Document:

EX-10.4

 

Exhibit 10.4

[date 1]

PERSONAL AND CONFIDENTIAL

[name and address]

     Dear [name]:

     The Dun & Bradstreet Corporation (the “Company”) considers it essential to the best interests
of its shareholders to foster the continued employment of key management personnel. In this
connection, the Board of Directors of the Company (the “Board”) recognizes that, as is the case
with many publicly held corporations, the possibility of a “Change in Control” (as such term is
defined in Section 2) may exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of key management
personnel to the detriment of the Company and its shareholders.

     The Board has determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of key members of the Company’s management, including yourself,
to their assigned duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control.

     In order to induce you to remain in the employ of the Company, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the “Agreement”) in the
event your employment with the Company is terminated under the circumstances described below
subsequent to a Change in Control. No provision of this letter agreement shall be effective for
any purpose whatsoever except upon the occurrence of either a “Potential Change in Control” (as
such term is defined in Section 2) or a Change in Control.

     1. Term of Agreement. This Agreement shall commence as of [date 1], and shall
continue in effect through [date 2}; provided, however, that commencing on [date 3], and each
January 1 thereafter, the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30th of the preceding year, the Company or you shall have
given notice to the other that it or you,

 

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respectively, does not wish to extend this Agreement, provided, however, that no such notice shall
be effective if a Change in Control or Potential Change in Control shall have occurred prior to the
date of such notice; and provided, further, that if a Change in Control shall have occurred during
the original or extended term of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four months beyond the month in which such Change in Control
occurred.

     2. Change in Control; Potential Change in Control.

(i) No benefits shall be payable hereunder unless there shall have been a Change in Control, as
set forth below. For purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if:

     (a) any “Person”, as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (other than the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company), is or becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the combined voting
power of the Company’s then outstanding securities;

     (b) during any period of twenty-four months (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than (1) a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section; (2) a director designated by any Person (including the Company)
who publicly announces an intention to take or to consider taking actions (including, but
not limited to, an actual or threatened proxy contest) which if consummated would constitute
a Change in Control; or (3) a director designated by any Person who is the Beneficial Owner,
directly or indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company’s securities) whose election by the Board or nomination
for election by the Company’s shareholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;

     (c) the shareholders of the Company approve a merger or consolidation of the Company
with any other company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20% or more

 

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of the combined voting power of the then outstanding securities of the Company or such
surviving entity; or

     (d) the shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.

(ii) For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have
occurred if:

     (a) the Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control;

     (b) any Person (including the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in Control; or

     (c) the Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.

(iii) You agree that, subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control, you will remain in the employ of the Company until the earliest of (a)
a date which is 180 days from the occurrence of such Potential Change in Control, (b) the
termination by you of your employment by reason of Disability as defined in Subsection 3(ii), or
(c) the date on which you first become entitled under this Agreement to receive the benefits
provided in Section 4(iii) below.

     3. Termination Following Change in Control.

(i) General. If any of the events described in Section 2 constituting a Change in Control
shall have occurred, you shall be entitled to the benefits provided in Section 4(iii) upon the
subsequent termination of your employment during the term of this Agreement unless such termination
is (a) because of your death or Disability, (b) by the Company for Cause, or (c) by you other than
for Good Reason. If your employment with the Company is terminated prior to a Change in Control at
the request of a Person engaging in a transaction or series of transactions that would result in a
Change in Control, the twenty-four month period set forth in Section 1 of this Agreement will
commence upon the subsequent occurrence of a Change in Control, your actual termination shall be
deemed a termination occurring during such twenty-four month period and covered by Section 3 of
this Agreement, your Date of Termination shall be deemed to have occurred immediately following the
Change in Control, and Notice of Termination shall be deemed to have been given by the Company
immediately prior to your actual termination.

(ii) Disability. If, as a result of your incapacity due to physical or mental illness or
disability, you shall have been absent from the full-time performance of your duties with the
Company for six consecutive months, and within thirty days after written notice of termination is
thereafter given you shall not have returned to the full-time performance

 

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of your duties, your employment may be terminated for “Disability”.

(iii) Cause. Termination by the Company of your employment for “Cause” shall mean
termination:

     (a) upon the willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good Reason (as defined in
Subsection 3(iv)), after a written demand for substantial performance is delivered to you by
the Board, which demand specifically identifies the manner in which the Board believes that
you have not substantially performed your duties;

     (b) upon the willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or

     (c) upon your conviction of a felony.

For purposes of this Subsection, no act, or failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty of conduct set
forth above in this Subsection and specifying the particulars thereof in detail.

(iv) Good Reason. You shall be entitled to terminate your employment for Good Reason.
For purposes of this Agreement, “Good Reason” shall mean the occurrence after a Change in Control,
without your express written consent, of any of the following circumstances unless, in the case of
paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected prior to the Date of
Termination (as defined in Section 3(vi)) specified in the Notice of Termination (as defined in
Section 3(v)) given in respect thereof:

     (a) the assignment to you of any duties inconsistent with the position in the Company
that you held immediately prior to the Change in Control, or an adverse alteration in the
nature or status of your responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control;

     (b) a reduction by the Company in your annual base salary and/or target bonus and/or
perquisites as in effect on the date hereof or as the same may be increased from time to
time except for across-the-board perquisites reductions similarly affecting all management
personnel of the Company and all

 

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management personnel of any Person in control of the Company;

     (c) the relocation of the Company’s offices at which you are principally employed
immediately prior to the date of the Change in Control to a location more than thirty-five
miles from such location, except for required travel on the Company’s business to an extent
substantially consistent with your business travel obligations prior to the Change in
Control; provided, however, that a relocation of the Company’s offices at which you are
principally employed immediately prior to the date of the Change in Control to New York City
shall not constitute “Good Reason” for purposes of this Agreement;

     (d) the failure by the Company to pay to you any portion of your compensation or to pay
to you any portion of an installment of deferred compensation under any deferred
compensation program of the Company within seven days of the date such compensation is due;

     (e) the failure by the Company to continue in effect any material compensation or
benefit plan in which you participated immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue your participation
therein (or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of the Change in
Control;

     (f) the failure by the Company to continue to provide you with benefits substantially
similar to those enjoyed by you under any of the Company’s life insurance, medical, dental,
accident, or disability plans or perquisites in which you were participating at the time of
the Change in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company’s normal vacation policy in effect
at the time of the Change in Control;

     (g) the failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or

     (h) any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Subsection (v) hereof (and, if
applicable, the requirements of Subsection (iii) hereof), which purported termination shall
not be effective for purposes of this Agreement.

Your right to terminate your employment pursuant to this Subsection shall not be affected by your
incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any

 

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circumstance constituting Good Reason hereunder.

(v) Notice of Termination. Any purported termination of your employment by the Company or
by you shall be communicated by written Notice of Termination to the other party hereto in
accordance with Section 6. “Notice of Termination” shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

(vi) Date of Termination, Etc. “Date of Termination” shall mean (a) if your employment is
terminated for Disability, thirty days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your duties during such thirty day period),
or (b) if your employment is terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the Notice of Termination (which, in
the case of a termination for Cause shall not be less than thirty days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason shall not be less than
fifteen nor more than sixty days from the date such Notice of Termination is given; provided,
however, that if within fifteen days after any Notice of Termination is given, or, if later, prior
to the Date of Termination (as determined without regard to this proviso), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning the termination,
then the Date of Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment,
order or decree of a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the Company will continue
to pay you your full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you as a participant in all compensation,
benefit and insurance plans in which you were participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other amounts due under this Agreement,
and shall not be offset against or reduce any other amounts due under this Agreement and shall not
be reduced by any compensation earned by you as the result of employment by another employer.

