Document:

AGO-9.30.2012-10Q Ex.10.1 SERP

ASSURED GUARANTY LTD. 
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN

(As Amended and Restated Effective January 1, 2009 and as amended by
the First, Second, Third, Fourth and Fifth Amendments)

Mayer Brown LLP

ASSURED GUARANTY LTD. 
SUPPLEMENTAL EMPLOYEE RETIREMENT  PLAN
SECTION 1 
GENERAL
1.1.    Purpose and Effective Date.  Assured Guaranty Ltd. (the “Company”) has established the Assured Guaranty Ltd. Employee Retirement Plan (the “Retirement Plan”) to provide retirement income for its eligible employees and the eligible employees of each Related Company (as defined in subsection 1.2) which, with the consent of the Company, adopts the Plan.  Contrary to the desire of the Company, the amount of contributions which may be made to the Retirement Plan for the benefit of an employee may be limited by reason of the application of certain provisions of the Internal Revenue Code of 1986 of the United States of America, as amended (the “Code”). The Company has established the Assured Guaranty Ltd. Supplemental Employee Retirement (the “Plan”) to assure that affected individuals will receive benefits in amounts comparable to the amounts that they would have received under the Retirement Plan if such limitations of the Code did not apply to the Retirement Plan.  The Plan also allows for additional contributions to provide additional retirement security for the participants.  The provisions set forth herein constitute an amendment, restatement and continuation of the Plan as in effect immediately prior to January 1, 2009 (the “Effective Date”), subject to the following:
		
	(a)
	The Plan as set forth herein shall apply to distributions under the Plan commencing on or after the Effective Date (excluding payments made before or made after the Effective Date that are part of a series of installment payments that commenced prior to the Effective Date); provided that payments which commenced prior to the Effective Date will be subject to the applicable provisions of the Plan as in effect prior to the Effective Date.

		
	(b)
	All amounts deferred under the Plan will be subject to the provisions of section 409A of the Code and applicable guidance issued thereunder (“Section 409A”), regardless of whether such amounts were deferred (within the meaning of Section 409A) on, prior to, or after January 1, 2005.

1.2.    Employers and Related Companies.  The term “Related Company” means any corporation or trade or business during any period during which it is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code.  The Company and each Related Company, which, with the Company’s consent, adopts the Plan are referred to below collectively as the “Employers” and individually as an “Employer”.
1.3.    Plan Administration.  The authority to control and manage the operation and administration of the Plan shall be vested in the Committee appointed by the Company to act under the Retirement Plan; provided, however, that, subject to the terms of the Plan, payment of any benefits to, or on behalf of Participants pursuant to Section 3 may be made at the direction of any two of the following officers of the Company:  (a) Chief Executive Officer (b) Chief Financial Officer, or (c) General Counsel.  In controlling and managing the operation and administration of the Plan, the Committee shall have the same rights, powers and duties as those delegated to it under the Retirement Plan, which includes full and discretionary power and authority to interpret and construe the provisions of the Plan and to determine the amount of benefits and the rights or eligibility of employees or Participants (as defined in subsection 2.1) under the Plan, and such other power and authority as may be necessary to discharge its duties hereunder.  Any interpretation of the Plan and any decision made by the Committee on any matter within the discretion of the Committee shall be binding on all persons.  A misstatement or other mistake of fact shall be corrected when it becomes known, and the Committee shall make such adjustment on account thereof as it considers equitable and practicable.  The Committee may delegate such of its ministerial or discretionary duties and functions as it may deem appropriate to any employee or group of employees of any Employer.
1.4.    Applicable Laws.  The Plan shall be construed and administered in accordance with the laws of Bermuda.
1.5.    Gender and Number.  Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
1.6.    Plan Year.  The “Plan Year” shall be the twelve-consecutive month period beginning on each January 1. 
1.7.    Notices.  Any notice or document required to be filed with the Committee under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of the Company, at its principal executive offices.  Any notice required under the Plan may be waived by the person entitled to notice.
1.8.    Form and Time of Elections.  Unless otherwise specified herein or as otherwise permitted by the Committee, any election or consent permitted or required to be made or given by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be made in writing to the Committee; provided, however, that any such election or consent shall be irrevocable to the extent required by Section 409A.
1.9.    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
1.10.    Action by Employers.  Any action required or permitted to be taken under the Plan by any Employer which is a corporation shall be by resolution of its Board of Directors, or by a person or persons authorized by its Board of Directors.  Any action required or permitted to be taken by any Employer which is a partnership shall be by a general partner of such partnership or by a duly authorized officer thereof.
1.11.    Limitations on Provisions.  The provisions of the Plan and any benefits payable hereunder shall be limited as described herein.  Any benefit payable under the Retirement Plan shall be paid solely in accordance with the terms and conditions of the applicable Retirement Plan and nothing in this Plan shall operate or be construed in any way to modify, amend, or affect the terms and provisions of the Retirement Plan.
1.12.    Assignment and Alienation; Forfeitures.  The benefits payable to any Participant or Beneficiary under the Plan may not be voluntarily or involuntarily pledged, assigned, alienated, transferred or otherwise anticipated.  In the event a Participant or Beneficiary attempts to do so, any amount that is subject to the purported pledge, assignment, alienation, transfer or other anticipation shall be immediately forfeited and neither the Participant nor his Beneficiary shall have any further rights to such benefits. 
Section 1A 
FREEZING OF THE PLAN
1A.1.    Purpose, Use of Terms.  Effective September 30, 2012, the Plan is frozen with respect to Participants and additional amounts as described in this Section 1A.  The purpose of this Section 1A is to set forth special provisions that apply to the freezing of the Plan.  Except where the context indicates the contrary, terms used and defined in the Plan shall have the same respective meanings for purposes of this Section 1A.  The provisions of this Section 1A shall modify and supersede the provisions of the Plan to the extent inconsistent therewith.
1A.2.    Freezing of Participation.  No individual who is not a Participant in the Plan on September 30, 2012 shall be eligible to become a Participant in the Plan.
1A.3.    Cessation of Crediting Amounts to Accounts.  For periods on and after September 30, 2012, no additional amounts will be credited to any Accounts under the Plan pursuant to Section 3 thereof (other than Deemed Dividends and amounts attributable to Deemed Dividends with respect Accounts invested in Units in the Employer Stock Fund as of September 30, 2012).
SECTION 2 
PARTICIPATION
2.1.    Participation.  Each employee of an Employer shall become a “Participant” as of the earlier of the date on which he becomes a participant in the Retirement Plan or the date on which he is designated as a Participant by the Committee.  Once an eligible employee becomes a Participant in the Plan, as long as he continues to have an Account balance under the Plan he will remain a Participant for all purposes under the Plan, except for purposes of the contribution provisions of Section 3.  However, U.S. taxpayer employees of Assured Guaranty Re Ltd. in Bermuda shall not accrue additional benefits under the Plan on and after January 1, 2009, except that this sentence shall not apply to those who are required to participate in the plan maintained by Assured Guaranty Ltd. in accordance with the Bermuda National Pension Scheme (Occupations Pensions) Act 1998, as amended).  For the avoidance of doubt, the preceding sentence shall not affect the continuing adjustment of Accounts for investment experience in accordance with the Plan, and further provided that the preceding sentence shall not require accelerated distribution of Accounts under the Plan.
2.2.    Plan Not Contract of Employment.  The Plan does not constitute a contract of employment, and participation in the Plan will not give any employee the right to be retained in the employ of the Company nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.
SECTION 3 
AMOUNT AND PAYMENT OF PLAN BENEFIT
3.1.    Accounts.  The Committee shall maintain “Supplemental Accounts” in the name of each Participant under the Plan which will reflect the amount, expressed in United States dollars, to which the Participant may become entitled under the Plan.  A Participant’s Supplemental Accounts shall be credited in each Plan Year as follows:
		
	(a)
	For any Plan Year, in the event the Participant's before-tax elective contributions to the Retirement Plan are limited by the provisions of sections 401(a)(17), 401(k)(3), 402(g) or 415 of the Code, as applicable, his compensation for the Plan Year will continue to be reduced by, and the Participant’s Supplemental Before-Tax Account credited with, an amount equal to the amount of before-tax elective contributions that would have been made under the Retirement Plan had the provisions of sections 401(a)(17), 401(k)(3), 402(g) or 415 of the Code, as applicable, not applied to him, and for this purpose it shall be assumed that the Participant makes the maximum before-tax elective contributions to the Retirement Plan (regardless of whether the Participant in fact makes the maximum contribution); provided, however, that such continuing before-tax elective contributions to this Plan shall be made pursuant to an election made by the Participant prior to the beginning of the Plan Year (or with respect to a newly-eligible Participant, within 30 days of first becoming eligible to participate, which election shall apply only to compensation payable after the date of such election), which election shall indicate the percentage of compensation to be contributed to this Plan after before-tax elective contributions to the Retirement Plan have been limited under sections 401(a)(17), 401(k)(3), 402(g) or 415 of the Code.  Such election with respect to a Plan Year shall be irrevocable on and after the beginning of that Plan Year.  Credits to the Participant's Supplemental Before-Tax Account pursuant to this paragraph 3.1(a) shall be made at the same time that before-tax elective contributions would otherwise have been credited to his accounts under the Retirement Plan.

