UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 1, 2006
ALLIED
WORLD ASSURANCE COMPANY HOLDINGS, LTD
(Exact Name of Registrant as Specified in Charter)
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Bermuda
(State or Other Jurisdiction
of Incorporation)
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001-32938
(Commission File Number)
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98-0481737
(I.R.S. Employer
Identification No.) |
27 Richmond Road
Pembroke HM 08, Bermuda
(Address of Principal Executive Offices and Zip Code)
Registrant’s telephone number, including area code: (441) 278-5400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On December 1, 2006, Allied World Assurance Company Holdings, Ltd and Allied World Assurance
Company, Ltd (together, the “Company”) entered into employment agreements with the following senior
officers: Marshall J. Grossack and Thomas McKevitt (each, an “Executive”). On November 6, 2006,
Allied World Assurance Company Holdings, Ltd filed a Current Report on Form 8-K with the Securities
and Exchange Commission attaching a copy of the form of employment agreement (the “Employment
Agreement”) between the Company and eight of its other senior officers. The employment agreements
for Messrs. Grossack and McKevitt, apart from their name and title, are identical to the Employment
Agreement attached as Exhibit 10.1 to that Current Report on Form 8-K and, accordingly, the form of
such Employment Agreement is incorporated herein by reference. The description of the Employment
Agreement contained herein is qualified in its entirety by reference to the form of Employment
Agreement filed therewith.
Under their respective Employment Agreements, each Executive receives an enumerated base
salary, which may be increased only upon approval of the Board of Directors of the Company (the
“Board”), and a discretionary annual cash bonus. The Employment Agreement provides for a cost of
living allowance in addition to base salary, financial and tax planning, expense reimbursement for
housing, club membership fees for a club in Bermuda and other business expenses, subject to
applicable limits set forth in each Employment Agreement and the policies of the Company as
approved from time to time by the Board.
Under the Employment Agreement, during the term of employment and ending on the 24-month
anniversary following any termination of employment, the Executive is subject to a non-interference
covenant. Generally, the non-interference covenant prevents the Executive from soliciting or hiring
employees or other service providers of the Company or its subsidiaries and from inducing any
customer, supplier, licensee or other business relation of the Company or its subsidiaries to cease
doing business with, or reduce the amount of business conducted with the Company or its
subsidiaries, or in any other manner interfering with the Company’s or its subsidiaries’
relationship with these parties. During the term of employment and ending following the Non-Compete
Period (as defined below), the Executive is subject to a non-competition covenant. Generally, the
non-competition covenant prevents the Executive from engaging in activities that are competitive
with the business of the Company or its subsidiaries in certain jurisdictions. The Employment
Agreement also contains standard confidentiality and assignment of inventions provisions. In
addition, the Employment Agreement provides that the Company shall generally indemnify the
Executive to the fullest extent permitted by Bermuda law, except in certain limited circumstances.
The “Non-Compete Period” shall mean (i) in the case of the Executive’s termination of
employment by the Company with Cause (as defined in the Employment Agreement), ending on the date
of such termination; (ii) in the case of the Executive’s termination of employment by the Company
without Cause or by the Executive for Good Reason (as defined in the Employment Agreement), ending
on the 24-month anniversary of the date of such termination; and (iii) in the case of the
Executive’s termination of employment by the Executive without Good Reason or as a result of a
Disability (as defined in the Employment Agreement), ending on the date of such termination;
provided, however, in the case of clause (iii) above, the Company may elect to extend the
Non-Compete Period up to an additional 12 months following the date of such termination, during
which period the Company shall be required to continue to pay the Executive his or her base salary
and provide coverage under the Company’s health and insurance plans (or the economic equivalent of
such coverage, including its cash value).
The Employment Agreement terminates upon the earliest to occur of (i) the Executive’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 the Executive with or without Good Reason. Upon any termination of
the Executive’s employment for any reason, except as may otherwise be requested by the Company in
writing and agreed upon in writing by the Executive, the Executive shall resign from any and all
directorships, committee memberships or any other positions the Executive holds with the Company or
any of its subsidiaries.
Upon termination of an Executive’s employment with the Company for any reason, including a
termination by the Company with Cause or by the Executive without Good Reason, the Executive shall
be entitled to all Accrued Obligations (as defined in the Employment Agreement). Upon termination
of the Executive’s employment due to his or her death or Disability, the Executive (or his or her
estate or beneficiaries), in addition to all Accrued Obligations, shall be entitled to any (i)
unpaid annual bonus in respect to any completed fiscal year prior to such termination, (ii) a pro
rata annual bonus if such termination occurs during a fiscal year and (iii) vesting, as of the
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date of termination, in the number of equity-based awards that otherwise would have vested
during the one-year period immediately following such termination.
Upon termination of an Executive’s employment by the Company without Cause or by the Executive
with Good Reason, in addition to any Accrued Obligations and unpaid annual bonus, the Executive
shall receive (i) an amount equal to the Severance Multiplier (as defined below) multiplied by the
sum of the Executive’s base salary and annual bonus to be paid in substantially equal monthly
installments over the period beginning on the termination date and ending one day prior to two and
one-half months following the end of the Company’s fiscal year in which such termination occurs,
(ii) continuation of coverage under the Company’s health and insurance plans (or the economic
equivalent of such coverage, including its cash value) for a period of years equal to the Severance
Multiplier and (iii) vesting, as of the date of termination, in the number of equity-based awards
that otherwise would have vested during the two-year period immediately following such termination.
The “Severance Multiplier” shall equal two, or if the Executive’s termination occurs within the
12-month period following a Change in Control (as defined in the Employment Agreement), the
Severance Multiplier shall equal three. The Company may require the Executive to execute a general
release prior to payment of any amount or provision of any benefit as a result of termination of
employment by the Company without Cause or by the Executive for Good Reason.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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| Exhibit No. |
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Description |
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10.1
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Form of Employment Agreement (incorporated by reference to
Exhibit 10.1 of the Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 6, 2006). |
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