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Exhibit 10.38  

 
 

NON-EMPLOYEE DIRECTOR
  CASH COMPENSATION ARRANGEMENT
  (EFFECTIVE: FEBRUARY 18, 2004)    
    

        Each director of Corgentech Inc. (the "Company") who is not an employee of the Company and who is not
affiliated with our principal stockholders receive an annual retainer fee of $10,000 paid in four equal quarterly installments. 

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NON-EMPLOYEE DIRECTOR CASH COMPENSATION ARRANGEMENT (EFFECTIVE: FEBRUARY 18, 2004)Judith A.
  Luengas

  	
   

  	
  Direct
  (407) 363-8077

  
	
  Senior
  Attorney

  	
   

  	
  Facsimile
  (407) 363-8219

  
	
  Legal
  Affairs

  	
   

  	
   

  

 

Exhibit 10.32

 

December 1, 2004

 

Gretchen Hofmann

8310 Tivoli Drive

Orlando, FL 32836

 

Re:  Employment Agreement — Option

 

Dear Gretchen:

 

Pursuant to your
Employment Agreement dated March 12, 2001 under which you have been employed as
Senior Vice President, Sales and Marketing, we hereby exercise our option to
extend the term for two (2) years, commencing on March 19, 2005 and continuing
until March 18, 2007, such employment to be on all the same terms and
conditions presently applicable to your employment.

 

Please acknowledge your
receipt of this letter and agreement to the foregoing additional term of your
Employment Agreement by signing and returning one original of this letter to
me.

 

Very truly yours,

 

 

UNIVERSAL ORLANDO

By: Judy Luengas

 

 

ACKNOWLEDGED AND AGREED:

 

	
  /s/ Gretchen Hofmann

  	
   

  	
  12/13/04

  	
   

  	
   

  	
   

  
	
  Gretchen Hofmann

  	
   

  	
  DateExhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

THIS AGREEMENT, made
and entered into as of the 28th 
day of April, 2004 by and between Assured Guaranty Ltd., a Bermuda
corporation, Assured Guaranty U.S. Holdings, Inc., a  Delaware corporation,  Assured Guaranty Corp., a Maryland
corporation (collectively referred to as the “Company”), and Dominic J.
Frederico (the “Executive”).

 

WHEREAS, the Company desires to offer employment to the Executive under the terms and conditions set forth below; and

 

WHEREAS, the
Executive wishes to accept such employment under such terms and conditions.

 

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the Company and the Executive (the “Parties”)
hereby agree as follows:

 

1.         Employment

 

The Company hereby employs the Executive, and the Executive hereby
accepts employment with the Company, for the term of this Agreement as set
forth in Section 2 below, in the position and with the duties and
responsibilities set forth in Section 3 below, and upon such other terms
and conditions as are hereinafter stated.

 

1

 

2.         Term and Place of Performance

 

(a) The term of the Agreement shall commence as of the date of the closing
of the initial public offering of Assured Guaranty Ltd. common shares
registered under the Securities Act of 1933, as amended (the “Commencement Date”)
and shall continue through the close of business on third anniversary of the
Commencement Date, subject to the terms and conditions of this Agreement (“Initial
Term”).  This Agreement shall
automatically renew for a one-year term after the Initial Term, and each
succeeding twelve months thereafter, unless either party gives notice in
writing at least 30 days prior to the expiration of the Initial Term or
succeeding one year term of its intention not to renew the Agreement.   If non-renewal is at the option of
Executive, it shall be treated as a Voluntary Termination.  If non-renewal is at the option of Company,
it shall be treated as a Termination Without Cause as that term is defined in Section 10(d)
herein.

 

(b). The obligations of the Company under this Agreement shall be
contingent upon the issuance of a work permit by the Government of Bermuda and
any other permits required by the Government of Bermuda. Failure to obtain said
permits shall void this Agreement, unless the Company decides Executive may
perform his duties at some other location. In the event the agreement is voided
under this section, Executive shall be entitled to the benefits provided for
Termination Without Cause under Section 10(d).

