Exhibit 10.1
INDEMNIFICATION AGREEMENT
     This INDEMNIFICATION AGREEMENT (the “Agreement”) is made and executed this
1st day of August, 2006, by and between
Allied World Assurance Company Holdings, Ltd, a company incorporated under the
laws of Bermuda (the “Company”), and                       (the “Indemnitee”).
     WHEREAS, the Company is aware that, in order to induce highly competent
persons to serve the Company as directors or officers or in other capacities,
the Company must provide such persons with adequate protection through insurance
and indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the Company;
     WHEREAS, the Company recognizes that the increasing difficulty in obtaining
directors’ and officers’ liability insurance, the increases in the cost of such
insurance and the general reductions in the coverage of such insurance have
increased the difficulty of attracting and retaining such persons;
     WHEREAS, the Board of Directors of the Company has determined that it is
essential to the best interests of the Company shareholders that the Company act
to assure such persons that there will be increased certainty of such protection
in the future;
     WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will continue to serve the Company free
from undue concern that they will not be so indemnified; and
     WHEREAS, the Indemnitee is willing to serve, continue to serve, and take on
additional service for or on behalf of the Company or any of its direct or
indirect subsidiaries on the condition that he/she be so indemnified;
     NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Indemnitee do hereby agree as follows:
     1. Service by the Indemnitee. The Indemnitee agrees to serve and/or
continue to serve as a director or officer of the Company faithfully and will
discharge his/her duties and responsibilities to the best of his/her ability so
long as the Indemnitee is duly elected or qualified in accordance with the
provisions of the Memorandum of Association, (the “Memorandum”), the Bye-laws,
as the same may be amended from time to time (the “Bye-laws”), and the Companies
Act 1981 of Bermuda (the “Companies Act”), or until his/her earlier death,
resignation or removal. The Indemnitee may at any time and for any reason resign
from such position (subject to any other contractual obligation or other
obligation imposed by operation by law), in which

 

--------------------------------------------------------------------------------

 

event the Company shall have no obligation under this Agreement to continue the
Indemnitee in any such position. Nothing in this Agreement shall confer upon the
Indemnitee the right to continue in the employ of the Company or as a director
of the Company or affect the right of the Company to terminate the Indemnitee’s
employment at any time in the sole discretion of the Company, with or without
cause, subject to any contract rights of the Indemnitee created or existing
otherwise than under this Agreement.
     2. Indemnification. The Company shall indemnify the Indemnitee against all
Expenses (as hereinafter defined), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the Indemnitee as provided in
this Agreement to the fullest extent permitted by the Memorandum, Bye-laws and
the Companies Act or other applicable law in effect on the date of this
Agreement and to any greater extent that applicable law may in the future from
time to time permit. Without diminishing the scope of the indemnification
provided by this Section 2, the rights of indemnification of the Indemnitee
provided hereunder shall include, but shall not be limited to, those rights
hereinafter set forth, except that no indemnification shall be paid to the
Indemnitee:
     (a) on account of any action, suit, investigation or proceeding in which
judgment is rendered against the Indemnitee for disgorgement of profits made
from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, as amended (the “Act”), or similar provisions of applicable law;
     (b) on account of conduct of the Indemnitee which is finally adjudged by a
court of competent jurisdiction to have been the result of fraud or dishonesty;
     (c) in any circumstance where such indemnification is expressly prohibited
by applicable law;
     (d) with respect to liability for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy or under a valid and
enforceable indemnity clause, Bye-law or agreement (other than this Agreement),
except in respect of any liability in excess of payment under such insurance,
clause, Bye-law or agreement;
     (e) if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect, both
the Company and the Indemnitee have been advised that it is the position of the
Securities and Exchange Commission that indemnification for liabilities arising
under the federal securities laws is against public policy and is, therefore,
unenforceable, and that claims for indemnification should be submitted to the
appropriate court for adjudication); or
     (f) in connection with any action, suit, investigation or proceeding by the
Indemnitee against the Company or any of its direct or indirect subsidiaries or
the directors, officers, employees or other Indemnitees of the Company or any of
its direct or indirect subsidiaries, (i) unless such indemnification is
expressly

