Exhibit 10.2

 

ARCH CAPITAL GROUP LTD.

 

Restricted Share Unit Agreement

 

THIS AGREEMENT, dated as of                   , between Arch Capital Group Ltd.
(the “Company”), a Bermuda company, and                        (the “Employee”).

 

WHEREAS, the Employee has been granted the following award under the Company’s
2007 Long Term Incentive and Share Award Plan (the “Plan”);

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows.

 

1.                AWARD OF SHARE UNITS.  PURSUANT TO THE PROVISIONS OF THE PLAN,
THE TERMS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE, THE EMPLOYEE IS HEREBY
AWARDED                  RESTRICTED SHARE UNITS (THE “AWARD”), SUBJECT TO THE
TERMS AND CONDITIONS HEREIN SET FORTH.  CAPITALIZED TERMS USED HEREIN AND NOT
DEFINED SHALL HAVE THE MEANINGS SET FORTH IN THE PLAN.  IN THE EVENT OF ANY
CONFLICT BETWEEN THIS AGREEMENT AND THE PLAN, THE PLAN SHALL CONTROL.

 

2.                TERMS AND CONDITIONS.  IT IS UNDERSTOOD AND AGREED THAT THE
AWARD OF RESTRICTED SHARE UNITS EVIDENCED HEREBY IS SUBJECT TO THE FOLLOWING
TERMS AND CONDITIONS:

 

(A)              VESTING OF AWARD.  SUBJECT TO SECTION 2(B) BELOW AND THE OTHER
TERMS AND CONDITIONS OF THIS AGREEMENT, THIS AWARD SHALL BECOME VESTED IN THREE
EQUAL ANNUAL INSTALLMENTS ON THE FIRST, SECOND AND THIRD ANNIVERSARIES OF THE
DATE HEREOF.  UNLESS OTHERWISE PROVIDED BY THE COMPANY, ALL AMOUNTS RECEIVABLE
IN CONNECTION WITH ANY ADJUSTMENTS TO THE SHARES UNDER SECTION 4(C) OF THE PLAN
OR SECTION 2(E) BELOW SHALL BE SUBJECT TO THE VESTING SCHEDULE IN THIS
SECTION 2(A).

 

(B)           TERMINATION OF SERVICE; FORFEITURE OF UNVESTED SHARE UNITS.

 

(I)         IN THE EVENT THE EMPLOYEE CEASES TO BE AN EMPLOYEE OF THE COMPANY
PRIOR TO THE DATE THE RESTRICTED SHARE UNITS OTHERWISE BECOME VESTED DUE TO HIS
OR HER DEATH OR PERMANENT DISABILITY (AS DEFINED IN THE COMPANY’S INCENTIVE
COMPENSATION PLAN ON THE DATE HEREOF), THE RESTRICTED SHARE UNITS SHALL BECOME
IMMEDIATELY VESTED IN FULL UPON SUCH TERMINATION OF EMPLOYMENT.

 

(II)        IN THE EVENT OF TERMINATION OF EMPLOYMENT (OTHER THAN BY THE COMPANY
FOR CAUSE, AS SUCH TERM IS DEFINED IN THE INCENTIVE COMPENSATION PLAN ON THE
DATE HEREOF) AFTER THE ATTAINMENT OF RETIREMENT AGE (AS DEFINED IN THE COMPANY’S
INCENTIVE COMPENSATION PLAN ON THE DATE HEREOF), THE RESTRICTED SHARE UNITS
SHALL CONTINUE TO VEST ON THE SCHEDULE SET FORTH IN PARAGRAPH 2(A) ABOVE SO LONG
AS THE EMPLOYEE DOES NOT ENGAGE IN ANY ACTIVITY IN COMPETITION WITH ANY ACTIVITY
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OTHER THAN SERVING ON THE BOARD OF
DIRECTORS (OR SIMILAR GOVERNING BODY) OF ANOTHER COMPANY OR AS A CONSULTANT FOR
NO MORE

 

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THAN 26 WEEKS PER CALENDAR YEAR (“COMPETITIVE ACTIVITY”).  IN THE EVENT THE
EMPLOYEE ENGAGES IN A COMPETITIVE ACTIVITY, ANY UNVESTED RESTRICTED SHARE UNITS
SHALL BE FORFEITED BY THE EMPLOYEE AND BECOME THE PROPERTY OF THE COMPANY.