     4. Compensation During Disability or Upon Termination. Following a Change in Control,
you shall be entitled to the following benefits during a period of disability, or upon termination
of your employment, as the case may be, provided that such period or termination occurs during the
term of this Agreement:

(i) During any period that you fail to perform your full-time duties with the Company as a result
of incapacity due to physical or mental illness or disability, you shall continue to receive your
base salary at the rate in effect at the commencement of any such period,

 

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together with all compensation payable to you under the Company’s disability plan or program or
other similar plan during such period, until this Agreement is terminated pursuant to Section 3(ii)
hereof. Thereafter, or in the event your employment shall be terminated by reason of your death,
your benefits shall be determined under the Company’s retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.

(ii) If your employment shall be terminated by the Company for Cause or by you other than for Good
Reason, the Company shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.

(iii) If your employment by the Company should be terminated by the Company other than for Cause or
Disability or if you should terminate your employment for Good Reason, you shall be entitled to the
benefits provided below:

     (a) the Company shall pay to you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other amounts to which you are entitled
under any compensation plan of the Company, at the time such payments are due;

     (b) in lieu of any further salary payments to you for periods subsequent to the Date
of Termination, the Company shall pay as severance pay to you, at the time specified in
Subsection (v), a lump sum severance payment (in addition to the payments provided in
paragraphs (c), (d), (e), (f), (g), (h) and (i) below) equal to (1) 300% of the greater of
(A) your annual base salary in effect on the Date of Termination or (B) your annual base
salary in effect immediately prior to the Change in Control, and (2) 300% of your target
bonus with respect to the year in which the Change in Control occurs; your annual base
salary and target bonus (as taken into account under the first half of this Subsection
(iii)(b)) shall count for three years additional credited service and be included in final
average earnings calculations for participants in the Company’s Retirement Account Plan,
Supplemental Executive Retirement Plan, Pension Benefit Equalization Plan and any successor
or substitute plans thereto;

     (c) in lieu of shares of common stock of the Company (“Common Shares”) issuable upon
exercise of outstanding options (“Options”) and stock appreciation rights (“SARs”), if any,
granted to you under the Company’s stock incentive plans (which Options and SARs shall be
cancelled upon the making of the payment referred to below), the Company shall pay to you,
at the time specified in Subsection (v), an amount in cash equal to the product of (1) the
excess of, in the case of Options that are incentive stock options (ISOs) under Section 422A
of the Internal Revenue Code of 1986 (the “Code”) and SARs related thereto, the closing
price of Common Shares as reported on the New

 

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York Stock Exchange on or nearest the Date of Termination (or, if not listed on such
exchange, on a nationally recognized exchange or quotation system on which trading volume in
the Common Shares is highest) and, in the case of all other Options and SARs related
thereto, the higher of such closing price or the highest per share price for Common Shares
actually paid in connection with any Change in Control, over the per share option price of
each Option held by you (whether or not then fully exercisable), and (2) the number of
Common Shares covered by each such Option;

     (d) in lieu of Common Shares issuable upon the lapse of restrictions, if any, granted
to you under the Company’s stock incentive plans or any successor or substitute plan(s)
thereto, the Company shall pay to you, at the time specified in Subsection (v), an amount in
cash equal to the product of (1) the closing price of Common Shares as reported on the New
York Stock Exchange on or nearest the Date of Termination (or, if not listed on such
exchange, on a nationally recognized exchange or quotation system on which trading volume in
the Common Shares is highest) or the highest per share price for Common Shares actually paid
in connection with any Change in Control, whichever is greater (such price, the “Price”),
and (2) the number of Common Shares granted to you subject to such restrictions;

     (e) (1) all outstanding performance units awarded to you under the Company’s stock
incentive plans, whether or not vested, shall be cancelled, and you shall receive a cash
payment equal to the amount you would have earned at a 100% target award valuation; and (2)
all outstanding unrestricted stock awarded to you under such plan, whether or not vested,
shall be cancelled, and you shall receive a cash payment equal to the product of (A) the
number of cancelled unrestricted shares and (B) the Price;

     (f) the Company shall provide you with a cash allowance, at the time specified in
Subsection (v), for outplacement counseling and job search activities in the amount of 20%
of your annual salary and target bonus as in effect on the Date of Termination but not to
exceed a maximum allowance of $100,000; and the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder);

     (g) for a thirty-six month period after such termination, the Company shall arrange to
provide you with life and health insurance benefits and perquisites substantially similar to
those which you were receiving immediately prior to the Notice of Termination.
Notwithstanding the foregoing, the Company shall not provide any benefit otherwise
receivable by you pursuant to this paragraph (g) if an equivalent benefit is actually
received by you during the thirty-six month period following your termination, and any such
benefit actually

 

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received by you shall be reported to the Company;

     (h) at the time specified in Subsection (v), the Company shall pay to you, in lieu of
amounts which may otherwise be payable to you under any bonus plan or cash incentive plan (a
“Bonus Plan”), an amount in cash equal to (1) your annual target bonus for the year in which
the Change in Control occurs, multiplied by a fraction, (A) the numerator of which equals
the number of full or partial days in such annual performance period during which you were
employed by the Company and (B) the denominator of which is 365, and (2) the entire target
bonus opportunity with respect to each performance period in progress under all other Bonus
Plans in effect at the time of termination; and

     (i) starting at age 55, you shall receive retiree medical and life benefits from the
Company. Such benefits shall be no less favorable than the benefits that you would have
received had you, at the time Notice of Termination is given, both (1) attained age 55 and
(2) retired from the Company. Notwithstanding the foregoing, any benefit described in the
preceding sentence shall constitute secondary coverage with respect to retiree medical and
life benefits actually received by you in connection with any subsequent employment (or
self-employment) following your termination.

(iv) In the event that you become entitled to any amounts pursuant to Subsections (iii) (b) (c)
(d) (e) (f) (g) and (h) of this Article (“Severance Payments”) or to any payments, benefits or
distribution (or combination thereof) by the Company, any of its affiliates, one or more trusts
established by the Company for the benefit of its employees or by any other entity, either pursuant
to this Agreement or otherwise (“Other Payments”), and such Severance Payments or Other Payments
will be subject to the tax (“Excise Tax”) imposed by Section 4999 of the Code, (or any similar
federal, state or local tax that may hereafter be imposed), the Company shall pay to you at the
time specified in Subsection (v) below, an additional amount (the “Gross-Up Payment”) such that the
net amount retained by you, after deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon the payment provided for
by this Subsection, shall be equal to the Total Payments. For purposes of determining whether any
of the Severance Payments or Other Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) any other payments or benefits received or to be received by you in connection
with a Change in Control or your termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such Person) (which,
together with the Severance Payments and Other Payments, constitute the “Total Payments”) shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all
“excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors
(and acceptable to you) such other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually

 

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rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax; (b)
the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal
to the lesser of (1) the total amount of the Total Payments and (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) (after applying clause (a), above); and (c) the
value of any non-cash benefits or any deferred payments or benefit shall be determined by the
Company’s independent auditors in accordance with the principles of Sections 280G(d) (3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained from deduction of such
state and local taxes. In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of your employment, you shall
repay to the Company within ten days after the time that the amount of such re
duction in Excise Tax
is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a
reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account hereunder at the
time of the termination of your employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make
an additional gross-up payment in respect of such excess (plus any interest payable with respect to
such excess) within ten days after the time that the amount of such excess is finally determined.

(v) The payments provided for in Subsections (iii)(b), (c), (d), (e), (f) and (h) shall be made
not later than the fifth day following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the Company shall pay
to you on such day an estimate, as determined in good faith by the Company, of the minimum amount
of such payments and shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to you, payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

(vi) Except as provided in Subsections (iii)(g) and (iii)(i) hereof, you shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit

 

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provided for in this Section 4 be reduced by any compensation earned by you as the result of
employment by another employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.

