Document:

Exhibit 10.2

 

Non-Qualified Stock Option Agreement under

Assured Guaranty Ltd. 2004
Long-Term Incentive Plan

 

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

WITNESSETH THAT:

 

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

 

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

 

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

 

(a)                                  The
“Participant” is                                                                                  .

 

(b)                                 The
“Grant Date” is                                                                                  .

 

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

 

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

 

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

 

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

 

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

 

 

	
  INSTALLMENT

  	
   

  	
  VESTING DATE APPLICABLE

  TO INSTALLMENT

  
	
  1/3 of Covered Shares

  	
   

  	
  One year anniversary of
  the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered Shares

  	
   

  	
  Two year anniversary of
  the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered Shares

  	
   

  	
  Three year anniversary
  of the Grant Date

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 if
the Participant’s Date of Termination occurs by reason of the Participant’s Retirement,
the ten-year anniversary of the Grant Date; or

 

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

 

5.  Method of Option
Exercise.  Subject to this
Agreement and the Plan, the Option may be exercised in whole or in part by
filing a written notice with the Secretary of the Company at its corporate
headquarters prior to the Company’s close of business on the last business day
that occurs prior to the Expiration Date. 
Such notice shall specify the number of shares of Stock which the
Participant elects to purchase, and shall be accompanied by payment of the
Exercise 

 

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Price for such shares of Stock indicated by the
Participant’s election.  Payment shall be
by cash or by check payable to the Company. 
Except as otherwise provided by the Committee before the Option is
exercised: (i) all or a portion of the Exercise Price may be paid by the
Participant by delivery of shares of Stock owned by the Participant and
acceptable to the Committee having an aggregate Fair Market Value (valued as of
the date of exercise) that is equal to the amount of cash that would otherwise
be required; and (ii) the Participant may pay the Exercise Price by authorizing
a third party to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise. 
The Option shall not be exercisable if and to the extent the Company
determines that such exercise would violate applicable state or Federal
securities laws or the rules and regulations of any securities exchange on
which the Stock is traded.  If the
Company makes such a determination, it shall use all reasonable efforts to
obtain compliance with such laws, rules and regulations.  In making any determination hereunder, the
Company may rely on the opinion of counsel for the Company.

 

6.  Withholding.  All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.  At the election of the Participant, and
subject to such rules and limitations as may be established by the Committee
from time to time, such withholding obligations may be satisfied through the
surrender of shares of Stock which the Participant already owns, or to which
the Participant is otherwise entitled under the Plan; provided, however, that
such shares may be used to satisfy not more than the Company’s minimum
statutory withholding obligation (based on minimum statutory withholding rates
for Federal and state tax purposes, including payroll taxes, that are
applicable to such supplemental taxable income).

 

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

 

8.  Cancellation and Rescission of Options.

 

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

 

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

 

9.  Heirs and Successors.  This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by 

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

(a)                                  Cause.  The term “Cause” shall mean (i) the rendering
of services for any organization or engaging directly or indirectly in any
business which is or becomes competitive with the Company or the Subsidiaries
(including, without limitation, Financial Security Assurance Inc., MBIA, Inc.,
AMBAC Financial Group Inc., and Radian Group Inc.), or which organization or
business, or the rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company or the Subsidiaries; (ii) the disclosure to anyone outside the Company
or the Subsidiaries, or the use in other than the Company’s or the Subsidiaries’
business, without prior written authorization from the Company or the
Subsidiaries, of any confidential information or material, relating to the
business of the Company or the Subsidiaries, acquired by the Participant either
during or after employment with the Company or the Subsidiaries; (iii) a
violation of any rules, policies, procedures or guidelines of the Company or
the Subsidiaries, including but not limited to the Company’s business conduct
guidelines; (iv) any attempt directly or indirectly to induce any employee of
the Company to be employed or perform services elsewhere or any attempt
directly or indirectly to solicit the trade or business of any current or
prospective customer, supplier or partner of the Company; (v) the Participant
being convicted of, or entering a guilty plea with respect to, a crime, whether
or not connected with the Company; or (vi) any other conduct or act determined
to be injurious, detrimental or prejudicial to any interest of the Company.

 

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

 

(c)                                  Date of Termination.  A Participant’s “Date of Termination” means, with
respect to an employee, the date on which the Participant’s employment with the
Company and Subsidiaries terminates for any reason, and with respect to a
Director, the date immediately following the last day on which the Participant
serves as a Director; provided that a Date of Termination shall not be deemed
to occur by reason of a Participant’s transfer of employment between the
Company and a Subsidiary or between two Subsidiaries; further provided that a
Date of Termination shall not be deemed to occur by reason of a Participant’s
cessation of service as a Director if immediately 

 

5

 

following
such cessation of service the Participant becomes or continues to be employed
by the Company or a Subsidiary, nor by reason of a Participant’s termination of
employment with the Company or a Subsidiary if immediately following such
termination of employment the Participant becomes or continues to be a
Director; and further provided that a Participant’s employment shall not be
considered terminated while the Participant is on a leave of absence from the
Company or a Subsidiary approved by the Participant’s employer.

