Document:

Exhibit
10.8

FORM OF

MASTER SEPARATION AGREEMENT

THIS MASTER SEPARATION AGREEMENT (this “Agreement”) is
made and entered into as of April [___], 2004, among ACE Limited, a Cayman
Islands corporation (“ACE”), ACE Financial Services Inc., a Delaware corporation
(“ACE Financial Services”), ACE Bermuda Insurance Ltd., a Bermuda company (“ACE
Bermuda”), and Assured Guaranty Ltd., a Bermuda company (the “Company”).

RECITALS

ACE has sponsored the formation of the Company and in
connection therewith:

A.            ACE
Financial Services has formed Assured Guaranty US Holdings Inc., a Delaware
corporation (“Assured Guaranty US Holdings”), and will transfer to Assured
Guaranty US Holdings all of the issued and outstanding shares of capital stock
of each of ACE Guaranty Corp., a Maryland corporation (“Assured Guaranty”) and
AGR Financial Products Inc., a Delaware corporation (“Assured Guaranty
Financial Products”), in exchange for all issued and outstanding shares of
capital stock of Assured Guaranty US Holdings and a note payable from Assured
Guaranty US Holdings to ACE Financial Services in the amount of $200.0 million
and in the form attached hereto as Exhibit A (the “Assured Guaranty US Holdings
Note”).

B.            Assured
Guaranty Re Overseas Ltd., a Bermuda company (“Assured Guaranty Re Overseas”)
has transferred to ACE Bermuda all of the issued and outstanding shares of
capital stock of ACE Capital Title Reinsurance Company, a New York corporation
(“ACE Title”).

C.            The
Company has filed a registration statement under the Securities Act (as defined
below) for the purpose of registering the sale (the “Public Offering”) of a
portion of the common shares of the Company (the “Common Shares”) to be issued
to ACE Financial Services and ACE Bermuda in connection with the formation of
the Company; and, on or after the effective date of the registration statement
under the Securities Act, the Company, ACE Financial Services and ACE Bermuda
shall enter into an underwriting agreement (the “Underwriting Agreement”) with
the underwriters of the Public Offering providing for the public offering of
the Common Shares.

D.            After
the execution and delivery of the Underwriting Agreement (the date of such
execution and delivery is referred to herein as the “Effective Date”) and prior
to the Closing Time (as defined below), (i) ACE shall transfer to ACE Bermuda
all of the issued and outstanding shares of the Company owned by ACE, and (ii)
ACE Financial Services will transfer to the Company (a) all of the issued and
outstanding shares of capital stock of Assured Guaranty US Holdings in exchange
for [________] Common Shares and a note payable from the Company to ACE
Financial Services in the amount of $900,000 and in the form attached hereto as
Exhibit B (the “Company Note A”) and (b) all of the issued and outstanding
shares of capital stock of ACE Finance Overseas Ltd., a company organized under
the laws of England (“Assured Guaranty Finance Overseas”), in exchange for
[________] Common Shares and a note payable from the Company to ACE Financial
Services in the amount of $100,000 and in the form attached hereto as Exhibit C
(the “Company Note B”).

 

E.             In
addition, after the Effective Date and prior to the Closing Time, ACE Bermuda
will transfer to the Company all of the issued and outstanding shares of
capital stock of Assured Guaranty Re International Ltd., a Bermuda company
(“Assured Guaranty Re International”), in exchange for [______] Common Shares
and a note payable from the Company to ACE Bermuda in the amount of $1.0
million and in the form attached hereto as Exhibit D (the “Company Note C”).

F.             The
parties hereto wish to provide for certain other transactions to be entered
into in connection with the formation of the Company and the Public Offering
and to set forth herein certain arrangements that will govern the relationship
between ACE, the Company and their respective Affiliates (as defined below)
following the Closing Time.

NOW, THEREFORE, in consideration of the mutual
promises, covenants and agreements set forth herein, the sufficiency of which
is acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1             Definitions.  As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

“ACE” has the meaning specified in the preamble to
this Agreement.

“ACE Bermuda” has the meaning specified in the
preamble to this Agreement.

“ACE Business” means the business conducted by any
member of the ACE Group (whether conducted before or after the Closing Time).

“ACE Confidential Information” has the meaning
specified in Section 9.3.

“ACE Financial Services” has the meaning specified in
the preamble to this Agreement.

“ACE Group” means ACE and each Post-Closing Subsidiary
of ACE.

“ACE Indemnified Party” has the meaning specified in
Section 8.1.

“ACE Liabilities” means collectively, except as
otherwise provided for in this Agreement or the Ancillary Agreements, any and
all Liabilities that arise out of any act, omission, event or condition
occurring or arising out of or relating to (i) the ownership, operation or use
of the ACE Business or (ii) the Transferred Business.

“ACE Title” has the meaning
specified in the recitals to this Agreement.

“Action” means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal.

 

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“Affiliate” of any Person means any Person that,
directly or indirectly, controls, is under common control with, or is
controlled by, such Person.

“AFS Tax Sharing Agreement” means the Amended and
Restated Agreement Concerning Filing of Consolidated Federal Income Tax
Returns, dated November 13, 1995, with respect to the ACE Financial Services
subgroup included within the ACE Prime Holdings Inc. consolidated group.

“AGR Tax Sharing Agreement” means the Agreement
Concerning Filing of Consolidated Federal Income Tax Returns, dated August 1, 2002,
among ACE Capital Re USA Holdings Incorporated, Assured Guaranty Re Overseas,
ACE Capital Mortgage Reinsurance Company, ACE Title and ACE Capital Re Inc.

“Ancillary Agreements” means the agreements set forth
in Section 3.1.

“Arbitrator” has the meaning specified in Section
10.3.

“Assured Guaranty” has the meaning specified in the
recitals of this Agreement.

“Assured Guaranty Finance Overseas” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty Finance Overseas Shares” has the
meaning specified in Section 2.3(a).

“Assured Guaranty Financial Products” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty Financial Products Shares” has the
meaning specified in Section 2.1(a).

“Assured Guaranty Re International” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty Re International Shares” has the
meaning specified in Section 2.4(a).

“Assured Guaranty Re Overseas” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty Shares” has the meaning specified in
Section 2.1(a).

“Assured Guaranty US Holdings” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty US Holdings Note” has the meaning
specified in the recitals of this Agreement.

“Assured Guaranty US Holdings Shares” has the meaning
specified in Section 2.1(b).

 

 

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“Business Day” means any day excluding Saturday,
Sunday and any day on which banks in New York, New York or Hamilton, Bermuda
have the option by law or other governmental action to close.

“Closing” has the meaning specified in Section 3.4.

“Closing Time” has the meaning specified in Section
3.4.

“Code” means the U.S. Internal Revenue Code of 1986,
as amended.

“Commission” means the U.S. Securities and Exchange
Commission.

“Common Shares” has the meaning specified in the
recitals of this Agreement.

“Company” has the meaning specified in the preamble to
this Agreement.

“Company Business” means the business conducted by any
member of the Company Group (whether conducted before or after the Closing
Time).

“Company Confidential Information” has the meaning
specified in Section 9.3.

“Company Group” means the Company and each
Post-Closing Subsidiary of the Company.

“Company Indemnified Parties” has the meaning
specified in Section 8.1.

“Company Liabilities” means collectively, except as
otherwise provided for in this Agreement or the Ancillary Agreements, any and
all Liabilities that arise out of any act, omission, event or condition occurring
or arising out of or relating to the ownership, operation or use of the Company
Business, but excluding any Liabilities arising out of or relating to the
Transferred Business.

“Company Note A” has the meaning specified in the
recitals of this Agreement.

“Company Note B” has the meaning specified in the
recitals of this Agreement.

“Company Note C” has the meaning specified in the
recitals of this Agreement.

“Confidential Information” has the meaning specified
in Section 9.3.

“Dispute” has the meaning specified in Section 10.3.

“Effective Date” has the meaning specified in the
recitals of this Agreement.

“Employment Agreement” means the Employment Agreement,
dated February 2, 1999, between ACE Financial Services and Joseph W. Swain.

“Encumbrance” means any security interest, pledge,
hypothecation, mortgage, lien (including, without limitation, environmental and
tax liens), violation, charge, lease, license,

 

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encumbrance, servient
easement, adverse claim, reversion, reverter, preferential arrangement,
restrictive covenant or restriction of any kind, including, without limitation,
any restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership.

 “Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any self-regulatory organization
having jurisdiction over the parties hereto or any of the parties to any of the
Ancillary Agreements, any United States or non-United States federal, national,
supranational, state, provincial, local or similar government, governmental,
regulatory (including, without limitation, insurance regulatory) or
administrative authority, legislative body, agency or commission or any court,
tribunal or judicial or arbitral body.

“Indemnified Party” has the meaning specified in
Section 8.2.

“Indemnifying Party” has the meaning specified in
Section 8.2.

“Information” has the meaning specified in Section
9.1.

“Insurance Proceeds” means
those monies (i) received by an insured from an insurance carrier or (ii) paid
by an insurance carrier on behalf of the insured, in either case net of any
applicable premium adjustments, retrospectively rated premium adjustments,
deductibles, retentions or costs paid by such insured.

“JAMS” has the meaning specified in Section
10.3.

“Keepwell Amendment” means
an amendment to the Amended and Restated Guaranty, dated February 15, 2000, by
Assured Guaranty Re Overseas in favor of ACE Title that permanently eliminates
any liability of Assured Guaranty Re Overseas thereunder in respect of (x) all
insurance and reinsurance business written by ACE Title subsequent to the date
of such amendment and (y) all other payment obligations incurred by ACE Title
subsequent to the date of such amendment.

 

“Liabilities” means any and all debts, liabilities and
obligations, payments, costs and expenses, whether accrued or unaccrued,
absolute or contingent, matured or unmatured, disclosed or undisclosed, known
or unknown, liquidated or unliquidated or determined or determinable,
including, without limitation, those arising under any law or regulation
(including, without limitation, any insurance law but excluding any tax law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.

“Losses” means any and all losses, liabilities,
claims, damages, obligations, payments, interest, penalties, fines, costs and
expenses, matured or unmatured, absolute or contingent, disclosed or
undisclosed, determined or determinable, accrued or unaccrued, liquidated or
unliquidated, known or unknown (including, without limitation, the costs and
expenses of any Action, threatened Action, demand, assessment, judgment,
settlement and compromise relating thereto and attorneys’ fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or
defending against, or settling any such Action or threatened Action).

“Misstatement” has the meaning specified in Section
8.1.

 

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“New York Property” means Unit No. 35D in The Museum
Tower Condominium located at 15 West 53rd Street, New York, NY.

“Person” includes an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, a body
corporate, an unincorporated organization, a group and a government or other
department or agency thereof.

“Post-Closing Subsidiaries” with respect to either ACE
or the Company means collectively all of the Persons that will, immediately
following the Closing Time, be Subsidiaries of such entity.

“Pre-Closing Periods” means
any taxable period ending before or on the date of the Closing.

 

“Public Offering” has the meaning specified in the
recitals of this Agreement.

“Registration Statement” means the Registration
Statement on Form S-1, as amended and supplemented from time to time, filed
with the Commission under the Securities Act relating to the Public Offering.

“Representatives” has the meaning specified in Section
9.1.

“Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder.

“Subsidiary” means, as to any Person, (i) any
corporation, partnership or other entity of which at the time of determination
more than 50% of the outstanding Voting Stock is owned, directly or indirectly,
by such Person and/or one or more Subsidiaries of such Person.

“Tax Allocation Agreement” means the Tax Allocation
Agreement specified in Section 3.1(x).

“Taxes” means any federal, state, county, local or
foreign taxes, charges, fees, levies or other assessments, including all net
income, gross income, sales, use, ad valorem, transfer, gains, profits, excise,
value added, franchise, real and personal property, gross receipt, capital
stock, business, disability employment, payroll, license, estimated, stamp,
custom or withholding taxes or charges imposed by any governmental entity, and
includes any interest and penalties on or additions to any such taxes and any such
expenses incurred in connection with the determination, settlement or
litigation of any Tax liability.

“Transferred Business” means the obligations of
members of the Company Group that have been retroceeded to or otherwise assumed
by members of the ACE Group pursuant to the Ancillary Agreements specified in
Section 3.1(i) through (viii).