(vii) With respect to the Detrimental Conduct Agreement between you and the Company (the “DCA”),
you will not be treated as having “entered into a binding and enforceable written severance
agreement with D&B” under the DCA by signing, or entering into, this Agreement, but if you receive
any amounts pursuant to Subsections (iii) (b), (c), (d), (e), (f), (g) and (h) of this Article, the
DCA shall thereby be deemed of no further force or effect.

(viii) With respect to the Supplemental Executive Benefit Plan of The Dun & Bradstreet
Corporation, as such plan applies to you, if you receive any amounts pursuant to Subsections (iii)
(b), (c), (d), (e), (f), (g) and (h) of this Article, you shall be deemed to have received the
Company’s “consent” under Section 4.3(c) of such plan (relating to the reduction in retirement
benefits upon certain terminations of employment).

(ix) With respect to the Supplemental Executive Benefit Plan of The Dun & Bradstreet Corporation,
the Pension Benefit Equalization Plan of The Dun & Bradstreet Corporation and the Profit
Participation Benefit Equalization Plan of The Dun & Bradstreet Corporation, as such plans apply to
you, following a Change in Control, the Compensation and Benefits Committee’s determinations and
interpretations of such plans shall be consistent with pre-Change in Control practice, to the
extent applicable, and, in the event of any dispute with you regarding your entitlement to benefits
under such plans, such determinations and interpretations shall be subject to a de novo standard of
review (and shall not be entitled to a deferential standard of review) by any tribunal or
adjudicator in connection with any post-Change in Control determination or interpretation of
benefit eligibility or entitlement.

     5. Successors; Binding Agreement.

(i) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such express assumption and agreement at or prior to the
effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms to which you would be
entitled hereunder if you were to terminate your employment for Good Reason following a Change in
Control, except that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or
otherwise.

(ii) This Agreement shall inure to the benefit of and be enforceable by you and your

 

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personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be payable to you hereunder
had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.

     6. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement (provided that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company), or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.

     7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the time or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of New York without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law. The obligations of the
Company under Section 4 shall survive the expiration of the term of this Agreement.

     8. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

     9. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     10. Prior Agreement. In consideration of the benefits provided hereunder, you agree
that all prior agreements with respect to the subject matter contained herein, made between you and
The Dun & Bradstreet Corporation have become null and void and of no force or effect.

     11. Entire Agreement. This Agreement sets forth the entire agreement of the

 

[date 1]
Page 13

parties hereto in respect of the subject matter contained herein and during the term of this
Agreement supersedes the provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any officer, employee or
representative of any party hereto with respect to the subject matter contained herein.

     If this letter sets forth our agreement on the subject matter hereof, kindly sign and return
to the Company the enclosed copy of this letter, which will then constitute our agreement on this
subject.

	 	 	 	 	 
	 	Sincerely,

THE DUN & BRADSTREET CORPORATION

 	 
	 	By:  	
 	 
	 	 	Patricia A. Clifford 	 
	 	 	Senior Vice President - Human Resources 	 
	 

Agreed to this ___day

of                     , 20___

 

[name]

 

[date 1]

PERSONAL AND CONFIDENTIAL

[name and address]

     Dear [name]:

     The Dun & Bradstreet Corporation (the “Company”) considers it essential to the best interests
of its shareholders to foster the continued employment of key management personnel. In this
connection, the Board of Directors of the Company (the “Board”) recognizes that, as is the case
with many publicly held corporations, the possibility of a “Change in Control” (as such term is
defined in Section 2) may exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of key management
personnel to the detriment of the Company and its shareholders.

     The Board has determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of key members of the Company’s management, including yourself,
to their assigned duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control.

     In order to induce you to remain in the employ of the Company, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the “Agreement”) in the
event your employment with the Company is terminated under the circumstances described below
subsequent to a Change in Control. No provision of this letter agreement shall be effective for
any purpose whatsoever except upon the occurrence of either a “Potential Change in Control” (as
such term is defined in Section 2) or a Change in Control.

     1. Term of Agreement. This Agreement shall commence as of [date 1], and shall
continue in effect through [date 2}; provided, however, that commencing on [date 3], and each
January 1 thereafter, the term of this Agreement shall automatically be extended for one additional
year unless, not later than September 30th of the preceding year, the Company or you shall have
given notice to the other that it or you, respectively, does not wish to extend this Agreement,
provided, however, that no such notice shall be effective if a Change in Control or Potential
Change in Control shall have occurred prior to the date of such notice; and provided, further, that
if a Change in Control shall have occurred during the original or extended term of this Agreement,
this Agreement shall continue in effect for a period of not less than twenty-four months beyond the
month in which such Change in Control occurred.

     2. Change in Control; Potential Change in Control.

(i) No benefits shall be payable hereunder unless there shall have been a Change in Control, as
set forth below. For purposes of this Agreement, a “Change in Control”

 

[date 1]
Page 2

shall be deemed to have occurred if:

     (a) any “Person”, as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (other than the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company), is or becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the combined voting
power of the Company’s then outstanding securities;

     (b) during any period of twenty-four months (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than (1) a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section; (2) a director designated by any Person (including the Company)
who publicly announces an intention to take or to consider taking actions (including, but
not limited to, an actual or threatened proxy contest) which if consummated would constitute
a Change in Control; or (3) a director designated by any Person who is the Beneficial Owner,
directly or indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company’s securities) whose election by the Board or nomination
for election by the Company’s shareholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;

     (c) the shareholders of the Company approve a merger or consolidation of the Company
with any other company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20% or more of the combined voting power
of the then outstanding securities of the Company or such surviving entity; or

     (d) the shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.

(ii) For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have
occurred if:

 

[date 1]
Page 3

     (a) the Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control;

     (b) any Person (including the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in Control; or

     (c) the Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.

(iii) You agree that, subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control, you will remain in the employ of the Company until the earliest of (a)
a date which is 180 days from the occurrence of such Potential Change in Control, (b) the
termination by you of your employment by reason of Disability as defined in Subsection 3(ii), or
(c) the date on which you first become entitled under this Agreement to receive the benefits
provided in Section 4(iii) below.

     3. Termination Following Change in Control.

(i) General. If any of the events described in Section 2 constituting a Change in Control
shall have occurred, you shall be entitled to the benefits provided in Section 4(iii) upon the
subsequent termination of your employment during the term of this Agreement unless such termination
is (a) because of your death or Disability, (b) by the Company for Cause, or (c) by you other than
for Good Reason. If your employment with the Company is terminated prior to a Change in Control at
the request of a Person engaging in a transaction or series of transactions that would result in a
Change in Control, the twenty-four month period set forth in Section 1 of this Agreement will
commence upon the subsequent occurrence of a Change in Control, your actual termination shall be
deemed a termination occurring during such twenty-four month period and covered by Section 3 of
this Agreement, your Date of Termination shall be deemed to have occurred immediately following the
Change in Control, and Notice of Termination shall be deemed to have been given by the Company
immediately prior to your actual termination.

(ii) Disability. If, as a result of your incapacity due to physical or mental illness or
disability, you shall have been absent from the full-time performance of your duties with the
Company for six consecutive months, and within thirty days after written notice of termination is
thereafter given you shall not have returned to the full-time performance of your duties, your
employment may be terminated for “Disability”.

(iii) Cause. Termination by the Company of your employment for “Cause” shall mean
termination:

     (d) upon the willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good Reason (as defined in
Subsection 3(iv)), after a written demand for substantial performance is delivered to you by
the Board, which

 

[date 1]
Page 4

demand specifically identifies the manner in which the Board believes that you have not
substantially performed your duties;

     (e) upon the willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; or

     (f) upon your conviction of a felony.

