Document:

Exhibit 10.1

Restricted Stock
Unit Agreement for

Outside Directors under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan

THIS AGREEMENT, entered
into as of the Grant Date (as defined in paragraph 1), by and between the
Director and Assured Guaranty Ltd. (the “Company”):

WITNESSETH THAT:

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

NOW, THEREFORE, IT IS
AGREED, by and between the Company and the Director, 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 “Director” is                                    .

(b)           The “Grant Date” is                                .

Other words and phrases
used in this Agreement are defined pursuant to paragraph 14 or elsewhere in
this Agreement.

2.  Restricted Stock Unit Award.  This Agreement specifies the terms of the “Restricted
Stock Unit Award” granted to the Director. 
Subject to the terms of this Agreement and the Plan, the Director is
hereby granted the right to receive           
shares (“Restricted Stock Units”) at the “Delivery Date,” which shall be the               
anniversary of the date the Director ceases to be a director of Assured
Guaranty Ltd.  Notwithstanding the
foregoing, if the Director ceases to be a director of the Company by reason of
his death or Disability (as defined in paragraph 3), and the Restricted Period
with respect to the Restricted Stock Units has ended under the terms of
paragraph 3, then the Delivery Date for the shares shall be the date
immediately following the date on which the Director ceases to be a director,
or as soon as practicable thereafter.

3.  Restricted Period.  Subject to the limitations of this Agreement,
the “Restricted Period” for the Restricted Stock Units shall begin on the Grant
Date and end on the day immediately prior to the next annual shareholders
meeting during which elections for directors are held following the Grant Date.

The Restricted Period
shall end prior to the date specified above to the extent set forth below:

(a)           The
Restricted Period shall end on the date the Director ceases to be a director of
the Company (and is not otherwise employed by the Company or its Subsidiaries),
if the Director ceases to be a director of the Company by reason of his
Disability or death. The Director shall be

 

 

considered to have a “Disability”
if the Nominating and Governance Committee of the Board of Directors determines
that he is unable to serve as a Director as a result of a medically
determinable physical or mental impairment.

(b)           The Restricted Period shall end upon
a Change in Control (as defined in the Plan), provided that such Change in
Control occurs on or before the date the Director ceases to be a director of
the Company.

4.  Transfer and Forfeiture of Shares.  If the Restricted Period with respect to the
Restricted Stock Units ends on or before the date the Director ceases to be a
director of the Company, then at the end of such Restricted Period, the
Restricted Stock Units shall be fully vested, and shall be transferred to the
Director free of all restrictions on the Delivery Date.  If the Restricted Period with respect to the
Restricted Stock Units does not end on or before the date the Director ceases
to be a director of the Company, then as of the date the Director ceases to be
a director of the Company, the Director shall forfeit all Restricted Stock
Units.

5.  Transferability.  Restricted Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the Delivery
Date.  However, if the Director is
indebted to the Company or a Subsidiary at the time otherwise scheduled for
distribution of the Director’s stock under this Agreement then, at that time,
the shares otherwise deliverable shall be reduced by the number of shares then
having a value equal to the amount of such indebtedness.

6.  Dividends.  The Director will be credited with additional
Restricted Stock Units to reflect dividends payable with respect to shares
during the period between the Grant Date and the Delivery Date, with the
increase in the number of Restricted Stock Units equal to the number of shares
which could be purchased with the dividends (assuming each Restricted Stock
Unit was a share), based on the value of such share at the time such dividends
are paid.  The Restricted Stock Units
credited on account of the preceding sentence (other than extraordinary
dividends, as determined by the Committee) shall be fully vested at the time of
crediting to the Director, and distribution shall be made with respect to such
Restricted Stock Units on the Delivery Date. 
Extraordinary dividends shall be vested in accordance with the same
schedule as the Restricted Stock Units to which such extraordinary dividends
are attributable.  No dividends shall be
credited to or for the benefit of the Director for Restricted Stock Units with
respect to record dates occurring prior to the Grant Date, or with respect to
record dates occurring on or after the date, if any, on which the Director has
forfeited those Restricted Stock Units.

7.  Director’s Rights to Shares.  Prior to the Delivery Date, (a) the Director
shall not be treated as owner of the shares, shall not have any rights as a
shareholder as to those shares, and shall have only a contractual right to
receive them, unsecured by any assets of the Company or its subsidiaries; (b)
the Director shall be not permitted to vote the Restricted Stock Units; and (c)
the Director’s right to receive such shares will be subject to the adjustment
provisions relating to mergers, reorganizations, and similar events set forth
in the Plan.

8.  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 benefits deliverable to the Director
under this Agreement have not

 

 2
 

 

been delivered at the
time of the Director’s death, 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 Director in a
writing filed with the Committee in such form and at such time as the Committee
shall require.  If a deceased Director
fails to designate a beneficiary, or if the Designated Beneficiary does not
survive the Director, any rights that would have been exercisable by the
Director and any benefits distributable to the Director shall be distributed to
the legal representative of the estate of the Director.  If a deceased Director designates a
beneficiary and the Designated Beneficiary survives the Director but dies
before the complete distribution of benefits to the Designated Beneficiary under
this Agreement, then any benefits distributable to the Designated Beneficiary
shall be distributed to the legal representative of the estate of the
Designated Beneficiary.

9.  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.

10.  Plan Governs.  Notwithstanding anything in this Agreement to
the contrary, this Agreement shall be subject to the terms of the Plan, a copy
of which may be obtained by the Director 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.

11.  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 Director, at the Director’s address
indicated by the Company’s records, or if to the Company, at the Company’s
principal executive office.

12.  Fractional Shares.  In lieu of issuing a fraction of a share,
resulting from an adjustment of the Restricted Stock Unit Award pursuant to the
Plan or otherwise, the Company will be entitled to pay to the Director an
amount equal to the fair market value of such fractional share.

13.  Amendment.  This Agreement may be amended in accordance
with the provisions of the Plan, and may otherwise be amended by written
agreement of the Director and the Company without the consent of any other
person.  However, no such amendment shall
result in an acceleration or other distribution that would not satisfy the
requirements of Code section 409A.

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

(a)                                  Cessation
as a Director.  References in this
Agreement to a Director ceasing to be a director shall mean the director
ceasing to serve on the board of directors of the Company and all the Related
Companies, subject to the following:

 

 3
 

 

(i)  The director relationship
will be deemed to have ended at the time the Director and the Company
reasonably anticipate that the level of bona fide services the Director would
perform after such date as a member of the boards of directors of the Company
and the Related Companies would permanently decrease to no more than 20% of the
average level of bona fide director services performed over the immediately
preceding 36 month period (or the full period of service as a member of the
boards of directors of the Company and the Related Companies if the Director
has performed services for the Company and the Related Companies as a director
for less than 36 months).

(ii)  The director relationship
will be treated as continuing intact while the Director is on a bona fide leave
of absence (determined in accordance with Treas. Reg. §409A-1(h)).

(b)                                 Related
Company.  The term “Related Company”
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.

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
Director 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:

  	
  /s/ James M. Michener

  	
   

  
	
  Its:

  	
  General Counsel

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  Director:

  	
  Donald H. Layton

  	
   

  
					

 

 

 4EXECUTION COPY                                                                                                                                             EXHIBIT 10.2
 

CREDIT AGREEMENT

among

ASSURED GUARANTY RE LTD.

THE LENDERS FROM TIME TO TIME PARTY HERETO

ING BANK N.V., LONDON BRANCH

as
Syndication Agent

NORDDEUTSCHE LANDESBANK GIROZENTRALE NEW YORK
BRANCH

as
Documentation Agent

and

DEUTSCHE BANK AG NEW YORK BRANCH

as Administrative Agent

dated as of July 31, 2007

DEUTSCHE BANK SECURITIES, INC.

Lead
Arranger

 

   
 

 

Table of Contents

	
  

  	
   

  	
  

  	
   

  	
  Page

  
	
  ARTICLE 1.   DEFINED
  TERMS

  	
   

  	
  1

  
	
  Section 1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.2.

  	
   

  	
  Interpretation

  	
   

  	
  11

  
	
  Section 1.3.

  	
   

  	
  Non-Dollar
  Currencies

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.   LOANS

  	
   

  	
  12

  
	
  Section 2.1.

  	
   

  	
  Commitment

  	
   

  	
  12

  
	
  Section 2.2.

  	
   

  	
  Manner of
  Borrowing and Disbursement

  	
   

  	
  12

  
	
  Section 2.3.

  	
   

  	
  Notes; Loan
  Account

  	
   

  	
  12

  
	
  Section 2.4.

  	
   

  	
  Interest Rate

  	
   

  	
  13

  
	
  Section 2.5.

  	
   

  	
  Repayment of
  Loans

  	
   

  	
  13

  
	
  Section 2.6.

  	
   

  	
  Prepayments

  	
   

  	
  13

  
	
  Section 2.7.

  	
   

  	
  Limitations on
  Sources of Payment

  	
   

  	
  14

  
	
  Section 2.8.

  	
   

  	
  Several
  Obligations and Rights of Lenders

  	
   

  	
  14

  
	
  Section 2.9.

  	
   

  	
  Pro Rata
  Treatment of Loans, Etc

  	
   

  	
  14

  
	
  Section 2.10.

  	
   

  	
  Individual
  Recovery

  	
   

  	
  14

  
	
  Section 2.11.

  	
   

  	
  Fronting Lenders

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.   REDUCTION,
  TERMINATION AND EXTENSION OF COMMITMENT

  	
   

  	
  18

  
	
  Section 3.1.

  	
   

  	
  Commitment,
  Administrative Agent and Fronting Fees

  	
   

  	
  18

  
	
  Section 3.2.

  	
   

  	
  Termination,
  Reduction or Extension of Commitments

  	
   

  	
  19

  
	
  Section 3.3.

  	
   

  	
  Yield Protection

  	
   

  	
  20

  
	
  Section 3.4.

  	
   

  	
  Reimbursement

  	
   

  	
  22

  
	
  Section 3.5.

  	
   

  	
  Manner of
  Payment; Calculations, etc

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.   CONDITIONS
  PRECEDENT

  	
   

  	
  25

  
	
  Section 4.1.

  	
   

  	
  Conditions
  Precedent to Commitments

  	
   

  	
  25

  
	
  Section 4.2.

  	
   

  	
  Conditions
  Precedent to Each Loan

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.   REPRESENTATIONS
  AND WARRANTIES; OTHER AGREEMENTS

  	
   

  	
  29

  
	
  Section 5.1.

  	
   

  	
  Due
  Organization, Etc

  	
   

  	
  29

  
	
  Section 5.2.

  	
   

  	
  Due
  Authorization, Etc

  	
   

  	
  29

  
	
  Section 5.3.

  	
   

  	
  Approvals

  	
   

  	
  29

  
	
  Section 5.4.

  	
   

  	
  Enforceability

  	
   

  	
  29

  
	
  Section 5.5.

  	
   

  	
  Pari Passu
  Obligations

  	
   

  	
  30

  
	
  Section 5.6.

  	
   

  	
  Financial
  Information, etc.

  	
   

  	
  30

  
	
  Section 5.7.

  	
   

  	
  Litigation

  	
   

  	
  32

  
	
  Section 5.8.

  	
   

  	
  Taxes

  	
   

  	
  32

  
	
  Section 5.9.

  	
   

  	
  Absence of
  Defaults, etc

  	
   

  	
  32

  
	
  Section 5.10.

  	
   

  	
  Permits

  	
   

  	
  32

  
	
  Section 5.11.

  	
   

  	
  Properties

  	
   

  	
  33

  
	
  Section 5.12.

  	
   

  	
  Compliance with
  Insurance Law

  	
   

  	
  33

  
	
  Section 5.13.

  	
   

  	
  Covered
  Portfolio

  	
   

  	
  34

  
	
  Section 5.14.

  	
   

  	
  Investment
  Company Status

  	
   

  	
  34

  

 

 

	
  Section 5.15.

  	
   

  	
  Ownership;
  Subsidiaries

  	
   

  	
  34

  
	
  Section 5.16.

  	
   

  	
  Legal Form; No
  Deductions

  	
   

  	
  35

  
	
  Section 5.17.

  	
   

  	
  Choice of Law

  	
   

  	
  35

  
	
  Section 5.18.

  	
   

  	
  Disclosure

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.   COVENANTS

  	
   

  	
  35

  
	
  Section 6.1.

  	
   

  	
  Use of Proceeds

  	
   

  	
  36

  
	
  Section 6.2.

  	
   

  	
  Conduct of
  Business and Company Existence

  	
   

  	
  36

  
	
  Section 6.3.

  	
   

  	
  Compliance with
  Laws

  	
   

  	
  36

  
	
  Section 6.4.

  	
   

  	
  Obligations and
  Taxes

  	
   

  	
  36

  
	
  Section 6.5.

  	
   

  	
  Maintenance of
  Insurance

  	
   

  	
  36

  
	
  Section 6.6.

  	
   

  	
  Liens

  	
   

  	
  36

  
	
  Section 6.7.

  	
   

  	
  Merger,
  Amalgamation or Sale of Assets

  	
   

  	
  37

  
	
  Section 6.8.

  	
   

  	
  Limitation on
  Modification of Indebtedness; Modifications of Charter, By-Laws and Certain
  Other Agreements; etc

  	
   

  	
  38

  
	
  Section 6.9.

  	
   

  	
  Affiliate
  Transactions

  	
   

  	
  38

  
	
  Section 6.10.

  	
   

  	
  Underwriting Criteria

  	
   

  	
  39

  
	
  Section 6.11.

  	
   

  	
  Collection of
  Pledged Recoveries and Pledged Premiums

  	
   

  	
  39

  
	
  Section 6.12.

  	
   

  	
  Pledged Reserves
  Release Notice

  	
   

  	
  39

  
	
  Section 6.13.

  	
   

  	
  Inspection of
  Books and Records

  	
   

  	
  39

  
	
  Section 6.14.

  	
   

  	
  Financial
  Reporting Requirements

  	
   

  	
  39

  
	
  Section 6.15.

  	
   

  	
  Information
  Requirements

  	
   

  	
  41

  
	
  Section 6.16.

  	
   

  	
  Other
  Information

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7.   EVENTS
  OF DEFAULT

  	
   

  	
  42

  
	
  Section 7.1.

  	
   

  	
  Events of
  Default

  	
   

  	
  42

  
	
  Section 7.2.

  	
   

  	
  Remedies

  	
   

  	
  44

  
	
  Section 7.3.

  	
   

  	
  No Waiver;
  Remedies Cumulative

  	
   

  	
  45

  
	
  Section 7.4.

  	
   

  	
  Right of Setoff;
  etc

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.   THE
  AGENTS

  	
   

  	
  45

  
	
  Section 8.1.

  	
   

  	
  Appointments

  	
   

  	
  45

  
	
  Section 8.2.

  	
   

  	
  Delegation

  	
   

  	
  46

  
	
  Section 8.3.

  	
   

  	
  Agent Not
  Liable; Reliance

  	
   

  	
  46

  
	
  Section 8.4.

  	
   

  	
  Indemnity

  	
   

  	
  48

  
	
  Section 8.5.

  	
   

  	
  Liability of
  Agent

  	
   

  	
  48

  
	
  Section 8.6.

  	
   

  	
  Agent May Act

  	
   

  	
  48

  
	
  Section 8.7.

  	
   

  	
  Successor.

  	
   

  	
  48

  
	
  Section 8.8.

  	
   

  	
  Determination by
  the Agent Conclusive and Binding

  	
   

  	
  49

  
	
  Section 8.9.

  	
   

  	
  Titled Agents

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.   NATURE
  OF OBLIGATIONS; INDEMNIFICATION

  	
   

  	
  49

  
	
  Section 9.1.

  	
   

  	
  Nature of
  Obligations; Survival

  	
   

  	
  49

  
	
  Section 9.2.

  	
   

  	
  Indemnification

  	
   

  	
  50

  

 

 ii
 

 

	
  ARTICLE 10.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  50

  
	
  Section 10.1.

  	
   

  	
  Costs, Expenses
  and Taxes

  	
   

  	
  50

  
	
  Section 10.2.

  	
   

  	
  Jurisdiction;
  Consent to Service of Process

  	
   

  	
  51

  
	
  Section 10.3.

  	
   

  	
  Severability

  	
   

  	
  51

  
	
  Section 10.4.

  	
   

  	
  Governing Law

  	
   

  	
  52

  
	
  Section 10.5.

  	
   

  	
  Waiver of Jury
  Trial

  	
   

  	
  52

  
	
  Section 10.6.

  	
   

  	
  Headings

  	
   

  	
  52

  
	
  Section 10.7.

  	
   

  	
  Notices and
  Addresses for Notice

  	
   

  	
  52

  
	
  Section 10.8.

  	
   

  	
  Successors and
  Assigns; Assignment and Assumption; Participations; Additional Lenders

  	
   

  	
  52

  
	
  Section 10.9.

  	
   

  	
  Lending Office

  	
   

  	
  55

  
	
  Section 10.10.

  	
   

  	
  Judgment
  Currency

  	
   

  	
  55

  
	
  Section 10.11.

  	
   

  	
  No Immunity

  	
   

  	
  55

  
	
  Section 10.12.

  	
   

  	
  Counterparts

  	
   

  	
  55

  
	
  Section 10.13.

  	
   

  	
  Records

  	
   

  	
  56

  
	
  Section 10.14.

  	
   

  	
  Register

  	
   

  	
  56

  
	
  Section 10.15.

  	
   

  	
  Amendments and
  Waivers

  	
   

  	
  56

  
	
  Section 10.16.

  	
   

  	
  Confidentiality

  	
   

  	
  57

  

 

 

LIST OF EXHIBITS AND
SCHEDULES

 

	
  EXHIBIT A

  	
   

  	
  —

  	
   

  	
  Form of Notice of Borrowing

  
	
  EXHIBIT B

  	
   

  	
  —

  	
   

  	
  Form of Note

  
	
  EXHIBIT C

  	
   

  	
  —

  	
   

  	
  Form of Security Agreement

  
	
  EXHIBIT D

  	
   

  	
  —

  	
   

  	
  Form of Assignment and Assumption Agreement

  
	
  EXHIBIT E

  	
   

  	
  —

  	
   

  	
  Form of Fronting Lender Supplement

  
	
  EXHIBIT F

  	
   

  	
  —

  	
   

  	
  Form of Fronting Lender Note

  
	
  EXHIBIT G

  	
   

  	
  —

  	
   

  	
  Form of Opinion of Special Bermuda Counsel to the
  Borrower

  
	
  EXHIBIT H

  	
   

  	
  —

  	
   

  	
  Form of Opinion of Special New York Counsel to the
  Borrower

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  	
  —

  	
   

  	
  Schedule of Commitments

  
	
  SCHEDULE 2

  	
   

  	
   

  	
   

  	
  Covered Portfolio Guidelines

  
	
  SCHEDULE 3

  	
   

  	
   

  	
   

  	
  List of Excluded Insured Obligations

  
	
  SCHEDULE 4

  	
   

  	
   

  	
   

  	
  Subsidiaries

  

 

 

 iii

 

CREDIT
AGREEMENT

THIS AGREEMENT, dated as
of July 31, 2007, among ASSURED GUARANTY RE LTD., a company organized
under the laws of Bermuda (the “Borrower”), the financial institutions
from time to time parties hereto as Lenders, ING BANK N.V., LONDON BRANCH, as
Syndication Agent (in such capacity, the “Syndication Agent”),
NORDDEUTSCHE LANDESBANK GIROZENTRALE NEW YORK BRANCH, as Documentation Agent
(in such capacity, the “Documentation Agent”), and DEUTSCHE BANK AG NEW
YORK BRANCH, as Administrative Agent for the Lenders (in such capacity, the “Administrative
Agent”);

WHEREAS, the Borrower has
requested that the Lenders, subject to and upon the terms and conditions herein
set forth, provide a credit facility to the Borrower, and, upon such terms and
conditions, the Lenders are willing to make such credit facility available to
the Borrower as provided for herein;

NOW, THEREFORE, in
consideration of the mutual promises contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE 1.

DEFINED TERMS

Section 1.1.   Definitions.   As
used in this Agreement, the following terms shall have the following meanings:

“Administrative Agent”
— Recitals.

“Administrative Agent
Fee Letter” — Section 3.1(c).

“Agreement” shall
mean this Credit Agreement.

“Assignee” —
Section 10.8(b).

“Assignment and
Assumption Agreement” — Section 10.8(b).

“Available Commitment”
as of any day shall mean (a) the Maximum Commitment (giving effect to any
reduction thereof effective on or before such day), minus (b) the
aggregate principal amount of Loans made by the Lenders hereunder determined
without regard to any repayment or prepayment thereof.

“Average Annual Debt
Service”, as of a specified date with respect to an Insured Obligation,
shall mean the applicable Retained Percentage times the sum of (i) the
aggregate outstanding principal amount of such Insured Obligation, and (ii) the
aggregate amount of interest thereafter required to be paid on such Insured
Obligation (giving effect to all mandatory sinking fund payments or other
regularly scheduled required redemptions, prepayments or other retirement of
principal), divided by the number of whole and fractional years from the date
of

 

 

determination to the
latest maturity date of such Insured Obligation and, with respect to the
Covered Portfolio as of such date as specified, shall mean the sum of the
Average Annual Debt Service as of such date of all Insured Obligations
contained in the Covered Portfolio.  In
the event that an Insured Obligation bears interest at a variable rate, the
interest thereon for purposes of the determination of Average Annual Debt
Service shall be calculated at the rate employed by the Borrower to compute
average annual debt service with respect to such Insured Obligation in
accordance with its customary business practices.

“Bankruptcy Laws” —
Section 7.1(f).

“Base Rate” shall
mean for any day, a rate per annum equal to the greater of (a) the Prime
Lending Rate in effect on such day and (b) the sum of (i) one-quarter percent
(0.25%) and (ii) the Federal Funds Rate in effect on such day.  Any change in the Base Rate due to a change
in the Prime Lending Rate or the Federal Funds Rate will be effective from and
including the effective date of such change in the Prime Lending Rate or the
Federal Funds Rate, respectively.

“Bermuda Insurance Law”
shall mean the Insurance Act 1978 of Bermuda.

“Borrower” —
Recitals.

“Borrower Event of
Insolvency” shall mean an Event of Default described in any of paragraphs
(f), (g) or (h) of Section 7.1 with respect to the Borrower.

“Business Day”
shall mean any day excluding (i) Saturday and Sunday, and (ii) any
day on which banks in New York City or Bermuda are authorized by law or other
governmental action to close.

“Certificate of
Registration” — Section 5.12.

“Change of Control”
shall mean and include the occurrence of any of the following events: (a) any
Person or entity (other than ACE Limited or one or its wholly owned
subsidiaries) or “group” (within the meaning of Sections 13(d) of the U.S.
Securities Exchange Act of 1934) shall have (i) acquired, directly or
indirectly, beneficial ownership of 30% (based on voting) or more of any
outstanding class of Voting Stock of the Parent, or (ii) the power (whether or
not exercised) to elect the majority of the board of directors of the Parent,
(b) the Borrower or either Principal Insurance Subsidiary shall cease to be a
Wholly-Owned Subsidiary of the Parent, (c) any Person, entity or “group”
(within the meaning of Sections 13(d) of the U.S. Securities Exchange Act of
1934) other than the Parent or a Wholly-Subsidiary of the Parent shall have
acquired, directly or indirectly, the power (whether or not exercised) to elect
the majority of the board of directors of any of the Borrower or either
Principal Insurance Subsidiary, or (d) a majority of the Board of Directors of
the Parent, the Borrower or either Principal Insurance Subsidiary shall not be
Continuing Directors thereof.

“Code” shall mean
the U.S. Internal Revenue Code of 1986.

“Collateral” shall
have the meaning assigned to that term in the Security Agreement.

 

 2
 

 

“Collateral Agent”
shall have the meaning assigned to that term in the Security Agreement.

“Collateral Account”
shall mean the Collateral Account established under the Security Agreement.

“Commitment” shall
mean with respect to any Lender, the amount set forth opposite its name in
Schedule 1 hereto (as amended or deemed amended pursuant to this
Agreement) under the heading “Commitment,” as it may be reduced from time to
time pursuant to Section 3.2 or adjusted from time to time as a result of
assignments to or from such Lender pursuant to Section 10.8(b).

“Commitment Period”
shall mean the period commencing on the Effective Date then in effect and
ending on the Maturity Date then in effect.

“Contingent Obligation”
shall mean, as to any Person, any obligation of such Person guaranteeing or
intended to guarantee any Indebtedness, leases, dividends or other obligations
(“primary obligations”) of any other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of such
Person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the holder of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the holder of such primary obligation against loss
in respect thereof; provided, however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount
of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.

“Continuing Directors”  shall mean, with respect to a Person, the
directors of such Person on the date of this Agreement and each other director,
if such director’s nomination for election to the board of directors of such
Person is supported by a majority of the then Continuing Directors of such
Person.

“Covered Portfolio”
shall mean and include each Insured Obligation outstanding on the Effective
Date then in effect and each Insured Obligation issued thereafter and prior to
the Loss Threshold Incurrence Date, other than Excluded Insured Obligations;
provided that (i) an Insured Obligation shall have met the Covered Portfolio
Guidelines when it was first included in the Covered Portfolio (and otherwise
shall be excluded therefrom) and (ii) no additional Insured Obligations shall
become part of the Covered Portfolio from and after the date on which any
Lender has given a notice to the Borrower pursuant to Section 7.2(b)
hereof as a result of the occurrence of an Event of Default.

 

 3
 

 

“Covered Portfolio
Guidelines” shall mean the guidelines set forth on Schedule 2 hereto.

“Cumulative Losses”
for a specified period shall mean the aggregate Losses of the Borrower
determined cumulatively during such period without regard to Pledged
Recoveries.

“Declining Lender”
— Section 3.2(d).

“Default” shall
mean any condition, event or act which with notice or lapse of time, or both,
would become an Event of Default.

“Default Rate”
shall mean a rate per annum equal to the sum of (i) the Base Rate, and (ii)
four percent (4%), which interest rate shall change as and when the Base Rate
shall change.

“Defaulted Amount”
— Section 2.11(c).

“Defaulting Lender”
— Section 2.11(c).

“Department” shall
mean each of the Bermuda Monetary Authority, the Bermuda Registrar of Companies
and the Bermuda Ministry of Finance.

“Documentation Agent”
— Recitals.

“Dollars”, “U.S.$”,
“$” and “U.S. dollars” shall mean the lawful currency of the
United States of America.

“Downgraded Lender”
shall mean a Fronting Lender which ceases to have the Required Ratings.

“Effective Date”
shall mean June 30, 2007, as such date may be extended from time to time
pursuant to

Section 3.2(c).

“Eligible Insurer”
shall mean any of (i) a Principal Insurance Subsidiary or (ii) AMBAC Assurance
Corporation, CIFG Assurance North America, Inc., Financial Guaranty Insurance
Company, Financial Security Assurance Inc., MBIA Insurance Company, XL Capital
Insurance Inc. or XL Financial Assurance Ltd.

“Eligible
International Security” shall mean Public Finance Obligations,
Infrastructure Obligations, Pooled Infrastructure Obligations or Regulated
Utility Obligations, as to which the related obligor is located within the
United Kingdom, Australia or Germany.

“Eligible Municipal
Security” shall mean “municipal obligation bonds,” “special revenue bonds,”
“utility first mortgage obligations” which an Eligible Insurer is permitted to
insure under the provisions of Section 6904(b)(1)(A), (B) or (C) of the
New York Insurance Law (without regard to clause (J) thereof) as in effect on
the date hereof, issued by the United States of America, a state thereof or the
District of Columbia, a municipality or governmental unit or other political
subdivision of the foregoing or any public agency or instrumentality thereof.

 

 4
 

 

“Event of Default”
— Section 7.1.

“Excluded Insured
Obligations” shall mean and include (a) Insured Obligations listed on
Schedule 3 hereto, (b) additional Insured Obligations which the
Borrower hereafter elects in writing to exclude from the Covered Portfolio with
the prior written consent of the Administrative Agent and the Majority Lenders
(which writing and consent shall be deemed to constitute an amendment
supplementing Schedule 3 hereto and shall not be unreasonably withheld)
and (c) upon notice to the Borrower from the Administrative Agent, any
Lender or Participant, any Insured Obligation which any Lender or any
Participant is obligated, or upon the occurrence of any contingency would be
obligated, to purchase or in respect of which any Lender is obligated, or upon
the occurrence of any contingency would be obligated, to make loans or
otherwise extend credit under the terms of a line of credit, standby bond
purchase agreement, letter of credit, liquidity agreement or similar agreement
or other credit or liquidity enhancement arrangement.

“Extending Lender”
— Section 3.2(d).

“Extension Request”
— Section 3.2(c).

“Federal Funds Rate”
shall mean for any period, a fluctuating interest rate equal for each day
during such period to the weighted average of the rates on overnight Federal
Funds transactions with members of the Federal Reserve System arranged by
Federal Funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by the Administrative Agent.

“Fronting Lender”
shall mean, with respect to a Lender, another Lender which is designated as a “Fronting
Lender” for such Lender, as set forth in a Fronting Lender Supplement.

“Fronting Lender
Commitment” shall mean, with respect to a Fronting Lender and another
Lender for which it acts as Fronting Lender, the commitment of such Fronting
Lender to provide Loans in respect of the Commitment of such other Lender, as
set forth in such Fronting Lender’s Fronting Lender Supplement.

“Fronting Lender Loan”
shall mean a Loan made by a Fronting Lender pursuant to Section 2.11,
unless otherwise provided in such Section.

“Fronting Lender Note”
shall mean the Note issued to any Lender pursuant to Section 2.11
evidencing Loans made by such Lender in its capacity as a Fronting Lender, and
any Notes issued by the Borrower and accepted by such Lender or a transferee in
exchange, substitution or replacement therefor.

“Fronting Lender
Percentage” shall mean, with respect to a Fronting Lender and the
Commitment of another Lender for which it acts as Fronting Lender, its
applicable Fronting Lender Commitment expressed as a percentage of the
Commitment of such other Lender.

 

 5
 

 

“Fronting Lender
Supplement” shall mean each supplement to this Agreement among a Fronting
Lender, the Borrower and the Administrative Agent, substantially in the form of
Exhibit E hereto, which is in effect from time to time.

“Increasing Extending
Lender” — Section 3.2(d).

“Indebtedness”
shall mean, as to any Person, without duplication, (i) all indebtedness
(including principal, interest, fees and charges) of such Person for borrowed
money or for the deferred purchase price of property or services, (ii) the face
amount of all letters of credit issued for the account of such Person and all
drafts drawn thereunder, (iii) all liabilities secured by any Lien on any
property owned by such Person, whether or not such liabilities have been
assumed by such Person, (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee and (v) all Contingent
Obligations of such Person

“Infrastructure
Obligations” shall mean obligations of investor-owned entities arising from
essential public infrastructure, including roads, bridges, tunnels, schools,
hospitals and government buildings that are operated pursuant to a public
private partnership arrangement, but excluding any transactions where the underlying
transaction is a toll-road greenfield project where the security for the bonds
issued are revenues that rely solely on volume-based traffic.

“Installment Premiums”
shall mean any and all premiums which are required to be paid or claimed to be
required to be paid to or for the account of the Borrower in respect of Insured
Obligations in the Covered Portfolio on a periodic basis rather than by payment
in full on the date of the effectiveness of the relevant Insurance Contract.

“Insurance Contracts”
— Section 5.12.

“Insured Obligation”
shall mean shall mean (i) Eligible Municipal Security, and (ii) Eligible
International Security, in any event to the extent that the payment of
principal thereof, together with interest thereon, is insured, reinsured or
otherwise guaranteed by an Eligible Insurer under an Insurance Contract and is
in turn reinsured by the Borrower in compliance with the applicable provisions
of the Bermuda Insurance Law.

“Lenders” shall
mean the Lenders listed on Schedule 1 hereto and any assignees of such Lenders
or New Lenders which hereafter become parties hereto pursuant to and in
accordance with Section 10.8(b) or 10.8(d) hereof; and “Lender”
shall mean any one of the foregoing Lenders.

