Exhibit 10.2
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
PERFORMANCE-BASED RSU AWARD AGREEMENT
          This Performance-Based RSU Award Agreement (this “Agreement”) sets
forth the terms and conditions of a target award (this “Award”) consisting of
restricted stock units that settle in cash and/or Common Shares (collectively,
the “RSUs”), granted to you under the Allied World Assurance Company Holdings,
Ltd Second Amended and Restated 2004 Stock Incentive Plan (the “Plan”).
     1. The Plan. This Award is made pursuant to the Plan, the terms and
conditions of which are incorporated in this Agreement. Capitalized terms used
in this Agreement are defined herein or in the attached Glossary of Terms.
     2. Award. The target number of RSUs subject to this Award (i.e., the Target
Cash-Settled RSUs and Target Share-Settled RSUs) is set forth at the end of this
Agreement (this target number assumes 100% achievement of the Selected
Performance Criteria). Each Award constitutes an unfunded and unsecured promise
of Allied World to deliver (or cause to be delivered) to you a certain number of
Common Shares (the “Share” or the “Shares” as the context requires) and/or cash
on the settlement date, subject to the terms of this Agreement. Until such
delivery of Shares, except as otherwise provided in Paragraph 3, you have only
the rights of a general unsecured creditor, and no rights as a shareholder of
Allied World. THIS AWARD IS SUBJECT TO ALL TERMS, CONDITIONS AND PROVISIONS OF
THE PLAN AND THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE CHOICE OF FORUM
PROVISIONS SET FORTH IN PARAGRAPH 14.
     3. Vesting and Delivery.
          (a) Determination of Performance Percentage. As soon as practicable
following the end of a Performance Period, the Committee shall determine the
Performance Period Percentage applicable to such Performance Period. The
determination of the Committee of the Performance Period Percentage shall be
final, binding and conclusive for all purposes under this Agreement and the
Plan.
          (b) Time and Form of Payment. Except as provided in this Paragraph 3
and in Paragraphs 4, 7 and 8, as soon as practicable following the Committee’s
determination of the Performance Period Percentage as described in
Paragraph 3(a), the Company shall:
     (i) issue or transfer to you, or cause to be issued or transferred to you,
the number of Shares underlying your Share-Settled RSUs, and shall either
(i) deliver, or cause to be delivered, to you a Certificate or Certificates
therefor, registered in your name; or (ii) cause such Shares to be credited to
your account at a third-party stock plan administrator as may be arranged for by
the Company or the Committee from time to time for purposes of the
administration of outstanding awards under the Plan. You shall be deemed the
beneficial owner of the Shares at the close of business on the date on which the
Committee determines the Performance Period Percentage and you shall be entitled
to any dividend or distribution that has not already been made with respect to
such Shares if the record date for such dividend or distribution is after the
close of business on the date on which the Committee determines the Performance
Period Percentage; and/or

 

