Exhibit 10.9.14
ARCH CAPITAL GROUP LTD.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is
hereby acknowledged, Arch Capital Group Ltd. (the "Company"), a Bermuda company,
hereby grants to Xxxx X. Xxxxxxx, an employee of the Company on the date hereof
(the "Option Holder"), the option to purchase common shares, $0.01 par value per
share, of the Company ("Shares"), upon the following terms:
WHEREAS, the Option Holder has been granted the following
award in connection with his or her retention as an employee and as compensation
for services to be rendered; and the following terms reflect the Company's Long
Term Incentive Plan for New Employees (the "Plan");
(a) GRANT. The Option Holder is hereby granted an option (the
"Option") to purchase 85,000 Shares (the "Option Shares") pursuant to the Plan,
the terms of which are incorporated herein by reference. The Option is granted
as of January 18, 2002 (the "Date of Grant") and such grant is subject to the
terms and conditions herein and the terms and conditions of the applicable
provisions of the Plan. This Option shall not be treated as an incentive stock
option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended. In the event of any conflict between this Agreement and the Plan, the
Plan shall control.
(b) STATUS OF OPTION SHARES. The Option Shares shall upon
issue rank equally in all respects with the other Shares.
(c) OPTION PRICE. The purchase price for the Option Shares
shall be, except as herein provided, $25.30 per Option Share, hereinafter
sometimes referred to as the "Option Price," payable immediately in full upon
the exercise of the Option.
(d) TERM OF OPTION. The Option may be exercised only during
the period (the "Option Period") set forth in paragraph (f) below and shall
remain exercisable until the tenth anniversary of the Date of Grant. Thereafter,
the Option Holder shall cease to have any rights in respect thereof. The right
to exercise the Option shall be subject to sooner termination as provided in
paragraph (j) below.
(e) NO RIGHTS OF SHAREHOLDER. The Option Holder shall not, by
virtue hereof, be entitled to any rights of a shareholder in the Company, either
at law or in equity.
(f) EXERCISABILITY. Except as otherwise set forth in paragraph
(j) below, the Option shall become exercisable as to one third of the Option
Shares on the Date of Grant, as to an additional one-third of the Option Shares
on the first anniversary of the Date of Grant, and as to the final one-third of
the Option Shares on the second anniversary of the Date of Grant, in each case
subject to paragraph (j) below. Subject to paragraph (j) below, the Option may
be exercised at any time or from time to time during the Option Period in regard
to all or any portion of the Option which is then exercisable, as may be
adjusted pursuant to paragraph (g) below.
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(g) ADJUSTMENTS FOR RECAPITALIZATION AND DIVIDENDS. In the
event that, prior to the expiration of the Option, 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 Option Holder and
preserve the value of the Option, (i) there shall automatically be substituted
for each Share subject to the unexercised Option 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, and (ii) the exercise price shall be increased or decreased
proportionately so that the aggregate purchase price for the Shares subject to
the unexercised Option shall remain the same as immediately prior to such event.
(h) NONTRANSFERABILITY. The Option, or any interest therein,
may not be assigned or otherwise transferred, disposed of or encumbered by the
Option Holder, other than by will or by the laws of descent and distribution.
During the lifetime of the Option Holder, the Option shall be exercisable only
by the Option Holder or by his or her guardian or legal representative.
Notwithstanding the foregoing, the Option may be transferred by the Option
Holder to members of his or her "immediate family " or to a trust or other
entity established for the exclusive benefit of solely one or more members of
the Option Holder's "immediate family." Any Option held by the transferee will
continue to be subject to the same terms and conditions that were applicable to
the Option immediately prior to the transfer, except that the Option will be
transferable by the transferee only by will or the laws of descent and
distribution. For purposes hereof, "immediate family" means the Option Holder's
children stepchildren, grandchildren, parents, stepparents, grandparents,
spouse, siblings (including half brother and sisters), in laws, and
relationships arising because of legal adoption.