For purposes of this Subsection, no act, or failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty of conduct set
forth above in this Subsection and specifying the particulars thereof in detail.

(iv) Good Reason. You shall be entitled to terminate your employment for Good Reason.
For purposes of this Agreement, “Good Reason” shall mean the occurrence after a Change in Control,
without your express written consent, of any of the following circumstances unless, in the case of
paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected prior to the Date of
Termination (as defined in Section 3(vi)) specified in the Notice of Termination (as defined in
Section 3(v)) given in respect thereof:

     (a) the assignment to you of any duties inconsistent with the position in the Company
that you held immediately prior to the Change in Control, or an adverse alteration in the
nature or status of your responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control;

     (b) a reduction by the Company in your annual base salary and/or target bonus and/or
perquisites as in effect on the date hereof or as the same may be increased from time to
time except for across-the-board perquisites reductions similarly affecting all management
personnel of the Company and all management personnel of any Person in control of the
Company;

     (c) the relocation of the Company’s offices at which you are principally employed
immediately prior to the date of the Change in Control to a location more than thirty-five
miles from such location, except for required travel on the Company’s business to an extent
substantially consistent with your business travel obligations prior to the Change in
Control; provided, however, that a relocation of the Company’s offices at which you are
principally employed immediately prior to the date of the Change in Control to New York City
shall not constitute “Good Reason” for purposes of this Agreement;

 

[date 1]
Page 5

     (d) the failure by the Company to pay to you any portion of your compensation or to pay
to you any portion of an installment of deferred compensation under any deferred
compensation program of the Company within seven days of the date such compensation is due;

     (e) the failure by the Company to continue in effect any material compensation or
benefit plan in which you participated immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue your participation
therein (or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of the Change in
Control;

     (f) the failure by the Company to continue to provide you with benefits substantially
similar to those enjoyed by you under any of the Company’s life insurance, medical, dental,
accident, or disability plans or perquisites in which you were participating at the time of
the Change in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company’s normal vacation policy in effect
at the time of the Change in Control;

     (g) the failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or

     (h) any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Subsection (v) hereof (and, if
applicable, the requirements of Subsection (iii) hereof), which purported termination shall
not be effective for purposes of this Agreement.

Your right to terminate your employment pursuant to this Subsection shall not be affected by your
incapacity due to physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.

(v) Notice of Termination. Any purported termination of your employment by the Company or
by you shall be communicated by written Notice of Termination to the other party hereto in
accordance with Section 6. “Notice of Termination” shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

(vi) Date of Termination, Etc. “Date of Termination” shall mean (a) if your employment

 

[date 1]
Page 6

is terminated for Disability, thirty days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your duties during such thirty day period),
or (b) if your employment is terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the Notice of Termination (which, in
the case of a termination for Cause shall not be less than thirty days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason shall not be less than
fifteen nor more than sixty days from the date such Notice of Termination is given; provided,
however, that if within fifteen days after any Notice of Termination is given, or, if later, prior
to the Date of Termination (as determined without regard to this proviso), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning the termination,
then the Date of Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment,
order or decree of a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the Company will continue
to pay you your full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you as a participant in all compensation,
benefit and insurance plans in which you were participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other amounts due under this Agreement,
and shall not be offset against or reduce any other amounts due under this Agreement and shall not
be reduced by any compensation earned by you as the result of employment by another employer.

     4. Compensation During Disability or Upon Termination. Following a Change in Control,
you shall be entitled to the following benefits during a period of disability, or upon termination
of your employment, as the case may be, provided that such period or termination occurs during the
term of this Agreement:

(i) During any period that you fail to perform your full-time duties with the Company as a result
of incapacity due to physical or mental illness or disability, you shall continue to receive your
base salary at the rate in effect at the commencement of any such period, together with all
compensation payable to you under the Company’s disability plan or program or other similar plan
during such period, until this Agreement is terminated pursuant to Section 3(ii) hereof.
Thereafter, or in the event your employment shall be terminated by reason of your death, your
benefits shall be determined under the Company’s retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.

(ii) If your employment shall be terminated by the Company for Cause or by you other than for Good
Reason, the Company shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus

 

[date 1]
Page 7

all other amounts to which you are entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further obligations to you under this
Agreement.

(iii) If your employment by the Company should be terminated by the Company other than for Cause or
Disability or if you should terminate your employment for Good Reason, you shall be entitled to the
benefits provided below:

     (a) the Company shall pay to you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other amounts to which you are entitled
under any compensation plan of the Company, at the time such payments are due;

     (b) in lieu of any further salary payments to you for periods subsequent to the Date
of Termination, the Company shall pay as severance pay to you, at the time specified in
Subsection (v), a lump sum severance payment (in addition to the payments provided in
paragraphs (c), (d), (e), (f), (g), (h) and (i) below) equal to (1) 200% of the greater of
(A) your annual base salary in effect on the Date of Termination or (B) your annual base
salary in effect immediately prior to the Change in Control, and (2) 200% of your target
bonus with respect to the year in which the Change in Control occurs; your annual base
salary and target bonus (as taken into account under the first half of this Subsection
(iii)(b)) shall count for two years additional credited service and be included in final
average earnings calculations for participants in the Company’s Retirement Account Plan,
Supplemental Executive Retirement Plan, Pension Benefit Equalization Plan and any successor
or substitute plans thereto;

     (c) in lieu of shares of common stock of the Company (“Common Shares”) issuable upon
exercise of outstanding options (“Options”) and stock appreciation rights (“SARs”), if any,
granted to you under the Company’s stock incentive plans (which Options and SARs shall be
cancelled upon the making of the payment referred to below), the Company shall pay to you,
at the time specified in Subsection (v), an amount in cash equal to the product of (1) the
excess of, in the case of Options that are incentive stock options (ISOs) under Section 422A
of the Internal Revenue Code of 1986 (the “Code”) and SARs related thereto, the closing
price of Common Shares as reported on the New York Stock Exchange on or nearest the Date of
Termination (or, if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in the Common Shares is highest) and, in the case
of all other Options and SARs related thereto, the higher of such closing price or the
highest per share price for Common Shares actually paid in connection with any Change in
Control, over the per share option price of each Option held by you (whether or not then
fully exercisable), and (2) the number of Common Shares covered by each such Option;

     (d) in lieu of Common Shares issuable upon the lapse of restrictions, if

 

[date 1]
Page 8

any, granted to you under the Company’s stock incentive plans or any successor or substitute
plan(s) thereto, the Company shall pay to you, at the time specified in Subsection (v), an
amount in cash equal to the product of (1) the closing price of Common Shares as reported on
the New York Stock Exchange on or nearest the Date of Termination (or, if not listed on such
exchange, on a nationally recognized exchange or quotation system on which trading volume in
the Common Shares is highest) or the highest per share price for Common Shares actually paid
in connection with any Change in Control, whichever is greater (such price, the “Price”),
and (2) the number of Common Shares granted to you subject to such restrictions;

     (e) (1) all outstanding performance units awarded to you under the Company’s stock
incentive plans, whether or not vested, shall be cancelled, and you shall receive a cash
payment equal to the amount you would have earned at a 100% target award valuation; and (2)
all outstanding unrestricted stock awarded to you under such plan, whether or not vested,
shall be cancelled, and you shall receive a cash payment equal to the product of (A) the
number of cancelled unrestricted shares and (B) the Price;

     (f) the Company shall provide you with a cash allowance, at the time specified in
Subsection (v), for outplacement counseling and job search activities in the amount of 15%
of your annual salary and target bonus as in effect on the Date of Termination but not to
exceed a maximum allowance of $50,000; and the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder);