 

(III)       IN THE EVENT THE EMPLOYEE CEASES TO BE AN EMPLOYEE OF THE COMPANY
AFTER A CHANGE IN CONTROL (AS DEFINED BELOW) DUE TO TERMINATION BY THE COMPANY
NOT FOR CAUSE ON OR BEFORE THE SECOND ANNIVERSARY OF THE OCCURRENCE OF THE
CHANGE IN CONTROL, THE RESTRICTED SHARE UNITS, TO THE EXTENT NOT ALREADY VESTED,
SHALL BECOME IMMEDIATELY VESTED IN FULL UPON SUCH TERMINATION OF EMPLOYMENT.

 

(IV)      IF THE EMPLOYEE CEASES TO BE AN EMPLOYEE OF THE COMPANY FOR ANY OTHER
REASON PRIOR TO THE DATE THE RESTRICTED SHARE UNITS BECOME VESTED, THE UNVESTED
RESTRICTED SHARE UNITS SHALL BE FORFEITED BY THE EMPLOYEE AND BECOME THE
PROPERTY OF THE COMPANY; PROVIDED THAT, IN THE EVENT OF A REDUNDANCY (AS DEFINED
BELOW), THE COMMITTEE, IN ITS SOLE DISCRETION, MAY, IN ACCORDANCE WITH ITS
AUTHORITY UNDER THE PLAN, DETERMINE THAT THE RESTRICTED SHARE UNITS, TO THE
EXTENT NOT VESTED, SHALL BECOME VESTED UPON SUCH TERMINATION OF EMPLOYMENT.

 

(V)       FOR PURPOSES OF THIS AGREEMENT, SERVICE WITH ANY OF THE COMPANY’S
SUBSIDIARIES (AS DEFINED IN THE PLAN) SHALL BE CONSIDERED TO BE SERVICE WITH THE
COMPANY.

 

(VI)      “CHANGE IN CONTROL” SHALL MEAN:

 

(A)                              any person (within the meaning of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a
Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of Voting Securities
representing 50% or more of the total voting power or value of all the then
outstanding Voting Securities; or

 

(B)                                the individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the “Board”) together with
those who become directors subsequent to such date and whose recommendation,
election or nomination for election to the Board was approved by a vote of at
least a majority of the directors then still in office who either were directors
as of such date or whose recommendation, election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
members of the Board; or

 

(C)                                the consummation of a merger, consolidation,
recapitalization, liquidation, sale or disposition by the Company of all or
substantially all of the Company’s assets, or reorganization of the Company,
other than any such transaction which would (x) result in more than 50% of the
total voting power and value represented by the voting securities of the
surviving entity outstanding immediately

 

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after such transaction being beneficially owned by the former shareholders of
the Company and (y) not otherwise be deemed a Change in Control under
subparagraphs (A) or (B) of this paragraph.

 

“Permitted Persons” means (A) the Company; (B) any Related Party; (C) Hellman &
Friedman or any of its subsidiaries or investment funds managed or controlled by
Hellman & Friedman; (D) Warburg Pincus or any of its subsidiaries or any
investment funds managed or controlled by Warburg Pincus or any of its
subsidiaries; or (E) any group (as defined in Rule 13b-3 under the Exchange Act)
comprised of any or all of the foregoing.

 

“Related Party” means (A) a majority-owned subsidiary of the Company; (B) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any majority-owned subsidiary of the Company; or (C) any entity,
50% or more of the voting power of which is owned directly or indirectly by the
shareholders of the Company in substantially the same proportion as their
ownership of Voting Securities immediately prior to the transaction.