(i) EXERCISE OF OPTION. In order to exercise the Option, the
Option Holder shall submit to the Company an instrument in writing signed by the
Option Holder, specifying the whole number of Option Shares in respect of which
the Option is being exercised, accompanied by payment, in a manner acceptable to
the Company, of the Option Price for the Option Shares for which the Option is
being exercised. Payment to the Company in cash (which shall include a broker
assisted exercise arrangement) or Shares already owned by the Option Holder
(provided that the Option Holder has owned such Shares for a minimum period of
six months or has purchased such Shares on the open market) and having a total
Fair Market Value (as defined below) equal to the exercise price, or in a
combination of cash and such Shares, shall be deemed acceptable for purposes
hereof. Option Shares will be issued accordingly by the Company on the exercise
date, and a share certificate dispatched to the Option Holder within 30 days.
The Company shall not be required to issue fractional Shares
upon the exercise of the Option. If any fractional interest in a Share would be
deliverable upon the exercise of the Option in whole or in part but for the
provisions of this paragraph, the Company, in lieu of delivering any such
fractional share therefor, shall pay a cash adjustment therefor in an amount
equal to their Fair Market Value (or if any Shares are not publicly traded, an
amount equal to the book value per share at the end of the most recent fiscal
quarter) multiplied by the frac-
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tion of the fractional share which would otherwise have been issued hereunder.
Anything to the contrary herein notwithstanding, the Company shall not be
obligated to issue any Option Shares hereunder if the issuance of such Option
Shares would violate the provision of any applicable law, in which event the
Company shall, as soon as practicable, take whatever action it reasonably can so
that such Option Shares may be issued without resulting in such violations of
law. For purposes hereof, Fair Market Value shall mean the mean between the high
and low selling prices per Share on the immediately preceding date (or, if the
Shares were not traded on that day, the next preceding day that the Shares were
traded) on the principal exchange on which the Shares are traded, as such prices
are officially quoted on such exchange.
(j) TERMINATION OF SERVICE. In the event the Option Holder
ceases to be an employee of the Company for any reason, except due to the Option
Holder's death or Permanent Disability (as defined in the Employment Agreement
between the Option Holder and the Company, dated as of January 18, 2002 (the
"Employment Agreement")) or due to a termination of the Option Holder's
employment by the Company for Cause (as defined in the Employment Agreement),
the Option, to the extent then exercisable, may be exercised for 90 days
following termination of employment (but not beyond the Option Period). To the
extent the Option is not exercisable at the time of termination of employment,
the Option shall be immediately forfeited. For purposes of this Option, service
with any of the Company's Subsidiaries (as defined in the Plan) shall be
considered to be service with the Company. In the event of a termination of the
Option Holder's employment for Cause, the Option shall immediately cease to be
exercisable and shall be immediately forfeited. In the event the Option Holder
ceases to be an employee of the Company due to the Option Holder's death or
Permanent Disability, the Option shall become immediately exercisable in full
and shall continue to be exercisable by the Option Holder (or his or her
Beneficiary in the event of death) for a period of three years following such
termination of employment (but not beyond the Option Period).
(k) OBLIGATIONS AS TO CAPITAL. The Company agrees that it will
at all times maintain authorized and unissued share capital sufficient to
fulfill all of its obligations under the Option.
(l) TRANSFER OF SHARES. The Option, the Option Shares, or any
interest in either, 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 and the terms and conditions hereof.
(m) EXPENSES OF ISSUANCE OF OPTION SHARES. The issuance of
stock certificates upon the exercise of the Option in whole or in part, shall be
without charge to the Option Holder. The Company shall pay, and indemnify the
Option Holder 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) by reason of the exercise of the Option in
whole or in part or the resulting issuance of the Option Shares.
(n) WITHHOLDING. No later than the date of exercise of the
Option granted hereunder, the Option Holder 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
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law to be withheld upon the exercise of such Option and the Company shall, to
the extent permitted or required by law, have the right to deduct from any
payment of any kind otherwise due to the Option Holder, federal, state and local
taxes of any kind required by law to be withheld upon the exercise of such
Option.
(o) REFERENCES. References herein to rights and obligations of
the Option Holder shall apply, where appropriate, to the Option Holder'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
Option.
(p) 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.
EXECUTIVE OFFICES:
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Secretary
If to the Option Holder:
The last address delivered to the Company by the Option Holder
in the manner set forth herein.
(q) 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 thereof.
(r) 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.
(s) 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 of Grant.
ARCH CAPITAL GROUP LTD.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
General Counsel & Secretary
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