     (g) for a twenty-four month period after such termination, the Company shall arrange to
provide you with life and health insurance benefits and perquisites substantially similar to
those which you were receiving immediately prior to the Notice of Termination.
Notwithstanding the foregoing, the Company shall not provide any benefit otherwise
receivable by you pursuant to this paragraph (g) if an equivalent benefit is actually
received by you during the twenty-four month period following your termination, and any such
benefit actually received by you shall be reported to the Company;

     (h) at the time specified in Subsection (v), the Company shall pay to you, in lieu of
amounts which may otherwise be payable to you under any bonus plan or cash incentive plan (a
“Bonus Plan”), an amount in cash equal to (1) your annual target bonus for the year in which
the Change in Control occurs, multiplied by a fraction, (A) the numerator of which equals
the number of full or partial days in such annual performance period during which you were
employed by the Company and (B) the denominator of which is 365, and (2) the entire target
bonus opportunity with respect to each performance period in progress

 

[date 1]
Page 9

under all other Bonus Plans in effect at the time of termination; and

(i) starting at age 55, you shall receive retiree medical and life benefits from the
Company. Such benefits shall be no less favorable than the benefits that you would have
received had you, at the time Notice of Termination is given, both (1) attained age 55 and
(2) retired from the Company. Notwithstanding the foregoing, any benefit described in the
preceding sentence shall constitute secondary coverage with respect to retiree medical and
life benefits actually received by you in connection with any subsequent employment (or
self-employment) following your termination.

(iv) In the event that you become entitled to any amounts pursuant to Subsections (iii) (b) (c)
(d) (e) (f) (g) and (h) of this Article (“Severance Payments”) or to any payments, benefits or
distribution (or combination thereof) by the Company, any of its affiliates, one or more trusts
established by the Company for the benefit of its employees or by any other entity, either pursuant
to this Agreement or otherwise (“Other Payments”), and such Severance Payments or Other Payments
will be subject to the tax (“Excise Tax”) imposed by Section 4999 of the Code, (or any similar
federal, state or local tax that may hereafter be imposed), the Company shall pay to you at the
time specified in Subsection (v) below, an additional amount (the “Gross-Up Payment”) such that the
net amount retained by you, after deduction of any Excise Tax on the Total Payments (as hereinafter
defined) and any federal, state and local income tax and Excise Tax upon the payment provided for
by this Subsection, shall be equal to the Total Payments. For purposes of determining whether any
of the Severance Payments or Other Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (a) any other payments or benefits received or to be received by you in connection
with a Change in Control or your termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such Person) (which,
together with the Severance Payments and Other Payments, constitute the “Total Payments”) shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all
“excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors
(and acceptable to you) such other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax; (b) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total
Payments and (2) the amount of excess parachute payments within the meaning of Section 280G(b)(1)
(after applying clause (a), above); and (c) the value of any non-cash benefits or any deferred
payments or benefit shall be determined by the Company’s independent auditors in accordance with
the principles of Sections 280G(d) (3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginal
rate

 

[date 1]
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of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the state and locality of
your residence on the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the event that the Excise
Tax is subsequently determined to be less than the amount taken into account hereunder at the time
of termination of your employment, you shall repay to the Company within ten days after the time
that the amount of
such reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to
the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time of the termination of your employment (including by
reason of any payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) within ten days after the time that the
amount of such excess is finally determined.

(v) The payments provided for in Subsections (iii)(b), (c), (d), (e), (f) and (h) shall be made
not later than the fifth day following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the Company shall pay
to you on such day an estimate, as determined in good faith by the Company, of the minimum amount
of such payments and shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to you, payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

(vi) Except as provided in Subsections (iii)(g) and (iii)(i) hereof, you shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced
by any compensation earned by you as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by you to the Company, or otherwise.

(vii) With respect to the Detrimental Conduct Agreement between you and the Company (the “DCA”),
you will not be treated as having “entered into a binding and enforceable written severance
agreement with D&B” under the DCA by signing, or entering into, this Agreement, but if you receive
any amounts pursuant to Subsections (iii) (b), (c), (d), (e), (f), (g) and (h) of this Article, the
DCA shall thereby be deemed of no further force or effect.

 

[date 1]
Page 11

(viii) With respect to the Supplemental Executive Benefit Plan of The Dun & Bradstreet
Corporation, as such plan applies to you, if you receive any amounts pursuant to Subsections (iii)
(b), (c), (d), (e), (f), (g) and (h) of this Article, you shall be deemed to have received the
Company’s “consent” under Section 4.3(c) of such plan (relating to the reduction in retirement
benefits upon certain terminations of employment).

(ix) With respect to the Supplemental Executive Benefit Plan of The Dun & Bradstreet Corporation,
the Pension Benefit Equalization Plan of The Dun & Bradstreet Corporation and the Profit
Participation Benefit Equalization Plan of The Dun & Bradstreet Corporation, as such plans apply to
you, following a Change in Control, the Compensation and Benefits Committee’s determinations and
interpretations of such plans shall be consistent with pre-Change in Control practice, to the
extent applicable, and, in the event of any dispute with you regarding your entitlement to benefits
under such plans, such determinations and interpretations shall be subject to a de novo standard of
review (and shall not be entitled to a deferential standard of review) by any tribunal or
adjudicator in connection with any post-Change in Control determination or interpretation of
benefit eligibility or entitlement.

     5. Successors; Binding Agreement.

(i) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such express assumption and agreement at or prior to the
effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms to which you would be
entitled hereunder if you were to terminate your employment for Good Reason following a Change in
Control, except that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or
otherwise.

(ii) This Agreement shall inure to the benefit of and be enforceable by you and your personal or
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.

     6. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective

 

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Page 12

addresses set forth on the first page of this Agreement (provided that all notice to the Company
shall be directed to the attention of the Board with a copy to the Secretary of the Company), or to
such other address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon receipt.

     7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the time or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of New York without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law. The obligations of the
Company under Section 4 shall survive the expiration of the term of this Agreement.

     8. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

     9. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     10. Prior Agreement. In consideration of the benefits provided hereunder, you agree
that all prior agreements with respect to the subject matter contained herein, made between you and
The Dun & Bradstreet Corporation have become null and void and of no force or effect.

     11. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and during the term of this Agreement
supersedes the provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any officer, employee or
representative of any party hereto with respect to the subject matter contained herein.

     If this letter sets forth our agreement on the subject matter hereof, kindly sign and return
to the Company the enclosed copy of this letter, which will then constitute our agreement on this
subject.

 

[date 1]
Page 13

	 	 	 	 	 
	 	Sincerely,

THE DUN & BRADSTREET CORPORATION

 	 
	 	By:  	
 	 
	 	 	Patricia A. Clifford 	 
	 	 	Senior Vice President - Human Resources 	 
	 

Agreed to this ___day

of                    , 20___

 

[name]<PAGE>

                                                                    EXHIBIT 10.7

                        ADMINISTRATIVE SERVICES AGREEMENT

            THIS AGREEMENT is made as of the 1st day of January, 2006 among (1)
ALLIED WORLD ASSURANCE COMPANY, LTD, a company organized under the laws of
Bermuda (the "Operating Company"), (2) ALLIED WORLD ASSURANCE HOLDINGS, LTD, a
company organized under the laws of Bermuda (the "Holding Company"), which owns
all the issued shares of the Operating Company, (3) ALLIED WORLD ASSURANCE
HOLDINGS (IRELAND) LTD, a company organized under the laws of Bermuda ("AWAH
IRE"), and (4) AMERICAN INTERNATIONAL COMPANY LIMITED, a company organized under
the laws of Bermuda ("AICL").

                               W I T N E S S E T H

          WHEREAS, the Operating Company, the Holding Company and AWAH
IRE (collectively, the "Companies" and each individually a "Company"); and

          WHEREAS, the Companies desire that AICL provide the Companies
with certain services, and AICL is willing to provide such services, all subject
to the terms and conditions hereinafter provided.

