Exhibit 10.4
ARCH CAPITAL GROUP LTD.
Restricted Share Unit Agreement
THIS AGREEMENT, dated as of May 13, 2015, between Arch Capital Group Ltd. (the
“Company”), a Bermuda company, and David McElroy (the “Employee”).
WHEREAS, the Employee has been granted the following award under the Company’s
2015 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 9,220
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 three equal
annual installments on the first, second and third anniversaries of the date
hereof. 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.
(i)     In the event the Employee ceases to be an employee of the Company prior
to the date the Restricted Share Units otherwise become vested due to his or her
death or Permanent Disability (as defined in the Company’s Incentive
Compensation Plan on the date hereof), the Restricted Share Units shall become
immediately vested in full upon such termination of employment.
(ii)    In the event of termination of employment (other than by the Company for
Cause, as such term is defined in the Company’s Incentive Compensation Plan on
the date hereof, and other than as set forth in Section 2(b)(i) or (iii) hereof)
after the attainment of Retirement Age (as defined in the Company’s Incentive
Compensation Plan on the date hereof), the Restricted Share Units shall continue
to vest on the schedule set forth in paragraph 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 Share Units
shall be forfeited by the Employee and become the property of the Company.

--------------------------------------------------------------------------------

(iii)    In the event the Employee ceases to be an employee of the Company after
a Change in Control (as defined below) due to termination (A) by the Company not
for Cause or (B) by the Employee for Good Reason (as defined in the Employment
Agreement dated as of June 5, 2009, and as amended on July 25, 2012, between the
Employee and Arch Insurance Group Inc.), in either case, on or before the second
anniversary of the occurrence of the Change in Control, the Restricted Share
Units, to the extent not already vested, shall become immediately vested in full
upon such termination of employment.
(iv)    If the Employee ceases to be an Employee of the Company for any other
reason prior to the date the Restricted Share Units become vested, the unvested
Restricted Share Units shall be forfeited by the Employee and become the
property of the Company.
(v)    For purposes of this Agreement, service with any of the Company’s
Subsidiaries (as defined in the Plan) shall be considered to be service with the
Company.
(vi)    “Change in Control” shall mean:

(A)
any person (within the meaning of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), other than a Permitted Person, 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 or value of all the then outstanding Voting Securities; or

(B)
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

(C)
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 more than 50% of the total voting power and value
represented by the voting securities of the surviving entity outstanding
immediately after such transaction being beneficially owned by the former
shareholders of the Company and (y) not otherwise be deemed a Change in Control
under subparagraphs (A) or (B) of this paragraph.

“Permitted Persons” means (A) the Company; (B) any Related Party; or (C) any
group (as defined in Rule 13b-3

2

--------------------------------------------------------------------------------

under the Exchange Act) comprised of any or all of the foregoing.
“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) any entity,
50% or more of the voting power of which is owned directly or indirectly by the
shareholders of the Company in substantially the same proportion as their
ownership of Voting Securities immediately prior to the transaction.

“Voting Security” means any security of the Company which carries the right to
vote generally in the election of directors.    
(c)    Distribution of Shares.  At the time the Employee ceases to be an
employee of the Company for any reason prior to attaining Retirement Age, the
Company shall distribute to the Employee (or his or her heirs in the event of
the Employee’s death) a number of Shares equal to the number of vested
Restricted Share Units then held by the Employee. In the event the Employee
ceases to be an employee of the Company after attaining Retirement Age, a number
of Shares equal to the number of vested Restricted Share Units held by the
Employee will be distributed by the Company to the Employee (or his or her heirs
in the event of the Employee’s death) at the later of (i) the time the Employee
ceases to be an employee of the Company, and (ii) the date the Restricted Share
Units are scheduled to vest pursuant to the schedule set forth in Section 2(a)
above (without regard to any acceleration of such vesting), so long as the
Restricted Share Units are not forfeited before such time as provided in Section
2(b).
(d)    Rights and Restrictions.  The Restricted Share Units shall not be
transferable, other than pursuant to will or the laws of descent and
distribution. Prior to vesting of the Restricted Share Units and delivery of the
Shares to the Employee following his termination of employment, the Employee
shall not have any rights or privileges of a shareholder as to the Shares
subject to the Award. Specifically, the Employee shall not have the right to
receive dividends or the right to vote such Shares prior to vesting of the Award
and delivery of the Shares.
(e)    Anti-dilution Adjustment. For the avoidance of doubt, the terms of
Section 4(c) of the Plan, relating to anti-dilution adjustments, will apply to
the Restricted Share Units.
(f)    Dividend Equivalents. As of each date on which a cash dividend is paid on
Shares, there shall be granted to the Employee that number of additional
Restricted Share Units (including fractional units) determined by
(i) multiplying the amount of such dividend per Share by the number of
Restricted Share Units held by the Employee, and (ii) dividing the total so
determined by the Fair Market Value of a Share on the date of payment of such
cash dividend. The Restricted Share Units granted pursuant to this Section 2(f)
will have the same terms and conditions (including vesting dates) as the
Restricted Share Units with respect to which they are granted.
(g)    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