 

Once obtained, the maintenance of such
permits throughout the term of this Agreement shall be a continuing condition
to the Company’s obligations under this Agreement. However, if despite the
Executive’s best efforts to maintain the permits, they are terminated or
revoked by the Government of Bermuda through no fault of the Executive, then
the Executive shall be entitled to the benefits provided for Termination
Without Cause under Section 10(d).

 

2

 

3.         Positions, Duties. and Time Devoted to the Company &
Its Affiliates

 

(a) During the term of the Agreement, the Executive shall be employed
as the Chief Executive Officer of the Company, with such powers and duties
normally attendant to such offices and such other duties as may be assigned to
the Executive.  Executive shall answer to
and be subject to the direction of the Assured Guaranty  Ltd. Board of Directors.

 

(b) The Executive agrees to remain in the employ of the Company during
the term of this Agreement, to devote his full business time exclusively to the
business affairs of the Company, and to perform his duties faithfully.  Subject to the demands of his position with
the Company, the Executive shall be permitted to:

 

(i) deliver lectures and fulfill speaking engagements; and

 

(ii) engage in industry, charitable and community activities; provided,
however, that any expenses, such as for travel, incurred by the Executive in
connection with such activities shall be for the personal account of the
Executive and shall not be reimbursed by the Company, unless based on
managements’ view it is done for the overall benefit of the Company in
forwarding its image, business abilities or quality of staff.

 

4.         Salary

 

For services rendered by the Executive to the Company during the term
of this Agreement while he is employed by the Company,
the Executive shall be paid a minimum annual base salary at a rate of $700,000.  The annual base salary shall be paid on a
monthly basis by the Company.  The
companies which comprise the Company as defined herein will fund the salary and
other compensation and benefits under this Agreement specified above in
proportion to the percentage of time executive performs work for each company.

 

3

 

5.              Moving Allowance

 

The Company will reimburse the Executive for reasonable moving expenses
for household goods in relocating to Bermuda. 
If Executive’s employment terminates pursuant to Sections 10(a), 10(b)
or 10(d) of this Agreement, the Company will reimburse the Executive for
reasonable moving expenses for household goods returning to the Executive’s
original port of departure or an allowance equal to this sum applied to another
destination.

 

6.              Annual Performance Incentive Plan

 

Subject to the terms and conditions of this
Agreement, once a year during the Initial Term, Executive shall receive an
annual performance incentive bonus award which will range from 0 to 200% of his
annual base salary, such amount to be determined by the Compensation Committee
of the Board of Directors and to be based on the performance of the Company and
the Executive.  Notwithstanding the
foregoing, for as long as the Company continues to participate in the ACE Group
short-term incentive program, Executive will be eligible to participate in such
plan, pursuant to its terms, as may be in effect from time to time .

 

7.           Long-Term Incentive Awards

 

(a) Sign-on Equity Award—  When
Assured Guaranty Limited (“AGL”) issues shares of publicly traded stock,
Executive will be granted an award of 250,000 restricted ordinary shares of AGL
stock that will vest 25% annually over a four year period with the first
quarter vesting starting one year after the date of the award .  When AGL issues shares of publicly traded
stock, Executive will also be granted an award of an option to purchase at the
IPO price 500,000 shares of AGL stock. 
These shares and options will be subject the terms and conditions that
will be set

 

4

 

forth in the AGL Long-Term Incentive Plan (“LTIP”).   Upon vesting or exercise of stock options,
the shares will be registered in the United States with the SEC and appropriate
states and will be freely tradable.

 

(b) Annual
Long-Term Incentive Awards—Executive will participate in the LTIP.  The “target award” for the Initial Term will
be 83,333 restricted shares of AGL stock and an option to purchase 166,667
shares of AGL stock, however the amount of any award made to Executive under
LTIP will be based on the profitability of the AGL and Executive’s performance
and will be subject to the discretion of the Compensation Committee of the AGL’s
Board of Directors.  All Long-Term Incentive
awards will be subject to the terms and conditions of the LTIP.

