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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into as of this 1st
day
of November, 2006, by and among Allied World Assurance Company
Holdings, Ltd, a
Bermuda corporation ("Holdings"), Allied World Assurance Company,
Ltd, a Bermuda
corporation ("AWAC" and together with Holdings, the "Company"), and
[_____]
("Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee and to enter into
an
agreement embodying the terms of such employment (this "Agreement")
and Employee
desires to enter into this Agreement and to accept such employment,
subject to
the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual
covenants
contained herein and for other good and valuable consideration, the
receipt and
sufficiency of which are mutually acknowledged, the Company and
Employee hereby
agree as follows:
Section 1. DEFINITIONS.
(a)
"Accrued Obligations" shall mean (i) all accrued but unpaid
Base
Salary through the date of termination of Employee's employment;
(ii) any unpaid
or unreimbursed expenses incurred in accordance with Company
policy, including
amounts due under Section 7 hereof, to the extent incurred prior to
termination
of employment; (iii) any benefits provided under the Company's
employee benefit
plans upon a termination of employment, in accordance with the
terms therein,
including rights to equity in the Company pursuant to any plan or
grant and the
right to receive tax reimbursement payments accrued but unpaid for
periods prior
to the date of termination; and (iv) rights to indemnification by
virtue of
Employee's position as an officer or director of the Company or its
subsidiaries
and the benefits under any directors' and officers' liability
insurance policy
maintained by the Company, in accordance with its terms
thereof.
(b) "Agreement" shall have the meaning set forth in the
recitals
hereto.
(c)
"Annual Bonus" shall have the meaning set forth in Section 4(c)
below.
(d) "AWAC" shall have the meaning set forth in the preamble
hereto.
(e) "Base Salary" shall mean the salary provided for in Section
4(a)
or any increased salary granted to Employee pursuant to Section
4(a) below.
(f) "Board" shall mean the Board of Directors of Holdings.
(g) "Cause" shall mean (i) Employee's willful failure (except
where
due to physical or mental incapacity), willful neglect or willful
refusal to
substantially perform his duties; (ii) any willful or intentional
act of
Employee with regard to the Company or its subsidiaries that has
the effect of
injuring the reputation or business of the Company or its
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subsidiaries in a material manner; (iii) Employee's conviction of,
or plea of
guilty or nolo contendere to, the commission of a criminal act that
would
constitute a felony in the United States; (iv) the commission by
Employee of an
act of fraud, embezzlement or material dishonesty against the
Company or its
subsidiaries (other than a good faith expense account dispute); or
(v)
Employee's breach of any material provision of this Agreement.
(h) "Change in Control" shall mean and be deemed to occur if (i)
any
"person" (as such term is defined in Section 3(a)(9) and as used in
Sections
13(d) and 14(d) of the Exchange Act), excluding the Company or any
or its
subsidiaries, a trustee or any fiduciary holding securities under
an employee
benefit plan of the Company or any of its subsidiaries, an initial
public
offering of Holdings' securities pursuant to an effective
registration statement
filed with the Securities and Exchange Commission, an underwriter
temporarily
holding securities pursuant to an offering of such securities or a
corporation
owned, directly or indirectly, by shareholders of Holdings in
substantially the
same proportion as their ownership of Holdings, is or becomes the
"beneficial
owner" as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly,
of securities of Holdings representing 50% or more of the combined
voting power
of Holdings' then outstanding securities ("Voting Securities");
(ii) during any
period of not more than two years, individuals who constitute the
Board as of
the beginning of the period and any new director (other than a
director
designated by a person who has entered into an agreement with
Holding to effect
a transaction described in clause (i) or (iii) of this sentence)
whose election
by the Board or nomination for election by Holdings' shareholders
was approved
by a vote of at least two-thirds (2/3) of the directors then still
in office who
either were directors at such time or whose election or nomination
for election
was previously so approved, cease for any reason to constitute a
majority
thereof; (iii) the shareholders of Holdings approve a merger,
consolidation,
amalgamation or reorganization or a court of competent jurisdiction
approves a
scheme of arrangement of Holdings, other than a merger,
consolidation,
amalgamation, reorganization or scheme of arrangement which would
result in the
Voting Securities of Holdings outstanding immediately prior thereto
continuing
to represent (either by remaining outstanding or by being converted
into Voting
Securities of the surviving entity) at least 50% of the combined
voting power of
the Voting Securities of Holdings or such surviving entity
outstanding
immediately after such merger, consolidation, amalgamation,
reorganization or
scheme of arrangement; or (iv) the shareholders of Holdings approve
a plan of
complete liquidation of Holdings or any agreement for the sale or
disposition by
Holdings of all or substantially all of its assets.
(i) "Commencement Date" shall mean November 1, 2006.
(j) "Company" except as otherwise expressly set forth herein,
shall
have the meaning set forth in the preamble hereto.
(k) "Competitive Activities" shall mean any business activities
in
which the Company or any of its subsidiaries are engaged, or have
committed
plans to engage, during the Term of Employment.
(l) "Confidential Information" shall have the meaning set forth
in
Section 9(a) below.
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(m) "Developments" shall have the meaning set forth in Section
9(e)
below.
(n) "Disability" shall mean any physical or mental disability
or
infirmity that has prevented the performance of Employee's duties
in all
material respects for a period of one hundred eighty (180)
consecutive calendar
days.
(o) "Employee" shall have the meaning set forth in the preamble
hereto.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as
amended.
(q) "Good Reason" shall mean, without Employee's written consent,
(i)
an adverse change in Employee's employment title; (ii) a material
diminution in
Employee's employment duties, responsibilities or authority, or the
assignment
to Employee of duties that are materially inconsistent with his
position; (iii)
any reduction in Base Salary or target Annual Bonus opportunity;
(iv) a
relocation of Employee's principal place of employment to a
location other than
Hamilton, Bermuda; or (v) any breach by the Company of any material
provision of
this Agreement.
(r) "Holdings" shall have the meaning set forth in the preamble
hereto.
(s) "Interfering Activities" shall mean (i) encouraging, soliciting
or
inducing, or in any manner attempting to encourage, solicit or
induce, any
Person employed by, as agent of, or a service provider to, the
Company or any
subsidiary thereof to terminate (or, in the case of an agent or
service
provider, reduce) such Person's employment, agency or service, as
the case may
be, with the Company or such subsidiary; provided, that the
foregoing shall not
be violated by general advertising not targeted at employees of the
Company nor
by serving as a reference upon an employee's request with regard to
an entity
with which Employee is not affiliated; or (ii) encouraging,
soliciting or
inducing, or in any manner attempting to encourage, solicit or
induce any
customer, supplier (including insurance brokers), licensee or other
business
relation of the Company or any subsidiary thereof to cease doing
business with
or reduce the amount of business conducted with the Company or such
subsidiary,
or in any way interfere with the relationship between any such
customer,
supplier (including insurance brokers), licensee or business
relation and the
Company or such subsidiary.
(t) "Person" shall mean any individual, corporation,
partnership,
limited liability company, joint venture, association, joint-stock
company,
trust (charitable or non-charitable), unincorporated organization
or other form
of business entity.
(u) "Non-Interference Period" shall mean the period commencing on
the
Commencement Date and ending on the twenty-four (24) month
anniversary of the
date of such termination.
(v) "Non-Compete Period" shall mean the period commencing on
the
Commencement Date and:
(i) in the case of Employee's termination of employment
hereunder
by
the Company for Cause, ending on the date of such termination;
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(ii) in the case of Employee's termination of employment
hereunder by the Company without Cause or by Employee for Good
Reason,
ending on the twenty-four (24) month anniversary of the date of
such
termination; or
(iii) in the case of Employee's termination of employment
hereunder by the Employee without Good Reason or as a result of
his
Disability, ending on the date of such termination; provided,
however, that
the
Company may elect to extend the Non-Compete Period up to an
additional
twelve (12) months following the date of such termination by
providing
Employee written notice of such election within five (5) business
days
following such termination specifying the applicable period of
extension,
in
which case, the Company shall be required to continue, through the
end
of
the Non-Compete Period, as so extended, (A) to pay Employee his
Base
Salary, in accordance with the Company's regular payroll practices,
and (B)
to
provide participation under the Company's health and other
insurance
plans, or if such continued participation in is not permissible,
provide
Employee with coverage that is economically equivalent to Employee
through
alternative arrangements, or the cash value of such coverage, in a
manner
that
places the Employee in a net economic position that is at least
equivalent to the position in which the Employee would have been
had such
alternative arrangements not been used by the Company.
(w) "Severance Multiplier" shall mean an amount equal to two
(2);
provided, however, if Employee's termination occurs within the
twelve (12) month
period following a Change in Control, the Severance Multiplier
shall equal three
(3).
(x) "Severance Term" shall mean the period specified in Section
8(d)(iii) below.
(y) "Term of Employment" shall mean the period specified in Section
2
below.
Section 2. ACCEPTANCE AND TERM OF EMPLOYMENT.
The Company agrees to employ Employee and Employee agrees to serve
the
Company on the terms and conditions set forth herein. The Term of
Employment
shall commence on the Commencement Date and shall continue until
Employee is
terminated as provided in Section 8 hereof.
Section 3. POSITION, DUTIES AND RESPONSIBILITIES; PLACE OF
PERFORMANCE.
(a) During the Term of Employment, Employee shall be employed
and
serve as [__________] of both Holdings and AWAC (together with such
other
position or positions consistent with Employee's title as the Board
shall
specify from time to time) and shall have such duties typically
associated with
such title. Subject to the foregoing, Employee also agrees to serve
as an
officer and/or director of the Company or any parent or subsidiary
of the
Company, in each case without additional compensation.
(b) Subject to the terms and conditions set forth in this
Agreement,
Employee shall devote his full business time, attention and efforts
to the
performance of his duties under
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this Agreement and shall not engage in any other business or
occupation during
the Term of Employment, including, without limitation, any activity
that (x)
conflicts with the interests of the Company or its subsidiaries,
(y) interferes
with the proper and efficient performance of his duties for the
Company, or (z)
interferes with the exercise of his judgment in the Company's best
interests.