--------------------------------------------------------------------------------

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.
4.    Expenses of Issuance of Shares. The issuance of stock certificates
hereunder shall be without charge to the Employee. The Company shall pay 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 Employee 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 law to be withheld with respect to the Award 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 Employee, federal,
state and local taxes of any kind required by law to be withheld.
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.    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.
Waterloo House
100 Pitts Bay Road
Pembroke HM 08 Bermuda
Attn.: Secretary
If to the Employee:
To the last address delivered to the Company by the
Employee in the manner set forth herein.
8.    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.
9.    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.

4

--------------------------------------------------------------------------------

10.    Counterparts.  This Agreement may be executed in two counterparts, each
of which shall constitute one and the same instrument.
11.    Section 409A. It is intended that this Agreement and the Award will
comply with Section 409A of the Code (and any regulations and guidelines issued
thereunder), to the extent the Agreement and Award are subject thereto, and the
Agreement shall be interpreted on a basis consistent with such intent. If an
amendment of the Agreement is necessary in order for it to comply with Section
409A, the parties hereto will negotiate in good faith to amend the Agreement in
a manner that preserves the original intent of the parties to the extent
reasonably possible. Notwithstanding any provision of this Agreement to the
contrary, for purposes of any provision of this Agreement providing for the
distribution of any Shares upon or following a termination of employment that is
considered deferred compensation under Section 409A, references to the
Employee’s “termination of employment” (and corollary terms) with the Company
shall be construed to refer to the Employee’s “separation from service” (within
the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company.
Notwithstanding any provision to the contrary in this Agreement, if the Employee
is deemed on the date of his or her “separation from service” (within the
meaning of Treas. Reg. Section 1.409A-1(h)) to be a “specified employee” (within
the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment
that is considered deferred compensation under Section 409A payable on account
of a “separation from service” that is required to be delayed pursuant to
Section 409A(a)(2)(B) of the Code (after taking into account any applicable
exceptions to such requirement), such payment shall not be made prior to the
earlier of (i) the expiration of the six (6)-month period measured from the date
of the Employee’s “separation from service,” or (ii) the date of the Employee’s
death (the “Delay Period”). Upon the expiration of the Delay Period, all
payments delayed pursuant hereto (whether they would have otherwise been payable
in a single sum or in installments in the absence of such delay) shall be paid
to the Employee in a lump sum and any remaining payments due under this
Agreement shall be paid in accordance with the normal payment dates specified
for them herein. Whenever payments under this Agreement are to be made in
installments, each such installment shall be deemed to be a separate payment for
purposes of Section 409A. No action or failure to act, pursuant to this Section
11 shall subject the Company to any claim, liability, or expense, and the
Company shall not have any obligation to indemnify or otherwise protect the
Employee from the obligation to pay any taxes, interest or penalties pursuant to
Section 409A of the Code.

5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
ARCH CAPITAL GROUP LTD.
By:
/s/ Dawna Ferguson    
Name: Dawna Ferguson
Title: Secretary

/s/ David McElroy    
David McElroy

6