 

(c) Retirement—If Executive retires at
age 55 or older from Company and has at least three years of service with the
Company,   any restricted shares of
Company ordinary stock and options to purchase shares of Company stock held by
Executive upon retirement will continue to vest in accordance with the
schedules set forth in the award grants, will be exercisable until the
expiration of their original term, and will otherwise be subject to the provisions of the applicable Company long-term incentive plan.

 

(d) Other-   Restricted stock grant awards and stock option
agreements presented to Executive under the LTIP shall not be inconsistent with
the terms of this agreement and to the extent that such awards or grants
include terms that are not addressed in this agreement the terms of said awards
and grants shall apply in full force and effect.

 

5

 

8.            Employee Benefits 

 

(a) During the term of his employment, the Executive shall be entitled
to participate in the Company’s retirement plan, supplemental retirement plan,
hospitalization plan, major medical plan, dental plan, group-term life
insurance plan, accidental death and dismemberment plan, and such other
employee benefits programs consistent with such benefits offered currently to
senior executives of ACE, subject to satisfaction of all eligibility
requirements of general applicability and all other terms and conditions of the
plans.

 

(b) The Executive shall be entitled to five weeks of vacation in a full
calendar year.  Unused vacation days
shall expire as of the last day of each one year period and may not be
accumulated, carried forward or redeemed for other compensation.

 

(c)  Notwithstanding
the foregoing, for as long as the Company continues to participate in the
existing employee benefit plans, 
Executive shall continue to be able to participate in such plans,
pursuant to their terms, as may be in effect from time to time .

 

(d)  The companies
which comprise the Company as defined herein will fund the benefits specified
above in proportion to the percentage of time executive performs work for each
company.

 

9.              Business Expense Reimbursement. Accommodation. Other
Perquisites

 

(a) During the term his employment, the
Executive shall be entitled to be reimbursed by Company for all reasonable
out-of-pocket travel and entertainment expenses incurred by him in performing
services under this Agreement, provided that the Executive submits reasonable documentation
with respect to such expenses.

 

6

 

(b) During the term of the Executive’s employment, the Company will
reimburse the Executive up to a maximum of $ 18,000 per month in respect of the
cost of suitable living accommodation in Bermuda. In the event that the
Executive chooses to purchase a residence in Bermuda, the Company will
reimburse him only for the fair market rental value of said residence to a
maximum of $18,000 per month, which amount shall be reviewed from time to time
in accordance with authorization from the Compensation Committee of the Board
of Directors.

 

(c) During the term of the Executive’s employment, the Company will
reimburse the Executive and/or his immediate family for up to a total of
sixteen round trip tourist class airfares per year between Bermuda and an East
Coast port of entry to the United States of America upon submission of
reasonable documentation that the fares were incurred.

 

(d) The Executive shall be entitled to reimbursement for initiation
fees and annual dues at a club of his selection in Bermuda.

 

(e) During the term of his employment, Executive shall be entitled to
reimbursement for the reasonable cost of any tax preparation service and
financial planning.

 

(f) The Executive shall be indemnified by the Company in accordance
with its Articles of Incorporation,

 

(g) The Executive shall be entitled to reimbursement for any tax
consequences arising specifically by his relocation to Bermuda for employment
purposes, any travel to and from company offices, and any subsequent relocation
to the U.S. or elsewhere as mentioned in Paragraph 5.

 

(h)  Executive will be eligible
to participate in the Executive automobile program.

 

(i)  This agreement includes the
Gross –Up provisions set forth  in
attachment A hereto which

 

7

 

are incorporated herein by reference.

 

10. Termination of Employment

 

(a) Termination Due to Death.

 

In the event of the Executive’s death during the term of his employment
hereunder, the estate or other legal representative of the Executive shall be
entitled to.

 

(i)             continuation of the
Executive’s annual base salary provided in Section 4 above through the
last day of the month in which the Executive dies;

 

(ii)          any rights and benefits
available under any employee benefits plans, policies, and practices of the
Company, determined in accordance with the applicable terms and provisions of
such plans, policies, and practices as in effect on the date of the Executive’s
death.