 

(d)                                 Detrimental
Activity.  The term “Detrimental
Activity” shall mean the occurrence of actions described in clause (i)
(relating to competition), (ii) (relating to confidentiality), or (iv)
(relating to solicitation), all as set forth under the definition of “Cause”
above.

 

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

 

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

 

(g)                                 Retirement. 
“Retirement” of a Participant shall mean with respect to an employee of
the Company or a Subsidiary, the occurrence of a Participant’s Date of
Termination with the consent of the Participant’s employer after the
Participant has completed five years of service and attained age 55.  For purposes of this definition, years of
service shall be determined in accordance with rules established by the
Committee, and shall take into account service with the Company and its
Subsidiaries, as well as service with ACE Limited and its subsidiaries
occurring prior to the initial public offering of stock of the Company.

 

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

 

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

 

Assured Guaranty Ltd.

 

	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
  Participant

  
	
   

  
	
   

  	
   

  

 

6Exhibit 10.3

 

To Be Used With Employment Agreement

 

Non-Qualified Stock Option Agreement under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan

 

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

 

WITNESSETH THAT:

 

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

 

WHEREAS, the Participant and the Company agree that
this Award is in full satisfaction of the stock option awards to be granted to
the Participant pursuant to paragraph 7(a) of the employment agreement between
the Company and the Participant dated April 28, 2004;

 

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

 

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

 

(a)                                  The
“Participant” is                                      .

 

(b)           The
“Grant Date” is                                                                                      .

 

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

 

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

 

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

 

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

 

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

 

 

	
  INSTALLMENT

  	
   

  	
  VESTING DATE APPLICABLE

  TO INSTALLMENT

  
	
  1/3 of Covered Shares

  	
   

  	
  One year anniversary of the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered Shares

  	
   

  	
  Two year anniversary of the Grant Date

  
	
   

  	
   

  	
   

  
	
  1/3 of Covered Shares

  	
   

  	
  Three year anniversary of the Grant Date

  

 

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

 

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

 

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

 

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

 

(d)                                 If
the Option is not fully exercisable upon the Participant’s Date of Termination,
and the Participant’s Date of Termination occurs by virtue of a Termination
Without Cause, then for purposes of applying the foregoing vesting schedule,
and for purposes of determining the Expiration Date of the Option, the
Participant shall be treated as though employed by the Company and Subsidiaries
after the Participant’s actual Date of Termination until the later of the date
on which the Payment Period ends under the Employment Agreement or the date on
which the term of the Employment Agreement ends.  The terms “Cause” and “Terminated Without
Cause” shall be defined as set forth in the Employment Agreement.  Notwithstanding the foregoing, if the
Executive’s employment is Terminated without Cause, the provisions of this
paragraph (d) shall apply only if the Executive executes and returns to the
Company a general release and waiver of all claims against the Company as
required under the Employment Agreement.

 

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

 

2

 

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

 

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

 

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

 

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

 

(d)                                 if
the Participant’s Date of Termination occurs because of Retirement, the ten-year
anniversary of the Grant Date;

 

(e)                                  if
the Participant’s Date of Termination occurs because of Termination Without
Cause, the later of the date on which the Payment Period ends under the
Employment Agreement or the date on which the term of the Employment Agreement
ends; or

 

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

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

 

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

 

6.  Withholding.  All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.  At the election of the Participant, and
subject to such rules 

 

3

 

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

 

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

 

8.  Cancellation and Rescission of Options.

 

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

 

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

 

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

 

4

 

benefits distributable to the Designated Beneficiary
shall be distributed to the legal representative of the estate of the
Designated Beneficiary.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

(f)            Employment Agreement.  “Employment Agreement” shall mean the
agreement between the Participant and the Company dated February 11, 2004 or
any successor agreement thereto.

 

(g)                                 Retirement. 
“Retirement” of a Participant shall mean with respect to an employee of
the Company or a Subsidiary, the occurrence of a Participant’s Date of
Termination after the Participant has completed five years of service and
attained age 55.  For purposes of this
definition, years of service shall be determined in accordance with rules
established by the Committee, and shall take into account service with the
Company and its Subsidiaries, as well as service with ACE Limited and its
subsidiaries occurring prior to the initial public offering of stock of the
Company.

 

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

 

6

 

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

 

Assured Guaranty Ltd.

 

	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  
	
  Participant

  
	
   

  	
   

  
	
   

  	
   

  

 

7

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