2

--------------------------------------------------------------------------------

 

required to be made by law, (ii) unless the proceeding was authorized by the
Board of Directors of the Company, (iii) unless such indemnification is provided
by the Company, in its sole discretion, pursuant to the powers vested in the
Company under applicable law, or (iv) except as provided in Sections 10 and 12
hereof.
     3. Actions or Proceedings Other Than an Action by or in the Right of the
Company. The Indemnitee shall be entitled to the indemnification rights provided
in this Section 3 if the Indemnitee was or is a party or witness or is
threatened to be a party or witness to any threatened, pending or completed
action, suit, investigation or proceeding, whether civil, criminal,
administrative or investigative in nature, other than an action by or in the
right of the Company, by reason of the fact that the Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company, or any of its
direct or indirect subsidiaries, or is or was serving at the request of the
Company, or any of its direct or indirect subsidiaries, as a director, officer,
employee, agent or fiduciary of any other entity, including, but not limited to,
another corporation, partnership, limited liability company, employee benefit
plan, joint venture, trust or other enterprise, or by reason of any act or
omission by him/her in such capacity. Pursuant to this Section 3, the Indemnitee
shall be indemnified against all Expenses, judgments, penalties (including
excise and similar taxes), fines and amounts paid in settlement which were
actually and reasonably incurred by the Indemnitee in connection with such
action, suit, investigation or proceeding (including, but not limited to, the
investigation, defense or appeal thereof); provided, however, that this
indemnity shall not extend to any matter in which the Indemnitee is found, in a
final judgment or decree not subject to appeal, to have committed fraud or
dishonesty.
     4. Actions by or in the Right of the Company. The Indemnitee shall be
entitled to the indemnification rights provided in this Section 4 if the
Indemnitee was or is a party or witness or is threatened to be made a party or
witness to any threatened, pending or completed action, suit, investigation or
proceeding brought by or in the right of the Company to procure a judgment in
its favor by reason of the fact that the Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or any of its direct or
indirect subsidiaries, or is or was serving at the request of the Company, or
any of its direct or indirect subsidiaries, as a director, officer, employee,
agent or fiduciary of another entity, including, but not limited to, another
corporation, partnership, limited liability company, employee benefit plan,
joint venture, trust or other enterprise, or by reason of any act or omission by
him/her in any such capacity. Pursuant to this Section 4, the Indemnitee shall
be indemnified against all Expenses actually and reasonably incurred by him/her
in connection with the defense or settlement of such action, suit, investigation
or proceeding (including, but not limited to the investigation, defense or
appeal thereof); provided, however, that this indemnity shall not extend to any
matter in which the Indemnitee is found, in a final judgment or decree not
subject to appeal, to have committed fraud or dishonesty.
     5. Indemnification for Expenses of Successful Party. Notwithstanding the
other provisions of this Agreement, to the extent that the Indemnitee has served
on behalf of the Company, or any of its direct or indirect subsidiaries, as a
witness or other participant in any class action or proceeding, or has been
successful, on the merits or otherwise, in defense of any action, suit,
investigation or proceeding referred to in Section 3 and 4 hereof, or in defense
of any claim, issue or matter therein, including, but not limited to, the
dismissal of any action without

3

--------------------------------------------------------------------------------

 

