Exhibit 10.5
ARCH CAPITAL GROUP LTD.
Restricted Share Unit Agreement
THIS AGREEMENT, dated as of February 26, 2004, between Arch Capital Group Ltd.
(the "Company"), a Bermuda company, and Ralph E. Jones, III (the "Employee").
WHEREAS, the Employee has been granted the following award as compensation for
services to be rendered; and 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 SHARE UNITS.
PURSUANT TO THE PROVISIONS OF THE PLAN, THE TERMS OF
WHICH ARE INCORPORATED HEREIN BY REFERENCE, THE EMPLOYEE IS HEREBY AWARDED 3,571
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 FOUR
EQUAL ANNUAL INSTALLMENTS, COMMENCING ON THE DATE HEREOF AND THEREAFTER ON THE
FIRST, SECOND AND THIRD ANNIVERSARIES THEREOF.
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.
EXCEPT
AS OTHERWISE SET FORTH IN SECTION 2(A) ABOVE, IN THE EVENT THE EMPLOYEE CEASES
TO BE AN EMPLOYEE OF THE COMPANY PRIOR TO THE DATE THE RESTRICTED SHARE UNITS
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 JUNE 4, 2003, BETWEEN THE EMPLOYEE AND ARCH
INSURANCE GROUP INC.), THE RESTRICTED SHARE UNITS 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 SHARE UNITS 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