 

(b) Termination Due to Disability.

 

In the event the Executive’s employment by the Company is terminated
because he is adjudged by the Compensation Committee to be disabled within the
meaning of the Company’s long-term disability plan, the Executive shall be
entitled to:

 

(i) continuation of the annual base salary provided in Section 4
above through the last day of the month in which the Executive’s employment
with the Company terminates due to disability;

 

(ii) any rights and benefits available under any employee benefits plans, policies, and practices of
the Company, determined in accordance with the applicable terms and provisions of such plans, policies, and
practices as in effect on the date of the Executive’s

 

8

 

termination of employment.

 

(c) Termination by the Company for Cause.

 

(i)
The employment of the Executive under this Agreement may be terminated by the
Company for Cause.  For purposes of this
Agreement, “Cause” shall mean;

 

(A)
conviction or admission of guilt by the Executive of a felony involving moral turpitude;

 

(B)
violations of Section 11 or 12 of this Agreement; or

 

(C)
the Executive, in carrying out his duties, has been guilty of (1) a willful,
serious, and continued failure to perform his duties,  (2) willful and serious misconduct or (3) a
willful and material breach of the Company Code of Conduct; provided, however,
that any act, or failure to act, by the Executive shall not constitute Cause
for purposes of this Section 10(c)(i)(c) if such act or failure to act,
was committed, or omitted, by the Executive in good faith and in a manner he
reasonably believed to be in the best interests of the Company.

 

(ii)
In the event of a termination of the Executive’s employment for Cause under Section 10(c)(i)
above, the Executive shall be entitled only to:

 

(a)
continuation of the annual base salary provided in Section 4 above through
the date on which termination for Cause occurs; and

 

(b) any other rights and benefits, if any, available under employee
benefit plans, policies, and practices of the Company, determined in accordance
with the applicable terms and provisions of such plans, policies, and
practices, as in effect on the date of his termination of employment.

 

9

 

 (d) Termination Without Cause

 

(i)
Anything in this Agreement to the contrary notwithstanding, the Executive’s
employment may be Terminated Without Cause as provided in this Section 10(d).  Termination Without Cause shall mean either
(1) a termination of the Executive’s employment by the Company, (other than a
termination due to death as described in Section 10(a) above, disability
as described in Section 10(b) above, or a Termination For Cause as
described in Section 10(c) above); or (2) a termination due to Good Reason
Resignation as defined as follows:. Good Reason Resignation shall mean
termination of employment that is voluntary on the part of the Executive but is
due to:  (i) a significant reduction of
the Executive’s responsibilities, title or status resulting from a  change in such title or status, or from the
assignment to the Executive of any duties inconsistent with his title, duties,
or responsibilities; or  (ii) a reduction
in the Executive’s salary, bonus potential, or a material  reduction of benefits.

 

(ii)
In the event there is a Termination Without Cause of the Executive’s
employment, the Executive shall be entitled to:

 

(A)
continuation of the annual base salary provided in Section 4 above until
the date which is twenty-four months after the last day of the month in which
such termination occurs (“Payment Period”); provided, however, that payments
pursuant to this Section 10(d)(ii)(A) are subject to the provisions of Section 13
and provided, however, that any payments made by the Company under paragraphs
4, 6, 7(a)(b), 8(b) herein after Executive’s termination of employment will
reduce by an equal amount any payments to be made hereunder as salary
continuation;

 

(B) continuation of coverage under the employee benefit plans of the
Company

 

10

 

in
which the Executive was participating at the time of his termination of
employment for the Payment Period of salary continuation under Section 10(d)(ii)(A)
above; provided, however, that (1) except as required by applicable law, any
such continued coverage shall terminate upon the subsequent full-time benefits
eligible employment of the Executive, and (2) if the company is unable to
continue such coverage, then they shall provide the Executive with economically
equivalent employee benefits to the extent such benefits are reasonably
available.