“Underwriting Agreement” has the meaning specified in
the recitals of this Agreement.

“Voting Stock” means stock of any class or classes or
other ownership interest having general voting power under ordinary
circumstances to elect a majority of the board of directors,

 

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managers, trustees or
persons with similar functions of the entity in question; provided that, for
the purposes of this definition, stock which carries only the right to vote
conditionally on the happening of an event will not be considered Voting Stock,
whether or not that event has happened.

Section 1.2             Other Definitional Provisions.  The words “hereof,” “hereto,” “herein,”
“hereunder” and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and references to any Article, Section, Exhibit or Schedule are
references to Articles, Sections, Exhibits or Schedules in or to this Agreement
unless otherwise specified.

ARTICLE II

TRANSFER OF SUBSIDIARIES AND ASSETS

Section 2.1             Formation of Assured Guaranty US
Holdings and Transfer of Certain Subsidiaries.

(a)           On or prior to the transactions
specified in Section 2.3, and subject to the receipt of any required third
party approvals, consents and the satisfaction of any conditions precedent set
forth herein, ACE Financial Services shall transfer and deliver to Assured
Guaranty US Holdings 20,834 shares of capital stock of Assured Guaranty,
constituting all of the issued and outstanding shares of capital stock of
Assured Guaranty (the “Assured Guaranty Shares”), and 1,000 shares of capital
stock of Assured Guaranty Financial Products, constituting all of the issued
and outstanding shares of capital stock of Assured Guaranty Financial Products
(the “Assured Guaranty Financial Products Shares”), in each case free of any
Encumbrance (except as required by the insurance regulations of certain
states), and shall deliver to Assured Guaranty US Holdings certificates,
registered in its name, or stock powers, duly endorsed, representing the
Assured Guaranty Shares and Assured Guaranty Financial Products Shares.

(b)           In exchange for the contribution of
the Assured Guaranty Shares and Assured Guaranty Financial Products Shares
provided for in Section 2.1(a), Assured Guaranty US Holdings shall (i) issue to
ACE Financial Services 1,000 shares of common stock, par value $0.01 per share,
of Assured Guaranty US Holdings, which shall represent all of its outstanding
capital stock (the “Assured Guaranty US Holdings Shares”), and deliver to ACE
Financial Services a certificate, registered in its name, representing such
shares, and (ii) issue and deliver to ACE Financial Services the Assured
Guaranty US Holdings Note.

Section 2.2             Transfer of Company Shares. 
On or after the Effective Date and prior to the transfers set forth in
Section 2.3, ACE shall transfer and deliver to ACE Bermuda 12,000 Common Shares,
representing all of the outstanding Common Shares as of the time of such
transfer, and shall deliver to ACE a certificate, registered in its name, or
share powers duly endorsed, representing such shares.

Section 2.3             Transfer of Assured Guaranty US
Holdings and Assured Guaranty Finance Overseas.

(a)           On or after the Effective Date and on
or prior to the Closing Time, and subject to the receipt of any required third
party approvals, consents and the satisfaction of any conditions

 

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precedent set forth
herein, ACE Financial Services shall transfer and deliver to the Company (i)
the Assured Guaranty US Holdings Shares and (ii) 200,000 shares of Assured
Guaranty Finance Overseas, representing all of the issued and outstanding
shares of Assured Guaranty Finance Overseas (the “Assured Guaranty Finance
Overseas Shares”), in each case free of any lien, claim or encumbrance of any
kind (except as may be required by applicable insurance regulations), and shall
deliver to the Company certificates, registered in its name, or stock or share
powers duly endorsed, representing the Assured Guaranty US Holdings Shares and
Assured Guaranty Finance Overseas Shares.

(b)           In exchange for the contribution of
the Assured Guaranty US Holdings Shares provided for in Section 2.3(a)(i), the
Company shall (i) issue to ACE Financial Services [_________] Common Shares,
and deliver to ACE Financial Services a certificate, registered in its name,
representing such shares, and (ii) issue and deliver to ACE Financial Services
the Company Note A.

(c)           In exchange for the contribution of
the Assured Guaranty Finance Overseas Shares provided for in Section
2.3(a)(ii), the Company shall (i) issue to ACE Financial Services [_________]
Common Shares, and deliver to ACE Financial Services a certificate, registered
in its name, representing such shares, and (ii) issue and deliver to ACE
Financial Services the Company Note B.

Section 2.4             Transfer
of Assured Guaranty Re International.

(a)           On or after the Effective Date and on
or prior to the Closing Time, and subject to the receipt of any required third
party approvals, consents and the satisfaction of any conditions precedent set
forth herein, ACE Bermuda shall transfer and deliver to the Company [______]
shares of Assured Guaranty Re International, constituting all of the issued and
outstanding shares of Assured Guaranty Re International (the “Assured Guaranty
Re International Shares”), free of any lien, claim or encumbrance of any kind,
and shall deliver to the Company a certificate, registered in its name, or
share powers, duly endorsed, representing such shares.

(b)           In exchange for the contribution of
the Assured Guaranty Re International Shares provided for in Section 2.4(a),
the Company shall (i) issue to ACE Bermuda [_________] Common Shares, and
deliver to ACE Bermuda certificates representing such shares, registered in its
name and in such denominations as ACE Bermuda shall notify the Company prior to
the Closing Time, and (ii) issue and deliver to ACE Bermuda the Company Note C.

Section 2.5             Transfer of Certain Other Assets.

(a)           On or prior to the Closing Time,
Assured Guaranty shall purchase the New York Property from ACE Financial
Services for a purchase price of $2.0 million (less any accrued and unpaid
property taxes and assessments and any accrued and unpaid common charges).

Section 2.6             Use of ACE Name;
Non-Disparagement.

(a)           The transfer to the Company of
Subsidiaries that have the word “ACE” in their name shall not bestow on the
Company any rights to, or license to use, any marks, designs, logos, names,
words or letters that include the word “ACE” or those that are suggestive or

 

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derivative thereof, and
the Company shall promptly, following the Closing Time, take all actions
reasonably necessary to change the corporate names of such Subsidiaries to
other names that will not reasonably suggest or imply any affiliation with ACE.

(b)           Commencing at the Closing Time,
neither the Company nor any of its Post-Closing Subsidiaries may use any marks,
designs, logos, names, words or letters that include the words “ACE” or those
that are suggestive or derivative thereof except (i) as may be required by law
and (ii) as may be necessary for the operation of its business prior to
changing its name, which shall not include the use thereof in connection with
any advertising, marketing or solicitation activities.

(c)           The Company and ACE each agree that
neither it nor any of its Post-Closing Subsidiaries shall make any statement
that would reasonably be viewed as intended to be disparaging of the business,
reputation or good name of the other.

ARTICLE III

ANCILLARY AGREEMENTS; CLOSING

Section 3.1             Ancillary Agreements.  As a condition precedent to the transfer of
the Subsidiaries and assets to the Company Group pursuant to Article II hereof,
the parties shall, or, in certain cases, shall cause their Affiliates to, enter
into the following Ancillary Agreements, in each case (unless otherwise
specified in this Article III or within the form of Ancillary Agreement)
effective as of the Closing Time:

(i)            a Quota Share Retrocession Agreement
between Assured Guarantee Re Overseas and ACE American Insurance Company
substantially in the form of Exhibit E (which shall be executed upon receipt of
required regulatory approvals);

(ii)           a Quota Share Retrocession Agreement
between Assured Guaranty and ACE American Insurance Company substantially in
the form of Exhibit F (which shall be executed upon receipt of required
regulatory approvals);

(iii)          a Quota Share Retrocession Agreement
between Assured Guaranty Re Overseas and ACE INA Overseas Insurance Company
Ltd. substantially in the form of Exhibit G;

(iv)          a Commutation Agreement between
Assured Guaranty Re Overseas and ACE INA Overseas Insurance Company Ltd.
substantially in the form of Exhibit H;

(v)           a Quota Share Retrocession Agreement
between Assured Guaranty Re International and ACE Bermuda substantially in the
form of Exhibit I;

(vi)          an Assignment and Termination
Agreement among Assured Guaranty Re International, ACE Title and ACE Bermuda
substantially in the form of Exhibit J (which shall be executed upon receipt of
required regulatory approvals);

(vii)         an Assignment Agreement between Assured
Guaranty Re Overseas, ACE European Markets Insurance Ltd. and ACE Bermuda
substantially in the form of Exhibit K;

 

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(viii)        an Assignment Agreement among Assured
Guaranty Re Overseas, ACE Title and ACE Bermuda substantially in the form of
Exhibit L;

(ix)           a Termination Agreement between
Assured Guaranty Re Overseas and ACE Insurance Ltd. in substantially the form
of Exhibit M;

(x)            a Transition Services Agreement
substantially in the form of Exhibit N;

(xi)           a Tax Allocation Agreement
substantially in the form of Exhibit O;

(xii)          a Bill of Sale and Assignment and
Assumption Agreement relating to the New York Property substantially in the
form of Exhibit P;

(xiii)         a Registration Rights Agreement
substantially in the form of Exhibit Q;

(xiv)        a Services Agreement between Assured
Guaranty and ACE American Insurance Company substantially in the form of
Exhibit R;

(xv)         an Employee Leasing Agreement between
Assured Guaranty and ACE American Insurance Company substantially in the form
of Exhibit S;

(xvi)        a Services Agreement between Assured
Guaranty (UK) Ltd. and ACE INA Services Limited substantially in the form of
Exhibit T; and

(xvii)       an Assignment and Assumption Agreement
between ACE Financial Services and the Assured Guaranty assigning to Assured
Guaranty all of ACE Financial Services’ rights and obligations under the
Employment Agreement, substantially in the form of Exhibit U.

Section 3.2             Payment of Expenses.  (a) 
The Company shall pay (or, to the extent incurred by and paid for by any
member of the ACE Group prior to the Closing Time, shall, at or prior to the
Closing Time, and, if incurred on or following the Closing Time, promptly upon
receipt of an invoice therefore, reimburse such member of the ACE Group for any
and all amounts so paid) the costs, fees, disbursements and expenses set forth
in Schedule 3.2(a).

(b)           ACE shall pay (or, to the extent
incurred by and paid for by any member of the Company Group on or prior to the
Closing Time shall, at or prior to the Closing Time, and, if incurred following
the Closing Time, promptly upon receipt of an invoice therefore, reimburse such
member of the Company Group for any and all amounts so paid) the costs, fees,
disbursements and expenses set forth in Schedule 3.2(b).

Section
3.3             Separation.

(a)           Settlement of Intercompany
Accounts. Except as otherwise provided for in this Agreement or the
Ancillary Agreements, prior to the Closing Time, each member of the Company
Group shall remit to the appropriate member of the ACE Group all amounts
estimated to be owing as of the Closing Time by such member of the Company
Group to such member of the ACE Group, and each member of the ACE Group shall
remit to the appropriate member of the Company Group all amounts estimated to
be owing as of the Closing Time by such member 

 

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of the ACE Group to such
member of the Company Group; provided, that payments for services of the type
specified in the Transition Services Agreement shall be paid as such times as
is consistent with past practice.

(b)           Removal of the Company from
Intercompany Agreements and Representation. Except as otherwise provided
herein and except for the Ancillary Agreements and the agreements described in
Schedule 3.3(b), effective as of the Closing Time, all agreements between or
among one or more members of the ACE Group, on the one hand, and one or more
members of the Company Group, on the other hand, shall terminate. After the
Closing Time, no member of the Company Group shall have any liability under any
such agreement to any member of the ACE Group and no member of the ACE Group
shall have any liability under any such agreement to any member of the Company
Group.