 

“Voting Security” means any security of the Company which carries the right to
vote generally in the election of directors.

 

(VII)        “REDUNDANCY” SHALL MEAN TERMINATION OF EMPLOYMENT BY THE COMPANY
DUE TO ITS NEED TO REDUCE THE SIZE OF ITS WORKFORCE, INCLUDING DUE TO CLOSURE OF
A BUSINESS OR A PARTICULAR WORKPLACE OR CHANGE IN BUSINESS PROCESS.  WHETHER A
TERMINATION OF EMPLOYMENT IS DUE TO A “REDUNDANCY” SHALL BE DETERMINED BY THE
COMMITTEE IN ITS SOLE AND ABSOLUTE DISCRETION, SUCH DETERMINATION BEING FINAL
AND BINDING ON ALL PARTIES HERETO AND ALL PERSONS CLAIMING THROUGH, IN THE NAME
OF OR ON BEHALF OF SUCH PARTIES.

 

(C)           DISTRIBUTION OF SHARES.  AT THE TIME OF VESTING AS PROVIDED ABOVE
IN SECTION 2(A) OR SECTION 2(B), AS APPLICABLE, THE COMPANY SHALL DISTRIBUTE TO
THE EMPLOYEE (OR HIS OR HER HEIRS IN THE EVENT OF THE EMPLOYEE’S DEATH) A NUMBER
OF SHARES EQUAL TO THE NUMBER OF VESTED RESTRICTED SHARE UNITS THEN HELD BY THE
EMPLOYEE.

 

(D)           RIGHTS AND RESTRICTIONS.  THE RESTRICTED SHARE UNITS SHALL NOT BE
TRANSFERABLE, OTHER THAN PURSUANT TO WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION.  PRIOR TO VESTING OF THE RESTRICTED SHARE UNITS AND DELIVERY OF
THE SHARES TO THE EMPLOYEE FOLLOWING HIS TERMINATION OF EMPLOYMENT, THE EMPLOYEE
SHALL NOT HAVE ANY RIGHTS OR PRIVILEGES OF A SHAREHOLDER AS TO THE SHARES
SUBJECT TO THE AWARD.  SPECIFICALLY, THE EMPLOYEE SHALL NOT HAVE THE RIGHT TO

 

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RECEIVE DIVIDENDS OR THE RIGHT TO VOTE SUCH SHARES PRIOR TO VESTING OF THE AWARD
AND DELIVERY OF THE SHARES.

 

(E)           ADJUSTMENTS FOR RECAPITALIZATION AND DIVIDENDS.  IN THE EVENT
THAT, PRIOR TO THE DISTRIBUTION OF SHARES PURSUANT TO SECTION 2(C) ABOVE, ANY
DIVIDEND IN SHARES, RECAPITALIZATION, SHARE SPLIT, REVERSE SPLIT,
REORGANIZATION, MERGER, CONSOLIDATION, SPIN-OFF, COMBINATION, REPURCHASE, OR
SHARE EXCHANGE, OR OTHER SUCH CHANGE AFFECTS THE SHARES SUCH THAT THEY ARE
INCREASED OR DECREASED OR CHANGED INTO OR EXCHANGED FOR A DIFFERENT NUMBER OR
KIND OF SHARES, OTHER SECURITIES OF THE COMPANY OR OF ANOTHER CORPORATION OR
OTHER CONSIDERATION, THEN IN ORDER TO MAINTAIN THE PROPORTIONATE INTEREST OF THE
EMPLOYEE AND PRESERVE THE VALUE OF THE AWARD, THERE SHALL AUTOMATICALLY BE
SUBSTITUTED FOR EACH SHARE SUBJECT TO THE AWARD THE NUMBER AND KIND OF SHARES,
OTHER SECURITIES OR OTHER CONSIDERATION (INCLUDING CASH) INTO WHICH EACH
OUTSTANDING SHARE SHALL BE CHANGED OR FOR WHICH EACH SUCH SHARE SHALL BE
EXCHANGED.

