EXHIBIT 10.12.5

 

ARCH CAPITAL GROUP LTD.
Restricted Share Agreement

 

THIS AGREEMENT, dated as of November 15, 2005, between Arch Capital Group Ltd.
(the “Company”), a Bermuda company, and Marc Grandisson (the “Employee”).

 

WHEREAS, the Employee has been granted the following award under the Company’s
2002 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 Shares.  Pursuant to the
provisions of the Plan, the terms of which are incorporated herein by reference,
the Employee is hereby awarded 50,000 Restricted Shares (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 Shares 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 on December 31, 2008.  Unless otherwise provided by
the Company, all dividends and other amounts receivable in connection with any
adjustments to the Shares under Section 4(c) of the Plan shall be subject to the
vesting schedule in this Section 2(a).

 

(b)                                 Termination of Service; Forfeiture of
Unvested Shares.  In the event the Employee ceases to be an employee of the
Company prior to the date the Restricted Shares otherwise become vested (i) due
to his or her death or Permanent Disability (as defined in the Company’s
Incentive Compensation Plan) or (ii) due to termination (A) by the Company not
for Cause (as defined in the Company’s Incentive Compensation Plan) or (B) by
the Employee for Good Reason (as defined in the Employment Agreement, dated as
of October 23, 2001 (as amended), between the Employee, Arch Reinsurance Ltd.
and the Company), the Restricted Shares shall become immediately vested in full
upon such termination of employment.  In the event of termination of employment
(other than by the Company for Cause) after the attainment of Retirement Age (as
defined in the Company’s Incentive Compensation Plan), the Restricted Shares
shall continue to vest on the schedule set forth in Section 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 than 26 weeks per calendar year (“Competitive Activity”).  In the event
the Employee engages in a Competitive Activity, any unvested Restricted Shares
shall be forfeited by the Employee and become the property of the

 

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Company.  If the Employee ceases to be an Employee of the Company for any other
reason prior to the date the Restricted Shares become vested, the Award shall be
forfeited by the Employee and become the property of the Company.  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.

 

(c)                                  Certificates.  Each certificate issued in
respect of Restricted Shares awarded hereunder shall be deposited with the
Company, or its designee, together with, if requested by the Company, a stock
power executed in blank by the Employee, and shall bear a legend disclosing the
restrictions on transferability imposed on such Restricted Shares by this
Agreement (the “Restrictive Legend”).  Upon the vesting of Restricted Shares
pursuant to Section 2 hereof and the satisfaction of any withholding tax
liability pursuant to Section 5 hereof, the certificates evidencing such vested
Shares, not bearing the Restrictive Legend, shall be delivered to the Employee.

 

(d)                                 Rights of a Stockholder.  Prior to the time
a Restricted Share is fully vested hereunder, the Employee shall have no right
to transfer, pledge, hypothecate or otherwise encumber such Restricted Share. 
During such period, the Employee shall have all other rights of a stockholder,
including, but not limited to, the right to vote and to receive dividends
(subject to Section 2(a) hereof) at the time paid on such Restricted Shares.

 

(e)                                  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, and indemnify the Employee from and against
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.  No later than the date of
vesting of (or the date of an election by the Employee under Section 83(b) of
the Code with respect to) the Award granted hereunder, 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
at such time with respect to such Award and the Company shall, to the extent
permitted or required by law, have the right to deduct from any payment of any

 

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kind otherwise due to the Employee, federal, state and local taxes of any kind
required by law to be withheld at such time.

 

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.

 

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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/ John D. Vollaro

 

 

 

 

 

 

 

 

/s/ Marc Grandisson

 

 

Marc Grandisson

 

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