SYNCORA GUARANTEE SERVICES INC. EMPLOYEE TRUST

Exhibit 10.10

EXECUTION COPY

SYNCORA GUARANTEE SERVICES INC.
EMPLOYEE TRUST

          THIS TRUST AGREEMENT (the “Agreement”), dated as of September 23, 2008, between Syncora Guarantee Services Inc., a Delaware corporation, as settlor (together with any successor thereto, the “Company”), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as trustee (the “Trustee”).

W   I   T   N   E   S   S   E   T   H

          WHEREAS, the Company has adopted the benefit plans and compensation arrangements set forth in the attached Schedule A (the “Plans”) for the benefit of eligible employees of the Company and its affiliates;

          WHEREAS, none of the Plans have been funded to date by the Company;

          WHEREAS, the Company desires to provide comfort to employees who participate in the Plans (the “Participants”) regarding the security of the payments they may be entitled to receive under the terms and conditions of the Plans;

          WHEREAS, in connection therewith, the Company desires to establish an irrevocable trust to be known as the Syncora Guarantee Services Inc. Employee Trust (the “Trust”) and to transfer to the Trust assets to be used principally to pay the benefits under the Plans (the “Benefits);

          WHEREAS, the Company intends the Trust to operate as a “secular” trust for Federal income tax purposes whereby Participants will be subject to taxation on the funds held in the Trust, other than funds on deposit in the Reserve Account, as and when their rights to benefits under the Plans are no longer subject to a substantial risk of forfeiture; and

          WHEREAS, the Trustee has agreed to act as trustee of the Trust, and to hold legal title to the assets of the Trust, in trust for the benefit of the Participants and, to the extent applicable, the Trustee, for the purpose hereinafter stated and in accordance with the terms hereof.

          NOW, THEREFORE, the Company hereby establishes the Trust with the Trustee, and the Trustee herby agrees to accept appointment as Trustee thereof, subject to the following terms and conditions:

ARTICLE I
CREATION OF TRUST AND ESTABLISHMENT OF RESERVE ACCOUNT

Section 1.1 Establishment of Trust and Initial Contribution.

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          (a) The Company hereby establishes with the Trustee and the Trustee hereby accepts appointment as trustee of an irrevocable trust. The parties intend that the Trust shall not be subject to the claims of creditors of the Company in a bankruptcy or other insolvency proceeding under Federal or state law. The name of the trust established pursuant to this Agreement is the Syncora Guarantee Services Inc. Employee Trust. The Trust is not a part of any of the Plans and the Trust is not intended to provide benefits to any employee or former employee or participant or beneficiary under any other employee benefit plan or arrangement of the Company or any of its affiliates. The assets of the Trust will be held, invested and disposed by the Trustee in accordance with the terms of this Agreement. The parties intend that the Trust will be an independent legal entity with title to and power to convey all of its assets as provided herein. The Company represents that the Trust (i) will not be subject to ERISA (as defined below) and (ii) will not be required to register as an “investment company” under the Investment Company Act of 1940. The Company further represents that (x) the Participants will not be vested under the Plans prior to the date set forth on Schedule A and (y) under the terms of the Plans, the Benefits do not include any right to earnings under the Trust.

          (b) The Trustee hereby acknowledges receipt from the Company of cash in the sum of twenty-three million four hundred and seventy thousand U.S. dollars ($23,470,000) (the “Contribution”). The Contribution shall be used solely for the purpose of paying ( i ) Benefits under the Plans, ( ii ) expenses and compensation of the Trustee, in accordance with Section 5.2, and ( iii ) any taxes payable by the Participants, the Trustee, the Company and/or the Third-Party Payroll Provider, in all cases in accordance with the terms and conditions of the Plans and/or this Agreement. The Company represents that no part of the Contribution comes from the Participants.

Section 1.2 Forfeiture of Plan Awards . In the event that a Participant forfeits his or her Benefits in accordance with the terms and conditions of the Plans, the amount that would otherwise have been payable to such Participant had the Participant not forfeited the right to receive the Benefit shall remain in the Trust and be used in accordance with this Agreement.