 

(F)            DIVIDEND EQUIVALENTS.  AS OF EACH DATE ON WHICH A CASH DIVIDEND
IS PAID ON SHARES, THERE SHALL BE GRANTED TO THE EMPLOYEE THAT NUMBER OF
ADDITIONAL RESTRICTED SHARE UNITS (INCLUDING FRACTIONAL UNITS) DETERMINED BY
(I) MULTIPLYING THE AMOUNT OF SUCH DIVIDEND PER SHARE BY THE NUMBER OF
RESTRICTED SHARE UNITS HELD BY THE EMPLOYEE, AND (II) DIVIDING THE TOTAL SO
DETERMINED BY THE FAIR MARKET VALUE OF A SHARE ON THE DATE OF PAYMENT OF SUCH
CASH DIVIDEND.  THE RESTRICTED SHARE UNITS GRANTED PURSUANT TO THIS
SECTION 2(F) WILL HAVE THE SAME TERMS AND CONDITIONS (INCLUDING VESTING DATES)
AS THE RESTRICTED SHARE UNITS WITH RESPECT TO WHICH THEY ARE GRANTED.

 

(G)           NO RIGHT TO CONTINUED EMPLOYMENT.  THIS AWARD SHALL NOT CONFER
UPON THE EMPLOYEE ANY RIGHT WITH RESPECT TO CONTINUANCE OF EMPLOYMENT BY THE
COMPANY NOR SHALL THIS AWARD INTERFERE WITH THE RIGHT OF THE COMPANY TO
TERMINATE THE EMPLOYEE’S EMPLOYMENT AT ANY TIME.

 

3.                TRANSFER OF SHARES.  THE SHARES DELIVERED HEREUNDER, OR ANY
INTEREST THEREIN, MAY BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED, OR
TRANSFERRED OR DISPOSED OF IN ANY OTHER MANNER, IN WHOLE OR IN PART, ONLY IN
COMPLIANCE WITH THE TERMS, CONDITIONS AND RESTRICTIONS AS SET FORTH IN THE
GOVERNING INSTRUMENTS OF THE COMPANY, APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE LAWS OR REGULATIONS AND THE TERMS AND
CONDITIONS HEREOF.

 

4.                EXPENSES OF ISSUANCE OF SHARES.  THE ISSUANCE OF STOCK
CERTIFICATES HEREUNDER SHALL BE WITHOUT CHARGE TO THE EMPLOYEE.  THE COMPANY
SHALL PAY ANY ISSUANCE, STAMP OR DOCUMENTARY TAXES (OTHER THAN TRANSFER TAXES)
OR CHARGES IMPOSED BY ANY GOVERNMENTAL BODY, AGENCY OR OFFICIAL (OTHER THAN
INCOME TAXES) OR BY REASON OF THE ISSUANCE OF SHARES.

 

5.                WITHHOLDING.  THE EMPLOYEE SHALL PAY TO THE COMPANY OR MAKE
ARRANGEMENTS SATISFACTORY TO THE COMMITTEE REGARDING PAYMENT OF ANY FEDERAL,
STATE OR LOCAL TAXES OF ANY KIND REQUIRED BY LAW TO BE WITHHELD WITH RESPECT TO
THE AWARD AND THE COMPANY SHALL, TO THE EXTENT PERMITTED OR REQUIRED BY LAW,
HAVE THE RIGHT TO DEDUCT FROM ANY PAYMENT OF

 

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ANY KIND OTHERWISE DUE TO THE EMPLOYEE, FEDERAL, STATE AND LOCAL TAXES OF ANY
KIND REQUIRED BY LAW TO BE WITHHELD.