(c)           Discontinuing of Insurance Coverage. Effective as
of the Closing Time, each member of the Company Group will cease to be covered
under any insurance policy covering ACE and any of its affiliates, including
directors’ and officers’ and errors and omissions insurance; provided, however,
that employees of members of the Company Group shall continue to be included in
insurance policies and other welfare and benefit plans of members of the ACE
Group in accordance with Article VII. 
Notwithstanding the foregoing, members of the Company Group shall
continue to be covered under ACE Group policies for claims made after the
Closing in respect of acts or events occurring up to and including the Closing
Time.  In addition, until the Closing
Time, ACE shall continue to include the Company, its Subsidiaries and their
respective directors (including D&O coverage for the all the proposed
directors of the Company as identified in the Registration Statement),
officers, employees and agents (the “Insured(s)”) in ACE’s corporate insurance
program, which provides the following coverages: (i) directors’ and officers’
liability insurance, (ii) professional liability/errors and omissions
insurance, (iii) commercial general liability insurance, (iv) property
insurance, (v) workers’ compensation insurance, (vi) fidelity and surety
insurance, (vii) employment practices liability insurance, (viii) travel and
accident insurance and (ix) kidnap and ransom insurance.  Coverage provided under ACE’s program shall
include, but shall not be limited to, claims arising out of or relating to (i)
the Public Offering, (ii) any public document connected with the Public
Offering, including, but not limited to, the prospectus for the Company and the
Registration Statement or (iii) any actions taken by the Company or its
directors, officers or employees prior to the Closing Time.  For a minimum of six years after the Closing
Time, ACE shall structure its corporate insurance program to permit the
Insureds to submit claims for insurance coverage, at substantially the current
level of insurance coverage, with respect to acts, events or occurrences that
took place prior to the Closing Time. 
ACE shall not provide ongoing insurance coverage to the Insureds
subsequent to the Closing Time.  To the
maximum extent permitted by law, ACE shall hold harmless and indemnify the
individuals listed in the Registration Statement as a Nominee for Director from
any and all liability or expense in connection with the Public Offering.

 

Section 3.4             Closing.  Subject to the terms and conditions of this
Agreement, all transactions contemplated by this Agreement shall be consummated
at a closing (the “Closing”) to be held at the offices of [______________] on
the date of the closing of the Public Offering, or at such other place or at
such other time or on such other date as ACE and the Company may mutually agree
upon in writing (the date and time at which the Closing takes place being the
“Closing Time”).

 

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Section 3.5             Deliveries by the ACE Group.

(a)           On or prior to the deliveries
specified in Section 3.5(c), ACE Financial Services shall deliver or cause to
be delivered to Assured Guaranty US Holdings:

(i)            a certificate representing the
Assured Guaranty Shares, duly endorsed or accompanied by stock powers (in form
reasonably satisfactory to Assured Guaranty US Holdings); and

(ii)           a certificate representing the
Assured Guaranty Financial Products Shares, duly endorsed or accompanied by
stock powers (in form reasonably satisfactory to Assured Guaranty US Holdings).

(b)           Concurrently with the deliveries
specified in Section 3.5(a), Assured Guaranty US Holdings shall issue and
deliver to ACE Financial Services:

(i)            the Assured Guaranty US Holdings
Shares; and

(ii)           the Assured Guaranty US Holdings
Note.

(c)           On or after the Effective Date and
prior to the transfers set forth in Section 3.5(d), ACE shall deliver or cause
to be delivered to ACE Bermuda a certificate representing the 12,000 Common
Shares owned by ACE, duly endorsed or accompanied by share certificates and
transfer form (in form reasonably satisfactory to ACE).

(d)           On or after the Effective Date and on
or prior to the Closing Time:

(i)            ACE Financial Services shall deliver
or cause to be delivered to the Company:

(A)                              the Assured Guaranty US Holdings Shares,
duly endorsed or accompanied by stock powers (in form reasonably satisfactory
to the Company); and

(B)                                the Assured Guaranty Finance Overseas
Shares, duly endorsed or accompanied by share certificates and transfer form
(in form reasonably satisfactory to the Company);

(ii)           ACE Bermuda shall deliver or cause to
be delivered to the Company the Assured Guaranty Re International Shares, duly
endorsed or accompanied by share certificates and transfer form (in form
reasonably satisfactory to the Company);

(iii)          ACE shall deliver or cause to be
delivered to Assured Guaranty title to the New York Property, in form
reasonably satisfactory to Assured Guaranty, upon payment of the purchase price
therefore; and ACE shall pay the purchase price for furniture and improvements
at the Company’s offices in New York City; and

 

12

 

(iv)          ACE shall deliver or cause to be
delivered to the Company         executed
copies of all Ancillary Agreements.

Section 3.6             Deliveries by the Company Group.

(a)           Concurrently with the deliveries
specified in Section 3.5(d)(i)(A), the Company shall issue and deliver to ACE
Financial Services:

(i)            certificates representing
[_________] Common Shares, registered in the name of ACE Financial Services;
and

(ii)           the Company Note A.

(b)           Concurrently with the deliveries
specified in Section 3.5(d)(i)(B), the Company shall issue and deliver to ACE
Financial Services:

(i)            certificates representing
[_________] Common Shares, registered in the name of ACE Financial Services;
and

(ii)           the Company Note B.

(c)           Concurrently with the deliveries
specified in Section 3.5(d)(ii), the Company shall issue and deliver to ACE
Bermuda:

(i)            certificates representing
[_________] Common Shares, registered in the name of ACE Bermuda; and

(ii)           the Company Note C.

(d)           Concurrently with the deliveries
specified in Section 3.5(d)(iv), the Company shall deliver or cause to be
delivered to ACE executed copies of all Ancillary Agreements.

(e)           Concurrently with the deliveries
specified in Section 3.5(d)(iii), the Company shall deliver or cause to be
delivered to ACE Financial Services the purchase price for the New York
Property by wire transfer in immediately available funds to an account designed
by ACE; and ACE shall deliver or cause to be delivered to the Company the
purchase price for the furniture and improvements in the Company’s offices in
New York City.

Section 3.7             Other Agreements.

(a)           ACE Bermuda will not (i) permit ACE
Title to write any insurance or reinsurance business (other than reinsurance
assumed pursuant to reinsurance treaties in effect at the Closing Time or
facultative reinsurace entered into with clients with whom ACE Title has
reinsurance treaties in effect at the Closing Time) or (ii) sell ACE Title or
any interest therein, in each case, until such time as the Keepwell Amendment
has become effective.  ACE and the
Company will use best efforts to obtain whatever rating agency approvals may be
required in order for the Keepwell Amendment to become effective.

 

13

 

(b)           ACE Financial Services shall take all
reasonable actions necessary to enforce, and shall cooperate with the Assured
Guaranty in enforcing, all of the rights originally granted to ACE Financial
Services under the Employment Agreement, including without limitation the
rights set forth in Section 10 thereof.

(c)           The Company shall, or shall cause one
of its Subsidiaries to, reimburse ACE for any amounts paid by ACE or any member
of the ACE Group pursuant letters of credit issued prior to the Closing Time on
behalf of the Company or any member of the Company Group for the benefit of
Persons who have ceded business to the Company or any member of the Company
Group promptly following receipt by the Company of notice of any such payment
(regardless of whether the Company is contesting or intends to contest the
payments made under such letters of credit.

(d)           ACE shall permit the Company and
Assured Guaranty Re International to continue to occupy the office space and
related properties currently occupied by the Company Assured Guaranty Re
International at 30 Woodbourne Avenue, Hamilton HM08 Bermuda, at the rental
rates in effect on the date hereof, until the earlier of (i) the date on which
the Company and/or Assured Guaranty Re International enters into a new lease
for such office space and related properties and (ii) December 31, 2004.  ACE shall also use its reasonable best
efforts to assist the Company and its Subsidiaries in obtaining a lease for
such office space and related properties on commercially reasonable terms, and
shall surrender such space and related properties (and enter into an agreement
with the lessor to effect such surrender) in connection therewith.

Section 3.8             Third Party Consents.

(a)           Each member of the ACE Group and the
Company Group shall use commercially reasonable efforts to obtain prior to the
Closing Time any consent, approval or authorization necessary for the
transactions contemplated herein or in any of the Ancillary Agreements.

(b)           If any consent, approval or
authorization necessary for the transactions contemplated by this Agreement has
not be obtained prior to the Closing Time, ACE shall, and shall cause the
appropriate member of the ACE Group to, and the Company shall and shall cause
the appropriate member of the Company Group to, each reasonably cooperate with
the appropriate members of the ACE Group or the Company Group, as the case may
be, in attempting to obtain such consents, approvals or authorizations as
promptly thereafter as practicable.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF ACE GROUP

ACE represents and warrants to the Company, as to
itself and each other member of the ACE Group, as of the date of this Agreement
and as of the Closing Time, as follows:

Section 4.1             Organization, Authority and
Qualification.

(a)           Each member of the ACE Group is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or the laws under which it currently

 

14

 

exists, and in good
standing in all jurisdictions in which the failure to qualify or be in good
standing could materially adversely affect the consummation or the validity of
the transactions provided for in this Agreement or any of the Ancillary
Agreements.

(b)           Each member of the ACE Group that is
a party to this Agreement has full corporate power and authority and has taken
all corporate action necessary to execute and deliver this Agreement and each
member of the ACE Group will have taken all corporate action necessary to
execute and deliver the Ancillary Agreements to which it is a party and to
perform its obligations hereunder and thereunder.  This Agreement has been, and each of the Ancillary Agreements
will be, duly authorized, executed and delivered by each member of the ACE Group
that is a party hereto and thereto and, assuming due authorization, execution
and delivery by all other parties to such agreement, each of this Agreement and
such Ancillary Agreements constitutes or will constitute, as the case may be,
the valid and legally binding obligation of such member of the ACE Group,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles.

Section 4.2             No Conflict.  The authorization, execution, delivery and
performance of this Agreement and the Ancillary Agreements by each of the
members of the ACE Group that are parties hereto and thereto do not and will
not:

(a)           violate, conflict with or result in
the breach of any provision of the certificate of incorporation, the memorandum
of association or by-laws (or similar organizational documents) of such member
of the ACE Group; or

(b)           conflict with or violate in any
material respect any law or Governmental Order applicable to such member of the
ACE Group or any of their respective assets, properties or businesses.

Section 4.3             Transferred Capital Stock.

(a)           Assured Guaranty and Assured
Guaranty Financial Products.  ACE
Financial Services has good and marketable title to the Assured Guaranty Shares
and the Assured Guaranty Financial Products Shares, free and clear of any
Encumbrances and, upon delivery to Assured Guaranty US Holdings of certificates
representing the Assured Guaranty Shares and the Assured Guaranty Financial
Products Shares, duly endorsed by ACE Financial Services for transfer to
Assured Guaranty US Holdings, good and marketable title to the Assured Guaranty
Shares and the Assured Guaranty Financial Products Shares shall pass to Assured
Guaranty US Holdings, free and clear of any Encumbrances.  The Assured Guaranty Shares and the Assured
Guaranty Financial Products Shares constitute validly issued, fully paid and
non-assessable shares of the capital stock of Assured Guaranty and Assured
Guaranty Financial Products, respectively, and are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Assured Guaranty Shares or the Assured Guaranty Financial
Products Shares, and there are no options, warrants or any other rights to
acquire the Assured Guaranty Shares or the Assured Guaranty Financial Products
Shares.  The Assured Guaranty Shares and
the Assured Guaranty 

 

15

 

Financial Products Shares represent all of the
outstanding capital stock of Assured Guaranty and Assured Guaranty Financial
Products, respectively.

(b)           Assured Guaranty Finance Overseas.  ACE Financial Services has good and
marketable title to the Assured Guaranty Finance Overseas Shares, free and
clear of any Encumbrances and, upon delivery to the Company of certificates
representing the Assured Guaranty Finance Overseas Shares, duly endorsed by ACE
Financial Services for transfer to the Company, good and marketable title to
the Assured Guaranty Finance Overseas Shares shall pass to the Company, free
and clear of any Encumbrances.  The
Assured Guaranty Finance Overseas Shares constitute validly issued, fully paid
and non-assessable shares of the capital stock of Assured Guaranty Finance
Overseas and are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of the Assured Guaranty
Finance Overseas Shares, and there are no options, warrants or any other rights
to acquire the Assured Guaranty Finance Overseas Shares.  The Assured Guaranty Finance Overseas Shares
represent all of the outstanding capital stock of Assured Guaranty Finance
Overseas.

