)(A) to
the Executive above may be paid to the Executive in a lump sum.  The interest rate used in
determining the present value shall be the interest rate on one-year United
States Treasury Bills at the auction of such instruments nearest in time to the
date of the Executive’s termination of employment under this Section 10(d).
Any such lump sum payment by the Company to the Executive shall not affect the
obligation of the Company as otherwise provided in Section 10(d)(ii)(B) above
to provide continuation coverage under the employee benefit plans.


 


(iv) During
the Payment Period, Executive shall make a good faith effort to seek other
employment.  If Executive attains other
employment during the Payment Period, he shall so notify Company and any
compensation paid to Executive by his new employer shall reduce, by an
equivalent amount, the  payments required
to be made under Section 10(d)(ii)(A).


 


(v) The
obligation of the Company to make or provide the payments and benefits set
forth in this Section 10(d) shall be strictly conditioned on the
Executive executing and returning to the Company a general release and waiver
of all claims against the Company in the form as submitted by the Company, and
on such release being returned and becoming irrevocable not later than the 15th day of the third calendar month following the
Executive’s termination of employment (or such later time as may be permitted
by the Company); provided that to the extent benefits provided pursuant to this
Section 10(d) would constitute Deferred Compensation, such 


 


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benefits shall be paid to the
Executive only if the release is returned within 60 days after the Executive’s
termination of employment; and further provided that with respect to amounts
payable under Section 10(d)(ii)(A) that are Deferred Compensation,
any such payment shall be made on the later of (I) the 15th day of the third calendar month following the
Executive’s termination of employment, and (II) the date payment of such
amounts that would otherwise have been due absent the provisions of clause (I) above;
and further provided that amounts delayed pursuant to clause (I) shall be
accumulated without interest paid on the date determined in accordance with
such clause (I).


 


(vi) If
there is a Termination Without Cause during the first year of the Initial Term,
the subject to the provisions of this Agreement, Executive will receive the
amounts payable under Section 10(d)(ii)(A) and (B) plus  any remaining but unpaid salary or contract
benefits due him for the first year of the Initial Term.


 


(vii) 
Any shares of restricted Company stock and options to purchase ordinary shares
of Company stock held by Executive will continue to vest in accordance with the
terms of the awards for the period of time which includes the completion of
this Contract and any subsequent Payment Period as set forth in Section 10(d)(ii)(A).


 


(e) Voluntary Termination by the Executive


 


The Executive may voluntarily
terminate his employment with the Company at any time prior to the expiration
of the term of this Agreement. Such termination shall constitute a voluntary
termination and, in such event, the Executive shall be limited to the same
rights and benefits as applicable to the termination for Cause, as described in
Section 10(c) above.


 


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(f) Change in Control


 


In the event
of a Change in Control (as defined below) all stock based awards in which the
Executive is not yet vested shall become fully vested and stock options shall
be exercisable for their term.  In
addition, the Executive may resign for any reason at any time during the twelve
month period following a Change in Control (as defined below) and receive the
same salary continuation, bonus eligibility and benefits as if the Executive
were Terminated Without Cause pursuant to Section 10(d) of this
Agreement.   The term Change in Control
shall be as defined in the Company’s long-term incentive plan as of the date
hereof, a copy of which is attached hereto as Exhibit A.  The
following shall not constitute a Change in Control for purposes of the equity
awards provided for under Section 7 of this Agreement:  (i) an
initial public offering of the Company’s securities pursuant to an effectively
filed registration statement, nor (ii) the first acquisition of the voting
securities of the Company, which occurs prior to an IPO of the Company’s
securities and which, absent this provision, would constitute a Change in
Control pursuant to the Company’s Long-term incentive plan (defining a Change
in Control with respect to the acquisition of voting securities of the Company)
(a “Sale”).


 


(g) Resignation Upon Termination


 


At the time of termination of
employment for any reason, the Executive agrees at the request of the Company
to resign from any position he holds as a Director (or other similar position)
of the Company and any Affiliates, unless other explicit arrangements are
agreed upon between the Executive and the Company.


