FREE WRITING PROSPECTUS
Filed
Pursuant to Rule 433
Registration No. 333-135464
The issuer has filed a
Market-Making Prospectus with the U.S. Securities and
Exchange Commission (SEC) for the public offering of the issuers
7.50% senior notes due 2016, which closed on July 26, 2006. Goldman,
Sachs & Co. is
continuing to make a market in the senior notes pursuant to the Market-Making Prospectus. Before you invest in the
issuers senior notes, you should read the Market-Making Prospectus and
other documents the issuer has filed with the SEC for more complete information about the issuer
and an investment in its senior notes. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, you may obtain a copy of the Market-Making Prospectus if you so
request by calling Goldman, Sachs & Co. toll-free at 1-866-471-2526.
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 29, 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)
Registrants
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)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Allied World Assurance Company (U.S.) Inc. Supplemental Executive Retirement
Plan
On December 29, 2006, the Newmarket Underwriters Insurance Company
Supplemental Executive Retirement Plan (the NUIC SERP) and the Allied World
Assurance Company, Ltd Supplemental Executive Retirement Plan (the AWAC SERP)
were combined with and merged into the Allied World Assurance Company (U.S.)
Inc. Supplemental Executive Retirement Plan (the SERP), effective as of
January 1, 2005, and the NUIC SERP and AWAC SERP ceased to be operative as of
such date. Newmarket Underwriters Insurance Company, Allied World Assurance
Company, Ltd and Allied World Assurance Company (U.S.) Inc. (AWAC US) are
subsidiaries of Allied World Assurance Company Holdings, Ltd (the Company).
The purpose of the SERP is to provide specified benefits to a group of
senior management of the Companys operating subsidiaries (currently all
assistant vice presidents and up) who pay U.S. income tax and who contribute
materially to the continued growth, development and future business success of
the Companys operating subsidiaries. The SERP permits the Companys operating
subsidiaries to adopt the SERP (each an Employer) and provide benefits to
eligible employees under one supplemental executive retirement plan, which
enables all of the Companys operating subsidiaries to have consistent plan
benefits and also enables employees to be moved more easily within the
Companys group of subsidiaries without a change in their benefits. The SERP
is intended to comply with Section 409A (Section 409A) of the Internal
Revenue Code of 1986 and shall be interpreted and administered, as necessary,
to comply with such provisions. The trust under the SERP is a grantor trust
for the benefit of participants in the SERP and remains subject to the claims
of creditors.
The SERP is filed as Exhibit 10.1 and is incorporated herein by reference.
The description of the SERP contained herein is qualified in its entirety by
reference to the SERP filed herewith.
Under the SERP, the Employer will make a contribution equal to 10% of a
participants annual salary and participants may voluntarily contribute up to
25% of their annual salary (for these purposes annual salary is capped at
$200,000 or such higher amount as determined by the Employer). Employee
contributions to the SERP vest immediately. There is a five-year cumulative
vesting period for all Employer contributions so that upon completion of five
years of service, a participant will be 100% vested in all prior and future
contributions made on his or her behalf by the Employer. Employer
contributions shall also fully vest upon a participant retiring after attaining
the age of 65, the termination of employment on account of a participants
death or disability, the termination of the SERP or a change in control (as
defined in the SERP). Notwithstanding these vesting provisions, a participant
shall forfeit all vested and unvested Employer contributions if he or she is
terminated for cause. Participating in the SERP, as opposed to participating
in the NUIC SERP or AWAC SERP, will not materially effect the total
compensation of our named executive officers.
Section 409A-related changes to the SERP include:
(1) A participant making a subsequent election to delay receipt of
benefits or to change the form of such payment must comply with the following
limitations: (i) such election may not take effect until at least 12 months
after the date on which the election is made; (ii) except in certain prescribed
circumstances, no payments specified in a subsequent election may be made
during the five-year period commencing on the date distribution of benefits
would have commenced but for such subsequent election; and (iii) with respect
to a subsequent election related to benefits payable pursuant to a fixed
schedule or payable at a specified time, such election may not be made less
than 12 months prior to the date of the first scheduled payment.
(2) A Section 409A-compliant provision for accelerated vesting and
distribution upon a change in control, which is triggered by acquisition of 50%
or more of the voting power of the Company, among other ways.
(3) Payment of benefits to a key employee must be postponed until six
months after such employees separation from service.
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Separation and Release Agreement with Jordan M. Gantz
Effective as of the close of business on December 31, 2006 (the
Termination Date), Jordan M. Gantz, Executive Vice President and Chief
Underwriting Officer of the Company, voluntarily terminated his employment with
the Company and its subsidiaries and resigned from all positions he held as an
employee, officer or director of the Company or its subsidiaries. The Company
and Mr. Gantz have entered into a Separation and Release Agreement, dated as of
the Termination Date (the Agreement), a copy of which is attached hereto as
Exhibit 10.2 and is incorporated herein by reference. The description of the
Agreement contained herein is qualified in its entirety by reference to the
Agreement filed herewith.
Under the Agreement, the Company agrees to continue to pay Mr. Gantzs
base salary (at a rate of $425,000 per annum) during the nine-month period
immediately following the Termination Date (the Severance Period) in
accordance with the Companys normal payroll practices, or a discounted lump
sum payment if the parties agree otherwise. The Agreement also provides for
the following payments and benefits to Mr. Gantz: (1) up to $1,000 per month
for equivalent medical and dental benefits provided under the Companys plans
through a provider chosen by Mr. Gantz terminating on the earlier to occur of
(i) the end of the Severance Period or (ii) the date on which Mr. Gantz is
eligible to receive benefits under such plans of a subsequent employer; (2) a
cash payment equal to the value of all unused vacation days accrued through the
Termination Date; (3) receipt of any benefits accrued through the Termination
Date under any employee benefit plans and programs he participated in as an
employee of the Company or its subsidiaries; (4) rent and utility payments on
his leased premises in Bermuda until the Termination Date; (5) $100,000 to
cover his repatriation and shipping expenses between Bermuda and the United
States; and (6) reimbursement for any un-reimbursed reasonable business
expenses and additional tax obligations caused by the U.S. Tax Increase and
Prevention and Reconciliation Act 2005, each in accordance with Company policy.
In addition, all vested stock options held by Mr. Gantz as of the Termination
Date shall remain exercisable for three months following the Termination Date,
in accordance with the Companys Amended and Restated 2001 Employee Stock
Option Plan.
Subject to certain limitations, the Agreement provides for a mutual
general release of claims by both parties. Mr. Gantz is also subject to
continued confidentiality and cooperation obligations. The Company has the
right to recover certain payments to Mr. Gantz should he breach the Agreement.
The Company also agrees to continue to advance any legal or other expenses
reasonably incurred by Mr. Gantz solely in connection with his involvement in
any investigation or proceeding undertaken by the Attorney General of Texas (or
similar body) arising from his employment with the Company.
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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Allied World Assurance Company (U.S.) Inc. Supplemental
Executive Retirement Plan.
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10.2
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Separation and Release Agreement, dated as of December 31,
2006, between Allied World Assurance Company Holdings, Ltd and
Jordan M. Gantz.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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ALLIED WORLD ASSURANCE COMPANY
HOLDINGS, LTD
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Dated: January 5, 2007 |
By: |
/s/ Wesley D. Dupont
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Name: Wesley D. Dupont |
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Title: Senior Vice
President and General Counsel |
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EXHIBIT
INDEX
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Exhibit No.
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Description |
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10.1
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Allied World Assurance Company (U.S.) Inc. Supplemental
Executive Retirement Plan.
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10.2
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Separation and Release Agreement, dated as of December 31,
2006, between Allied World Assurance Company Holdings, Ltd and
Jordan M. Gantz.