(c)           Assured Guaranty Re International.  ACE Bermuda has good and marketable title to
the Assured Guaranty Re International Shares, free and clear of any
Encumbrances and, upon delivery to the Company of certificates representing the
Assured Guaranty Re International Shares, duly endorsed by ACE Bermuda for
transfer to the Company, and registration of such transfers in the Company’s
name in the Register of Members of Assured Guaranty Re International, good and
marketable title to the Assured Guaranty Re International Shares shall pass to
the Company, free and clear of any Encumbrances.  The Assured Guaranty Re International Shares constitute validly
issued, fully paid and non-assessable shares of the share capital of Assured
Guaranty Re International and are not subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or understanding, including
any such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the Assured
Guaranty Re International Shares, and there are no options, warrants or any
other rights to acquire the Assured Guaranty Re International Shares.  The Assured Guaranty Re International Shares
represent all of the outstanding share capital of Assured Guaranty Re
International.

(d)           Assured Guaranty US Holdings.  ACE Financial Services shall have good and
marketable title to the Assured Guaranty US Holdings Shares on the date of the
contribution of such shares to the Company, free and clear of any Encumbrances
and, upon delivery to the Company of certificates representing the Assured
Guaranty US Holdings Shares, duly endorsed by ACE Financial Services for
transfer to the Company, good and marketable title to the Assured Guaranty US
Holdings Shares shall pass to the Company, free and clear of any
Encumbrances.  The Assured Guaranty US
Holdings Shares shall, as of such time, constitute validly issued, fully paid
and non-assessable shares of the capital stock of Assured Guaranty US Holdings
and shall not be subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of the Assured Guaranty
US Holdings Shares, and as of such time there shall be no options, warrants or
any other rights to acquire the Assured Guaranty 

 

16

 

US Holdings Shares.  The Assured Guaranty US Holdings Shares
represent all of the outstanding capital stock of Assured Guaranty US Holdings.

Section 4.4             Tax Representations.

(a)           All
material Tax Returns required to be filed by applicable law have been timely
filed by, or with respect to, the Company’s Post-Closing Subsidiaries, and all
such Tax Returns are true, correct and complete in all material respects.  Each of the Company’s Post-Closing
Subsidiaries has paid (or there has been paid on its behalf) within the time
and in the manner prescribed by law all material Taxes that are due and
payable, or claimed or asserted by any Taxing authority to be due and payable,
from or with respect to it for the Pre-Closing Periods.

(b)           The Company’s Post-Closing Subsidiaries have established
(and until Closing will maintain) on their books and records reserves adequate
to pay all Taxes not yet due and payable in accordance with GAAP to the extent
required.

 

(c)           None of the Company’s Post-Closing Subsidiaries has
requested any extension of time within which to file any Tax return, which Tax
return has not since been filed.

 

(d)           ACE or a member of the ACE Group shall pay all sales, use,
transfer, real property transfer, recording, gains, stock transfer and other
similar Taxes and fees (“Transfer Taxes”) arising out of or in connection with
the transactions effected pursuant to this Agreement, and shall indemnify,
defend and hold harmless the Company and the Company’s Post-Closing
Subsidiaries with respect to such Transfer Taxes.

 

(e)           Except
as disclosed in Schedule 4.4(e), there are no outstanding agreements, waivers,
or arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to any of the Company’s Post-Closing Subsidiaries for any taxable
period.

(f)            Except
as disclosed in Schedule 4.4(f), none of the Company’s Post-Closing
Subsidiaries is a party to, is bound by, or has any obligation under, any Tax
allocation or sharing agreement or similar contract or arrangement.  Notwithstanding any disclosure contained in
the Schedules to the Agreement, the ACE Group represents and warrants that at
the Closing, none of the Company’s Post-Closing Subsidiaries shall be a party
to, be bound by or have any obligation under, any Tax allocation or sharing
agreement or similar contract or arrangement, other than the Tax Allocation
Agreement, the AFS Tax Sharing Agreement and the AGR Tax Sharing Agreement.

(g)           Each
of the Company’s Post-Closing Subsidiaries has materially complied with all
applicable laws, rule and regulations relating to the payment and withholding
of Taxes and has timely withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so withheld and paid
over.

(h)           There
is no deficiency, claim, lien, audit, examination, action, suit, proceeding or
investigation in progress or pending or, to the knowledge of the ACE Group,
threatened against or with respect to any of the Company’s Post-Closing
Subsidiaries in respect of any Taxes.

 

17

 

(i)            No
claim has ever been made by any taxing authority with respect to any of the
Company’s Post-Closing Subsidiaries in a jurisdiction in which such company
does not file Tax returns that any of the Company’s Post-Closing Subsidiaries
is or may be subject to taxation by that jurisdiction which has not been
resolved.

(j)            None
of the Company’s Post-Closing Subsidiaries has been a member of an affiliated
group filing consolidated, combined or unitary Tax returns other than a group
for which ACE was the common parent.

(k)           Between
the date of this Agreement and the Closing Date, without the prior written
consent of the Company (such consent not to be unreasonably withheld), none of
the Company’s Post-Closing Subsidiaries will change any Tax accounting method
or change any material Tax election or settle or compromise any material Tax
liability.

(l)            The
Company’s Post-Closing Subsidiaries are not a party to any Tax ruling or
closing agreement with any Taxing authority that would have a continuing
material adverse effect after the Closing date.

Section 4.5             No Other Representations or
Warranties.  Except for the
representations and warranties contained in this Agreement and the Ancillary
Agreements, neither ACE nor any other Person makes any express or implied
representation or warranty on behalf of or with respect to ACE or any other
member of the ACE Group, and ACE hereby disclaims any representation or
warranty not contained herein or therein.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP

The Company represents and warrants to ACE, as to
itself and each other member of the Company Group, as of the date of this
Agreement and as of the Closing Time, as follows:

Section 5.1             Organization, Authority and
Qualification.

(a)           Each member of the Company Group is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and in good standing in all jurisdictions in
which the failure to qualify or be in good standing could materially adversely
affect the consummation or the validity of the transactions provided for in
this Agreement or any of the Ancillary Agreements.

(b)           Each member of the Company Group that
is a party to this Agreement has full corporate power and authority and has
taken all corporate action necessary to execute and deliver this Agreement and
each member of the Company Group will have taken all corporate action necessary
to execute and deliver the Ancillary Agreements to which it is a party and to
perform its obligations hereunder and thereunder.  This Agreement has been, and each of the Ancillary Agreements
will be, duly authorized, executed and delivered by each member of the Company
Group that is a party hereto and thereto and, assuming due authorization,
execution and delivery by all other parties to such agreement, each of this
Agreement and such Ancillary Agreements constitutes or will constitute, as the
case may be, the valid and legally binding obligation of such member of the
Company Group, enforceable in accordance with its terms, subject to bankruptcy,

 

18

 

insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

Section 5.2             No Conflict.  The authorization, execution, delivery and
performance of this Agreement and the Ancillary Agreements by each of the
members of the Company Group that are parties hereto and thereto do not and
will not:

(a)           violate, conflict with or result in
the breach of any provision of the certificate of incorporation, the memorandum
of association or by-laws (or similar organizational documents) of such member
of the Company Group; or

(b)           conflict with or violate in any
material respect any law or Governmental Order applicable to such member of the
Company Group or any of their respective assets, properties or businesses.

Section 5.3             Common Shares.  The Common Shares to be issued to ACE
Financial Services and ACE Bermuda pursuant to this Agreement, upon issuance
and payment therefor as contemplated by this Agreement and registration thereof
in the Register of Members for the Company, and the Common Shares previously
issued to ACE shall, at the Closing Time, constitute all of the issued and
outstanding share capital of the Company and shall be validly authorized and
issued, fully paid and non-assessable and shall not be subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Common Shares, and as of such time there shall be no options,
warrants or any other rights to acquire Common Shares except for any such
options, warrants or other rights granted under the Company’s 2004 Long-Term
Incentive Plan or the Company’s Replacement Grant Plan.

Section 5.4             Tax Representations.

(a)           The Company has no plan or intention
to enter into any transaction a significant purpose of which is to reduce the
amount of Tax benefits otherwise payable to ACE Financial Services under the
Tax Allocation Agreement.

(b)           The Company has no plan or intention
to enter into any transaction which may result in the disqualification or
invalidation of the election made under section 338(h)(10) of the Code, which
transactions include but are not limited to the merger, liquidation, conversion
or other corporate transactions involving any Post-Closing Subsidiary of the
Company which may result in the Internal Revenue Service (or other applicable
tax authority, as the case may be) disqualifying or invalidating any election
under section 338(h)(10) of the Code.

Section 5.5             No Other Representations or
Warranties.  Except for the
representations and warranties contained in this Agreement and the Ancillary
Agreements, neither the Company nor any other Person makes any express or
implied representation or warranty on behalf of or with respect to the Company
or any other member of the Company Group, and the Company hereby disclaims any
representation or warranty not contained herein or therein.

 

19

 

ARTICLE VI

THE PUBLIC OFFERING AND ACTIONS PENDING THE PUBLIC OFFERING

Section 6.1             Transactions Prior to the Public
Offering.  Subject to the conditions
specified in Section 6.3, the Company and ACE shall use reasonable commercial
efforts to consummate the Public Offering. 
Such efforts shall include, but not necessarily be limited to, those
specified in this Section 6.1 (to the extent not previously accomplished):

(a)           The Company has filed the
Registration Statement and shall use its reasonable best efforts to cause the
Registration Statement to become effective under the Securities Act, including
by filing such amendments thereto as may be necessary or appropriate,
responding to comments from the Commission and taking such other action in that
connection as may be requested by ACE. 
The Company and ACE shall also cooperate in preparing, filing with the
Commission and causing to become effective a registration statement registering
the Common Shares under the Securities Exchange Act of 1934, as amended.

(b)           The Company, ACE Financial Services
and ACE Bermuda shall enter into an underwriting agreement with the
underwriters named in the Registration Statement, in form and substance
reasonably satisfactory to the Company and ACE, and shall comply with their
obligations thereunder.

(c)           The Company and ACE shall consult
with each other and the underwriters regarding the timing, pricing and other
matters with respect to the Public Offering, it being understood that decisions
on such matters may be dictated by ACE in its sole discretion.

(d)           The Company shall take such action as
may be necessary or appropriate under state securities and blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Public Offering.

(e)           The Company shall prepare, file and
seek to make effective an application for listing of the Common Shares on the
New York Stock Exchange, subject to official notice of issuance.

Section 6.2             Cooperation. The Company
shall, at ACE’s direction, promptly take any and all actions necessary or
desirable to consummate the Public Offering as contemplated by the Registration
Statement and the Underwriting Agreement, including filing the prospectus
relating to the Public Offering with the Registrar of Companies in Bermuda in
accordance with the Bermuda Companies Act 1981 prior to the Public Offering or
as soon as practicable after the publication of the prospectus.  Notwithstanding anything to the contrary
contained herein, as between the Company and ACE, ACE may in its sole
discretion terminate, abandon or amend any aspect of the Public Offering and
the other transactions contemplated hereby, and the Company shall take all
actions directed by ACE in that regard.

Section 6.3             Conditions Precedent to the
Consummation of the Public Offering. The parties hereto shall use their
reasonable commercial efforts to satisfy the conditions listed below for the
consummation of the Public Offering as soon as practicable. The obligations of
the parties to use their reasonable commercial efforts to consummate the Public
Offering shall be conditioned on the satisfaction or waiver by the Company and
ACE of the following conditions:

 

20

 

(a)           the Registration Statement shall have
been filed and declared effective by the Commission, and there shall be no stop
order in effect with respect thereto;

(b)           the actions and filings with regard
to state securities and blue sky laws of the United States (and any comparable
laws under any foreign jurisdictions) described in Section 6.1(d) shall have
been taken and, where applicable, have become effective or been accepted;

(c)           the Common Shares shall have been
accepted for listing on the New York Stock Exchange, on official notice of
issuance;

(d)           the Company, ACE Financial Services,
ACE Bermuda and the underwriters shall have entered into the Underwriting
Agreement and all conditions to the obligations of the parties thereunder shall
have been satisfied or waived in accordance with the terms thereof;

(e)           any approvals from Governmental Authorities
necessary to consummate the Public Offering shall have been obtained and be in
full force and effect;

(f)            no Governmental Order or other legal
restraint or prohibition shall be in place preventing the consummation of the
Public Offering;

(g)           such other actions as the parties
hereto may, based upon the advice of counsel, reasonably request to be taken
prior to the Public Offering in order to assure the successful completion of
the Public Offering shall have been taken; and

(h)           this Agreement and all Ancillary
Agreements shall have been executed and delivered and shall not have been
terminated.