“Lending Office” —
Section 10.9.

“Lien” shall mean
any mortgage, pledge, security interest, encumbrance, lien or other charge of
any kind (including any lease in the nature thereof, and any conditional sale
or other title retention agreement), and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or similar statute of any
jurisdiction, foreign or domestic.

“Loan” or “Loans”
shall mean the loans extended to the Borrower by the Lenders pursuant to
Section 2.1(a) and shall include Fronting Lender Loans to the extent
provided in Section 2.11(c).

 

 6
 

 

“Loan Date” shall
mean, with respect to a Loan, the original date on which such Loan was made.

“Loan Documents”
shall mean this Agreement, the Notes, the Security Agreement, the
Administrative Agent Fee Letter and each such other agreement or instrument
evidencing, securing or pertaining to this Agreement, the Notes, the Security
Agreement or any Loan, as shall, from time to time, be executed by the Borrower
and delivered to the Administrative Agent or any Lender.

“Loss” shall mean,
at any time, the aggregate sum of (i) the amount paid by the Borrower at such
time or required at such time to be paid by the Borrower under the Borrower’s
reinsurance of Eligible Insurers for claims with respect to an Insured
Obligation in the Covered Portfolio by reason of the failure by the issuer
thereof or other obligor with respect thereto to pay insured amounts on such
Insured Obligations when due (including adjustment expenses with respect to
such claims), plus (ii) Permitted Reserves at such time, minus (iii) amounts
paid at such time or reasonably expected by the Borrower at such time to be
paid to the Borrower under reinsurance agreements (whether facultative or
treaty) and similar arrangements with respect to the claims referred to in
clause (i); provided that, without limiting the
generality of the foregoing, the term “Loss” shall not include any damages,
penalties or similar amounts required to be paid by the Borrower in respect of
an insurance contract by reason of the breach by the Borrower or an Eligible
Insurer of its obligations thereunder or the cancellation or termina­tion
thereof other than in accordance with its terms.

“Loss Threshold
Incurrence Date” shall mean the date on which the Borrower has Cumulative
Losses for the current Commitment Period that exceed the aggregate Pledged
Recoveries received by the Borrower during the current Commitment Period by an
amount equal to the greater of (i) $260,000,000 and (ii) 4.50% of
Average Annual Debt Service on the Covered Portfolio as of such date.

“Majority Lenders”
shall mean, at any time, Lenders and Fronting Lenders to which greater than 50%
of the Loans in the aggregate are owing, or, if no Loans are outstanding,
Lenders having greater than 50% in the aggregate of the Commitments (including
the Fronting Lender Percentage of any Defaulting Lender’s Commitment)
excluding, in each case, Defaulting Lenders.

“Maturity Date”
shall mean June 30, 2014 or, if such day is not a Business Day, on the next
preceding Business Day, as such date may be extended from time to time pursuant
to Section 3.2(c).

“Maximum Commitment”
shall mean the aggregate of the Commitments of all Lenders, initially an amount
equal to $200,000,000, as such amount may be reduced as provided in
Section 3.2 or increased pursuant to Section 10.18(d).

“Moody’s” shall
mean Moody’s Investors Service, Inc. and its successors.

“New Lender” —
Section 10.8(d).

 

 7
 

 

“New York Insurance
Law” shall mean the Insurance Law of the State of New York, as in effect
from time to time.

“Nonfunding Notice”
— Section 2.11(c).

“Non-U.S. Lender” —
Section 3.5(c).

“Note” shall mean
the limited recourse promissory note of the Borrower issued to any Lender
pursuant to Section 2.3 evidencing such Lender’s Loan (including a
Fronting Lender Note), and any notes issued by the Borrower and accepted by
such Lender or a transferee in exchange, substitution or replacement therefor,
and “Notes” shall mean all such Notes collectively.

“Parent” shall
mean Assured Guaranty Ltd., an exempted company incorporated under the laws of
Bermuda.

“Participant” —
Section 10.8(c).

“Payment Office”
shall mean the office of the Administrative Agent at 60 Wall Street, New York,
New York 10005, or such office as the Administrative Agent shall from time to
time designate by notice to the Borrower.

“Permitted Liens” —
Section 6.5.

“Permitted Reserves”
shall mean, with respect to any Insured Obligation, an amount equal to the case
based reserves, net of reinsurance, esta­blished in accordance with the
Borrower’s statutory accounting practices which are deemed necessary or prudent
in the reasonable judgment of the Borrower by reason of the failure or
anticipated failure by the issuer of such Insured Obligation or other obligor
with respect thereto to pay such Insured Obligation when due.

“Person” shall
mean and include an individual, a partnership, a limited liability company, an
exempted company, a joint venture, a corporation, a trust, an unincorporated
organization and a government or political subdivision or any department,
agency or instrumentality thereof.

“Pledged Premiums”
shall mean an amount equal to any and all Installment Premiums which are paid
or payable with respect to defaulted Insured Obligations in the Covered
Portfolio on or after the Loss Threshold Incurrence Date, other than any
Installment Premiums equal to the amount of reinsurance premiums paid or
payable to any Person other than the Borrower under reinsurance agreements
(whether facultative or treaty) and similar agreements.

“Pledged Reserves
Account” shall mean shall mean the Pledged Reserves Account established
under the Security Agreement.

“Pledged Reserves
Account Funds” shall mean at any time the aggregate amount of proceeds of
Loans borrowed hereunder for the purpose of establishing or maintaining

 

 8
 

 

Permitted Reserves, such
proceeds to be deposited in the Pledged Reserves Account in accordance with
Section 4(b) of the Security Agreement.

“Pledged Reserve
Release Notice” shall have the meaning set forth in Section 6.12.

“Pledged Reserve
Repayment Date” shall mean the date on which the Borrower delivers the
Pledged Reserve Release Notice required by Section 6.12.

“Pooled Infrastructure
Obligations” shall mean, generally, financings supported by pools of
obligations of investor-owned entities arising from essential public
infrastructure, including roads, bridges, tunnels, schools, hospitals and  government buildings, that are operated
pursuant to a public private partnership arrangement.

“Pledged Recoveries”
shall mean the amount of (a) any and all moneys and other payments, property
and other consideration and compensation received or receivable by or for the
account of the Borrower (excluding the aggregate amount of any and all monies,
payments, property, consideration and compensation paid or payable to any Person
other than the Borrower under reinsurance agreements (whether facultative or
treaty) and similar arrangements) from and after the Loss Threshold Incurrence
Date which represent repayment of or reimbursement for payments made with
respect to an Insured Obligation in the Covered Portfolio (without regard to
whether such claim was paid from the proceeds of a Loan), whether from the
issuer thereof or any other Person, including moneys and other payments,
property and other consideration and compensation received or receivable under
or pursuant to (i) an Insurance Contract, any reimbursement agreement,
guaranty, letter of credit, security agreement, pledge agreement or other
contract, agreement or arrangement, (ii) any account or account receivable,
(iii) any cause of action, whether sounding in tort, contract or
otherwise, and any judicial, arbitration or other proceeding by or before any
court, agency, tribunal, association or other governmental or private body or
any compromise, settlement or similar arrangement (after providing for
reasonable expenses), (iv) any voluntary payment or gift, (v) any
reinsurance of such Insured Obligation to the extent that the payment under
such reinsurance was not applied to reduce the related Loss in accordance with
clause (iii) of the definition thereof attributable to the Borrower’s payment
of such claim, (vi) any contractual, statutory, common law or other right
of subrogation, (vii) any realization upon any security interest or other
Lien, or (viii) any other legal or equitable right or claim, whether or
not similar to the foregoing), (b) any and all Pledge Premiums, (c) Pledged
Reserve Account Funds, to the extent not used by the Borrower to fund Losses
and (d) all other general intangibles, chattel paper, receivables, documents
and instruments arising from or related to the moneys and other payments,
property and other consideration and compensation, Pledged Premiums or Pledged
Reserve Account Funds referred to above.

“Prime Lending Rate”
shall mean the rate as announced by Deutsche Bank AG New York Branch as its
prime lending rate and shall change when and as such prime lending rate
changes.  The Borrower acknowledges that
the Prime Lending Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer, and that Deutsche
Bank AG New York Branch, and its affiliates may make commercial loans or other
loans at rates of interest at, above or below the Prime Lending Rate.

 

 9
 

 

“Principal Insurance
Subsidiary” shall mean each of Assured Guaranty Corp., a Maryland
corporation, and Assured Guaranty (UK) Ltd., an English company.

“Public Finance
Obligations” shall mean obligations issued or guaranteed by sovereign or
sub-sovereign entities local authorities in the United Kingdom.

“Regulated Utility
Obligations” shall mean obligations of investor-owned utilities in  the water, gas and electric sectors that are
regulated by a public or governmental authority.

“Replacement Lender”
- Section 3.2(d).

“Required Ratings”
shall mean, with respect to a Fronting Lender, the long term credit ratings
from Moody’s and S&P specified as the Required Ratings for such Fronting
Lender in the Fronting Lender Supplement to which it is a party (or such other
ratings to which the Borrower and the Administrative Agent may consent).

“Reserve” shall
mean, with respect to an Insured Obligation, any and all reserves established
or maintained by the Borrower at such time which are deemed necessary or
prudent in the reasonable judgment of the management of the Borrower by reason
of the failure or anticipated failure by the issuer of an Insured Obligation or
other obligor with respect thereto to pay such Insured Obligation when due as
reflected on the Borrower’s books and which are or will be reported by the
Borrower in its statutory financial statements in accordance with the Bermuda
Insurance Law.

“Retained Percentage”
of an Insured Obligation shall mean 100% minus the aggregate percentage of the
risk under Insurance Contracts with respect thereto which has been ceded by the
Borrower to other Persons under reinsurance agreements (whether facultative or
treaty) and similar arrangements.

“S&P” shall
mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, and its successors.

“Security Agreement”
shall mean the Security Agreement and Collateral Assignment between the
Borrower and the Administrative Agent, executed and delivered pursuant to
Section 4.1(d) of this Agreement.

“Subsidiary” shall
mean, with respect to any Person (herein referred to as the “parent”), any
corporation, association or other business entity (whether now existing or
hereafter organized) of which at least a majority of the Voting Stock is, owned
or controlled by the parent or one or more Subsidiaries of the parent, or by the
parent and one or more Subsidiaries of the parent.

“Syndication Agent”
— Recitals.

“U.S. Borrower” —
Section 3.5(c).

“Voting Stock” shall mean stock or shares of
any class or classes (or equivalent interests) or any other securities of a
business entity if the holders of the stock or shares of such

 

 10

 

class or classes (or
equivalent interests) or such securities are ordinarily, or may, upon the
occurrence of contingencies be, entitled to vote for the election of directors
(or persons performing similar functions) of 
such business entity, even though the right so to vote has been
suspended or such contingencies have not yet occurred.

“Wholly-Owned
Subsidiary” shall mean, as to any Person, (i) any Subsidiary 100% of whose
capital stock is or shares are at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person or (ii) any Subsidiary in which
such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a
100% equity interest at such time.

“written” or “in
writing” shall mean any form of written communication or a communication by
means of telex, telecopier device, telegraph or cable.

Section 1.2.   Interpretation.   In
this Agreement and the Security Agreement, unless otherwise stated or a
contrary intention appears:

(a)           the definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined;

(b)           whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms;

(c)           the terms “hereof”, “hereby”, “hereto”,
“hereunder” and similar terms mean this Agreement, and the term “heretofore”
means before, and the term “hereafter” means after, the execution date hereof;

(d)           all references to sections, schedules
and exhibits are to sections, schedules and exhibits in or to this Agreement
unless otherwise specified;

(e)           the words “including” and “include”
as used herein shall be deemed to be followed by the words “without limitation”;

(f)            any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein);

(g)           reference to any law, rule,
regulation, statute, treaty, code, ordinance or other applicable law means such
applicable law as amended, modified, codified, replaced or reenacted, in whole
or in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of any
applicable law means that provision of such applicable law from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision; and

(h)           any reference herein to any Person
shall be construed to include such Person’s successors and assigns.

 

 11
 

 

Section 1.3.   Non-Dollar
Currencies.   For purposes of any determination hereunder or under the
Security Agreement with respect to the amount of Cumulative Losses or of
Pledged Recoveries, all amounts paid or accrued in currencies other than US
dollars shall be translated into US dollars at the currency exchange rates in
effect on the date of such determination, as determined in good faith by the
Administrative Agent.

ARTICLE 2.

LOANS

Section 2.1.   Commitment.   Each
Lender, severally and not jointly, irrevocably agrees, upon the terms and
subject only to the conditions of this Agreement, to lend from time to time to
the Borrower on a limited recourse basis as set forth in Section 2.7, on and
after the Effective Date and prior to the Maturity Date, amounts which in the
aggregate do not exceed the Commitment of such Lender as set forth in Schedule
1 hereto or, in the case of a Fronting Lender, the Fronting Commitment of such
Fronting Lender as set forth in the Fronting Lender Supplement to which such
Fronting Lender is a party.

Section 2.2.   Manner
of Borrowing and Disbursement.

(a)           The Borrower shall give the
Administrative Agent notice not later than 12:00 noon (New York City time) on
the second (2nd)
Business Day prior to each borrowing of Loans to be made hereunder.  Such notice shall specify (i) the date
of the proposed borrowing, which shall be a Business Day, and (ii) the
amount of the proposed borrowing and shall be substantially in the form of, and
contain the certifications contained in, Exhibit A hereto.

(b)           Upon receipt of each notice described
in Section 2.2(a), the Administrative Agent shall promptly notify each Lender
of the contents thereof and the amount of such Lender’s Loan thereunder.  The Administrative Agent shall concurrently
notify each Fronting Lender of the contents of such notice from the
Borrower.  Each Lender shall, not later
than 12:00 noon (New York City time) on the date specified in such notice and
subject to the satisfaction of the conditions set forth in Section 4.2,
make available through its applicable Lending Office to the Administrative
Agent, at such account as the Administrative Agent shall designate, the amount
of its Loan in immediately available funds.

(c)           On the date of a borrowing hereunder,
the Administrative Agent shall, subject to the satisfaction of the conditions
set forth in Section 4.2, disburse the amounts made available to the
Administrative Agent by the Lenders in like funds by transferring such amounts
or by wire transfer to the account of the Borrower in the United States as
specified in the Borrower’s notice described in Section 2.2(a).

Section 2.3.   Notes;
Loan Account.

(a)           Each Lender’s Loans shall be
evidenced by one or more Notes payable to the order of such Lender for the
account of its Lending Office in an aggregate stated principal amount equal to
such Lender’s Commitment and payable in the aggregate principal amount of the
Loans evidenced thereby and otherwise substantially in the form of Exhibit B
hereto.

 

 12
 

 

(b)           Each Lender is irrevocably authorized
from time to time to record the date, interest rate and amount of each Loan
made by such Lender and each payment and prepayment with respect thereto on the
grid attached to such Lender’s Note or on a continuation thereof which may be
attached thereto by such Lender and made a part thereof, and any such notation
shall, absent manifest error, constitute prima  facie evidence of
the accuracy of the information so recorded; provided, that the failure
to make any such notations shall not affect the validity of the Borrower’s
obligations hereunder or under such Note.

Section 2.4.   Interest
Rate.

(a)           Except as otherwise provided in
subsection (c) below, each Loan shall bear interest on the outstanding
principal amount thereof a rate per annum equal to the sum of (i) the Base
Rate from time to time in effect plus (ii) two percent (2%), which interest
rate will change as and when the Base Rate shall change.

(b)           Interest on Loans shall be payable in
arrears (i) on the last Business Day of each March, June, September and
December, (ii) on the date on which such Loan is repaid in full,
(iii) when such Loan is due (whether at maturity, after acceleration or
otherwise), and (iv) if such Loan is overdue, on demand (and, if not
demanded, as otherwise as provided in clauses (i), (ii) and (iii) above).

(c)           Any overdue principal of any Loan
and, to the extent permitted by law, overdue interest thereon shall bear
interest, payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment (after as well as
before judgment), at a rate per annum equal to the Default Rate.

(d)           The Administrative Agent shall
determine each interest rate applicable to the Loans hereunder.  The Administrative Agent shall give prompt
notice to the Borrower and the Lenders by telefax or by telephone of each rate
of interest so determined, and its determination thereof shall be conclusive,
absent manifest error.

Section 2.5.   Repayment
of Loans.   Subject to Section 2.7, all Loans shall mature and the
principal amount thereof shall be due and payable on the Maturity Date.

Section 2.6.   Prepayments.

(a)           The Borrower shall have the right at
any time, and from time to time, upon at least three (3) Business Days notice
to the Administrative Agent to prepay, in whole or in part, Loans at the time
outstanding.  Any such notice shall
specify the amount of the Loans to be prepaid and the date of prepayment.  The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice.  Amounts to be prepaid pursuant to this
paragraph shall irrevocably be due and payable on the date specified in the
applicable notice of prepayment. 
Interest on the amount prepaid, accrued to the prepayment date, and any
amounts payable pursuant to Section 3.4 in respect of such prepayment,
shall be paid on such date.  Each partial
prepayment of Loans made pursuant to this paragraph shall be in a principal
amount of at least $1,000,000.

 

 13
 

 

(b)           On each Pledged Reserve Repayment
Date, an amount equal to 100% of the Pledged Reserves Account Funds with
respect to which the Borrower has delivered a Pledged Reserves Release Notice
as required by Section 6.12 shall be applied as a mandatory prepayment of
principal of outstanding Loans.

(c)           Amounts prepaid or repaid in respect
of Loans may not be reborrowed.

Section 2.7.   Limitations
on Sources of Payment.   The obligations of the Borrower under this
Article 2 to make payments of principal and interest on the Loans and the
Notes are limited recourse obligations of the Borrower payable solely from the
Pledged Recoveries, the Pledged Premiums, the Pledged Reserves Account Funds
and the other Collateral, and none of the Administrative Agent, the Collateral
Agent, the Lenders or any other Person shall be entitled to procure any money
judgment against any other assets or properties or to levy or foreclose upon or
attach any other assets or properties of the Borrower for payment of such
obligations; provided, however, that nothing herein contained
shall limit, restrict or impair the lien created by the Security Agreement or
the right of the Administrative Agent, the Collateral Agent, the Lenders or any
other Person to exercise any of their rights herein or in any of the other Loan
Documents during the existence of an Event of Default, or to bring suit and
obtain a judgment against the Borrower (recourse thereon being limited as to
payment of principal and interest on the Loans and the Notes as provided in
this Section 2.7).

Section 2.8.   Several
Obligations and Rights of Lenders.   The failure of any Lender to make
any Loan to be made by it on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan on such date, but, except as
provided in Section 2.11, no Lender shall be responsible for the failure
of any other Lender to make a Loan to be made by such other Lender.  The amounts payable at any time hereunder to
each Lender shall be a separate and independent debt, and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and
the other Loan Documents, and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.

Section 2.9.   Pro
Rata Treatment of Loans, Etc.   Except to the extent otherwise provided
herein, each borrowing under Section 2.2 shall be made from the Lenders
pro rata on the basis of their respective Commitments, and each prepayment and
payment of principal of or interest on Loans shall be made to the
Administrative Agent for the account of the Lenders pro rata in accordance with
the respective unpaid principal amounts of the Loans held by such Lenders.

Section 2.10.   Individual
Recovery.   Each Lender agrees that if it shall, through the exercise
of any right of counterclaim, setoff, banker’s lien, realization of security or
otherwise, receive payment of a proportion of the amount due and payable to it
hereunder or under its Note as principal or interest which is greater than the
proportion received by any other Lender in respect of the aggregate of such
amounts due and payable to the Lender hereunder and under the Notes, the Lender
receiving such proportionately greater payment shall purchase participations
in, or if and to the extent specified by any such other Lenders, direct
interests in, the rights of such Lenders hereunder and under their Notes (which
it shall be deemed to have done simultaneously upon the receipt of such
payment), so that all such recoveries with respect to such amounts due and
payable hereunder and under all the Notes held by the Lenders (net of any

 

 14
 

 

expenses which may have
been incurred by the respective Lenders in obtaining or preserving such
recoveries) shall be pro rata in accordance with the unpaid principal and
interest on the Loans held by each Lender. 
In the event that any such payment is required to be returned or
disgorged, or is otherwise disturbed by legal process, further appropriate
adjustments shall be made.  The Borrower
expressly consents to the foregoing arrangements.

Section 2.11.   Fronting
Lenders.

(a)           From time to time the Borrower shall
have the right, with the consent of the Administrative Agent (which consent
shall not be unreasonably withheld) and each affected Fronting Lender, to
designate one or more commercial banks or other financial institutions as
Fronting Lenders with respect to one or more other Lenders under this
Agreement.  The designation of a Person
as a Fronting Lender shall become effective when (i) the Borrower, the Administrative
Agent and such Person have entered into a Fronting Lender Supplement (or on
such later date as may be set forth in such Fronting Lender Supplement), which
shall set forth the Fronting Lender Commitment of such Person with respect to
each other Lender for which it is acting as Fronting Lender, and (ii) the
Borrower shall have duly executed and delivered to such Person a Fronting
Lender Note in the stated principal amount of its Fronting Lender Commitments,
dated the date of such Fronting Lender Supplement (or of any applicable modification
thereto), payable to the order of such Person for the account of its applicable
Lending Office and substantially in the form of Exhibit F hereto.  Each Fronting Lender’s Fronting Lender Note
shall evidence Fronting Lender Loans made by such Fronting Lender pursuant to
this Section 2.11 and otherwise shall constitute a Note for all purposes
under this Agreement and the other Loan Documents.  A Fronting Lender Supplement may be amended
or otherwise modified from time to time or terminated with the written consent
of the Borrower, the Administrative Agent and the Fronting Lender which is a
party thereto.

(b)           The Fronting Lender Commitment of
each Fronting Lender with respect to a Lender shall be automatically reduced by
an amount equal to its applicable Fronting Lender Percentage of the amount of
any reduction in such related Lender’s Commitment.  In addition, the Fronting Lender Commitment
of each Fronting Lender with respect to its related Lender shall be
automatically reduced by an amount equal to its applicable Fronting Lender
Percentage of the amount of the Commitment of such related Lender which is
sold, assigned or otherwise transferred by such related Lender to another
Person; provided that a participation granted by such related Lender in
accordance with Section 10.8(c) shall not constitute a sale, assignment or
transfer for purposes of this paragraph. 
The Fronting Lender Commitment of each Fronting Lender with respect to
its related Lender shall be automatically terminated upon the termination of
the Commitment of such related Lender.

(c)           In the event that a Lender (including
a Lender which is a Defaulting Lender) determines that, for any reason (other
than the failure of the Borrower to satisfy the conditions set forth in
Section 4.2), it will not make available to the Administrative Agent the
full amount of a Loan required to be made by it pursuant to this Agreement on
the date specified for a borrowing hereunder pursuant to Section 2.2, it
will give notice (a “Nonfunding Notice”) thereof to the Borrower and the
Administrative Agent not later than 1:00 p.m. (New York City time) on the
Business Day immediately preceding the date of such borrowing.  In the event that a Lender shall have given a
Nonfunding Notice, or in the event that any Lender for any reason

 

 15
 

 

(other than the failure
of the Borrower to satisfy the conditions set forth in Section 4.2) fails
to make available to the Administrative Agent the full amount of a Loan
required to be made by it pursuant to this Agreement by 12:00 noon (New York City
time) on the date specified for a borrowing hereunder pursuant to
Section 2.2, such Lender shall thereupon become a “Defaulting Lender”,
and the amount of the Loan identified in the Nonfunding Notice or any other
amount of a Loan which a Defaulting Lender was required but failed to advance
when required hereunder shall be a “Defaulted Amount”.

(d)           The Administrative Agent shall notify
the Borrower and each Fronting Lender (if any) with respect to a Defaulting
Lender (i) promptly following the Administrative Agent’s receipt of any
Nonfunding Notice from such Defaulting Lender, which notice shall  describe the contents of such Nonfunding
Notice, identify the Defaulting Lender and state the date on which the Loan
described in such Nonfunding Notice is required to be made, the Defaulting
Lender’s Defaulted Amount and such Fronting Lender’s Fronting Lender Percentage
thereof, and (ii) unless described in a notice given pursuant to clause
(i), not later than 1:00 p.m. (New York City time) on the date on which such
Defaulting Lender failed to make available to the Administrative Agent the full
amount of a Loan required to be made by it pursuant to this Agreement, which
notice shall identify the Defaulting Lender and state the amount of the
Defaulting Lender’s Loan which was not made available and such Fronting Lender’s
Fronting Lender Percentage thereof.

(e)           Each Fronting Lender receiving a
notice from the Administrative Agent pursuant to Section 2.11(d) shall,
(i) not later than 12:00 noon (New York City time) on the funding date
specified in such notice, if such notice was received prior to such date, or
(ii) not later than 5:00 p.m. (New York City time) on such date, if such
notice was received on such date, in either case subject to the satisfaction of
the conditions set forth in Section 4.2, make available through its
applicable Lending Office to the Administrative Agent at the Administrative
Agent’s Payment Office for such account as the Administrative Agent shall
designate, a Fronting Lender Loan in the amount of its Fronting Lender
Percentage of the Defaulted Amount specified in such notice, in immediately
available funds; provided that the aggregate amount of Fronting Lender
Loans (determined without regard to any repayments or purchases thereof) which
a Fronting Lender is required to make in respect of a Defaulting Lender shall
not exceed its Fronting Lender Commitment with respect to such Defaulting
Lender.  Such funds received by the
Administrative Agent shall be disbursed to the Borrower as provided in Section 2.2(c).

(f)            Fronting Lender Loans shall
constitute Loans for all purposes under this Agreement and the other Loan
Documents, except as otherwise provided herein. 
Upon the making of a Fronting Lender Loan by a Fronting Lender pursuant
to this Section 2.11, such Fronting Lender, to the extent of such Fronting
Lender Loan, shall have all the rights, but none of the obligations, of the
Defaulting Lender hereunder in respect of the Fronting Lender Percentage of the
Defaulted Amount, including the right to receive the Defaulting Lender’s pro
rata share of any payment received in respect of Loans hereunder and the voting
or consent rights of the Defaulting Lender in respect of the Fronting Lender
Percentage of the Defaulted Amount and an amount of the Defaulting Lender’s
Commitment equal to the Fronting Lender Percentage of such Defaulted Amount; provided
that the Defaulting Lender’s pro rata share of any payment received in respect
of principal of Loans hereunder shall be allocated first to its Fronting Lenders

 

 16
 

 

in respect of Fronting
Lender Loans made in respect of such Defaulting Lender and then to the Loans of
such Defaulting Lenders.

(g)           No Fronting Lender Loan made by a
Fronting Lender pursuant to this Section 2.11 shall relieve any Defaulting
Lender of its obligations under this Agreement. 
Without limitation of other rights any party hereto may have against
such Defaulting Lender, if one or more Fronting Lenders have made one or more
Fronting Lender Loans in respect of a Defaulting Lender, such Defaulting Lender
shall on demand by a Fronting Lender, advance funds in respect of the aggregate
Defaulted Amount in respect of which such Fronting Lender made Fronting Lender
Loans pursuant to clause (i) or clause (ii) below:

(i)            If
such Fronting Lender elects to have funds provided under this clause (i), the
Defaulting Lender, without regard to any failure of the conditions set forth in
Section 4.2 to be satisfied with respect to such Loan, shall make a Loan
to the Borrower hereunder in the amount of the aggregate outstanding principal
amount of the Fronting Lender Loans of such Fronting Lender in respect of such
Defaulting Lender and simultaneously purchase from such Fronting Lender the
right to receive the accrued and unpaid interest on such Fronting Lender Loans
for a purchase price equal to the amount of such accrued and unpaid
interest.  Any Loan described in this
clause (i) shall be made available by the Defaulting Lender through its
applicable Lending Office to the Administrative Agent at the Administrative
Agent’s Payment Office for such account as the Administrative Agent shall
designate, in immediately available funds. 
On any date on which any such amounts are made available to the
Administrative Agent by a Defaulting Lender, the Administrative Agent shall
notify the Borrower and each affected Fronting Lender and shall disburse such
amounts in like funds by transferring such amounts to the affected Fronting
Lenders, in proportion to their respective Fronting Lender Commitments relating
to such Defaulting Lender.  Such
disbursement received by a Fronting Lender, to the extent thereof, shall be
deemed to constitute the prepayment of outstanding principal amount of its
Fronting Lender Loans relating to such Defaulting Lender and the purchase by
such Defaulting Lender of the right to receive the accrued and unpaid interest
thereon concurrently with the making of the Loan by such Defaulting Lender, but
as between such Defaulting Lender and the Borrower, such Fronting Lender Loans
shall be deemed to be continued on such date as a Loan hereunder owed to such
Defaulting Lender and interest thereon shall accrue from the date on which
interest was last paid on such Fronting Lender Loans (or, if no interest has
been paid thereon, from the date on which such Fronting Lender Loans were
made).

(ii)           If
such Fronting Lender elects to have funds provided under this clause (ii), the
Defaulting Lender, without regard to any failure of the conditions set forth in
Section 4.2 to be satisfied with respect to such Loan, shall purchase the
Fronting Lender Loans of such Fronting Lender in respect of such Defaulting
Lender or participations therein, in either case for a purchase price equal to
the outstanding principal amount of the Fronting Lender Loans or portion
thereof being purchased or in which a participation is being purchased, plus
accrued and unpaid interest thereon. 
Such purchase price shall be made available by the Defaulting Lender
through its applicable Lending Office to the Administrative Agent at the
Administrative Agent’s Payment Office for such account as the Administrative
Agent shall designate, in immediately

 

 17
 

 

available funds.  On any date on
which any such amounts are made available to the Administrative Agent by a
Defaulting Lender, the Administrative Agent shall notify the Borrower and each
affected Fronting Lender and shall disburse such amounts in like funds by
transferring such amounts to the affected Fronting Lenders, in proportion to
their respective Fronting Lender Commitments relating to such Defaulting Lender.  Upon payment in accordance with this clause
(ii) and to the extent of the payment received by a Fronting Lender
representing the outstanding principal amount of its Fronting Lender Loans to
such Defaulting Lender, at the election of such Fronting Lender either
(A) such Fronting Lender shall be deemed to have assigned to the
Defaulting Lender such portion of such Loan, in which case such portion shall
cease to be a Fronting Lender Loan and shall be continued as a Loan hereunder
made pursuant to the Commitment of such Defaulting Lender, and the outstanding
principal amount thereof shall cease to be evidenced by the Fronting Lender
Note held by such Fronting Lender and shall become evidenced by the Note held
by such Defaulting Lender, without further action by any party, or
(B) such Defaulting Lender shall be deemed to have purchased a
participation in such Fronting Lender’s Fronting Lender Loan pursuant to
Section 10.8(c).

In addition to the
foregoing and to the rights of Fronting Lenders to receive interest in respect
of Fronting Lender Loans as provided herein (or payments of purchase price in
respect thereof as provided in this Section 2.11), such Defaulting Lender
shall pay compensation to its Fronting Lenders on demand in respect of the outstanding
principal amount of each Fronting Lender Loan made in respect of such
Defaulting Lender calculated at a per annum rate equal to two percent (2.0%)
for the period commencing on the date on which such Fronting Lender Loan was
made and continuing until the date such Loan is repaid (including pursuant to
clause (i) above) or the purchase price described in clause (ii)
above is received by such Fronting Lender.

ARTICLE 3.

REDUCTION,
TERMINATION AND EXTENSION OF COMMITMENT

Section 3.1.   Commitment,
Administrative Agent and Fronting Fees.

(a)           The Borrower hereby agrees to pay to
the Administrative Agent for the account of the Lenders a nonrefundable
commitment fee for the period commencing on the Effective Date and ending on
the Maturity Date (or on such earlier date on which the Commitments shall have
been terminated), at the rate of 55 basis points (0.55%) per annum on the
Available Commitment.  Such fee shall be
payable in immediately available funds quarterly in arrears on the last Business
Day of each March, June, September and December, commencing September 30, 2007,
and on the Maturity Date (or on such earlier date on which the Commitments
shall have been terminated) and shall be calculated on the average daily amount
of the Available Commitment for the period commencing on and including the most
recent payment date (or, in the case of the first payment date, commencing on
and including the Effective Date), and ending on but excluding the applicable
payment date.