 

(iii)
At the discretion of the Compensation Committee, the present value of any
amounts payable to the Executive in accordance with Section 10(d)(ii)(A)
above may be paid to the Executive in a lump sum.  The interest rate used in
determining the present value shall be the interest rate on one-year United
States Treasury Bills at the auction of such instruments nearest in time to the
date of the Executive’s termination of employment under this Section 10(d).
Any such lump sum payment by the Company to the Executive shall not affect the
obligation of the Company as otherwise provided in Section 10(d)(ii)(B)
above to provide continuation coverage under the employee benefit plans.

 

(iv)
During the Payment Period, Executive shall make a good faith effort to seek
other employment.  If Executive attains
other employment during the Payment Period, he shall so notify Company and any
compensation paid to Executive by his new employer shall reduce, by an
equivalent amount, the  payments required
to be made under Section 10(d)(ii)(A).

 

(v)
The obligation of the Company to make or provide the payments and benefits set
forth in this Section 10(d) shall be strictly conditioned on the Executive
executing and returning to the Company a general release and waiver of all
claims against the Company in the form as submitted by the Company.

 

11

 

(vi)
If there is a Termination Without Cause during the first year of the Initial
Term, the subject to the provisions of this agreement, Executive will receive
the amounts payable under Section 10(d)(ii)(A) and (B) plus  any remaining but unpaid salary or contract
benefits due him for the first year of the Initial Term.

 

(vii)  Any shares of restricted Company stock and
options to purchase ordinary shares of Company stock held by Executive will
continue to vest in accordance with the terms of the awards for the period of
time which includes the completion of this Contract and any subsequent Payment
Period as set forth in Section 10(d)(ii)(A).

 

(e) Voluntary Termination
by the Executive

 

The
Executive may voluntarily terminate his employment with the Company at any time
prior to the expiration of the term of this Agreement. Such termination shall
constitute a voluntary termination and, in such event, the Executive shall be
limited to the same rights and benefits as applicable to the termination for
Cause, as described in Section 10(c) above.

 

(f) Change in Control  

 

In the event of a Change in Control (as defined below) all stock based
awards in which the Executive is not yet vested shall become fully vested and
stock options shall be exercisable for their term.  In addition, the Executive may resign for any
reason at any time during the twelve month period following a Change in Control
(as defined below) and receive the same salary continuation, bonus eligibility
and benefits as if the Executive were Terminated Without Cause pursuant to Section 10(d)
of this Agreement.   The term Change in
Control shall be as defined in the Company’s long-term incentive plan as of the
date hereof, a copy of which is attached hereto as Exhibit A.

 

12

 

(g) Resignation Upon
Termination

 

At the time of termination of employment for
any reason, the Executive agrees at the request of the Company to resign from
any position he holds as a Director (or other similar position) of the Company
and any Affiliates, unless other explicit arrangements are agreed upon between
the Executive and the Company.

 

11. Noncompetition

 

During
the term of the Executive’s employment and for a period of 12 months following
the termination of his employment for any reason other than a Termination
Without Cause, the Executive shall not, directly or indirectly, whether as an
employee, consultant, partner, principal, agent, distributor, representative,
stockholder (except as a less than one percent stockholder of a publicly traded
company or a less than five percent stockholder of a privately held company) or
otherwise, engage, within the United States, Bermuda, or the Cayman Islands, if
such activities involve insurance or reinsurance of United States based
entities or risks  in any activities that
are competitive with the financial guaranty insurance business then being
conducted by the Company and which, during the period covered by the Executive’s
employment, were  conducted by the
Company. For as long as the above described restrictions on competition apply,
the Executive shall not hire any employee or former employee of the Company or
any present or former affiliate company of the Company nor encourage any
employee of the Company to leave the employ of the Company.   This section will not be in effect
after the Executive’s termination of employment, unless, at the option of
Company, Company continues to pay Executive’s base salary during the 12 months
after Executive’s termination or resignation from employment for any reason.