prejudice, the Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by the Indemnitee in connection therewith; provided,
however, that this indemnity shall not extend to any matter in which the
Indemnitee is found, in a final judgment or decree not subject to appeal, to
have committed fraud or dishonesty.
     6. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by the Indemnitee in connection with
the investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Section 3 or 4 hereof, but is not
entitled to indemnification for the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for the portion of such Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by the Indemnitee to which the Indemnitee is entitled.
     7. Procedure for Determination of Entitlement to Indemnification. (a) To
obtain indemnification under this Agreement, the Indemnitee shall submit to the
Company a written request, including documentation and information which is
reasonably available to the Indemnitee and is reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of a request for
indemnification, advise the Board of Directors in writing that the Indemnitee
has requested indemnification. Any Expenses incurred by the Indemnitee in
connection with the Indemnitee’s request for indemnification hereunder shall be
borne by the Company.
     (b) Upon written request by the Indemnitee for indemnification pursuant to
Section 3 or 4 hereof, the entitlement of the Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons, who shall be empowered to make such determination: (i) if a
Change in Control (as hereinafter defined) shall have occurred, by Independent
Counsel (as hereinafter defined) (unless the Indemnitee shall request in writing
that such determination be made by the Board of Directors (or a committee
thereof) in the manner provided for in clause (ii) of this Section 7(b)) in a
written opinion to the Board of Directors, a copy of which shall be delivered to
the Indemnitee; or (ii) if a Change in Control shall not have occurred, (A)(1)
by the Board of Directors of the Company, by a majority vote of Disinterested
Directors (as hereinafter defined) even though less than a quorum, or (2) by a
committee of Disinterested Directors designated by majority vote of
Disinterested Directors, even though less than a quorum, or (B) if there are no
such Disinterested Directors or, even if there are such Disinterested Directors,
if the Board of Directors, by the majority vote of Disinterested Directors, so
directs, by Independent Counsel in a written opinion to the Board of Directors,
a copy of which shall be delivered to the Indemnitee. Such Independent Counsel
shall be selected by the Board of Directors and approved by the Indemnitee. Such
determination of entitlement to indemnification shall be made not later than
45 days after receipt by the Company of a written request for indemnification.
If the person making such determination shall determine that the Indemnitee is
entitled to indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such part of
indemnification among such claims, issues or matters. If it is so determined
that the Indemnitee is entitled to indemnification, payment to the Indemnitee
shall be made within ten days after such determination.

4

--------------------------------------------------------------------------------

 

     8. Presumptions and Effect of Certain Proceedings. (a) In making a
determination with respect to entitlement to indemnification, the Indemnitee
shall be presumed to be entitled to indemnification hereunder and the Company
shall have the burden of proof in the making of any determination contrary to
such presumption.
     (b) If the Board of Directors, or such other person or persons empowered
pursuant to Section 7 to make the determination of whether the Indemnitee is
entitled to indemnification, shall have failed to make a determination as to
entitlement to indemnification within 45 days after receipt by the Company of
such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be absolutely
entitled to such indemnification, absent actual and material fraud in the
request for indemnification or a prohibition of indemnification under applicable
law. The termination of any action, suit, investigation or proceeding described
in Section 3 or 4 hereof by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself: (a) create a
presumption that the Indemnitee committed fraud or dishonesty; or (b) otherwise
adversely affect the rights of the Indemnitee to indemnification, except as may
be provided herein.
     9. Advancement of Expenses. All reasonable Expenses actually incurred by
the Indemnitee in connection with any threatened or pending action, suit,
investigation or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit, investigation or proceeding, if so requested
by the Indemnitee, within 20 days after the receipt by the Company of a
statement or statements from the Indemnitee requesting such advance or advances
and a copy of any order, invoice, bill or other evidence of such Expenses
reasonably acceptable to the Company. The Indemnitee may submit such statements
and evidence from time to time. The Indemnitee’s entitlement to such Expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statements and evidence shall reasonably evidence the Expenses incurred by the
Indemnitee in connection therewith and shall include or be accompanied by a
written affirmation by the Indemnitee of the Indemnitee’s good faith belief that
the Indemnitee has met the standard of conduct necessary for indemnification
under this Agreement and an undertaking by or on behalf of the Indemnitee to
repay such amount if it is ultimately determined that the Indemnitee is not
entitled to be indemnified against such Expenses by the Company pursuant to this
Agreement or otherwise. Each written undertaking to pay amounts advanced must be
an unlimited general obligation but need not be secured, and shall be accepted
without reference to financial ability to make repayment.
     10. Remedies of the Indemnitee in Cases of Determination not to Indemnify
or to Advance Expenses. In the event that a determination is made that the
Indemnitee is not entitled to indemnification hereunder or if the payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 7 and 8, or if Expenses are not advanced pursuant to
Section 9, the Indemnitee shall be entitled to a final adjudication in any court
of competent jurisdiction of the Indemnitee’s entitlement to such
indemnification or advance. Alternatively, the Indemnitee may, at the
Indemnitee’s option, seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association, such
award to be made within 60 days following the filing of the