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     (ii) transfer to you, or cause to be transferred to you, an amount of cash
equal to the aggregate Fair Market Value of the Shares underlying your
Cash-Settled RSUs, determined as of the date on which the Performance Period
Percentage is approved by the Committee pursuant to Paragraph 3(a). Your Award
shall be settled as soon as practicable following the Committee’s determination.
          (c) Termination of Employment due to Death or Disability. In the event
that your employment is terminated due to your death or Disability at any time
prior to the end of a Performance Period, you or your estate or beneficiaries,
as the case may be, shall be entitled to (i) 25% of the Award, if such
termination occurs during the first (1st) fiscal year of the Performance Period,
(ii) 50% of the Award, if such termination occurs during the second (2nd) fiscal
year of the Performance Period, or (iii) 75% of the Award, if such termination
occurs during the third (3rd) fiscal year of the Performance Period. The Award
payable under this Paragraph 3(c) shall be settled in Shares and/or cash, as
applicable, as soon as practicable following your termination of employment due
to death or Disability, as the case may be, but in no event later than March 15
of the fiscal year immediately following the year in which such termination
occurred.
          (d) Delay in Delivery. Notwithstanding anything contained herein to
the contrary, any delivery of Shares or cash otherwise required to be made
hereunder to you at any date as a result of the termination of your employment
for any reason shall be delayed for such period of time as may be necessary to
meet the requirements of section 409A(a)(2)(B)(i) of the U.S. Internal Revenue
Code of 1986, as amended (the “Code”), and shall be delivered and/or paid on the
earliest date on which such delivery or payments can be made without violating
the requirements of section 409A(a)(2)(B)(i) of the Code.
     4. Termination of the Awards.
          (a) Unless the Committee determines otherwise, and except as provided
in Paragraph 3(c), your rights in respect of your Award shall immediately
terminate, and no Shares and/or cash shall be delivered in respect of such
Award, if at any time prior to the date on which the Committee determines the
Performance Period Percentage your employment with the Company terminates for
any reason.
          (b) Unless the Committee determines otherwise, and except as provided
in Paragraph 3(c), your rights in respect of your Award (whether or not vested)
shall immediately terminate, and no Shares and/or cash shall be delivered in
respect of such Award, if at any time prior to the settlement date:
     (i) you attempt to have any dispute under this Agreement or the Plan
resolved in any manner that is not provided for by Paragraph 14;
     (ii) you in any manner, directly or indirectly, (A) Solicit any Client to
transact business with a Competitive Enterprise or to reduce or refrain from
doing any business with the Company, (B) interfere with or damage (or attempt to
interfere with or damage)

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any relationship between the Company and any such Client or (C) Solicit any
person who is an employee of the Company to resign from the Company or to apply
for or accept employment with any Competitive Enterprise; or
     (iii) you fail to certify to Allied World, in accordance with procedures
established by the Committee that you have complied, or the Committee determines
that you have failed to comply, with all of the terms and conditions of this
Agreement. By accepting the delivery of Shares and/or cash under this Agreement,
you shall be deemed to have represented and certified at such time that you have
complied with all the terms and conditions of this Agreement.
          (c) Unless the Committee determines otherwise, if on the settlement
date in respect of any Shares and/or cash that would be deliverable under the
terms and conditions of this Agreement, except that you have not complied with
the conditions or your obligations under Paragraph 4(b)(iii), all of your rights
with respect to your Award shall terminate prior to settlement. In addition,
except as otherwise required by law or with the express prior written consent of
the Board, you shall keep the amount of your Award strictly confidential and you
expressly agree that any breach of this Agreement to keep such information
confidential may result in forfeiture of the Award and/or immediate termination
of your employment.
          (d) Without limiting the application of Paragraph 4(b) or
Paragraph 4(c), your rights in respect of your Award that become vested solely
by reason of a Disability shall terminate immediately, and no Shares and/or cash
shall be delivered in respect of such Award if, following the termination of
your employment with the Company by reason of Disability prior to the settlement
date you (i) form, or acquire a 5% or greater equity ownership, voting or profit
participation interest in, any Competitive Enterprise or (ii) associate in any
capacity (including, but not limited to, association as an officer, employee,
partner, director, consultant, agent or advisor) with any Competitive
Enterprise.
          (e) The settlement of the Award as set forth herein (including there
being no settlement of the Award based on a determination by the Committee that
(i) the minimum Performance Period Percentage was not met or (ii) you failed to
comply with the terms and conditions of this Agreement) shall extinguish the
Company’s entire obligation hereunder in respect of your Award, and you shall
not be entitled to any further payment in respect thereof.
     5. Repayment. If following the delivery of Shares and/or cash, the
Committee determines that all terms and conditions of this Agreement in respect
of such delivery were not satisfied, the Company shall be entitled to receive,
and you shall be obligated to pay the Company immediately upon demand therefor,
the Fair Market Value of the Shares and the amount of cash received by you with
respect to your Award, without reduction for any Shares and/or cash applied to
satisfy withholding tax or other obligations in respect of such Shares and/or
cash.
     6. Non-transferability. Except as otherwise may be provided by the
Committee, the limitations set forth in Section 3.5 of the Plan shall apply to
this entire award. Any assignment in violation of the provisions of this
Paragraph 6 shall be null and void.