		
	(b)
	Subject to the requirements of paragraph 3.1(a), for any Plan Year, a Participant's Supplemental Matching Account shall be credited with an amount equal to the difference, if any, between (a) the matching contributions that would have been contributed on behalf of the Participant to the Retirement Plan for that Plan Year, in accordance with the terms thereof and based on his before-tax elective contributions under the Retirement Plan and this Plan, determined without regard to the limitations of sections 401(a)(17), 401(k)(3), 401(m), 402(g) or 415 of the Code, and (b) the amount of matching contributions made to the Retirement Plan on behalf of the Participant, or if greater, the amount of matching contributions that would have been made to the Retirement Plan if the Participant made the maximum before-tax elective contributions to the Retirement Plan (regardless of whether the Participant in fact makes the maximum contribution).  Credits to the Participant's Supplemental Matching Account pursuant to this paragraph 3.1(b) shall be made at the same time that matching contributions would otherwise have been credited to his accounts under the Retirement Plan.

		
	(c)
	A Participant’s “Discretionary Matching Contribution Account” shall be credited for a Plan Year in the amount, if any, determined by the Company in its sole discretion, on behalf of each Participant who is employed by an Employer on the last day of that year, and with respect to whom before-tax contributions that could have been made by the Participant to the Retirement Plan have been limited for such Plan Year as a result of the application of sections 401(a)(17), 401(k)(3), 401(m), 402(g) or 415 of the Code.  Such Discretionary Matching Contribution shall be expressed as a percentage of the contribution credited to the Participant’s Supplemental Before-Tax Account pursuant to paragraph (a) above and, in the discretion of the Company, the maximum before-tax elective contributions to the Retirement Plan (regardless of whether the Participant in fact makes the maximum contribution); provided, however, that the Discretionary Matching Contribution with respect to any Plan Year shall not exceed fifty percent of that portion of the sum of the Participant’s before-tax elective contribution to the Retirement Plan (based on the assumption that the Participant made the maximum before-tax elective contribution to the Retirement Plan) and the Participant’s before-tax elective contribution to this Plan which does not exceed six percent (one percent with respect to a Participant who is also an active participant in the Assured Guaranty Bermuda Pension Plan, as defined in the Retirement Plan) of the Participant’s compensation (as defined in the Retirement Plan, but disregarding the limitations therein) for that Plan Year.

		
	(d)
	For any Plan Year, a Participant's Supplemental Core Account shall be credited with an amount equal to the difference, if any, between (a) the Employer Core Contribution that would have been contributed on behalf of the Participant to the Retirement Plan for that Plan Year, in accordance with the terms thereof determined without regard to the limitations of sections 401(a)(17) or 415 of the Code (assuming the Participant made the maximum contributions to the Retirement Plan, regardless of whether the Participant in fact makes the maximum contribution) and (b) the amount of the Employer Core Contributions that would have been made to the Retirement Plan on behalf of the Participant (assuming the Participant made the maximum contributions to the Retirement Plan, regardless of whether the Participant in fact makes the maximum contribution, and assuming that such contributions would be subject to the limits of sections 401(a)(17) and 415 of the Code).  Credits to the Participant's Supplemental Core Account pursuant to this paragraph 3.1(d) shall be made at the same time that Employer Core Contributions would otherwise have been credited to his accounts under the Retirement Plan.

		
	(e)
	For any Plan Year, a Participant’s Supplemental Core Account may be credited with an additional amount, as determined by the Company in its sole discretion, which amount, if any, shall be allocated to the accounts of that group of Participants designated by the Company it its sole discretion.  Such “Discretionary Core Contribution” shall be allocated to the accounts of such designated Participants in an amount equal to a percentage of each such Participant’s compensation for the Plan Year.  Credits to the Participant's Supplemental Core Account of a Discretionary Core Contribution pursuant to this paragraph 3.1(e) shall be made as soon as practicable following the Company’s determination to credit such Discretionary Core Contribution.

3.2.    Adjustment of Accounts.  Each Participant’s Accounts shall be adjusted in accordance with this Section 3 in a uniform manner as of each Valuation Date, as follows:
		
	(a)
	first, charge to the Account balance the amount of any distributions under the Plan with respect to that Account that have not previously been charged;

		
	(b)
	then, adjust the Account balance for the applicable Investment Return Rate(s); and

		
	(c)
	then, credit to the Account balance the amount to be credited to that Account in accordance with subsection 3.1 that have not previously been credited.

Except as otherwise designated by the Committee, the term “Valuation Date” means the last day of each calendar quarter.

3.3.    Investment Return Rates.  The “Investment Return Rate(s)” with respect to the Account(s), or portions of the Supplemental Account(s), of any Participant for any period shall be the Investment Return Rate(s) elected by the individual in accordance with subsection 3.4 from among such investment alternatives (if any) for that period which, in the discretion of the Committee, are offered from time to time under this subsection 3.3, including the Employer Stock Fund (as defined in Exhibit B) subject to the rules and regulations set forth in Exhibit B.
3.4.    Participant Selection of Investment Return Rate.  The Investment Return Rate alternatives under the Plan, and a Participant’s ability to choose among Investment Return Rate alternatives, shall be determined in accordance with rules established by the Committee from time to time; provided, however, that the Company may not modify the Investment Return Rate with respect to periods prior to the adoption of such modification; and provided further that the Participant’s selection of the Employer Stock Fund as an Investment Return Rate is subject to the rules and regulations set forth in Exhibit B.
3.5.    Statement of Accounts.  As soon as practicable after the last day of each Plan Year, the Committee will cause to be delivered to each Participant a statement of the balance of his Supplemental Account as of that day.
3.6.    Distribution.  Subject to the following provisions of this subsection 3.6 and subsection 3.8, a Participant’s Supplemental Account balance shall be payable to the Participant in accordance with the rules and regulations set forth in Exhibit A, which forms part of the Plan, and in accordance with such other restrictions and limitations imposed by the Committee and applicable law.  Subject to any applicable currency exchange laws, payments shall be made in such currency as the Committee shall elect, based on the currency exchange rate of the Trustee of the Retirement Plan as of the date of payment.  In the event of a Participant’s death, the amount which would otherwise be payable to the Participant shall be paid to one or more beneficiaries designated by the Participant for purposes of the Plan in a writing filed with the Committee prior to the date of death.  Any such designation shall cancel any previous designation by the Participant.  If no such designation is on file on the date of the Participant’s death, or if the designated beneficiary predeceases the Participant, the Participant’s Supplemental Account balance shall be paid to the Participant’s estate.
3.7.    Distributions to Persons Under Disability.  In the event a Participant or his beneficiary is declared incompetent and a conservator or other person legally charged with the care of his person or of his estate is appointed, any benefit to which such Participant or beneficiary is entitled under the Plan shall be paid to such conservator or other person legally charged with the care of his person or of his estate.
3.8.    Forfeiture of Certain Accounts.  Notwithstanding any provision of the Plan to the contrary, in no event shall any amount attributable to the Participant’s Supplemental Matching Account, Supplemental Discretionary Matching Account, and Supplemental Core Account be payable to or on account of a Participant whose Termination Date occurs prior to the Participant’s completion of twelve consecutive months of employment with an Employer for any reason other than the death of the Participant or if the Participant attains age 65; provided, however, for purposes of this sentence, each Participant who was an employee of ACE Limited or a subsidiary of ACE Limited immediately prior to the Effective Date and who became an employee of an Employer in connection with the initial public offering of shares of Assured Guaranty Ltd shall be credited with twelve consecutive months of service of employment with the Employers on the later of the Effective Date or the first date on which he is employed by an Employer.  
3.9.    Termination Date.  A Participant’s “Termination Date” is the date on which the Participant ceases to be employed by the Company and all of the Related Companies, subject to the following: 
		
	(a)
	The employment relationship will be deemed to have ended at the time the Participant and his employer reasonably anticipate that the level of bona fide services the Participant would perform for the Company and the Related Companies after such date (whether as an employee or independent contractor, but not as a director) would permanently decrease to no more than 20% of the average level of bona fide services performed over the immediately preceding 36 month period (or the full period of service to the Company and the Related Companies if the Participant has performed services for the Company and the Related Companies for less than 36 months).  In the absence of an expectation that the Participant will perform at the above-described level, the date of termination of employment will not be delayed solely by reason of the Participant continuing to be on the Company's and the Related Companies' payroll after such date.