5

--------------------------------------------------------------------------------

 

demand for arbitration. The Company shall not oppose the Indemnitee’s right to
seek any such adjudication or award in arbitration or any other claim. Such
judicial proceeding or arbitration shall be made de novo, and the Indemnitee
shall not be prejudiced by reason of a determination (if so made) that the
Indemnitee is not entitled to indemnification. If a determination is made or
deemed to have been made pursuant to the terms of Section 7 or Section 8 hereof
that the Indemnitee is entitled to indemnification, the Company shall be bound
by such determination and shall be precluded from asserting that such
determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court or before any such arbitrator that
the Company is bound by all the provisions of this Agreement and is precluded
from making any assertions to the contrary. If the court or arbitrator shall
determine that the Indemnitee is entitled to any indemnification hereunder, the
Company shall pay all reasonable Expenses actually incurred by the Indemnitee in
connection with such adjudication or award in arbitration (including, but not
limited to, any appellate proceedings).
     11. Notification and Defense of Claim. Promptly after receipt by the
Indemnitee of notice of the commencement of any action, suit, investigation or
proceeding, the Indemnitee will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company in writing of the
commencement thereof; but the omission to so notify the Company will not relieve
the Company from any liability that it may have to the Indemnitee otherwise than
under this Agreement or otherwise, except to the extent that the Company may
suffer material prejudice by reason of such failure. Notwithstanding any other
provision of this Agreement, with respect to any such action, suit,
investigation or proceeding as to which the Indemnitee gives notice to the
Company of the commencement thereof:
     (a) The Company will be entitled to participate therein at its own expense.
     (b) Except as otherwise provided in this Section 11(b), to the extent that
it may wish, the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof with counsel
reasonably satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal or other
Expenses subsequently incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Indemnitee shall have the right to employ the Indemnitee’s own
counsel in such action or lawsuit, but the fees and Expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of the Indemnitee unless (i) the employment of counsel
by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of the defense of such action and such
determination by the Indemnitee shall be supported by an opinion of counsel,
which opinion shall be reasonably acceptable to the Company, or (iii) the
Company shall not in fact have employed counsel to assume the defense of the
action, in each of which cases the fees and Expenses of counsel shall be at the
expense of the Company.

6

--------------------------------------------------------------------------------

 

