Exhibit 10.5
ARCH CAPITAL GROUP LTD.
Restricted Share Agreement
THIS AGREEMENT, dated as of September 22, 2004, between Arch Capital Group Ltd.
(the "Company"), a Bermuda company, and Robert Clements (the "Director").
WHEREAS, the following terms reflect 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 DIRECTOR IS HEREBY AWARDED 1,600 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 IN THREE EQUAL ANNUAL INSTALLMENTS, COMMENCING ON THE DATE HEREOF
AND THEREAFTER ON THE FIRST AND SECOND ANNIVERSARIES THEREOF.
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).
NOTWITHSTANDING
THE FOREGOING, IF A CHANGE IN CONTROL OCCURS AND THE DIRECTOR CEASES TO BE A
DIRECTOR OF THE COMPANY FOR ANY REASON, THEN THE RESTRICTED SHARES SHALL BECOME
IMMEDIATELY VESTED IN FULL UPON SUCH TERMINATION OF SERVICE.
For purposes of this Agreement, a "Change in Control" shall be deemed to occur
if 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 more than 50% of the total
voting power of all then outstanding Voting Securities.
"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 stockholders
of the Company in substantially the same proportion as their ownership of Voting
Securities immediately prior to the transaction.