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

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

3.10.    Transfers from ACE Limited Supplemental Retirement Plan.  Each employee of an Employer who satisfies the following conditions shall have an Account established on his behalf under the Plan, and such Account shall be credited with an amount reflecting amounts attributable to such individual’s participation in the ACE Limited Supplemental Retirement Plan:
		
	(a)
	the Participant was an employee of ACE Limited or a subsidiary of ACE Limited immediately prior to the Effective Date; 

		
	(b)
	the Participant became an employee of an Employer in connection with the initial public offering of shares of the Company; and

		
	(c)
	the Participant was a participant in the ACE Limited Supplemental Retirement Plan.

An employee of an Employer who satisfies the foregoing conditions shall become a Participant in the Plan in accordance with the terms and conditions of the Plan.  If an employee of an Employer is not otherwise eligible to participate in the Plan, he shall be treated as a Participant only with respect to amounts credited to his Accounts which are attributable to the obligations assumed by his Employer from the ACE Limited Supplemental Retirement Plan until such employee has met the requirements for participation in the Plan.  The Accounts of each Participant under the Plan, including any portion of an Account transferred pursuant to this subsection 3.10, shall be subject to the terms of the Plan, including, but not limited to, the terms relating to Investment Return Rates and the restrictions regarding the forms and time of payment; and the portion of a Participant’s Account balances which is attributable to amounts transferred pursuant to this subsection 3.10 shall be payable from the Plan only after the date on which the Participant is otherwise eligible for a distribution from the Plan.
SECTION 4 
SOURCE OF BENEFIT PAYMENTS
4.1.    Liability for Benefit Payments.  The amount of any benefit payable under the Plan shall be paid from the general revenues of the Employer of the Participant with respect to whom the benefit is payable; provided, however, that if a Participant has been employed by more than one Employer, the portion of his Plan benefits payable by any such Employer shall be that portion accrued while the Participant was employed by that Employer, and earnings on such portion; and provided further, that if any portion of a Participant’s Plan benefit is attributable to amounts transferred to the Plan pursuant to subsection 3.10 of the Plan, that portion of the Participant’s benefit attributable to such transferred amounts, and earnings on such portion, shall be payable by the Employer that assumed the obligation to pay such transferred benefit to the Participant.  An Employer’s obligation under the Plan shall be reduced to the extent that any amounts due under the Plan are paid from one or more trusts, the assets of which are subject to the claims of general creditors of the Employer or any affiliate thereof; provided, however, that nothing in the Plan shall require the Company or any Employer to establish any trust to provide benefits under the Plan.
4.2.    No Guarantee.  Neither a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Employers whatsoever, including, without limitation, any specific funds, assets, or other property which the Employers, in their sole discretion, may set aside in anticipation of a liability under the Plan.  A Participant shall have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Employers.  Nothing contained in the Plan shall constitute a guarantee by any of the Employers that the assets of the Employers shall be sufficient to pay any benefits to any person.
4.3.    Successors.  The obligations of the Company and each Employer under the Plan shall be binding on any assignee or successor in interest thereto.  Prior to any merger, consolidation or sale of assets, the Company, or if applicable, the Employer, shall require any such successor to expressly assume all of the Company’s, or if applicable, all of the Employer’s, obligations under the Plan.
SECTION 5 
CLAIMS ADMINISTRATION 
5.1.    General.  The Committee shall, in its sole discretion, determine if a Participant is entitled to receive payment of a benefit under the Plan.  If a Participant, beneficiary or his or her representative is denied all or a portion of an expected Plan benefit for any reason and the Participant, beneficiary or his or her representative desires to dispute the decision of the Committee, he or she must file a written notification of his or her claim with the Committee. 
5.2.    Claims Procedure.  Upon receipt of any written claim for benefits, the Committee shall be notified and shall give due consideration to the claim presented.  If any Participant or beneficiary claims to be entitled to benefits under the Plan and the Committee determines that the claim should be denied in whole or in part, the Committee shall, in writing, notify such claimant within ninety (90) days of receipt of the claim that the claim has been denied.  The Committee may extend the period of time for making a determination with respect to any claim for a period of up to ninety (90) days, provided that the Committee determines that such an extension is necessary because of special circumstances and notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision.  If the claim is denied to any extent by the Committee, the Committee shall furnish the claimant with a written notice setting forth:
		
	(a)
	the specific reason or reasons for denial of the claim;

		
	(b)
	a specific reference to the Plan provisions on which the denial is based;

		
	(c)
	a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

		
	(d)
	an explanation of the provisions of this Section 5.

5.3.    Right of Appeal.  A claimant who has a claim denied wholly or partially under subsection 5.2 may appeal to the Committee for reconsideration of that claim.  A request for reconsideration under this subsection 5.3 must be filed by written notice within sixty (60) days after receipt by the claimant of the notice of denial under subsection 5.2.
5.4.    Review of Appeal.  Upon receipt of an appeal the Committee shall promptly take action to give due consideration to the appeal.  Such consideration may include a hearing of the parties involved, if the Committee feels such a hearing is necessary.  In preparing for this appeal the claimant shall be given the right to review pertinent documents and the right to submit in writing a statement of issues and comments.  After consideration of the merits of the appeal the Committee shall issue a written decision which shall be binding on all parties.  The decision shall specifically state its reasons and pertinent Plan provisions on which it relies.  The Committee’s decision shall be issued within sixty (60) days after the appeal is filed, except that the Committee may extend the period of time for making a determination with respect to any claim for a period of up to sixty (60) days, provided that the Committee determines that such an extension is necessary because of special circumstances and notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision.  
5.5.    Designation.  The Committee may designate any other person of its choosing to make any determination otherwise required under this Section 5.  Any person so designated shall have the same authority and discretion granted to the Committee hereunder.
SECTION 6 
AMENDMENT AND TERMINATION
The Company may, at any time, amend or terminate the Plan; provided, however, that subject to the provisions of the following sentence, neither an amendment nor a termination shall adversely affect the rights of any Participant to benefits credited to a Participant’s account under the Plan as of the date immediately prior to the date of the amendment or termination (but subject to losses and earning allocable to such account after the date of the amendment or termination) without the consent of the Participant.  The Company, by Plan amendment or termination, may prospectively eliminate the right to have amounts credited to any Supplemental Account pursuant to the provisions of subsection 3.1 or subsection 3.3, or reduce the amount which is required to be credited to any such account pursuant to those provisions.  In no event may any such amendment, modification, or termination be adopted or effective if it would result in accelerated recognition of income or imposition of additional tax under Section 409A.
Exhibit A
ASSURED GUARANTY LTD. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Distribution Rules and Regulations
Subject to such restrictions and limitations as may be imposed by the Committee, the following shall apply to the distribution of a Participant’s Supplemental Account balances:

A-1.  Commencement of Distribution.  Payment of the Participant’s Supplemental Account balances shall be made (or, if payment is made in installments, shall commence) within 60 days of the Participant’s Termination Date, subject to the following:  

		
	(a)
	If the Participant becomes Permanently Disabled prior to his Termination Date (regardless of whether the Participant remains employed for a period after becoming Permanently Disabled), the Participant’s Supplemental Account balances will be paid in a lump sum within 60 days of becoming Permanently Disabled, without regard to any election made by the Participant to receive installments.  A Participant will be considered to be “Permanently Disabled” for purposes of the Plan if he would be treated as “disabled” in accordance with the provisions of Treas. Reg. §1.409A-3(i)(4).