(b)           Except to the extent otherwise
provided herein, each payment of the commitment fee accruing under
Section 3.1(a) shall be made for the account of the Lenders, pro rata
according to their respective Commitments; provided that, so long as a Lender
is a Defaulted

 

 18
 

 

Lender, its share of the
commitment fee shall instead be for the account of the Fronting Lenders with
respect to such Defaulted Lenders, pro rata according to their respective
related Fronting Lender Commitments.

(c)           The Borrower hereby agrees to pay to
the Administrative Agent for its own account the fees set forth in the fee
letter between the Borrower and the Administrative Agent which refers to this
Section 3.1(c) (the “Administrative Agent Fee Letter”).

(d)           The Borrower further hereby agrees to
pay to each Fronting Lender the fees set forth in the Fronting Lender
Supplement to which such Fronting Lender is a party.

Section 3.2.   Termination,
Reduction or Extension of Commitments.

(a)           The Borrower may at any time
terminate the Maximum Commitment by giving the Administrative Agent at least
one (1) Business Day notice thereof and may at any time reduce the Maximum
Commitment by giving the Administrative Agent at least three (3) Business Days
notice thereof.  Each such reduction
shall reduce the Maximum Commitment only in integral multiples of
$5,000,000.  Any notice of reduction or
termination pursuant to this Section 3.2(a) shall be irrevocable.  Any such reduction shall be applied to the
Commitment of each Lender pro rata based upon their respective Commitments as in
effect immediately prior to such reduction, and any such termination shall
terminate the Commitments of all Lenders.

(b)           If any Lender shall have become a
Downgraded Lender, the Borrower may terminate the Commitment (and, if
applicable, Fronting Lender Commitment) of such Lender by notice to the
Administrative Agent and such Lender, unless prior to the effective date of
such termination such Lender ceases to be a Downgraded Lender.  Any such termination shall be effective on
the date of termination specified in such notice.  On the effective date of any termination
referred to in this Section 3.2(b), the Commitment and any further
obligation of such Downgraded Lender to make Loans hereunder shall terminate.  Subject to the foregoing, any notice of
termination given pursuant to this Section 3.2(b) shall be irrevocable.

(c)           Before (but not earlier than 120 days
nor later than 90 days before) each anniversary of the Maturity Date, the
Borrower may make a written request (an “Extension Request”) to the
Administrative Agent who shall forward a copy to each of the Lenders that the
Effective Date and the Maturity Date be extended by one calendar year.  Such Extension Request shall include a
certification by a senior officer of the Borrower that no Default or Event of
Default has occurred and is continuing and all representations and warranties
contained herein and the other Loan Documents are true and correct in all
material aspects on and as of the date of the Extension Request (it being
understood and agreed that any representation or warranty which expressly
refers by its terms to a specified date shall be required to be true only as of
such date).  If by the date occurring 45
days next succeeding the Administrative Agent’s receipt of such Extension
Request, any Lender agrees thereto in writing by so indicating on counterparts
of the Extension Request and delivering such counterpart to the Borrower and
provided that no Loans have been made through the Maturity Date then in effect,
the “Effective Date” as to such Lender shall mean the 30th day of June occurring in the year in which
such extension occurs and the “Maturity Date” as to such Lender shall mean the
30th day of June occurring in the calendar year
next succeeding the Maturity Date then in effect.  Any failure by a Lender to so notify the

 

 19
 

 

Borrower shall be deemed
to be a disapproval by such Lender of the Borrower’s Extension Request.  If an extension has become effective as
provided herein, the Commitment of any Lender which does not so agree to such
extension, and the Fronting Commitment of such Lender if such Lender is a
Fronting Lender, shall terminate on the 30th day of June in the year in which such
extension occurs.  No Lender shall be
obligated to grant any extension pursuant to this Section 3.2(c) and any
such extension shall be in the sole discretion of each Lender.  The Borrower shall pay to each Lender which
does not so agree all amounts owing under its Note and this Agreement on the
effective date of the termination of such Lender’s Commitment.

(d)           If less than all of the Lenders
consent to an Extension Request (each Lender that has not so consented being a “Declining
Lender”, and each other Lender being an “Extending Lender”), the
Borrower shall have the right to require any Declining Lender to assign in full
its rights and obligations under this Agreement (i) to any one or more
Extending Lenders designated by the Borrower that have offered in their
returned counterpart of the Extension Request to increase their respective
Commitments (and, if any such Extending Lender is a Fronting Lender, its
Fronting Commitment) (each such Extending Lender being an “Increasing
Extending Lender”) and/or (ii) to any one or more transferees designated by
the Borrower and consented to by the Administrative Agent that agree to assume
all of such rights and obligations (each such transferee being a “Replacement
Lender”), provided that (1) such Declining Lender shall have received
payment of all amounts owing under its Note and this Agreement on the effective
date of such assignment, (2) such assignment shall otherwise have occurred in
compliance with Section 10.8, (3) the aggregate amount of the increases in
the Commitments (and, if applicable, Fronting Commitments) of Increasing
Extending Lenders plus the new Commitments (and, if applicable, Fronting
Commitments) of Replacements Lenders shall be equal to the amount of such
Declining Lender’s Commitment (and, if applicable, its Fronting Commitment),
and (3) the effective date of such assignment shall be the date specified by
the Borrower and agreed to by each Replacement Lender or Increasing Extending
Lender, as the case may be, which date shall be on or prior to the applicable
Maturity Date.

(e)           The Administrative Agent shall give
prompt notice to each Lender of any reduction, termination or extension of the
Maximum Commitment or of the Commitment of any Lender pursuant to this
Section 3.2.

Section 3.3.   Yield
Protection.

(a)           If any law, rule, regulation or
guideline, whether or not having the force of law (including any United States
or foreign law, rule, regulation or guideline) or the enforcement,
interpretation or administration thereof by any court or any administrative or
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof shall at any time after the date of
this Agreement (A) impose, modify or deem applicable any reserve, special
deposit or similar requirement (including pursuant to Regulation D of the
Board of Governors of the Federal Reserve System) against credits or
commitments to extend credit extended by, or participations therein by, or
assets (funded or contingent) of, deposits with or for the account of, or other
acquisitions of funds by, any Lender or any Participant (or any Lending Office
thereof), or (B) subject credits or commitments to extend credit extended
by any Lender or any Participant (or any Lending Office thereof) to any
assessment or other cost imposed by the Federal Deposit Insurance Corporation
or any successor

 

 20

 

thereto, or
(C) impose on any Lender or any Participant (or any Lending Office
thereof) any other or similar condition regarding this Agreement, the
commitments or obligations of any Lender or any Participant (or any Lending
Office thereof) hereunder or the participation of such Participant (or any
Lending Office thereof) therein, and the result of any such event shall be to
increase the cost to such Lender or such Participant (or such Lending Office
thereof) of making, funding or maintaining (or agreeing to make, fund or
maintain) its Loans or its commitments or obligations hereunder or its
participation therein by an amount which such Lender or such Participant shall
in its reasonable judgment deem to be material (which increase in cost shall be
the result of the reasonable allocation by such Lender or such Participant, as
the case may be, of the aggregate of such cost increases resulting from such
events), then, upon demand from such Lender in accordance with
Section 3.3(c), the Borrower shall pay to the Administrative Agent (for
the account of such Lender or such Participant, as the case may be) from time
to time as specified by such Lender (which shall be at least 30 days after the
related notice from such Lender or such Participant given pursuant to Section 3.3(c))
additional amounts which shall be sufficient to compensate such Lender or
Participant, as the case may be, for such increased cost, together with
interest on each such amount from the date payment is due until the date of
payment in full thereof at the rate set forth in Section 3.5(f).

(b)           If any Lender or any Participant
shall have determined in its reasonable judgment that the adoption after the
date hereof of any law, rule, regulation or guideline (whether or not having
the force of law) regarding capital adequacy (including any United States or
foreign law, rule, regulation or guideline), or any change in any applicable
law, rule, regulation or guideline, as the case may be, or any change in the
enforcement or interpretation or administration thereof by any court or any
administrative or governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender or any Participant (or any Lending Office thereof) with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender or such
Participant or of its bank holding company, if any, as a consequence of the
obligations of such Lender hereunder or under the participation of such
Participant therein to a level below that which such Lender, such Participant
or such bank holding company could have achieved but for such adoption, change
or compliance (taking into consideration the policies of such Lender or such
Participant, as the case may be, and of its bank holding company, if any, with
respect to capital adequacy) by an amount deemed by such Lender or such
Participant to be material, then upon demand from such Lender in accordance
with Section 3.3(c), the Borrower shall pay to the Administrative Agent
(for the account of such Lender or such Participant, as the case may be) from
time to time as specified by such Lender (which shall be at least 30 days after
the related notice from such Lender or such Participant given pursuant to
Section 3.3(c)) such additional amount or amounts as will compensate such
Lender, Participant or bank holding company, as the case may be, for such
reduction, together with interest on each such amount from the date payment is
due until the date of payment in full thereof at the rate set forth in
Section 3.5(f).

(c)           Each demand by any Lender or any
Participant for compensation pursuant to Section 3.3(a) or 3.3(b) shall be
made by notice to the Borrower, accompanied by a certificate of such Lender or
such Participant, as the case may be, in reasonable detail setting forth the
computation of such compensation (including the reason therefor), which
certificate shall be

 

 21
 

 

conclusive, absent
manifest error.  In determining such
amount, such Lender or such Participant may use any reasonable averaging and
attribution methods.  A copy of any such
demand shall be sent to the Administrative Agent concurrently when given to the
Borrower.  The provisions of this
Section 3.3 shall survive termination of this Agreement.

Section 3.4.   Reimbursement.   Whenever
any Lender or any Participant shall sustain or incur any losses, expenses and
liabilities (including any interest paid by such Lender or such Participant to
lenders of funds borrowed by it to make or carry any Loan or its participation
therein, any termination costs paid by such Lender or such Participant to other
parties to interest rate swap or similar arrangements, and any loss, including
lost profits sustained by such Lender or such Participant in connection with
the re-employment of such funds) in connection with (i) the failure by the
Borrower to borrow any Loan after having given notice of its intention to
borrow in accordance with Section 2.2(a) (whether by reason of the
Borrower’s election not to proceed or the nonfulfillment of any of the
conditions set forth in Article 4), or (ii) the failure by the
Borrower to pay the principal amount of any Loan when due (whether at maturity,
on the date fixed for prepayment, by reason of acceleration or otherwise) other
than solely by reason of the operation of the provisions of Section 2.7
and the unavailability or insufficiency of Pledged Recoveries or Pledged
Premiums to pay such amounts, the Borrower agrees to pay to the Administrative
Agent (for the account of such Lender or Participant, as the case may be), upon
demand by such Lender or Participant, an amount sufficient to compensate such
Lender or such Participant for all such losses and out-of-pocket
expenses.  The provisions of this
Section 3.4 shall survive termination of this Agreement.

Section 3.5.   Manner
of Payment; Calculations, etc.

(a)           Each payment (including prepayments)
by the Borrower on account of the principal of or interest on the Loans and any
other amount owed to the Administrative Agent or any Lender under this
Agreement or the Notes shall be made not later than 12:00 noon (New York City
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Payment Office, for the account of such Lender or
the Administrative Agent, as the case may be, and any payments received by the
Administrative Agent after such time shall be deemed to have been paid on the
next succeeding Business Day.  In the
case of a payment for the account of a Lender, the Administrative Agent will promptly
thereafter distribute the amount so received in like funds to such Lender.  If the Administrative Agent shall not have
received any payment from the Borrower on any such date and at such time, the
Administrative Agent will notify the Lenders accordingly.  All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.

(b)           The Borrower will make all payments
of principal, interest and any other amounts on, or in respect of, the Notes or
the other Loan Documents without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature (“Taxes”) imposed or levied by
or on behalf of Bermuda or any other jurisdiction in which the Borrower is
organized or any other jurisdiction from which or through which a payment is
made by the Borrower (a “Taxing Jurisdiction”) or any political
subdivision or taxing authority thereof or therein, unless such Taxes are
required to be withheld or deducted by (x) the laws (or any regulations or
rulings promulgated thereunder) of a Taxing Jurisdiction or any political
subdivision or taxing authority thereof or therein or (y)

 

 22
 

 

an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including a holding by a court of competent
jurisdiction or by a taxing authority in a Taxing Jurisdiction or any political
subdivision thereof).  If a withholding
or deduction at source is required, the Borrower will, subject to certain
limitations and exceptions described below, pay to the holder of Notes or other
party to which such payment is owed such additional amounts as may be necessary
so that every net payment of principal, interest or any other amount made to
such Person, after the withholding or deduction, will not be less than the
amount provided for in such Note or other Loan Document to be then due and
payable.

The Borrower will
not be required to pay any additional amounts pursuant to the preceding paragraph
to the holder of Notes or other party to which such amount is owed for or on
account of:

(i)            any Tax which would not have been
imposed but for the fact that such Person (A) was a resident, domiciliary or
national of, or engaged in business or maintained a permanent establishment or
was physically present in, the relevant Taxing Jurisdiction or any political
subdivision thereof or otherwise had some connection with the relevant Taxing
Jurisdiction other than by reason of the mere ownership of, or receipt of
payment under, or enforcement of claims under such Note or other Loan Document,
or (B) in the case of payments on a Note, presented such Note for payment in
the relevant Taxing Jurisdiction or any political subdivision thereof, or
presented such Note for payment more than 90 days after the date on which the
payment in respect of such Note became due and payable or provided for,
whichever is later;

(ii)           any estate, inheritance, gift, sale,
transfer, personal property or similar tax, assessment or other governmental
charge;

(iii)          (A) any Tax that is imposed or
withheld by reason of the failure by such Person to comply with
Section 3.5(c) of this Agreement or (B) with any reasonable request by the
Borrower addressed to such Person within 60 days of such request (such request
to include any relevant form required to provide the following information or
declaration in English) (x) to provide information concerning the nationality,
residence or identity of the Person or (y) to make any declaration or other similar
claim or satisfy any information or reporting requirement, which is required or
imposed by statute, treaty, regulation or administrative practice of the
relevant Taxing Jurisdiction or any political subdivision thereof as a
precondition to exemption from all or part of such tax, assessment or other
governmental charge;

(iv)          any withholding or deduction required
to be made pursuant to EU Directive on the taxation of savings
implementing the conclusions of ECOFIN council meetings of 26-27 November
2000 or 3 June 2003 or any law implementing or complying with, or
introduced in order to conform to, such EU Directive; or

(v)           any combination of items (i), (ii),
(iii) or (iv) above.

 

 23
 

 

In addition, the Borrower
shall not be required to pay additional amounts with respect to any payment of
principal, interest or any other amounts on, any Note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such Note
to the extent such payment would be required by the laws of the relevant taxing
jurisdiction (or any political subdivision or relevant taxing authority thereof
or therein) to be included in the income for tax purposes of a beneficiary or
partner or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to such
additional amounts had it been the holder of such Note.

A certificate of
any Lender, the Administrative Agent or the Collateral Agent as to additional
amounts due under this Section 3.5(b), stating in reasonable detail the
amount and nature thereof, shall, absent manifest error, be final, conclusive
and binding on the parties hereto.  The
provisions of this Section 3.5(b) shall survive termination of this
Agreement.

(c)           (i) A Lender that is entitled to
an exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located or subject to tax, or any treaty
to which such jurisdiction is a party, with respect to payments under this
Agreement or other Loan Documents shall deliver to the Borrower (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit payments to be made
without withholding or at a reduced rate, provided that such Lender is legally
entitled to complete, execute and deliver such documentation and in such Lender’s
judgment such completion, execution or submission would not materially
prejudice such Lender.  To the extent, if
any, the Borrower is a “U.S. Person” as defined in Section 7701(a)(30) of the
Code (a “U.S. Borrower”), each Lender (or Transferee) that is not a U.S.
Person (a “Non-U.S. Lender”) shall deliver to the U.S. Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. Internal Revenue Service Form W-8BEN, Form W-8ECI or W-8IMY,
as applicable, or any subsequent versions thereof or successors thereto,
properly completed and duly executed by such Non U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on payments
by the U.S. Borrower under this Agreement and the other Loan Documents.  Such forms shall be delivered by each Non
U.S. Lender within 10 Business Days of the request by the U.S. Borrower.  If any Non-U.S. Lender provides a Form W-8IMY,
such Non-U.S. Lender must also attach the additional documentation that must be
transmitted with the Form W-8IMY.  Each
Lender and Participant agrees to notify the Administrative Agent and the
Borrower promptly of any change in circumstances or applicable law which would
modify or render invalid any exemption claimed pursuant to this clause (i).

(ii)           Notwithstanding anything to the
contrary contained in Section 3.5(b), but subject to the immediately
succeeding sentence, the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold Taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder or under the other Loan
Documents (without any obligation to pay the respective Lender additional amounts
with respect thereto) for the account of any Non-U.S. Lender which has not
provided to the Borrower such forms required to be provided to the Borrower
pursuant to clause (i) of this Section 3.5(c). Notwithstanding anything to
the contrary

 

 24
 

 

contained in the
preceding sentence, the Borrower agrees to indemnify each Lender in the manner
set forth in Section 3.5(b) in respect of any amounts deducted or withheld
by it as described in the immediately preceding sentence as a result of any
changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof,
relating to the deducting or withholding of Taxes.

(d)           If any payment under this Agreement
or under the Notes shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day, and such extension of time shall in such case be included in computing
interest and fees, if any, in connection with such payment.

(e)           Interest on the Loans and commitment
fees shall be computed on the basis of a year of 365 (or, if applicable, 366)
days and for the actual number of days elapsed.

(f)            If any payment under this Agreement
shall not be paid when due, such payment shall, unless otherwise specified
herein or in the Notes, bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment (after as well as before judgment), at a rate per annum equal to the
Default Rate.

(g)           If some but less than all amounts due
from the Borrower are received by the Administrative Agent, the Administrative
Agent shall distribute such amounts in the following order of priority:  (i) to the payment of all other amounts not
otherwise referred to in this Section 3.5(g) then due and payable
hereunder or under the Notes, (ii) to the payment of interest then due and
payable on the Loans, and (iii) to the payment of principal then due and
payable on the Loans.

ARTICLE 4.

CONDITIONS
PRECEDENT

Section 4.1.   Conditions
Precedent to Commitments.   The obligations of the Lenders to make
Loans under this Agreement shall become effective upon the satisfaction of the
following conditions on or before such date to the reasonable satisfaction of
the Administrative Agent:

(a)           As of the date of this Agreement,
(i) there shall exist no Default or Event of Default, and (ii) all
representations and warranties made by the Borrower herein or in any of the
other Loan Documents shall be true and correct with the same effect as though
such representations and warranties had been made at and as of such time;

(b)           Each Lender shall have received a
Note dated the date of this Agreement, in a principal amount equal to its
Commitment and otherwise meeting the requirements of Section 2.3;

(c)           Each Fronting Lender shall have
received a Fronting Lender Note dated the date of this Agreement and otherwise
meeting the requirements of Section 2.11;

 

 25
 

 

(d)           The Administrative Agent, the
Collateral Agent and the Borrower shall have entered into the Security
Agreement and Collateral Assignment, substantially in the form of Exhibit C
hereto (the “Security Agreement”);

(e)           The Administrative Agent shall have
received (i) results of Uniform Commercial Code searches with respect to
the name “Assured Guaranty Re Ltd.” from the office of the Recorder of Deeds of
the District of Columbia, confirming the absence of Liens on the Collateral
other than in favor of the Collateral Agent for the benefit of the Lenders,
(ii) Form Number 9, Particulars of a Mortgage or Charge, executed by
the Borrower in form appropriate for registration, together with the Security
Agreement, with the Bermuda Registrar of Companies; and Uniform Commercial Code
financing statements naming the Borrower as debtor and the Collateral Agent as
secured party, appropriate for the perfection of the Collateral Agent’s Lien on
the Collateral created and held for the benefit of the Lenders under the
Security Agreement, to the extent such Lien can be perfected by filing under
the Uniform Commercial Code, shall have been duly filed with the appropriate
office in the District of Columbia, and all fees, taxes and other charges in
connection therewith shall have been paid and (iii) evidence of all other
filings as may be necessary or, in the opinion of the Collateral Agent,
desirable to register and perfect the security interests purported to be
created by the Security Agreement and that all other actions necessary or, in
the opinion of the Collateral Agent, desirable to perfect, register and protect
the security interests purported to be created by the Security Agreement have
been taken;

(f)            The Administrative Agent shall have
received each of the following, in form and substance satisfactory to the
Administrative Agent:

(i)            A
certificate of the President of the Borrower, dated the date of this Agreement,
(A) to the effect that the conditions set forth in Sections 4.1(a) hereof
have been satisfied and that no governmental filings, consents and approvals
(except for the registration of Form Number 9, Particulars of a Mortgage
or Charge, and the Security Agreement with the Bermuda Registrar of Companies
and the filing of the UCC-1 Financing Statements with the appropriate office in
the District of Columbia), are necessary to be secured by the Borrower in order
to permit the borrowings hereunder, the grant of the Lien under the Security
Agreement and the execution, delivery and performance in accordance with their
respective terms of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby, and (B)
certifying the incumbency and signatures of the officers signing the Loan
Documents on behalf of the Borrower;

(ii)           a
certificate of compliance with respect to the Borrower issued as of a recent
date by the Bermuda Registrar of Companies;

(iii)          a
certificate of the Secretary or an Assistant Secretary of the Borrower, to
which is attached copies of the memorandum of association and certificate of
incorporation of the Borrower, the by-laws of the Borrower and of resolutions
adopted by the Board of Directors of the Borrower authorizing the execution,
delivery and performance in accordance with their respective terms of the Loan
Documents, certifying (A) that the memorandum of association and
certificate of incorporation of the Borrower

 

 26
 

 

are attached and are in full force and effect, (B) that the
by-laws are attached and are in full force and effect, and (C) that such
resolutions were duly adopted and are in full force and effect;

(iv)          a
certificate of compliance with respect to the Borrower issued by the Bermuda
Monetary Authority pursuant to the Bermuda Insurance Law;

(v)           opinions
of Conyers, Dill & Pearman, special Bermuda counsel for the Borrower, and
Mayer, Brown, Rowe & Maw LLP, special New York counsel for the Borrower,
each dated as of the date of this Agreement, which are substantially to the
effect set forth in the forms attached hereto as, respectively, Exhibits G
and H; and

(vi)          such
other documents, instruments or approvals (and, if reasonably requested by
either the Administrative Agent or the Majority Lenders, duplicates or executed
copies thereof certified by an appropriate governmental official or an
authorized officer of the Borrower) as either Agent or the Majority Lenders may
reasonably request;

(g)           The Administrative Agent shall
receive a certificate, dated within five (5) days of the date of this
Agreement, signed by the president or a senior financial officer of the
Borrower, setting forth in reasonable detail as of July 31, 2007 (i) a list of
the largest 25 Insured Obligations in the Covered Portfolio and the largest 5
non-U.S. Insured Obligations contained in the Covered Portfolio by country and
(ii) each claim paid by the Borrower under any Insurance Contract with respect
to such Insured Obligations equal to or greater than $10,000,000;

(h)           All necessary governmental (Bermuda
and non-Bermuda) and third party approvals in connection with the transactions
contemplated by the Loan Documents and otherwise referred to herein or therein
shall have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the transactions contemplated by the Loan Documents
and otherwise referred to herein or therein;

(i)            No litigation by any entity (private
or governmental) shall be pending or threatened with respect to this Agreement
or any other Loan Document or the transactions contemplated hereby or thereby,
or with respect to any material Indebtedness of the Borrower or which any
Lender shall determine would reasonably be expected to have a materially
adverse effect on the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower or of the
Borrower and its Subsidiaries taken as a whole or the Covered Portfolio, and
there shall not exist any judgment, order, injunction or other restraint issued
or filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon the making
of the Loans;

(j)            Nothing shall have occurred (and
neither any Lender nor the Administrative Agent shall have become aware of any
fact or condition not previously known) which is reasonably likely to have a
material adverse effect on the rights or remedies of the Lenders or on the
ability of the Borrower to perform its obligations to the Lenders, or which is
reasonably likely to have a materially adverse effect on the business,
property, assets, liabilities,

 

 27
 

 

condition (financial or
otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries
taken as a whole or the Covered Portfolio;

(k)           The Administrative Agent shall have
received reasonably satisfactory evidence that claims-paying ability of the
Borrower is publicly assigned a rating of Aa2 by Moody’s and AA by S&P;

(l)            The Administrative Agent Fee Letter
shall be satisfactory to the Borrower and the Administrative Agent and all fees
payable on the date of this Agreement pursuant thereto or to any Fronting
Lender Supplement shall have been paid; and

(m)          All legal proceedings and all
instruments in connection with the transactions contemplated by this Agreement
and the other Loan Documents shall be satisfactory in form and substance to the
Administrative Agent.

A certificate of the
Administrative Agent delivered to the Borrower stating that this Agreement has
become effective shall be conclusive evidence thereof.

Section 4.2.   Conditions
Precedent to Each Loan.   The obligation of each Lender to make each
Loan is subject to the fulfillment of each of the following conditions
immediately prior to or contemporaneously with the making of such Loan, unless
waived in writing by the Administrative Agent and each Lender:

(a)           The Administrative Agent shall have
received the appropriate notice of borrowing pursuant to Section 2.2(a);

(b)           The Loss Threshold Incurrence Date
shall have occurred;

(c)           Immediately after giving effect to
each such Loan, the aggregate principal amount of Loans made hereunder,
determined without regard to any repayments or prepayments thereof, shall not
exceed the Cumulative Losses incurred after the Loss Threshold Incurrence Date;

(d)           The aggregate amount of such Loan
does not exceed the aggregate Available Commitment in effect on such date
(after giving effect to any reduction of the Maximum Commitment on such date
pursuant to Section 3.2); and

(e)           The aggregate amount of such Loan to
be made by any Lender (other than a Fronting Lender Loan) does not exceed the
Commitment of such Lender in effect on such date (after giving effect to any
reduction thereof on such date pursuant to Section 3.2) minus the
aggregate principal amount of Loans theretofore made by such Lender (other than
a Fronting Lender Loan) hereunder without regard to any repayment or prepayment
thereof.

Each borrowing hereunder,
whether or not accompanied by a written notice of borrowing, shall be deemed to
be a representation and warranty by the Borrower on the date thereof as to the
satisfaction of the conditions set forth in paragraphs (b), (c), (d) and
(e) above.

 

 28
 

 

ARTICLE 5.

REPRESENTATIONS
AND WARRANTIES; OTHER AGREEMENTS

In order to induce
the Administrative Agent and the Lenders to enter into this Agreement and to
make the Loans, the Borrower makes the following representations and warranties
to the Administrative Agent and the Lenders, which shall survive the execution
and delivery of this Agreement and the making of each Loan:

Section 5.1.   Due
Organization, Etc.   The Borrower is an exempted company duly
incorporated, validly existing and in good standing under the laws of Bermuda,
is duly qualified as a foreign company in good standing in each jurisdiction in
which failure to so qualify would materially adversely affect its business,
assets, operations or financial condition, and has all requisite power and
authority and all requisite governmental licenses, authorizations, permits,
consents and approvals to conduct its business and to own its properties.

Section 5.2.   Due
Authorization, Etc.   The execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents are within its company
powers, have been duly authorized by the Borrower and do not and will not
(i) violate any provision of any law, rule, regulation (including the
Bermuda Insurance Law, the U.S. Investment Company Act of 1940 or Regulations U
or X of the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Borrower or of the memorandum of association, certificate
of incorporation or by-laws of the Borrower, (ii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or by which it
or its properties may be bound or affected, or (iii) result in, or
require, the creation or imposition of any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Borrower (other than as
contemplated by the Loan Documents), other than, in the case of
clauses (ii) and (iii), breaches, defaults or Liens which would not
reasonably be expected to materially and adversely affect the business, assets,
operations or financial condition of the Borrower or the ability of the
Borrower to perform its obligations under this Agreement or any other Loan
Document.

Section 5.3.   Approvals.   No
consent, approval or other action by, or any notice to or filing with any court
or administrative or governmental body, other than the registration and filings
described in Section 4.1(e), each of which has been made prior to the date of
this Agreement, is or will be necessary for the valid execution, delivery or
performance by the Borrower of this Agreement or any of the other Loan
Documents.

Section 5.4.   Enforceability.   This
Agreement and each of the other Loan Documents constitute legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors’ rights generally, the rights of creditors of
insurers, the supervisory power of insurance regulatory authorities, and the
availability of equitable remedies, whether such matter is heard in a court of
law or a court of equity and to possible judicial action giving effect to
foreign governmental actions or laws affecting creditors’ rights.

 

 29
 

 

Section 5.5.   Pari
Passu Obligations.   Except with respect to the Borrower’s obligations
to pay the principal of and interest on the Loans (which the Lenders
acknowledge are limited by Section 2.7), the obligations of the Borrower
under this Agreement and the other Loan Documents are recourse and general
obligations of the Borrower which shall at all times rank at least pari passu
in priority of payment and in all other respects with all other unsecured and
unsubordinated obligations of the Borrower; except for obligations mandatorily
preferred by law and secured obligations to pay claims under Insurance
Contracts.

Section 5.6.   Financial
Information, etc.

(a)           The Borrower has heretofore furnished
to the Administrative Agent and, through the Administrative Agent, to each
Lender the consolidated balance sheets of the Parent and its consolidated
subsidiaries at December 31, 2004, 2005 and 2006 and at March 31, 2007 and the
related consolidated statements of operations, comprehensive income,
shareholders’ equity and cash flows of the Parent and its consolidated
subsidiaries for the fiscal years or three month period, as the case may be,
ended on such dates.  Such financial
statement present fairly, subject, in the case of such balance sheet as at
March 31, 2007, and the related statements for the three months then ended, to
normal year-end audit adjustments, the consolidated financial condition of the
Parent and its consolidated subsidiaries at such dates and the consolidated
results of operations, comprehensive income, shareholders’ equity and cash
flows of the Parent and its consolidated subsidiaries for the respective
periods ended on such dates.  All such
financial statements have been prepared in accordance with United States
generally accepted accounting principles and practices consistently applied,
subject, in the case of such balance sheet as at March 31, 2007, and such
related statements for the three months then ended, to normal year-end audit
adjustments.

(b)           The Borrower has heretofore furnished
to the Administrative Agent and, through the Administrative Agent, to each
Lender the consolidated balance sheets of the Borrower and its consolidated
subsidiaries at December 31, 2004, 2005 and 2006 and at March 31, 2007 and the
related consolidated statements of operations, comprehensive income,
shareholders’ equity and cash flows of the Borrower and its consolidated
subsidiaries for the fiscal years or three month period, as the case may be,
ended on such dates.  Such financial
present fairly, subject, in the case of such balance sheet as at March 31,
2007, and the related statements for the three months then ended, to normal
year-end audit adjustments, the consolidated financial condition of the
Borrower and its consolidated subsidiaries at such dates and the consolidated
results of operations, comprehensive income, shareholders’ equity and cash
flows of the Borrower and its consolidated subsidiaries for the respective
periods ended on such dates.  All such
financial statements have been prepared in accordance with United States
generally accepted accounting principles and practices consistently applied,
subject, in the case of such balance sheet as at March 31, 2007, and such
related statements for the three months then ended, to normal year-end audit
adjustments.