 


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(h)  Termination of Employment


 


References in
this Agreement to the Executive’s termination of employment (including
references to the Executive’s employment termination, and to the Executive
terminating employment) shall mean the Executive ceasing to be employed by the
Company and the Affiliates, subject to the following:


 


(i)  The
employment relationship will be deemed to have ended at the time the Executive
and his or her employer reasonably anticipate that a level of bona fide
services the Executive would perform for the Company and the Affiliates after
such date (whether as an employee or independent contractor, but not as a
director) would permanently decrease to no more than 20% of the average level
of bona fide services performed over the immediately preceding 36 month period
(or the full period of service to the Company and the Affiliates if the
Executive has performed services for the Company and the Affiliates for less
than 36 months).  In the absence of an
expectation that the Executive will perform at the above-described level, the
date of termination of employment will not be delayed solely by reason of the
Executive continuing to be on the Company’s and the Affiliates’ payroll after
such date.


 


(ii)  The
employment relationship will be treated as continuing intact while the
Executive is on a bona fide leave of absence (determined in accordance with
Treas. Reg. §1.409A-1(h)).


 


(iii) 
The determination of the Executive’s termination of employment by reason of a
sale of assets, sale of stock, spin-off, or other similar transaction of the
Company or an Affiliate will be made in accordance with Treas. Reg.
§1.409A-1(h).


 


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(iv)  The
term “Affiliates” means all persons with whom the Company is considered to be a
single employer under section 414 (b) of the Code and all persons with
whom the Company would be considered a single employer under section 414 (c) of
the Code.


 


(i)  Deferred Compensation Restrictions


 


If the Executive is a Specified
Employee at the time of termination of employment, payments of benefits under
this Agreement that constitute Deferred Compensation may not be paid before the
date that is six months after the date of termination of employment or, if
earlier, the date of death of the Executive. 
At the end of the six-month period described in the preceding sentence,
amounts that could not be paid by reason of the limitation in this paragraph (i) shall
be paid on the first day of the seventh month following the date of termination
of employment.  For purposes of this
Agreement, the term “Specified Employee” shall be defined in accordance with
Treas. Reg. §1.409A-1(i) and such rules as may be established by the
Chief Executive Officer of the Company or his or her delegate from time to
time.  For purposes of this Agreement,
the term “Deferred Compensation” means payments or benefits that would be
considered to be provided under a nonqualified deferred compensation plan as
that term is defined in Treas. Reg. §1.409A-1 (and excludes, among other
things, certain amounts not treated as providing for the deferral of
compensation pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), which provides for
the exclusion of certain separation payments which are less than $450,000,
subject to certain other provisions and restrictions).


 


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11. Noncompetition


 


During the
term of the Executive’s employment and for a period of 12 months following the
termination of his employment for any reason other than a Termination Without
Cause, the Executive shall not, directly or indirectly, whether as an employee,
consultant, partner, principal, agent, distributor, representative, stockholder
(except as a less than one percent stockholder of a publicly traded company or
a less than five percent stockholder of a privately held company) or otherwise,
engage, within the United States, Bermuda, or the Cayman Islands, if such
activities involve insurance or reinsurance of United States based entities or
risks that are competitive with the financial guaranty insurance business then
being conducted by the Company and which, during the period covered by the
Executive’s employment, were conducted by the Company,  by the Company. For as long as the above
described restrictions on competition apply, the Executive shall not hire any
employee or former employee of the Company or any present or former affiliate
company of the Company nor encourage any employee of the Company to leave the
employ of the Company.   This section
will not be in effect after the Executive’s termination of employment, subject
to the following:


 


(i)  The
Company may, at its option, by notice to the Executive provided to the
Executive not later than 10 days after the termination of employment, agree to
continue to pay the Executive’s base salary for the period that ends at the
earlier of (A) the one year anniversary of the Executive’s termination or
resignation from employment for any reason or (B) the last date on which
amounts could be paid and satisfy the short-term deferral exception to
treatment of such payments as Deferred Compensation (as provided in Treas. Reg.
§1.409A-1(b)(4)), and the restrictions of this Section shall remain in
effect during the 


 


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period as to which those
payments are made.  The Company’s
election to make the payments under this paragraph (i) shall apply to not
less than the entire period set forth in the preceding sentence, except with
the consent of the Executive.


 


(ii) If the Company elects to make payments in accordance with
paragraph (i) above, and such period ends earlier than one-year
anniversary of the date of termination, then the Company may, by notice to the
Executive during the first 15 days of the taxable year following the taxable
year in which the Executive’s termination of employment occurs, elect to
continue to make such payments for the remainder of the period ending on the
one-year anniversary of the termination date, and the restrictions of this Section shall
remain in effect during the remainder of such one-year period.  The Company’s election to make the payments
under this paragraph (ii) shall apply to not less than the entire period
set forth in the preceding sentence, except with the consent of the Executive.