The Company shall not be entitled to assume the defense of any action, suit,
investigation or proceeding brought by or on behalf of the Company or as to
which the Indemnitee shall have reached the conclusion provided for in clause
(ii) above.
     (c) The Company shall not be liable to indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of any action, suit, investigation
or proceeding effected without its written consent, which consent shall not be
unreasonably withheld. The Company shall not be required to obtain the consent
of the Indemnitee to settle any action, suit, investigation or proceeding which
the Company has undertaken to defend if the Company assumes full and sole
responsibility for such settlement and such settlement grants the Indemnitee a
complete and unqualified release in respect of any potential liability.
     (d) If, at the time of the receipt of a notice of a claim pursuant to this
Section 11, the Company has director and officer liability insurance in effect,
the Company shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as
a result of such proceeding in accordance with the terms of the policies.
     12. Other Right to Indemnification. The indemnification and advancement of
Expenses provided by this Agreement are cumulative, and not exclusive, and are
in addition to any other rights to which the Indemnitee may now or in the future
be entitled under any provision of the Bye-laws or Memorandum of the Company,
any vote of shareholders or Disinterested Directors, any provision of law or
otherwise.
     13. Director and Officer Liability Insurance. The Company shall maintain
directors’ and officers’ liability insurance for so long as the Indemnitee’s
services are covered hereunder, provided and to the extent that such insurance
is available on a commercially reasonable basis. In the event the Company
maintains directors’ and officers’ liability insurance, the Indemnitee shall be
named as an insured in such manner as to provide the Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company’s
officers or directors. However, the Company agrees that the provisions hereof
shall remain in effect regardless of whether liability or other insurance
coverage is at any time obtained or retained by the Company, except that any
payments made to, or on behalf of, the Indemnitee under an insurance policy
shall reduce the obligations of the Company hereunder.
     14. Intent. This Agreement is intended to be broader than any applicable
statutory indemnification rights and shall be in addition to any other rights
the Indemnitee may have under the Company’s Memorandum, Bye-laws, applicable law
or otherwise. To the extent that a change in applicable law (whether by statute
or judicial decision) permits greater indemnification by agreement than would be
afforded currently under the Company’s Memorandum, Bye-laws, applicable law or
this Agreement, it is the intent of the parties that the Indemnitee enjoy by
this Agreement the greater benefits so afforded by such change. In the event of
any change in applicable law, statute or rule which narrows the right of a
Bermuda company to indemnify a

7

--------------------------------------------------------------------------------

 

member of its Board of Directors or an officer, employee, agent or fiduciary,
such change, to the extent not otherwise required by such law, statute or rule
to be applied to this Agreement, shall have no effect on this Agreement or the
parties’ rights and obligations hereunder.
     15. Attorney’s Fees and Other Expenses to Enforce Agreement. In the event
that the Indemnitee is subject to or intervenes in any action, suit,
investigation or proceeding in which the validity or enforceability of this
Agreement is at issue or seeks an adjudication or award in arbitration to
enforce the Indemnitee’s rights under, or to recover damages for breach of, this
Agreement the Indemnitee, if he/she prevails in whole or in part in such action,
shall be entitled to recover from the Company and shall be indemnified by the
Company against any actual expenses for attorneys’ fees and disbursements
reasonably incurred by the Indemnitee.
     16. Effective Date. The provisions of this Agreement shall cover claims,
actions, suits, investigations or proceedings whether now pending or hereafter
commenced and shall be retroactive to cover acts or omissions or alleged acts or
omissions which heretofore have taken place. The Company shall be liable under
this Agreement, pursuant to Sections 3 and 4 hereof, for all acts of the
Indemnitee while serving as a director and/or officer, notwithstanding the
termination of the Indemnitee’s service, if such act was performed or omitted to
be performed during the term of the Indemnitee’s service to the Company.
     17. Duration of Agreement. This Agreement shall survive and continue even
though the Indemnitee may have terminated his/her service as a director,
officer, employee, agent or fiduciary of the Company or as a director, officer,
employee, agent or fiduciary of any other entity, including, but not limited to,
another corporation, partnership, limited liability company, employee benefit
plan, joint venture, trust or other enterprise or by reason of any act or
omission by the Indemnitee in any such capacity. This Agreement shall be binding
upon the Company and its successors and assigns, including, without limitation,
any company or other entity which may have acquired all or substantially all of
the Company’s assets or business or into which the Company may be consolidated
or merged, and shall inure to the benefit of the Indemnitee and his/her
successors, assigns, heirs, devisees, executors, administrators or other legal
representations. The Company shall require any successor or assignee (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by written
agreement in form and substance reasonably satisfactory to the Company and the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or assignment had taken place.
     18. Disclosure of Payments. Except as expressly required by any federal or
state securities laws or other federal or state law, neither party shall
disclose any payments under this Agreement unless prior approval of the other
party is obtained.
     19. Severability. If any provision or provisions of this Agreement shall be
held invalid, illegal or unenforceable for any reason whatsoever, (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, but not limited to, all portions of any Sections of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby and (b) to
the fullest extent possible, the provisions of this Agreement (including, but
not limited to, all

