Exhibit 10.4


 


ARCH CAPITAL GROUP LTD.

Restricted Share Agreement


 


THIS AGREEMENT, dated as of February 23, 2006, between
Arch Capital Group Ltd. (the “Company”), a Bermuda company, and                       
(the “Employee”).


WHEREAS, the Employee has been granted the following
award under the Company’s [2002/2005] 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 Shares.  Pursuant
to the provisions of the Plan, the terms of which are incorporated herein by
reference, the Employee is hereby awarded                       
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.  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 Shares 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 dividends and other amounts receivable in
connection with any adjustments to the Shares under Section 4(c) of the Plan
shall be subject to the vesting schedule in this Section 2(a).


(b)           Termination of Service; Forfeiture of Unvested
Shares.


(i)            In the event the Employee ceases to be an
employee of the Company prior to the date the Restricted Shares otherwise
become vested due to his or her death or Permanent Disability (as defined in
the Company’s Incentive Compensation Plan), the Restricted Shares 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 In Plan) after the attainment
of Retirement Age (as defined in the Company’s Incentive Compensation Plan),
the Restricted Shares shall continue to vest on the schedule set forth in Section
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 Shares 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                       , between the Employee and                       , in either case, on or before the second
anniversary of the occurrence of the Change in Control, the Restricted Shares,
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 Shares become vested, the Award shall
be forfeited by the Employee and become the property of the Company; provided
that, in the event of a Redundancy (as defined below), the Committee, in its
sole discretion, may, in accordance with its authority under the Plan,
determine that the Restricted Shares, to the extent not vested, shall become
vested upon such termination of employment.


(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



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(C)              the
consummation of a merger, consolidation, recapitalization, liquidation, sale or
disposition by the 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; (C) Hellman
& Friedman or any of its subsidiaries or investment funds managed or
controlled by Hellman & Friedman; (D) Warburg Pincus or any of its
subsidiaries or any investment funds managed or controlled by Warburg Pincus or
any of its subsidiaries; or (E) any group (as defined in Rule 13b-3
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.


(vii)                                             “Redundancy” shall mean termination of
employment by the Company due to its need to reduce the size of its workforce,
including due to closure of a business or a particular workplace or change in
business process.  Whether a termination of employment is due to a “redundancy”
shall be determined by the Committee in its sole and absolute discretion, such
determination being final and binding on all parties hereto and all persons
claiming through, in the name of or on behalf of such parties.



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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 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 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 (subject to Section 2(a) hereof) 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.


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.


5.             Withholding.  No later than the date of vesting of (or the
date of an election by the Employee under Section 83(b) of the Code with
respect to) the Award granted hereunder, 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 at
such time with respect to such 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 at such time.


6.             References.  References
herein to rights and obligations of the Employee shall apply, where
appropriate, to the Employee’s legal representative or estate without



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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.

Wessex House, 4th Floor

45 Reid Street

Hamilton HM 12 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.


10.           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:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 



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