		
	(b)
	If the Participant’s Termination Date is his date of death, the Participant’s Supplemental Account balances will be paid in a lump sum within 60 days of death.

		
	(c)
	If a Participant is a Specified Employee at the time of his Termination Date, and payment of benefits under the Plan is by reason of the Participant’s Termination Date, payments of benefits under the Plan may not be paid before the date that is six months after the Participant’s Termination Date or, if earlier, the date of death of the Participant.  At the end of the six-month period described in the preceding sentence, amounts that could not be paid by reason of the limitation in this paragraph (c) shall be paid on the first day of the seventh month following the Termination Date.  For purposes of the Plan, the term “Specified Employee” shall be defined in accordance with Treas. Reg. §1.409A-1(i) and such rules as may be established by the Chief Executive Officer of the Company or his delegate from time to time.

A-2.  Lump Sum Distribution.  Except to the extent provided in subsection A-3, a Participant’s Supplemental Account balances will be paid in a lump sum in an amount equal to the Participant’s Supplemental Account balances determined as of the Valuation Date next prior to the Benefit Commencement Date.

A-3.  Installments.  A Participant may elect to have his Supplemental Account balances paid in annual installments over a period elected by the Participant not exceeding five years, subject to the following:

		
	(a)
	Payment will be made in installments rather than a lump sum only if, at the time of the Participant’s Termination Date, (i) the Participant has attained at least age 55, (ii) the Participant has completed at least five Years of Service, and (iii) the amount of the Participant’s Supplemental Account balances is equal to or greater than $50,000 as of the Valuation Date coincident with or immediately prior to the Participant’s Termination Date.  A Participant’s “Years of Service” shall be measured by employment during a twelve (12) month period commencing with the Participant’s date of hire and anniversaries thereof.  

		
	(b)
	Payment will be made in installments rather than a lump sum only if the Participant’s election to receive such installments is filed with the Committee no later than the 30th day following the date on which the Participant first becomes eligible to participate in the Plan in accordance with subsection 2.1.

		
	(c)
	If the Participant dies while receiving installments, the Participant’s remaining Supplemental Account balances will be paid in a lump sum within 60 days of death.

		
	(d)
	The amount of each installment paid under this subsection A-3 will equal the result of dividing the Participant's Supplemental Account balances (determined as of the most recent Valuation Date occurring before the date on which such payment is made) by the number of installments remaining immediately before the payment.

		
	(e)
	The second, third, fourth, and fifth annual installments (as applicable) will be paid during the first, second, third, and fourth calendar years, respectively, after the calendar year in which the Participant’s Termination Date occurs; provided that (i) the time of payment within the calendar year will be determined by the Committee, except that the installment payable in each such calendar year will be paid not more than 30 days after the anniversary of the Termination Date that occurs in that calendar year; and (ii) the payment of the first and second installments will be subject to paragraph A-1(c) hereof (relating to the six-month delay for Specified Employees).

A-4.  Unforeseeable Emergency.  The Committee may permit the distribution of all or a portion of a Participant’s Account if the Committee, in its sole discretion, determines that the Participant has experienced an unforeseeable emergency, but only to the extent, if any, that such distribution would satisfy the requirements of Treas. Reg. §1.409A-3(i)(3).  Upon a distribution to a Participant under this subsection A-4, the Participant’s deferrals shall cease and no further deferrals shall be made for such Participant for the remainder of the Plan Year. 

A-5.  Adjustments Prior to Commencement Date and During Installments.  Prior to payment of a Participant’s Supplemental Account balances in a lump sum, and during the period installments are being paid under subsection A-3, the remaining balances in the Participant's Supplemental Accounts shall continue to be invested at the direction of the Participant and credited with earnings or losses in accordance with the provisions of the Plan.

A-6.  Section 457A of the Code.  Notwithstanding anything in the Plan to the contrary, amounts deferred under the Plan that would otherwise be subject to Section 457A of the Internal Revenue Code of 1986 (the “Code”) except for the fact that the amounts are attributable to services performed prior to January 1, 2009 shall be distributed to a Participant (to the extent not previously distributed) in a single lump sum payment on January 1, 2017 (or, for any Participant who has a tax year other than the calendar year, the first day of the last taxable year beginning prior to January 1, 2018).

Exhibit B
ASSURED GUARANTY LTD. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Employer Stock Fund Rules and Regulations
Subject to the following restrictions and limitations, Participants may elect the Employer Stock Fund as an Investment Return Rate alternative for all or a portion of their Accounts.  To the extent that the “Employer Stock Fund” is chosen as a Participant’s Investment Return Rate for all or a portion of an Account, the Account will be credited with Units, with each such Unit representing the right to receive one share of common stock of the Company (“Shares”) upon a distribution from the Plan pursuant to Exhibit A.  The number of Units credited to such Participant’s Account will be equal to the number of Shares which could have been purchased with the value of the Account deemed invested in the Employer Stock Fund based on the fair market value of a Share at the time of such deemed purchase.  
B-1.  Eligibility.  Participants who are selected by the Committee are eligible to invest all or a portion of their Accounts in the Employer Stock Fund.  
B-2.  Allocations to Employer Stock Fund.  A Participant may elect to have all or a portion of such Participant’s Account allocated to the Employer Stock Fund.  Any such election under this subsection B-2 will be effective not earlier than the date the election is filed with the Committee or its delegate.  Such election to allocate a portion of such Account to the Employer Stock Fund shall be irrevocable, and any such portion of the Participant’s Account allocated to the Employer Stock Fund shall remain allocated to the Employer Stock Fund until the Participant receives a distribution from the Plan pursuant to Exhibit A with the number of Shares to be distributed to such Participant equal to the number of Units held in such Participant’s Account.  An election to allocate a portion of a Participant’s Account to the Employer Stock Fund may only be made at a time when a Participant would be permitted to purchase or sell actual Shares in accordance with the Policy on Trading in Securities Related to Assured Guaranty Ltd. or any of its Subsidiaries, as from time to time in effect, or any replacement policy relating to trading in the Company’s securities (the “Insider Trading Policy”).  To the extent permitted by the Committee, a Participant may elect to have amounts which are first credited to the Participant’s Account credited directly to the Employer Stock Fund, provided, however that such election regarding initial contributions shall be subject to the same requirements and restrictions described above in this subsection B-2 with respect to elections to have an existing portion of a Participant’s Account allocated to the Employer Stock Fund.
B-3.  Dividends.  To the extent that any record date for dividends on Shares occurs during the period in which all or a portion of a Participant’s Account is allocated to the Employer Stock Fund, the Participant’s Account will be credited with an amount equal to the dividends that would be payable with respect to such Units, determined as though each Unit credited to the Participant’s Account was a Share (the “Deemed Dividends”).  The Deemed Dividends shall be credited to an Investment Return Rate that is a money market fund or other similar Investment Return Rate selected by the Committee.

Exhibit C
ASSURED GUARANTY LTD. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Account Balances Transferred From the Assured Guaranty Ltd. Supplemental Employee Retirement Plan to the Assured Guaranty Corp. Supplemental Executive Retirement Plan
Effective January 6, 2012, the Company shall transfer the Account balances of Participants in the Plan who are US Taxpayers to the extent such Accounts are invested in a Investment Return Rate alternative other than Units in the Employer Stock Fund (such transferred account balances referred to herein as the “Transferred Accounts”) from the Plan to the Assured Guaranty Corp. Supplemental Executive Retirement Plan (the “AGC Plan”).  The Transferred Accounts shall be subject to the terms of the AGC Plan, including, but not limited to, Exhibit B of the AGC Plan.  The transfer shall not include that portion of any Account invested in Units in the Employer Stock Fund.