 


12.
Confidential Information


 


The Executive covenants that he shall not, without the prior written
consent of the Chief Executive Officer use, or disclose to any person (other
than an employee of either of the Company, or other person to whom disclosure
is necessary to the performance by the Executive of his duties in the employ of
the Company) any confidential or proprietary information about the Company or
their business, unless and until such information has become known to the
public generally (other than as a result of unauthorized disclosure by the
Executive). The foregoing covenants by the Executive shall be without
limitation as to time and geographic applications.


 


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13. Remedy for
Violation of Noncompetition or Confidential Information Provisions


 


Without
intending to limit the remedies available to the Company for the breach of any
of the Executive’s covenants in Sections 11 and 12, the Executive acknowledges
and agrees that damages at law are an insufficient remedy for the Company and
that, accordingly, the Company shall be entitled to apply for and obtain
injunctive relief in any court of competent jurisdiction to restrain the breach
or threatened breach, or otherwise specifically enforce, any or all of said
covenants. The Parties acknowledge that each of the covenants contained in
Sections 11 and 12 is an essential element of this Agreement. If any covenant
or term of Section 11 or 12 or any portion thereof of this Section 13,
is determined to be invalid or unenforceable in any instance, such
determination shall not prevent the reassertion thereof with respect of any
other breach or violation. If, in any proceeding, a court (or other tribunal)
refuses to enforce the covenants contained in Section 11 or 12 or this Section 13
because such covenants cover too extensive a geographic area or too long a
period of time, any such covenant shall be deemed amended to the extent (but
only to the extent) required by law to permit its enforceability hereunder.


 


Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
Executive’s employment is terminated without Cause (as defined in Section 10(d)(i))
and the Court determines that the Executive has violated Section 11 or 12
of this Agreement, then the Companies shall be entitled to discontinue any
payments or benefits that would otherwise be provided under Section 10(d) and
the Executive shall forfeit his rights to the same.


 


20

















 


14. Withholding


 


Anything in
this Agreement to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive shall be subject to withholding
of such amounts relating to taxes as the Company may reasonably determine they
are required to withhold pursuant to any applicable law or regulation. In lieu
of withholding such amounts, in whole or in part, the Company may, in their
sole discretion, accept other provision for payment of taxes as required by
law, provided they are satisfied that all requirements of law affecting their
responsibilities to withholding such taxes have been satisfied.


 


15. Arbitration
of All Disputes


 


Subject to the
provisions of Section 15, any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in the City of Hamilton in accordance with the law of Bermuda by
three arbitrators appointed by the Parties. If the Parties cannot agree on the
appointment of the arbitrators, one shall be appointed by the Company and one by the Executive and the third shall be
appointed by the first two arbitrators. If the first two arbitrators cannot
agree on the appointment of a third arbitrator, then the third
arbitrator shall be appointed by the Chief Justice of the Supreme Court of
Bermuda. The arbitration shall be conducted in accordance with the rules of
the Arbitration Act, 1986, as amended, except with respect to the selection of the arbitrators which shall be as provided
in this Section 15. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. The arbitrators’ fees
and any expenses relating to the arbitration (other than the Parties’ own legal
fees and expenses) shall be shared equally by the parties.


 


21

















 


16. Entire
Agreement


 


This Agreement
as in effect as of the Amendment Effective Date contains the entire agreement
between the Parties concerning the subject matter hereof and supercedes all
prior agreements, undertakings, discussions, negotiations, and undertakings,
whether written or oral, between the Company and the Executive with respect
thereto, including, but not limited to, the version of this Agreement entered
into as of the Original Effective Date and as in effect immediately prior to
the Amendment Effective Date.


 


17. Assignability;
Binding Nature


 


This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs, and assigns. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive,
other than his rights to receive salary and bonuses hereunder which may be
transferred by will or operation of law subject to the limitations of this
Agreement. 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 the sale or liquidation of all or
substantially all of the assets of the Company, provided that that assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations,
and duties of the Company as contained in this Agreement, either contractually
or as a matter of law.


 


22

















 


18. Amendment
or Waiver


 


No provision in
this Agreement may be amended or waived unless such amendment or waiver is (1) agreed
to in writing, and (2) the agreement is signed by the Executive and by
authorized officers. No waiver by any party hereto of any breach by any other
party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time.