                    NOW, THEREFORE, it is agreed as follows:

1.    Services to be Provided

1.1   AICL shall, in Bermuda only, provide the services described in paragraph 1
      of Schedule 1 hereto, and for the avoidance of doubt the services
      described in paragraph 2 of Schedule 1 hereto are specifically excluded
      and AICL shall not be required to provide any such excluded services.

      To the fullest extent practicable, AICL shall provide the services
      described in paragraph 1 of Schedule 1 hereto through consultants and/or
      temporary staff in either case acting under the supervision and direction
      of AICL and the costs and expenses incurred by AICL relating thereto shall
      be reimbursed to AICL by the Companies as provided in Section 2.2 below.
      The number and experience of such consultants and temporary employees
      shall be mutually agreed between AICL and the Companies.

      Without prejudice to the rights of AICL under this Agreement (including
      under Section 2.1 hereof), the Companies shall not be required to obtain
      any services, including those described above, from AICL or be prohibited
      from obtaining such services from parties other than AICL, provided that
      the Companies shall obtain the prior written consent of AICL to retain any
      party other than AICL to provide any services that require access to
      AICL's facilities or network and that are the subject of this Agreement,
      such consent not to be unreasonably withheld or delayed.

1.2   During the term of this Agreement, AICL shall perform all of its
      obligations under this Agreement: (i) to the best of its professional
      ability; and (ii) with that degree of knowledge, skill and judgment which
      is exercised by it with respect to its own business and the business of
      its parent and insurance and reinsurance affiliates.

<PAGE>

1.3   AICL shall comply with all applicable laws, rules and regulations in
      respect of all activities conducted by it under this Agreement.

1.4   AICL leases premises in Sophia House at Church Street, Hamilton, Bermuda,
      The Perry Building at Church Street, Hamilton, Bermuda and Chevron House
      at Church Street, Hamilton, Bermuda, which the Companies currently occupy.
      During the term of this Agreement, the Companies shall be entitled to
      continue to occupy those premises and in consideration therefor shall
      reimburse AICL for all rents, costs and expenses paid or incurred by AICL
      in respect of such premises. AICL shall invoice the Companies for such
      rents, costs and expenses on a monthly basis and the Companies shall
      promptly reimburse AICL upon receipt of any such invoice. If, during the
      term of this Agreement the Companies wish to vacate the said premises, the
      Companies shall give AICL not less than ninety (90) days prior written
      notice of their intention to do so.

2.    Payment and Reimbursement of Service Fees and Costs

2.1   As remuneration for the services provided under this Agreement, the
      Companies shall (in addition to the reimbursement of the costs and
      expenses described in Sections 1.1, 1.4, and 2.2 hereof) pay to AICL a fee
      of $20,000 per month to be payable monthly in advance on the first
      business day (that is a day that banks in Bermuda are open for business)
      of each calendar month, provided that if the term of this Agreement is
      extended beyond September 30, 2006 in accordance with the provisions of
      Section 3.1 below, the Companies shall (in addition to the costs and
      expenses described in Sections 1.1, 1.4 and 2.2 hereof) pay to AICL a
      monthly fee of $50,000 payable in the same manner described above.

2.2   In addition to monthly invoices for fees and in addition to invoices for
      the rents, fees and expenses payable pursuant to section 1.4, AICL shall
      issue, each month, a separate invoice for any of the following costs and
      expenses incurred by AICL:

            (a)   the actual costs of telephone calls;

            (b)   the applicable fees charged by Quantum Communications Limited;

            (c)   any and all fees and expenses incurred in connection with the
                  engagement of consultants and/or the employment of temporary
                  employees by AICL as contemplated by section 1.1 above; and

            (d)   such additional fees and expenses agreed between the parties.

      The Companies shall pay the amount of or otherwise reimburse AICL for any
      such costs promptly upon receipt of any such invoice therefor.

3.    Term and Termination of Agreement

3.1   The term of this Agreement (the "Term") shall commence effective as of
      January 1, 2006 and shall continue in force until September 30, 2006,
      provided that the Companies may on not less than 30 days' prior written
      notice to AICL extend the term of this Agreement

                                      -2-
<PAGE>

      for an additional period not to extend beyond December 31, 2006.
      Notwithstanding the foregoing, the Companies may terminate this Agreement
      (i) upon 30 days' prior written notice to AICL (save in respect of Section
      1.4 in which case the notice provisions of that Section shall apply in
      respect of the matters the subject thereof) and (ii) at any time for
      Company Cause (as defined in Section 3.2(a) of this Agreement), and AICL
      may terminate this Agreement at any time for AICL Cause (as defined in
      Section 3.2(b) of this Agreement).

3.2   (a) This Agreement may be terminated by the Companies, immediately upon
      the lapse of any applicable cure period, by notice served on AICL if: (i)
      AICL commits a material breach of its obligations under this Agreement,
      which breach shall have continued without having been cured for a period
      of 60 days after notice thereof from the Companies; (ii) AICL or any of
      its principals is engaging or has engaged during the term of this
      Agreement in fraud or dishonesty or any act involving moral turpitude;
      (iii) a distress, execution, sequestration or other process is levied or
      enforced upon the property of AICL which is not discharged within 30 days;
      (iv) AICL is unable to pay its debts in the normal course of business,
      which inability shall have continued for a period of 30 days; (v) AICL
      ceases or threatens to cease, wholly or substantially, to carry on its
      business; (vi) an encumbrancer takes possession of, or a receiver or
      trustee is appointed over the whole or any part of the undertaking,
      property or assets of AICL; (vii) an order is made or a resolution is
      passed for the winding-up of AICL; or (viii) American International Group,
      Inc. ceases to own, directly or indirectly, interests representing more
      than 50% of the voting interests in AICL (any of the foregoing (i) -
      (viii) of this paragraph (a), "Company Cause").

(b)   This Agreement may be terminated by AICL, immediately upon the lapse of
      any applicable cure period, by notice served on the Holding Company if:
      (i) any of the Companies commits a material breach of its obligations
      under this Agreement, which breach shall have continued without having
      been cured for a period of 60 days after notice thereof from AICL; (ii) a
      distress, execution, sequestration or other process is levied or enforced
      upon any of the properties of the Companies which is not discharged within
      30 days; (iii) any of the Companies are unable to pay their debts in the
      normal course of business, which inability shall have continued for a
      period of 30 days; (iv) the Operating Company ceases or threatens to
      cease, wholly or substantially, to carry on its business; (v) an
      encumbrancer takes possession of, or a receiver or trustee is appointed
      over the whole or any part of the undertaking, property or assets of
      either the Holding Company or the Operating Company; (vi) an order is made
      or a resolution is passed for the winding-up of either the Holding Company
      or the Operating Company; or (vii) the shareholders of the Holding Company
      as of the date hereof, taken together, cease to own, directly or
      indirectly, interests representing more than 50% of the voting interests
      in the Holding Company (except in the case of an initial public offering)
      (any of the foregoing (i) - (vii) of this paragraph (b), "AICL Cause").

3.3   If this Agreement is terminated, any fees and/or expenses payable under
      Sections 1.4 and/or 2 of this Agreement shall be prorated to the effective
      date of termination.

                                      -3-
<PAGE>

4.    Representations and Warranties

4.1   Representations and Warranties of AICL

      AICL represents and warrants as of the date hereof as follows: (i) AICL is
      a company duly incorporated, validly existing and in good standing under
      the laws of Bermuda; (ii) the execution, delivery and performance by AICL
      of this Agreement are within AICL's corporate powers, have been duly
      authorized by all necessary corporate action, do not contravene (a) AICL's
      memorandum of association or bye-laws; or (b) law or any regulation or
      contractual restriction binding on or affecting AICL; (iii) no
      authorization or approval or other action by, and no notice to or filing
      with, any governmental authority is required for the due execution,
      delivery and performance by AICL of this Agreement except for such filings
      with, and approvals of such governmental authorities as will have been
      made and obtained prior to the date of this Agreement; and (iv) this
      Agreement is the legal, valid and binding obligation of AICL enforceable
      against AICL in accordance with its terms.