(c)           The Borrower has heretofore furnished
to the Administrative Agent and, through the Administrative Agent, to each
Lender the consolidated balance sheets of the Assured Guaranty Corp. and its
consolidated subsidiaries at December 31, 2004, 2005 and 2006 and at March 31,
2007 and the related consolidated statements of operations, comprehensive
income, shareholders’ equity and cash flows of the Assured Guaranty Corp. and
its consolidated

 

 30

 

subsidiaries for the
fiscal years or three month period, as the case may be, ended on such
dates.  Such financial present fairly,
subject, in the case of such balance sheet as at March 31, 2007, and such
related statements for the three months then ended, to normal year-end audit
adjustments, the consolidated financial condition of the Assured Guaranty Corp.
and its consolidated subsidiaries at such dates and the consolidated results of
operations, comprehensive income, shareholders’ equity and cash flows of the
Assured Guaranty Corp. and its consolidated subsidiaries for the respective
periods ended on such dates.  All such
financial statements have been prepared in accordance with United States
generally accepted accounting principles and practices consistently applied,
subject, in the case of such balance sheet as at March 31, 2007, and such
related statements for the three months then ended, to normal year-end audit
adjustments.

(d)           The Borrower has heretofore furnished
to the Administrative Agent and, through the Administrative Agent, to each
Lender the Borrower’s annual statements and its financial statements as filed
with the Department for the years ended December 31, 2005 and 2006 and its
quarterly statements and financial statements as filed with the Department for
the three-month period ended March 31, 2007. 
Such financial statements present fairly, subject, in the case of such
financial statements as at March 31, 2007 and for the three months then ended,
to normal year-end audit adjustments, the financial condition of the Borrower
as of the respective dates of such statements. 
Such annual and quarterly financial statements were prepared in
accordance with the statutory accounting principles set forth in the Bermuda
Insurance Law, all of the assets described therein were the absolute property
of the Borrower at the dates set forth therein, free and clear of any liens or
claims thereon, except as therein stated, and each such annual statement is a
full and true statement of the assets and liabilities and of the condition and
affairs of the Borrower as of the end of the respective periods covered thereby
and of its income and deductions therefrom for such periods.

(e)           The Borrower has heretofore furnished
to the Administrative Agent and, through the Administrative Agent, to each
Lender the annual statements of Assured Guaranty Corp. and its financial
statements as filed with the Maryland Department of Insurance for the years
ended December 31, 2005 and 2006 and its quarterly statements and financial statements
as filed with the Maryland Insurance Administration for the three-month period
ended March 31, 2007.  Such financial
statements present fairly, subject, in the case of such financial statements as
at March 31, 2007 and for the three months then ended, to normal year-end audit
adjustments, the financial condition of Assured Guaranty Corp. as of the
respective dates of such statements. 
Such annual and quarterly financial statements were prepared in
accordance with the statutory accounting principles set forth in the Insurance
Article of the Annotated Code of Maryland and related regulations, all of the
assets described therein were the absolute property of Assured Guaranty Corp.
at the dates set forth therein, free and clear of any liens or claims thereon,
except as therein stated, and each such annual statement is a full and true
statement of the assets and liabilities and of the condition and affairs of
Assured Guaranty Corp. as of the end of the respective periods covered thereby
and of its income and deductions therefrom for such periods

(f)            Since March 31, 2007, there has been
no material adverse change in the business, operations, property, assets or
condition (financial or otherwise) of the Borrower, the Borrower and its
consolidated subsidiaries taken as a whole, the Parent and its consolidated
subsidiaries taken

 

 31
 

 

as a whole or Assured
Guaranty Corp. and its consolidated subsidiaries taken as a whole.  Except as fully reflected in the Borrower’s
consolidated financial statements described above in this Section 5.6, as
of the date of such financial statements, there were no liabilities or
obligations with respect to the Borrower or any of its consolidated
subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrower or to the Borrower and its consolidated
subsidiaries taken as a whole.  The
Borrower does not know of any basis for the assertion against the Borrower of
any liability or obligation of any nature whatsoever that is not fully
reflected in such financial statements which, either individually or in the
aggregate, would be material to the Borrower or to the Borrower and its
consolidated subsidiaries taken as a whole.

Section 5.7.   Litigation.   There
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower, or any properties or
rights of the Borrower, by or before any court, arbitrator or administrative or
governmental body in which there is a reasonable possibility of an adverse
decision or determination which could materially and adversely affect the
business, assets, operations or financial condition of the Borrower or the
Borrower and its Subsidiaries taken as a whole or the ability of the Borrower
to perform its obligations under this Agreement or any other Loan Document or
which in any way draws into question the validity or enforceability of this
Agreement or any of the other Loan Documents.

Section 5.8.   Taxes.   The
Borrower has filed all material income, franchise, excise and other tax returns
which are required to be filed, and has paid all taxes as shown on said returns
and all assessments received by it to the extent that such taxes have become
due, other than taxes being contested in good faith and for which adequate
reserves have been established.

Section 5.9.   Absence
of Defaults, etc.   The Borrower is not in violation of any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
or of the memorandum of association or by-laws of the Borrower, or in default
under any material indenture, agreement, lease or instrument to which it is a
party or by which it or any of its properties may be subject or bound where, in
any such case, such violation or default may result in a material adverse
effect on the business, assets, operations or financial condition of the
Borrower or the Borrower and its Subsidiaries taken as a whole or on its
ability to perform its obligations under this Agreement or any other Loan
Document.

Section 5.10.   Permits.

(a)           The Borrower has all franchises,
permits, licenses and other similar authority necessary for the conduct of its
business as now being conducted by it and as planned to be conducted, the lack
of which could materially and adversely affect the operations or condition,
financial or otherwise, of such entity, and it is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.

(b)           The Borrower owns or possesses all
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights and copyrights, (or valid licenses thereof) and is the exclusive owner or
has valid rights to use all the technology and know-how necessary to

 

 32
 

 

conduct the Borrower’s
business as now being conducted and as planned to be conducted without conflict
with or infringement upon any valid rights of others and the lack of which could
materially and adversely affect the operations or condition, financial or
otherwise, of the Borrower or the Borrower and its Subsidiaries, taken as a
whole, and the Borrower has not received any notice of infringement upon or
conflict with the asserted rights of others.

Section 5.11.   Properties.   The
Borrower has title to all material personal property owned by it, in each case,
free and clear of all liens, claims and encumbrances and defects, except such
as are described therein or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Borrower. 
With respect to any property and assets leased by the Borrower, it is in
compliance in all material respects with the terms of such leases and hold
valid leasehold interests free of any liens, claims or encumbrances, except
where failure to do so would not materially affect the operations or condition,
financial or otherwise, of the Borrower or the Borrower and its Subsidiaries,
taken as a whole.

Section 5.12.   Compliance
with Insurance Law.   The Borrower is authorized under Bermuda law to
conduct the business of insurance and/or reinsurance as permitted by its
certificate of registration under Bermuda Insurance Law (the “Certificate of
Registration”).  The Borrower is in
compliance in all material respects with all applicable provisions of the
Bermuda Insurance Law and applicable regulations thereunder.  Without limiting the generality of the
foregoing, the Borrower (a) has all other requisite governmental licenses,
authorizations, permits, consents and approvals to conduct its insurance and
other business as presently conducted and proposed to be conducted in Bermuda
and each other jurisdiction, if any,  in
which it writes or issues policies of insurance (including any form of
financial guaranty insurance, fidelity and surety insurance or credit
insurance), surety bonds, guaranties, contracts of reinsurance or other
undertakings similar to the foregoing (collectively, “Insurance Contracts”)
or in which it conducts business, except for failures, if any, to have such
licenses, authorizations, permits, consents and approvals which singly or in
the aggregate do not have a material adverse effect on the business, assets, operations
or financial condition of the Borrower or the ability of the Borrower to
perform its obligations under this Agreement or any of the other Loan
Documents, (b) where required, has made all filings of each of its forms
of Insurance Contracts and of its rates and charges with the relevant
Department and all other administrative or governmental bodies required for the
use thereof and has obtained all requisite approvals thereof, except for
failures, if any, to file or to obtain such approvals which singly or in the
aggregate do not have a material adverse effect on the business, assets,
operations or financial condition of the Borrower or the ability of the
Borrower to perform its obligations under this Agreement or any of the other
Loan Documents, (c) has duly established and maintains all reserves
required under the Bermuda Insurance Law and the regulations of the relevant
Department thereunder and other applicable laws, rules and regulations, except
for failures, if any, to maintain reserves which do not have a material adverse
effect on the business, assets, operations or financial condition of the
Borrower or the ability of the Borrower to perform its obligations under this
Agreement or any of the other Loan Documents, (d) is in compliance with all conditions
attached to its Certificate of Registration and continues to meet and maintain
the relevant solvency margin(s), liquidity and other ratios applicable under
the Bermuda Insurance Law, (e) has duly filed all annual statements,
financial statements and other information and reports required to have been
filed with the relevant Department and each other administrative or
governmental body, except for

 

 33
 

 

failures, if any, to file
which singly or in the aggregate do not have a material adverse effect on the
business, assets, operations or financial condition of the Borrower or the
ability of the Borrower to perform its obligations under this Agreement or any
of the other Loan Documents, and (f) is in compliance (and has not
received any notice from the relevant Department or similar administrative or
governmental body or an authorized representative thereof claiming that it is
not in compliance) with the Bermuda Insurance Law and the regulations of the
relevant Department thereunder and with all other applicable foreign, federal,
state and other laws, rules and regulations relating to its insurance and other
business, except with respect to failures, if any, to comply which singly or in
the aggregate do not have a material adverse effect on the business, assets,
operations or financial condition of the Borrower or the ability of the
Borrower to perform its obligations under this Agreement or any of the other
Loan Documents.

Section 5.13.   Covered
Portfolio.   Substantially all of the Insured Obligations in the
Covered Portfolio on the date of this Agreement were insured or reinsured by
the Borrower under Insurance Contracts in the form or forms heretofore supplied
to the Administrative Agent, and each such Insurance Contract is the legal,
valid, binding and enforceable obligations of the Borrower in accordance with
its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally, the supervisory power of insurance regulatory
authorities and the availability of equitable remedies.  In the Borrower’s reasonable judgment, the
Insured Obligations represent an overall risk of loss (based on all factors
including investment quality and geographical and market diversification) which
is not materially greater than the risk of loss represented by all of the
Borrower’s Insured Obligations as of the Effective Date.  To the Borrower’s knowledge, its rights
included among the Collateral are valid and binding against the obligors
thereunder in accordance with their respective terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally, the
supervisory power of insurance regulatory authorities and the availability of
equitable remedies, except for such Collateral which, in the aggregate, will
not have a material and adverse effect on the right and ability of the
Collateral Agent, on behalf of the Lenders, in accordance with the Security
Agreement, to realize upon the Collateral as a whole.

Section 5.14.   Investment
Company Status.   Neither the Parent nor the Borrower is required to be
registered as an “investment company,” as such term is defined in the United
States Investment Company Act of 1940.

Section 5.15.   Ownership;
Subsidiaries.   As of the date hereof, the authorized share capital of
the Borrower consists of 1,377,587 common shares all of which are issued.  All such shares have been duly and validly
issued, and are fully paid and non-assessable (which term means that no further
sums are required to be paid by the holders thereof in connection with the
issue of their shares). The Borrower does not have outstanding any securities
convertible into or exchangeable for its common shares or outstanding any
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its common
shares.  Set forth on Schedule 4
hereto is a complete and correct list, as of the date hereof, of all of the
Subsidiaries of the Borrower, together with, for each subsidiary, (i) the
jurisdiction of organization of such Subsidiary, the Persons having an
ownership interest therein and (ii) the nature of the ownership represented by
such ownership interests. As of the date of this

 

 34
 

 

Agreement, (a) the
Borrower and, to the extent applicable, the appropriate Subsidiary owns free
and clear of Liens, and has the unencumbered right to vote all outstanding
ownership interest in each Person shown to be held by it in Schedule 4,
(b) all of the issued and outstanding capital stock of each such Person
organized as a corporation has been duly and validly issued, and are fully paid
and nonassessable, and (c) no Subsidiary of the Borrower has any outstanding
securities convertible into or exchangeable for capital stock or outstanding
any rights to subscribe for or to purchase, or any option for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock except as otherwise disclosed on Schedule 4.

Section 5.16.   Legal
Form; No Deductions.   Other than the filings and registrations
described in Section 4.1(j)(i), all formalities required in Bermuda for the
validity and enforceability of this Agreement and each of the Loan Documents
(including any necessary registration, recording, stamping or filing with any
court or other government authority in Bermuda) have been accomplished, and no
taxes (including stamp duties) remain required to be paid to the government of
Bermuda or any political subdivision thereof or therein, and no notarization is
required, for the validity and enforceability of this Agreement or any other
Loan Document.

Section 5.17.   Choice
of Law.   In any proceedings taken in Bermuda in relation to this
Agreement or any of the other Loan Documents which by its terms is governed by
New York law, the choice of New York law as the governing law of this Agreement
and the other applicable Loan Documents and any judgment obtained in New York
will be recognized and enforced.

Section 5.18.   Disclosure.   All
factual information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of the Borrower in writing to the Administrative
Agent or the Lenders (including all information contained in the Loan
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in
writing to the Lenders will be, true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information (taken as a
whole) not misleading at such time in light of the circumstances under which
such information was provided.  There is
no fact known to the Borrower which materially adversely affects the business,
assets, operations or financial condition of the Borrower or the Borrower and
its Subsidiaries taken as a whole or the ability of the Borrower to perform its
obligations under this Agreement or any Loan Document which has not been set
forth in this Agreement or in the financial statements referred to in
Section 5.6.

ARTICLE 6.

COVENANTS

The Borrower agrees that,
so long as any Loan remains outstanding or any obligation of the Borrower
hereunder or under the Notes or any other Loan Document remains unpaid or
unsatisfied or any Lender has any obligation to make a Loan or advance other
amounts

 

 35
 

 

hereunder, unless the
Administrative Agent and the Majority Lenders otherwise consent in writing:

Section 6.1.   Use
of Proceeds.   The Borrower will use the proceeds of the Loans only to
pay or reimburse itself for the payment of Losses, including establishing or
maintaining Reserves, in respect of the Covered Portfolio.  No part of the proceeds of any Loan will be used
by the Borrower to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock. Neither the
making of any Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulations T, U or X of the Board of
Governors of the Federal Reserve System

Section 6.2.   Conduct
of Business and Company Existence.   The Borrower will continue to
engage in business substantially as conducted on the date of this Agreement and
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence as an exempted company and material rights,
licenses, permits and franchises, except where the failure to preserve, renew
and keep in full force and effect such rights, licenses, permits and franchises
will not have a material adverse effect on the business, assets, operations or
financial condition of the Borrower or the ability of the Borrower to perform
its obligations under this Agreement or any of the other Loan Documents or the
rights of the Administrative Agent, the Collateral Agent or the Lenders
hereunder or under any other Loan Document or where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.

Section 6.3.   Compliance
with Laws.   The Borrower will comply in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including the Bermuda Insurance Law and the insurance
laws of any other jurisdiction applicable to the Borrower) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings.

Section 6.4.   Obligations
and Taxes.   The Borrower shall pay all its material obligations
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property, before the same
shall become in default, as well as all material lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might become a Lien or
charge upon such properties or any part thereof; provided, however,
that the Borrower shall not be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so long as
the validity or amount thereof shall be contested in good faith by appropriate
proceedings.

Section 6.5.   Maintenance
of Insurance.   The Borrower will, and will cause each of its
Subsidiaries to, (i) maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as is consistent and in accordance with industry practice and
(ii) furnish to the Administrative Agent, upon its reasonable request, full
information as to such insurance carried.

Section 6.6.   Liens.   The
Borrower will not create, incur, assume or permit or suffer to exist any Lien
upon or with respect to any Pledged Recoveries, the Collateral Account or funds

 

 36
 

 

therein or other
Collateral, provided that the provisions of this Section 6.5 shall not
prevent the creation, incurrence, assumption or existence of the following (“Permitted
Liens”):

(a)           the Liens in favor of the Lenders
under the Security Agreement or otherwise permitted thereunder;

(b)           inchoate Liens for taxes, assessments
or governmental charges or levies not yet due or Liens for taxes, assessments
or governmental charges or levies being contested in good faith and by
appropriate proceedings;

(c)           (i) Liens in respect of property or
assets of the Borrower imposed by law, which were incurred in the ordinary
course of business and do not secure indebtedness for borrowed money, such as
carriers’, warehousemen’s, materialmen’s and mechanics’ liens, (ii) other
similar Liens arising in the ordinary course of business, which relate to
indebtedness which has not been paid when due and payable in accordance with
its terms and which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property or assets subject to any such Lien, and (iii) Liens on
deposit and securities accounts which arise in the ordinary course of business
and do not secure indebtedness for borrowed money;

(d)           Liens in respect of statutory
preference or priorities granted to certain claims under Bermuda law;

(e)           good-faith pledges or deposits made
in the ordinary course of business to secure statutory or regulatory
obligations; and

(f)            Liens on assets in respect of
liabilities assumed by Borrower in the ordinary course of the reinsurance
business of Borrower.

Section 6.7.   Merger,
Amalgamation or Sale of Assets.   The Borrower will not, and will not
permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs
or enter into any transaction of  merger,
amalgamation or consolidation, or convey, sell, lease or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or any substantial
part of its property or assets, or purchase or otherwise acquire (in one or a
series of related transactions) all or substantially all of the property or
assets (other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person, or permit any of
its Subsidiaries so to do any of the foregoing, except that:

(i)            each
of the Borrower and its Subsidiaries may in the ordinary course of business
buy, sell or lease assets;

(ii)           any
Subsidiary may wind up its affairs or liquidate or dissolve into, and may
consolidate, amalgamate or merge with or into, the Borrower or any other
Subsidiary of the Borrower;

(iii)          the
assets or stock or shares of any Subsidiary of the Borrower may be purchased or
otherwise acquired by any Person in an arms-length transaction for fair value,
or by the Borrower or any other Subsidiary of the Borrower;

 

 37
 

 

(iv)          the
Borrower or any of its Subsidiaries may purchase or otherwise acquire all or
substantially all of the properties or assets of any Person (other than the
Borrower) or acquire such Person by merger or amalgamation so long as (a) no
Default or Event of Default has occurred and is continuing or would occur after
giving effect thereto, (b) the consolidated net worth (determined in accordance
with U.S. generally accepted accounting principles) of the Borrower and its
Subsidiaries taken as a whole immediately after giving effect to such purchase,
acquisition, amalgamation or merger is at least equal to such consolidated net
worth immediately prior to such purchase, acquisition, amalgamation or merger,
(c) such purchase, acquisition, amalgamation or merger shall not result in any
downgrading of the rating assigned to the Borrower’s claims paying ability by
Moody’s or S&P from that in effect immediately prior to such purchase,
acquisition or merger and (d) the Borrower shall deliver to the Agent a
certificate of the president or the treasurer of the Borrower stating that such
purchase, merger, amalgamation or acquisition complied with the conditions
contained in this clause (iv);

(v)           the
Borrower or any Subsidiary may amalgamate or merge into another Person so long
as (a) such amalgamation or merger is solely for the purpose of changing
domicile, (b) the surviving corporation assumes all obligations of the Borrower
or any Subsidiary under each of the Credit Documents and (c) no Default or
Event of Default has occurred and is continuing or would occur after giving
effect thereto;

(vi)          any
Subsidiary may take any action not otherwise permitted by this Section 6.6 so
long as no Default or Event of Default has occurred and is continuing to the
extent such action is not in any manner adverse to the security interest
created pursuant to the Security Agreement or otherwise materially adverse to
the Borrower or the Lenders; and

(vii)         intercompany
transfers shall be permitted in accordance with Section 6.9.

Section 6.8.   Limitation
on Modification of Indebtedness; Modifications of Charter, By-Laws and Certain
Other Agreements; etc.   The Borrower will not, and will not permit any
of its Subsidiaries to, (i) amend or modify, or permit the amendment or
modification of, any provision of any Indebtedness or of any agreement
(including any purchase agreement, indenture, loan agreement or security
agreement) in any manner materially adverse to the security interest created
pursuant to the Security Agreement or otherwise materially adverse to the
Lenders or (ii) amend, modify or change its company charter (including by the
filing or modification of any certificate or designation) or by-laws, or any
agreement entered into by it, with respect to its share capital, or enter into
any new agreement with respect to its share capital in any manner materially
adverse to the security interest crated pursuant to the Security Agreement or
otherwise materially adverse to the Lenders.

Section 6.9.   Affiliate
Transactions.   The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any transaction or series of related transactions,
whether or not in the ordinary course of business, with any Affiliate of the
Borrower or any of its Subsidiaries, other than in compliance with applicable
law (including any applicable insurance law).

 

 38
 

 

Section 6.10.   Underwriting
Criteria.   The Borrower shall maintain its criteria for underwriting
Insurance Contracts and related reinsurance substantially as in effect on the
date of this Agreement.

Section 6.11.   Collection
of Pledged Recoveries and Pledged Premiums.   The Borrower shall at all
times use commercially reasonable efforts to collect and otherwise realize upon
all Pledged Recoveries and Pledged Premiums in compliance with applicable law
unless, with respect to Pledged Recoveries, the account debtor, obligor or insurer
has separately agreed with the Collateral Agent to deposit such Pledged
Recoveries directly into the Collateral Account and (if such direction is a
condition precedent to the obligation of such account debtor, obligor or
insurer to make such deposits) the Collateral Agent or the Administrative Agent
has so directed such Person to make such deposits pursuant to the Security
Agreement.

Section 6.12.   Pledged
Reserves Release Notice.   The Borrower hereby acknowledges and agrees
that if, at any time, it shall cease to maintain all or any portion of
Permitted Reserves in respect of which Pledged Reserves Account Funds have been
deposited in the Pledged Reserves Account, the Borrower as promptly as possible
(and in any event within three Business Days) after it shall cease to maintain
such Permitted Reserves shall give written notice thereof (each such notice, a “Pledged
Reserves Release Notice”) to the Administrative Agent and the Collateral
Agent which notice shall provide the amount of such Pledged Reserves Account
Funds that have been released.

Section 6.13.   Inspection
of Books and Records.   The Borrower will keep and cause its
Subsidiaries to keep proper books of record and account in conformity with
generally accepted accounting principles shall be made of all dealings and
transactions in relation to its business and activities; and, subject to
Section 10.16, will permit representatives of any Lender or the
Administrative Agent following reasonable notice to examine and make abstracts
from any of its books and records and those of its Subsidiaries and to discuss
its and their affairs, finances and accounts with its and their officers,
employees and independent public accountants, during regular business hours,
and as often as may reasonably be desired.

Section 6.14.   Financial
Reporting Requirements.   The Borrower will (x) furnish or cause to be
furnished to the Administrative Agent (with sufficient copies for distribution
to the Lenders) or (y), in the case of the clauses (a) through (d) below, post
or cause to be posted on the “Investor Information” portion of the Parent’s
website, www.assuredguaranty.com, or at such other place at such website, or on
another publicly accessible website, as the Borrower shall have designated by
not less than 30 days’ prior notice to the Administrative Agent and each
Lender:

(a)           Within 60 days after the close of
each of the first three quarterly accounting periods in each fiscal year of the
Parent, the Borrower and Assured Guaranty Corp., the consolidated balance
sheets of the Parent, the Borrower and Assured Guaranty Corp. and their
respective consolidated subsidiaries as at the end of such quarterly period and
the related consolidated statements of operations, comprehensive income,
shareholders equity and cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, in each case setting forth comparative figures for the related periods
in the prior fiscal year, all of which shall be certified by the chief
financial officer or treasurer of

 

 39
 

 

the Parent, the Borrower
and Assured Guaranty Corp., as the case may be, subject to year end audit
adjustments;

(b)           Within 90 days after the close of
each fiscal year of the Parent, the Borrower and Assured Guaranty Corp., the
consolidated balance sheets of the Parent, the Borrower and Assured Guaranty
Corp. and their respective consolidated subsidiaries as at the end of such
fiscal year and the related consolidated statements of operations,
comprehensive income, shareholders equity and cash flows for such fiscal year,
in each case setting forth comparative figures for the preceding fiscal year
and certified, by the independent certified public accountants the Parent, the
Borrower and Assured Guaranty Corp., as the case may be, who shall be of
recognized national standing;

(c)           Promptly, and in any event within
five Business Days after the filing thereof, a copy of the annual statement for
each calendar year and quarterly statements for each calendar quarter as filed
with the Department or other then comparable agency of other applicable
jurisdictions and the financial statements of the Borrower for such calendar
year or quarter prepared in accordance with applicable statutory accounting
practices, accompanied by any and all letters, reports and/or certifications
prepared by public accountants required to be filed with the Department or such
other comparable agency, certified by the treasurer of the Borrower as
presenting fairly in accordance with statutory accounting principles applied
(except as specifically set forth therein) on a basis consistent with prior
periods, the information contained therein;

(d)           Promptly, and in any event within
five Business Days after the filing thereof, a copy of the annual statement for
each calendar year and quarterly statements for each calendar quarter as filed
with the Maryland Insurance Administration or other then comparable agency of
other applicable jurisdictions and the financial statements of Assured Guaranty
Corp. for such calendar year or quarter prepared in accordance with applicable
statutory accounting practices, accompanied by any and all letters, reports
and/or certifications prepared by public accountants required to be filed with
the Maryland Insurance Administration or such other comparable agency,
certified by the treasurer or other principal financial officer of Assured
Guaranty Corp as presenting fairly in accordance with statutory accounting
principles applied (except as specifically set forth therein) on a basis
consistent with prior periods, the information contained therein;

(e)           together with each delivery of
financial statements pursuant to paragraphs (a) and (b) of this
Section 6.14,

(i)            a
certificate of a principal financial officer of the Borrower (A) listing the
Insured Obligations in the Covered Portfolio, individually and grouped by type
of Insured Obligations, (B) identifying, by name and amount, for Eligible
International Securities constituting Insured Obligations, the five largest
single obligor exposures (treated each Person and its Affiliates as a single
obligor for such purposes) for each of the United Kingdom, Australia and
Germany, (C) calculating in reasonable detail as of the date of such financial
statements the Average Annual Debt Service on the Covered Portfolio, (D)
listing each Loss with respect to each Insured Obligations in the Covered
Portfolio, (E) if the Loss Threshold Insurance Date has occurred, identifying
the

 

 40
 

 

Insurance Contracts and each reinsurance agreement with respect
thereto, (F) calculating in reasonable detail as of the date of such financial
statements (1) prior to the Loss Threshold Insurance Date, the excess of the
Borrower’s Cumulative Losses (stating separately any Permitted Reserves
included therein) for the current Commitment Period over the Borrower’s
aggregate Pledged Recoveries received during the current Commitment Period, and
(2) if such date is on or after the Loss Threshold Insurance Date, (I) evidence
of the occurrence thereof, (II) the amount of Installment Premiums with respect
to defaulted obligations received on or prior to such date and thereafter
payable in respect of the Covered Portfolio, (III) the aggregate amount of
Pledged Recoveries received by or for the account of the Borrower during the
current Commitment Period on or prior to such date, and (IV) the balance of the
Collateral Account as of such date; and

(ii)           a
certificate of the President or a Vice President of the Borrower stating that
the signer has reviewed the terms of this Agreement and has made, or caused to
be made under his supervision, a review in reasonable detail of the
transactions and condition of the Borrower during the period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signer does not
have knowledge of the existence as at the date of the officer’s certificate, of
any condition or event which constitutes a Default or an Event of Default or,
if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Borrower has taken or is taking
or proposes to take with respect thereto;

(f)            promptly after the filing thereof, a
copy of the annual statement for each calendar year and quarterly statements
for each calendar quarter as filed with the relevant Department or other then
comparable agency of other jurisdictions and the financial statements of the
Borrower for such calendar year or quarter prepared in accordance with
statutory accounting practices accompanied by a report thereon of the independent
public accountants of the Parent, the Borrower or Assured Guaranty Corp.
referred to in paragraph (b) above; and

(g)           promptly after the receipt thereof by
the Borrower or any of its Subsidiaries, a copy of any “management letter”
received by the Borrower or such Subsidiary from its certified public
accountants and the management’s responses thereto.

Section 6.15.   Information
Requirements.   The Borrower will furnish or cause to be furnished to
the Administrative Agent (with sufficient copies for distribution to the
Lenders) within five (5) Business Days after the Borrower has received written
notice or otherwise has actual knowledge thereof, written notice describing in
reasonable detail:

(a)           the
commencement of all proceedings and investigations by or before any Department
or any other governmental body and any actions and proceedings in any court or
before any arbitrator against or in any other way relating to the Borrower
which, if adversely determined, would reasonably be expected, singly or when
aggregated with all other such proceedings, investigations and actions if
adversely determined, to have a materially adverse effect on the business,
assets, liabilities, financial position, results of operations or cash flows of

 

 41

 

the Borrower, or on the
ability of the Borrower to perform its obligations under this Agreement or any
other Loan Document;

(b)           any report known to and relating to
the Borrower published by Moody’s, S&P or any other nationally recognized
rating agency which, with the consent of the Borrower, rates the
creditworthiness of the Borrower’s claims paying ability;

(c)           any material adverse change with
respect to the business, assets, liabilities, financial position, results of
operations or cash flows of the Borrower; and

(d)           any Default or Event of Default.

Section 6.16.   Other
Information.   The Borrower will furnish or cause to be furnished to
the Administrative Agent (with sufficient copies for distribution to the
Lenders):

(a)           promptly after the Borrower has received
notice or otherwise has knowledge thereof, written notice describing in
reasonable detail:

(i)            each
default by the issuer of any Insured Obligation in the Covered Portfolio or
other obligor with respect thereto which could form the basis of a claim under
an Insurance Contract;

(ii)           each
material default by any party to any reinsurance agreement or similar
arrangement with the Borrower which covers any material amount of Insured
Obligations in the Covered Portfolio; and

(iii)          all
Reserves (including Permitted Reserves) established by the Borrower with
respect to any Loss or any matter referred to in clauses (i) above; and

(b)           from time to time and promptly upon
each request, such material data, certificates, reports, statements, opinions
of counsel addressed to the Administrative Agent and the Lenders, documents or
further information regarding the Covered Portfolio, the Collateral or the
business, assets, liabilities, financial position, results of operations or
cash flows of the Borrower, either Principal Insurance Subsidiary or the Parent
as any Lender or the Administrative Agent reasonably may request.

ARTICLE 7.