Section 1.3 Reserve Account . On or prior to September 23, 2008, the Trustee shall establish within the Trust an account (the “Reserve Account”) into which the Company shall deposit the Reserve Account Required Amount. Amounts on deposit in the Reserve Account shall be invested in accordance with Section 3.1. Amounts on deposit in the Reserve Account may be used by the Trustee to pay any taxes, liabilities, compensation, expenses and/or other amounts owing to the Trustee in accordance with the terms of this Agreement, but in no instance shall amounts on deposit in the Reserve Account be used to pay Benefits.

Section 1.4 Definitions. Capitalized terms used but not defined herein shall have the meaning prescribed to them in the Plans. Certain capitalized terms have the meanings set forth below:

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          (a) Authorized Signatory . An “Authorized Signatory” is an individual authorized to provide information and direction on behalf of the Company to the Trustee hereunder. Each Authorized Signatory must be an officer of the Company or of Parent. The Authorized Signatories as of the date of this Agreement are set forth on Schedule C.

          (b) Business Day . “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York or Wilmington, Delaware are authorized or required by law to be closed.

          (c) ERISA . “ERISA” is the Employee Retirement Income Security Act of 1974, as amended.

          (d) FDIC . “FDIC” means the Federal Deposit Insurance Corporation.

          (e) Final Distribution Date . The “Final Distribution Date” is September 30, 2009.

          (f) Notice of Insolvency . “Notice of Insolvency” means written notice to the Trustee from an Authorized Signatory that the Company has suspended its business, made a general assignment for the benefit of its creditors, or is a debtor in any case or proceeding, whether voluntary or involuntary, under any federal, state or foreign (including any provincial) bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar law or laws.

          (g) Parent . “Parent” means Syncora Holdings Ltd.

          (h) Reserve Account Required Amount . The “Reserve Account Required Amount” is an amount equal to $66,000.

          (i) Termination Date . The “Termination Date” is the later of (i) the date on which the entirety of the Trust Fund has been distributed in accordance with this Agreement and (ii) the third Business Day following the date on which all taxes with respect to the Trust have been paid for the 2009 calendar year.

          (j) Third-Party Payroll Provider . “Third-Party Payroll Provider” means Ceridian Corporation, or any other third-party payroll provider engaged by the Company to distribute Benefits and identified to the Trustee by an Authorized Signatory in writing on or prior to the date hereof.

          (k) Trust Fund . The assets held at any time and from time to time by the Trustee under the Trust collectively are herein referred to as the “Trust Fund” and shall consist of ( i ) the Contribution, ( ii ) amounts on deposit in the Reserve Account and ( iii ) any earnings or other income earned on account of any assets held in the Trust, less disbursements therefrom. Except as herein otherwise provided, title to the Trust Fund shall at all times be vested in the Trustee. The parties intend that the Trust Fund shall not be subject to any lien or attachment of any creditor of the Company or any third party and

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shall be used solely for the purposes and subject to the conditions set forth in this Agreement.

          (l) Trust Year . “Trust Year” means each 12-month period beginning on January 1 and ending on December 31 thereafter, provided that ( i ) the initial Trust Year shall be the period beginning on the date hereof and ending on December 31, 2008 and ( ii ) the final Trust Year shall be the period beginning on January 1 of the year in which the Termination Date occurs and ending on the Termination Date.

          (m) Trustee . The Trustee named above, and any successor thereof, is hereby designated as the trustee hereunder to receive, hold, invest, administer and distribute the Trust Fund in accordance with this Agreement, the provisions of which shall govern the power, duties and responsibilities of the Trustee.

ARTICLE II
GENERAL DUTIES OF THE PARTIES

Section 2.1 General Duties of Company . The Company shall, upon the request of the Trustee, furnish the Trustee with such reasonable information as is necessary or appropriate for the Trustee to carry out the Trustee’s responsibilities under this Agreement, and the Trustee shall be entitled to conclusively rely on the information received from the Company.

Section 2.2 General Duties of the Trustee .

          (a) The Trustee shall hold the Trust Fund until the date as of which a distribution pursuant to Section 3.4 occurs. The Trustee shall be responsible only for the property actually received by the Trustee hereunder and not for any amount which the Company is required to contribute to the Trust Fund hereunder. The Trustee shall have no duty or authority to compute any amount to be contributed to the Trust Fund or to bring any action or proceeding to enforce the collection of any contribution required to be made to the Trust Fund. The rights, duties and obligations of the Trustee hereunder shall be solely as set forth herein.

          (b) The Trustee shall make such distributions from the Trust Fund as may be required under the terms of this Agreement.