Exhibit D
ASSURED GUARANTY LTD. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Account Balances Transferred From the Assured Guaranty Ltd. Supplemental Employee Retirement Plan to the Freisenbruch Meyer Pension Trust
Effective October 1, 2012, the Company shall transfer the Account balances of each Participant in the Plan, other than any Account or portion of Accounts invested in Units in the Employer Stock Fund, (such transferred Account balances referred to herein as the “Transferred Accounts”) from the Plan to the Freisenbruch Meyer Pension Trust (“FMPT”); provided, however, that any transfer of a Participant’s Account balances shall be subject to such Participant’s consent as may be required by the Committee.  Following transfer, the Transferred Accounts shall be subject to the terms of the FMPT.  The transfer shall not include any Account or portion of any Account invested in Units in the Employer Stock Fund (including amounts attributable to Deemed Dividends).  Effective October 1, 2012, and upon the transfer of the Transferred Accounts to the FMPT, the liability of the Employers for any benefit payments under the Plan shall cease, except with respect to all or a portion of any Account invested in Units in the Employer Stock Fund (including amounts attributable to Deemed Dividends).AGO-9.30.2012-10Q Ex.10.2 2004LTIP

Conformed Copy

ASSURED GUARANTY LTD. 
2004 LONG-TERM INCENTIVE PLAN
(As amended and restated as of May 7, 2009  
and as amended by the First Amendment)

ASSURED GUARANTY LTD. 2004 
LONG-TERM INCENTIVE PLAN
(As amended and restated as of May 7, 2009  
and as amended by the First Amendment)
SECTION 1 
GENERAL
1.1.    Purpose.  The Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the "Plan") has been established by Assured Guaranty Ltd. (the "Company") to (i) attract and retain persons eligible to participate in the Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve long-range goals; (iii) provide incentive compensation opportunities that are competitive with those of other similar companies; and (iv) further identify Participants’ interests with those of the Company’s other shareholders through compensation that is based on the Company’s common shares; and thereby promote the long-term financial interest of the Company and the Subsidiaries, including the growth in value of the Company’s equity and enhancement of long-term shareholder return.  The Plan was amended and restated on August 5, 2008, to conform to the requirements of section 409A of the Code.  The Plan as so amended and restated was amended and restated as of May 7, 2009 in the form set forth herein, to be effective with respect to Awards granted after December 31, 2008, subject to shareholder approval.
1.2.    Participation.  Subject to the terms and conditions of the Plan, the Committee shall determine and designate, from time to time, from among the Eligible Individuals, those persons who will be granted one or more Awards under the Plan, and thereby become "Participants" in the Plan.
1.3.    Operation, Administration, and Definitions.  The operation and administration of the Plan, including the Awards made under the Plan, shall be subject to the provisions of Section 5 (relating to operation and administration).  Capitalized terms in the Plan shall be defined as set forth in the Plan (including the definition provisions of Section 9).
SECTION 2     
OPTIONS AND SARS
2.1.    Definitions.
		
	(a)
	The grant of an "Option" entitles the Participant to purchase Shares at an Exercise Price established by the Committee.  Any Option granted under this Section 2 may be either an incentive stock option (an "ISO") or a non-qualified option (an "NQO"), as determined in the discretion of the Committee.  An "ISO" is an Option that is intended to satisfy the requirements applicable to an "incentive stock option" described in section 422(b) of the Code.  An "NQO" is an Option that is not intended to be an "incentive stock option" as that term is described in section 422(b) of the Code.

		
	(b)
	A stock appreciation right (an "SAR") entitles the Participant to receive, in cash or Shares (as determined in accordance with subsection 2.5), value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of Shares at the time of exercise; over (b) an Exercise Price established by the Committee.

2.2.    Exercise Price.  The "Exercise Price" of each Option and SAR granted under this Section 2 shall be established by the Committee or shall be determined by a method established by the Committee at the time the Option or SAR is granted.  The Exercise Price shall not be less than 100% of the Fair Market Value of a Share on the date of grant (or, if greater, the par value, if any, of a Share).
2.3.    Exercise.  An Option and an SAR shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee.  In no event, however, shall an Option or SAR expire later than ten years after the date of its grant.
2.4.    Payment of Option Exercise Price.  The payment of the Exercise Price of an Option granted under this Section 2 shall be subject to the following:
		
	(a)
	Subject to the following provisions of this subsection 2.4, the full Exercise Price for Shares purchased upon the exercise of any Option shall be paid at the time of such exercise (except that, in the case of an exercise arrangement approved by the Committee and described in paragraph 2.4(c), payment may be made as soon as practicable after the exercise).

		
	(b)
	Subject to applicable law, the full Exercise Price shall be payable in cash, by promissory note, or by tendering, by either actual delivery of shares or by attestation, Shares acceptable to the Committee (including shares otherwise distributable pursuant to the exercise of the Option), and valued at Fair Market Value as of the day of exercise, or in any combination thereof, as determined by the Committee.

		
	(c)
	Subject to applicable law, the Committee may permit a Participant to elect to pay the Exercise Price upon the exercise of an Option by irrevocably authorizing a third party to sell Shares (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.

2.5.    Settlement of Award.  Settlement of Options and SARs is subject to subsection 5.7.
2.6.    No Repricing.  Except for either adjustments pursuant to paragraph 5.2(f) (relating to the adjustment of Shares), or reductions of the Exercise Price approved by the Company's shareholders, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan be surrendered to the Company as consideration for the grant of a replacement Option or SAR with a lower Exercise Price.  Except as approved by Company’s stockholders, in no event shall any Option or SAR granted under the Plan be surrendered to Company in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or SAR is greater than the then current Fair Market Value of a Share.  In addition, no repricing of an Option or SAR shall be permitted without the approval of Company’s stockholders if such approval is required under the rules of any stock exchange on which Stock is listed.  
2.7.    Grants of Options and SARs.  An Option may but need not be in tandem with an SAR, and an SAR may but need not be in tandem with an Option (in either case, regardless of whether the original award was granted under this Plan or another plan or arrangement).  If an Option is in tandem with an SAR, the Exercise Price of both the Option and SAR shall be the same, and the exercise of the Option or SAR with respect to a Share shall cancel the corresponding tandem SAR or Option right with respect to such Share.  If an SAR is in tandem with an Option but is granted after the grant of the Option, or if an Option is in tandem with an SAR but is granted after the grant of the SAR, the later granted tandem Award shall have the same Exercise Price as the earlier granted Award, but the Exercise Price for the later granted Award may be less than the Fair Market Value of the Share at the time of such grant.
SECTION 3     
FULL VALUE AWARDS
3.1.    Definition.  A "Full Value Award" is a grant of one or more Shares or a right to receive one or more Shares in the future, with such grant subject to one or more of the following, as determined by the Committee:
		
	(a)
	The grant shall be in consideration of a Participant’s previously performed services, or surrender of other compensation that may be due.

		
	(b)
	The grant shall be contingent on the achievement of performance or other objectives during a specified period.

		
	(c)
	The grant shall be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives.

The grant of Full Value Awards may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee.
3.2.    Restrictions on Awards.  
		
	(a)
	The Committee may designate a Full Value Award granted to any Participant as "performance-based compensation" as that term is used in section 162(m) of the Code.  To the extent required by Code section 162(m), any Full Value Award so designated shall be conditioned on the achievement of one or more performance objectives.  The performance objectives shall be based on Performance Measures selected by the Committee.  For Awards under this Section 3 intended to be "performance-based compensation," the grant of the Awards and the establishment of the performance objectives shall be made during the period required under Code section 162(m).  

		
	(b)
	If the right to become vested in a Full Value Award is conditioned on the completion of a specified period of service with the Company or the Subsidiaries, without achievement of Performance Measures or other performance objectives (whether or not related to the Performance Measures) being required as a condition of vesting, and without it being granted in lieu of other compensation, then the required period of service for full vesting shall be not less than three years (subject to acceleration of vesting, to the extent permitted by the Committee, in the event of the Participant’s death, disability, retirement, change in control or involuntary termination).  However, the Committee may grant Full Value Awards that do not condition vesting on achievement of performance objectives, and such Awards shall not be subject to the limits of foregoing provisions of this paragraph (b), provided that the aggregate number of shares subject to Full Value Awards granted pursuant to this paragraph (b) (excluding any such Awards to the extent that they have been forfeited or cancelled) may not exceed 5% of the limit imposed by paragraph 5.2(b) (relating to the limit on Shares granted under the Plan).