4.2   Representations and Warranties of the Companies

      Each of the Companies represents and warrants as of the date hereof as
      follows: (i) it is a company duly formed, validly existing and in good
      standing under the laws of Bermuda; (ii) the execution, delivery and
      performance by it of this Agreement are within its corporate powers, have
      been duly authorized by all necessary corporate action, do not contravene
      (a) its memorandum of association or bye-laws; or (b) law or any
      regulation or contractual restriction binding on or affecting it; (iii) no
      authorization or approval or other action by, and no notice to or filing
      with, any governmental authority is required for the due execution,
      delivery and performance by it of this Agreement except for such filings
      with, and approvals of such governmental authorities as will have been
      made and obtained prior to the date of this Agreement; and (iv) this
      Agreement is its legal, valid and binding obligation enforceable against
      it in accordance with the terms of this Agreement.

5.    Right of the Companies to Inspect Records

5.1   AICL shall keep, in a manner and form approved by or acceptable to the
      Operating Company, true and complete books and records of all the
      Operating Company's business conducted under and pursuant to this
      Agreement.

5.2   AICL shall maintain all Books and Records with regard to the Operating
      Company's business separately from the records of its other businesses,
      provided that AICL may use identical computer and other systems so long as
      information with regard to the Operating Company is maintained separately
      and in an identifiable manner. The Operating Company shall have the right
      at all times during AICL's business hours, and at its own expense, to
      inspect the Books and Records of AICL (or any entity employed by AICL for
      any such purpose) relating to the services provided hereunder. The term
      "Books and Records" shall mean all materials, books and records and data
      in whatever form or medium (i) furnished by the Companies to AICL in
      connection with the performance by

                                      -4-
<PAGE>

      AICL of its obligations under this Agreement; (ii) generated by AICL in
      connection with the performance by AICL of its obligations under this
      Agreement; or (iii) that in any way pertain to the performance of the
      obligations of AICL under this Agreement, including books of account,
      insurance and reinsurance policies and contracts entered into by any of
      the Companies and all correspondence related thereto, underwriting files,
      claim and reserving files, data on premium and claim payments and any and
      all materials, books and records and data relating to Companies' business.

6.    Ownership of Books and Records by the Companies

6.1   All Books and Records kept by AICL in connection with the Operating
      Company's business managed by AICL shall be and remain the sole property
      of the Companies and will remain the property of the Companies following
      termination of this Agreement, including all databases maintained by AICL
      relating to the Companies' accounting, insurance or other records and
      whether or not such data is maintained on information systems owned by
      AICL or the Companies or neither. All such Books and Records shall be
      delivered to the Companies upon termination of this Agreement.

6.2   The Companies shall maintain such Books and Records for a period of ten
      (10) years or for the period as may be required under their respective
      records retention policies if longer or for such longer period of time as
      may be required by law or any applicable court order and AICL shall have
      reasonable access to and the right to inspect and copy at its own expense,
      such Books and Records during such period for (i) AICL's preparation of
      tax returns, including, but not limited to, any inquiries by any
      governmental or regulatory authority in respect of the taxes of AICL, (ii)
      AICL's response to any claims, lawsuits, legal proceedings or
      investigations or (iii) any audit purposes.

6.3   Notwithstanding any other provision of this Section 6 or this Agreement
      generally, AICL shall have the right to retain, at its own expense, a copy
      of any Books and Records and any original computer back-up tapes which
      contain information relating to both the business and operations of AICL
      or its affiliates and the Companies; provided that AICL shall maintain
      such Books and Records and tapes for a period of ten (10) years or for the
      period as may be required under its records retention policy if longer or
      for such longer period of time as may be required by law or any applicable
      court order and further provided that the Companies, at their own expense,
      shall have reasonable access to and the right to inspect and make a copy
      of such copy of the Books and Records and original tapes to the extent
      they relate to the business and operations of any of the Companies or to
      respond to any tax matters, claims, lawsuits, legal proceedings,
      investigations or audit matters.

7.    Confidentiality

7.1   AICL hereby acknowledges that, as a result of its performance of services
      for the Companies under this Agreement, it may acquire non-public
      information with respect to the Companies and their respective affairs,
      including: (a) information relating to the business, finances, methods of
      operation, business plans, marketing strategies and other information
      relating to the Companies and customers of the Companies; and (b) other

                                      -5-
<PAGE>

      trade secrets and proprietary information of the Companies (hereinafter
      collectively referred to as "Confidential Information").

7.2   During the Term and at all times thereafter, AICL shall, and shall cause
      each of its directors, officers, employees and agents (such persons,
      collectively "Covered Persons") to, keep confidential (to the extent
      required hereby) all Confidential Information that any of them may obtain
      and to not use such Confidential Information for any purpose other than in
      the course of the performance of this Agreement.

7.3   The foregoing restrictions shall not apply with respect to any
      Confidential Information (i) previously known to AICL through a source not
      bound by any obligation to keep the Confidential Information confidential,
      (ii) lawfully obtained by AICL, other than in its capacity as the provider
      of services to the Companies under this Agreement, from sources not bound
      by any obligation to keep such Confidential Information confidential, or
      (iii) the disclosure of which to any Covered Person is necessary to carry
      out the purposes of this Agreement, provided, however, that such
      disclosure referred to in this clause (iii) shall be limited to the extent
      reasonably necessary to protect the rights of the Companies with respect
      to its Confidential Information, and that as a condition to disclosing any
      Confidential Information to any person who is not bound by a duty of
      confidentiality to AICL and its clients, AICL shall require that such
      person enter into a confidentiality agreement with the Companies on terms
      satisfactory to the Companies. In addition, notwithstanding anything to
      the contrary provided in this Agreement, the restrictions upon use and
      disclosure of information under this Section 7 shall not apply to any
      information developed by, and/or provided to the Companies or AICL by,
      American International Group, Inc. (to the extent that American
      International Group, Inc. is not subject to any confidentiality obligation
      to the Companies with respect thereto) or any of its affiliates (to the
      same extent) other than information generated by AICL in connection with
      the performance by AICL of its obligations under this Agreement.

7.4   AICL may disclose any Confidential Information if and as required as a
      result of any governmental investigation, court order, subpoena,
      deposition, interrogatory, request for documents, civil investigative
      demand, or similar legal duress, and to the extent reasonably necessary
      for AICL or any of its affiliates to comply with applicable securities
      laws and regulations and stock exchange requirements and the applicable
      regulations of other regulatory agencies having jurisdiction over AICL or
      any of its affiliates.

7.5   Notwithstanding anything provided in this Section 7, Confidential
      Information may be disclosed with the prior written consent of the Board
      of Directors of the Holding Company or the Operating Company, as the case
      may be.

8.    Indemnification

8.1   The Companies hereby, jointly and severally, indemnify and hold AICL and
      each of its directors, officers, servants, agents and employees
      (collectively, "AICL Indemnitees"), harmless from and agree to defend each
      of them from and against all and any manner of liabilities, suits, claims,
      damages and expenses ("Losses") arising out of or in connection with the
      performance by AICL of its obligations hereunder (other than those Losses
      that

                                      -6-
<PAGE>

      are the result of willful misconduct, bad faith or gross negligence on the
      part of any of the AICL Indemnitees, with respect to which AICL shall
      remain liable).

