Exhibit 10.12
ARCH CAPITAL GROUP LTD.
RESTRICTED SHARE AGREEMENT
THIS AGREEMENT, dated as of January 30, 2001, between Arch Capital Group
Ltd. (the "Company"), a Bermuda company, and Xxxxx X. Xxxxxxxx (the "Employee").
WHEREAS, the Employee has been granted the following award in connection
with his retention as an employee and as compensation for services to be
rendered; and the following terms reflect the Company's 1995 Long Term Incentive
and Share Award Plan (as amended, 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 5,000
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.
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 the other terms and conditions of
this Agreement, this Award shall become vested in accordance with the
following schedule:
The Following Number
of Restricted Shares
Shall Vest on
On This Date Each Respective Date
------------ ---------------------
1/30/02 1,250
1/30/03 1,250
1/30/04 1,250
1/30/05 1,250
; provided that all such shares shall immediately become vested (i) to the
extent provided in Section 2(b) hereof and (ii) upon a Change in Control.
"Change in Control" means any of the following occurring after the
date hereof:
a. any person (within the meaning of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than a
Permitted Person or an Initial Investor, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of Voting Securities representing 35%
or more of the total voting power of all the then outstanding Voting
Securities; or
b. any Initial Investor is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of Voting Securities representing 50% percent or more of
the total voting power of all the then outstanding Voting
Securities; or
c. 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
d. 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 at least 60% of the total voting power represented by the
voting securities of the surviving entity or, in the case of an
asset sale, the successor entity, outstanding immediately after such
transaction being beneficially owned, directly or indirectly, by the
stockholders of the Company immediately preceding the transaction
and (y) not otherwise be deemed a Change in Control under
subparagraphs a, b, c or e of this Section 2(a); or
e. the Board adopts a resolution to the effect that, for
purposes hereof, a Change in Control has occurred.
(i) "Initial Investors" means (A) The Trident
Partnership, L.P.; (B) Xxxxx & McLennan Risk Capital
Holdings, Ltd.; or (C) any majority-owned subsidiary or
parent (or equivalent in the case of a non-corporate
entity) of the foregoing.
(ii) "Permitted Persons" means (A) the Company; (B) any
Related Party; or (C) any group (as defined in Rule
13d-3 under the Exchange Act) comprised of any or all of
the foregoing.
(iii) "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) a corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of
Voting Securities.
(iv) "Voting Security" means any security of the Company
which carries the right to vote generally in the
election of directors.
(b) TERMINATION OF SERVICE; FORFEITURE OF UNVESTED SHARES. In the
event the Employee ceases to be an employee of the Company (i) due to
retirement after attainment of age 65 or (ii) due to death or disability,
as determined under the Company's long-term disability plan, the
Restricted Shares subject to the Award, to the extent not already vested
in full, shall become immediately and fully vested at the time of such
termination of service. If the Employee ceases to be an employee of the
Company for any other reason, the portion of the Award which is not then
vested 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
wholly owned subsidiaries 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
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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(a) or 2(b) 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
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. Each certificate for Shares delivered hereunder, unless at
the time of issuance such Shares are registered under the Securities Act of
1933, as amended, shall bear the following legend or such other legend as the
Company deems appropriate:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the 'Act'), and may not be offered,
sold or otherwise transferred except (i) in compliance with the provisions
of any applicable state securities or 'Blue Sky' laws and (ii) (A)
pursuant to an effective registration under the Act, (B) in compliance
with Rule 144 under the Act, (C) inside the United States to a Qualified
Institutional Buyer in compliance with Rule 144A under the Act, (D)
outside the United States in compliance with Rule 904 of Regulation S
under the Act or (E) inside the United States to an institutional
'accredited investor' as defined in Rule 501(a)(1), (2), (3) or (7) under
the Act in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction under the
Act and the rules and regulations promulgated thereunder."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend or such other legend deemed appropriate by the
Company shall also bear such legend unless, in the opinion of counsel for the
Company, the securities represented thereby need no longer be subject to the
restriction contained herein. The provisions of this Section 3 shall be binding
upon all subsequent holders of certificates bearing the above legend.
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.
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5. WITHHOLDING. The Employee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable tax withholding requirements, or
similar requirements, arising out of this Agreement.
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. SETTLEMENT OF DISPUTES. Any dispute between the parties arising from or
relating to the terms of this Agreement shall be resolved by arbitration held in
the State of Connecticut in accordance with the rules of the American
Arbitration Association. All costs associated with any arbitration, including
all legal expenses, for both parties shall be borne by the Company.
8. NO MITIGATION. To the extent that the vesting of any portion of the
Award is accelerated upon a Change in Control or upon a termination of service
as provided herein, neither the Shares delivered hereunder nor any interest
therein, shall be reduced by any compensation received by the Employee in
connection with any other employment.
9. 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 Employee:
Xxxxx X. Xxxxxxxx
000 X. 00xx Xxxxxx, Xxx. 00X
New York, N.Y. 10023
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflict of laws.
11. ENTIRE AGREEMENT. This Agreement constitutes 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.
12. 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/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
President and Chief Executive Officer
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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