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Exhibit 10.1
ALLIED WORLD ASSURANCE COMPANY (U.S.) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of January 1, 2005)
TABLE OF CONTENTS
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Page |
PURPOSE |
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1 |
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ARTICLE 1 |
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DEFINITIONS |
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1 |
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ARTICLE 2 |
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SELECTION AND ENROLLMENT |
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6 |
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ARTICLE 3 |
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DEFERRAL OF COMPENSATION |
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7 |
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ARTICLE 4 |
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EMPLOYER CONTRIBUTIONS |
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9 |
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ARTICLE 5 |
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SHORT-TERM PAYOUT AND UNFORESEEABLE FINANCIAL EMERGENCIES |
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ARTICLE 6 |
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BENEFIT DISTRIBUTIONS |
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11 |
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ARTICLE 7 |
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FORFEITURE |
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12 |
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ARTICLE 8 |
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BENEFICIARY DESIGNATION |
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12 |
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ARTICLE 9 |
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LEAVE OF ABSENCE |
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13 |
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ARTICLE 10 |
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TERMINATION, AMENDMENT AND MODIFICATION |
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ARTICLE 11 |
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ADMINISTRATION |
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ARTICLE 12 |
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CLAIMS PROCEDURES |
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ARTICLE 13 |
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TRUST |
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ARTICLE 14 |
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MISCELLANEOUS |
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ALLIED WORLD ASSURANCE COMPANY (U.S.) INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Purpose
The purpose of the Allied World Assurance Company (U.S.) Inc. Supplemental Executive
Retirement Plan is to provide specified Benefits to a select group of senior management who
contribute materially to the continued growth, development and future business success of Allied
World Assurance Company (U.S.) Inc., a Delaware corporation, or its Affiliates. The Plan is
intended to comply with Section 409A and shall be interpreted and administered, as necessary, to
comply with such provisions. The Plan is also intended to permit Affiliates (as defined below) of
Allied World Assurance Company (U.S.) Inc. to provide benefits to eligible Participants (as defined
below) under one supplemental executive retirement plan. Accordingly, effective as of January 1,
2005, the Newmarket Underwriters Insurance Company Supplemental Executive Retirement Plan (the NUIC
SERP) and the Allied World Assurance Company, Ltd Supplemental Executive Retirement Plan (the AWAC
SERP) shall be combined with and merged into the Plan, and the NUIC SERP and AWAC SERP shall cease
to be operative as of such date. The trusts under the NUIC SERP and AWAC SERP have been
transferred to the Trust (as defined below) under the Plan.
Article 1
Definitions
Unless otherwise clearly apparent from the context, the following phrases and terms shall have
the meanings indicated:
1.1 Account shall mean, with respect to a Participant, any or all of a Participants
Deferral Account or Employer Contribution Account.
1.2 Affiliates shall mean an affiliate within the meaning of Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (the Exchange Act).
1.3 Annual Deferral Amount shall mean for any Plan Year the portion of a
Participants Earnings that is deferred pursuant to Article 3.
1.4 Annual Installment Method shall mean a method of distributing the balance in a
Participants Account wherein such balance is distributed in annual installments up to ten years,
as elected by the Participant (the Installment Period). The amount of each annual installment
shall be computed as follows: the amount of each annual installment shall equal (i) the vested
balance in the Account, as of the Measurement Date immediately preceding the date the installment
is paid, divided by (ii) the number of years remaining in the Installment Period. For purposes
hereof, Measurement Date shall mean the first day of the month next preceding the date on which
the annual installment is paid or such other date (determined by the Committee) as of which the
vested balance in an Account is determined, provided, that in no event shall the amount of any
annual installment exceed the vested balance in the Participants Account as of the date on which
any such installment is paid.
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1.5 Appeals Committee shall mean the committee designated to hear appeals pursuant
to Section 12.3.
1.6 Beneficiary shall mean one or more persons, trusts, estates or other entities,
designated in accordance with Article 8, that are entitled to receive Benefits upon the death of a
Participant.
1.7 Beneficiary Designation Form shall mean the form established from time to time
by the Committee that a Participant completes, signs and returns to the Committee to designate one
or more Beneficiaries.
1.8 Benefit or Benefits shall mean the vested balance of a Participants
Account payable under the Plan.
1.9 Board shall mean the board of directors of the Company.
1.10 Change in Control shall mean and be deemed to occur if:
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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 Parent Company or any or its subsidiaries, a trustee
or any fiduciary holding securities under an employee benefit plan of the Parent Company or
any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering
of such securities or a corporation owned, directly or indirectly, by shareholders of Parent
Company in substantially the same proportion as their ownership of Parent Company, is or
becomes the beneficial owner as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of securities of Parent Company representing 50% or more of the combined voting
power of Parent Companys then outstanding securities (Voting Securities); |
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during any period of not more than two years, individuals who constitute the Board of Parent
Company 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 Parent Company to effect a
transaction described in paragraphs (a) or (c) of this Section 1.10) whose election by the
Board or nomination for election by Parent Companys 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; |
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the shareholders of Parent Company approve a merger, consolidation, amalgamation or
reorganization or a court of competent jurisdiction approves a scheme of arrangement of Parent
Company, other than a merger, consolidation, amalgamation, reorganization or scheme of
arrangement which would result in the Voting Securities of Parent Company 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 Parent Company or such surviving entity outstanding
immediately after such merger, consolidation, amalgamation, reorganization or scheme of
arrangement; |
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(d) |
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the shareholders of Parent Company approve a plan of complete liquidation of Parent Company
or any agreement for the sale or disposition by Parent Company of all or substantially all of
its assets; |
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with respect to any Employer, a Change in Control would occur applying the rules in clause
(a) hereof as if such Employer were the Parent Company, which Change in Control shall apply
only to Employees of any such Employer; or |
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(f) |
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with respect to any Employer, the shareholders of the Employer approve any agreement for the
sale or disposition by such Employer to an unrelated party of all or substantially all of its
assets, which Change in Control shall apply only to Employees of any such Employer. |
1.11 Claimant shall have the meaning set forth in Section 12.1.
1.12 Code shall mean the Internal Revenue Code of 1986, as amended from time to
time.
1.13 Committee shall mean the committee designated to administer the Plan as
described in Article 11.
1.14 Company shall mean Allied World Assurance Company (U.S.) Inc. and any successor
to all or substantially all of the Companys assets or business.
1.15 Deferral Account shall mean, with respect to any Participant, an account to
which shall be credited the Participants Annual Deferral Amounts, and any income, gains and losses
attributable thereto, less any amounts distributed to the Participant or his Beneficiary that
relate to such Deferral Account. The Deferral Account balance shall be a bookkeeping entry only
and shall be utilized solely for the measurement and determination of the amounts to be paid to a
Participant or his Beneficiary pursuant to the Plan.
1.16 Disability or Disabled shall mean, with respect to any Participant,
an inability to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months. The Participant shall be deemed Disabled if
determined to be (i) totally disabled by the Social Security Administration or (ii) disabled under
a Company sponsored disability insurance program, provided such programs definition of disability
complies with Section 409A.
1.17 Distribution Event shall mean the earlier of a Participants Retirement,
Disability, Termination of Employment, death or a Change in Control, the occurrence of which
entitles the Participant (or his Beneficiary, as the case may be) to Benefits in accordance with
Article 6.
1.18 Domestic Partner shall mean a person who has formed a domestic partnership with
a Participant where such partnership has been in existence throughout the one-year period ending on
the earlier of the Participants date of death or the date distribution of his Benefits commences.
A domestic partnership is: (i) a relationship between two adults of the same or opposite gender,
which includes residing together and being jointly responsible for each others
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common welfare and financial obligations, where the Participant has attested to meeting
certain criteria for domestic partnership as determined from time to time by the Committee in
accordance with applicable law; or (ii) a domestic partnership that has been registered with a
governmental entity pursuant to State or local law authorizing such registration.
1.19 Earnings means the payments expressed in monetary terms and paid (directly or
indirectly) to the Participant by the Employer of any wages, salary or leave pay up to a maximum of
$200,000 per year or such higher maximum per year as the Employer shall in its absolute discretion
determine, but does not include any of the following: (i) any fee or commission; or (ii) any
bonus, including payments from a profit-sharing scheme, housing benefit, cost of living allowance
or other perquisite paid to a Participant; or (iii) overtime payments, severance payments,
retirement or long-service recognition payments or health insurance premiums.
1.20 Election Form shall mean the form established from time to time by the
Committee for Participants to make elections under the Plan. A Participant must complete and
submit a new Election Form for each Plan Year in which a Participant elects to defer a portion of
his Earnings and indicate the form and time at which amounts deferred during such Plan Year are to
be distributed. The Subsequent Election Limitations applies independently to each such Election
Form.