SECTION 4     
CASH INCENTIVE AWARDS
A Cash Incentive Award is the grant of a right to receive a payment of cash (or in the discretion of the Committee, Shares having value equivalent to the cash otherwise payable) that is contingent on achievement of performance or other objectives over a specified period established by the Committee.  The grant of Cash Incentive Awards may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee.  The Committee may designate a Cash Incentive Award granted to any Participant as "performance-based compensation" as that term is used in section 162(m) of the Code.  To the extent required by Code section 162(m), any such Award so designated shall be conditioned on the achievement of one or more performance objectives.  The performance objectives shall be based on Performance Measures as selected by the Committee.  For Awards under this Section 4 intended to be "performance-based compensation," the grant of the Awards and the establishment of the performance objectives shall be made during the period required under Code section 162(m).  Except as otherwise provided in the applicable plan or arrangement, distribution of any bonus awards by the Company or its Subsidiaries (whether granted this Plan or otherwise), for a performance period ending in a calendar year, shall be made to the participant not later than March 15 of the following calendar year; provided, however, that for purposes of determining compliance with Code section 409A, a payment will be considered to satisfy the requirement of this sentence if distribution is made no later than the end of the calendar year following the end of the applicable performance period.
SECTION 5     
OPERATION AND ADMINISTRATION
5.1.    History.  The Plan was amended and restated as of August 5, 2008, to conform to the requirements of section 409A of the Code.  The Plan as so amended and restated was amended and restated as of May 7, 2009 in the form set forth herein, to be effective with respect to Awards granted after December 31, 2008, contingent on shareholder approval of such restatement by the Company’s shareholders at the 2009 annual meeting, to increase the shares reserved under the Plan and to make certain other revisions.  To the extent not prohibited by applicable law or the applicable rules of any stock exchange, Awards which are to use Shares reserved under the Plan that are contingent on the approval by the Company’s shareholders may be granted prior to that meeting contingent on such approval.  The Plan shall be unlimited in duration and, in the event of Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards may be granted under the Plan after the ten-year anniversary of May 7, 2009, which is the date on which the shareholders approved the Plan as amended and restated to increase the reserved Shares.
5.2.    Shares and Other Amounts Subject to Plan.  The Shares for which Awards may be granted under the Plan shall be subject to the following:
		
	(a)
	The Shares with respect to which Awards may be made under the Plan shall be: (i) shares currently authorized but unissued; (ii) to the extent permitted by applicable law, currently held or acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions (it being recognized that at the time of adoption of the Plan the Company is not permitted to have treasury shares); or (iii) shares purchased in the open market by a direct or indirect wholly-owned subsidiary of the Company (as determined by the Chief Executive Officer or the Chief Financial Officer of the Company).  The Company may contribute to the subsidiary or trust an amount sufficient to accomplish the purchase in the open market of the Shares to be so acquired (as determined by the Chief Executive Officer or the Chief Financial Officer of the Company).

		
	(b)
	Subject to the following provisions of this subsection 5.2, the maximum number of Shares that may be delivered to Participants and their beneficiaries under the Plan shall be 10,970,000 Shares (which number includes all shares available for delivery under this paragraph (b) since the establishment of the Plan in 2004, determined in accordance with the terms of the Plan).

		
	(c)
	To the extent provided by the Committee, any Award may be settled in cash rather than Shares.

		
	(d)
	Only Shares, if any, actually delivered to the Participant or beneficiary on an unrestricted basis with respect to an Award shall be treated as delivered for purposes of the determination under paragraph (b) above, regardless of whether the Award is denominated in Shares or cash.  Consistent with the foregoing:

		
	(i)
	To the extent any Shares covered by an Award are not delivered to a Participant or beneficiary because the Award is forfeited or canceled, or the Shares are not delivered on an unrestricted basis (including, without limitation, by reason of the Award being settled in cash or used to satisfy the applicable tax withholding obligation), such Shares shall not be deemed to have been delivered for purposes of the determination under paragraph (b) above.

		
	(ii)
	If the exercise price of any Option granted under the Plan or the tax withholding obligation with respect to any Award granted under the Plan is satisfied by tendering Shares to the Company (by either actual delivery or by attestation), only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the number of Shares available for delivery under the Plan.

		
	(e)
	Subject to paragraph 5.2(f), the following additional maximums are imposed under the Plan:

		
	(i)
	The maximum number of Shares that may be delivered to Participants and their beneficiaries with respect to ISOs granted under the Plan shall be 10,970,000 Shares (which number includes all Shares available for delivery under this paragraph (e)(i) since the establishment of the Plan in 2004, determined in accordance with the terms of the Plan); provided, however, that to the extent that Shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to ISOs, such rules shall apply to the limit on ISOs granted under the Plan.

		
	(ii)
	The maximum number of Shares that may be covered by Awards granted to any one Participant during any one-calendar-year period pursuant to Section 2 (relating to Options and SARs) shall be 2,500,000 Shares.  For purposes of this paragraph (ii), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to such Share, the tandem Option and SAR rights with respect to each Share shall be counted as covering but one Share for purposes of applying the limitations of this paragraph (ii).

		
	(iii)
	The maximum number of Shares that may be issued in conjunction with Awards granted pursuant to Section 3 (relating to Full Value Awards) shall be 2,500,000 Shares.

		
	(iv)
	For Full Value Awards that are intended to be "performance-based compensation" (as that term is used for purposes of Code section 162(m)), no more than 1,250,000 Shares may be delivered pursuant to such Awards granted to any one Participant during any one-calendar‐year period (regardless of whether settlement of the Award is to occur prior to, at the time of, or after the time of vesting); provided that Awards described in this paragraph (iv) that are intended to be performance-based compensation shall be subject to the following:

		
	(A)
	If the Awards are denominated in Shares but an equivalent amount of cash is delivered in lieu of delivery of Shares, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of Shares into cash.

		
	(B)
	If delivery of Shares or cash is deferred until after Shares have been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the Shares are earned shall be disregarded.

		
	(v)
	For Cash Incentive Value Awards that are intended to be "performance-based compensation" (as that term is used for purposes of Code section 162(m)), the maximum amount payable to any Participant with respect to any performance period shall equal $500,000 multiplied by the number of calendar months included in that performance period; provided that Awards described in this paragraph (v), that are intended to be performance-based compensation, shall be subject to the following:

		
	(A)
	If the Awards are denominated in cash but an equivalent amount of Shares is delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into Shares.

		
	(B)
	If delivery of Shares or cash is deferred until after cash has been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the cash is earned shall be disregarded.

		
	(f)
	In the event of a corporate transaction involving the Company (including, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization, merger, amalgamation, consolidation, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares), the Committee may adjust Awards to reflect the transactions.  Action by the Committee may include: (i) adjustment of the number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the Exercise Price of outstanding Options and SARs; and (iv) any other adjustments that the Committee determines to be equitable (which may include, without limitation, (A) replacement of Awards with other Awards which the Committee determines have comparable value and which are based on shares of a company resulting from the transaction, and (B) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of payment, provided that in the case of an Option, the amount of such payment may be the excess of value of the Shares subject to the Option at the time of the transaction over the exercise price).  However, in no event shall this paragraph (f) be construed to permit a modification (including a replacement) of an Option or SAR if such modification either: (i) would result in accelerated recognition of income or imposition of additional tax under Code section 409A; or (ii) would cause the Option or SAR subject to the modification (or cause a replacement Option or SAR) to be subject to Code section 409A, provided that the restriction of this clause (ii) shall not apply to any Option or SAR that, at the time it is granted or otherwise, is designated as being deferred compensation subject to Code section 409A.

5.3.    General Restrictions.  Delivery of Shares or other amounts under the Plan shall be subject to the following:
		
	(a)
	Notwithstanding any other provision of the Plan, the Company shall have no obligation to recognize an exercise of an Option or SAR or deliver any Shares or make any other distribution of benefits under the Plan unless such exercise, delivery or distribution complies with all applicable laws (including, without limitation, the requirements of the United States Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity or other regulatory authority with respect to the issue of shares and securities by the Company.

		
	(b)
	To the extent that the Plan provides for issuance of share certificates to reflect the issuance of Shares, the issuance may be effected on a non-certificated basis, to the extent not prohibited by or may be made in compliance with applicable law, the Bye-laws of the Company, or the applicable rules of any stock exchange.