EVENTS OF DEFAULT

Section 7.1.   Events
of Default.   Each of the following shall constitute an Event of
Default hereunder (each herein called an “Event of Default”):

(a)           default in the payment when due of
(i) the principal of any Loan or Note or (ii)  interest on any Loan
or Note or any other interest, fees or other amounts payable under this
Agreement, in any such case if such default described in this clause (ii)
shall have continued for a period of two (2) Business Days; or

 

 42
 

 

(b)           any representation or warranty made
by the Borrower herein or in any of the other Loan Documents or in any
certificate furnished by or on behalf of the Borrower in connection with or
pursuant to this Agreement or any of the Loan Documents shall be false or
misleading in any material respect on the date as of which made; or

(c)           The Borrower shall fail to perform or
observe any of the provisions contained in Section 6.1, 6.2, 6.4 through
6.12, inclusive, or 6.15 hereof or in the Security Agreement; or

(d)           The Borrower shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement or
any of the other Loan Documents on its part to be performed or observed and
with respect to any such term, covenant or agreement contained herein, and such
failure remains unremedied for 30 days after notice of such failure from the
Administrative Agent or any Lender or, if by reason of the nature of such failure
the same cannot be remedied within such 30 days, Borrower shall fail to proceed
with reasonable diligence to remedy such failure;

(e)           The Borrower or any of its
Subsidiaries shall be in default in the payment of any principal of or interest
on any Indebtedness with an outstanding principal balance in excess of
$10,000,000 beyond any period of grace stated with respect thereto in any
instrument evidencing such Indebtedness or in any agreement under which any
such Indebtedness is created, or the Borrower or any of its Subsidiaries shall
default in the performance of any agreement under which any such Indebtedness
is created beyond the grace period provided therein if the effect of such
default is to cause such Indebtedness to become, or to permit any holder or
beneficiary thereof, or a trustee on behalf thereof, with notice if required,
to declare such Indebtedness to be, due prior to its stated maturity; or

(f)            The Borrower or any of its
Subsidiaries shall commence a voluntary case concerning it under any
bankruptcy, reorganization, arrangement, readjustment of debt, relief or
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereinafter in effect (collectively, “Bankruptcy
Laws”) or any involuntary case is commenced against the Borrower or any of
its Subsidiaries under any Bankruptcy Laws and relief is ordered against the
Borrower or any of its Subsidiaries or the petition is controverted but is not
dismissed within 60 days after the commencement of the case; or the Borrower or
any of its Subsidiaries is not generally paying its debts as such debts become
due; or a custodian or the like is appointed for, or takes charge of, all or
substantially all of the property of the Borrower or any of its Subsidiaries; or
the Borrower or any of its Subsidiaries commences any other proceeding under
any Bankruptcy Laws relating to the Borrower or any of its Subsidiaries or the
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or
the Borrower or any of its Subsidiaries fails to controvert in a timely manner
any such case under any Bankruptcy Law or any such proceeding or any order of
relief or other order approving any such case or proceeding or in the
appointment of any custodian or the like of or for it or any substantial part
of its property or suffers any such appointment to continue undischarged or
unstayed for a period of 60 days; or the Borrower or any of its Subsidiaries
makes a general assignment for the benefit of creditors; or any action is taken
by the Borrower or any of its Subsidiaries for the purpose of effecting any of
the foregoing; or a receiver or trustee or other officer or representative of a
court or of creditors, or any court, governmental officer or agency, shall
under color of legal authority, take

 

 43
 

 

and hold possession of
any substantial part of the property or assets of the Borrower or any of its
Subsidiaries for a period in excess of 60 days; or

(g)           entry against the Borrower or any of
its Subsidiaries of a decree or order of a court or any Department or other
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or rehabilitator or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs,
and such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or

(h)           consent by the Borrower or any of its
Subsidiaries to the appointment of a conservator or receiver or rehabilitator
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Borrower or any of
its Subsidiaries of or relating to all or substantially all of its property; or

(i)            this Agreement, any Note, the
Security Agreement or any other material Loan Document shall not be or shall
cease to be in full force and effect for any reason; or the Security Agreement
shall fail to grant to the Lenders the Liens intended to be created thereby; or
any Person other than the Lenders shall have any Lien (other than Permitted
Liens) on any material portion of the Collateral; or any Pledged Recoveries
shall be unavailable to pay the obligations of the Borrower hereunder or under
any other Loan Document in accordance with the terms hereof or thereof for any
reason; or

(j)            one or more judgments or decrees
shall be entered against the Borrower or any of its Subsidiaries involving in
the aggregate for the Borrower and its Subsidiaries a liability (not paid or
fully covered by insurance) of $10,000,000 or more at any one time, and all
such judgments or decrees shall not have been vacated, discharged or stayed or
bonded pending appeal within 60 days after the entry thereof; or

(k)           a Change of Control shall have
occurred.

Section 7.2.   Remedies.   Upon
the occurrence of an Event of Default and while such Event of Default shall be
continuing, the Administrative Agent shall, at the request of the Majority
Lenders in their sole discretion, subject to the limitations of
Section 2.7, take any one or more of the following actions; provided
that the Lenders shall not in any event have the right to decline to make
additional Loans when otherwise required by this Agreement except as otherwise
provided in Section 4.2 hereof:

(a)           by notice to the Borrower and subject
to Section 2.7, declare all amounts payable by the Borrower hereunder to
be forthwith due and payable, and the same shall thereupon become due and
payable without demand, presentment, protest or further notice of any kind, all
of which are hereby expressly waived; provided that no notice or
declaration of any kind is required upon the occurrence of a Borrower Event of
Insolvency;

(b)           by notice to the Borrower, exclude any
additional Insured Obligations from the Covered Portfolio;

 

 44
 

 

(c)           exercise any or all of the rights and
remedies of the Administrative Agent or the Lenders under any of the Loan
Documents, notify the Collateral Agent that an Event of Default has occurred,
and direct the Collateral Agent to exercise in respect of the Collateral, the
rights and remedies of the Collateral Agent under the Security Agreement; and

(d)           take whatever other action at law or
in equity may appear necessary or desirable to collect the amounts then due and
thereafter to become due hereunder or to enforce any other of its rights
hereunder.

Section 7.3.   No
Waiver; Remedies Cumulative.   No failure by the Administrative Agent
or any Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any exercise or partial exercise
of any right hereunder or under any other Loan Document preclude any other
further exercise thereof or the exercise of any other right.  Subject to the provisions of
Section 2.7, the remedies provided are cumulative and not exclusive of any
remedies provided by law.

Section 7.4.   Right
of Setoff; etc.   Except as otherwise provided in Section 2.7
hereof, in addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, during the continuance of any
Event of Default hereunder, upon any amount becoming due and payable by the
Borrower hereunder, the Administrative Agent and each Lender is hereby
authorized at any time and from time to time, without notice to the Borrower or
to any other person or entity, any such notice being hereby expressly waived by
the Borrower, to setoff and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time held or owing by
the Administrative Agent or such Lender to or for the credit or the account of
the Borrower against and on account of the obligations and liabilities of the
Borrower to the Administrative Agent or such Lender under this Agreement,
irrespective of whether or not (i) the Administrative Agent or such Lender
shall have made any demand hereunder, or (ii) the Administrative Agent
shall have declared the principal of and interest on the Loans and Notes and
any other amounts due hereunder to be due and payable as permitted by
Section 7.2.

ARTICLE 8.

THE AGENTS

Section 8.1.   Appointments.   Each
Lender hereby irrevocably designates and appoints Deutsche Bank AG New York
Branch, as its agent to act as the Administrative Agent as specified herein and
in the other Loan Documents; and each Lender hereby irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on behalf of such
Lender under the provisions of this Agreement and the other Loan Documents and
to give such consents, approvals or directions and to exercise such other
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Loan Documents, as
applicable, together with such other powers as are reasonably incidental
thereto.  The Administrative Agent agrees
to act as such upon the express conditions contained in this Agreement.  Notwithstanding any provision to the contrary
elsewhere in this Agreement or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities (except those expressly set
forth herein or in the other Loan Documents) or any

 

 45
 

 

fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent.  Each Lender hereby irrevocably designates and
appoints Deutsche Bank Trust Company Americas, as its agent to act as the
Collateral Agent as specified in the Security Agreement; and each Lender hereby
irrevocably authorizes the Collateral Agent, in such capacity, to take such
action on behalf of such Lender under the provisions of the Security Agreement
and the other Loan Documents and to give such consents, approvals or directions
and to exercise such other powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of the Security Agreement and
the other Loan Documents, as applicable, together with such other powers as are
reasonably incidental thereto.  The
provisions of this Article 8 are solely for the benefit of the
Administrative Agent, the Collateral Agent and the Lenders, and the Borrower
shall have no rights as a third party beneficiary of any of the provisions
hereof.  In performing functions and
duties under this Agreement and the other Loan Documents, the Administrative
Agent and the Collateral Agent shall act solely as agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with the Borrower.

Section 8.2.   Delegation.   The
Administrative Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

Section 8.3.   Agent
Not Liable; Reliance.

(a)           Neither the Administrative Agent nor
any of its officers, directors, employees, agents or attorneys-in-fact shall be
(i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection with this Agreement or the other Loan
Documents (except in the case of the Administrative Agent, for its own gross
negligence or willful misconduct) or (ii) responsible in any manner to any
Lender for any recitals, statements, representations or warranties made by the
Borrower or any of its officers contained in this Agreement or any of the other
Loan Documents, any other document or in any certificate, report, statement or
other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
document of for any failure of the Borrower or its officers to perform its
obligations hereunder or thereunder.  The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Borrower.  The Administrative Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the
Administrative Agent to any Lender or by or on behalf of the Borrower to the
Administrative Agent or any Lender, or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or

 

 46
 

 

agreements contained
herein or therein or as to the use of the proceeds of the Loans or of the
existence or possible existence of any Default or Event of Default.

(b)           The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent
or the Borrower.  The Administrative
Agent shall be fully justified in failing or refusing to take an action under
this Agreement or any other Loan Document, unless it shall first receive such
advice or concurrence of the Lenders as it deems appropriate and it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all Lenders.

(c)           The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, unless it has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is furnished pursuant to Section 8.3(c) of this
Agreement.  In the event that the
Administrative Agent receives such a notice, it shall give prompt notice thereof
to each Lender.

(d)           Each Lender expressly acknowledges
that neither the Administrative Agent nor any of its officers, directors,
employees, agents or attorneys-in-fact have made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and made its own decision to
enter into this Agreement and, if applicable, its Assignment and Assumption
Agreement.  Each Lender also represents that
it will, independently and without reliance upon the Administrative Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower.  The
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower which may come into the possession of the Administrative
Agent or any of its officers, directors, employees, agents or
attorneys-in-fact.

 

 47
 

 

Section 8.4.   Indemnity.   The
Lenders agree to indemnify the Administrative Agent and the Collateral agent
ratably according to their respective Commitments from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, reasonable expenses (including inspection expenses pursuant to
Section 6.13 and reasonable fees and expenses of legal counsel and other experts)
or disbursements of any kind whatsoever which may at any time (including at any
time following the payment of any Loan or the termination of this Agreement) be
imposed on, incurred by or asserted against the Administrative Agent or the
Collateral Agent in its capacity as such in any way relating to or arising out
of this Agreement or any other Loan Document, or any documents contemplated by
or referred to herein or the transactions contemplated hereby or any action
taken or omitted to be taken by the Administrative Agent or the Collateral
Agent under or in connection with any of the foregoing is not paid by the
Borrower; provided  that no Lender shall be liable to the
Administrative Agent or the Collateral Agent for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from such agent’s own
gross negligence or willful misconduct. 
If any indemnity furnished to the Administrative Agent or the Collateral
Agent for any purpose shall, in its opinion, be insufficient or become
impaired, the Administrative Agent or the Collateral Agent, as the case may be,
may call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.  The agreements in this Section 8.4 shall
survive the repayment of the Loans and the termination of this Agreement.

Section 8.5.   Liability
of Agent.   In no event shall the Administrative Agent have any
liabilities or responsibilities to the Borrower on account of the failure of
any Lender to perform its obligations hereunder or to any Lender on account of
the failure of the Borrower to perform its obligations hereunder or under any
other Loan Document.

Section 8.6.   Agent
May Act.   The Administrative Agent may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower, all as
though it were not Administrative Agent hereunder.  The terms “Lenders” and “Majority Lenders”
and any similar terms shall include the Administrative Agent in its individual
corporate capacity as a Lender or one of the Majority Lenders.

Section 8.7.   Successor.

(a)           The Administrative Agent may resign
as such at any time upon at least 30 days’ prior notice to the Borrower and all
Lenders, such resignation not to be effective until a successor Administrative
Agent is in place.  If the Administrative
Agent at any time shall resign, the Majority Lenders (after consultation with
the Borrower if no Event of Default shall have occurred and be continuing) may
appoint another Lender or an affiliate thereof reasonably acceptable to the
Borrower as a successor Administrative Agent, which shall thereupon become the
Administrative Agent hereunder.  If no
such successor shall have been so appointed by the Majority Lenders, and shall
have accepted such appointment, within 30 days after the retiring agent has
given notice of resignation, then the retiring agent may, on behalf of the
Lenders, appoint a successor Administrative Agent (after consultation with the
Borrower if no Event of Default shall have occurred and be continuing).  Notwithstanding the resignation of an
Administrative Agent hereunder, the provisions of Sections 8.2 through 8.5
shall continue to inure to the benefit of such Administrative Agent in respect
of any action taken or omitted to be

 

 48
 

 

taken by it in its
capacity as such while it was the Administrative Agent under this Agreement or
any other Loan Document.

(b)           The Collateral Agent may resign as
such at any time upon at least 30 days’ prior notice to the Borrower and all
Lenders, such resignation not to be effective until a successor Collateral
Agent is in place.  If the Collateral
Agent at any time shall resign, the Majority Lenders may appoint another Lender
or an affiliate thereof reasonably acceptable to the Borrower as a successor
Collateral Agent, which shall thereupon become the Collateral Agent
hereunder.  If no such successor shall
have been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring agent has given notice of
resignation, then the Administrative Agent shall act as Collateral Agent until
a successor is appointed in accordance with this Section 8.7(b).  Notwithstanding the resignation of a
Collateral Agent hereunder, the provisions of Sections 8.2 through 8.5 shall
continue to inure to the benefit of such Collateral Agent in respect of any
action taken or omitted to be taken by it in its capacity as such while it was
the Collateral Agent under this Agreement or any other Loan Document.

Section 8.8.   Determination
by the Agent Conclusive and Binding.   Any determination required or
expressly permitted to be made by the Administrative Agent under this Agreement
shall be made by the Administrative Agent, in good faith and, when made, shall
be conclusive and binding on all parties.

Section 8.9.   Titled
Agents.   Each of the Syndication Agent and the Documentation Agent, in
its capacity as such, assumes no responsibility or obligation hereunder,
including for servicing, enforcement or collection of any of the Loans, nor any
duties as an agent hereunder for the Lenders. 
The titles of “Syndication Agent” and “Documentation Agent” are solely
honorific and imply no fiduciary responsibility on the part of the Syndication
Agent or the Documentation Agent, in its capacity as such, to the
Administrative Agent, the Borrower or any Lender and the use of such titles
does not impose on the Syndication Agent or the Documentation any duties or
obligations greater than those of any other Lender or entitle the the
Syndication Agent or the Documentation Agent to any rights other than those to
which any other Lender is entitled.

ARTICLE 9.

NATURE OF
OBLIGATIONS; INDEMNIFICATION

Section 9.1.   Nature
of Obligations; Survival.   The obligations of the Borrower under this
Agreement and the Notes and the other Loan Documents (other than payment of
principal of and interest on the Loans or under any Note, which are limited
recourse obligations subject to the provisions of Section 2.7) shall be
absolute, unconditional and irrevocable, shall be full recourse and general
obligations of the Borrower and shall be satisfied strictly in accordance with
the terms of this Agreement, under all circumstances whatsoever.  All covenants, agreements, representations
and warranties made herein or in any Note or any other Loan Document or in any
certificate, document or instrument delivered pursuant hereto or thereto shall
survive the date of this Agreement, the making of each Loan and the occurrence
of the Maturity Date and shall continue in full force and effect so long as
principal of or interest on any Loan or any Note remains outstanding or unpaid,
any other amount payable by the Borrower under this Agreement, any Note or any
other Loan Document remains unpaid or any other obligation of the Borrower to

 

 49
 

 

perform any other act
hereunder or under any Note or any other Loan Document remains unsatisfied or
any Lender has any obligation to make a Loan or any other advance of moneys to
the Borrower hereunder.

Section 9.2.   Indemnification.   Notwithstanding
the provisions of Section 2.7 hereof, the Borrower hereby indemnifies and
holds harmless the Administrative Agent, each Lender and each Participant from
and against any and all claims, damages, losses, liabilities and reasonable
costs and expenses whatsoever (including reasonable attorneys’ fees) relating
to this Agreement or any other Loan Document which the Administrative Agent,
such Lender or such Participant may incur (or which may be claimed against the
Administrative Agent, such Lender or such Participant by any person or entity
whatsoever), including the failure of the Borrower to make payments of
principal of and interest on the Loans and the Notes, by reason of or in
connection with (a) the failure by the Borrower to deposit any amounts in
the Collateral Account which are required to be deposited therein as provided
in the Security Agreement or (b) the unavailability to any Lender or to
any Participant for any reason of any Pledged Recoveries or other Collateral by
reason of (i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to
the Borrower, or (ii) the Borrower’s rescission or repudiation of any term
hereof or of any other Loan Document or any Loan; provided, however,
that the Borrower shall not be liable to the Administrative Agent, any Lender
or any Participant for the payment of any such claims, damages, losses,
liabilities, costs and expenses incurred by reason of the gross negligence or
willful misconduct of such Person or any of its Affiliates.

ARTICLE 10.

MISCELLANEOUS

Section 10.1.   Costs,
Expenses and Taxes.   Upon the receipt of reasonable documentation
evidencing such expenses, the Borrower agrees to pay or cause to be paid
(a) to the Administrative Agent all reasonable out-of-pocket
expenses, including reasonable fees and expenses of counsel (including New York
and Bermuda counsel) for the Administrative Agent incurred by the
Administrative Agent from time to time (i) arising in connection with the
preparation, execution, duplication, delivery and performance of this
Agreement, any other Loan Documents and any documents, instruments or
transactions pursuant to or in connection herewith and (ii) relating to
any requested amendments, waivers or consents to this Agreement, any other Loan
Document or any such documents or instruments, and (b) to the
Administrative Agent and each Lender, fees and expenses of counsel (including
New York and Bermuda counsel) for the Administrative Agent or such Lender
incurred by the Administrative Agent or such Lender in connection with the
enforcement or preservation by any of them of rights under this Agreement or
any such documents or instruments, including such expenses as may be incurred
by the Administrative Agent or such Lender in enforcing this Agreement or any
of such other documents or instruments after an Event of Default shall have
occurred.  The Borrower agrees to pay all
stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by the Administrative Agent or a Lender
to be payable in connection with this Agreement, the Notes or any other
documents, instruments or transactions pursuant to or in connection herewith,
and the Borrower agrees to save the Administrative Agent and the Lenders
harmless from and against any and all present or future

 

 50
 

 

claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions.  The
provisions of this Section 10.1 shall survive the termination of this
Agreement.

Section 10.2.   Jurisdiction;
Consent to Service of Process.

(a)           Each party hereto hereby agrees that
any legal action or proceeding against the others with respect to this
Agreement, any of the other Loan Documents or any of the agreements, documents
or instruments delivered in connection herewith or therewith may be brought in
the courts of the State of New York or of the United States of America for the
Southern District of New York as the applicable party may elect, and, by
execution and delivery hereof, the Borrower, for itself and in respect to its
property, generally and unconditionally accepts and consents to the
jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be
exclusive, unless waived by the Administrative Agent in writing, with respect
to any action or proceeding brought by it against either Agent or any Lender
and any questions relating to usury. 
Each party agrees that Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York shall apply to this Agreement and the
other Loan Documents and waives any right to stay or to dismiss any action or
proceeding brought against it before said courts on the basis of forum non
conveniens.  Except as specifically set
forth herein, nothing herein shall limit the right of either party to bring
proceedings against the other in any other court or tribunal otherwise having
jurisdiction.

(b)           By the execution and delivery of this
Agreement, the Borrower acknowledges that it has, by separate written
instrument, irrevocably designated and appointed Assured Guaranty Corp., 1325
Avenue of the Americas, New York, New York 10019 Attention:  Secretary, as its authorized agent upon which
process may be served in any suit, action or proceeding arising out of or
relating to this Agreement, the Notes or any other Loan Document that may be
instituted in any court of the State of New York or of the United States of
America for the Southern District of New York or brought by the Administrative
Agent, the Collateral Agent or any Lender, and acknowledges that Assured
Guaranty Corp. has accepted such designation, and agrees that service of
process upon Assured Guaranty Corp. and written notice of said service to the
Borrower (in accordance with Section 10.7), shall be deemed in every
respect effective service of process upon it in any such suit or
proceeding.  The Borrower further agrees
to take any and all action, including the execution and filing of any and all
such documents and instruments as may be necessary to continue such designation
and appointment of Assured Guaranty Corp. (or any other Person with the prior
written consent of the Administrative Agent) in full force and effect so long
as this Agreement shall remain in effect or any of the Notes shall be
outstanding.

Section 10.3.   Severability.   Any
provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or nonauthorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.

 

 51

Section 10.4.      Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.

Section 10.5.      Waiver
of Jury Trial.  EXCEPT TO THE EXTENT
PROHIBITED BY LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES TRIAL
BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE WHATSOEVER
ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND IN CONNECTION WITH SUCH ACTION OR PROCEEDING, WHETHER ARISING
UNDER STATUTE (INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF
CONTRACT, TORT OR OTHERWISE AND INCLUDING ANY CHALLENGE TO THE LEGALITY,
VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF THIS SECTION OR THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENTS.

Section 10.6.      Headings.  Section headings in this Agreement are
included herein for convenience or reference only and shall not constitute a
part of this Agreement for any other purpose.

Section 10.7.      Notices
and Addresses for Notice.  All
notices and other communications provided for hereunder shall be in writing
and, (a) if to the Borrower, mailed or delivered to it, addressed to it at
30 Woodbourne Ave., 5th Floor, Hamilton
HM 08 Bermuda, Attention: David Penchoff, President, with copy at the same
address, Attention:  James M. Michener,
General Counsel, (b) if to the Administrative Agent, mailed or delivered
to it, addressed to it at 60 Wall Street, New York, New York 10005,
Attention:  John S. McGill, Director and
(c) if to a Lender, mailed or delivered to it at its address as shown on
Schedule 1 hereto or in the Assignment and Assumption Agreement by which
it became a party hereto; or as to any party as such party may direct in a
written notice to all other parties.  All
such notices and other communications shall, when mailed, be effective three
(3) days after the date of deposit in the mails, addressed as aforesaid.  In lieu of notice by mail or delivery,
written notice may be given over telecopier at the appropriate numbers set
forth below, such notice over telecopier to be effective when transmitted.

	
   

  	
  If to the Administrative Agent:

  	
   

  	
  Telecopier No.: (212) 797-0270

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to the Borrower:

  	
   

  	
  Telecopier No.: (441) 296-3379

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to a Lender:

  	
   

  	
  To it at its telecopier number as set forth on
  Schedule 1 hereto or in the Assignment and Assumption Agreement by which it
  became a party hereto.

  

 

Section 10.8.      Successors
and Assigns; Assignment and Assumption; Participations; Additional Lenders.

(a)       This
Agreement is a continuing obligation and binds, and the benefits hereof shall
inure to, the Borrower, the Administrative Agent and the Lenders and their 

 52
 

respective
successors and assigns; provided that, except as specifically provided
herein, the Borrower may not transfer or assign any or all of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and of each Lender.

(b)      Each
Lender may, at any time, sell, assign, and transfer to another commercial bank
or other financial institution (“Assignee”) which is approved in advance
by the Administrative Agent and the Borrower (which approvals shall not be
unreasonably withheld or delayed) all or a portion of its rights and
obligations as Lender in this Agreement, its Note, the other Loan Documents or
any Loan; provided that the approval of the Borrower shall not be required for
an assignment by a Lender to an Affiliate of such Lender having an unsecured
senior debt rating (or shadow rating as reflected in a letter) by each of Moody’s
and S&P which is at least as high as the assigning Lender.  In addition, the approval of each Fronting
Lender acting as such with respect to a Lender shall be required for the
assignment by such Lender of all or a portion of its rights and obligations as
Lender in this Agreement, its Note, the other Loan Documents or any Loan.  Any such sale or assignment of a portion of a
Lender’s interest in such Lender’s Loan shall be in respect of integral
multiples of $1,000,000 in principal amount (or such other amount to which the
Administrative Agent and the Borrower may consent in writing).  Each assignment pursuant to this
Section 10.8(b) shall be effected by the Administrative Agent, the
assignor Lender and its Assignee executing an Assignment and Assumption
Agreement substantially in the form of Exhibit D hereto (appropriately
completed) (each, an  “Assignment and
Assumption Agreement”) and the rights and duties of such Lender and the
Assignee each to the other shall be as defined therein.  The parties hereto agree to execute such
documents as may be necessary to effectuate any such assignment, including, in
the case of the Borrower, to exchange the Note or Notes held by the assignor
Lender for a new Note or Notes payable to such Lender (if it has retained any
Commitment) and a new Note or Notes payable to the Assignee in the respective
amounts which reflect the assignment being made under this
Section 10.8(b).  Promptly following
any assignment pursuant to this Section 10.8(b), the Administrative Agent
shall notify the Lenders thereof.  From
and after the effective date determined pursuant to such Assignment and
Assumption Agreement, (i) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Assumption Agreement, have
the rights and obligations of a Lender hereunder as set forth therein and
(ii) the transferor Lender shall, to the extent provided in such
Assignment and Assumption Agreement, be released from its Commitment and other
obligations under this Agreement; provided, however, that after
giving effect to such assignment, the obligations from which such Lender is
released shall have been assumed by an Assignee or Assignees.  If a Fronting Lender shall cease to have the
Required Ratings, such Lender shall, upon the request and at the expense of the
Borrower and in accordance with this Section 10.8(b), sell, assign, and
transfer its rights and obligations as Lender in this Agreement, its Note, the
other Loan Documents and any Loan to one or more other commercial banks or
other financial institutions identified by the Borrower which have an unsecured
senior debt rating (or shadow rating as reflected in a letter) by each of Moody’s
and S&P which is acceptable to the Borrower; provided that, after
giving effect to such sale, assignment and transfer, the Commitment and, if
applicable, Fronting Lender Commitment of the assigning Lender shall have
terminated and such Lender shall have received (as purchase price or otherwise)
an amount equal to the outstanding principal amount of its Loans and all
accrued and unpaid interest thereon and all other amounts owing to such Lender
hereunder or any other Loan Document (whether or not then due and payable).

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(c)       Each
Lender shall be entitled at any time to sell, assign, transfer or otherwise
grant participations in the whole or any part of such Lender’s rights and/or
obligations under this Agreement, its Assignment and Assumption Agreement (if
applicable), the other Loan Documents or any Loan to any Person.  No such participation pursuant to this
Section 10.8(c) shall relieve a Lender from its obligations
hereunder.  Any such participant is
referred to in this Agreement as a “Participant”, which term shall not
include any sub-participant, assignee, purchaser or transferee of any
such direct participant.  Except as
specifically set forth below, no such Participant shall have any rights under
this Agreement (the Participant’s rights against any Lender in respect of such
participation or other arrangement or transfer to be those set forth in the
agreement or agreements executed by such Lender in favor of such
Participant).  The Borrower agrees that
the provisions of Sections 3.3, 3.4, 3.5(b), 3.5(c) and 9.2 shall run to
the benefit of each Participant and its participations or interests herein, and
each Lender may enforce such provisions on behalf of any of its
Participants.  Each Lender shall use its
best efforts to give the Administrative Agent and the Borrower at least 30 days
prior written notice of any participation, assignment, sale or other transfer
under this Section 10.8(c).  Each Lender
agrees that without the consent of the Administrative Agent and the Borrower,
it will not enter into or grant any such participation to a Participant which
has not delivered to the Administrative Agent and the Borrower the forms and
documents applicable to it contemplated by Section 3.5(c).  In entering into any participation agreement
with a Participant, each Lender shall use reasonable efforts to provide that,
if such Participant demands such materially excess compensation as described in
Section 3.3(d), such agreement may be terminated by such Lender without
the payment of any compensation or penalties. 
Upon a participation, assignment, sale or transfer in accordance with
the foregoing, the Borrower shall execute such documents and do such acts as
such Lender may reasonably request to effect such transaction.

(d)      From
time to time with the prior consent of the Administrative Agent and so long as
no Loans have been made hereunder, the Borrower shall have the right to
increase the Maximum Commitment by (i) increasing the amount of the
Commitment of any Lender with the prior consent of such Lender, or
(ii) adding as a Lender hereunder one or more commercial banks or other financial
institutions (each, a “New Lender”). 
No such increase in the Maximum Commitment shall be effective until
(A) in the case of an increased Commitment of a Lender, the Borrower shall
have exchanged the Note held by such Lender for a new Note payable to such
Lender in the amount of the increased Commitment, and such Lender shall have
entered into an amendment to Schedule 1 to this Agreement modifying the
amount of such Lender’s Commitment, or (B) in the case of the addition of
a New Lender, the Borrower shall have executed and delivered to the New Lender
a Note payable to such Lender in the amount of its Commitment, and the New
Lender shall have executed and delivered to the Borrower and the Administrative
Agent a joinder agreement by which it agrees to be bound hereunder and under
the other Loan Documents as a Lender and, without limiting the generality of
the foregoing, confirms to the Administrative Agent and other Lenders the
acknowledgments and representations as to the New Lender contained in Section 8.3(d)
hereof as of the date of such joinder agreement and amends Schedule 1 to
this Agreement to add the appropriate information with respect to the New
Lender and its Commitment.

(e)       Each
Lender shall endeavor to notify the Administrative Agent and the Borrower
within 60 days after the date of this Agreement and, with respect to each new
Participant or New Lender, within 60 days after such Person becomes a
Participant or a Lender, 

 54
 

of each
Insured Obligation identified in the most recent certificate delivered by the
Borrower to the Lenders pursuant to Section 6.14(c)(i) hereof which such
Lender or such Participant, as the case may be, is obligated to purchase under
the terms of a line of credit, standby bond purchase agreement, letter of credit,
liquidity agreement or similar agreement or arrangement.

Section 10.9.      Lending
Office.  Any Lender or any
Participant may make, transfer and carry any Loan at, to or for the account of
any branch office, Subsidiary or affiliate (its “Lending Office”); provided
that no such Lender or Participant shall be entitled to receive any greater
amount pursuant to Section 3.3 or 3.5(b) as a result of any voluntary
action taken by such Lender or such Participant (other than for the purpose of
complying with applicable law) pursuant to this Section 10.9 than such Lender
or such Participant would have been entitled to receive absent such action
except as a result of circumstances arising after the date of such action.

Section 10.10.    Judgment Currency. 
This is an international credit transaction in which the specification
of Dollars and payment in New York City is of the essence, and the obligations
of the Borrower under this Agreement or any other Loan Document to make payment
to (or for the account of) a Lender, a Participant, the Administrative Agent or
the Collateral Agent in Dollars shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted into any
other currency or in another place except to the extent that such tender or
recovery results in the effective receipt by such Lender or Participant, the
Administrative Agent or the Collateral Agent, as the case may be, in New York
City of the full amount of Dollars payable to such Lender or Participant, the
Administrative Agent or the Collateral Agent, as the case may be, under this
Agreement or such other Loan Document. 
If a judgment is given in relation to any sum due to the Collateral
Agent, the Administrative Agent or any Lender hereunder (in this Section called
an “entitled person”), and such judgment is given in a currency (in this
Section called the “judgment currency”) other than Dollars, the Borrower
agrees to indemnify the entitled person to the extent that the amount of
Dollars which could have been purchased by the Administrative Agent in
accordance with normal banking procedures on the Business Day following receipt
of such sum is less than the sum which could have been so purchased by the
Administrative Agent had such purchase been made on the day on which such judgment
was given or, if such day is not a Business Day, on the Business Day
immediately preceding the giving of such judgment.

Section 10.11.    No Immunity.  To the
extent that the Borrower may be or become entitled, in any jurisdiction in
which judicial proceedings may at any time be commenced with respect to this
Agreement or any other Loan Document, to claim for itself or its properties or
revenues any immunity from suit, court jurisdiction, attachment prior to
judgment, attachment in aid of execution of a judgment, execution of a judgment
or from any other legal process or remedy relating to its obligations under
this Agreement or any other Loan Document, and to the extent that in any such
jurisdiction there may be attributed such an immunity (whether or not claimed),
the Borrower hereby irrevocably agrees not to claim and hereby irrevocably
waives such immunity to the fullest extent permitted by the laws of such
jurisdiction.

Section 10.12.    Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be
regarded as the original and all of which shall constitute one and the same
Agreement.

 55
 

Section 10.13.    Records.  The unpaid
principal amount of all outstanding Loans, the unpaid interest accrued thereon,
the interest rate or rates applicable to such unpaid principal amount and the
duration of such applicability, and the accrued and unpaid fees and other
amounts due hereunder shall at all times be ascertained from the records of the
Lenders.  Such records and the
Administrative Agent’s records with respect to any loan account maintained
pursuant to Section 2.3(b) shall be presumed to be correct unless the
contrary shall be shown.

Section 10.14.    Register.  The
Borrower shall keep at its principal executive office a register for the
registration and registration of transfers of Notes.  The name and address of each holder of one or
more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register.  Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for the purpose of receiving
payment and for all other purposes hereof, and the Borrower shall not be affected
by any notice or knowledge to the contrary. 
Upon the request of the Borrower, the Administrative Agent hereby agrees
to use its reasonable efforts to provide to the Borrower such information not
otherwise available to the Borrower in order to enable it to maintain such
register.