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     7. Withholding, Consent and Legends.
          (a) The delivery of Shares and/or cash is conditioned on your
satisfaction of any applicable withholding taxes (in accordance with Section 3.3
of the Plan).
          (b) Your rights in respect of your Award are conditioned on the
receipt by the Company or third-party stock plan administrator, as applicable,
to the full satisfaction of the Committee of any required consents (as defined
in Section 3.4 of the Plan) that the Committee may determine to be necessary or
advisable (including, without limitation, your consenting to deductions from
your wages, or another arrangement satisfactory to the Committee, to reimburse
the Company for advances made on your behalf to satisfy withholding and other
tax obligations in connection with this Award).
          (c) Allied World may affix to Certificates representing Shares issued
pursuant to this Agreement any legend that the Committee determines to be
necessary or advisable (including to reflect any restrictions to which you may
be subject under a separate agreement with Allied World). Allied World may
advise the transfer agent to place a stop transfer order against any legended
Shares.
     8. Rights of Offset. The Company shall have the right to offset, or cause
to be offset, against the obligation to deliver Shares and/or cash under this
Agreement any outstanding amounts (including, without limitation, travel and
entertainment or advance account balances, loans or amounts repayable to the
Company pursuant to tax equalization, housing, automobile or other employee
programs) you then owe to the Company and any amounts the Committee otherwise
deems appropriate.
     9. No Rights to Continued Employment. Nothing in this Agreement or the Plan
shall be construed as giving you any right to continued employment by the
Company or affect any right that the Company may have to terminate or alter the
terms and conditions of your employment.
     10. Successors and Assigns of Allied World. The terms and conditions of
this Agreement shall be binding upon, and shall inure to the benefit of, Allied
World and its successor entities.
     11. Committee Discretion. The Committee shall have full discretion with
respect to any actions to be taken or determinations to be made in connection
with this Agreement, and its determinations shall be final, binding and
conclusive.
     12. Amendment. The Committee reserves the right at any time to amend the
terms and conditions set forth in this Agreement as permitted by the Plan, and
the Board may amend the Plan in any respect. Notwithstanding the foregoing, no
such amendment shall materially adversely affect your rights and obligations
under this Agreement without your consent. Any amendment of this Agreement shall
be in writing signed by an authorized member of the Committee or a person or
persons designated by the Committee.
     13. Adjustment. In the event of a recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, amalgamation,
consolidation, rights offering, separation, reorganization or liquidation, or
any other change in the corporate structure or the Shares,

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subsequent to the date of the Date of Grant, the Committee or the Board shall
make such equitable adjustments, designed to protect dilution or enlargement of
rights, as it may deem appropriate in accordance with the Plan.
     14. Governing Law; Venue. THIS AWARD SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN CONSIDERATION OF YOUR
ACCEPTANCE OF THIS AWARD, YOU HEREBY EXPRESSLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF AND VENUE IN THE COURTS OF BERMUDA WITH RESPECT TO ANY SUIT OR
CLAIM INSTITUTED BY THE COMPANY OR YOU RELATING TO THIS AWARD.
     15. Headings. The headings in this Agreement are for the purpose of
convenience only and are not intended to define or limit the construction of the
provisions hereof.

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          IN WITNESS WHEREOF, Allied World has caused this Agreement to be duly
executed and delivered as of the Date of Grant.

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

Recipient:
Target Numbers for the Award:

    - Target Share-Settled RSUs (the “Target Share-Settled RSUs”):       -
Target Cash-Settled RSUs (the “Target Cash-Settled RSUs”):

Date of Grant:

                 
Receipt
               
Acknowledge:
               
 
               
Address:
               
 
      Street        
 
               
 
 
 
 
City,
 
 
 
State
 
 
 
Zip Code    
 
               
 
               
 
  Social Security No./Local I.D. No.    