5.4.    Tax Withholding.  All distributions under the Plan are subject to withholding of all applicable taxes, and the Committee may condition the delivery of any Shares or other benefits under the Plan on satisfaction of the applicable withholding obligations.  Except as otherwise provided by the Committee and subject to applicable law, such withholding obligations may be satisfied (i) through cash payment by the Participant; (ii) through the surrender of Shares which the Participant already owns (provided, however, that to the extent Shares described in this clause (ii) are used to satisfy more than the minimum statutory withholding obligation, as described below, then, except as otherwise provided by the Committee, payments made with Shares in accordance with this clause (ii) shall be limited to Shares held by the Participant for not less than six months prior to the payment date); or (iii) through the surrender of Shares to which the Participant is otherwise entitled under the Plan; provided, however, that such Shares under this clause (iii) 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).
5.5.    Grant and Use of Awards.  In the discretion of the Committee, a Participant may be granted any Award permitted under the provisions of the Plan, and more than one Award may be granted to a Participant.  Subject to subsection 2.6 (relating to repricing), Awards may be granted as alternatives to or replacement of awards granted or outstanding under the Plan, or any other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary).  Subject to the overall limitation on the number of Shares that may be delivered under the Plan, the Committee may use available Shares as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or a Subsidiary, including the plans and arrangements of the Company or a Subsidiary assumed in business combinations.  Notwithstanding the provisions of subsection 2.2, Options and SARs granted under the Plan in replacement for awards under plans and arrangements of the Company or a Subsidiary assumed in business combinations may provide for Exercise Prices that are less than the Fair Market Value of the Shares at the time of the replacement grants, if the Committee determines that such Exercise Price is appropriate to preserve the economic benefit of the award.  The provisions of this subsection shall be subject to the provisions of subsection 5.15.
5.6.    Dividends and Dividend Equivalents.  An Award (including without limitation an Option or SAR Award) may provide the Participant with the right to receive dividend or dividend equivalent payments with respect to Shares subject to the Award (both before and after the Shares subject to the Award is earned, vested, or acquired), which payments may be either made currently or credited to an account for the Participant, and may be settled in cash or Shares as determined by the Committee.  Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in Shares, will be subject to the Company's Bye-laws as well as applicable law and further may be subject to such conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in Share equivalents.  The provisions of this subsection shall be subject to the provisions of subsection 5.15.
5.7.    Settlement of Awards.  The obligation to make payments and distributions with respect to Awards may be satisfied through cash payments, the delivery of Shares, the granting of replacement Awards, or combination thereof as the Committee shall determine.  Satisfaction of any such obligations under an Award, which is sometimes referred to as "settlement" of the Award, may be subject to such conditions, restrictions and contingencies as the Committee shall determine.  The Committee may permit or require the deferral of any Award payment or distribution, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, and may include converting such credits into deferred Share equivalents.  Except for Options and SARs designated at the time of grant or otherwise as intended to be subject to Code section 409A, this subsection 5.7 shall not be construed to permit the deferred settlement of Options or SARs, if such settlement would result in deferral of compensation under Treas. Reg. §1.409A-1(b)(5)(i)(A)(3) (except as permitted in paragraphs (i) and (ii) of that section).  Each Subsidiary shall be liable for payment of cash due under the Plan with respect to any Participant to the extent that such benefits are attributable to the services rendered for that Subsidiary by the Participant.  Any disputes relating to liability of a Subsidiary for cash payments shall be resolved by the Committee.  The provisions of this subsection shall be subject to the provisions of subsection 5.15.
5.8.    Transferability.  Except as otherwise provided by the Committee, Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution.
5.9.    Form and Time of Elections.  Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.
5.10.    Agreement With Company.  An Award under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall, in its sole discretion, prescribe.  The terms and conditions of any Award to any Participant shall be reflected in such form of written (including electronic) document as is determined by the Committee.  A copy of such document shall be provided to the Participant, and the Committee may, but need not require that the Participant sign a copy of such document.  Such document is referred to in the Plan as an "Award Agreement" regardless of whether any Participant signature is required.
5.11.    Action by Company or Subsidiary.  Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board, or (except to the extent prohibited by applicable law or applicable rules of any stock exchange) by a duly authorized officer of such company.
5.12.    Gender and Number.  Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
5.13.    Limitation of Implied Rights.
		
	(a)
	Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan.  A Participant shall have only a contractual right to the Shares or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.

		
	(b)
	The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee or other individual the right to be retained in the employ of the Company or any Subsidiary or the right to continue to provide services to the Company or any Subsidiary, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.  Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights and is registered in the Company's Register of Shareholders.

		
	(c)
	All Stock and shares issued under any Award or otherwise are to be held subject to the provisions of the Company's Bye-laws and each Participant is deemed to agree to be bound by the terms of the Company's Bye-laws as they stand at the time of issue of any Shares under the Plan.

5.14.    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
5.15.    Limitations under Section 409A.  The provisions of the Plan shall be subject to the following: 
		
	(a)
	Neither subsection 5.5 nor any other provision of the Plan shall be construed to permit the grant of an Option or SAR if such action would cause the Option or SAR being granted or the option or stock appreciation right being replaced to be subject to Code section 409A, provided that this paragraph (a) shall not apply to any Option or SAR (or option or stock appreciation right granted under another plan) being replaced that, at the time it is granted or otherwise, is designated as being deferred compensation subject to Code section 409A.

		
	(b)
	Except with respect to an Option or SAR that, at the time it is granted or otherwise, is designated as being deferred compensation subject to Code section 409A, no Option or SAR shall condition the receipt of dividends with respect to an Option or SAR on the exercise of such Award, or otherwise provide for payment of such dividends in a manner that would cause the payment to be treated as an offset to or reduction of the exercise price of the Option or SAR pursuant Treas. Reg. §1.409A-1(b)(5)(i)(E).

		
	(c)
	The Plan shall not be construed to permit a modification of an Award, or to permit the payment of a dividend or dividend equivalent, if such actions would result in accelerated recognition of taxable income or imposition of additional tax under Code section 409A.

SECTION 6     
CHANGE IN CONTROL
Subject to the provisions of paragraph 5.2(f) (relating to the adjustment of shares), the occurrence of a Change in Control shall have the effect, if any, with respect to any Award as set forth in the Award Agreement or, to the extent not prohibited by the Plan or the Award Agreement, as provided by the Committee.
SECTION 7     
COMMITTEE
7.1.    Administration.  The authority to control and manage the operation and administration of the Plan shall be vested in a committee (the "Committee") in accordance with this Section 7.  The Committee shall be selected by the Board, and shall consist solely of two or more members of the Board.  As a committee of the Board, the Committee is subject to the overview of the Board.  If the Committee does not exist, or for any other reason determined by the Board, and to the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.
7.2.    Powers of Committee.  The Committee’s administration of the Plan shall be subject to the following:
		
	(a)
	Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the Eligible Individuals those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of Shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 8) to cancel or suspend Awards.

		
	(b)
	To the extent that the Committee determines that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States and Bermuda, the Committee will have the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States and Bermuda.

		
	(c)
	The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any Award Agreement made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

		
	(d)
	Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

		
	(e)
	In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to applicable corporate law.  

		
	(f)
	Notwithstanding any other provision of the Plan, no benefit shall be distributed under the Plan to any person unless the Committee, in its sole discretion, determines that such person is entitled to benefits under the Plan.

7.3.    Delegation by Committee.  Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.  Any such allocation or delegation may be revoked by the Committee at any time.
7.4.    Information to be Furnished to Committee.  The Company and Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties.  The records of the Company and Subsidiaries as to an employee’s or Participant’s employment (or other provision of services), termination of employment (or cessation of the provision of services), leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect.  Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
SECTION 8     
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, and the Board or the Committee may amend any Award Agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board (or the Committee if applicable); and further provided that adjustments pursuant to paragraph 5.2(f) shall not be subject to the foregoing limitations of this Section 8; and further provided that the provisions of subsection 2.6 (relating to Option and SAR repricing) cannot be amended unless the amendment is approved by the Company's shareholders.  No amendment or termination shall be adopted or effective if it would result in accelerated recognition of income or imposition of additional tax under Code section 409A or, except as otherwise provided in the amendment, would cause amounts that were not otherwise subject to Code section 409A to become subject to section 409A.
SECTION 9     
DEFINED TERMS
In addition to the other definitions contained herein, the following definitions shall apply:
		
	(a)
	Award.  The term "Award" means any award or benefit granted under the Plan, including, without limitation, the grant of Options, SARs, and Full Value Awards.

		
	(b)
	Board.  The term "Board" means the Board of Directors of the Company.