Section 10.15.    Amendments and Waivers. 
Subject to the next succeeding sentence, any term, covenant, agreement
or condition of this Agreement and the other Loan Documents may be amended with
the consent of the Borrower, the Administrative Agent and the Majority Lenders
or compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the Administrative Agent
and the Majority Lenders, and in any such event the failure to observe, perform
or discharge any such covenant, condition or obligation (whether such amendment
is executed or such consent or waiver is given before or after such failure)
shall not be construed as a breach of such covenant, condition or obligation or
an Event of Default.  Notwithstanding the
preceding sentence, (a) the Borrower, the Administrative Agent and certain
Lenders may enter into amendments pursuant to Section 10.8(d) hereof
without the consent of any other Lender, (b) without the prior written
consent of each Lender adversely affected thereby, no amendment to or waiver
under this Agreement or any other Loan Document shall (i) increase the
Commitment of any Lender, (ii) alter the time for the payment of the
principal of or interest on the Loans, the amount of principal thereof, the
rate of interest thereon, or the requirement pursuant to Section 2.9(a) of
the pro rata application of amounts received by the Administrative Agent,
(iii) permit any subordination of the principal of or interest on any
Loan, (iv) alter the amount of any fee to be paid to any Lender,
(v) change the percentage of the Lenders required to constitute the
Majority Lenders, (vi) amend or waive the provisions of Sections 2.7,
2.8, 2.10, 3.4, 3.5, 4.2, 6.11, 9.2 or 10.8 of this Agreement, this
Section 10.15 or the definition of “Loss Threshold Incurrence Date” set
forth in Section 1.1 of this Agreement, (vii) amend or waive
Section 7.1 of this Agreement applicable to an Event of Default relating
to the timing or amount of any payment due under this Agreement,
(viii) amend or waive Section 2 of, or the definitions of “Collateral”
or “Secured Obligations” contained in, the Security Agreement, or
(ix) waive, release or reduce any Collateral; and (c) without the
prior consent of the Administrative Agent, if it is adversely affected thereby
no such amendment or waiver shall alter the rights of the Administrative
Agent.  Subsequent holders of the Notes
shall be bound by any waiver hereunder or amendment hereof, whether or not any
such subsequent holder had notice of such waiver or amendment and whether or
not such waiver or amendment is reflected in any or all of the Notes.

 56
 

Section 10.16.    Confidentiality. 
The Administrative Agent, the Collateral Agent, each Lender and each
Fronting Lender agrees to keep confidential all non-public information provided
to it by the Borrower, the Administrative Agent, the Collateral Agent, any
Lender or any Fronting Lender pursuant to or in connection with this Agreement
and the other Loan Documents, whether written or oral or otherwise recorded,
whether or not specifically identified as “confidential”, together with
analyses, compilations or other materials prepared by the directors, officers,
employees, agents, auditors, attorneys, consultants or advisors to the parties
hereto which may contain or otherwise reflect such information (collectively,
the “Information”) but in any event may make disclosure: (a) to any
of their respective affiliates (provided they shall agree to keep such
information confidential in accordance with the terms of this Section);
(b) as reasonably requested by any bona fide assignee, Participant or
other transferee in connection with the contemplated transfer of any Loan or
participations therein as permitted hereunder (provided they shall agree to
keep such information confidential in accordance with the terms of this
Section); (c) as required or requested by any governmental authority or
representative thereof; (d) pursuant to legal process or in connection with any
legal proceedings; (e) to the Administrative Agent’s or such Lender’s
independent auditors and other professional advisors (provided they shall be
notified of the confidential nature of the information); (e) after the
happening and during the continuance of an Event of Default, to any other
Person, in connection with the exercise by the Administrative Agent or the
Lenders of rights hereunder or under any of the other Loan Documents; and
(f) to the extent such information (x) becomes publicly available other
than as a result of a breach of this Section or (y) becomes available to
the Collateral Agent, the Administrative Agent, any Lender or any Fronting
Lender on a nonconfidential basis from a source other than the Borrower or any
affiliate of the Borrower which source, to the knowledge of the Administrative
Agent, the Collateral Agent, any Lender or any Fronting Lender, is not
prohibited from disclosing such information pursuant to a contractual, legal or
fiduciary obligation to the Borrower or a third party.  Notwithstanding anything to the contrary set
forth herein or in any other written or oral understanding or agreement to
which the parties hereto are parties or by which they are bound, the parties
hereto acknowledge and agree that (i) any obligations of confidentiality
contained herein and therein do not apply and have not applied from the
commencement of discussions between the parties to the tax treatment and tax
structure of the transactions contemplated by the Loan Documents (and any
related transactions or arrangements), and (ii) each party (and each of its
employees, representatives, or other agents) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by the Loan Documents and all materials of any
kind (including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulations Section 1.6011-4; provided, however, that with respect
to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions contemplated
by the Loan Documents as well as other information, this sentence shall only
apply to such portions of the document or similar item that relate to the tax
treatment or tax structure of the transactions contemplated by the Loan
Documents; provided, further, however, to the extent not inconsistent with the
immediately preceding clause (ii), the parties hereto do not intend anything
contained in this sentence to be a waiver of any applicable privilege each may
have to maintain (in its sole discretion) the confidentiality of a
communication with its attorney or a confidential communication with a
federally authorized tax practitioner under Section 7525 of the Internal
Revenue Code relating to the transactions contemplated by the Loan Documents.

 57
 

[Signature
Pages Follow]

 

 58

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date
first above written.

	
   

  	
  ASSURED GUARANTY RE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[Signature Pages to Credit
Agreement]

 

 

	
   

  	
  DEUTSCHE BANK AG NEW YORK

  BRANCH, as Administrative Agent and as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[Signature Pages to Credit Agreement]

 

 

	
   

  	
  ING BANK N.V. LONDON BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[Signature
Pages to Credit Agreement]

 

 

 

	
   

  	
  BAYERISCHE LANDESBANK NEW

  YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[Signature
Pages to Credit Agreement]

 

 

 

	
   

  	
  LANDESBANK HESSEN-THÜRINGEN

  NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[Signature
Pages to Credit Agreement]

 

 

 

	
   

  	
  NORDDEUTSCHE LANDESBANK

  GIROZENTRALE NEW YORK BRANCH

  AND/OR CAYMAN BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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[Signature Pages to Credit
Agreement]

 

EXHIBIT A

TO CREDIT AGREEMENT

FORM OF NOTICE
OF BORROWING

[Date]

DEUTSCHE BANK AG NEW YORK
BRANCH,

as Administrative
Agent

	
  

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
			

 

	
  

  	
  Re:

  	
  Borrowing under Credit Agreement, dated as of
  July 31, 2007, among Assured Guaranty Re Ltd., the Lenders from time to
  time party thereto, Deutsche Bank AG New York Branch, as Administrative
  Agent, and the other parties thereto

  

 

Dear Sirs:

Assured Guaranty
Re Ltd., a company organized under the laws of Bermuda (the “Borrower”),
hereby requests that a Loan be made to the Borrower by the Lenders under the
Credit Agreement referred to above (the “Credit Agreement”) as follows
(all capitalized terms herein having the meanings ascribed thereto in the
Credit Agreement):

1.             The aggregate amount of the Loans
requested hereby (the “Subject Loans”) is
$                  .

2.             The date on which the Subject Loans
are requested to be made (the “Loan Date”) is                   ,
which is a Business Day not less than two (2) Business Days after the date
hereof.

3.             The Loss Threshold Incurrence Date
has occurred.

4.             The Available Commitment as of the
Loan Date (determined after giving effect to any reduction of the Maximum
Commitment on or prior to the Loan Date) will be $                  ,
which is at least equal to the amount of the Subject Loans.

5.             Immediately after giving effect to
the Subject Loans, the aggregate principal amount of Loans made under the
Credit Agreement, determined without regard to any repayments or prepayments
thereof, does not exceed $              ,
which equals the Borrower’s Cumulative Losses incurred after the Loss Threshold
Incurrence Date.

6.             Each of the conditions set forth in
the Credit Agreement to the Lenders’ obligations to make the Subject Loans have
been satisfied.

7.             The proceeds of the Subject Loans
will be applied as provided in Section 6.1 of the Credit Agreement, and
Schedule 1 hereto contains a description in reasonable detail of the Loss
which the proceeds of the Loans will be applied to pay, including an 

identification of
the Insured Obligation which is in default, the amount of such default, a
calculation of the Permitted Reserves, if any, being established with respect
to such Loss and the amount of Pledged Premiums, if any, received by the
Borrower or hereafter payable in respect of such Insured Obligation.

8.             The statements set forth above
shall be true and correct on and as of the Loan Date.

9.             The aggregate amount of the Pledged
Recoveries received by or for the account of the Borrower during the current
Commitment Period and the aggregate amount of Pledged Premiums received by or
for the account of the Borrower since the Loss Threshold Incurrence Date as of
[date within 15 days of the date of the Notice of Borrowing] equals $               ,
which amount has been deposited into the Collateral Account and has been
applied or is available to pay the principal of and interest on Loans when due
(whether at the stated or any accelerated maturity date thereof), and the
balance of the Collateral Account as of such date equals $                   .

10.           The Subject Loans are to be disbursed
to the following account of the Borrower:

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

11.           The undersigned is duly authorized
and empowered in the name and on behalf of the Borrower to present this Notice
of Borrowing and to request and obtain the Subject Loans upon and in accordance
with, and subject to, the terms and conditions set forth in the Credit
Agreement and the other Loan Documents.

IN WITNESS
WHEREOF, the Borrower has executed and delivered this Notice of Borrowing this         
day of                           ,
20  .

	
   

  	
  ASSURED GUARANTY RE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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 A-2

EXHIBIT B

TO CREDIT AGREEMENT

 

FORM OF PROMISSORY NOTE

 

	
  US$

  	
   

  	
   

  	
  [Date]

  

 

FOR VALUE RECEIVED, the
undersigned, ASSURED GUARANTY RE LTD., a Bermuda exempted company (the
“Borrower”), hereby promises to pay to                                                    
(the “Lender”), or its assigns, at the offices of Deutsche Bank AG New York
Branch, 60 Wall Street, New York, New York 10005, in lawful money of the United
States of America in immediately available funds, the principal sum of
                                         
Dollars (US$                       )
or, if less, the aggregate unpaid principal amount of the Loans (as defined in
the hereinafter referred to Credit Agreement) outstanding and payable to the
Lender by the Borrower under the Credit Agreement, dated as of July 31,
2007, among the Borrower, the Lenders from time to time parties thereto,
Deutsche Bank AG New York Branch, as Administrative Agent, and the other
parties thereto, as amended from time to time (the “Credit Agreement”) in the
amounts and on the dates set out in the Credit Agreement.  The Borrower also promises to pay interest on
the unpaid principal amount of such Loans from the date on which such Loans are
made until the Loans are repaid in full at such interest rates and payable on
such dates as are determined pursuant to the Credit Agreement.

If any payment on this
Note shall be specified to be made upon a day which is not a Business Day (as
defined in the Credit Agreement), it shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
computing interest, if any, in connection with such payment.

The Lender is authorized
to record the date and amount of each Loan and each payment, prepayment and
conversion with respect thereto on the grid attached hereto or on a
continuation thereof which shall be attached hereto and made a part hereof, and
any such notation shall constitute prima  facie evidence of the
accuracy of the information so recorded; provided  that the
failure to make any such notations shall not affect the validity of the
Borrower’s obligations hereunder.

Except as otherwise
provided in the Credit Agreement, presentment, demand, protest and notice of
dishonor are hereby waived by the undersigned.

This Note evidences the
Lender’s Loans under, and is entitled to the benefits and subject to the
provisions of, the Credit Agreement and the other Loan Documents (as defined in
the Credit Agreement).  This Note is secured
by, and is entitled to the benefits and is subject to the provisions of, the
Security Agreement and Collateral Assignment, dated as of July 31, 2007,
between the Borrower and Deutsche Bank AG New York Branch, as Administrative
Agent, and Deutsche Bank Trust Company Americas, as Collateral Agent and
securities intermediary.  

The Credit Agreement,
among other things, contains provisions with respect to the acceleration of the
maturity of this Note upon the happening of certain stated events, and for
mandatory and optional prepayments of the principal of this Note prior to
maturity, all upon the terms and conditions specified therein.

The payment obligations
of the Borrower under this Note are limited as provided in Section 2.7 of the
Credit Agreement.

This Note is transferable
only in accordance with the provisions of the Credit Agreement.

This Note shall be
construed in accordance with and governed by the laws of the State of New York.

	
   

  	
  ASSURED GUARANTY RE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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 B-2
 

 

	
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  Loan

  	
   

  	
  Unpaid Principal

  Paid or

  Prepaid

  	
   

  	
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  Amount of

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 B-3

EXHIBIT C

TO CREDIT AGREEMENT

EXECUTION COPY

SECURITY AGREEMENT

AND COLLATERAL DEED OF ASSIGNMENT

THIS SECURITY AGREEMENT
AND COLLATERAL DEED OF ASSIGNMENT, dated as of July 31, 2007, among
ASSURED GUARANTY RE LTD., an exempted company incorporated under the laws of
Bermuda (the “Borrower”), DEUTSCHE BANK AG NEW
YORK BRANCH, in its capacity as Administrative Agent under the Credit
Agreement, as defined herein, and DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), as collateral agent for the ratable benefit of the
Secured Parties, as defined herein (in such capacity, the “Collateral
Agent”) and as securities intermediary as provided herein;

WHEREAS, the parties
hereto have agreed to enter into this Deed (as defined below) as a condition to
the effectiveness of the Credit Agreement,

NOW THEREFORE, in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree, and this Deed witnesseth, as follows:

Section 1.   Definitions.

(a)           All terms defined in Article 1, 8 or
9 of the Uniform Commercial Code, as in effect on the date of this Deed, are
used herein with the meanings therein given; such terms include but are not
limited to “account”, “chattel paper”, “collateral”, “control”, “deposit
account”, “document”, ‘entitlement order”, “financial asset”, “general
intangibles”, “instrument”, “money”, “proceeds”, “security” and “security
interest”.  In addition, the terms “collateral”
and “security interest”, when capitalized, have the respective meanings as
specified in paragraph (c) below.

(b)           Except in the case of “Agreement” and
as otherwise specified herein, all terms (including, without limitation, the
terms “Lenders”, “Base Rate”, “Borrower”, “Covered Portfolio”, “Commitment
Period”, “Event of Default”, “Insured Obligations”, “Lien”, “Loan”, “Loan
Documents”, “Loss”, “Majority Lenders”, “Maximum Commitment”, “Note”, “Person”,
“Pledged Premiums” and “Pledged Recoveries”) defined in the Credit Agreement
are used herein with the meanings therein given, whether or not the Credit
Agreement is otherwise in effect.

(c)           As used herein the following terms
shall have the meanings specified below:

“Account”
means each the Collateral Account and the Pledged Reserves Account.

“Collateral”
means all of the Borrower’s right, title and interest in, to and under or
arising out of the following, wherever located and now existing or hereafter
arising:

 

(i)            all Pledged Recoveries including,
without limitation:

(A)     all
accounts, chattel paper, documents, instruments, general intangibles, letter of
credit rights, deposit accounts, commercial tort claims from time to time
listed on Schedule A hereto and other claims and causes of action (whether
sounding in contract or otherwise) evidencing, securing, constituting, relating
to the repayment or reimbursement of, or otherwise in respect of or arising out
of, the payment of a claim by the Borrower under an Insurance Contract covering
any Insured Obligation in the Covered Portfolio;

(B)     all
interests in insurance and reinsurance as such insurance or reinsurance relates
to the repayment or reimbursement of the payment of a claim by the Borrower
under an Insurance Contract covering any Insured Obligation in the Covered
Portfolio (to the extent that the payment under such insurance or reinsurance
was not deducted in determining the Loss attributable to the Borrower’s payment
of a claim giving rise to a Pledged Recovery); and

(C)     all
claims, rights, powers, privileges and remedies under any of the foregoing, all
rights to make determinations, to exercise any election (including, without
limitation, election of remedies) or option, to give or receive any notice,
consent, waiver or approval, to demand, receive, enforce, collect or receipt
for any of the foregoing or any property subject thereto, to enforce or execute
any checks, instruments or orders, to file any claims and to take any action
which (in the reasonable opinion of the Collateral Agent or the Administrative
Agent) may be necessary or advisable in connection with any of the foregoing;

(ii)           each Account and all amounts, moneys,
securities (certificated and uncertificated), instruments, documents, general
intangibles, financial assets or other investment property on deposit therein
or distributable therefrom and all interest, dividends, gains and other
earnings thereon; and

(iii)          all additions and accessions to, all
replacements and substitutions for, all improvements to and all products and
proceeds of any of the Collateral described in clauses (i) and (ii) above.

“Collateral
Account” is defined in Section 8 of this Deed.

“Credit
Agreement” means the Credit Agreement, dated as of July 31, 2007,
among the Borrower, the Lenders from time to time party thereto, the
Administrative Agent and the other parties thereto, as amended or supplemented
from time to time.

“Deed”
means this Deed, from time to time as amended, supplemented or otherwise
modified.

“Initial
Funding Date” means the date of the first Loan under the Credit Agreement.

“Pledged
Reserves Account” is defined in Section 8 of this Deed.

 2
 

“Qualified
Investments” means (i) direct and general obligations of the United States
Government or any agency thereof and obligations guaranteed by the United
States Government, due within six months from the date of purchase and payable
in the United States of America in dollars of the United States of America,
(ii) certificates of deposit of, or demand or time deposits in, or money market
funds of a commercial bank or financial institution rated Aa or P-1 or equivalent
or better by Moody’s and AA or A-1 or equivalent or better by S&P approved
by the Collateral Agent and the Borrower which are fully secured by securities
of the type listed in clause (i) above, and (iii) certificates of deposit of,
or demand or time deposits in, or money market funds of financial institutions
approved by the Collateral Agent and the Borrower; provided, that the
Borrower shall not invest any amounts in money market fund that would subject
the Borrower to withholding or similar taxes in connection with such
investment.

“Secured
Obligations” means all principal at any time outstanding and all interest
from time to time accrued or payable in respect of the Loans or the Notes, now
existing or hereafter arising.

“Secured Parties” means the Lenders, the Fronting Bank Lender, the
Administrative Agent, the Collateral Agent and each other party to whom a
Secured Obligation is from time to time owed.

“Security
Interest” means the Uniform Commercial Code security interest in the
Collateral purported to be granted pursuant to Section 2.

“Trigger
Event” means the
date on which either (a) the Borrower has Cumulative Losses for the current
Commitment Period, net of aggregate Pledged Recoveries received by the Borrower
during the current Commitment Period, in an amount equal to 50% of the greater
of (i) $260,000,000 and (ii) 4.50% of Average Annual Debt Service on
the Covered Portfolio as of such date, or (b) the claims-paying ability of the
Borrower is publicly assigned a rating of A2 or lower (or in unrated) by Moody’s
or A or lower (or is unrated) by S&P.

“Uniform
Commercial Code” means the Uniform Commercial Code as in effect from time
to time in the State of New York or, if applicable, in another specified
jurisdiction.

Section   2.   Security Interests.  As security for the prompt payment and
performance when due of all Secured Obligations, the Borrower does hereby
grant, assign, transfer, deliver and set over, as collateral security and not
as an absolute assignment of the whole, to the Collateral Agent, for the
ratable benefit of, and as agent for, the Secured Parties, and does hereby grant to the Collateral Agent
for the ratable benefit of the Secured Parties a continuing security interest in, all of the Collateral,
whether now existing or hereafter arising or acquired and wherever located.

Section   3.   General Representations,
Warranties and Covenants.  The Borrower
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Deed, as follows:

 3
 

(a)           So long as any Secured Obligations
are outstanding, the Borrower’s right, title and interest in the Collateral is
and will be free from any Lien, other than Permitted Liens.  The Borrower shall defend such right, title
and interest against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Collateral Agent or the Lenders
(other than the holders of Permitted Liens).

(b)           This Deed is effective to create in
favor of the Collateral Agent for the ratable benefit of the Secured Parties a security
interest in and assignment of all of the Borrower’s right, title and interest
in and to the Collateral now owned or acquired from time to time after the date
hereof by the Borrower under the laws of the State of New York, which security
interest and assignment are entitled to all the rights, priorities and benefits
afforded by the Uniform Commercial Code or other relevant law to perfected
security interests or collateral assignments; provided that this Deed will
create a security interest in commercial tort claims only when this Deed is
amended and re-authenticated to add a description of any relevant commercial
tort claim to Schedule A hereto.

(c)           The Borrower will file as soon as
practicable following the date of this Deed (i) the Particulars of a Mortgage
or Charge and a certified copy of this Deed with the Registrar of Companies in
Bermuda and (ii) a UCC financing statement relating to the Collateral with the
applicable office in the District of Columbia. 
Subject to the filing of continuation statements in respect of such
financing statement required from time to time under the District of Columbia
Uniform Commercial Code and, in the case of commercial tort claims, to the
amendment and re-authentication of this Deed to update Schedule A hereto
as contemplated by Section 5(d) below, (A) the Security Interest in and to
the Collateral, to the extent the same can be perfected by filing of financing
statements under the Uniform Commercial Code, constitutes and will constitute a
perfected security interest therein, subject to no other security which is
perfected by filing of financing statements, and (B) subject further to the
Collateral Agent’s obtaining and maintaining possession or control over
Collateral as to which a security interest can be perfected by possession or
control under the Uniform Commercial Code, the Security Interest in and to the
Collateral, to the extent the same can be perfected by possession or control
under the Uniform Commercial Code, constitutes and will constitute a perfected
first security interest therein, subject to no other Lien other than Permitted
Liens; provided that continuation of such security interest in the proceeds of
the Collateral is limited by the provisions of Sections 9-203, 9-315
and 9-322 of the Uniform Commercial Code. 
Provided that the Collateral Agent complies with the terms of this Deed,
the provisions of this Deed are sufficient to cause the Collateral Agent to
have and maintain control over each Account and all financial assets credited
thereto within the meaning of the Uniform Commercial Code.  The Lien upon the Collateral will, upon the
filing of the Particulars of a Mortgage or Charge and a certified copy of this
Deed with the Registrar of Companies in Bermuda, constitute a security interest
in favor of the Collateral Agent for the benefit of the Secured Parties which
is senior to any other Lien (other than Permitted Liens), now existing or
hereafter arising, under the laws of Bermuda.

(d)           Upon delivery to the Collateral Agent
of an agreement in favor of the Collateral Agent in form and substance
comparable to Annex 1 hereto by the applicable insurer, the provisions of
this Deed and such other agreement will be sufficient to create in favor of the
Collateral Agent, for the benefit of the Secured Parties, a Lien on all of the
Borrower’s right, title and interest in and to all reinsurance agreements
described in such agreement, as executed and

 4
 

delivered, to the
extent such rights, title and interest relate to the repayment or reimbursement
of a claim by the Borrower pursuant to such agreements covering any Insured
Obligation in the Covered Portfolio, which Lien will be senior to any other
Lien (other than any Permitted Liens) therein now existing or hereafter
created.

(e)           There is no financing statement,
particulars of a mortgage or charge (or similar statement or instrument of
registration under the law of any jurisdiction) naming the Borrower or any of
its predecessors in interest as debtor now on file or registered in any public
office evidencing any Lien on the Collateral, which has not been terminated,
and neither the Borrower nor any of its predecessors in interest has executed
or filed, and so long as this Deed remains in effect or any of the Secured
Obligations remain unpaid, the Borrower will not execute or file, any financing
statement or particulars of a mortgage or charge (or similar statement or
instrument of registration under the law of any jurisdiction) relating to any
of its right, title or interest in or to any of the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interest of the Collateral Agent for the benefit of the Secured
Parties granted and provided for in this Deed.

(f)            The registered office, chief
executive offices and chief place of business of the Borrower are located at 30
Woodbourne Avenue, Hamilton, HM 08, Bermuda, and the Borrower will not move its
chief executive offices or its chief place of business except to such new
location as the Borrower may establish in accordance with the last sentence of
this Section 3(f).  Originals of all
material documents evidencing Collateral which are held by the Borrower and the
only original books of account and records of the Borrower relating thereto are,
and will continue to be (so long as any Secured Obligations are outstanding),
kept at such chief executive office or at such new location as the Borrower may
establish in accordance with the last sentence of this Section 3(f).  The Borrower shall establish no such new
location until (i) it shall have given to the Collateral Agent not less than 30
days’ prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as
the Collateral Agent or the Administrative Agent may reasonably request, and
(ii) with respect to such new location, it shall have taken such action,
reasonably satisfactory to the Collateral Agent and the Administrative Agent
(including, without limitation, all action required by Section 5 hereto),
to maintain the Lien of the Collateral Agent for the ratable benefit of the
Secured Parties in the Collateral intended to be granted in full force and
effect.

(g)           The legal name of the Borrower is as
set forth on the signature page hereto, and the Borrower shall not change such
name, conduct its business in any name other than such name or take title to
any Collateral in any name other than such name while this Deed remains in
effect unless (i) it shall have given to the Collateral Agent not less than 30
days’ prior written notice of its intention so to do, setting forth such name
or names and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new name
or names, it shall have taken such action, reasonably satisfactory to the
Collateral Agent and the Administrative Agent (including, without limitation,
all action required by Section 5 hereto), to maintain the Lien of the
Collateral Agent for the benefit of the Secured Parties in the Collateral
intended to be granted in full force and effect.  Neither the Borrower nor any predecessor to
its business and assets has ever had any name, or conducted business under any
name in any jurisdiction, other than the Borrower’s name set forth on the
signature page

 5
 

hereto and (ii)
the Borrower’s predecessor names, Capital Global Underwriters Limited, ACE
Capital Re Limited, ACE Capital Re International Ltd. and Assured Guaranty Re
International Ltd.

(h)           The Borrower shall mark its financial
records as may be necessary or appropriate to evidence, protect and perfect the
security interest of the Collateral Agent for the benefit of the Secured
Parties in the Collateral and shall cause its financial statements to reflect
such security interest in accordance with generally accepted and statutory
accounting principles.

(i)            The Borrower will not sell,
transfer, change the registration, if any, of, dispose of, attempt to dispose
of, or materially modify, compromise, settle, release, surrender or abandon the
Collateral or any part thereof, or grant any material waiver, consent,
extension or indulgence affecting rights of payment with respect thereto, other
than (i) in the ordinary course of its business and in compliance with the
provisions of Section 6.7 of the Credit Agreement or (ii) with the prior
written consent of the Collateral Agent. 
The Borrower will not create, incur, assume or suffer to exist any Lien
upon any of its right, title or interest in or to any of the Collateral other
than the Lien of this Deed and Permitted Liens without the prior written
consent of the Collateral Agent.

(j)            The Collateral Agent is authorized
(but is under no obligation) to make, upon five (5) Business Days’ notice to
the Borrower (except in the case of exigent circumstances, in which
circumstances upon such notice, if any, as may then be practical), any payments
which in the opinion of the Collateral Agent, the Administrative Agent or the
Majority Lenders are necessary to discharge any Liens which have or may take
priority over the Lien of this Deed other than Permitted Liens.  The Borrower shall have no claim against the
Collateral Agent or any Lender by reason of its decision not to make any
payments or perform such obligations permitted under this Section.  The Borrower shall repay to the Collateral
Agent any sums paid by the Collateral Agent upon demand.  Any sums paid and expenses incurred by the
Collateral Agent pursuant to this paragraph shall bear interest at a rate per
annum equal to the Default Rate and shall be payable upon demand.  In the event that the Borrower claims, by
written notice to the Collateral Agent received within the five (5) Business
Days immediately following the giving of any notice by the Collateral Agent pursuant
to the first sentence of this paragraph or, if any payment described therein
shall have been made without notice, the five Business Days immediately
following the giving of notice by the Collateral Agent of the making of such
payment, that such payment is not necessary to discharge such Lien and to
preserve the priority of the Lien of this Deed, and obtains a final
determination by a court of competent jurisdiction confirming such claim in a
proceeding in which the Collateral Agent has the opportunity to participate
fully, the Collateral Agent will upon demand reimburse the Borrower for its
reasonable expenses incurred under this paragraph.

(k)           The Borrower will not assert against
the Collateral Agent or any Secured Party any claim or defense which the
Borrower may have against any obligor under the Collateral or any part thereof
or any other Person with respect to the Collateral or any part thereof for so
long as this Deed remains in effect.

(l)            The Borrower will within the five
(5) Business Days immediately following a written request therefor pay to the
Collateral Agent the amount of any and all 

 6
 

reasonable and
validly incurred expenses, including, without limitation, the reasonable fees
and expenses of its counsel and of agents, which the Collateral Agent may incur
in connection with (i) the administration of this Deed, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights
of the Collateral Agent or the Secured Parties hereunder or (iv) the failure by
the Borrower to perform or observe any of the provisions hereof.

Section   4.   Special Provisions Concerning
Pledged Recoveries, etc.  The
Borrower represents, warrants and agrees as follows:

(a)           From and after the Loss Threshold
Incurrence Date, (i) the Borrower will cause all Pledged Recoveries and Pledged
Premiums to be promptly (and in any event within one Business Day following
receipt thereof by the Borrower) to be deposited into the Collateral Account,
and (ii) prior to such deposit the Borrower will hold any payments received by
it representing Pledged Recoveries or Pledged Premiums in trust for the benefit
of the Collateral Agent.

(b)           The Borrower hereby irrevocably
instructs (i) the Administrative Agent to transfer all Pledged Reserves Account
Funds to the Collateral Agent on the date a Loan is made in respect of such
Pledged Reserves Account Funds within instructions to the Collateral Agent  to deposit such Pledged Reserves Account
Funds directly into the Pledged Reserves Account, and (ii) the Collateral
Agent, upon receipt of any funds accompanied by any such notice, to make such
deposit.

(c)           On each date on which any payment of
principal or interest is required to be paid under the Credit Agreement, the
Collateral Agent, upon instruction from the Administrative Agent, shall
transfer immediately available funds to the Administrative Agent  in an amount equal to the lesser of (i) the
credit balance of the Collateral Account on such date and (ii) the aggregate
amount of such principal and/or interest required to be paid on such date in each
case in payment for the account of the Borrower of such principal and interest.

(d)           Promptly upon receipt of any written
instruction of the Borrower on any Business Day during regular business hours,
the Collateral Agent shall transfer to the Administrative Agent immediately
available funds in an amount equal to the lesser of (i) the credit balance of
the Accounts on such Business Day and (ii) the amount of (x) fees then due and
payable on such Business Day pursuant to Section 3.1 of the Credit
Agreement or (y) any prepayment of Loans to be made on such Business Day
pursuant to Section 2.6(a) of the Credit Agreement, in payment for the account
of the Borrower of such fees or the amount of such prepayment, as applicable.

(e)           Prior to the date of the first
borrowing of Loans and so long as no Default or Event of Default has occurred
and is continuing, the Borrower may from time to time on any Business Day
during regular business hours instruct the Collateral Agent (with a copy of
such instruction to the Administrative Agent) to transfer immediately available
funds in an amount equal to all or a portion of the credit balance in the
Collateral Account to the Borrower, as determined below.  Any such instruction (i) shall contain a
certification by an Authorized Officer of the Borrower that (x) no Default or
Event of Default has occurred and is continuing and (y)

 7
 

and to the best of such
Authorized Officer’s knowledge, there is no reasonable likelihood that the
initial Borrowing of Loans shall occur within three months of the date of such
instruction and (ii) shall specify the amount requested to be so
transferred.  Promptly upon receipt of
any such instruction on any Business Day, the Collateral Agent shall transfer
to the Borrower on such Business Day (at such account as the Borrower shall
specify in such instruction) immediately available funds in an amount equal to
the lesser of (a) the credit balance of the Collateral Account on such Business
Day and (b) the amount specified in such instruction.  Any transfer to the Borrower made pursuant to
this Section 4(e) shall be made free and clear of any pledge or security
interest hereunder.