          (c) In no event shall the Trustee have any obligation to provide, and in no event shall the Trustee provide, any legal, tax, accounting, audit or other advice to the Company with respect to the Plans or the Trust. The Company acknowledges that it shall rely exclusively on the advice of its accountants and/or attorneys with respect to all legal, tax, accounting, audit and other advice required or desired by the Company with respect to the Plans or the Trust. The Company acknowledges that the Trustee has not made any representations of any kind, and shall not make any representations of any kind, concerning the legal, tax, accounting, audit or other treatment of the Plans or the Trust.

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          (d) The Company acknowledges that the Trustee is not an advisor concerning or a promoter with respect to the Plans or the Trust, but merely is a service provider offering the Trust services expressly set forth in this Agreement. In particular, the Company acknowledges that the Trustee is not a joint venturer or partner with the Company’s accountants, auditors, consultants or with any other party, with respect to the Plans or the Trust, and that the Trustee and the Company’s accountants, auditors and consultants at all times remain independent parties dealing at arm’s length, and independently, with each other and with the Company.

          (e) The Trustee shall have no liability for any losses arising out of delays in performing the services which it renders under this Agreement which result from events beyond its control, including without limitation, interruption of the business of the Trustee due to acts of God, acts of governmental authority, acts of war, riots, civil commotions, insurrections, labor difficulties (including, but not limited to, strikes and other work stoppages due to slow-downs), or any action of any courier or utility, mechanical or other malfunction, or electronic interruption.

ARTICLE III
INVESTMENT, ADMINISTRATION AND
DISBURSEMENT OF TRUST FUND

Section 3.1 Investment of the Trust Fund . The Company shall direct the Trustee regarding the investment and the reinvestment of the Trust Fund. Without limiting the generality of the preceding sentence, the Company shall have the right, at any time and from time to time, in its sole discretion, to direct the Trustee as to the investment and reinvestment of all or specified portions of the Trust Fund and the income therefrom and to appoint an investment manager or investment managers to direct the Trustee as to the investment and reinvestment of all or specified portions thereof. As of the execution of this Agreement, and until the Trustee is notified otherwise in writing by an Authorized Signatory, the Company shall be solely responsible for directing the investment and reinvestment of the Trust Fund. Initially, the Trust Fund shall be invested in the Federated Money Market U.S. Treasury Cash Reserves (Institutional Service Shares) Fund (the “Initial Investment Option”). The Trustee shall have no responsibility for the selection of investment options under the Trust and shall not render investment advice to any person in connection with the selection of such options.

          Notwithstanding the foregoing, in the event that the Company directs the Trustee to invest the Trust Fund in an investment option other than the Initial Investment Option, the Trustee may, notwithstanding such designation, continue to hold in the Initial Investment Option that portion of the Trust Fund which it reasonably determines to be sufficient for the ordinary administration and for the disbursement of funds in accordance with the terms of the Agreement.

          The Trust may hold assets of any kind, including shares of any registered investment company, whether or not the Trustee or any of its affiliates is an advisor to, or other service provider to, such investment company and receives compensation from such

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investment company for the services provided (which compensation shall be in addition to the compensation of the Trustee under the Trust). The Company acknowledges that shares in any such investment company are not obligations of the Trustee or any other bank, are not deposits and are not insured by the FDIC, the Federal Reserve or any other governmental agency.

          Notwithstanding anything contained herein to the contrary, after December 31, 2009, the Company may not direct the investment of the Trust Fund and the Trustee will hold the assets of the Trust uninvested.

Section 3.2 Administrative Powers of Trustee . Subject to the terms of this Agreement, the Trustee shall have the power to do all acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable for the protection of the Trust Fund and for carrying out its duties and responsibilities under this Agreement.

Section 3.3 Dealings with Trustee . Persons dealing with the Trustee shall be under no obligation to see to the proper application of any money paid or property delivered to the Trustee or to inquire into the Trustee’s authority as to any transaction.

Section 3.4 Distributions from Trust Fund, Other than Amounts on Deposit in the Reserve Account . The Trustee shall make distributions from the Trust Fund, other than amounts on deposit in the Reserve Account, and, subject to Section 3.4(b)(ii), the Third-Party Payroll Provider shall use such distributions to pay Benefits as and when such Benefits are due to the Participants. The process by which such distributions shall be made shall be as follows: