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


 

















 


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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