1.21 Employee shall mean a person who is subject to U.S. income tax and is an
employee of any Employer.
1.22 Employer shall mean the Company or any Affiliate of the Company that has been
selected by the Company to participate in the Plan.
1.23 Employer Contribution means the amount the Employer contributes to the Plan
pursuant to Section 4.1 hereof for each Plan Year.
1.24 Employer Contribution Account shall mean, with respect to any Participant, an
account to which shall be credited the Employer Contributions pursuant to Section 4.1, and any
income, gains and losses attributable thereto, less any amounts distributed to the Participant or
his Beneficiary that relate to such Account. The Employer Contribution Account balance shall be a
bookkeeping entry only and shall be utilized solely for the measurement and determination of the
amounts to be paid to a Participant or his Beneficiary.
1.25 ERISA shall mean the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
1.26 Key Employee shall mean an Employee treated as a specified employee under
Code Section 409A(a)(2)(B)(i), i.e., a key employee of the Company (as defined in Code Section
416(i) without regard to paragraph (5) thereof), which is defined as an employee who, at any time
during the year, is (i) an officer of the Company having annual compensation in excess of $130,000
(indexed), (ii) a five percent owner of the Parent Company, or (iii) a one percent owner of the
Parent Company having annual compensation of more than $150,000. For purposes of clause (i), no
more than 50 employees (or, if lesser, the greater of three or ten percent of the employees) shall
be treated as officers. The Committee shall determine which Employees shall be deemed Key Employees
using December 31st as an identification date.
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1.27 Key Employee Limitation shall mean the following limitation, which is intended
to comply with Section 409A. Notwithstanding any Election Form to the contrary, distribution of the
Benefit payable by reason of a Participants Termination of Employment or Retirement to a
Participant who is a Key Employee shall not be made before six months after such separation from
service (or, if earlier, the Participants date of death). At the end of such six-month period,
payments that would have been payable but for the Key Employee Limitation shall be paid in lump sum
on the first day of the seventh month following the Participants Termination of Employment or
Retirement and remaining payments shall commence as indicated on the relevant Election Forms.
1.28 Parent Company shall mean Allied World Assurance Company Holdings, Ltd and any
successor to all or substantially all of its assets or business.
1.29 Participant shall mean any Employee (i) who is selected to participate in the
Plan, (ii) who timely submits a signed Election Form to the Committee, and (iii) who commences
participation in the Plan. A spouse or former spouse of a Participant shall not be treated as a
Participant or have an Account balance, even if such spouse or former spouse has an interest in the
Participants Benefits as a result of applicable law or property settlements resulting from legal
separation, divorce or dissolution of the domestic partnership.
1.30 Plan shall mean the Allied World Assurance Company (U.S.) Inc. Supplemental
Executive Retirement Plan, which shall be evidenced by this instrument, as it may be amended from
time to time.
1.31 Plan Year shall mean a period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.
1.32 Retirement, Retire(s), Retiring or Retired shall
mean, with respect to an Employee, a voluntary severance from employment from any Employers
participating in the Plan (for any reason other than a leave of absence, death or Disability) on or
after the attainment of age sixty five (65).
1.33 Section 409A shall mean Code Section 409A, as the same may be amended from time
to time, and any successor statute to such section of the Code.
1.34 Short-Term Payout shall mean the Benefit set forth in Section 5.1.
1.35 Subsequent Election Limitations shall mean the following limitations applicable
to any Participants subsequent election to delay receipt of Benefits or to change the form of such
payment: (i) such election may not take effect until at least 12 months after the date on which the
election is made; (ii) with respect to an election related to Benefits payable for reasons other
than death, Disability or Unforeseeable Emergency, no payments specified in a subsequent election
may be made during the five-year period commencing on the date distribution of benefits would have
commenced but for such subsequent election; and (iii) with respect to a subsequent election related
to Benefits payable pursuant to a fixed schedule or payable at a specified time, such election may
not be made less than 12 months prior to the date of the first scheduled payment. For purposes
hereof, installment payments shall be treated as a single payment.
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1.36 Termination of Employment, Terminate Employment or Terminating
Employment shall mean the severing of employment with any Employer participating in the Plan,
voluntarily or involuntarily, for any reason other than Retirement, Disability, death or an
authorized leave of absence, provided the Employee does not remain employed with any other
Employer.
1.37 Trust shall mean the Trust Agreement under the Allied World Assurance Company
(U.S.) Inc. Supplemental Executive Retirement Plan with Reliance Trust Company effective as of
December 31, 2006, as amended from time to time, and any successor trust thereto.
1.38 Unforeseeable Emergency shall mean a severe financial hardship to a Participant
resulting from an illness or accident of the Participant, the Participants spouse or a dependent
(within the meaning of Code Section 152(a)) of the Participant, loss of the Participants property
due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, or such other circumstances or events, if any,
that are included within the meaning of unforeseeable emergency under Section 409A.
Article 2
Selection and Enrollment
2.1 Selection of Participants by Committee. Participants shall be limited to a select
group of senior management Employees, as determined by the Committee.
2.2 Initial Enrollment Requirements. As a condition to participation, each
Participant shall complete, execute and return to the Committee, an Election Form, with respect to
services performed subsequent to such election, within 30 days after being selected to participate
in the Plan. Any Participant may, on or before December 31, 2007, change his elections with
respect to amounts deferred under the Plan on or before December 31, 2007; provided that such
election may not apply to payments that would otherwise be payable in 2007 or cause payments to be
made in 2007 that would otherwise be payable in a later year. The Committee shall establish from
time to time such other enrollment requirements as it determines are necessary, convenient or
appropriate to carry out any of the purposes or the intent of the Plan or to better assure the
Plans compliance with Section 409A. Participation shall commence as soon as practicable following
timely receipt of all required enrollment materials.
2.3 Termination of Participation and/or Deferrals. Any Employee who becomes a
Participant shall remain a Participant until the earliest to occur of his Termination of
Employment, Disability, Retirement or death. However, if the Committee determines in good faith
that a Participant no longer qualifies as a member of a select group of management or highly
compensated employees, as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Participants participation in the Plan will cease on
December 31st of the Plan Year in which such determination is made.
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Article 3
Deferral of Compensation
3.1 Amount of Deferral. Subject to Section 3.2, each Plan Year a Participant may elect
to defer his Earnings in one percent (1%) increments up to a maximum percentage of twenty-five
percent (25%) of such Earnings or as shall otherwise be determined for each Participant by the
Committee in its sole discretion. Except as otherwise provided herein, any such election shall be
irrevocable.
3.2 Election to Defer. Except as provided below, each Plan Year a Participant may
make an irrevocable deferral election, by timely delivering an Election Form to the Committee, in
accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year
for which the election is made. If no such Election Form is timely delivered for a Plan Year, the
Annual Deferral Amount shall be zero for that Plan Year. Such Election Form shall indicate the
form and time at which amounts deferred during such Plan Year are to be distributed. Subject to
the Subsequent Election Limitations, such distribution election shall govern the deferred amounts.
3.3 Withholding of Annual Deferral Amounts. For each Plan Year, the Annual Deferral
Amount shall be withheld from each regularly scheduled Employer payroll in equal amounts, as
adjusted from time to time for changes in Earnings. Any Earnings not paid in scheduled payroll
shall be withheld at the time the Earnings are or otherwise would be paid to the Participant.
3.4 Investment of Trust Assets. The trustee of the Trust shall be authorized, upon
written instructions received from the Committee or an investment manager appointed by the
Committee, to invest and reinvest the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of stock and reinvestment of the proceeds in one or more
investment vehicles designated by the Committee.
3.5 Vesting of Deferral and Employer Contributions Accounts. A Participant shall at
all times be 100% vested in his Deferral Account. A Participants vested interest in his Employer
Contribution Account shall be determined under Section 4.3.
3.6 Crediting/Debiting of Account Balances. Amounts shall be credited or debited to a
Participants Account in accordance with the following rules:
3.6.1 Election of Measurement Funds. A Participant, in connection with his initial
deferral election pursuant to Section 2.2, shall elect, on an Election Form, one or more
Measurement Funds (defined in Section 3.6.3) to be used to determine the additional amounts to be
credited to his Account. Once each calendar month, a Participant may change the Measurement
Fund(s) to be used to determine the additional amounts to be credited to his Account, or the
portion of his Account allocated to each previously or newly elected Measurement Fund.
3.6.2 Proportionate Allocation. In making an election described in Section 3.6.1, the
Participant shall specify on the Election Form, in increments of one percentage point
-7-
(1%), the percentage of his Account to be allocated to a Measurement Fund (as if the
Participant was making an investment in that Measurement Fund with that portion of his Account).
3.6.3 Measurement Funds. The Participant may elect one or more of the measurement
funds selected by the Committee (the Measurement Funds) for the purpose of crediting additional
amounts to his Account. The Committee may, in its sole discretion, discontinue, substitute or add
a Measurement Fund at any time.
3.6.4 Crediting or Debiting Method. The performance of each Measurement Fund shall be
determined by the Committee, in its reasonable discretion, based on the performance of the
Measurement Funds themselves. A Participants Deferral Account balance shall be credited or
debited on a daily basis based on the performance of each applicable Measurement Fund as though (i)
a Participants Deferral Account was invested in the Measurement Fund(s) selected by the
Participant and (ii) the portion of the Annual Deferral Amount that was actually deferred during
any calendar month was invested in such Measurement Fund(s) in the percentages applicable to such
calendar month, no later than the close of business on the last business day of such calendar
month, at the closing price on such date. A Participants Employer Contribution Account balance
shall be credited or debited on a daily basis based on the performance of each applicable
Measurement Fund as though (i) a Participants Employer Contribution Account was invested in the
Measurement Fund(s) selected by the Participant and (ii) the portion of the Employer Contribution
that was actually deferred during any calendar month was invested in such Measurement Fund(s) in
the percentages applicable to such calendar month, no later than the close of business on the last
business day of such calendar month, at the closing price on such date.
3.6.5 No Actual Investment. Notwithstanding any other provision of the Plan to the
contrary, the Measurement Funds are to be used for measurement purposes only, and a Participants
election of any such Measurement Fund, the allocation to his Account thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to a Participants Account shall
not be considered or construed in any manner as an actual investment of his Account in any such
Measurement Fund. If the Committee or the trustee of the Trust, in its own discretion, decides to
invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to
such investments. Without limiting the foregoing, a Participants Account shall at all times be a
bookkeeping entry only and shall not represent any investment made on his behalf by the Company or
the trustee, and the Participant shall at all times remain an unsecured creditor of the Company.
3.7 FICA and Other Taxes. In accordance with Section 409A, for each Plan Year in
which an Annual Deferral Amount is being withheld with respect to a Participant, the Participants
Employer shall withhold from that portion of the Participants compensation that is not being
deferred, in a manner determined by the Employer, the Participants share of FICA, if applicable,
and any other applicable employment taxes on such Annual Deferral Amount. If necessary, the
Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.7, provided
such amount does not exceed the aggregate of the FICA amount and the applicable income tax
withholding related to such FICA amount.
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3.8 Withholding on Distributions. The Employer, or the trustee of the Trust, shall
withhold from any payments made to a Participant under the Plan all federal, state and local
income, employment and other taxes that the Employer or the trustee of the Trust, as applicable,
deems necessary or appropriate to be withheld, in connection with such payments, in amounts and in
a manner to be determined in the sole discretion of the Employer or the trustee of the Trust, as
the case may be.
Article 4
Employer Contributions
4.1 Employer Contributions. Each Participants Employer Contribution Account shall be
credited with Employer Contributions equal to no less than ten percent (10%) of the Participants
Earnings for the applicable period, as determined by the Committee. Employer Contributions shall
be credited to a Participants Account on a monthly basis, but in no event later than fifteen (15)
days after the close of each month. Amounts shall be credited or debited to the Participants
Employer Contribution Account in accordance with Section 3.6.
4.2 Distribution. A Participants Employer Contribution Account shall be distributed
at the same time and in the same form as the Participants Deferral Account. If a participant did
not properly complete and deliver an Election Form for a Plan year, the vested Employer
Contributions with respect to such Plan Year shall be distributed from the Employer Contribution
Account in a lump sum on the earliest Distribution Event. However, to the extent the Employer
Contribution is distributed pursuant to a Short-Term Payout election under Section 5.1 prior to the
date such Employer Contributions become vested, then such Employer Contribution Account shall be
distributed within 90 days after the Participant becomes vested in such Employer Contributions.
4.3 Vesting of Employer Contributions. Upon (i) Retiring after attaining age sixty
five (65), (ii) terminating employment on account of death or Disability, (iii) termination of the
Plan or (iv) a Change in Control, a Participant shall become fully vested in his Employer
Contributions Account. A Participant who terminates employment prior to becoming vested under the
preceding sentence shall have, as of the date of such termination, a non-forfeitable right to the
following percentage of Employer Contributions.
|
|
|
|
|
Years of Continuous Employment |
|
Vested Percentage |
Less than 1 |
|
|
0 |
|
At least 1 but less than 2 |
|
|
20 |
|
At least 2 but less than 3 |
|
|
40 |
|
At least 3 but less than 4 |
|
|
60 |
|
At least 4 but less than 5 |
|
|
80 |
|
Upon completion of 5 |
|
|
100 |
|
Upon Terminating Employment, a Participant shall forfeit all unvested Employer Contributions
credited to his Employer Contributions Account. Notwithstanding anything herein to the contrary,
any Employee who is a Participant as of December 31, 2005 shall be credited with any continuous
service with American International Group, Inc., The Chubb Corporation, Swiss Re
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or the Affiliates of any of them, provided, that such service ceased immediately prior to the
Participants commencement of employment with the Company or any of its Affiliates.
Notwithstanding anything herein to the contrary, the Committee at any time and from time to time
may order that all or any part of a Participants Employer Contribution Account shall become vested
and no longer subject to forfeiture, and may order payment of the amounts so vested on the dates
specified in such orders, if the Committee finds such action appropriate in the circumstances.
4.4 Impact of Reemployment on Vesting. A Participant who is rehired by an Employer
after his Termination of Employment shall not be entitled to amounts forfeited under Section 4.3
prior to his reemployment.
4.5 FICA and Other Taxes on Employer Contributions. In accordance with Section 409A,
for each Plan Year in which a Participant becomes vested in Employer Contributions credited to his
Employer Contribution Account, the Participants Employer shall withhold from that portion of the
Participants Earnings that is not being deferred, in a manner determined by the Employer, the
Participants share of FICA, if applicable, and any other applicable employment taxes on the
Employer Contributions vesting in such year. If necessary, the Committee may reduce the Annual
Deferral Amount in order to comply with this Section 4.5, provided such amount does not exceed the
aggregate of the FICA amount and the income tax withholding related to such FICA amount.
Article 5
Short-Term Payout and Unforeseeable Financial Emergencies
5.1 Short-Term Payout. In connection with each election to defer an Annual Deferral
Amount, a Participant may elect to receive such Annual Deferral Amount as a Short-Term Payout by
indicating the specified date to which such amount is to be paid on the Election Form. The
Short-Term Payout shall be a lump sum payment in an amount equal to the Annual Deferral Amount plus
amounts credited or debited pursuant to Section 3.6 on that amount. The Participants Account
shall be valued as of December 31st of the Plan Year preceding the Plan Year in which
such distribution shall be made. Short-Term Payouts shall be distributed within 90 days after the
first day of any Plan Year designated by the Participant that is at least five Plan Years after the
Plan Year with respect to which the Annual Deferral Amount is actually deferred.
5.1.1 Election Changes. Subject to the Subsequent Election Limitations, any
Participant who elects a Short-Term Payout may make another election to further defer the
distribution of such Short-Term Payout by submitting to the Committee either a new Election Form
(during the open enrollment period) or a distribution re-election form (at any time during the Plan
Year).
5.1.2 Distribution Event Takes Precedence. Should a Distribution Event occur prior to
a scheduled Short-Term Payout, then the provisions of Article 6 shall govern the distribution of
Benefits.
5.2 Unforeseeable Financial Emergencies. Upon approval by the Committee, a Participant
may withdraw all or any portion of his vested Account balance for an Unforeseeable
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Emergency. The amounts distributed with respect to an Unforeseeable Emergency may not exceed
the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after taking into account the extent to
which such hardship is or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participants assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of deferrals under this
Plan. Notwithstanding Section 3.2, if the Committee approves a distribution, the Participants
deferrals under the Plan shall cease. A Participant electing a withdrawal under this Section 5.2
may designate the Account or Accounts from which any amounts so distributed shall be taken. If no
election is made, amounts distributed shall be taken first from the Participants Deferral Account
and then from the Participants Employer Contribution Account (to the extent vested).
Article 6
Benefit Distributions
6.1 Distribution Event. Except as otherwise provided in Article 10, the Participants
Benefit shall be distributed upon the occurrence of a Distribution Event in accordance with the
provisions of this Article 6, subject to the Key Employee Limitation.
6.1.1 Retirement Benefit. For each Plan Year in which the Participant makes an
election to defer under Section 3.2, the Participant may elect on an Election Form to receive at
Retirement amounts deferred and contributions credited to his Account for such Plan Year in either
(i) a lump sum, or (ii) pursuant to the Annual Installment Method over a period of up to ten years.
If a Participant does not make an affirmative election in any Plan Year, the Participant will be
deemed to have elected a lump sum distribution with respect to amounts deferred that Plan Year.
Subject to the Subsequent Election Limitations, a Participant may change any prior election
annually to an allowable method of distribution by submitting to the Committee either a new
Election Form (during open enrollment) or a distribution re-election form (at any point during the
Plan Year).
6.1.2 Termination Benefit. If a Participant Terminates Employment, his vested Account
shall be paid in a lump sum.
6.1.3 Disability Benefit. If a Participant becomes Disabled, either before or after
Retirement or Terminating Employment, his vested Account (or remaining portion thereof) shall be
paid in a lump sum.
6.1.4 Death Benefit. Upon a Participants death, his vested Account shall be paid in
a lump sum to his Beneficiary. However, if a Participant dies before his Benefit is paid in full,
any undistributed Benefit payments shall continue and shall be paid to the Participants
Beneficiary on the same schedule as the Benefit would have been paid to the Participant had the
Participant survived.
6.2 Valuation and Commencement of Benefits Payable in Cash. To the extent applicable,
a Participants Account will be valued and Benefits payable in cash shall commence as follows:
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6.2.1 Valuation and Commencement of Lump Sum. The Participants Account will be valued
as of the first day of the month following a Distribution Event. Subject to the Key Employee
Limitation, Benefit payments will begin within 90 days following the Distribution Event.
6.2.2 Valuation and Commencement of Installments. The Participants Account will be
valued as of the first day of the month following a Distribution Event. Subject to the Key
Employee Limitation, Benefit payments will begin on the first day of the third month following the
Distribution Event.
6.3 Automatic Cash-out of Small Accounts. Notwithstanding anything in the Plan or any
Election Form to the contrary, if the value of a Participants vested Account is less than $100,000
at any point in time after the date of a Distribution Event, then such Account shall be paid in a
lump sum within 90 days of the Distribution Event or the date the balance in such Account drops
below $100,000. For purposes hereof, the Participants Account will be valued as of the first day
of the month following such Distribution Event.
Article 7
Forfeiture
7.1 Forfeiture Notwithstanding any other provisions of the Plan to the contrary, a
Participant shall forfeit all vested and unvested Employer Contributions if he:
|
(a) |
|
(i) willfully fails (except where due to physical or mental incapacity),
willfully neglects or willfully refuses to substantially perform his duties; (ii)
commits any willful or intentional act with regard to the Employer that has the
effect of injuring the reputation or business of the Employer in a material manner;
(iii) is convicted of, or pleads guilty or nolo contendere to, the
commission of a criminal act that would constitute a felony in the United States; or
(iv) commits an act of fraud, embezzlement or material dishonesty against the
Employer (other than a good faith expense account dispute); or |
|
|
(b) |
|
at any time improperly discloses to others any trade secrets or other
confidential information, including customer lists, relating to the Company or its
Affiliates or to the business of the Company or its Affiliates. |
Article 8
Beneficiary Designation
8.1 Beneficiary. Each Participant shall have the right, at any time, to designate a
Beneficiary to receive any Benefits payable under the Plan upon his death.
8.2 Beneficiary Designation. A Participant may designate a Beneficiary by completing
a Beneficiary Designation Form, and returning it to the Committee. A Participant shall have the
right to change a Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Committees rules and procedures, as in effect from time to
time. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The
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Committee shall be entitled to rely on the last properly executed Beneficiary Designation Form
filed by the Participant and accepted by the Committee prior to his death. No designation or
change in designation of a Beneficiary shall be effective until received and acknowledged in
writing by the Committee.
8.3 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 8.1 and 8.2 or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participants Benefits, the Participants surviving
spouse or Domestic Partner, if any, shall be deemed the designated Beneficiary. If the Participant
has no surviving spouse or Domestic Partner, the Benefits remaining to be paid to a Beneficiary
shall be payable to the executor or personal representative of the Participants estate.
8.4 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to the Plan, the Committee may cause the Participants
Employer to withhold such payments until this matter is resolved to the Committees satisfaction.
8.5 Discharge of Obligation. The payment of Benefits under the Plan to a Beneficiary
shall fully and completely discharge all Employers and the Committee from all further obligations
under the Plan with respect to the Participant.
Article 9
Leave of Absence
9.1 Paid Leave of Absence. A Participant, who is authorized by his Employer to take a
paid leave of absence, shall continue to be considered employed by the Employer, and the Annual
Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with
Section 3.3.
9.2 Unpaid Leave of Absence. Any Participant who is authorized by his Employer to
take an unpaid leave of absence shall continue to be considered employed by the Employer and upon
the Participants return to a paid employment status, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based on the deferral election,
if any, made for that Plan Year. If no election was made for that Plan Year, no deferral shall be
withheld.
9.3 Leave of Absence Exceeding Six Months. Notwithstanding Sections 9.1 or 9.2
hereof, if the period of a leave of absence (whether paid or unpaid) exceeds six months and the
Participants right to reemployment is not provided either by law or contract, the Participants
employment relationship is deemed to terminate on the first day of the month following such
six-month period and the payment of Benefits shall commence in accordance with Article 6.
Article 10
Termination, Amendment and Modification
10.1 Termination. The Company intends to continue the Plan indefinitely. However, the
Company by action of its Board or a duly authorized committee thereof, in accordance with its
by-laws, reserves the right to terminate the Plan at any time, subject to the limitations on plan
-13-
termination imposed by Section 409A. However, no such termination shall deprive any
Participant or Beneficiary of a right accrued under the Plan prior to the date of termination. A
Participants entire Account shall then be distributed to the Participant (or Beneficiary) in such
form and on the earliest date permitted under Section 409A.
10.2 Amendment. The Company may, at any time, amend or modify the Plan in whole or in
part by action of its Board, a committee thereof, or the Committee. However, no such amendment or
modification may operate to (i) decrease the value of a Participants Account balance computed as
of the date the amendment or modification is approved, or (ii) effect the timing or form of the
distribution of an Account balance that is scheduled to commence on or before such date in a manner
that would violate Section 409A.
10.3 Effect of Benefit Payment. The full payment of the Benefit under Article 6,
shall completely discharge all obligations to a Participant and his designated Beneficiaries under
the Plan.
Article 11
Administration
11.1 Committee Duties. The Plan shall be administered by a Committee, which shall
consist of the Board or such committee, as the Board shall appoint. Members of the Committee may
be Participants. The Committee shall have the discretion and authority to (i) make, amend,
interpret, and enforce all appropriate rules and regulations for the administration of this Plan
and (ii) decide or resolve any and all questions involving the interpretation of the Plan. Any
individual serving on the Committee who is a Participant shall not vote or act on any matter
relating solely to him. When making a determination or calculation, the Committee shall be
entitled to rely on information furnished by a Participant or the Company.
11.2 Agents. In the administration of the Plan, the Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with counsel who may be
counsel to any Employer.
11.3 Binding Effect of Decisions. The decision or action of the Committee with
respect to any question arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.
11.4 Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, and any Employee to whom the duties of the Committee may be delegated,
against any and all claims, losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of willful misconduct by the Committee
or any of its members or any such Employee.
11.5 Employer Information. To enable the Committee to perform its functions, each
Employer shall supply full and timely information to the Committee on all matters relating to the
compensation of its Participants, the date and circumstances of the Retirement, Disability, death
-14-
or Termination of Employment of its Participants, and such other pertinent information as the
Committee may reasonably require.
Article 12
Claims Procedures
12.1 Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to as a Claimant) may deliver to the Committee a
written claim for a determination with respect to the amounts distributable to such Claimant from
the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim
must be made within 60 days after such notice was received by the Claimant. All other claims must
be made within 180 days of the date on which the event that caused the claim to arise occurred.
The claim must state with particularity the determination desired by the Claimant.
12.2 Notification of Decision. The Committee shall consider a Claimants claim
and make a final decision within 60 days of receipt of such claim based on all comments, documents,
records, and other information submitted. This period may be extended by an additional 60 days for
matters beyond the control of the Plan. The Committee shall notify the Claimant via electronic
means or in writing that (i) the Claimants requested determination has been made, and that the
claim has been allowed in full, or (ii) the Committee has reached a conclusion contrary, in whole
or in part, to the Claimants requested determination. If any part of the claim is denied, such
notice must set forth in a manner calculated to be understood by the Claimant (i) the specific
reason(s) for the denial of the claim, or any part thereof, (ii) specific reference(s) to pertinent
provisions of the Plan upon which such denial was based, (iii) a description of any additional
material or information necessary for the Claimant to perfect the claim, and an explanation of why
such material or information is necessary, and (iv) an explanation of the claim review procedures
set forth in Sections 12.3 and 12.4.
12.3 Review of Denied Claim. Within 60 days after receiving a notice from the
Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimants duly
authorized representative) may file with a committee designated by the Board to determine such
appeals (the Appeals Committee) a written request for a review of the denial of the claim. On
receipt of such an appeal, a Claimant (or the Claimants duly authorized representative) will be
given the opportunity to review and receive copies of any documents pertinent to the claim. Not
later than 30 days after the review procedure commences, a Claimant (or the Claimants duly
authorized representative) may request a hearing with the Appeals Committee, which the Appeals
Committee, in its sole discretion, may grant.
12.4 Decision on Review. The Appeals Committee will render a final decision within 60
days of receipt of the appeal, unless special circumstances require an extension of time to 120
days. The Appeals Committee will base its decision on all relevant information submitted by a
Claimant (or the Claimants duly authorized representative) without regard to whether such
information was previously submitted or considered. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain (i) specific reasons for the
decision, (ii) specific reference(s) to the pertinent Plan provisions upon which the decision was
based, and (iii) such other matters as the Appeals Committee deems relevant.
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12.5 Legal Action. A Claimants compliance with the foregoing provisions of this
Article 12 is a mandatory prerequisite to a Claimants right to commence any legal action with
respect to any claim for Benefits under this Plan.
Article 13
Trust
13.1 Establishment of the Trust. The Company shall establish the Trust, and each
Employer shall at least annually transfer over to the Trust such assets as the Employer determines,
in its sole discretion, are necessary to provide, on a present value basis, for its respective
future liabilities created with respect to the Annual Deferral Amounts for such Employers
Participants for all periods prior to the transfer, as well as any debits and credits to the
Participants Account balances for all periods prior to the transfer, taking into consideration the
value of the assets in the trust at the time of the transfer.
13.2 Interrelationship of the Plan and the Trust. The provisions of the Plan shall
govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions
of the Trust shall govern the rights of the Employers and the creditors of the Employers to the
assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its
obligations under the Plan.
13.3 Distributions from the Trust. Each Employers obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employers obligations under the Plan.
Article 14
Miscellaneous
14.1 Status of Plan. The Plan is intended (i) to be a plan that is not qualified
within the meaning of Code Section 401(a) and is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of management or
highly compensated employees within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1),
and (ii) to comply with Section 409A. The Plan shall be administered and interpreted to the extent
possible in a manner consistent with such intent.
14.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or claims in any property
or assets of an Employer. For purposes of the payment of Benefits under this Plan, any and all of
an Employers assets shall be, and remain, the general, unpledged unrestricted assets of the
Employer. An Employers obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money or distribute Shares, as the case may be, in the future.
14.3 Employers Liability. The Employers shall be jointly and severally liable for
all Benefits under the Plan, provided that the Employers liability for the payment of Benefits
shall be defined only by the Plan and related forms. No Employer shall have any obligation to a
Participant under the Plan except as expressly provided in the Plan and related forms.
-16-
14.4 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly declared
to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual
payment, be (i) subject to seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any other person, (ii)
transferable by operation of law in the event of a Participants or any other persons bankruptcy
or insolvency, or (iii) transferable to a spouse or Domestic Partner as a result of a property
settlement or otherwise.
14.5 Not a Contract of Employment. The terms and conditions of the Plan shall not be
deemed to constitute a contract of employment between any Employer and a Participant. Nothing in
this Plan shall be deemed to give a Participant the right to be retained in the service of any
Employer as an Employee, or to interfere with the right of any Employer to discipline or discharge
the Participant at any time.
14.6 Furnishing Information. A Participant or his Beneficiary will cooperate with the
Committee by furnishing any and all information requested by the Committee and take such other
actions as may be requested in order to facilitate the administration of the Plan and the payments
of Benefits hereunder, including, but not limited to, taking such physical examinations as the
Committee may deem necessary.
14.7 Terms. Whenever any words are used herein in the masculine, they shall be
constructed as though they were in the feminine in all cases where they would apply, and whenever
any words are used herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases when they would so apply.
14.8 Captions. The captions of the articles, sections and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or construction of any of its
provisions.
14.9 Governing Law. Subject to ERISA and the Code, the provisions of the Plan shall
be construed and interpreted according to the laws of the State of Delaware without regard to its
conflicts of law principles.
14.10 Notice. Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:
Allied World Assurance Company (U.S.) Inc.
Supplemental Executive Retirement Plan Committee
100 Summer Street
Boston, Massachusetts 02110
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Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail,
as of the date shown on the postmark on the receipt for registration or certification. Any notice
or filing required or permitted to be given to a Participant under this Plan shall be sufficient if
in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
14.11 Successors. The provisions of this Plan shall bind and inure to the benefit of
the Participants Employer and its successors and assigns and the Participant and the Participants
Beneficiaries.
14.12 Validity. If any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts hereof, and the Plan
shall be construed and enforced as if such illegal or invalid provision had never been inserted
herein.
14.13 Incompetent. If the Committee determines in its discretion that a Benefit under
this Plan is to be paid to a minor, a person declared incompetent or a person incapable of handling
the disposition of that persons property, the Committee may direct payment of such Benefit to the
guardian, legal representative or person having the case and custody of such minor, incompetent or
incapable person. The Committee may require proof of minority, incompetence, incapacity, or
guardianship, as it may deem appropriate prior to distribution of the Benefit. Any payment of a
Benefit shall be a payment for the account of the Participant and the Participants Beneficiary, as
the case may be, and shall be a complete discharge of any liability under the Plan for such payment
amount.
14.14 Distribution in the Event of Taxation. If the Internal Revenue Service or a
court of competent jurisdiction determines that Plan Benefits are includible in the gross income of
a Participant under Section 409A prior to actual receipt of the Benefits, the Company shall
immediately cause to be distributed to the Participant the Benefits found to be so includible.
14.15 Insurance. The Employers, on their own behalf or on behalf of the trustee of
the Trust, and, in their sole discretion, may apply for and procure insurance on the life of the
Participant, in such amounts and in such forms as the trustee may choose. The Employers or the
trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any such policy or policies, and
at the request of the Employers shall submit to medical examinations and supply such information
and execute such documents as may be required by the insurance company or companies to whom the
Employers have applied for insurance.
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14.16 Inability to Locate A Participant. It is the responsibility of a Participant to
apprise the Committee of any change in his or her address or the address of any Beneficiary. In
the event that the Committee is unable to locate a Participant or Beneficiary within two years of a
Distribution Event, the Participants Account shall be forfeited and amounts returned to the
Company and neither the Participant or any Beneficiary shall have a claim to such Benefits.
14.17 Coordination with Other Benefits. Benefits provided for a Participant or
Participants Beneficiary under the Plan are in addition to any other benefits available to such
Participant under any other plan or program for employees of the Participants Employer. The Plan
shall supplement and shall not supersede, modify or amend any other such plan or program, except as
may otherwise be provided.
IN WITNESS WHEREOF, the Company has signed this Plan document as of this 29th day
of December 2006.
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Allied World Assurance Company (U.S.) Inc. |
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By:
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/s/ Richard E. Jodoin |
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Name:
Title:
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Richard E. Jodoin
President |
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By:
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/s/ Wesley D. Dupont |
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Name:
Title:
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Wesley D. Dupont
Secretary |
-19-
Exhibit 10.2
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (this Agreement), dated as of December 31, 2006,
confirms the following understandings and agreements between Allied World Assurance Company
Holdings, Ltd (the Company) and Jordan M. Gantz (hereinafter referred to as you or your).
1. Employment Status. You have voluntarily terminated your employment with the
Company and its subsidiaries effective on the close of business on December 31, 2006 (the
"Termination Date). You hereby confirm your resignation from any and all positions you held as an
employee, officer or director of the Company or its subsidiaries as of the Termination Date.
2. Separation Payments and Benefits.
(a) The Company agrees to continue to pay your base salary (at a rate of $425,000 per annum)
during the nine (9) month period (the "Severance Amount") immediately following the Termination
Date (the Severance Period) in accordance with the Companys normal payroll practices. If the
parties agree, you may receive a discounted lump sum payment of the Severance Amount to be paid by
January 31, 2007.
(b) You will be entitled to continued participation, on the same basis (including without
limitation, cost contributions) as the other senior executives of the Company or its subsidiaries,
in any medical or dental plan maintained by the Company or its subsidiaries in which you were
participating until the Termination Date (the Welfare Plans). Thereafter, the Company will pay
up to $1000/month to you for benefits equivalent to those provided under the Welfare Plans through
a medical plan provider of your choice in the State of Arizona until the earlier of (x) the end of
the Severance Period or (y) the date, or dates, you are eligible to receive benefits under the same
type of plan of a subsequent employer.
(c) You will be entitled to a cash payment equal to the value of all unused vacation accrued
through the Termination Date calculated in accordance with the Companys vacation policy to be paid
by January 31, 2007.
(d) You will be entitled to receive all benefits, if any, that have accrued to your benefit
through the Termination Date under the employee benefit plans and programs in which you
participated as an employee of the Company or its subsidiaries in the manner and in accordance with
the terms of such plans and programs. The Company agrees that the amounts under the Companys
Supplemental Executive Retirement Plan shall vest fully upon the Termination Date.
(e) All vested Options shall, in accordance with the terms of the Companys Amended and
Restated 2001 Employee Stock Option Plan, remain exercisable for the three (3) month period
following the Termination Date, at which point, any Options not exercised shall expire.
(f) In connection with the Leasing Agreement, dated October 31, 2005 (the Leasing
Agreement), pursuant to which you lease the premises Why Not, 20 Crown Hill,
Devonshire DV 03 (the Premises), you have notified the Landlord (as defined in the Leasing
Agreement), in writing, of your intention to terminate the Leasing Agreement in accordance with
paragraph 5(d) thereof. The Company will pay the rent and utility costs relating to the Premises
until December 31, 2006. In connection therewith, you agree to fully vacate the Premises on or
prior to December 31, 2006.
(g) In connection with your repatriation, the Company will provide you with an allowance of
$100,000 to cover your travel between Bermuda and your home in the United States, and to cover the
various costs and expenses of shipping your household goods and personal effects to the United
States to be paid by January 31, 2007.
(h) The Company will continue to arrange and pay for the provision of the services of the
accounting firm, KPMG, in order to prepare your 2006 and 2007 tax returns.
(i) The Company confirms that you will be entitled to reimbursement by the Company of the
additional tax obligation caused by the U.S. Tax Increase and Prevention and Reconciliation Act
2005 for 2006 in accordance with the policy set out by the Company by email on 15th June
2006 to its U.S. citizen employees.
(j) The Company shall promptly reimburse you for any unreimbursed reasonable business expenses
incurred by you in accordance with the terms of applicable Company policy, subject to your
submission of appropriate documentation to the Company, as may be required by such policy, within a
reasonable time following the date hereof.
(k) The Company agrees that to the extent the Company communicates with its staff or with your
prospective employers regarding your separation from the Company, the substance of any such
communication shall be as set forth in Exhibit A.
(l) From and after the Termination Date, except for such rights as are granted by this
Agreement, you will no longer be entitled to receive any further payments, compensation or other
monies (including severance compensation) from the Company or any of its subsidiaries or to receive
any of the benefits or participate in any benefit plan or program of the Company or any of its
subsidiaries, including without limitation, any salary payment, bonus payment, severance payment,
salary continuation payment, accrued vacation or unused personal days and expense reimbursements.
3. Release.
(a) As used in this Agreement, the term claims will include all claims, covenants,
warranties, promises, undertakings, actions, suits, causes of action, obligations, debts, accounts,
attorneys fees, judgments, losses and liabilities, of whatsoever kind or nature, in law, equity or
otherwise.
(b) For and in consideration of the payments and benefits described in paragraph 2 above, and
other good and valuable consideration, you, for and on behalf of yourself and your heirs,
administrators, executors and assigns, effective the date hereof, do fully and forever release,
remise and discharge the Company, its direct and indirect parents, subsidiaries and affiliates,
together with their respective officers, directors, partners, shareholders, employees
-2-
and agents (collectively, and with the Company, the Group) from any and all claims which you
had, may have had, or now have against the Group, for or by reason of any matter, cause or thing
whatsoever, including any claim arising out of or attributable to your employment or the
termination of your employment with the Company, including but not limited to claims of breach of
contract, wrongful termination, unjust dismissal, defamation, libel or slander, or under any
federal, state or local law dealing with discrimination based on age, race, sex, national origin,
handicap, religion, disability or sexual preference. This release of claims includes, but is not
limited to, all claims arising under the Age Discrimination in Employment Act (ADEA), Title VII
of the Civil Rights Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the
Family Medical Leave Act, the Equal Pay Act, the New York Human Rights Law, the New York City
Administrative Code, the Employment Act 2000 of Bermuda, the Human Rights Act 1981 of Bermuda, each
as may be amended from time to time, and all other federal, state and local labor and
anti-discrimination laws, the common law and any other purported restriction on an employers right
to terminate the employment of employees.
(c) You specifically release all claims relating to your employment and its termination under
ADEA, a United States federal statute that, among other things, prohibits discrimination on the
basis of age in employment and employee benefit plans.
(d) You are specifically agreeing to the terms of the release contained in this paragraph 3
because the Company has agreed to pay you money and other benefits to which you were not otherwise
entitled under the Companys policies, and has provided such other good and valuable consideration
as specified herein. The Company has agreed to provide this money and other benefits because of
your agreement to accept it in full settlement of all possible claims you might have or ever had,
and because of your execution of this Agreement.
(e) Notwithstanding any provision of this paragraph 3 to the contrary, by executing this
Agreement, you are not releasing any claims relating to: (i) your rights to enforce this Agreement,
(ii) any indemnification rights you may have as a former officer or director of the Company or its
subsidiaries in accordance with the Companys or such subsidiarys bye-laws, as the case may be,
and (iii) any benefits under any directors and officers liability policy maintained by the
Company or its subsidiaries, in accordance with such policys terms.
(f) The Group does fully and forever release, remise and discharge you, your heirs, successors
and assigns (collectively, the Releasees) from any and all claims which the Group ever had, now
has or may have against the Releasees for or by reason of any matter, cause or thing whatsoever,
including any claim arising out of or attributable to your employment or the termination of your
employment with the Company; provided that such released claims shall not include any claims to
enforce this Agreement, including specifically paragraph 5(d) of this Agreement (pertaining to the
repayment of expenses advanced).