 

13

 

12. Confidential Information

 

The Executive covenants that he shall not,
without the prior written consent of the Chief Executive Officer use, or
disclose to any person (other than an employee of either of the Company, or
other person to whom disclosure is necessary to the performance by the
Executive of his duties in the employ of the Company) any confidential or
proprietary information about the Company or their business, unless and until
such information has become known to the public generally (other than as a
result of unauthorized disclosure by the Executive). The foregoing covenants by
the Executive shall be without limitation as to time and geographic
applications.

 

13. Remedy for Violation of Noncompetition or Confidential Information
Provisions

 

Without intending to limit the remedies
available to the Company for the breach of any of the Executive’s covenants in
Sections 11 and 12, the Executive acknowledges and agrees that damages at law
are an insufficient remedy for the Company and that, accordingly, the Company
shall be entitled to apply for and obtain injunctive relief in any court of
competent jurisdiction to restrain the breach or threatened breach, or
otherwise specifically enforce, any or all of said covenants. The Parties
acknowledge that each of the covenants contained in Sections 11 and 12 is an
essential element of this Agreement. If any covenant or term of Section 11
or 12 or any portion thereof of this Section 13, is determined to be
invalid or unenforceable in any instance, such determination shall not prevent
the reassertion thereof with respect of any other breach or violation. If, in
any proceeding, a court (or other tribunal) refuses to enforce the covenants
contained in Section 11 or 12 or this Section 13 because such
covenants cover too extensive a geographic area or too long a period of time,
any such covenant shall be deemed amended to the

 

14

 

extent (but only to the extent) required by law to permit its
enforceability hereunder.

 

Notwithstanding anything contained in this
Agreement to the contrary, in the event that the Executive’s employment is
terminated without Cause (as defined in Section 10(d)(i)) and the Court
determines that the Executive has violated Section 11 or 12 of this
Agreement, then the Companies shall be entitled to discontinue any payments or
benefits that would otherwise be provided under Section 10(d) and the
Executive shall forfeit his rights to the same.

 

14. Withholding

 

Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive shall be subject to withholding of such amounts relating to taxes
as the Company may reasonably determine they are required to withhold pursuant
to any applicable law or regulation. In lieu of withholding such amounts, in
whole or in part, the Company may, in their sole discretion, accept other
provision for payment of taxes as required by law, provided they are satisfied
that all requirements of law affecting their responsibilities to withholding
such taxes have been satisfied.

 

15. Arbitration of All Disputes

 

Subject to the provisions of Section 15,
any controversy or claim arising out of or relating to this Agreement or the
breach thereof shall be settled by arbitration in the City of Hamilton in
accordance with the law of Bermuda by three arbitrators appointed by the
Parties. If the Parties cannot agree on the appointment of the arbitrators, one
shall be appointed by the Company and one by the Executive and the third shall be
appointed by the first two arbitrators. If the first two

 

15

 

arbitrators cannot agree on the appointment
of a third arbitrator, then the third arbitrator
shall be appointed by the Chief Justice of the Supreme Court of Bermuda. The
arbitration shall be conducted in accordance with the rules of the Arbitration
Act, 1986, as amended, except with respect to the selection of the arbitrators which shall be as
provided in this Section 15. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
arbitrators’ fees and any expenses relating to the arbitration (other than the
Parties’ own legal fees and expenses) shall be shared equally by the parties.

 

16. Entire Agreement

 

This Agreement contains the entire agreement
between the Parties concerning the
subject matter hereof and supercedes all prior agreements, undertakings,
discussions, negotiations, and undertakings, whether written or oral, between
the Company and the Executive with respect thereto.

 

17. Assignability; Binding Nature

 

This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs, and
assigns. No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive, other than his rights to receive
salary and bonuses hereunder which may be transferred by will or
operation of law subject to the limitations of this Agreement. No rights or
obligations of the Company under this Agreement may be assigned or transferred
by the Company except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Company is not
the continuing entity, or the sale or liquidation of all or substantially all
of the assets of the Company, provided

 

16

 

that that assignee or transferee is the successor to all or substantially
all of the assets of the Company and such assignee or transferee assumes the
liabilities, obligations, and duties of the Company as contained in this
Agreement, either contractually or as a matter of law.

