Document:

Exhibit
10.12

 

MODIFICATION
AGREEMENT

 

This
Modification Agreement (the “Agreement”) dated as of January 1, 2000, is made
by and between ACE Guaranty Re Inc. (formerly Capital Reinsurance Company), a
Maryland domiciled insurance company (“AGRE”) and its direct parent company,
ACE Financial Services Inc. (formerly Capital Re Corporation), a Delaware
domiciled insurance holding company (“ACE Financial”).

 

WHEREAS, AGRE and ACE Financial entered into a Service Agreement as of
January 1, 1995 (the “Service Agreement”), a copy of which is attached hereto;

 

WHEREAS, AGRE maintains its own offices and staff of
professional insurance executives and administrative and clerical personnel who
are experienced in the management of insurance companies;

 

WHEREAS,
ACE Financial requires certain support services in order to conduct its
business and AGRE desires to provide such services;

 

WHEREAS, AGRE and ACE Financial desire to amend the
Service Agreement as of January 1, 2000 so as to increase the monthly fee
payable thereunder from $5,000 to 20,833.33 (equivalent to $250,000 annually);

 

NOW, THEREFORE, in consideration of the mutual
promises contained herein and for other good and valuable consideration the
receipt of which is hereby acknowledged, AGRE and ACE Financial hereby agree as
follows:

 

1.                                       Paragraph 6 of the Service Agreement shall be
deleted and replaced in its entirety by the following:

 

6.                                       In consideration of the services provided by
ACE Guaranty Re Inc. pursuant to this Agreement, ACE Financial Services Inc.
shall pay to ACE Guaranty Re Inc. a monthly fee of $ 20,833.33 (equivalent to
$250,000 annually) no later than the first day of each month during the term
hereof. The components of the monthly fee are as follows:

 

Accounting and Finance Services — $ 10,833.33

Legal Services — $7,000

Administrative Support — $3,000

 

The monthly fee is ACE Guaranty Re Inc.’s cost of
providing the services pursuant to this Agreement. The monthly fee for any
month not wholly within the term of this Agreement shall be pro-rated accordingly.

 

2.                                       Except
as provided in paragraph 1 of this Agreement, the terms and provisions of the
Service Agreement shall not be amended.

 

 

IN WITNESS WHEREOF, the undersigned duly
authorized officers of ACE Guaranty Re Inc. and ACE Financial Services Inc.
have executed this Agreement as of January 1, 2000.

 

 

	
  ACE GUARANTY RE INC.

  	
  ACE FINANCIAL SERVICES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Geraldine Alfino Egler

  	
   

  	
  By:

  	
  /s/ Lisa Mumford

  	
   

  
	
  Name:  Geraldine Alfino Egler

  	
  Name:  Lisa Mumford

  
	
  Title:  Senior Vice President,

  Secretary and General Counsel

  	
  Title:  Senior Vice President,

  Chief Financial Officer and

  Treasurer

  
						

 

 

SERVICE
AGREEMENT

 

This
Service Agreement (the “Agreement”) is made as of the first day of January
1995, between Capital Reinsurance Company, a Maryland domiciled insurance
company (“Capital Re”), and Capital Re Corporation, a Delaware domiciled
insurance holding company (the “Holding Company”).

 

WHEREAS,
Capital Re is a reinsurer licensed under the New York Insurance Law; and

 

WHEREAS,
Capital Re maintains its own offices and staff of professional insurance
executives and administrative and clerical personnel who are experienced in the
management of insurance operations;

 

WHEREAS,
the Holding Company requires certain support services in order to conduct its business
and Capital Re desires to provide such services.

 

NOW,
THEREFORE, in consideration of the mutual benefits to be derived, Capital Re
and the Holding Company do hereby agree as follows:

 

1.                                       Capital Re will make available such services,
including legal, data processing, accounting, tax and financial planning
services to the Holding Company, as are needed and requested by the Holding
Company.  Under no circumstances shall
any member of Capital Re’s staff be granted any authority pursuant to this
Agreement to make investment or business decisions on behalf of the Holding
Company or otherwise make any legally binding commitments on behalf of the
Holding Company.

 

2.                                       Capital Re’s staff members who provide such
services to the Holding Company will remain for, all purposes, the employees of
Capital Re and will be instructed to provide the services to the Holding
Company with the same degree of care and diligence as they would exercise in
the performance of the same or similar services to Capital Re.

 

3.                                       Capital Re shall compensate its staff members
who provide such services to the Holding Company on the same basis as they are
customarily compensated for the performance of their regular duties to Capital
Re.  The Holding Company shall make no
direct payment of any kind to, or compensate in any manner, the staff members
of Capital Re whose services it uses.

 

4.                                       The Holding Company shall remain the sole
owner of all records, documents and other work products developed, utilized or
maintained for the Holding Company by Capital Re’s staff.

 

5.                                       Each party shall have the right to conduct an
audit of the relevant books, records and accounts of the other party upon
giving reasonable notice of its intent to conduct such an audit. In the event
of such audit, the party being audited shall give to the party requesting the
audit reasonable cooperation and access to all books, records and accounts
necessary to the audit.

 

 

6.                                       In consideration of the services provided by
Capital Re pursuant to this Agreement, the Holding Company shall pay to Capital
Re a monthly fee of $5,000 no later than the first day of each month during the
term hereof. The components of the monthly fee are as follows:

 

Accounting and Finance Services - $2,000

Legal Services - $1,500

Administrative Support - $1,500

 

The monthly fee is Capital Re’s cost of providing the services pursuant
to this Agreement. The monthly fee for any month not wholly within the term of
this Agreement shall be pro-rated accordingly.

 

7.                                       Should an irreconcilable difference of opinion
between Capital Re and the Holding Company arise as to the interpretation of
any matter respecting this Agreement, such difference shall be submitted to
arbitration as the sole remedy available to both parties. Such arbitration
shall be in the accordance with the rules of the American Arbitration
Association, and the arbitration shall take place in New York City.

 

8.                                       This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Maryland.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first day of January, 1995.

 

 

	
  CAPITAL
  REINSURANCE COMPANY

  	
  CAPITAL
  RE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Lisa Mumford

  	
   

  	
  By:

  	
    /s/ Howard S. Yaruss

  	
   

  
	
  Name:  Lisa Mumford

  	
  Name:  Howard S. Yaruss

  
	
  Title:  Vice President

  	
  Title:  Vice PresidentExhibit 10.13

 

AMENDED
AND RESTATED

SERVICE AGREEMENT

 

This
Amended and Restated Service Agreement (this “Agreement”), entered into as of
January 1, 2003 by and between ACE Guaranty Corp. (formerly “ACE Guaranty Re
Inc.”), a Maryland domiciled insurance company, (“AGC”) and ACE American
Insurance Company, a Pennsylvania domiciled insurance company, (“ACE American”)
acting through its Financial Solution’s division (the “Division”), amends and
restates the prior Service Agreement between the parties dated as of July 1,
2001.

 

WHEREAS,
AGC maintains a staff of professional insurance executives and administrative
and clerical personnel who are experienced in the management of insurance
operations; and

 

WHEREAS,
AGC is able to provide administrative, tax, accounting, human resources, data
processing, data systems, payroll services and legal services to the Division;
and

 

WHEREAS,
the Division requires certain support services in order to conduct business on
behalf of ACE American, and AGC desires to provide services,

 

NOW,
THEREFORE, in consideration of the mutual benefits to be derived, the parties
hereto hereby agree as follows:

 

1.                                       AGC will make available such services,
including administrative, tax, accounting, human resources, data processing,
data systems, payroll services and legal services to the Division as are needed
and requested by ACE American.

 

2.                                       AGC’s staff members who provide services to
the Division will remain, for all purposes, the employees of AGC and will be
instructed to provide the services to the Division with the same degree of care
and diligence as they would exercise in the performance of the same or similar
services to AGC.

 

3.                                       AGC shall compensate its staff members who
provide such services to the Division on the same basis as they are customarily
compensated for the performance of their regular duties to AGC.  ACE American shall not make any direct
payment of any kind to, or compensate in any manner, the staff members of AGC
whose services are provided to it.

 

4.                                       ACE American shall remain the sole owner of
all records, documents and other work product developed, utilized or maintained
for the Division by AGC’s staff.

 

5.                                       Each party hereto shall have the right to
conduct up to four audits per year of such books, records and accounts of the
other party as are reasonably necessary to confirm compliance by such other
party with the terms hereof upon giving reasonable notice of its intent to
conduct such an audit.  In the event of
such audit, the party being audited shall give to the party requesting the
audit reasonable cooperation and access to all books, records and accounts
necessary to the audit.

 

1

 

6.                                       In consideration of the services provided by
AGC to the Division, ACE American shall pay to AGC, monthly in arrears, a
service fee of twenty-seven thousand eighty-three dollars ($27,083).

 

7.                                       ACE American shall reimburse AGC on a cost
basis for expenses related to any outside vendors who provide legal, management
information systems, accounting, tax or financial planning services on behalf
of the Division. AGC shall provide ACE American with a written accounting of
amounts due pursuant to paragraph 6 hereof within ten days following the end of
each month.  ACE American shall pay all
amounts due to AGC within fifteen days after receipt of such accounting.

 

8.                                       Should an irreconcilable difference of
opinion between the parties arise as to the interpretation of any matter
respecting this Agreement, such difference shall be submitted to arbitration as
the sole remedy available to the parties. 
Such arbitration shall be conducted in the accordance with the rules of
the American Arbitration Association, and the arbitration shall take place in
New York City.

 

9.                                       This Agreement shall be effective as of January
1, 2003 and shall terminate sixty (60) days following written notice given by
any party to the other parties of its intent to terminate this Agreement.  The parties to this Agreement shall
re-evaluate this Agreement and the fee for services annually prior to November
1 and shall amend the Agreement by written consent as necessary.

 

10.                                 This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.

 

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

 

12.                                 This Agreement shall be binding upon all
successors, assignees and transferees of the parties to this Agreement;
provided, however, that neither this Agreement nor any rights or obligations
under this Agreement may be assigned or transferred by any party without the
prior written consent of the other parties.

 

13.                                 This Agreement constitutes and sets forth the
entire agreement and understanding of the parties pertaining to the subject
matter hereof. All amendments or modifications hereto shall be in writing and
signed by all of the parties.

 

2

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.

 

	
  ACE GUARANTY CORP.

  
	
   

  
	
   

  
	
  By:

  	
  /s/
  Geraldine Alfino Egler

  	
   

  
	
   

  	
  Name:

  	
  Geraldine
  Alfino Egler

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  General Counsel

  
	
   

  
	
  ACE AMERICAN INSURANCE
  COMPANY

  
	
   

  
	
   

  
	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

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