(f)            Promptly upon receipt of a copy of a
Pledged Reserves Release Notice on any Business Day during regular business
hours, the Collateral Agent shall transfer to the Administrative Agent on such
Business Day immediately available funds in an amount equal to the lesser of
(i) the credit balance of the Pledged Reserves Account on such Business Day and
(ii) the sum of (A) the amount of Pledged Reserves Account Funds set forth in
the related Pledged Reserves Release Notice to be applied to the Borrower’s
obligations to prepay Loans under Section 2.6(b) of the Credit Agreement
in payment for the account of the Borrower of such Secured Obligations plus (B)
an amount equal to the interest and other earnings on such Pledged Reserves
Account Funds to be applied to the Borrower’s obligations to pay interest on
Loans under the Credit Agreement in payment for the account of the Borrower.

(g)           From time to time, the Borrower may
apply Pledged Reserves Account Funds and other Collateral contained in the
Pledged Reserves Account to Losses.  In
the event that the Borrower shall so apply any Pledged Reserves Account Funds
and/or any such other Collateral, it shall give written notice to the Collateral
Agent and the Administrative Agent thereof. 
Any such notice shall (i) set forth in reasonable detail (x) the
relevant Insured Obligation, (y) the default by the issuer of the relevant
Insured Obligation, and (z) the amount of the Loss relating to such Insured
Obligation to which such Pledged Reserves Account Funds and/or other Collateral
shall be applied and (ii) shall contain a representation, warranty and covenant
that promptly upon receipt of any Pledged Reserves Account Funds released in
accordance with this Section 4(g), the Borrower shall apply the same to
the Loss described in such request. 
Notwithstanding the occurrence of a Default or Event of Default, the
Collateral Agent shall transfer to the Borrower promptly following receipt of
any such notice on any Business Day during regular business hours, in
immediately available funds and at such account as the Borrower shall specify
in such instructions, an amount equal to the lesser of (i) the credit balance
of the Pledged Reserves Account on such Business Day and (ii) the amount set
forth in such notice.  Any transfer to
the Borrower made pursuant to this Section 4(g) shall be made free and
clear of any pledge or security interest hereunder.

(h)           Any instruction given by the Borrower
to the Collateral Agent pursuant to Sections 4(b) through 4(g) inclusive
shall be deemed to have been given on a certain Business Day only if it is
received by the Collateral Agent on or prior to 1:00 p.m.  (New York time) on such Business Day.  In the event that the Collateral Agent
receives any such instruction after 1:00 p.m. (New York time) on any Business
Day, such instruction shall be deemed to have been given on the immediately
succeeding Business Day.

 8
 

 

(i)            Without limiting the generality of
the foregoing, on and after the Initial Funding Date, regardless of whether an
Event of Default shall have occurred, (i) upon request of the Collateral Agent
or the Administrative Agent, the Borrower shall notify all account debtors and
other obligors to make (and use commercially reasonable efforts to cause) all
payments on account of Pledged Recoveries to be made directly to the Collateral
Account, and (ii) the Collateral Agent may, at its option, and shall, at the
direction of the Administrative Agent, at its option, directly notify such
account debtors and other obligors with respect to any Pledged Recoveries to
make payments with respect thereto as provided in the preceding clause
(i).  The reasonable costs and expenses
of collection (including, without limitation, reasonable attorneys’ fees) from
such account debtors and other obligors and from account debtors, whether
incurred by the Borrower or the Collateral Agent shall be borne by the
Borrower.  The Collateral Agent shall
deliver a copy of each notice referred to in the preceding clause (ii) to the
Borrower, provided that the failure by the
Collateral Agent to so notify the Borrower shall not affect the effectiveness
of such notice or the other rights of the Collateral Agent created by this
Deed.  In the event that any account
debtor or other obligor (including any party to an Insurance Contract) is
prohibited by applicable law or any direction of any regulatory authority from
depositing any Collateral (including any cash) into the Collateral Account,
within one Business Day of the date on which such account debtor or other
obligor was required to deposit such Collateral into the Collateral Account,
the Borrower shall deposit into the Collateral Account in accordance with
Section 4(a) cash in an amount equal to the amount of the Collateral which
should have been deposited into the Collateral Account by such account debtor
or other obligor.

(j)            The Borrower will service and
administer the Collateral in accordance with Section 6.11 of the Credit
Agreement.

Section   5.   Financing Statements, etc.;
Documentary Stamp Taxes.

(a)           The Borrower will, at its own
expense, make, execute, endorse, acknowledge, file, register and/or deliver to
the Collateral Agent from time to time such financing statements, particulars
of mortgages and charges and other assurances or instruments and take such
further steps relating to its right, title and interest in and to the
Collateral, which the Collateral Agent, the Administrative Agent or the
Majority Lenders reasonably deem appropriate or advisable to perfect, register,
preserve or protect the security interest of the Collateral Agent for the
benefit of the Secured Parties therein or to more fully grant, assign,
transfer, deliver and set over to and vest in the Collateral Agent for the
benefit of the Secured Parties all and singular the Collateral hereby granted,
assigned, transferred, delivered or set over or intended to be so.  The Borrower authorizes the Collateral Agent
to make, execute, endorse, acknowledge, file, register and/or deliver from time
to time such financing statements, particulars of mortgages and charges and
other assurances or instruments and take such further steps relating to its
right, title and interest in and to the Collateral, in the name and on behalf
of the Borrower and without the signature of the Borrower if permitted, and the
Borrower will pay all applicable filing fees and related reasonable
expenses.  The Borrower authorizes the
Collateral Agent to prepare and file, at the Borrower’s expense, such financing
statements and continuation statements and other amendments thereto under any
applicable the Uniform Commercial Code which the Collateral Agent or the
Majority Lenders reasonably deem appropriate or advisable to perfect, preserve
or protect the Security Interest in the Collateral.

 9
 

The Collateral Agent
shall provide a copy of any such filing to the Borrower, together with an
identification of the place of such filing and the filing number thereof.

(b)           If the Borrower owns or acquires any
instrument constituting Collateral, from and after the Initial Funding Date the
Borrower shall promptly notify the Collateral Agent thereof, and upon written
request by the Collateral Agent will promptly deliver such instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent.

(c)           If the Borrower is at any time a
beneficiary under a letter of credit constituting Collateral, from and after
the Initial Funding Date the Borrower shall promptly notify the Collateral
Agent thereof and, at the written request of the Collateral Agent, the Borrower
shall, pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent, use its reasonable commercial efforts to (i) arrange
for the issuer and any confirmer of such letter of credit to consent to an
assignment to the Collateral Agent of the proceeds of any drawing under such
letter of credit or (ii) arrange for the Collateral Agent to become the
transferee beneficiary of such letter of credit.

(d)           If Borrower shall at any time have or
acquire a commercial tort claim constituting Collateral, from and after the
Initial Funding Date the Borrower shall promptly notify the Collateral Agent
thereof in a writing signed by the Borrower. 
The Borrower and the Collateral Agent shall enter into an amendment to
this Deed which shall describe the details of the commercial tort claim, and
the Collateral Agent shall update Schedule B hereto.

(e)           Upon the request of the Collateral
Agent made at any time or from time to time from and after the Initial Funding
Date, (i) the Borrower shall promptly furnish to the Collateral Agent a list of
all electronic chattel paper held or owned by the Borrower and constituting
Collateral, (ii) if requested in writing by the Collateral Agent, the Borrower
shall promptly take all actions which are reasonably practicable so that the
Collateral Agent has “control” of all such electronic chattel paper in
accordance with the requirements of Section 9-105 of the Uniform Commercial
Code, and (iii) the Borrower shall promptly following any request in writing by
the Collateral Agent deliver all of its tangible chattel paper constituting
Collateral to the Collateral Agent.

(f)            If the Borrower shall at any time
enter into a reinsurance agreement or similar agreement which constitutes an
insurance policy within the meaning of the applicable Uniform Commercial Code
and cedes risk to the Borrower with respect to Insured Obligations in the
Covered Portfolio, the Borrower shall promptly notify the Collateral Agent and
the Administrative Agent thereof.  At the
written request of the Collateral Agent or the Administrative Agent at any time
from and after the occurrence of a Trigger Event, the Borrower shall (i)
provide notice to each counterparty insurer party to each such reinsurance
agreement or similar agreement, now existing or hereafter entered into
substantially in the form and substance set forth as Annex 1 hereto, (ii) use
its best efforts to obtain the written acceptance of such notice by such
counterparty insurer and (iii) deliver an original counterpart of each such
agreement to the Collateral Agent.  Such
obligation of the Borrower to provide such notice is without prejudice to any
rights of the Collateral Agent to provide such a notice or any other notice to
any such counterparty insurer now or hereafter granted under applicable law or
under the Credit Agreement or any other Loan Document.

 10

(g)           The Borrower agrees to procure, pay
for, affix to all documents any documentary tax stamps required by applicable
law, and the Borrower will indemnify and hold the Collateral Agent and each
Secured Party harmless against any liability (including, without limitation,
interest and penalties) in respect of such documentary stamp taxes.

Section 6.   Events of Default.  Upon the occurrence of any Event of Default
and during the continuance thereof, in addition to any rights and remedies now
or hereafter granted under applicable law or under the Credit Agreement or any
other Loan Document and not by way of limitation of any such rights and
remedies:

(a)           The Collateral Agent, acting on
behalf of the Secured Parties, shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code or similar foreign law as
enacted in any applicable jurisdiction with respect to the Borrower’s right,
title and interest in and to the Collateral and any portion thereof, and the
right, without notice to, or assent by, the Borrower, in the name of the
Borrower or in the name of the Collateral Agent or otherwise:

(i)            with respect to any Collateral
comprised of accounts or general intangibles, to ask for, demand, collect,
receive, compound and give acquittance for all or any part of any payment to be
made pursuant thereto, to extend the time of payment of, compromise or settle
for cash, credit or otherwise, and upon any terms and conditions thereof, to
endorse the name of the Borrower on any checks, drafts or other orders or
instruments for the payment of moneys payable to the Borrower which shall be issued
in respect thereof, to exercise and enforce any rights and remedies in respect
thereof, to file any claims, commence, maintain or discontinue any actions,
suits or other proceedings deemed by the Collateral Agent or the Majority
Lenders necessary or advisable for the purpose of collecting or enforcing
payment and performance thereof or to direct the Borrower to perform any of the
foregoing, to make test verifications thereof or any portion thereof, to notify
any or all account debtors thereunder to make payment thereof directly to the
Collateral Agent for credit to the Collateral Account and to require the
Borrower to forthwith give similar notice to the account debtors, and to
require the Borrower forthwith to account for and transmit to the Collateral
Agent in the same form as received for deposit into the Collateral Account all
proceeds (other than physical property) of collection thereof received by the
Borrower and, until so transmitted, to hold the same in trust for the
Collateral Agent for the benefit of the Secured Parties and not commingle such
proceeds with any other funds of the Borrower;

(ii)           to exercise all claims, rights,
powers, privileges and remedies under any of the Collateral, all rights to make
determinations, to exercise any election (including, without limitation,
election of remedies) or option, to give or receive any notice, consent, waiver
or approval, to demand, receive, enforce, collect or receipt for any of the
Collateral or any property subject thereto, to enforce or execute any checks,
instruments or orders, to file any claims and to take any action which (in the
opinion of the Collateral Agent or the Majority Lenders) may be necessary or
advisable in connection with any of the foregoing;

 

 11
 

(iii)          to pay all payments or perform any
obligations which are payable or to be performed by the Borrower under any of
the Collateral (whether to the Secured Parties or others), upon the failure of
the Borrower to make such payments or perform such obligations within the time
permitted therein;

(iv)          to take possession of any of the
Collateral and, for that purpose, to enter, with the aid and assistance of any
Person or Persons and with or without legal process, any premises where the
Collateral, or any part thereof, is, or may be, placed or assembled, and to
remove any of such Collateral;

(v)           to execute any instrument and do all
other things necessary and proper to protect and preserve and realize upon the
Collateral and the other rights contemplated hereby;

(vi)          upon notice to such effect, to require
the Borrower to deliver, at the Borrower’s expense, any Collateral which is
reasonably movable to the Collateral Agent at a place designated by the
Collateral Agent, and after delivery thereof the Borrower shall have no further
claim to or interest in the Collateral; and

(vii)         without obligation to resort to other
security, at any time and from time to time, to sell, re-sell, assign and
deliver all or any of the Collateral, in one or more parcels at the same or
different times, and all right, title and interest, claim and demand therein
and right of redemption thereof, at public or private sale, for cash, upon
credit or for future delivery, and at such price or prices and on such terms as
the Collateral Agent may determine, with the amounts realized from any such
sale to be applied to the Secured Obligations in the manner provided in the
Credit Agreement or otherwise required by law.

The Borrower hereby agrees, to the extent permitted by
law, that all of the foregoing may be effected without demand, advertisement or
notice (except as hereinafter provided or as may be required by law), all of
which (except as hereinafter provided) are hereby expressly waived, to the
extent permitted by law.  The Collateral
Agent shall not be obligated to do any of the acts hereinabove authorized, but
in the event that the Collateral Agent elects to do any such act, the
Collateral Agent shall not be responsible to the Borrower except for its gross
negligence or willful misconduct.  The
Collateral Agent is hereby irrevocably appointed the true and lawful
attorney-in-fact of the Borrower in its name and stead, to make all necessary
agreements, instruments and documents and to take all other actions and for
such other purposes as are necessary or desirable to effectuate the provisions
of this paragraph (a), and for that purpose it may substitute one or more
Persons with like power, the Borrower hereby ratifying and confirming all that
its said attorney, or such substitute or substitutes, shall lawfully do by
virtue hereof.

(b)           The Collateral Agent may take legal
proceedings for the appointment of a receiver or receivers (to which the
Collateral Agent shall be entitled as a matter of right) to take possession of
the Collateral pending the sale thereof pursuant either to the powers of sale
granted by this Deed or to a judgment, order or decree made in any judicial
proceeding for the foreclosure or involving the enforcement of this Deed.

 12
 

(c)           Upon any sale of any of the
Collateral, whether made under the power of sale hereby given or under
judgment, order or decree in any judicial proceeding for the foreclosure or
involving the enforcement of this Deed,

(i)            the Collateral Agent or any Secured
Party may bid for and purchase the property being sold, and upon compliance
with the terms of sale may hold, retain and possess and dispose of such
property for the ratable benefit of the Secured Parties without further
accountability, and may, in paying the purchase money therefor, deliver any
instruments evidencing the Secured Obligations or agree to the satisfaction of
all or a portion of the Secured Obligations in lieu of cash in payment of the
amount which shall be payable thereon, and such instruments, in case the
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Collateral Agent after being appropriately stamped to show
partial payment;

(ii)           the Collateral Agent is hereby
irrevocably appointed the true and lawful attorney-in-fact of the Borrower in
its name and stead, to make all necessary deeds, bills of sale and instruments
of assignment and transfer of the property thus sold and for such other
purposes as are necessary or desirable to effectuate the provisions of this
Deed, and for that purpose it may execute and deliver all necessary deeds, bills
of sale and instruments of assignment and transfer, and may substitute one or
more Persons with like power, the Borrower hereby ratifying and confirming all
that its said attorney, or such substitute or substitutes, shall lawfully do by
virtue hereof; but if so requested by the Collateral Agent or by any purchaser,
the Borrower shall ratify and confirm any such sale or transfer by executing
and delivering to the Collateral Agent or to such purchaser all property,
deeds, bills of sale, instruments or assignment and transfer and releases as
may be designated in any such request;

(iii)          all right, title, interest, claim and
demand whatsoever, either at law or in equity or otherwise, of the Borrower of,
in and to the property so sold shall be divested; such sale shall be a
perpetual bar both at law and in equity against the Borrower, its successors
and assigns, and against all Persons claiming or who may claim the property
sold or any part thereof from, through or under the Borrower, its successors or
assigns;

(iv)          the receipt of the Collateral Agent or
of the officer thereof making such sale shall be a sufficient discharge to the
purchaser or purchasers at such sale for his or their purchase money, and such
purchaser or purchasers, and his or their assigns or personal representatives,
shall not, after paying such purchase money and receiving such receipt of the
Collateral Agent or of such officer therefor, be obliged to see to the
application of such purchase money or be in any way answerable for any loss, misapplication
or nonapplication thereof; and

(v)           to the extent that it may lawfully do
so, the Borrower agrees that it will not at any time that the Secured
Obligations are outstanding insist upon, or plead, or in any manner whatsoever
claim or take the advantage of, any appraisement, valuation, stay, extension or
redemption laws, or any law permitting it to direct the order in which the
Collateral or any part thereof shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance or
enforcement of this Deed or 

 13
 

any Loan Document, and
the Borrower hereby expressly waives all benefit or advantage of any such laws
and covenants that it will not hinder, delay or impede the execution of any
power granted or delegated to the Collateral Agent in this Deed, but will
suffer and permit the execution of every such power as though no such laws were
in force.

In the event of any sale of Collateral pursuant to
this Section, the Collateral Agent shall, at least 10 days before such sale,
give the Borrower written notice of its intention to sell, except that, if the
Collateral Agent shall determine in its sole discretion that any of the
Collateral threatens to decline speedily in value, any such sale may be made
upon three (3) days’ written or telecopied notice to the Borrower.

(d)           The Borrower upon written request of
the Collateral Agent from time to time will deliver to the Collateral Agent
executed counterparts or copies of each contract, agreement, document or
instrument constituting part of the Collateral.

Section 7.   Application of Moneys.   All
moneys which the Collateral Agent shall receive pursuant hereto shall be
applied to the Secured Parties ratably in accordance with amounts then due to
each Secured Party to discharge the Secured Obligations, in such order as is provided
in the Credit Agreement or otherwise required by law.  After the termination of this Deed pursuant
to Section 10 hereof, any balance then remaining shall be paid to the
Borrower, unless a court of competent jurisdiction otherwise directs.

Section 8. Accounts.

(a)           The Borrower shall within 30 days
following the date hereof establish with DBTCA, as securities intermediary, two
accounts for purposes of this Deed, each in the name of the Borrower for the
benefit of the Collateral Agent, one such account (including any subaccounts
therein) being the “Collateral Account” and the other such account
(including any subaccounts therein) being the “Pledged Reserves Account”.  Subject to the provisions of this Deed, each
Account shall be under the sole control of the Collateral Agent.  DBTCA, as securities intermediary, shall
comply with the instructions of the Collateral Agent with respect to each
Account and shall comply with any entitlement order received from the Collateral
Agent, without further consent of the Borrower or any other person, with
respect to all securities, financial assets or other investment property
credited to each Account, and DBTCA, as securities intermediary, will not
comply with entitlement orders or instructions concerning either Account or
securities, financial assets or other investment property credited thereto
originated by the Borrower.  Prior to the
termination of this Deed and subject to the following provisions of this
Section 8, amounts in the Accounts shall be applied only to pay and
discharge Secured Obligations.  At the
request of the Collateral Agent, the Borrower agrees promptly to cause each or
both Accounts to be opened with and maintained by another bank or banks (the “Depositary”)
acceptable to the Collateral Agent and the Borrower under an account agreement
in form and substance satisfactory to the Collateral Agent and the Borrower and
subject to an agreement providing the Collateral Agent with control over each
applicable Account and all Collateral credited from time to time thereto, in
form and substance similar hereto.  Each
Account shall at all times be maintained within the United States.  The Borrower and DBTCA, as securities
intermediary, agree that each Account constitutes a “securities account” for
purposes of Articles 8 and 9 of the Uniform Commercial Code and that, so long
as an Account is maintained with 

 14
 

DBTCA, as securities
intermediary, (i) DBTCA, as securities intermediary, will treat all of the
Collateral credited from time to time to such Account as financial assets
within the meaning of Article 8 of the Uniform Commercial Code to the
fullest extent it may do so under the Uniform Commercial Code, and (ii) DBTCA,
as securities intermediary, shall act as a securities intermediary with respect
to such Account.  For purposes of
Articles 8 and 9 of the Uniform Commercial Code, all matters relating to the
Collateral and each Account shall be governed by the laws of the State of New
York.

(b)           All cash, documents, instruments,
securities general intangibles, financial assets and other investment property
and Collateral from time to time on deposit in or credited to each Account, and
all rights pertaining to investments of funds in each Account, shall
immediately and without any need for any further action on the part of the
Borrower or the Collateral Agent become subject to the security interest, lien
and assignment set forth in this Deed. 
Any earnings on investments of funds in either Account shall be
deposited into or retained in the Collateral Account, as the case may be.

(c)           Without limitation of any other
rights which the Collateral Agent may have in and to any funds in either
Account, including interest accrued and accredited thereto, if the Loss
Threshold Incurrence Date has occurred, (i) the Collateral Agent shall have the
exclusive right to deliver instructions and entitlement orders to the issuer of
or any securities intermediary for any securities, financial assets or other
investment property in each Account without further consent from the Borrower,
(ii) the proceeds of any investments in each Account which mature or which
shall from time to time be sold may be reinvested in Qualified Investments for
the account of such Account, (iii) any net income or gain on the investment of
funds from time to time held in an Account shall be credited to such Account,
and any net loss on any such investment shall be charged against such Account
and (iv) the Collateral Agent shall be authorized to invest and reinvest the
funds from time to time deposited in either Account in Qualified Investments in
the sole discretion of the Collateral Agent. 
The Collateral Agent shall not be a trustee for the Borrower, nor shall
have any obligations or responsibilities, or shall be liable for anything done
or not done, in connection with this Deed or any funds in the Collateral
Account, except as expressly provided herein and except that the Collateral
Agent shall have the obligations of a secured party under the Uniform
Commercial Code in effect from time to time in the State of New York.  In no event, however, shall the Collateral
Agent have any obligations or responsibilities or be liable in any way for any
investment decision made pursuant to this Section or for any decrease in the
value of any funds pledged or invested pursuant to this Deed.  At any time after an Event of Default has
occurred and is continuing, the Collateral Agent may sell any documents,
instruments and securities held in the Collateral Account and deliver
instructions and entitlement orders with respect thereto and may immediately
apply the proceeds thereof and any other cash held in the Collateral Account
against and on account of the Secured Obligations in the manner provided in
Section 7.

(d)           In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, at any time after an Event of Default has occurred and is continuing,
the Collateral Agent is hereby authorized at any time and from time to time,
without notice to the Borrower or to any other person or entity, any such
notice being hereby expressly waived by the Borrower, to appropriate and apply
all moneys in each Account against and on account of the Secured Obligations in
the manner provided in Section 7, irrespective of 

 15
 

whether or not the
Collateral Agent shall have made any demand hereunder.  The Collateral Agent is hereby authorized to
debit each Account and to withdraw funds therefrom to pay interest and
principal when due under the Credit Agreement and the Notes without further
instruction from the Borrower.

(e)           From and after the occurrence of an
Event of Default, the Collateral Agent shall transfer or direct the transfer of
available funds from each Account to the Administrative Agent on each date any
principal amount of the Loans or interest thereon are required to be paid
pursuant to the Credit Agreement in an amount equal to the lesser of (i) the
available credit balance of such Account on such date and (ii) the aggregate
amount of such principal and/or interest required to be paid on such date in
payment for the account of the Borrower of such principal and interest.

Section 9.   Agreement as Security.   This
Deed is being made as security for the Secured Obligations, and the Collateral
Agent’s acceptance of this Deed shall not constitute a satisfaction of any
indebtedness, liability, duty or obligation, or any part thereof, now or
hereafter owed by the Borrower or relieve the Borrower of any of its
indebtedness, liabilities, duties or obligations under the Credit Agreement or
the Loan Documents.  Neither the
Collateral Agent nor any Secured Party hereby assumes any indebtedness,
liabilities, duties or obligations of the Borrower under or in respect of any
of the Collateral, and neither the Collateral Agent nor any Secured Party shall
have any liability or obligation to any Person by reason of the failure of the
Borrower to perform any thereof.  The
Borrower shall indemnify and hold harmless the Collateral Agent and each
Secured Party from and against all liability, loss or damage which it may
suffer or incur and which arises out of or results from any claim or any
alleged indebtedness, liability, duty or obligation on the part of the
Collateral Agent or any Secured Party to perform or discharge any indebtedness,
liabilities, duties or obligations of the Borrower under or in respect of any
of the Collateral, together with all costs and expenses (including, without
limitation, court costs and reasonable attorneys’ fees) paid or incurred in
connection therewith, except to the extent such liability, loss or damage
results from the gross negligence or willful misconduct of the Collateral Agent
or any Secured Party.

Section 10.   Termination.   On the
date on which all Loans and the indebtedness represented thereby (including,
without limitation, the interest thereon) have been paid in full pursuant to
and in accordance with the Credit Agreement and the Notes, all other Secured
Obligations have been paid in full in accordance with the terms thereof, the
Commitments have terminated and the Lenders have no further obligation to make
Loans or otherwise to advance funds under the Credit Agreement or the Loan
Documents, this Deed shall terminate, any Collateral held by DBTCA in its
capacities as securities intermediary or Collateral Agent shall be turned over
to the Borrower or as the Borrower may otherwise direct, the grant, assignment
and transfer contained in Section 2 shall become null and void, the
Collateral shall be reassigned to the Borrower by DBTCA in its capacities as
securities intermediary and Collateral Agent without recourse to DBTCA in
either capacity and without any representations, warranties or agreements of
any kind and DBTCA in its capacities as securities intermediary and Collateral
Agent shall release in writing the Borrower from its obligations hereunder,
subject, however, in each case to retroactive reinstatement if at any time all
or any part of any payment theretofore applied by the Collateral Agent
hereunder to any of the Secured Obligations is or must be rescinded, disgorged
or returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy 

 16
 

or reorganization of the
Borrower).  At the expense of the
Borrower, DBTCA in its capacities as securities intermediary and Collateral
Agent will execute all documents and make all filings required in order to
release its Liens on the Collateral.

Section 11.   Miscellaneous.

(a)           All notices and other communications
provided for hereunder shall be in writing and, if to the Borrower, mailed or
delivered to it, addressed to it at 30 Woodbourne Ave., 5th Floor, Hamilton HM 08 Bermuda, Attention:
David Penchoff, President, with copy at the same address, Attention:  James M. Michener, General Counsel; if to the
Administrative Agent, mailed or delivered to it, addressed to it at 60 Wall Street, New York, New York 10005, Attention:  John S. McGill, Director;  if to the Collateral Agent, mailed or
delivered to it, addressed to it at 60
Wall Street, New York, New York 10005, Attention:  Laron Galea, if to any Lender, mailed or
delivered to it, addressed to it as indicated on Schedule 1 to the Credit
Agreement; or as to any party as such party may otherwise direct in a written
notice.  All such notices and other
communications shall, when mailed, be effective three days after the date of
deposit in the mails, addressed as aforesaid. 
In lieu of notice by mail or delivery, written notice may be given over
telecopier at the appropriate numbers set forth below, such notice over
telecopier to be effective when transmitted:

	
  

  	
  If to the Borrower:

  	
  Telecopier No.: (441) 296-3379

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the Administrative Agent:

  	
  Telecopier No.: 
  (212) 797-0270

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the Collateral Agent:

  	
  Telecopier No.: 
  (212) 797-8622

  
	
   

  	
   

  	
   

  
	
   

  	
  If to any Lender:

  	
  As specified in Schedule 1 to the Credit Agreement

  

 

(b)           No delay on the part of the
Collateral Agent in exercising any of its rights, remedies, powers and
privileges hereunder or partial or single exercise thereof, shall constitute a
waiver thereof.  None of the terms and
conditions of this Deed may be changed, waived, modified or varied in any
manner whatsoever unless in writing duly signed by the Borrower and the
Collateral Agent and consented to in the manner and to the extent required by
Section 10.15 of the Credit Agreement. 
No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances without notice or
demand.

(c)           The obligations of the Borrower
hereunder shall remain in full force and effect subject to applicable law, any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar laws affecting creditors’ rights generally, to the
rights of creditors of insurers, to the supervisory powers of insurance
regulatory authorities, to general principles of equity (regardless of whether
such principles are considered in a proceeding in equity or law) and to
judicial action giving effect to foreign governmental actions or laws affecting
creditors’ rights.  The obligations of
the Borrower hereunder shall remain in full force and effect without regard to,
and shall not be impaired by, (i) any exercise or non-exercise, or any waiver
of, any right, remedy, power or privilege under or in respect of this Deed, the
Credit Agreement or the Loan Documents approved by the Borrower or any security
for any of the Secured Obligations; and (ii) any amendment to or modification
of any of the Credit Agreement or the Loan Documents, the Secured Obligations
or any security for any of the 

 17
 

Secured Obligations,
provided that such amendment or modification was made in accordance with the
terms of such document.  The rights and
remedies of the Collateral Agent and the Secured Parties herein provided for are
cumulative and not exclusive of any rights or remedies which the Collateral
Agent or any Secured Party would otherwise have.

(d)           This Deed shall be binding upon the
Borrower and its successors and assigns and shall inure to the benefit of the
Collateral Agent, the Secured Parties and their successors and assigns
(including, without limitation, any successor Collateral Agent under the Credit
Agreement), except that the Borrower may not transfer or assign any of its
obligations, right or interest hereunder without the prior written consent of
the Collateral Agent and the Majority Lenders and the Secured Parties may only
assign their rights and interests in compliance with Section 10.8 of the Credit
Agreement.  The Borrower acknowledges and
agrees that any Lender may assign all or any portion of its rights and interest
herein as provided in Section 10.8 of the Credit Agreement, and the term “Lender”
or “Lenders” as used herein shall include any Assignee, any New Lender or any
other party which at any time hereafter is deemed to be or have the rights of a
“Lender” under the Credit Agreement.  All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Deed.

(e)           The Collateral Agent has been
appointed as Collateral Agent hereunder by the Lenders and shall be entitled
hereunder to the benefits of the Credit Agreement.  The Collateral Agent shall be obligated, and
shall have the right, hereunder to make demands, to give notices, to exercise
or refrain from exercising any rights, and to take or refrain from taking
action (including, without limitation, the release or substitution of
Collateral) solely in accordance with this Deed and the Credit Agreement.

(f)            Each party hereby agrees that any
legal action or proceeding against the other with respect to this Deed, any of
the Loan Documents or any of the agreements, documents or instruments delivered
in connection herewith or therewith may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York as the applicable party may elect, and, by execution and delivery hereof,
the Borrower, for itself and in respect to its property, generally and
unconditionally accepts and consents to the jurisdiction of the aforesaid
courts and agrees that such jurisdiction shall be exclusive, unless waived by
the Collateral Agent in writing, with respect to any action or proceeding
brought by it against the Collateral Agent or any Secured Party and any
questions relating to usury.  Each party
agrees that Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York shall apply to this Deed and the Loan Documents
and waives any right to stay or to dismiss any action or proceeding brought
against it before said courts on the basis of forum non conveniens.  Except as specifically set forth herein,
nothing herein shall limit the right of either party to bring proceedings
against the other in any other court or tribunal otherwise having jurisdiction.

(g)           THIS DEED AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 18
 

(h)           Any provision of this Deed which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.

(i)            Section headings in this Deed are
included herein for convenience or reference only and shall not constitute a
part of this Deed for any other purpose.

(j)            This Deed may be executed in several
counterparts, each of which shall be regarded as the original and all of which
shall constitute one and the same Deed.

[The remainder of this page has been
intentionally left blank.]

 19

IN WITNESS
WHEREOF, the parties hereto have caused this Deed to be executed and delivered
by their duly authorized officers as of the date first above written.

	
   

  	
  SIGNED AS A DEED FOR AND ON BEHALF OF:

  
	
   

  	
  ASSURED GUARANTY RE LTD.,

  
	
   

  	
  as Borrower

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNED AS A DEED FOR AND ON BEHALF OF:

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS, 

  as Collateral Agent and as Securities Intermediary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNED AS A DEED FOR AND ON BEHALF OF:

  
	
   

  	
  DEUTSCHE BANK AG NEW YORK BRANCH, 

  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

[Signature Pages to Security Agreement]

 

SCHEDULE A to

SECURITY AGREEMENT AND

COLLATERAL DEED OF ASSIGNMENT

Description of Commercial Tort Claims

Included in the Collateral

As of the date of
this Deed, none.