 

6.                REFERENCES.  REFERENCES HEREIN TO RIGHTS AND OBLIGATIONS OF
THE EMPLOYEE SHALL APPLY, WHERE APPROPRIATE, TO THE EMPLOYEE’S LEGAL
REPRESENTATIVE OR ESTATE WITHOUT REGARD TO WHETHER SPECIFIC REFERENCE TO SUCH
LEGAL REPRESENTATIVE OR ESTATE IS CONTAINED IN A PARTICULAR PROVISION OF THIS
AGREEMENT.

 

7.                NOTICES.  ANY NOTICE REQUIRED OR PERMITTED TO BE GIVEN UNDER
THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN GIVEN WHEN
DELIVERED PERSONALLY OR BY COURIER, OR SENT BY CERTIFIED OR REGISTERED MAIL,
POSTAGE PREPAID, RETURN RECEIPT REQUESTED, DULY ADDRESSED TO THE PARTY CONCERNED
AT THE ADDRESS INDICATED BELOW OR TO SUCH CHANGED ADDRESS AS SUCH PARTY MAY
SUBSEQUENTLY BY SIMILAR PROCESS GIVE NOTICE OF:

 

If to the Company:

 

Arch Capital Group Ltd.
Wessex House, 4th Floor
45 Reid Street
Hamilton HM 12 Bermuda
Attn.: Secretary

 

If to the Employee:

 

To the last address delivered to the Company by the Employee in the manner set
forth herein.

 

8.                GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS.

 

9.                ENTIRE AGREEMENT.  THIS AGREEMENT AND THE PLAN CONSTITUTE THE
ENTIRE AGREEMENT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF, AND
ANY PREVIOUS AGREEMENT OR UNDERSTANDING AMONG THE PARTIES WITH RESPECT THERETO
IS SUPERSEDED BY THIS AGREEMENT AND THE PLAN.

 

10.              COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO
COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

11.           Section 409A.  It is intended that this Agreement and the Award
will comply with Section 409A of the Code (and any regulations and guidelines
issued thereunder), to the extent the Agreement and Award are subject thereto,
and the Agreement shall be interpreted on a basis consistent with such intent. 
If an amendment of the Agreement is necessary in order for it to comply with
Section 409A, the parties hereto will negotiate in good faith to amend the
Agreement in a manner that preserves the original intent of the parties to the
extent reasonably possible.  Notwithstanding any provision of this Agreement to
the contrary, for purposes of this

 

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Agreement, the Employee’s employment will be deemed to have terminated on the
date of the Employee’s “separation from service” (within the meaning of Treas.
Reg. Section 1.409A-1(h)) with the Company.  Notwithstanding any provision to
the contrary in this Agreement, if the Employee is deemed on the date of his or
her “separation from service” (within the meaning of Treas. Reg.
Section 1.409A-1(h)) to be a “specified employee” (within the meaning of Treas.
Reg. Section 1.409A-1(i)), then with regard to any payment that is required to
be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into
account any applicable exceptions to such requirement), such payment shall not
be made prior to the earlier of (i) the expiration of the six (6)-month period
measured from the date of the Employee’s “separation from service,” or (ii) the
date of the Employee’s death (the “Delay Period”).  Upon the expiration of the
Delay Period, all payments delayed pursuant hereto (whether they would have
otherwise been payable in a single sum or in installments in the absence of such
delay) shall be paid to the Employee in a lump sum and any remaining payments
due under this Agreement shall be paid in accordance with the normal payment
dates specified for them herein.  No action or failure to act, pursuant to this
Section 11 shall subject the Company to any claim, liability, or expense, and
the Company shall not have any obligation to indemnify or otherwise protect the
Employee from the obligation to pay any taxes, interest or penalties pursuant to
Section 409A of the Code.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

 

ARCH CAPITAL GROUP LTD.

 

 

 

 

 

By:

/s/ Dawna Ferguson

 

 

Name: Dawna Ferguson

 

 

Title: Secretary

 

 

 

 

 

 

 

 

[Employee signature]

 

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