8.2   Indemnification Procedures

(a)   In the case of any claim asserted by a third party against a party
      entitled to indemnification under this Section 8 (the "Indemnified
      Party"), notice shall be given by the Indemnified Party to the party
      required to provide indemnification (the "Indemnifying Party") promptly
      after such Indemnified Party has actual knowledge of any claim as to which
      indemnity may be sought, and the Indemnified Party shall permit the
      Indemnifying Party (at the expense of such Indemnifying Party) to assume
      the defense of any claim or any Litigation resulting therefrom, provided
      that: (i) counsel for the Indemnifying Party who shall conduct the defense
      of such claim or litigation shall be satisfactory to the Indemnified
      Party, and the Indemnified Party may participate in such defense at such
      Indemnified Party's expense; and (ii) the failure of any Indemnified Party
      to give notice as provided herein shall not relieve the Indemnifying Party
      of its indemnification obligation under this Agreement except to the
      extent that such failure results in a lack of actual notice to the
      Indemnifying Party and such Indemnifying Party is materially prejudiced by
      way of any forfeiture of rights or defenses or otherwise as a result of
      such failure to give notice.

(b)   Except with the prior written consent of the Indemnified Party, no
      Indemnifying Party, in the defense of any such claim or litigation, shall
      consent to entry of any judgment or enter into any settlement that
      provides for injunctive or other non-monetary relief affecting the
      Indemnified Party or that does not include as an unconditional term
      thereof the giving by each claimant or plaintiff to such Indemnified Party
      of a release from all liability with respect to such claim or litigation.
      The parties shall cooperate in the defense of any claim or litigation
      brought under this Section 8.2 and the records of each shall be available
      to the other with respect to such defense.

8.3   The Companies shall maintain insurance coverage of the kinds and in the
      amounts that is appropriate for their businesses. AICL shall be an
      additional named insured on the Companies' comprehensive liability
      insurance. The Companies shall deliver to AICL a certificate of insurance
      with respect thereto. Said insurance shall provide that it cannot be
      amended or canceled without the insurer first giving AICL not less than 60
      days' prior written notice thereof.

8.4   AICL shall maintain insurance coverage of the kinds and in the amounts
      that is appropriate for its business, including errors and omissions
      liability insurance coverage.

9.    Arbitration

      Any controversy or claim arising out of or relating to this Agreement, or
      the breach thereof, shall be submitted to a panel of three arbitrators.
      Each party shall appoint an arbitrator and the two arbitrators so
      appointed will appoint a third arbitrator who shall act as the umpire of
      the panel. Each such arbitrator shall be a current or former senior
      business or company manager but shall not be associated with any of the
      parties to this

                                      -7-
<PAGE>

      Agreement. Any arbitration hereunder shall take place in Bermuda, and
      shall be conducted in accordance with the Rules of The Bermuda
      International Conciliation and Arbitration Act 1993, as it may be amended
      or re-enacted from time to time. The decision of a majority of the
      arbitrators shall be in writing, shall state the reasons for the award,
      and shall be final and not subject to appeal, and judgment upon the award
      or determination rendered by the arbitrators may be entered in any court
      having jurisdiction thereof or having jurisdiction over the parties or
      their assets.

10.   Notices

      All communications provided for hereunder shall be in writing, and if to
      the Companies, mailed or delivered to each of the Companies at The Bermuda
      Commercial Bank Building, 43 Victoria Street, Hamilton, HM 12, Bermuda,
      Attention: President, or if to AICL, mailed or delivered to AICL at its
      office at American International Building, 29 Richmond Road, Pembroke,
      Bermuda HM 08, Attention: President, or addressed to either party at any
      address that such party may hereafter designate by written notice to the
      other party.

11.   Entire Agreement; Amendment

      This Agreement constitutes the entire agreement between the parties with
      respect to the provision of administrative services to the Companies by
      AICL and supersedes and extinguishes any warranty, representation or
      arrangement previously given or made with respect thereto, other than
      those expressly set out herein. The express terms hereof supersede any
      course of performance or usage of the trade. This Agreement may not be
      amended except in writing signed by each of the parties hereto.

12.   No Waiver

      Neither the failure nor delay on the part of any party in exercising any
      right, remedy, power or privilege under this Agreement shall operate as a
      waiver thereof, nor shall any single or partial exercise of any right,
      remedy, power or privilege preclude any other or further exercise of the
      same or of any other right, remedy, power or privilege, nor shall any
      waiver of any right or remedy, power or privilege with respect to any
      occurrence be construed as a waiver of such right, remedy, power or
      privilege with respect to any other occurrence. No waiver hereunder shall
      be effective unless it is in writing and is signed by the party asserted
      to have granted such waiver.

13.   Successors and Assigns

13.1  The provisions of this Agreement shall be binding upon and shall inure to
      the benefit of and be enforceable by each of the parties hereto and their
      respective successors and assigns. Except to the extent expressly provided
      for in this Agreement, AICL shall not have the right to assign any of its
      right, powers and obligations under this Agreement without the prior
      written consent of the Companies.

13.2  AICL shall not delegate or subcontract any of its obligations to be
      performed hereunder other than those obligations the delegation or
      subcontracting of which is expressly

                                      -8-
<PAGE>

      contemplated by this Agreement, without the prior consent of the Operating
      Company, provided that the Companies at all times shall have the right (to
      be exercised in a reasonable manner) to disapprove any delegate or
      subcontractor (including delegations or subcontracting expressly
      contemplated hereby) to which AICL has delegated or sub-contracted, or to
      which AICL proposes to delegate or subcontract, such obligations, and
      provided, further, that AICL shall remain responsible for the prudent
      selection of delegates or sub-contractors to which its obligations are
      delegated pursuant to this Agreement.

14.   Governing Law; Submission to Jurisdiction

      This Agreement shall be governed by and construed in accordance with the
      laws of Bermuda, without reference to the principles of conflicts of law
      thereof. If any suit is instituted by any of the parties to enforce any of
      the terms or conditions of this Agreement, each of the parties hereby
      submits to the exclusive jurisdiction of and venue in the courts of
      Bermuda.

15.   Relationship of the Parties

      Each of the Companies and AICL are independent of one another. Nothing in
      this Agreement shall be deemed to create: (i) a joint venture or
      partnership between the parties; (ii) a relationship of employer and
      employee; (iii) a relationship of principal and agent; or (iv) any
      relationship other than independent parties contracting with each other
      solely for the purpose of carrying out the provisions of this Agreement.

16.   Counterparts

      This Agreement may be executed in any number of counterparts, each of
      which shall be an original with the same effect as if the signatures
      thereto and hereto were upon the same instrument, and such counterparts
      together shall constitute one and the same instrument.

17.   Headings

      The section headings contained herein are for convenience only and shall
      not alter or limit or define the provisions hereof.

18.   Severability

      In the event that any word, sentence, paragraph, provision, section,
      subsection or article of this Agreement is found to be void or voidable,
      the remainder of this Agreement shall nevertheless be legal and binding
      with the same force and effect as though the void or voidable parts were
      deleted.

                                      -9-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in Pembroke, Bermuda on the date first written above.

ALLIED WORLD ASSURANCE HOLDINGS, LTD

By:  /s/  Scott Carmilani
     ---------------------------------
Name:    Scott Carmilani
Title:   President and Chief Executive Officer

ALLIED WORLD ASSURANCE COMPANY, LTD

By:  /s/  Scott Carmilani
     ---------------------------------
Name:    Scott Carmilani
Title:   President and Chief Executive Officer

ALLIED WORLD ASSURANCE HOLDINGS (IRELAND) LTD

By:  /s/  Scott Carmilani
     ---------------------------------
Name:    Scott Carmilani
Title:   Director

AMERICAN INTERNATIONAL COMPANY LIMITED

By:  /s/  S. George Cubbon
     ---------------------------------
Name:    S. George Cubbon
Title:   President

                                      -10-

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