 


19. Notices


 


Any notice
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the party concerned at the address indicated below to such changed
address of which such party may subsequently by similar process give notice:


 


	
  If to the Company:

  	
   

  	
  Attention Chairman of the Board

  
	
   

  	
   

  	
  Assured Guaranty Ltd.

  
	
   

  	
   

  	
  30 Woodbourne Ave

  
	
   

  	
   

  	
  Hamilton, Bermuda

  
	
   

  	
   

  	
   

  
	
  If to the Executive:

  	
   

  	
  Mr. Dominic J. Frederico

  
	
   

  	
   

  	
  Ship’s Hill, #11

  
	
   

  	
   

  	
  Tucker’s Point

  
	
   

  	
   

  	
  Bermuda HS02

  



 


20. 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 


 


23

















 


Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.


 


21.
Survivorship


 


The respective rights and
obligations of the parties shall survive any termination of this Agreement to
the extent necessary to the intended preservation of such rights and
obligations.


 


22.
References


 


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 estate or
other legal representative. All statements of or references to dollar amounts
in this Agreement shall mean lawful money of the United States of America.


 


23.
Governing-Law


 


This Agreement shall be
governed by and construed and interpreted in accordance with the laws of
Bermuda, without reference to the principles of conflict of laws of any
jurisdiction.


 


24. Headings


 


The headings of paragraphs
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.


 


25.
Counterparts


 


This Agreement may be executed in one or more counterparts.


 


IN WITNESS
WHEREOF, the Executive has signed this Agreement on
the date set forth below and, on behalf of the Company, the undersigned officer
of the Company has executed this 


 


24

















 


Agreement
pursuant to the authority delegated to him by resolutions of the Compensation
Committee of the Board of Directors on August 8, 2007.


 


 


	
   

  	
   

  	
  Assured Guaranty Ltd., Assured Guaranty
  Corp.,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Assured Guaranty U.S. Holdings, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:                   ,
  2008

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  James Michener

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Their General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:                   ,
  2008

  	
   

  	
   

  
	
   

  	
   

  	
  Dominic J. Frederico

  



 


25

















 


EXHIBIT A

Gross-Up Provisions


 


(a)  Anything in this Agreement to the
contrary notwithstanding, except for paragraph (b) below, in the event it
shall be determined that the Executive shall become entitled to payments and/or
benefits provided by this Agreement or any other amounts in the “nature of
compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company or any affiliate, any person
whose actions result in a change of ownership or effective control of the
Company covered by Section 280G of the Code or any person affiliated with
the Company or such person) as a result of such change in ownership or
effective control of the Company (a “Payment”) would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.


 


(b)  Notwithstanding the provisions of
paragraph (a) above, if it shall be determined that the Executive would
otherwise be entitled to the Gross-Up Payment, but the value of all Payments do
not exceed 310% of the Executive’s “base amount,” within the meaning of Section 280G
of the Code, then no Gross-Up Payment shall be made to the Executive and the
amounts payable under this Agreement or any other amounts in the “nature of
compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company) shall be reduced so that the
value of all Payments, in the aggregate, equals the Safe Harbor Amount.  The “Safe Harbor Amount” means 2.99 times the
Executive’s “base amount,” within the meaning of Section 280G of the
Code.  The reduction in accordance with
this paragraph (b) shall be made in the following order:


 


(i)  First, by reducing
the cash amounts of Payments (excluding coverage under a hospitalization plan,
major medical plan, dental plan, group-term life insurance plan, accidental
death and dismemberment plan (“welfare benefits”) that would not constitute
Deferred Compensation (with the Payments subject to such reduction to be
determined by the Company), to the extent necessary to decrease the Payments to
the Base Amount.


 


(ii)  Next, if after
the reduction to zero of the amounts described in paragraph (i) above, the
remaining scheduled Payments are greater than the Base Amount, then by reducing
the cash amounts of Payments (excluding welfare benefits) that constitute
Deferred Compensation, with the reductions to be applied first to the Payments
scheduled for the latest distribution date, and then applied to distributions
scheduled for progressively earlier distribution dates, to the extent necessary
to decrease the Payments to the Base Amount.