8

--------------------------------------------------------------------------------

 

portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
     20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought shall
be required to be produced to evidence the existence of this Agreement.
     21. Captions. The captions and headings used in this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
     22. Definitions. For purposes of this Agreement:
     (a) “Change in Control” shall mean a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Act, whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, a Change in Control
shall include: (i) the acquisition (other than from the Company) after the date
hereof by any person, entity or “group” within the meaning of Section 13(d)(3)
or 14(d)(2) of the Act (excluding, for this purpose, the Company or its
subsidiaries, any employee benefit plan of the Company or its subsidiaries which
acquires beneficial ownership of voting securities of the Company, and any
qualified institutional investor who meets the requirements of Rule 13d-1(b)(1)
promulgated under the Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Act), of 20% or more of either the
then-outstanding shares of common stock or the combined voting power of the
Company’s then-outstanding capital stock entitled to vote generally in the
election of directors; (ii) individuals who, as of the date hereof, constitute
the Board of Directors (the “Incumbent Board”) ceasing for any reason to
constitute at least a majority of the Board of Directors, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or (iii) approval by the shareholders of the Company of (A) a
reorganization, merger, amalgamation or consolidation, in each case, with
respect to which persons who were the shareholders of the Company immediately
prior to such reorganization, merger, or consolidation do not, immediately
thereafter, own more than 75% of the

9

--------------------------------------------------------------------------------

 

combined voting power entitled to vote generally in the election of directors of
the reorganized, merged, amalgamated, consolidated or other surviving company’s
then-outstanding voting securities, (B) a liquidation or dissolution of the
Company, or (C) the sale of all or substantially all of the assets of the
Company; provided, however, that the Company’s initial public offering of
Company securities shall not be considered a Change of Control.
     (b) “Disinterested Director” shall mean a director of the Company who is
not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
     (c) “Expenses” shall include all attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees and all other disbursements or expenses incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating or being
or preparing to be a witness in any threatened, pending or completed action,
suit, investigation or proceeding, whether civil, criminal, administrative or
investigative in nature.
     (d) “Independent Counsel” shall mean a law firm or a member of a law firm
that neither is presently nor in the past five years has been retained to
represent (i) the Company or the Indemnitee in any matter material to either
such party or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or the Indemnitee
in an action to determine the Indemnitee’s right to indemnification under this
Agreement.
     23. Entire Agreement, Modification and Waiver. This Agreement constitutes
the entire agreement and understanding of the parties hereto regarding the
subject matter hereof, and no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver. No supplement, modification or
amendment of this Agreement shall limit or restrict any right of the Indemnitee
under this Agreement in respect of any act or omission of the Indemnitee prior
to the effective date of such supplement, modification or amendment unless
expressly provided therein.

10

--------------------------------------------------------------------------------

 

     24. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
(i) delivered by hand with receipt acknowledged by the party to whom said notice
or other communication shall have been directed, (ii) mailed by certified or
registered mail, return receipt requested with postage prepaid, on the date
shown on the return receipt or (iii) delivered by facsimile transmission on the
date shown on the facsimile machine report:

             
 
  (a)   If to the Indemnitee, to:    
 
           
 
           
 
     
 
     
 
  (b)   If to the Company, to:    
 
           
 
      Allied World Assurance Company Holdings, Ltd    
 
      43 Victoria Street    
 
      Hamilton, Bermuda HM 12    
 
      Attention: General Counsel    
 
      Facsimile: (441) 292-0055    
 
           
 
      with a copy to:    
 
           
 
      Willkie Farr & Gallagher LLP    
 
      Attn: Steven A. Seidman, Esq.    
 
      787 Seventh Avenue    
 
      New York, NY 10019    

or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
     25. Governing Law. The parties hereto agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of Bermuda.

11

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

              ALLIED WORLD ASSURANCE COMPANY
HOLDINGS, LTD
 
       
 
  By:    
 
            Name:     Title:
 
            INDEMNITEE
 
       
 
  By:    
 
            Name:

12