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Glossary of Terms
Solely for purposes of this Award, the following terms shall have the meanings
set forth below. Capitalized terms not defined in this Glossary of Terms shall
have the meanings as used or defined in the Agreement.
          “Allied World” means Allied World Assurance Company Holdings, Ltd or a
successor entity.
          “Board” means the Board of Directors of Allied World.
          “Cash-Settled RSUs” means, with respect to any Performance Period, the
number of Common Shares equal to your Target Cash-Settled RSUs multiplied by the
Performance Period Percentage for such Performance Period.
          “Certificate” means a share certificate (or other appropriate document
or evidence of ownership) representing Common Shares of Allied World.
          “Client” means any client or prospective client of the Company to whom
the Company provided services, or for whom the Company transacted business, or
whose identity became known to you in connection with your relationship with or
employment by the Company.
          “Committee” means the Compensation Committee of the Board; provided,
however, if at any time during the term of the Plan the Compensation Committee
is not comprised of any members, the full Board shall be deemed to be the
Committee hereunder until such time that the Compensation Committee of the Board
has at least one member.
          “Common Shares” means the common shares of Allied World.
          “Company” means Allied World and its subsidiaries.
          “Competitive Enterprise” means a business enterprise that (i) engages
in any activity, or (ii) owns or controls a significant interest in any entity
that engages in any activity, that, in either case, competes anywhere with any
activity in which the Company is engaged. The activities covered by the previous
sentence include, without limitation, all insurance and re-insurance, and
insurance and reinsurance related activities, and asset management located in
Bermuda and abroad.
          “Disability” means, in the absence of any employment agreement between
you and the Company otherwise defining Disability, any physical or mental
disability or infirmity that prevents the performance of your employment duties
for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty
(120) non-consecutive days during any twelve (12) month period. Any question as
to the existence, extent or potentiality of your Disability upon which you and
the Company cannot agree shall be determined by a qualified, independent
physician selected by the Company and approved by you (which approval shall not
be unreasonably withheld). In the event there is an employment agreement between
you and the Company defining Disability, “Disability” shall have the meaning
provided in such agreement.

 

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          “Fair Market Value” means, with respect to a Common Share on any day,
the fair market value as determined in accordance with a valuation methodology
approved by the Committee and consistent with the requirements of Section 409A
of the Code, or if there is a public market for the shares on such date, (i) the
methodology as determined by the Committee in its sole and absolute discretion,
or (ii) if the Committee has not set forth a pricing methodology, the closing
price of the Common Shares on such stock exchange on which the shares are
principally trading on the date in question, or, if there were no sales on such
date, on the closest preceding date on which there were sales of shares.
          “Performance Criteria” means one or more of the following performance
metrics: (i) consolidated earnings before or after taxes (including earnings
before interest, taxes, depreciation and amortization); (ii) net income;
(iii) operating income; (iv) earnings per share; (v) book value per share;
(vi) return on shareholders’ equity; (vii) return on investment; (viii) stock
price; (ix) improvements in capital structure; (x) revenue or sales; and
(xi) total return to shareholders.
          “Performance Period” means the three consecutive fiscal year period
ending on December 31, 2012.
          “Performance Period Percentage” means, unless otherwise determined by
the Committee, for any Performance Period, a percentage determined as a function
of percentage achievement of the Selected Performance Criteria, as follows:

          Percentage Achievement of Selected       Performance Criteria  
Performance Period Percentage  
Less than 80%
    0 %
80%
    50 %
100%
    100 %
120% or greater
    150 %

To the extent the percentage achievement of the Selected Performance Criteria
falls between any level set forth on the table above, the Performance Period
Percentage shall be the Performance Period Percentage for the percentage
achievement level immediately below that actually obtained plus 2.50% for each
whole percentage achievement in excess of such stated level (e.g., at 90%
achievement of the Selected Performance Criteria, the Performance Period
Percentage will equal 50% plus 25%, or 75%).
          “Selected Performance Criteria” means, with respect to a Performance
Period, the Performance Criteria that are selected to measure the performance of
the Company over the Performance Period.
          “Share-Settled RSUs” means, with respect to any Performance Period,
the number of Common Shares equal to your Target Share-Settled RSUs multiplied
by the Performance Period Percentage for such Performance Period.

 

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          “Solicit” means any direct or indirect communication of any kind
whatsoever, regardless of by whom initiated, inviting, advising, encouraging or
requesting any person or entity, in any manner, to take or refrain from taking
any action.