 


As a result of uncertainty in the application
of Section 280G of the Code at the time of any initial determination by
the Accounting Firm (as described in paragraph (c) below), it is possible
that Payments will have been paid or distributed by the Company which should
not be so paid or 


 


26

















 


distributed (“Overpayment”)
or that additional Payments which were not paid or distributed by the Company
could have been so paid or distributed (“Underpayment”), in each case,
consistent with the calculation of the amount due hereunder.  In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Executive which the Executive shall
repay to the Company promptly upon receiving notice of such Overpayment
together with interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no amount shall be payable by the Executive
to the Company (or if paid by the Executive to the Company shall be returned to
the Executive) if and to the extent such payment would not reduce the amount
which is nondeductible under Section 280G of the Code or which is subject
to taxation under Section 4999 of the Code.  In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive together
with interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code.


 


(c)  Subject to the provisions of
paragraph (d) below, all determinations required to be made under this Exhibit B,
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment, or whether a reduction in Payments is required under
paragraph (b) above is required, and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
accounting firm (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. 
The Accounting Firm shall be jointly selected by the Company and the
Executive and shall not, during the two years preceding the date of its
selection, have acted in any way on behalf of the Company or its affiliated
companies.  If the Company and the
Executive cannot agree on the firm to serve as the Accounting Firm, then the
Company and the Executive shall each select a nationally recognized accounting
firm and those two firms shall jointly select a nationally recognized
accounting firm to serve as the Accounting Firm.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Exhibit B,
shall be paid by the Company to the Executive within five days of the receipt
of the Accounting Firm’s determination. 
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that failure
to report the Excise Tax on the Executive’s applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty.  Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (a “Gross-Up
Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company
exhausts its remedies pursuant to paragraph (d) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Gross-Up Underpayment that has occurred and
any such Gross-Up Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.


 


(d)  The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up
Payment.  Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such 


 


27

















 


claim and the date on which
such claim is requested to be paid.  The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he or she gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:


 


(i)                                     give the Company any
information reasonably requested by the Company relating to such claim,


 


(ii)                                  take such action in
connection with contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company,


 


(iii)                               cooperate with the Company
in good faith in order effectively to contest such claim, and


 


(iv)                              permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.


 


Without limitation on the foregoing
provisions of this paragraph (d), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided the Executive shall
not be required by the Company to agree to any extension of the statute of
limitations relating to the payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
unless such extension is limited solely to such contested amount.  Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.


 


(e)  If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph (d) above,
the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of paragraph (d) above) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If,
after the receipt by the Executive of an amount 


 


28

















 


advanced by the Company
pursuant to paragraph (d) above, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.


 


(f)  If, pursuant to regulations issued
under Section 280G or 4999 of the Code, the Company and the Executive were
required to make a preliminary determination of the amount of an excess
parachute payment and thereafter a redetermination of the Excise Tax is
required under the applicable regulations, the parties shall request the
Accounting Firm to make such redetermination. 
If as a result of such redetermination an additional Gross-Up Payment is
required, the amount thereof shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm’s determination.  If the redetermination of the Excise Tax
results in a reduction of the Excise Tax, the Executive shall take such steps
as the Company may reasonably direct in order to obtain a refund of the excess
Excise Tax paid.  If the Company
determines that any suit or proceeding is necessary or advisable in order to
obtain such refund, the provisions of paragraph (d) above relating to the
contesting of a claim shall apply to the claim for such refund, including,
without limitation, the provisions concerning legal representation, cooperation
by the Executive, participation by the Company in the proceedings and
indemnification by the Company.  Upon
receipt of any such refund, the Executive shall promptly pay the amount of such
refund to the Company.  If the amount of
the income taxes otherwise payable by the Executive in respect of the year in
which the Executive makes such payment to the Company is reduced as a result of
such payment, the Executive shall, no later than the filing of his income tax
return in respect of such year, pay the amount of such tax benefit to the
Company.  In the event there is a
subsequent redetermination of the Executive’s income taxes resulting in a
reduction of such tax benefit, the Company shall, promptly after receipt of
notice of such reduction, pay to the Executive the amount of such
reduction.  If the Company objects to the
calculation or recalculation of the tax benefit, as described in the preceding
two sentences, the Accounting Firm shall make the final determination of the
appropriate amount.  The Executive shall
not be obligated to pay to the Company the amount of any further tax benefits
that may be realized by him or her as a result of paying to the Company the
amount of the initial tax benefit.


 


29