ARTICLE VII

EMPLOYEE MATTERS

Section 7.1             ACE Restricted Shares.  On or prior to the Closing Time, ACE shall
pay to the Company $5,298,012 by wire transfer of immediately available funds
to an account designated by the Company for contribution to the trust to be
established by the Company to grant restricted share awards in replacement of
unvested restricted shares of ACE held by employees of the Company and its
Subsidiaries that will be terminated as a result of the Public Offering and the
transactions contemplated hereby.

Section 7.2             Other Welfare and Benefit Plan
Provisions.

(a)           ACE shall permit employees of Assured
Guaranty Re International to continue to participate in the welfare plans in
which they participate on the date hereof, including health and medical plans
and insurance plans, and the fringe benefit plans covering mortgage subsidies,
day care and parking, until the earlier of (i) the date on which Assured
Guaranty Re International notifies ACE that all such employees have been
provided coverage under plans maintained by Assured Guaranty Re International
and (ii) December 31, 2004.  Assured
Guaranty Re International shall reimburse ACE for costs associated with the
foregoing at the rates in effect on the date hereof, or the costs thereof shall
be billed directly by the provider to Assured Guaranty Re International.

 

21

 

(b)           In the event that any Person who will
become an employee of any member of the Company Group has balances in any
qualified or supplemental retirement or pension plans or deferred compensation
plans of any member of the ACE Group, ACE shall cooperate, and cause each of
its Subsidiaries to cooperate, in transferring such balances to corresponding
plans maintained by members of the Company Group, to the extent permitted under
such plans.

(c)           In the event that any Person who will
become an employee of any member of the ACE Group has balances in any qualified
or supplemental retirement or pension plans or deferred compensation plans of
any member of the Company Group, the Company shall cooperate, and cause each of
its Subsidiaries to cooperate, in transferring such balances to corresponding plans
maintained by members of the ACE Group, to the extent permitted under such
plans.

 

ARTICLE VIII

INDEMNIFICATION

Section 8.1             General Cross Indemnification.  (a) 
Except as otherwise specifically set forth in any provision of this
Agreement, or of any Ancillary Agreement, ACE shall indemnify, defend and hold
harmless each member of the Company Group and their respective officers,
directors, employees, representatives and agents (each a “Company Indemnified
Party”) from and against any and all Losses of such Company Indemnified Party
arising out of, by reason of or otherwise in connection with:

(i)            the ACE Liabilities;

(ii)           any untrue statement or alleged
untrue statement of material fact contained in the Registration Statement or
the prospectus that forms a part thereof, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading (a
“Misstatement”), made by a member of the ACE Group or any ACE Indemnified
Party; provided, that Losses under this clause shall be limited to third-party
claims by purchasers of the Common Shares in the Public Offering or thereafter
(including, without limitation, the underwriters of the Public Offering);

(iii)          the action currently pending in the
United States district Court for the Southern District of New York entitled
World Omni Financial Corp. v. ACE Capital Re Inc., Case No. 02 CV 0476 (RO),
and any subsequent Action arising out of or based upon the same or
substantially similar facts as the foregoing case;

(iv)          the action currently pending in the
Ohio State Court filed by Olympic Title Insurance Company and certain of its
principals against ACE, ACE Title, ACE Capital RE Inc., Assured Guaranty Re
Overseas, Assured Guaranty Overseas US Holdings Inc., Assured Guaranty Re
International and ACE Bermuda, and any subsequent Action arising out of or
based upon the same or substantially similar facts as the foregoing case; or

 

22

 

(v)           any breach by any member of the ACE
Group of any of their representations or warranties in, or any covenant,
commitment, obligation, agreement or undertaking to be performed or complied
with by any of them under, this Agreement or any Ancillary Agreement.

(b)           Except as otherwise specifically set
forth in any provision of this Agreement or any Ancillary Agreement, the
Company shall indemnify, defend and hold harmless each member of the ACE Group
and their respective officers, directors, employees, representatives and agents
(each an “ACE Indemnified Party”) from and against any and all Losses of such
ACE Indemnified Party arising out of, by reason of or otherwise in connection
with:

(i)            the Company Liabilities;

(ii)           any Misstatement made by a member of
the Company Group or any Company Indemnified Party; provided, that Losses under
this clause shall be limited to third-party claims by purchasers of the Common
Shares in the Public Offering or thereafter (including, without limitation, the
underwriters of the Public Offering); or

(iii)          any breach by any member of the
Company Group of any of their representations or warranties in, or any
covenant, commitment, obligation, agreement or undertaking to be performed or
complied with by any of them under, this Agreement or any Ancillary Agreement.

(c)           The indemnity obligations contained
in this Section 8.1 are applicable whether or not any Action or the facts or
transactions giving rise to such Action arose prior to, on or subsequent to the
date of this Agreement.

Section 8.2             Indemnification Procedures.  If any Action is brought in respect of which
indemnity may be sought pursuant to this Agreement, the Person seeking
indemnification (the “Indemnified Party”) shall promptly notify the Person
against whom indemnification is sought (the “Indemnifying Party”) in writing of
the institution of such Action (but the failure so to notify will not relieve
the Indemnifying Party from any liability that it may have to the Indemnified
Party under this Article 8 to the extent the Indemnifying Party is not
materially prejudiced as a result thereof, and in no event shall it relieve the
Indemnifying Party from any liability it may have otherwise than pursuant to
this Article 8), and the Indemnifying Party shall assume the defense of such
Action, including the employment of counsel reasonably satisfactory to the
Indemnified Party and payment of expenses. 
Notwithstanding the foregoing, ACE shall assume the defense of the
Actions described in Section 8.1(a)(iii) and (iv) without the requirement of
notice from an Indemnified Party.  The
Indemnified Party shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of
Indemnified Party unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party
shall not have employed counsel reasonably satisfactory to the Indemnified
Party within a reasonable time or (iii) such Indemnified Party shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to
those available to the Indemnifying Party and may present a conflict for
counsel representing the Indemnified Party and the Indemnifying Party (in which
case the Indemnifying Party shall not have the right 

 

23

 

to direct the defense of
such Action on behalf of the Indemnified Party), in any of which events such
fees and expenses shall be borne by the Indemnifying Party and paid as incurred
(it being understood, however, that the Indemnifying Party shall not be liable
for the fees and expenses of more than one separate counsel (in addition to
local counsel) for the Indemnified Parties in any one Action or series of
related Actions in the same jurisdiction representing the Indemnified
Parties).  Anything in this Section 8.2
to the contrary notwithstanding, the Indemnifying Party shall not be liable for
any settlement effected without its written consent unless the Indemnifying
Party shall have failed to assume the defense of such Action or reimburse the
Indemnified Party for fees and expenses of counsel as contemplated by this
Section 8.2 within 30 days after receipt by the Indemnifying Party of the
request therefor.  An Indemnifying Party
will not, without the prior written consent of the Indemnified Party, settle or
compromise or consent to the entry of any judgment in any Action in respect of
which indemnification may be sought hereunder unless such settlement,
compromise or consent includes an unconditional release of the Indemnified
Parties from all liability arising out of the Action.

Section 8.3             Limitations on Indemnification
Obligations.  The amount which an
Indemnifying Party is or may be required to pay to any Indemnified Party
pursuant to Section 8.1 shall be reduced (including, without limitation,
retroactively) by any Insurance Proceeds or any other amounts actually
recovered by or on behalf of such Indemnified Party, in reduction of the
related Loss.  If an Indemnified Party
has received the payment required by this Agreement from an Indemnifying Party
in respect of any Loss and has subsequently actually received Insurance
Proceeds or other amounts in respect of such Loss, then such Indemnified Party
shall promptly pay to such Indemnifying Party a sum equal to the amount of such
Insurance Proceeds or other amounts actually received (up to but not in excess
of the amount of any indemnity payment made hereunder).  An insurer who would otherwise be obligated
to pay any claim shall not be relieved of the responsibility with respect
thereto or, solely by virtue of the indemnification provisions hereof, have any
subrogation rights with respect thereto, it being expressly understood and
agreed that no insurer or any other third party shall be entitled to a
“windfall” (i.e., a benefit they would not be entitled to receive in the
absence of the indemnification provisions) by virtue of the indemnification
provisions hereof.

Section 8.4             Remedies Cumulative.  The remedies provided in this Article VIII
shall be cumulative and shall not preclude assertion by an Indemnified Party of
any other rights at law or in equity or the seeking of any and all other
remedies against any Indemnifying Party.

Section 8.5             Contribution. If any
indemnification provided for in this Article VIII is unavailable to an
Indemnified Party in respect of any Loss arising out of or related to
information contained in the Registration Statement as provided in Section
8.1(a)(ii) or Section 8.1(b)(ii), then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Loss, in such proportion
as is appropriate to reflect the relative fault of the Company and each other
member of the Company Group, on the one hand, and ACE and each other member of
the ACE Group, on the other hand, in connection with the Misstatements that
resulted in such Loss. With respect to any Loss relating to matters covered by
Section 8.1(a)(ii) or 8.1(b)(ii) or otherwise relating to misstatements or
omissions under securities or antifraud laws, the relative fault of a member of
the Company Group, on the one hand, and of a member of the ACE Group, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue 

 

24

 

statement of a material
fact or the omission or alleged omission to state a material fact relates to a
member of the Company Group or a member of the ACE Group and was supplied by
such member.

Section 8.6             Mutual Release. Effective as
of the Closing Time, and except as otherwise specifically set forth in this
Agreement or any Ancillary Agreement, ACE, on behalf of itself and the other
members of the ACE Group, and the Company, on behalf of itself and the other
members of the Company Group, hereby releases and forever discharges each
Company Indemnified Party (in the case of the release by ACE) or ACE
Indemnified Party (in the case of the release by the Company), as the case may
be, in their respective capacities as such, of and from all debts, demands, Actions,
accounts, covenants, contracts, agreements, damages and Liabilities whatsoever
of every name and nature, both in law and in equity, which the releasing party
has or ever had or ever will have, which arise out of or relate to events,
circumstances or actions taken by such other party occurring or failing to
occur or any conditions existing on or prior to the Closing Time; provided,
however, that the foregoing general release shall not apply to (i) any
Liabilities or other obligations (including Liabilities with respect to
payment, reimbursement, indemnification or contribution) under this Agreement
or any Ancillary Agreement or assumed, transferred, assigned, allocated or
arising under this Agreement or any Ancillary Agreement (including any
Liability that the parties may have with respect to payment, performance,
reimbursement, indemnification or contribution pursuant to this Agreement or
any Ancillary Agreement for claims brought against the parties by third
parties) and the foregoing release will not affect any party’s right to enforce
this Agreement or any Ancillary Agreement in accordance with their respective
terms.

Section 8.7             Survival of Indemnities.  The obligations of the Company and ACE under
this Article VIII shall survive indefinitely.

Section 8.8             Other Indemnification Provisions.

(a)           Notwithstanding any provision of this
Agreement to the contrary, if a member the Company Group seeks to assert any
right to indemnification hereunder from ACE and such claim may be asserted
against a Post-Closing Subsidiary of ACE, such member of the Company Group
shall first seek to recover from the such Post-Closing Subsidiary unless doing
so would materially prejudice such member of the Company Group in obtaining
relief.

(b)           Claims for indemnification under any
Ancillary Agreement shall be subject to the procedures set forth in this
Article VIII unless otherwise specified in the Ancillary Agreement.

ARTICLE IX

ACCESS TO INFORMATION; FURTHER ASSURANCES

Section 9.1             Access to Information.  From and after the Closing Time, ACE shall
afford to the Company and the Company’s Post-Closing Subsidiaries and their
respective authorized accountants, counsel and other designated representatives
(collectively, “Representatives”) reasonable, and reasonably prompt, access
(including using commercially reasonable efforts to give access to Persons
possessing information) during normal business hours to all data and
information that is specifically described in writing (collectively, 

 

25

 

“Information”) within the
possession of ACE or any Post-Closing Subsidiary of ACE relating to the Company
or any Post-Closing Subsidiary of the Company, insofar as such Information is
reasonably required by the Company or such Post-Closing Subsidiary, including
in connection with its preparation of regulatory reports and filings.  Similarly, from and after the Closing Time,
the Company shall afford to ACE, any Post-Closing Subsidiary of ACE and their
respective Representatives reasonable, and reasonably prompt, access (including
using commercially reasonable efforts to give access to Persons possessing
information) during normal business hours to Information within the possession
of the Company or any Post-Closing Subsidiary of the Company relating to ACE or
any Post-Closing Subsidiary of ACE, insofar as such Information is reasonably
required by ACE or such Post-Closing Subsidiary, including in connection with
its preparation of regulatory reports and filings.  Information may be requested under this Article IX for, without
limitation, audit, accounting, claims, litigation (other than any claims or
litigation between the parties hereto or their Subsidiaries) and tax purposes,
as well as for purposes of fulfilling disclosure and reporting obligations and
for performing this Agreement and the transactions contemplated hereby.

