EXHIBIT 10.7.6
ARCH CAPITAL GROUP LTD.
RESTRICTED SHARE AGREEMENT
THIS AGREEMENT, dated as of January 1, 2001, between Arch Capital
Group Ltd. (the "Company"), a Bermuda corporation, and Xxxxxx Xxxxxxxx (the
"Executive").
WHEREAS, the Company and the Executive have entered into a Retention
and Change in Control Agreement, dated as of May 5, 2000 (the "Retention
Agreement"), under which the Executive will receive compensation at an annual
rate equal to one-half of the salary of the Company's President and Chief
Executive as compensation for the Executive's services as Chairman of the Board
of Directors; 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 Executive is hereby awarded
12,500 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 full on January 1, 2002;
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%
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 Executive's services as Chairman of the Board of Directors of
the Company cease (i) due to death or Disability (as defined in the
Retention Agreement), or (ii) due to (A) termination by the Company
without Cause (as defined in the Retention Agreement) or (B)
Constructive Termination (as defined in the Retention Agreement), 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 Executive's services with the
Company cease for any other reason, then a prorated portion of the
Award based on the number of days the Executive served the Company
during the calendar year of such termination shall become vested and
the remaining portion of the Award shall be forfeited by the Executive
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.
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(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 Company, a stock power
executed in blank by the Executive, 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 Executive.
(d) RIGHTS OF A STOCKHOLDER. Prior to the time a Restricted Share is
fully vested hereunder, the Executive shall have no right to transfer,
pledge, hypothecate or otherwise encumber such Restricted Share. During
such period, the Executive 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 SERVICES. This Award shall not confer upon
the Executive any right with respect to continuance of services with
the Company nor shall this Award interfere with the right of the
Company to terminate the Executive's services 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 Executive. The Company shall pay, and
indemnify the Executive from and
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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.
5. WITHHOLDING. The Executive 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
Executive shall apply, where appropriate, to the Executive'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 Executive
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 Executive:
[Address of Executive]
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.
/s/ XXXXX X. XXXXX
---------------------------------
By: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
/s/ XXXXXX XXXXXXXX
---------------------------------
Xxxxxx Xxxxxxxx
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