		
	(c)
	Change in Control.  The term "Change in Control" means the occurrence of the events described in any of paragraphs (i), (ii), (iii) or (iv) below:

		
	(i)
	Acquisition of Securities.  The acquisition (disregarding any Excluded Acquisitions) by any Person of ownership of any Voting Securities if, immediately after such acquisition, such Person has ownership of more than twenty-five percent (25%) of either the Outstanding Company Common Shares, or the combined voting power of the Outstanding Company Voting Securities.  In no event shall a Change in Control occur by reason of ownership of Shares, Voting Securities, Outstanding Company Common Shares, or Outstanding Company Voting Securities by ACE Limited and/or any successor or Affiliate of ACE Limited.

		
	(ii)
	Change in Board.  Individuals who constitute the Incumbent Board cease for any reason to represent greater than 50% of the voting power of members of the Board.

		
	(iii)
	Corporate Transaction.  Consummation of (A) a Corporate Transaction or (B) the sale or other disposition of more than fifty percent (50%) of the operating assets of the Company (determined on a consolidated basis), but not including an Internal Reorganization.

		
	(iv)
	Liquidation.  Approval by the shareholders of the Company of a plan of complete liquidation or dissolution of the Company.

		
	(v)
	Definitions.  The terms used in the definition of "Change in Control" shall have the following meanings:

		
	(A)
	An "Affiliate" of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified.

		
	(B)
	The term "Company Plan" means an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate of the Company.

		
	(C)
	The term "Corporate Transaction" means any reorganization, merger, amalgamation, consolidation, or other business combination involving the Company.

		
	(D)
	The following shall constitute "Excluded Acquisitions" of Shares or Voting Securities (whichever is applicable):

		
	(I)
	Any acquisition of Shares or Voting Securities (whichever is applicable) by a Company Plan.

		
	(II)
	Any acquisition of Shares or Voting Securities (whichever is applicable) by an underwriter temporarily holding securities pursuant to an offering of such securities.

		
	(III)
	Any acquisition of Shares or Voting Securities (whichever is applicable) by any Person pursuant to an Internal Reorganization.

		
	(IV)
	Any acquisition of Shares or Voting Securities (whichever is applicable) directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company).

		
	(V)
	Any acquisition of Shares or Voting Securities (whichever is applicable) by the Company.

		
	(VI)
	Any acquisition of Shares or Voting Securities (whichever is applicable) by ACE Limited and/or any successor or Affiliate of ACE Limited or any employee benefit plan (or related trust) maintained by any such entity.

		
	(E)
	The members of the "Incumbent Board" shall mean the members of the Board of Directors as of the date immediately prior to the date of the initial public offering of the shares of the Company and shall also mean any individual becoming a director after that date whose election, or nomination for election by the Company shareholders, was approved by a vote of a least a majority of the directors then comprising the Incumbent Board; provided, however, that there shall be excluded for this purpose any such individual whose initial assumption of office occurs as a result of an actual or publicly threatened election contest (as such terms are used in Rule 14a-11 promulgated under the Securities Exchange Act of 1934) or other actual or publicly threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

		
	(F)
	The term "Internal Reorganization" means a sale-leaseback or other arrangement resulting in the continued utilization of the assets being sold or otherwise transferred (or the operating products of such assets) by the Company.  The term "Internal Reorganization" also means a Corporate Transaction to which all of paragraphs (I), (II), and (III) below are applicable:

		
	(I)
	All or substantially all of the individuals and entities who have ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Corporate Transaction have ownership of more than fifty percent (50%) of, respectively, the then outstanding shares of common equity securities and the combined voting power of the then outstanding Voting Securities entitled to vote generally in the election of directors, as the case may be, of the ultimate parent entity resulting from such Corporate Transaction (including, without limitation, an entity which, as a result of such transaction, has ownership of the Company or all or substantially all of the assets of the Company either directly or through one or more subsidiaries) in substantially the same relative proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be.

		
	(II)
	No Person (other than the Company, any Company Plan or related trust, the corporation resulting from such Corporate Transaction, and any Person having ownership, immediately prior to such Corporate Transaction, directly or indirectly, of more than twenty-five percent (25%) of the Outstanding Company Common Shares or the Outstanding Company Voting Securities, as the case may be) will have ownership of more than twenty-five percent (25%) of, respectively, the then outstanding common shares of the ultimate parent entity resulting from such Corporate Transaction or the combined voting power of the then outstanding Voting Securities of such entity.

		
	(III)
	Individuals who were members of the Incumbent Board immediately prior to the Corporate Transaction will constitute at least a majority of the members of the board of directors of the ultimate parent entity resulting from such Corporate Transaction.

		
	(G)
	The term "Outstanding Company Common Shares" as of any date means the then outstanding common shares, of whatever subclass or series, of the Company.

		
	(H)
	The term "Outstanding Company Voting Securities" as of any date means the then outstanding Voting Securities (which shall be counted based on the number of votes that may be cast per share).

		
	(I)
	The term "ownership" means beneficial ownership within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934.

		
	(J)
	The term "Person" means an individual, entity or group as that term is used in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934.

		
	(K)
	The term "Voting Securities" as of any date means any of the outstanding securities of the Company entitled to vote generally in the election of the Company’s Board of Directors.

		
	(d)
	Code.  The term "Code" means the United States Internal Revenue Code of 1986, as amended.  A reference to any provision of the Code shall include reference to any successor provision of the Code.

		
	(e)
	Dollars.  As used in the Plan, the term "dollars" or numbers preceded by the symbol "$" means amounts in United States dollars.

		
	(f)
	Eligible Individual.  For purposes of the Plan, the term "Eligible Individual" means any employee of the Company or a Subsidiary, and any consultant, director, or other person providing services to the Company or a Subsidiary; provided, however, that to the extent required by the Code, an ISO may only be granted to an employee of the Company or a subsidiary corporation of the Company (as that term is used in section 424(f) of the Code).  An Award may be granted to an employee or other individual providing services, in connection with hiring, retention or otherwise, prior to the date the employee or service provider first performs services for the Company or the Subsidiaries, provided that such Awards shall not become vested prior to the date the employee or service provider first performs such services.

		
	(g)
	Fair Market Value.  Except as otherwise provided by the Committee, the “Fair Market Value” of a Share as of any date shall be the closing market composite price for such Share as reported for the New York Stock Exchange - Composite Transactions on that date or, if the Shares are not traded on that date, on the next preceding date on which the Shares were traded.

		
	(h)
	Performance Measures.  The "Performance Measures" shall be based on any one or more of the following Company, Subsidiary, operating unit or division performance measures: gross premiums written; net premiums written; net premiums earned; net investment income; losses and loss expenses; underwriting and administrative expenses; operating expenses; cash flow(s); operating income; profits, earnings before interest and taxes; net income; stock price; return on equity; dividends; strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures; or any combination thereof.  Each goal may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other companies, and in the case of earnings-based measures, may use or employ comparisons relating to capital, shareholders’ equity and/or shares outstanding, investments or to assets or net assets.

		
	(i)
	Shares.  The term "Shares" means common shares of the Company.

		
	(j)
	Subsidiaries.  For purposes of the Plan, the term "Subsidiary" means any corporation, partnership, joint venture or other entity during any period in which at least a fifty percent voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a successor to the Company) has a significant interest, as determined in the discretion of the Committee.

		
	(k)
	Stock.  The term "Stock" is sometimes used to refer to common shares of the Company.

		
	(l)
	Termination of Service.  With respect to Awards that constitute Deferred Compensation, references to the Participant's termination of employment (including references to the Participant's employment termination, and to the Participant terminating employment, a Participant’s separation from service, and other similar reference) and references to a Participant's termination as a director (including separation from service and other similar references) shall mean, respectively, the Participant ceasing to be employed by, or ceasing to perform director services for, the Company and the Affiliates, subject to the following:

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

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

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

		
	(iv)
	If a Participant performs services both as an employee of the Company or an Affiliate, and a member of the board of directors of the Company or an Affiliate, the determination of whether termination of employment or termination of service as a director shall be made in accordance with Treas. Reg. §1.409A-1(h)(5) (relating to dual status service providers).

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

		
	(vi)
	The term “Deferred Compensation” means payments or benefits that would be considered to be provided under a nonqualified deferred compensation plan as that term is defined in Treas. Reg. §1.409A-1.

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