Exhibit 10.2
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
John C.R. Hele, 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 under the Company’s 2007 Long
Term Incentive and Share Award Plan (the
“Plan”);
(a) Grant .
The Option Holder is hereby granted an option (the
“Option”) to purchase 40,000 Shares (the “Option
Shares”) pursuant to the Plan, the terms of which are
incorporated herein by reference. The Option is granted as of
April 1, 2009 (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 . Upon issue, the Option Shares shall 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, $55.74 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 in
three equal annual installments on the first, second and third
anniversaries 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.
(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 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 (which shall include a broker assisted exercise
arrangement), of the Option Price for the Option Shares for which
the Option is being exercised. Payment to the Company in cash
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 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, 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 multiplied by the
fraction of the fractional share which would otherwise have been
issued hereunder. Anything to the contrary herein
notwithstanding, the Company shall
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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