Section 9.2             Retention of Records.  Each of ACE and the Company and their
respective Post-Closing Subsidiaries shall retain, and shall cause their
respective Post-Closing Subsidiaries to retain, following the Closing Time, for
a period consistent with the longer of their respective document retention
policies in effect at such time or for such longer period as may be required by
applicable law or regulations, respectively, all significant information
relating to the business of the other and the other’s Subsidiaries or the
obligations of the other or the other’s Subsidiaries, and shall notify the
other parties hereto prior to disposing of such information and provide them
with an opportunity to obtain such information, at their own expense, prior to
such disposal.

Section 9.3             Confidential Information.

(a)           Neither the Company, nor any of its
Post-Closing Subsidiaries nor any of their respective directors, officers and
agents may disclose any information of a confidential nature received from a
member of the ACE Group (“ACE Confidential Information”) and neither ACE, nor
any of its Post-Closing Subsidiaries nor any of their respective directors,
officers and agents may disclose any information of a confidential nature
received from a member of the Company Group (“Company Confidential Information”
and, together with the ACE Confidential Information, “Confidential
Information”).

(b)           Confidential Information shall not
include information which is or becomes generally known on a non-confidential
basis, provided that the source of such information was not bound by a
confidentiality agreement or other obligation of confidentiality.

(c)           If the Company or ACE or any of its
Post-Closing Subsidiaries or any of their respective directors, officers or
agents is legally requested or required under an order or subpoena issued by a
court, administrative agency or arbitration panel (through oral examination,
interrogatories, requests for information or documents, civil investigation
demand or other legal, administrative or arbitration processes) to disclose any
Confidential Information, the party being so requested or required to disclose
such Confidential Information shall give the party whose Confidential Information
is subject to such request or requirement prompt written notice of the 

 

26

 

request, requirement,
subpoena or order to permit such other party (if it so elects) to seek an
appropriate protective order preventing or limiting disclosure.  If such party seeks such an order or takes
other steps to avoid or limit disclosure, the other party shall cooperate with
such party at such party’s expense.  If,
in the absence of such protective order, a party is compelled to disclose
Confidential Information, such party may disclose such Confidential Information
without liability hereunder.

(d)           Each party agrees that money damages
would not be a sufficient remedy for any breach of this Section 9.3 and that,
in addition to all other remedies, each party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach.

Section 9.4             Further Assurances; No Agency;
Specific Performance.  If at any
time after the Closing Time any further action is reasonably necessary or
advisable to carry out the purposes of this Agreement or any Ancillary
Agreement, the proper officers of each party to this Agreement shall take all
such action or cause the applicable Post-Closing Subsidiaries to take all such
action.  Each of ACE and its
Post-Closing Subsidiaries and the Company and its Post-Closing Subsidiaries
shall use its commercially reasonable efforts to obtain all consents and
approvals, to enter into all amendatory agreements and to make all filings and
applications that may be required for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, including, without
limitation, all applicable governmental and regulatory filings.  Under no circumstances does this Agreement
or any of the Ancillary Agreements create an agency relationship between ACE
and the Company, except to the extent specified in any such Ancillary
Agreement.  The parties each agree and
acknowledge that remedies at law for any breach of their obligations under this
Section 9.4 are inadequate and that in addition thereto each party, as
applicable, shall be entitled to equitable relief, including injunction and
specific performance, in the event of any such breach.

ARTICLE X

MISCELLANEOUS

Section 10.1           Termination.  Notwithstanding any provision of this
Agreement or any Ancillary Agreement to the contrary, this Agreement may be
terminated and the Public Offering and other transactions contemplated hereby
may be abandoned at any time prior to the Public Offering (subject to the terms
of the Underwriting Agreement) by and in the sole discretion of ACE.  In the event of such termination, no party
shall have any liability of any kind to any other party on account of such
termination.

Section 10.2           Survival.  All representations, covenants and
agreements contained or provided for herein shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
party benefiting from any such covenant or agreement, and shall survive the
execution of this Agreement.

Section 10.3           Governing Law; Dispute Resolution.

(a)           Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the state of New
York, without regard to its conflict of laws principles.

 

27

 

(b)           Dispute
Resolution.

(i)            Mandatory
Arbitration.  The parties
hereto shall promptly submit any dispute, claim, or controversy arising out of
or relating to this Agreement, the Ancillary Agreements (unless they
specifically provide otherwise) and/or the transactions contemplated hereunder,
including effect, validity, breach, interpretation, performance, or enforcement
(collectively, a “Dispute”) to binding arbitration in New York, New York at the
offices of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) before an
arbitrator (the “Arbitrator”) in accordance with JAMS’ Arbitration Rules and
Procedures and the Federal Arbitration Act, 9 U.S.C. Section 1, et seq. The Arbitrator
shall be a former federal judge selected from JAMS’ pool of neutrals.  The parties agree that, except as otherwise
provided herein respecting temporary or preliminary injunctive relief, binding
arbitration shall be the sole means of resolving any Dispute.

(ii)           Costs.  The costs of the arbitration proceeding and
any proceeding in court to confirm or to vacate any arbitration award or to
obtain temporary or preliminary injunctive relief as provided in paragraph
(iii) below, as applicable (including, without limitation, actual attorneys’
fees and costs), shall be borne by the unsuccessful party and shall be awarded
as part of the Arbitrator’s decision, unless the Arbitrator shall otherwise
allocate such costs in such decision.

(iii)          Injunctive
Relief.  Nothing herein
prevents the parties hereto from seeking or obtaining temporary or preliminary
injunctive relief in a court for any breach or threatened breach of any
provision hereof pending the hearing before and determination of the
Arbitrator.  The parties hereby agree
that they shall continue to perform, or cause their Post-Closing Subsidiaries
to perform, any and all obligations under this Agreement and the Ancillary
Agreements, including, without limitation, the Services Agreement, pending the
hearing before and determination of the Arbitrator, it being agreed and
understood that the failure to so perform will cause irreparable harm to each
party and its Affiliates and that the putative breaching party has assumed all
of the commercial risks associated with such breach or threatened breach of any
provision hereof by such party.

(iv)          Discovery.  The parties shall be entitled to reasonable
discovery, including a production of non-privileged documents and answers to a
reasonable number of interrogatories. 
Depositions may be ordered by the arbitrator upon a showing of need.

(v)           Courts.  The parties agree that the State and Federal
courts in The City of New York shall have jurisdiction for purposes of
enforcement of their agreement to submit Disputes to arbitration and of any
award of the Arbitrator.

Section 10.4           Notices.  All notices, requests, claims, demands and
other communications hereunder and under the Ancillary Agreements shall be in
writing and shall be deemed to have been duly given if delivered by hand (with
receipt confirmed), or by certified mail, postage prepaid and return receipt
requested, or facsimile transmission addressed as follows (or to such other
address as a party may designate by written notice to the others) and shall be
deemed given on the date on which such notice is received:

 

28

 

	
   

  	
  If to ACE:

  
	
   

  	
   

  
	
   

  	
  ACE Limited

  
	
   

  	
  ACE Global Headquarters

  
	
   

  	
  19 Woodbourne Avenue

  
	
   

  	
  Hamilton HM08 Bermuda

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile: 
  (441) [_________]

  
	
   

  	
   

  
	
   

  	
  If to the Company:

  
	
   

  	
   

  
	
   

  	
  Assured Guaranty Ltd.

  
	
   

  	
  30 Woodbourne Avenue

  
	
   

  	
  Hamilton HM08 Bermuda

  
	
   

  	
  Attention: 
  General Counsel

  
	
   

  	
  Facsimile: 
  (441) [_________]

  

 

 

Section 10.5           Amendment and Modification.  The parties may by written agreement, subject
to any regulatory approval as may be required, (a) extend the time for the
performance of any of the obligations or other acts of the parties hereto; (b)
waive any inaccuracies in the documents delivered pursuant to this Agreement;
and (c) waive compliance with or modify, amend or supplement any of the
agreements contained in this Agreement or waive or modify performance of any of
the obligations of any of the parties hereto. 
This Agreement may not be amended or modified except by an instrument in
writing duly signed on behalf of the parties hereto.

Section 10.6           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

Section 10.7           No Third Party Beneficiaries.  Except for Section 10.16 and the provisions
of Article VIII, this Agreement is solely for the benefit of the parties hereto
and shall not be deemed to confer upon third parties any remedy, claim,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.

Section 10.8           Headings.  The Article and Section headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.

Section 10.9           Severability.  To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remaining provisions of this Agreement shall be unaffected and
shall continue in full force and effect.

Section 10.10         Waiver.  No failure by any party to take any action
or assert any right hereunder shall be deemed to be a waiver of such right in
the event of the continuation or repetition of the circumstances giving rise to
such right, unless expressly waived in writing.

Section 10.11         Expenses.  Except as otherwise specified in this
Agreement or the Ancillary Agreements, all costs and expenses, including,
without limitation, fees and 

 

29

 

disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement,
the Ancillary Agreements and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses, whether or not the Closing Time
shall have occurred.

Section 10.12         Public Announcement.  No party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior consent of the other party and the parties
shall cooperate as to the timing and contents of any such press release or
public announcement.

Section 10.13         Entire Agreement.  This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between ACE and the Company with respect
to the subject matter hereof and thereof.

Section 10.14         Assignment of this Agreement.  No party may assign this Agreement by
operation of law or otherwise without the express written consent of the other
parties; provided, however, this Agreement may be assigned by
operation of law or otherwise without the express written consent of the other
parties hereto by ACE and/or the Company to their respective Post-Closing
Subsidiaries so long as such assignment does not relieve the assigning party of
liability hereunder.

Section 10.15         Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

Section 10.16         Limit on Recovery from Company
Directors and Officers.  In any
legal action commenced by ACE against the Company, any of its Post-Closing
Subsidiaries or the officers and/or directors of the Company or such
Post-Closing Subsidiaries, ACE will not recover from any officer or director of
the Company or its Post-Closing Subsidiaries any amount that is in excess of
the amount the Company and/or such Post-Closing Subsidiaries are able to
indemnify such officer or director, other than in the circumstance where such
indemnification of such officer or director by the Company and/or such Post-Closing
Subsidiaries is restricted due to such officer or director having engaged in
fraud, intentional misconduct or criminal acts.  ACE and the Company agree that the officers and directors of the
Company and its Post-Closing Subsidiaries are third party beneficiaries of the
agreement set forth in this Section 10.16.

[Intentionally left
blank]

 

30

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the day and year first above written.

	
   

  	
  ACE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACE FINANCIAL SERVICES
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ACE BERMUDA INSURANCE LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSURED GUARANTY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  

 

 

31Exhibit
10.9

 

 

FORM
OF

TRANSITION
SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (the “Agreement”)
is entered into as of the [__] day of April, 2004, between Assured Guaranty
Ltd., a Bermuda company (the “Company”), and ACE Limited, a Cayman Islands
corporation (“ACE”).

RECITALS

A.            The
Company and ACE and certain Affiliates of ACE are parties to that certain
Master Separation Agreement, dated as of April [__], 2004 (the “Separation
Agreement”), pursuant to which it is contemplated that the Company will make a
Public Offering of the Company’s Common Shares held by Subsidiaries of
ACE.  Terms used but not defined herein
have the meanings given to them in the Separation Agreement.

B.            The
Company and its Subsidiaries, as wholly-owned Subsidiaries of ACE, have
previously received certain administrative, support and other services from ACE
and its Affiliates.