4. No Suit. You represent that you have not filed or permitted to be filed against
the Group, individually or collectively, any complaints, charges or lawsuits arising out of your
employment, or any other matter arising on or prior to the date hereof, and you covenant and agree
that you will never individually or with any other person file, or commence the filing of, any
charges, lawsuits, complaints or proceedings with any governmental agency or otherwise against the
Group with respect to the subject matter of this Agreement and claims released
-3-
pursuant to this Agreement (including, without limitation, any claims relating to the
termination of your employment), except as may be necessary to enforce this Agreement, to obtain
benefits described in or granted under this Agreement, or to seek a determination of the validity
of the waiver of your rights under ADEA. In addition, you agree that you will not voluntarily
participate or assist in any judicial, administrative, arbitral or other proceedings of any nature
or description against the Group brought by or on behalf of any administrative agencies or any
current or former employees or service providers of the Company or any of its subsidiaries, other
than pursuant to a valid subpoena or court order.
5. Other Agreements.
(a) Without the prior written consent of the General Counsel of the Company (the General
Counsel), except to the extent required by an order of a court having jurisdiction or under
subpoena from an appropriate government agency, in which event, you agree, to the extent legally
permitted, to consult with the General Counsel prior to responding to any such order or subpoena,
you will not discuss with, disclose to or use for the benefit of any third party any confidential
or proprietary current or historical trade secrets, customer lists, drawings, designs, information
regarding the Companys insurance placements, product development (including types of insurance
products), business practices, marketing plans, sales plans, management organization information,
operating policies (including underwriting policies, risk assessment policies and relationships
with its investors), legal matters, or manuals, business plans, financial records, packaging design
or any other financial, commercial, business or technical information relating to the Company or
its subsidiaries (collectively, Confidential Information); provided, however, that your
obligation under this paragraph 5(a) will not apply to any information that is publicly available
or hereafter becomes publicly available, in each case without your breach of this paragraph 5(a).
(b) You agree that you will not make, or cause to be made, any statement or communicate any
information (whether oral or written) that disparages or reflects negatively on the Company or any
member of the Group, except as may otherwise be required by applicable law or compelled by process
of law. The Company likewise agrees that its officers and directors and those of any Group Company
(collectively, the Company, its Directors and Officers") will not make, or cause to be made, any
statement or communicate any information (whether oral or written) that disparages or reflects
negatively on you; provided that nothing in this provision affects the Companys, its Directors,
or Officers: (i) testimonial obligations; or (ii) right to take a legal or factual position in
litigation or other legal or administrative proceedings, including investigations by any regulatory
authority.
(c) You agree to cooperate fully with, and, upon reasonable notice, make yourself available
to, the Company and its counsel in connection with any investigations, administrative proceedings
or litigation relating to any matters in which you were involved or of which you had knowledge as a
result of your employment with the Company, including but not limited to, the providing of
interviews, statements, documents or other requested information so long as the co-operation sought
shall not unreasonably interfere with your duties at a future employer. The Company agrees to
provide you with reasonable notice regarding any such request for your cooperation and to pay for
any pre-approved out-of-pocket expenses incurred by you in connection with such cooperation,
including such fees and expenses of counsel of your
-4-
choice, provided you supply the Company with appropriate documentation of such out-of-pocket
expenses. The Company further agrees that should you suffer loss of income due to being obliged to
take unpaid or reduced pay leave from a future employer in order to provide such co-operation to
the Company, the Company shall pay to you an amount equivalent to this loss upon production of
documentation evidencing the same.
(d) The Company agrees that it shall continue to advance any legal or other expenses you
reasonably incur solely in connection with your involvement in any investigation or proceedings
undertaken by the Attorney General of Texas (or similar body) arising from your employment with the
Company, and will pay any such fees and expenses of counsel of your choice incurred to date;
provided that, in the event that there is a final adjudication that you engaged in an act of fraud
or dishonesty, you shall be required to repay such expenses advanced.
(e) Prior to the Termination Date, you shall deliver to the Company all of (i) the property of
the Company, including credit cards, cell phones, handheld devices (e.g., Blackberry),
equipment, card-key passes, door and file keys, computer access codes, software and other property
that you received, prepared or helped prepare in connection with your employment with the Company,
and (ii) all documents and data, of any nature and in whatever medium, containing or pertaining to
any Confidential Information. You also agree that you have not retained and will not retain any
copies, duplicates, reproductions or excerpts of the above items except as permitted by the
Company.
6. Remedies. The Company and you will be entitled to have the provisions of paragraph
5 specifically enforced through injunctive relief, without having to prove the adequacy of the
available remedies at law, and without being required to post bond or security, it being
acknowledged and agreed that any such breach will cause irreparable injury and that money damages
will not provide an adequate remedy. Moreover, you understand and agree that if you breach any
provisions of this Agreement, in addition to any other legal or equitable remedy the Company may
have, the Company will be entitled to cease making any payments or providing any benefits to you or
on your behalf under paragraphs 2(a) and 2(b) hereof, recover any payments made to you or on your
behalf under paragraphs 2(a) and 2(b) hereof, and you will reimburse the Company for all its
reasonable attorneys fees and costs incurred by it arising out of any such breach should a court
so order. The remedies set forth in this paragraph 6 will not apply to any challenge to the
validity of the waiver and release of your rights under ADEA. In the event you challenge the
validity of the waiver and release of your rights under ADEA, then the Companys right to
attorneys fees and costs will be governed by the provisions of ADEA, so that the Company may
recover such fees and costs if the lawsuit is brought by you in bad faith. Except as may be
expressly provided in this paragraph, any such action permitted by the Company under this
paragraph, however, will not affect or impair any of your obligations under this Agreement,
including without limitation, your release of claims in paragraph 3 hereof. Each of you and the
Company further agrees that nothing herein will preclude the Company or you from recovering
attorneys fees, costs or any other remedies specifically authorized under applicable law.
7. Severability. In the event that any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or impaired thereby.
Moreover, if
-5-
any one or more of the provisions contained in this Agreement is held to be excessively broad
as to duration, scope, activity or subject, such provisions will be construed by limiting and
reducing them so as to be enforceable to the maximum extent compatible with applicable law.
8. No Admission. Nothing herein will be deemed to constitute an admission of
wrongdoing by you or the Company. Neither this Agreement nor any of its terms will be used as an
admission or introduced as evidence as to any issue of law or fact in any proceeding, suit or
action, other than an action to enforce this Agreement.
9. Miscellaneous.
(a) You and the Company represent and acknowledge that, in executing this Agreement, neither
has relied upon any representation or statement not set forth herein. This Agreement sets forth
the entire agreement between the parties hereto and, except as otherwise expressly provided, fully
supersedes any and all prior negotiations, discussions, agreements or understandings between the
parties hereto pertaining to the subject matter hereof. This Agreement may not be changed, amended
or modified, except by writing signed by the party affected by such change, amendment or
modification.
(b) The descriptive headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this Agreement.
(c) All payments provided for in this Agreement will be reduced by any and all applicable
withholdings, contributions and payroll taxes.
(d) This Agreement may be executed in two counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.
(e) This Agreement will be governed by and construed in accordance with the laws of the State
of New York without application of conflict of law provisions.
(f) The Company and you acknowledge that each has read this Agreement in its entirety, fully
understand its meaning and are executing this Agreement voluntarily and of your own free will with
full knowledge of its significance. You acknowledge and warrant that you have had the opportunity
to consider for twenty-one (21) days the terms and provisions of this Agreement and that you have
been advised by the Company to consult with an attorney prior to executing this Agreement. The
Company and you will have the right to revoke this Agreement for a period of seven (7) days
following your execution of this Agreement, by giving written notice of such revocation to the
Company. This Agreement shall not become effective until the eighth (8th) day following
your execution of it, without any revocation of this Agreement during the revocation period per the
terms of this subsection (f). In the event of revocation of this Agreement pursuant to this
subsection (f), this Agreement shall be null and void and of no effect, and the Company shall have
no obligations under this Agreement.
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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ALLIED WORLD ASSURANCE COMPANY
HOLDINGS, LTD |
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By: |
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/s/ Scott Carmilani |
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Name: |
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Scott Carmilani |
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Title: |
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President and Chief Executive Officer |
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/s/ Jordan M. Gantz
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Jordan M. Gantz
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-7-