Document:

Exhibit 10.2

 

To Be Used With Employment Agreement

 

Non-Qualified Stock Option Agreement under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan

 

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

 

WITNESSETH THAT:

 

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

 

WHEREAS,
the Participant and the Company agree that this Award is in full satisfaction
of the stock option awards to be granted to the Participant pursuant to
paragraph 7(a) of the employment agreement between the Company and the
Participant dated February 11, 2004;

 

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

 

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

 

(a)                                  The
“Participant” is                              .

 

(b)                                 The
“Grant Date” is                                                                                   .

 

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

 

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

 

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

 

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

 

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

 

 

	
  INSTALLMENT

  	
   

  	
  VESTING
  DATE APPLICABLE

  TO INSTALLMENT

  
	
  1/3 of Covered Shares

  	
   

  	
  One year anniversary of the Grant Date

  
	
  1/3 of Covered Shares

  	
   

  	
  Two year anniversary of the Grant Date

  
	
  1/3 of Covered Shares

  	
   

  	
  Three year anniversary of the Grant Date

  

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

8.  Cancellation and Rescission of Options.

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

	
  Assured Guaranty
  Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
  Participant

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

7Exhibit 10.3

 

Restricted Stock Agreement for

Outside Directors under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan(1)

 

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

 

WITNESSETH THAT:

 

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

 

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

 

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

 

(a)                                  The
“Director” is                         .

 

(b)                                 The
“Grant Date” is                                                                                 .

 

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

 

Other words and phrases
used in this Agreement are defined pursuant to paragraph 15 or elsewhere in
this Agreement.

 

2.  Restricted Stock Award.  This Agreement specifies the terms of the “Restricted
Stock Award” granted to the Director.

 

3.  Restricted Period.  Subject to the limitations of this Agreement,
the “Restricted Period” for the Covered Shares of the Restricted Stock Award
shall begin on the Grant Date and end [Alternative 1:  (for initial grants)  on the day immediately prior to the third
annual shareholders meeting following the meeting during which elections for
directors were held and the Director was elected.  Alternative 2:  (for use after share
guidelines have been met) on the day immediately prior to the next
annual shareholders meeting during which elections for directors are held
following the Grant Date.]

 

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

 

(1)  This form should only be used for the
initial one-time award valued at $100,000 and awards that are made AFTER the
director has satisfied the share ownership guidelines.

 

 

before the date the
Director ceases to be a director of the Company, then as of the date the
Director ceases to be a director of the Company, the Director shall forfeit all
Covered Shares.

 

5.  Transferability.  Except as otherwise provided by the
Committee, the Restricted Stock Award may not be sold, assigned, transferred,
pledged or otherwise encumbered during the Restricted Period.

 

6.  Dividends.  The Director shall be entitled to receive any
dividends paid with respect to the Covered Shares that become payable during
the Restricted Period.  Any dividends
shall be payable to the Director in cash. 
The Director shall not be prevented from receiving dividends and
distributions paid on the Covered Shares of Restricted Stock merely because
those shares are subject to the restrictions imposed by this Agreement and the
Plan; provided, however that no dividends or distributions shall be payable to
or for the benefit of the Director with respect to record dates for such
dividends or distributions for any Covered Shares occurring on or after the
date, if any, on which the Director has forfeited those shares.

 

7.  Voting.  The Director shall not be prevented from
voting the Restricted Stock Award merely because those shares are subject to
the restrictions imposed by this Agreement and the Plan; provided, however,
that the Director shall not be entitled to vote Covered Shares with respect to
record dates for any Covered Shares occurring on or after the date, if any, on
which the Director has forfeited those shares.

 

8.  Registration of Restricted Stock Award.  Each certificate issued in respect of the
Covered Shares awarded under this Agreement shall be registered in the name of
the Director.

 

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

 

10.  Administration.  The authority to manage and control the
operation and administration of this Agreement shall be vested in the
Committee, and the Committee shall have all powers with respect to this
Agreement as it has with respect to the Plan. 
Any interpretation of this Agreement by the Committee and any decision
made by it with respect to this Agreement is final and binding on all persons.

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Assured Guaranty
  Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

3

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