C.            In
order to effect an orderly transition by the Company to a separate, stand-alone
entity following the Public Offering, each of the parties hereto desires that
certain services previously provided by the other party or its Affiliates be
provided for a period of time following the Closing Time.  For purposes of this Agreement, the party
providing the services, directly or through an Affiliate, shall be referred to
as the “Service Provider,” and the party receiving the services shall be
referred to as the “Service Receiver.”

NOW, THEREFORE, in consideration of the mutual
promises, covenants and agreements set forth herein, the sufficiency of which
is acknowledged, the parties hereby agree as follows:

ARTICLE
1

SERVICES

1.1           Services.  Subject to the terms and conditions of this
Agreement, each Service Provider, acting through it and/or its Affiliates’
respective employees, agents, contractors or independent third parties, agrees
to provide or cause to be provided to the Service Receiver and its Post-Closing
Subsidiaries the services set forth in Schedule 1.1 hereto (all of such
services plus any additional services provided pursuant to Section 1.3 are collectively
referred to herein as the “Services”). 
At all times during the performance of the Services, all Persons
performing such Services (including agents, temporary employees, independent
third parties and consultants) shall be construed as being independent from the
Service Receiver and its Affiliates, and such Persons shall not be considered
or deemed to be an employee of the Service Receiver or its Affiliates nor
entitled to any employee benefits of the Service Receiver or its Affiliates as
a result of this Agreement.

 

1.2           Service Coordinators. Each
party will nominate a representative to act as the primary contact Person with
respect to the provision of the Services as contemplated by this Agreement (the
“Service Coordinators”). The initial Service Coordinators shall be James
Michener for the Company and its Affiliates and Andy Gibbs for ACE and its
Affiliates.  Unless the Company and ACE
otherwise agree, ACE and the Company agree that all notices and communications
relating to this Agreement other than those day to day communications and
billings relating to the actual provision of the Services shall be directed to
the Service Coordinators in accordance with Section 5.5 hereof.

1.3           Additional Services. From the
date hereof until 12 months following the Closing Time, the Company and its
Affiliates may request additional Services from ACE and its Affiliates by
providing written notice. Upon mutual agreement as to the cost, duration and
scope of such additional Services, ACE and the Company may supplement in
writing Schedule 1.1 hereto to include such additional Services.

1.4           Third Party Services.  Service Providers shall have the right to
hire third party subcontractors to provide all or part of any Service
hereunder; provided, that, in the event such subcontracting is inconsistent
with past practices and the practice applied by the Service Provider generally
from time to time within its own organization, the Service Provider obtains the
prior written consent of the Service Receiver, which consent shall not be
unreasonably withheld.

1.5           Standard of Performance;
Limitation of Liability. The Services to be provided hereunder shall be
performed with the same general degree of care as when performed within the
Service Provider’s organization. In the event a Service Provider or its
Affiliates fails to provide the Services in accordance herewith, the sole and
exclusive remedy of the Service Receiver and its Affiliates shall be to, at the
Service Receiver’s sole discretion, either (i) have the Service reperformed, or
(ii) not pay for such Service, or if payment has already been made, receive a
refund of the payment made therefor; provided that in the event the Service
Provider defaults in the manner described in Section 3.3(ii), the Service
Receiver shall have the further rights set forth in Section 3.3. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 1.5, NO REPRESENTATIONS OR WARRANTIES OF
ANY KIND, IMPLIED OR EXPRESSED, ARE MADE BY A SERVICE PROVIDER OR ITS
AFFILIATES WITH RESPECT TO THE SERVICES UNDER THIS AGREEMENT AND ALL SUCH
REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED. EACH SERVICE
RECEIVER, ON ITS OWN BEHALF AND BEHALF OF ITS AFFILIATES, HEREBY EXPRESSLY
WAIVES ANY RIGHT THE SERVICE RECEIVER OR ANY OF ITS AFFILIATES MAY OTHERWISE
HAVE FOR ANY LOSSES, TO ENFORCE SPECIFIC PERFORMANCE OR TO PURSUE ANY OTHER
REMEDY AVAILABLE IN CONTRACT, AT LAW OR IN EQUITY IN THE EVENT OF ANY
NON-PERFORMANCE, INADEQUATE PERFORMANCE, FAULTY PERFORMANCE OR OTHER FAILURE OR
BREACH BY A SERVICE PROVIDER OR ITS AFFILIATES UNDER OR RELATING TO THIS
AGREEMENT, NOTWITHSTANDING THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR
ACTIVE OR PASSIVE) OR GROSS NEGLIGENCE OF A SERVICE PROVIDER OR ITS AFFILIATES
OR ANY OTHER PERSON INVOLVED IN THE PROVISION OF SERVICES AND WHETHER DAMAGES
ARE ASSERTED IN CONTRACT OR TORT, UNDER FEDERAL, STATE OR FOREIGN LAWS OR OTHER
STATUTE OR OTHERWISE.

 

2

 

1.6           Conflict with Laws.
Notwithstanding any other provision hereof, a Service Provider shall not be
required to provide a Service to the extent the provision thereof would violate
or contravene applicable law. To the extent that the provision of any such
Service would violate applicable law, the parties agree to work together in
good faith to provide such Service in a manner that would not violate any law.

ARTICLE 2

FEES; PAYMENTS

2.1           Fees. Each Service will be
provided at the price indicated in Schedule 1.1 or as otherwise agreed pursuant
to Section 1.3.

2.2           Payments. Charges for Services
shall be invoiced monthly by the Service Provider or its Affiliate providing
the Service. The Service Receiver shall make the corresponding payment no later
than 30 calendar days after receipt of the invoice. Each invoice shall be
directed to the applicable Service Coordinator or such other person designated
in writing from time to time by such Service Coordinator. The invoice shall set
forth in reasonable detail for the period covered by such invoice: (i) the
Services rendered, (ii) the basis for the calculation of the costs (if
otherwise than set forth on Schedule 1.1), and (iii) such additional
information as the Service Receiver may reasonably request at least 30 days in
advance of the billings for a particular Service. In the event there is any dispute
with respect to an invoice, the Service Receiver shall make the payment for all
non-disputed portions in accordance herewith.

ARTICLE 3

TERM; TERMINATION OF SERVICES

3.1           Term. The term of this
Agreement shall commence effective as of the Closing Time and shall continue in
force until the termination of all Services in accordance with the duration of
such Services set forth in Schedule 1.1 or as otherwise set forth herein or
agreed by the parties pursuant to Section 1.3.

3.2           Discontinuation of Services.  A Service Receiver may, upon written notice
to the Service Provider, elect to discontinue any individual Service from time
to time.  A Service Provider may, upon
30 days’ notice and with the Service Receiver’s prior written consent, elect to
discontinue providing any individual Service from time to time. The Service
Receiver may withhold such consent in its sole discretion.

3.3           Termination for Default. In
the event (i) of a failure of the Service Receiver to pay for Services in
accordance with the terms of this Agreement, or (ii) of a failure of the
Service Provider to perform, or cause to be performed, the Services in
accordance with the terms of this Agreement, then in either case the
non-defaulting party shall have the right, at its sole discretion, to terminate
this Agreement if the defaulting party has (A) failed to cure the default
within30 days of receipt of written notice of the default (which notice must
include a statement that it constitutes a notice of default under this
Agreement) or, (B) if such default is not reasonably susceptible to cure within
a 30 day period, taken action within 30 days of receipt of the written

 

3

 

notice of default
reasonably designed to cure such default as soon as is reasonably practicable.
The right to terminate this Agreement set forth in clause (ii) above and the
rights set forth in Section 1.5 shall constitute the sole and exclusive rights
and remedies for a breach hereunder (including without limitation any breach caused
by an Affiliate of a Service Provider or other third party providing a Service
hereunder).

ARTICLE 4

INDEMNIFICATION

4.1           Personal Injury.  EACH PARTY (AS AN INDEMNIFYING PARTY) SHALL
ASSUME ALL LIABILITY FOR AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD THE
OTHER PARTY, ITS AFFILIATES AND THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS
AND AGENTS (ALL AS INDEMNIFIED PARTIES) FREE AND HARMLESS FROM AND AGAINST ALL
LOSSES ARISING OUT OF OR RELATING TO ANY INJURY TO OR DEATH OR SICKNESS OF ANY
EMPLOYEE, AGENT OR REPRESENTATIVE OF THE INDEMNIFYING PARTY, ITS AFFILIATES OR
THEIR CONTRACTORS OR SUBCONTRACTORS HOWSOEVER ARISING AND WHETHER OR NOT CAUSED
BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR
GROSS NEGLIGENCE OF THE INDEMNIFIED PARTIES, EXCEPT TO THE EXTENT SUCH LOSS IS
CAUSED BY THE WILLFUL MISCONDUCT OF AN INDEMNIFIED PARTY.

4.2           Property Damage. EACH PARTY
(AS AN INDEMNIFYING PARTY) SHALL ASSUME ALL LIABILITY FOR AND SHALL RELEASE,
DEFEND, INDEMNIFY AND HOLD THE OTHER PARTY, ITS AFFILIATES AND THEIR RESPECTIVE
EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS (ALL AS INDEMNIFIED PARTIES) HARMLESS
FROM AND AGAINST ALL LOSSES ARISING OUT OF OR RELATING TO ANY LOSS OF OR DAMAGE
TO PROPERTY OWNED BY SUCH INDEMNIFYING PARTY, ITS AFFILIATES, THEIR CONTRACTORS
OR SUBCONTRACTORS OR THEIR RESPECTIVE EMPLOYEES, AGENTS OR REPRESENTATIVES,
HOWSOEVER ARISING AND WHETHER OR NOT CAUSED BY THE NEGLIGENCE (WHETHER SOLE,
JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR GROSS NEGLIGENCE OF THE INDEMNIFIED
PARTIES, EXCEPT TO THE EXTENT SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OF
AN INDEMNIFIED PARTY.

4.3           Services Received. Each
Service Receiver hereby acknowledges and agrees that: (a) the Services to be
provided hereunder are subject to and limited by the provisions hereof,
including, without limitation, the limitation of remedies available to the
Service Receiver which restricts available remedies resulting from a Service
not provided in accordance with the terms hereof to either non-payment or reperformance
of such defective Service and, in certain limited circumstances, the right to
terminate this Agreement; (b) the Services are being provided solely as a
result of the Public Offering and the Service Provider and its Affiliates do
not provide any such Services to non-Affiliates in the normal course of
business; and (c) a material inducement to the Service Provider’s agreement to
provide the Services is the limitation of liability set forth herein and the
release and indemnity provided by the Service Receiver. ACCORDINGLY, EXCEPT
WITH REGARD TO THE LIMITED REMEDIES AND INDEMNITIES 

 

4

 

EXPRESSLY SET FORTH
HEREIN, THE SERVICE RECEIVER SHALL ASSUME ALL LIABILITY FOR AND SHALL FURTHER
INDEMNIFY THE SERVICE RECEIVER, ITS AFFILIATES AND THEIR RESPECTIVE EMPLOYEES,
OFFICERS, DIRECTORS AND AGENTS (ALL AS INDEMNIFIED PARTIES) AGAINST AND
HARMLESS FROM ALL LOSSES ARISING OUT OF OR RELATING TO THE SERVICES, HOWSOEVER
ARISING AND WHETHER OR NOT CAUSED BY THE NEGLIGENCE OR GROSS NEGLIGENCE OF THE
SERVICE PROVIDER, ITS AFFILIATES OR ANY THIRD PARTY SERVICE PROVIDER.

ARTICLE 5

MISCELLANEOUS

5.1           Confidentiality. The Company
and ACE each acknowledge and agree that the terms of Section 9.3 of the
Separation Agreement shall apply to information, documents, plans and other
data made available or disclosed by any member of the Company Group or the ACE
Group in connection with this Agreement.

5.2           Force  Majeure. Continued performance of a Service may be suspended
immediately to the extent caused by any event or condition beyond the
reasonable control of the party suspending such performance, including acts of
God, fire, labor or trade disturbance, war, civil commotion, compliance in good
faith with any law, unavailability of materials or other event or condition
whether similar or dissimilar to the foregoing (a “Force Majeure Event”). The
party claiming suspension due to a Force Majeure Event will give prompt notice
to the other of the occurrence of the Force Majeure Event giving rise to the
suspension and of its nature and anticipated duration. The parties shall
cooperate with each other to find alternative means and methods for the
provision of the suspended Service.