To be supplemented
from time to time in accordance with Section 5(d).

 

ANNEX 1 to

SECURITY AGREEMENT

AND COLLATERAL ASSIGNMENT

FORM OF
ACKNOWLEDGMENT AND CONSENT AGREEMENT

as of [                      
    ], 200    

Deutsche Bank AG, New
York Branch, as Administrative
   Agent

60 Wall Street

New York, New York 10005

Deutsche Bank Trust
Company Americas Branch, as Collateral
   Agent

60 Wall Street

New York, New York 10005

Re:          Assured Guaranty Re Ltd.

Ladies and Gentlemen,

The undersigned
(the “Company”) refers to [described reinsurance agreement] (each, as amended,
supplemented or otherwise modified from time to time, a “Reinsurance
Agreement” and, collectively, the “Reinsurance Agreements”).  Assured Guaranty Re Ltd. (“AGR”) advised the
Company that AGR is a party to a Credit Agreement, dated as of July 31, 2007
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among AGR, the lenders from time to time party thereto (the “Lenders”)
and Deutsche Bank AG, New York Branch, as Administrative Agent (in such
capacity, the “Administrative Agent”), Deutsche Bank Trust Company
Americas, as Collateral Agent (in such capacity, the “Collateral Agent”)
and other parties, providing for a committed credit facility to AGR from the
Lenders in reliance on, among other things, the security provided by the Security
Agreement referred to therein (as amended, supplemented or otherwise modified
from time to time, the “Security Agreement”).

Pursuant to the
Security Agreement, AGR will grant, assign, transfer, deliver and set over to
the Collateral Agent, as agent for the Lenders and certain other Persons, and
will grant to the
Collateral Agent for the ratable benefit of the Lenders and certain other
Persons a 

 

continuing security interest in, all of AGR’s right, title and
interest, whether now existing or hereafter arising or acquired, in and to
(i) the Reinsurance Agreements to the extent such right, title and
interest relates to the repayment or reimbursement of the payment of a claim by
AGR under the Reinsurance Agreements covering any Insured Obligation in the
Covered Portfolio (each as defined in the Credit Agreement) and (ii) all
claims, rights, powers, privileges and remedies under any of the foregoing, all
rights to make determinations, to exercise any election (including, without
limitation, election of remedies) or option, to give or receive any notice,
consent, waiver or approval, to demand, receive, enforce, collect or receipt
for any of the foregoing or any property subject thereto, to enforce or execute
any checks, instruments or orders, to file any claims and to take any action
which (in the opinion of the Collateral Agent) may be necessary or advisable in
connection with any of the foregoing (the “Assigned Collateral”), as
security for the prompt payment and performance of the obligations of AGR under
the Credit Agreement.

In consideration
of the credit facility being provided to AGR pursuant to the Credit Agreement,
and acknowledging that the Lenders will rely on this letter in agreeing to
extend credit to AGR pursuant thereto, the Company hereby:

(a)   (i) acknowledges and consents to AGR
entering into the Security Agreement, the assignment by AGR of the Assigned
Collateral to the Collateral Agent, for the benefit of the Secured Parties,
pursuant to the Security Agreement, and to the grant of a security interest
therein in favor of the Collateral Agent, for the benefit of the Secured
Parties, pursuant to the Security Agreement, and (ii) agrees that such
assignment and grant of a security interest will not diminish the rights of AGR
under any Reinsurance Agreement nor impose on the Collateral Agent or any
Lender or other Secured Party any duties or obligations of AGR under any
Reinsurance Agreement.  The parties
hereto agree that (x) such assignment and grant of a security interest
shall not relieve AGR of any of its duties or obligations under any Reinsurance
Agreement and (y) the Company shall retain all of its rights and remedies
under each Reinsurance Agreement against AGR to the same extent as such
assignment and grant had not occurred; and

(b)   agrees that if the Collateral Agent or the
Administrative Agent shall have delivered to the Company notice that the
Initial Funding Date has occurred, the Company will thereafter, unless
prohibited by applicable law (including the direction of any regulatory authority)
make all payments due to AGR under or with respect to Assigned Collateral,
directly to, or in accordance with the instructions of, the Collateral Agent
for deposit into the Collateral Account to be held and applied in accordance
with the Security Agreement.

The Company agrees
to make and maintain appropriate notations on its books and records to reflect
the assignment of the Assigned Collateral as contemplated by this Agreement.

The Company
acknowledges that the Credit Agreement, the Security Agreement and the other
Loan Documents (excluding the Reinsurance Agreements) may be amended,
supplemented or otherwise modified (including extensions thereof and increases
or other changes in the commitments thereunder) from time to time without the
consent of the Company 

 

and that, as so
amended, supplemented or otherwise modified, shall continue to constitute the
Credit Agreement, the Security Agreement or such Loan Document for purposes of
this Agreement; provided that no such amendment, supplement or modification
shall alter or otherwise adversely change the rights or obligations of the
Company hereunder without the Company’s prior written consent.

The parties agree
that the Company shall not have or incur any liability for any non-performance
(or delay in performance) of its obligations under this Agreement to the extent
such non-performance (or delay in performance) is caused by any unforeseen
circumstance not within the reasonable control of the Company  including, without limitation, any act of
God, strike, civil commotion, act of terrorism, riot, war, threat of war,
political upheaval and any fire, explosion, storm, flood, earthquake or other
natural physical disaster.  The parties
also agree that in no event shall the Company be liable for any indirect, special,
incidental or punitive losses or damages of any kind whatsoever, including lost
profits, relating to its obligations under this Agreement.

The Company hereby
represents and warrants to the Administrative Agent and the Collateral Agent
that:

(a)           it
has no notice or knowledge of any assignment relative to the right, title and
interest of AGR in, to and under any Assigned Collateral, other than the
assignment and grant of a security interest to the Collateral Agent referred to
above,

(b)           as
of the date hereof, there are no unresolved disputes between the parties under
any Reinsurance Agreement, and

(c)           all
amounts due on or prior to the date hereof to the Company under the Reinsurance
Agreements have been paid in full.

The parties agree
that all notices, instructions and other communications provided for herein
shall be effective if in writing and, (i) if to the Company, mailed or
delivered to it, addressed to it at                                        ,
Attention:                                        ,
(ii) if to Deutsche Bank, the Collateral Agent or the Administrative
Agent, mailed or delivered to it, addressed to it at 60 Wall Street, New York,
New York 10015, Attention:             ,
and (iii) if to AGR, mailed or delivered to it, addressed to it at  30 Woodbourne Avenue, Hamilton, HM 08,
Bermuda, Attention: General Counsel, or as to any party as such party may
direct from time to time in a written notice to all other parties.  All such notices and other communications
shall be effective when received or, if mailed, on the earlier of the date of
receipt or three (3) business days after the date of deposit in the mails,
addressed as aforesaid.  In lieu of
notice by mail or delivery, written notice may be given over telecopier at the
following numbers (i) if to the Company, at (      )
      -        ,
(ii) if to Deutsche Bank, the Collateral Agent or the Administrative Agent,
at (212) 797-0270, and (iii) if to AGR, at (441) 296-1083, or as to any party to
such other number as such party may direct from time to time in a written
notice to all other parties.  Any such
notice over telecopier shall be effective when transmitted.

This Agreement may
be amended, terminated or otherwise modified only with the written consent of
the Company, the Administrative Agent, the Collateral Agent and AGR.

 

No delay on the part of any party hereto in exercising
any right, power, privilege or remedy hereunder or any other Loan Document or
in failing to exercise the same shall operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial exercise of any right,
power, privilege or remedy under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy; and no notice to or demand on any party
hereto shall be deemed a waiver of any obligation or duty of any other party or
any such other party’s right to take further action without notice or
demand.  The rights and remedies provided
in this Agreement and in the other Loan Documents and all other agreements,
instruments and documents referred to in any of the foregoing are cumulative
and shall not be exclusive of any rights or remedies provided by law.

This Agreement
shall automatically terminate upon the delivery of notice to the Company by the
Collateral Agent that (i) all Commitments under the Credit Agreement have
terminated, (ii) there are no Loans outstanding and (iii) all
obligations owing to the Secured Parties under the Credit Agreement and the other
Loan Documents (other than indemnity obligations and other obligations
contained in the Loan Documents which by their terms are expressed to survive
the termination of the Loan Documents and which are not then due and payable)
have been indefeasibly paid in full.

This Agreement
shall be binding upon and shall inure to the benefit of the Company, the
Administrative Agent, the Collateral Agent and Assured Re and their respective
successors and assigns, and shall also inure to the benefit of the Lenders and
the other Secured Parties and their respective successors, transferees and
assigns.  Any Person which shall become
the “Collateral Agent” under and as defined in the Credit Agreement shall be
deemed to be the Collateral Agent hereunder; any Person which shall become the “Administrative
Agent” under and as defined in the Credit Agreement shall be deemed to be the
Administrative Agent hereunder; any Person which shall become a “Lender” under
and as defined in the Credit Agreement shall be deemed to be a Lender
hereunder; and any Person which shall become a “Secured Party” under and as
defined in the Credit Agreement shall be deemed to be a Secured Party
hereunder.

Any provision of
this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.

THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

EXCEPT TO THE
EXTENT PROHIBITED BY LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE
WHATSOEVER ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND IN CONNECTION WITH SUCH ACTION OR PROCEEDING, WHETHER
ARISING UNDER STATUTE (INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER
THE LAW OF CONTRACT, TORT 

 

OR OTHERWISE AND
INCLUDING ANY CHALLENGE TO THE LEGALITY, VALIDITY, BINDING EFFECT OR
ENFORCEABILITY OF THIS SECTION OR THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS.

Each party hereto
hereby agrees that any legal action or proceeding against the others with
respect to this Agreement may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York as the
applicable party may elect, and, by execution and delivery hereof, the Company,
for itself and in respect to its property, generally and unconditionally
accepts and consents to the jurisdiction of the aforesaid courts and agrees
that such jurisdiction shall be exclusive, unless waived by the Collateral Agent
in writing, with respect to any action or proceeding brought by it against the
Collateral Agent, the Administrative Agent or any Lender.  Each party agrees that Sections 5-1401
and 5-1402 of the General Obligations Law of the State of New York shall apply
to this Agreement and waives any right to stay or to dismiss any action or
proceeding brought against it before said courts on the basis of forum non
conveniens.  Except as specifically set
forth herein, nothing herein shall limit the right of either party to bring
proceedings against the other in any other court or tribunal otherwise having
jurisdiction.

[applicable to
non-U.S. entities:  By the execution and
delivery of this Agreement, the Company (i) acknowledges that it has, by
separate written instrument, irrevocably designated and appointed                                                 ,
                                    ,
New York, New York             ,
as its authorized agent upon which process may be served in any suit, action or
proceeding arising out of or relating to this Agreement that may be instituted
in any court of the State of New York or of the United States of America for
the Southern District of New York or brought by the Collateral Agent and
acknowledges that                                                 ,
has accepted such designation, and agrees that service of process upon                                                 ,
and written notice of said service to the Company (in accordance with this
Agreement), shall be deemed in every respect effective service of process upon
it in any such suit or proceeding.  the
Company further agrees to take any and all action, including the execution and
filing of any and all such documents and instruments as may be necessary to
continue such designation and appointment                                     
in full force and effect so long as this Agreement shall remain in effect.]

[applicable to
non-U.S. entities:  To the extent that
the Company may be or become entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this Agreement, to
claim for itself or its properties or revenues any immunity from suit, court
jurisdiction, attachment prior to judgment, attachment in aid of execution of a
judgment, execution of a judgment or from any other legal process or remedy
relating to its obligations under this Agreement, and to the extent that in any
such jurisdiction there may be attributed such an immunity (whether or not
claimed), the Company hereby irrevocably agrees not to claim and hereby
irrevocably waives such immunity to the fullest extent permitted by the laws of
such jurisdiction.]

[applicable to
non-U.S. entities:  This is an
international credit transaction in which the specification of U.S. Dollars and
payment in the United States is of the essence, and the obligations of the
Company under this Agreement to make payments to the Collateral Agent or any
Depositary or for deposit into the Collateral Account shall not be discharged
or satisfied 

 

by any tender or
recovery pursuant to any judgment expressed in or converted into any other
currency or in another place except to the extent that such tender or recovery
results in the effective receipt by the Collateral Agent or any Depositary, at
its office in which the Collateral Account is maintained in the United States,
of the full amount of U.S. Dollars payable under this Agreement.  If a judgment is given in relation to any sum
payable hereunder to the Collateral Agent or any Depositary or for deposit into
the Collateral Account (in this paragraph called an “entitled person”),
and such judgment is given in a currency (in this Section called the “judgment
currency”) other than U.S. Dollars, the Company agrees to indemnify the
entitled person to the extent that the amount of U.S. Dollars which could have
been purchased by the Administrative Agent in accordance with normal banking
procedures on the Business Day following receipt of such sum is less than the
sum which could have been so purchased by the Administrative Agent had such
purchase been made on the day on which such judgment was given or, if such day
is not a Business Day, on the Business Day immediately preceding the giving of
such judgment.

This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
agreement.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

Agreed to and accepted,
as

of the date first above written:

DEUTSCHE BANK AG, NEW
YORK BRANCH,
    as Administrative Agent

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  

 

 

DEUTSCHE BANK AMERICAS TRUST
COMPANY,
    as Collateral Agent

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged and agreed to, as

  	
   

  	
   

  
	
  of the date first above written:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ASSURED GUARANTY RE LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

TO CREDIT AGREEMENT

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

dated as of
                        

Reference is made to the Credit Agreement described in
Item 1 of Annex I annexed hereto (as such agreement may hereafter be amended,
modified or supplemented from time to time, the “Credit Agreement”).  Unless defined in Annex I attached hereto,
terms defined in or defined for purposes of the Credit Agreement are used herein
as so defined. Deutsche Bank AG New York Branch, as Administrative Agent under
the Credit Agreement (in such capacity, the “Administrative Agent”),                                                 
(the “Assignor”) and                         
(the “Assignee”), hereby agree as follows:

(a)           The
Assignor hereby sells and assigns to the Assignee without recourse and without
representation or warranty (other than as expressly provided herein), and the
Assignee hereby purchases and assumes from the Assignor, that interest in and
to that portion of the Assignor’s Commitment and other rights, duties and
obligations under the Credit Agreement, in and to that portion of the Assignor’s
Loans (if any) as of the date hereof which represents the percentage interest specified
in Item 2 of Annex I hereto (the “Assigned Share”).

(b)           Following
the execution of this Agreement by the Administrative Agent, the Assignor and
the Assignee, the consent hereto by Assured Guaranty Re Ltd. (the “Borrower”)
and payment by the Assignee to the Assignor of the purchase price for the
Assigned Share as agreed upon by the Assignor and the Assignee, this Agreement
shall become effective as of the Settlement Date specified in Item 3 of Annex I
hereto (the “Settlement Date”). 
As of the Settlement Date, [(i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided herein and therein, have the
rights and obligations of a Lender thereunder and under the other Loan
Documents and (ii) the Assignor shall, to the extent provided in this Agreement
and in the Credit Agreement, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Loan Documents] [(i) the
Assignee’s Commitment set forth in Schedule 1 to the Credit Agreement
shall be increased by the amount set forth in Item 2(d) of Annex I hereto and
(ii) the Assignor’s Commitment set forth on said Schedule shall be decreased by
the same amount].

(c)           The
Assignor (i) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties and
representations made in or in connection with the Credit Agreement or any of
the other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any of the other
Loan Documents or any other instrument or document furnished pursuant thereto;
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition 

 

of or
the performance or observance by the Borrower of any of its obligations under
the Credit Agreement, any of the other Loan Documents or any other instrument
or document furnished pursuant thereto; and (iv) requests that the
Administrative Agent request that the Borrower exchange the Note held by the
Assignor evidencing any Loans made by the Assignor under the Credit Agreement
for a new Note payable to the Assignor (if the Assignor has retained any
interest in the Commitment or any Loans) a new Note payable to the Assignee in
the respective amounts which reflect the assignment being made hereby.

(d)           The
Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to therein, the
Security Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Agreement; (ii) agrees that it will, independently and without reliance upon
the Assignor or the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) confirms its agreement with the provisions of Article 8 of the Credit
Agreement and appoints and authorizes the Administrative Agent on its behalf to
exercise such powers under the Credit Agreement and the other Loan Documents,
as are delegated to the Administrative Agent or the Collateral Agent by the
terms thereof and hereof, together with such powers as are reasonably
incidental thereto; and (iv) agrees that it will be bound by all of the terms
and conditions of the Credit Agreement and the other Loan Documents and will
perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement and the other Loan Documents are required to be
performed by it as a Lender.

(e)           Notwithstanding
any provision to the contrary contained in the Credit Agreement, (i) the
Assignee’s pro rata share of commitment fees, interest payments and other
periodic payments will be appropriately adjusted to reflect the period of time
during which this Agreement has been in effect, and (ii) to the extent that the
Assignee receives any such interest or other amount pursuant to the Credit
Agreement in respect of any period of time during which this Agreement was not
in effect, or that the Assignor receives any such interest or other amount
pursuant to the Credit Agreement in respect of any period of time prior to the
time during which this Agreement was in effect, the Assignor or the Assignee,
as the case may be, will forthwith pay to the other its pro rata share thereof,
appropriately adjusted as provided in clause (i) above.

(f)            Any
amendment to, waiver of any provision of or consent pursuant to this Agreement,
shall be effective with and only upon the prior written agreement of the
Administrative Agent, the Borrower, the Assignor and the Assignee, unless
otherwise provided in the Credit Agreement.

(g)           The
addresses of Assignor and Assignee for purposes of all notices or other
communications hereunder or under the Credit Agreement are as set forth on Item
4 of Annex I hereto, or to such other address as shall be designated by such
party pursuant to Section 10.7 of the Credit Agreement.

(h)           All
payments to be made to the Assignor or the Assignee hereunder or under the Credit
Agreement shall be made by federal wire in accordance with the Credit
Agreement, or as otherwise directed by the Assignor or the Assignee, as the
case may be, by 

 

notice
to the other and to the Administrative Agent and as may be acceptable to the Administrative
Agent.

(i)            This
Agreement shall be binding upon, and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the Assignee
may not assign any of its rights or obligations hereunder except as permitted
by Section 10.8(b) or 10.8(c) of the Credit Agreement.

(j)            THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused
this Assignment and Assumption Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written, such
execution also being made on Annex I hereto.

	
  

  	
  DEUTSCHE BANK AG NEW YORK BRANCH,

  
	
   

  	
    as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR],

  	
   

  
	
   

  	
    as Assignor

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

	
  

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
    as Assignee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED TO:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSURED GUARANTY RE 
  LTD.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT

ANNEX I

1.             Name and Date of Credit Agreement:

Credit Agreement, dated as of July 31, 2007,
among Assured Guaranty Re Ltd., the Lenders from time to time party thereto,
Deutsche Bank AG New York Branch, as Administrative Agent, and the other
parties thereto, as it may have been further amended.

2.             Amounts (as of date of Assignment and Assumption
Agreement):

	
  

  	
  (a)

  	
   

  	
  Aggregate Amount of Assignor’s

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Commitment

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  Aggregate Amount of Assignor’s

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Fronting Lender
  Commitment

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
   

  	
  Aggregate Amount of Assignor’s

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Loans Currently
  Outstanding

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
   

  	
  Aggregate Amount of Assignor’s

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Fronting Lender
  Loans Currently

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Outstanding

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
   

  	
  Percentage of Assignor’s

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Commitment and
  Loans Assigned

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
   

  	
  Assigned Amount of Commitment

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
   

  	
  Assigned Amount of Fronting Lender

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Commitments

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
   

  	
  Amount of Assigned Share of Loans

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Currently
  Outstanding

  	
  $                        

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
   

  	
  Amount of Assigned Share of Fronting

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Lender Loans
  Currently Outstanding

  	
  $                        

  	
   

  	
   

  

 

3.             Settlement Date:

4.             Notice Addresses:

5.             Payment
Instructions:

 

ACCEPTED AND
AGREED:

	
  [NAME OF ASSIGNOR] 

  	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
  Name:

  
	
   

  	
  Title

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   DEUTSCHE BANK
  AG NEW YORK BRANCH, as Administrative Agent 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT G

TO CREDIT AGREEMENT

FORM OF FRONTING
LENDER SUPPLEMENT

Reference is made
to the Credit Agreement, dated as of July 31, 2007, among Assured Guaranty Re
Ltd. (the “Borrower”), the Lenders from time to time party thereto,                                                    ,
as Administrative Agent, and the other parties thereto (as such agreement may
hereafter be amended, modified or supplemented from time to time, the “Credit
Agreement”).  Terms defined in or
defined for purposes of the Credit Agreement are used herein as so
defined.  The Borrower, the
Administrative Agent and the Lender identified in Item 1 on Annex I hereto (the
“Fronting Lender”) hereby agree as follows:

1.             By this Supplement and effective on
the date identified in Item 2 on Annex I hereto, the Fronting Lender
hereby agrees to be bound by, and shall have rights and obligations under, the
Credit Agreement and the other Loan Documents as a Fronting Lender.

2.             The Lenders for which the Fronting
Lender is acting as Fronting Lender and the Fronting Lender Commitment and the
Fronting Lender Percentage of the Fronting Lender for each such Lender are set
forth in Item 3 on Annex I hereto, subject to adjustment as provided in the
Credit Agreement.

3.             The entire Commitment of each
Lender for which the Fronting Lender is acting as Fronting Lender is identified
in the list of all Lenders and Commitments as of the date hereof set forth on
Annex II hereto.

4.             The Administrative Agent hereby
requests, on behalf of the Fronting Lender, that the Borrower deliver, and the
Borrower does hereby agree to deliver, a Fronting Lender Note payable to the
Fronting Lender in the aggregate amount of Fronting Lender Commitments of the
Fronting Lender hereunder or under other Fronting Lender Supplements dated the
date hereof.

5.             The Required Ratings for the
Fronting Lender are those set forth in Item 4 on Annex I hereto.

6.             The Borrower hereby agrees to pay
to the Administrative Agent for the account of the Fronting Lender a fronting
lender commitment fee as set forth in the fee letter among the Borrower, the
Administrative Agent and the Fronting Lender dated on or about the date hereof
which refers to this Supplement.

7.             Any amendment to, waiver of any
provision of or consent pursuant to this Supplement shall be effective with and
only upon the prior written agreement of the Borrower, the Administrative Agent
and the Fronting Lender, unless otherwise provided in the Credit Agreement.

8.             This Supplement shall be binding
upon, and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that
the Fronting Lender may

 

 

not assign any of its
rights or obligations hereunder except as permitted by Section 10.8(b) or
10.8(c) of the Credit Agreement.

9.             THIS SUPPLEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused
this Supplement to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution also being made
on Annex I hereto.

	
  

  	
  ASSURED GUARANTY
  RE LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
  

  	
   

  
	
   

  	
  [ 

  	
  ]

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

	
  

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [

  	
  ]

  
	
   

  	
  as Fronting
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

	
  

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
  

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

 

ANNEX I TO

FRONTING LENDER SUPPLEMENT

1.             Name of Fronting Lender:

2.             Effective Date:

3.             Fronting Lender Commitments and
Percentages:

 

	
  

  	
   

  	
  Name of Lender

  	
   

  	
  Fronting Lender

  Commitment

  	
   

  	
  Fronting Lender 

  Percentage of 

  Total Lender

  Commitment

  	
   

  
	
   

  	
   

  	
  (a)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Fronting Lender
  Commitments hereunder:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4.             Required Ratings:

Moody’s:

S&P:

 

 

[Remainder of page intentionally left blank, Signature Page to follow.]

 

	
  ACCEPTED AND AGREED:

  	
   

  
	
  ASSURED GUARANTY
  RE LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

	
  [

  	
  ]

  	
   

  
	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  [

  	
  ]

  	
   

  
	
  as Fronting
  Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

 

ANNEX II TO

FRONTING LENDER SUPPLEMENT

SCHEDULE OF COMMITMENTS

	
   

  	
   

  
	
  Name and Notice Address
  of Lender

  	
  Commitment

   

  

 

 

EXHIBIT H

TO CREDIT AGREEMENT

FORM OF FRONTING LENDER NOTE

	
  US$

  	
  [Date]

  

 

FOR VALUE RECEIVED, the undersigned, ASSURED GUARANTY
RE LTD., a Bermuda exempted company (the “Borrower”), hereby promises to pay to
                                                  
(the “Lender”), or its assigns, at the offices of Deutsche Bank AG New York
Branch, 60 Wall Street, New York, New York 10005, in lawful money of the United
States of America in immediately available funds, the principal sum of                                          
Dollars (US$                    )
or, if less, the aggregate unpaid principal amount of the Fronting Lender Loans
(as defined in the hereinafter referred to Credit Agreement) outstanding and
payable to the Lender by the Borrower under the Credit Agreement, dated as of
July 31, 2007, among the Borrower, the Lenders from time to time party
thereto, Deutsche Bank AG New York Branch, as Administrative Agent, and the
other parties thereto, as amended from time to time (the “Credit Agreement”),
in the amounts and on the dates set out in the Credit Agreement.  The Borrower also promises to pay interest on
the unpaid principal amount of such Loans from the date on which such Loans are
made until the Loans are repaid in full at such interest rates and payable on
such dates as are determined pursuant to the Credit Agreement.

If any payment on this Note shall be specified to be
made upon a day which is not a Business Day (as defined in the Credit
Agreement), it shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in computing interest, if any,
in connection with such payment.

The Lender is authorized to record the date and amount
of each Fronting Lender Loan and each payment, prepayment and conversion with
respect thereto on the grid attached hereto or on a continuation thereof which
shall be attached hereto and made a part hereof, and any such notation shall
constitute prima  facie
evidence of the accuracy of the information so recorded; provided
that the failure to make any such
notations shall not affect the validity of the Borrower’s obligations
hereunder.

Except as otherwise provided in the Credit Agreement,
presentment, demand, protest and notice of dishonor are hereby waived by the
undersigned.

This Note evidences the Lender’s Fronting Lender Loans
under, and is entitled to the benefits and subject to the provisions of, the
Credit Agreement and the other Loan Documents (as defined therein).  This Note is secured by, and is entitled to
the benefits and is subject to the provisions of, the Security Agreement and
Collateral Assignment, dated as of July 25, 2007, between the Borrower and
Deutsche Bank AG New York Branch, as

Administrative Agent, and Deutsche Bank Trust Company
Americas, as Collateral Agent and securities intermediary. The Credit
Agreement, among other things, contains provisions with respect to the
acceleration of the maturity of this Note upon the happening of certain stated
events, and for mandatory and optional prepayments of the principal of this
Note prior to maturity, all upon the terms and conditions specified therein.

The payment obligations of the Borrower under this
Note are limited as provided in Section 2.7 of the Credit Agreement.

This Note is transferable only in accordance with the
provisions of the Credit Agreement.

This Note shall be construed in accordance with and
governed by the laws of the State of New York.

	
  

  	
  ASSURED GUARANTY RE LTD.

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
  GRID

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Amount of

  Loan

  	
   

  	
  Unpaid Principal

  Paid or

  Prepaid

  	
   

  	
  Principal

  Amount of

  Note

  	
   

  	
  Notation

  Made by

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT I

TO CREDIT AGREEMENT

FORM OF OPINION OF BERMUDA COUNSEL TO BORROWER]

[To be provided]

EXHIBIT H

TO CREDIT AGREEMENT

FORM OF OPINION OF NEW YORK COUNSEL TO THE BORROWER

[To be provided]

EXHIBIT I

TO CREDIT AGREEMENT

FORM OF OPINION OF COUNSEL TO THE BORROWER

[To be provided]

SCHEDULE 1

TO CREDIT AGREEMENT

SCHEDULE OF COMMITMENTS

	
  Name and Notice Address of Lender

  	
   

  	
   

  	
   

  	
  Commitment

  	
   

  
	
  DEUTSCHE BANK AG NEW YORK BRANCH

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  Address:

  	
  60 Wall Street    

  	
   

  	
   

  	
   

  
	
   

  	
  New York, NY 10005

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: John S. McGill,
  Director

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone: 212-250-8666

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: 212-797-0270

  	
   

  	
   

  	
   

  
	
   

  	
  Email:
  john-s.mcgill@db.com

  	
   

  	
   

  	
   

  
	
  ING BANK N.V.
  LONDON BRANCH 

  	
   

  	
  40,000,000

  	
   

  
	
  Address:

  	
  60 London Wall

  	
   

  	
   

  	
   

  
	
   

  	
  London EC2M 5TQ

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: Nicola
  Haffner, Vice President

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone: 44 20 7787
  5908

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: 44 20 7767
  7507

  	
   

  	
   

  	
   

  
	
   

  	
  Email:
  nicola.haffner@uk.ing.com

  	
   

  	
   

  	
   

  
	
  BAYERISCHE
  LANDESBANK NEW YORK BRANCH 

  	
   

  	
  55,000,000

  	
   

  
	
  Address:

  	
  560 Lexington Avenue

  	
   

  	
   

  	
   

  
	
   

  	
  New York, NY 10022

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: Robert
  Albano, Vice President

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone: 212 310-9981

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: 212 230-9114
  

  	
   

  	
   

  	
   

  
	
   

  	
  Email:
  ralbano@bayernlbny.com

  	
   

  	
   

  	
   

  
	
  LANDESBANK HESSEN-THÜRINGEN NEW YORK BRANCH 

  	
   

  	
  30,000,000

  	
   

  
	
  Address:

  	
  420 Fifth Avenue, 24th Floor 

  	
   

  	
   

  	
   

  
	
   

  	
  New York, NY 10018-2729 

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: Samuel Bridges, Financial Institutions

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Loan Administrator 

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone: 212 703-5309

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: 212 703-5256

  	
   

  	
   

  	
   

  
	
   

  	
  Email: samuel.bridges@helabany.com

  	
   

  	
   

  	
   

  
								

 

 

	
  Name and Notice Address of Lender

  	
   

  	
   

  	
   

  	
  Commitment

  
	
  NORDDEUTSCHE
  LANDESBANK GIROZENTRALE

  NEW YORK BRANCH AND/OR CAYMAN BRANCH

  	
   

  	
  30,000,000

  
	
  Address:

  	
  1114 Avenue of the
  Americas, 37th Floor

  	
   

  	
   

  
	
   

  	
  New York, NY 10036

  	
   

  	
   

  
	
   

  	
  Attention:  Stephanie Hoevermann. Vice President

  	
   

  	
   

  
	
   

  	
  Telephone:  212 812-6806

  	
   

  	
   

  
	
   

  	
  Facsimile:  212 812-6860

  	
   

  	
   

  
	
   

  	
  Email: stephanie.hoevermann@nordlb.com

  	
   

  	
   

  
	
   

  	
  TOTAL:

  	
   

  	
  $200,000,000

  
						

 

 

SCHEDULE 2

TO CREDIT AGREEMENT

COVERED PORTFOLIO GUIDLINES

At the time of
inclusion into the Covered Portfolio, an Insured Obligation must meet each of
the following criteria:

(ii)           Such Insured Obligation was
underwritten by an Eligible Insurer as primary insurance provider;

(iii)          Such Insured Obligation was an
Eligible Municipal Security or an Eligible International Security;

(iv)          Such Insured Obligation had a minimum
rating of Baa3 and BBB- by Moody’s and S&P (without giving effect to any
insurance or other guaranty of an Eligible Insurer);

(v)           No payment or interest was overdue in
respect of such Insured Obligation;

(vi)          Such Insured Obligation was not in any
default or “workout” situation (including suspension or deferment of repayment,
repayment negotiations, or any other restructuring).

 

SCHEDULE 3

TO CREDIT AGREEMENT

LIST OF EXCLUDED INSURED OBLIGATIONS

 No initial
excluded obligations.

This Schedule 3 is
subject to supplementation as provided in the definition of “Covered Portfolio”
contained in Exhibit A to the Credit Agreement.

SCHEDULE 4

TO CREDIT AGREEMENT

SUBSIDIARIES

None.

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