Notwithstanding the foregoing, nothing herein shall preclude
Employee from (i)
serving, with the prior written consent of the Board, as a member
of the board
of directors or advisory boards (or their equivalents in the case
of a
non-corporate entity) of non-competing businesses and charitable
organizations,
(ii) engaging in charitable activities and community affairs, and
(iii) subject
to the terms and conditions set forth in Section 9 hereof, managing
his personal
investments and affairs; provided, however, that the activities set
out in
clauses (i), (ii) and (iii) shall be limited by Employee so as not
to materially
interfere, individually or in the aggregate, with the performance
of his duties
and responsibilities hereunder.
(c) Employee's principal place of employment shall be at the
Company's
corporate headquarters in Hamilton, Bermuda, although Employee
understands and
agrees that he may be required to travel from time to time for
business reasons.
Section 4. COMPENSATION.
During the Term of Employment, Employee shall be entitled to
the
following compensation:
(a) Base Salary.
Employee shall be paid an annualized Base Salary,
payable in accordance with the regular payroll practices of the
Company, of not
less than $[_____], subject to increase, if any, as may be approved
in writing
by the Board, but not to decrease from the then current Base
Salary.
(b) Cost of Living Allowance. In addition to the Base Salary,
Employee
shall also receive a monthly cost of living allowance based upon
the amount of
Base Salary that would have been spent on a "basket" of goods and
services had
Employee not relocated to Bermuda, and will be determined based
upon Base
Salary, the size of Employee's family living in Bermuda and foreign
exchange
rate fluctuations between the U.S. dollar and Bermuda dollar. The
actual amount
of the cost of living allowance shall be determined by the Company
in a manner
consistent with determination of cost of living allowances for
other senior
executives of the Company.
(c) Annual Bonus. Employee shall be eligible for an annual
incentive
bonus award determined by the Board in respect of each fiscal year
during the
Term of Employment (the "Annual Bonus"). The Annual Bonus shall be
earned and
payable in accordance with the terms of Holdings' annual bonus plan
as in effect
from time to time.
(d) Change in Control Acceleration. Notwithstanding any contrary
terms
of any Company equity plan or other agreement pursuant to which
equity-based
awards have been granted to Employee, upon the occurrence of a
Change in
Control, all such equity-based awards shall fully vest immediately
prior to such
Change in Control.
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Section 5. EMPLOYEE BENEFITS.
(a) General. During the Term of Employment, Employee shall be
entitled
to participate in health, insurance, retirement and other
perquisites and
benefits generally provided to other senior executives of the
Company that are
made available from time to time, including, without limitation,
participation
in the Company's home leave policy, relocation policy, tax return
preparation
policy and repatriation policy, each as in effect from time to
time. Employee
shall also be entitled to the same number of holidays, vacation and
sick days as
are generally allowed to senior executives of the Company in
accordance with the
Company policy in effect from time to time.
(b) Additional Benefits. During the Term of Employment, in addition
to
any perquisites and benefits provided generally to Employee
pursuant to
subsection (a) above, Employee shall be entitled to the following
benefits:
(i) Reimbursement or payment of the cost of financial and tax
planning, such reimbursement not to exceed $10,000 per year;
(ii) A housing allowance for a residence in Bermuda equal to
$[__________] per month, subject to periodic review for increase;
and
(iii) Reimbursement of an annual subscription to a club in
Bermuda not to exceed $6,000 in membership fees per year.
Section 6. "KEY-MAN" INSURANCE.
At any time during the Term of Employment, the Company shall have
the
right to insure the life of Employee for the sole benefit of the
Company, in
such amounts, and with such terms, as it may determine. All
premiums payable
thereon shall be the obligation of the Company. Employee shall have
no interest
in any such policy, but agrees to reasonably cooperate with the
Company in
taking out such insurance by submitting to physical examinations,
supplying all
information reasonably required by the insurance company, and
executing all
necessary documents, provided that no financial obligation or
liability is
imposed on Employee by any such documents.
Section 7. REIMBURSEMENT OF BUSINESS EXPENSES.
Employee is authorized to incur reasonable business expenses in
carrying out his duties and responsibilities under this Agreement
and the
Company shall promptly reimburse him for all such reasonable
business expenses
incurred in connection with carrying out the business of the
Company, subject to
documentation in accordance with the Company's policy, as in effect
from time to
time.
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Section 8. TERMINATION OF EMPLOYMENT.
(a) General. The Term of Employment shall terminate upon the
earliest
to occur of (i) Employee's death, (ii) a termination by reason of a
Disability,
(iii) a termination by the Company with or without Cause, and (iv)
a termination
by Employee with or without Good Reason. Upon any termination of
Employee's
employment for any reason, except as may otherwise be requested by
the Company
in writing and agreed upon in writing by Employee, Employee shall
resign from
any and all directorships, committee memberships or any other
positions Employee
holds with the Company or any of its subsidiaries.
(b) Termination due to Death or Disability. Employee's emp