5.3           Automatic Termination.
Notwithstanding any provision of this Agreement to the contrary, this Agreement
shall terminate automatically in the event the Separation Agreement is
terminated prior to the Closing Time. In the event of such termination, no
party shall have any liability of any kind to any other party on account of
such termination.

5.4           Governing Law. This Agreement
shall be governed by, and construed in accordance with, the laws of the state
of New York, without regard to its conflict of laws principles.

5.5           Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand (with receipt confirmed), or by certified
mail, postage prepaid and return receipt requested, or facsimile transmission
addressed as follows (or to such other address as a party may designate by
written notice to the others) and shall be deemed given on the date on which
such notice is received:

If to ACE:

ACE Limited

 

5

 

ACE Global Headquarters

17 Woodbourne Avenue

Hamilton HM08 Bermuda

Attention:  General Counsel

Facsimile:  (441) [_________]

If to the Company:

Assured Guaranty Ltd.

30 Woodbourne Avenue

Hamilton HM08 Bermuda

Attention:  General Counsel

Facsimile:  (441) 296-7779

5.6           Amendment and Modification.  The parties may by written agreement,
subject to any regulatory approval as may be required, (a) extend the time for
the performance of any of the obligations or other acts of the parties hereto;
and (b) waive compliance with or modify, amend or supplement any of the
agreements contained in this Agreement or waive or modify performance of any of
the obligations of any of the parties hereto. 
This Agreement may not be amended or modified except by an instrument in
writing duly signed on behalf of the parties hereto.

5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

5.8           No Third Party Beneficiaries.  This Agreement is solely for the benefit of
the parties hereto and shall not be deemed to confer upon third parties any
remedy, claim, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.

5.9           Headings.  The Article and Section headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.

5.10         Severability.  To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remaining provisions of this Agreement shall be unaffected and
shall continue in full force and effect.

5.11         Waiver.  No failure by any party to take any action
or assert any right hereunder shall be deemed to be a waiver of such right in
the event of the continuation or repetition of the circumstances giving rise to
such right, unless expressly waived in writing.

5.12         Entire Agreement.  This Agreement, the Separation Agreement and
the Ancillary Agreements constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between ACE and the Company
with respect to the subject matter hereof and thereof.

 

6

 

 

5.13         Assignment of this Agreement.  No party may assign this Agreement without
the express written consent of the other party.

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

[Intentionally left
blank]

 

 

7

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as
of the day and year first above written.

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ACE LIMITED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ASSURED GUARANTY LTD.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

 

8

 

 

Schedule 1.1

Services

 

Services
Provided by ACE Limited and Subsidiaries to Assured Guaranty Ltd. and
Subsidiaries

 

	
   

  Service Provider

  	
   

  	
  Service
  Recipient(s)

  	
   

  	
   

  Service

  	
   

  	
   

  Fee

  	
   

  	
   

  Duration

  
	
  ACE American Insurance Company

  	
   

  	
  Assured Guaranty Ltd. and Subsidiaries

  	
   

  	
  Tax consulting and compliance services consistent with tax consulting
  and compliance services services historically provided by ACE American to
  Subsidiaries of Assured Guaranty Ltd., including without limitation providing
  U.S. and international tax advice, preparing tax returns, responding to
  inquiries from tax authorities and assisting with tax audits.  In addition, ACE American will assist
  Assured Guaranty Ltd. in transitioning the tax consulting and compliance
  function to a tax professional to be hired by Assured Guaranty Ltd. or one of
  its subsidiaries.

  	
   

  	
  Pro rata portion of ACE American’s tax department’s budget, based on
  time spent servicing Assured Guaranty Ltd. and Subsidiaries.  Billings will be based on estimated
  budget, with a true-up at year end. 
  Estimated monthly amount for 2004 is [$36,072].

  	
   

  	
  May 1, 2004 through September 15, 2005

  
	
  ACE American Insurance Company

  	
   

  	
  Assured Guaranty Ltd. and Subsidiaries

  	
   

  	
  PeopleSoft functional services consistent with PeopleSoft functional
  services historically provided by ACE American to Subsidiaries of Assured
  Guaranty Ltd., including without limitation: 
  

  • Chartfield
  (chart of accounts) and tree maintenance 
  

   

   

   

  	
   

  	
  $4,333 per month.

  	
   

  	
  May 1, 2004 through April 30, 2005.

  

 

9

 

	
   

  	
   

  	
   

  	
   

  	
  • Configuration
  maintenance

  • Report maintenance and updates

  • Validation and testing of enhancements constructed by the IT teams

  • Assistance with minor development efforts and continuous functionality

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACE American Insurance Company

  	
   

  	
  Assured Guaranty Ltd. and Subsidiaries

  	
   

  	
  Information Technology Services as follows: 

  PeopleSoft information technology services consistent with PeopleSoft
  information technology services historically provided by ACE American to
  Subsidiaries of Assured Guaranty Ltd., including without limitation: 

  • Helpdesk
  support (7 a.m. to 7 p.m.) 

  • Hardware and
  software hosting • Application maintenance and tuning 

  • Use of PeopleSoft software 

  • Connection to
  ACE network  

  Three off-site user
  licenses for NILS INSource (vendor is CCH Insurance Services)  

  Use of the products
  described on Annex A to this Schedule 1.1

  	
   

  	
  $19,000 per month.

  	
   

  	
  May 1, 2004 through April 30, 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACE Financial Solutions International Ltd.

  	
   

  	
  Assured Guaranty Re International Ltd.

  	
   

  	
  Transition of records management.

  	
   

  	
  $[    ], one-time fee, payable following
  completion of service.

  	
   

  	
  May 1, 2004 (or as soon as practical thereafter) until completed.

  

 

 

10

 

	
  ACE Financial Solutions International Ltd.

  	
   

  	
  Assured Guaranty Ltd. and Assured Guaranty Re International Ltd.

  	
   

  	
  General and administrative expense payments consistent with general
  and administrative expense payments services historically provided by ACE
  Financial Solutions International to Assured Guaranty Re International Ltd.

  	
   

  	
  $[    ] per month.

  	
   

  	
  May 1, 2004 through April 30, 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACE Limited

  	
   

  	
  Assured Guaranty Ltd. and Assured Guaranty Re International Ltd.

  	
   

  	
  Human Resources services consistent with such services historically
  provided by ACE Limited to Assured Guaranty Re International Ltd., including
  without limitation: 

  • Employee recruitment and
  orientation 

  • Administration of
  Performance  Management Process 

  • Compliance with relevant
  Bermuda employment laws and regulations

  Compensation and Benefits
  services consistent with such services historically provided by ACE Limited
  to Assured Guaranty Re International Ltd., including without limitation:

  • Processing and payment of
  monthly salaries and benefits • Compliance with relevant
  income tax laws 

  • Management of Assured
  Guaranty Ltd.’s equity program Monthly analysis of salary and expense
  variances

  • Guidance and direction in annual budget
  process (i.e., annual increases, 

  	
   

  	
  $[   ] per month.

  	
   

  	
  May 1, 2004 through December 31, 2004.

  

 

11

 

 

	
   

  	
   

  	
   

  	
   

  	
  bonus levels, etc.) 

  • Assist in
  management of employee benefit vendors (e.g., UBS)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACE Financial Solutions International Ltd.

  	
   

  	
  Assured Guaranty Ltd. and Assured Guaranty Re International Ltd.

  	
   

  	
  Information technology services as outlined in the Service Level
  Agreement attached hereto as Annex B

  	
   

  	
  Per Annex B.

  	
   

  	
  May 1, 2004 through April 30, 2005.

  

 

Services
Provided by Assured Guaranty Ltd. and Subsidiaries to ACE Limited and
Subsidiaries

 

	
  Service Provider

  	
   

  	
  Service
  Recipient(s)

  	
   

  	
   

  Service

  	
   

  	
   

  Fee

  	
   

  	
   

  Duration

  
	
  ACE Guaranty Re Overseas Ltd.

  	
   

  	
  ACE Financial Services Inc.

  	
   

  	
  Servicing of Mandatory Income Preferred Shares

  	
   

  	
  No fee

  	
   

  	
  May 1, 2004 to December 30, 2004

  

 

 

12

 

Annex
A to Schedule 1.1

 

 

	
  Function

  	
   

  	
  Vendor
  Name

  	
   

  	
  Product
  Name

  	
   

  	
  Product
  Version

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Backups

  	
   

  	
  EMC

  	
   

  	
  EMC Timefinder, SRDF, BCV

  	
   

  	
   

  
	
  Backups

  	
   

  	
  IBM

  	
   

  	
  Tivoli Storage Manager IBM 3740 tape library

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Backups

  	
   

  	
  Oracle

  	
   

  	
  Oracle RMAN integrated with
  EMC to use BCV’s for managing backup instead of having to utilize the
  production disks

  	
   

  	
   

  
	
  Capacity Planning

  	
   

  	
  EMC

  	
   

  	
  EMC Capacity Planner

  	
   

  	
   

  
	
  Clustering and Failover

  	
   

  	
  Veritas

  	
   

  	
  Veritas Glocal Cluster Manager

  	
   

  	
  Cluster Server 1.3.1 / Volume Manager 3.0

  
	
  COBOL Compiler

  	
   

  	
  Merant

  	
   

  	
  Server Express Cobol Compiler for UNIX

  	
   

  	
  3.0 (SP1) or 4.0

  
	
  COBOL Compiler

  	
   

  	
  Merant

  	
   

  	
  Server Express Cobol Compiler for UNIX - 2nd copy
  with Application Server

  	
   

  	
  3.0 (SP1) or 4.0

  
	
  RDBMS

  	
   

  	
  Oracle

  	
   

  	
  Oracle 8I Enterprise Addition

  	
   

  	
  8.1.7

  
	
  DBA Tools

  	
   

  	
  Embarcadero

  	
   

  	
  DB Artisan Oracle

  	
   

  	
  5.4

  
	
  DBA Tools

  	
   

  	
  Embarcadero

  	
   

  	
  Performance Center Client

  	
   

  	
  5.4

  
	
  DBA Tools

  	
   

  	
  Embarcadero

  	
   

  	
  Performance Center Managed Database Instance

  	
   

  	
  5.4

  
	
  DBA Tools

  	
   

  	
  EMC

  	
   

  	
  EMC Symmetrix DB Tuner

  	
   

  	
   

  
	
  ETL (Extract Transform & Load)

  	
   

  	
  Informatica

  	
   

  	
  PowerCenter Standard Class II (upgrade Peoplesoft
  OEM license) for site 1

  	
   

  	
  5

  
	
  ETL (Extract Transform & Load)

  	
   

  	
  Informatica

  	
   

  	
  PowerCenter Lab License (unlimited) for site 2

  	
   

  	
  5

  
	
  ETL (Extract Transform & Load)

  	
   

  	
  Informatica

  	
   

  	
  Unlimited Sources & Targets

  	
   

  	
  5

  
	
  ETL (Extract Transform & Load)

  	
   

  	
  Informatica

  	
   

  	
  3 Onsite Training Days

  	
   

  	
  5

  
	
  OLAP (OnLine Analytical Processing)

  	
   

  	
  Hyperion/Essbase or Cognos Enterprise Server

  	
   

  	
  TBD

  	
   

  	
  TBD

  
	
  SAN Tuning & Failover

  	
   

  	
  EMC

  	
   

  	
  EMC PowerPath

  	
   

  	
   

  

 

13

 

	
  Scheduling

  	
   

  	
  Computer Assosiates

  	
   

  	
  AutoSys

  	
   

  	
  3.5

  
	
  Shadowing

  	
   

  	
  Citrix

  	
   

  	
  Citrix

  	
   

  	
   

  
	
  Storage Management

  	
   

  	
  EMC

  	
   

  	
  EMC Foundation Suite by Veritas

  	
   

  	
   

  
	
  Version Control

  	
   

  	
  Merant

  	
   

  	
  PVCS Professional (Suite of Version Manager, Tracker
  and Configuration Builder)

  	
   

  	
  6.7 or 7.0

  
	
  Workflow Analyzer

  	
   

  	
  EMC

  	
   

  	
  EMC Workflow Analyzer

  	
   

  	
   

  

 

 

14

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