 

18. Amendment or Waiver

 

No provision in this Agreement may be amended
or waived unless such amendment or waiver is (1) agreed to in writing, and (2)
the agreement is signed by the Executive and by authorized officers. No waiver
by any party hereto of any breach by any other party of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of a similar or dissimilar condition or provision at the same or any prior or
subsequent time.

 

19. Notices

 

Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the party concerned at the address indicated below
to such changed address of which such party may subsequently by similar process
give notice:

 

	
  If to the Company:

  	
  Attention Chairman of the Board

  
	
   

  	
  Assured Guaranty Ltd.

  
	
   

  	
  30 Woodbourne Ave

  
	
   

  	
  Hamilton, Bermuda

  
	
   

  	
   

  
	
  If to the Executive:

  	
  Mr. Dominic J. Frederico

  
	
   

  	
  Ship’s Hill, #11

  
	
   

  	
  Tucker’s Point

  
	
   

  	
  Bermuda HS02

  

 

17

 

20. Severability

 

In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.

 

21. Survivorship

 

The respective rights and obligations of the parties shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

 

22. References

 

In the event of the Executive’s death or a judicial determination of
his incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his estate or other legal representative. All
statements of or references to dollar amounts in this Agreement shall mean
lawful money of the United States of America.

 

23. Governing-Law

 

This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Bermuda, without reference to the principles of
conflict of laws of any jurisdiction.

 

24. Headings

 

The headings of paragraphs contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this

 

18

 

Agreement.

 

25. Counterparts

 

This Agreement may be executed in one or more counterparts.

 

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

 

	
   

  	
  Assured Guaranty Ltd., .,

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Donald J. Kramer

  
	
   

  	
   

  
	
   

  	
  Its Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Assured Guaranty Corp., Assured Guaranty
  U.S. 

  
	
   

  	
  Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dominic J. Frederico

  
										

 

 

EXHIBIT A

Gross-Up Provisions

 

(a)  Anything in this Agreement to the contrary
notwithstanding, except for paragraph (b) below, in the event it shall be
determined that the Executive shall become entitled to payments and/or benefits
provided by this Agreement or any other amounts in the “nature of compensation”
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company or any affiliate, any person whose actions result
in a change of ownership or effective

 

19

 

control of the Company covered by Section 280G of the Code or any
person affiliated with the Company or such person) as a result of such change
in ownership or effective control of the Company (a “Payment”) would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

 

(b)  Notwithstanding the provisions of paragraph
(a) above, if it shall be determined that the Executive would otherwise be
entitled to the Gross-Up Payment, but the value of all Payments do not exceed
310% of the Executive’s “base amount,” within the meaning of Section 280G
of the Code, then no Gross-Up Payment shall be made to the Executive and the
amounts payable under this Agreement or any other amounts in the “nature of
compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company) shall be reduced so that the
value of all Payments, in the aggregate, equals the Safe Harbor Amount.  The “Safe Harbor Amount” means 2.99 times the
Executive’s “base amount,” within the meaning of Section 280G of the
Code.  The Executive shall be entitled to
select the order in which payments are to be reduced in accordance with the
foregoing provisions of this paragraph (b). 
As a result of uncertainty in the application of Section 280G of
the Code at the time of any initial determination by the Accounting Firm (as
described in paragraph (c) below), it is possible that Payments will have been
paid or distributed by the Company which should not be so paid or distributed (“Overpayment”)
or that additional Payments which were not paid or distributed by the Company
could have been so paid or distributed (“Underpayment”), in each case,
consistent with the calculation of the amount due hereunder.  In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Executive which the Executive shall
repay to the Company promptly upon receiving notice of such Overpayment
together with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code; provided, however, that no amount shall be payable by the
Executive to the Company (or if paid by the Executive to the Company shall be
returned to the Executive) if and to the extent such payment would not reduce
the amount which is nondeductible under Section 280G of the Code or which
is subject to taxation under Section 4999 of the Code.  In the event that the Accounting Firm determines
that an Underpayment has occurred, any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive together with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the
Code.

 

(c)  Subject to the provisions of paragraph (d)
below, all determinations required to be made under this Exhibit B, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment, or whether a reduction in Payments is required under paragraph (b)
above is required, and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm (the “Accounting
Firm”) which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by the Company.  The Accounting Firm
shall be jointly selected by the Company and the Executive and

 

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shall not, during the two years preceding the date of its selection,
have acted in any way on behalf of the Company or its affiliated
companies.  If the Company and the
Executive cannot agree on the firm to serve as the Accounting Firm, then the
Company and the Executive shall each select a nationally recognized accounting
firm and those two firms shall jointly select a nationally recognized
accounting firm to serve as the Accounting Firm.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Exhibit B, shall be
paid by the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination.  If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with a written opinion that failure to report the Excise
Tax on the Executive’s applicable federal income tax return would not result in
the imposition of a negligence or similar penalty.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (a “Gross-Up
Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company
exhausts its remedies pursuant to paragraph (d) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Gross-Up Underpayment that has occurred and
any such Gross-Up Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.

 

(d)  The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of a Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which he or she
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

 

(i)                                     give
the Company any information reasonably requested by the Company relating to
such claim,

 

(ii)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(iii)                               cooperate
with the Company in good faith in order effectively to contest such claim, and

 

(iv)                              permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs and expenses.

 

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Without
limitation on the foregoing provisions of this paragraph (d), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further
provided the Executive shall not be required by the Company to agree to any
extension of the statute of limitations relating to the payment of taxes for
the taxable year of the Executive with respect to which such contested amount
is claimed to be due unless such extension is limited solely to such contested
amount.  Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

 

(e)  If, after the receipt by the Executive of an
amount advanced by the Company pursuant to paragraph (d) above, the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
paragraph (d) above) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto).  If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph (d) above,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

(f)  If, pursuant to regulations issued under Section 280G
or 4999 of the Code, the Company and the Executive were required to make a
preliminary determination of the amount of an excess parachute payment and
thereafter a redetermination of the Excise Tax is required under the applicable
regulations, the parties shall request the Accounting Firm to make such
redetermination.  If as a result of such
redetermination an additional Gross-Up Payment is required, the amount thereof
shall be paid by the Company to the Executive within five days of the receipt
of the Accounting Firm’s determination. 
If the redetermination of the Excise Tax results in a reduction of the
Excise Tax, the Executive shall take such steps as the Company may reasonably
direct in order to obtain a refund of the excess Excise Tax paid.  If the Company determines that any suit or
proceeding is necessary or advisable in order to obtain such refund, the
provisions of paragraph (d) above relating to the contesting of a claim shall
apply to the claim for such refund, including, without limitation, the
provisions concerning legal representation, cooperation by the Executive,
participation by the Company in the proceedings and indemnification by the
Company.  Upon receipt of any such
refund, the Executive shall promptly pay the amount of such refund to the
Company.  If the amount of the income
taxes otherwise payable by the Executive in respect of the year in which the
Executive makes

 

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such payment to the Company is reduced as a result of such payment, the
Executive shall, no later than the filing of his income tax return in respect
of such year, pay the amount of such tax benefit to the Company.  In the event there is a subsequent
redetermination of the Executive’s income taxes resulting in a reduction of
such tax benefit, the Company shall, promptly after receipt of notice of such
reduction, pay to the Executive the amount of such reduction.  If the Company objects to the calculation or
recalculation of the tax benefit, as described in the preceding two sentences,
the Accounting Firm shall make the final determination of the appropriate
amount.  The Executive shall not be
obligated to pay to the Company the amount of any further tax benefits that may
be realized by him or her as a result of paying to the Company the amount of
the initial tax benefit.

 

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