Document:

EXHIBIT 10.12.6

ARCH
CAPITAL GROUP LTD.

Restricted Share Agreement

THIS AGREEMENT, dated as of July 1, 2005, between Arch
Capital Group Ltd. (the “Company”), a Bermuda company, and Preston Hutchings
(the “Employee”).

WHEREAS, the Employee has been granted the following
award in connection with his or her retention as an employee and as
compensation for services to be rendered; and the following terms reflect the
Company’s 2002 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 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.  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 on the fifth anniversary 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. 
Except as otherwise set forth in Section 2(a) above, in the event
the Employee ceases to be an employee of the Company prior to the date the
Restricted Shares otherwise become vested (i) due to his death or Permanent
Disability (as defined below) or (ii) due to termination by the Company not for
Cause (as defined below), the Restricted Shares subject to the Award shall
become vested in full at the time of such termination of service.  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.  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.

For purposes hereof, 
“Cause” means (a) theft or embezzlement
by the Employee with respect to the Company or its subsidiaries; (b)
malfeasance or gross negligence in the performance of the Employee’s duties;
(c) the commission by the Employee of any felony or any crime involving moral
turpitude; (d) willful or prolonged absence from work by the Employee (other
than by reason of disability due to physical or mental ill-

 

 

ness) or failure, neglect or refusal by the Employee
to perform his or her duties and responsibilities without the same being corrected
within ten (10) days after being given written notice thereof; (e) continued
and habitual use of alcohol by the Employee to an extent which materially
impairs the Employee’s performance of his or her duties without the same being
corrected within ten (10) days after being given written notice thereof; or
(f) the Employee’s use of illegal drugs without the same being corrected
within ten (10) days after being given written notice thereof.  For purposes hereof, “Permanent Disability” means those circumstances where the Employee is unable to
continue to perform the usual customary duties of his or her assigned job for a
period of six (6) months in any twelve (12) month period because of physical,
mental or emotional incapacity resulting from injury, sickness or disease.  Any questions as to the existence of a
Permanent Disability shall be determined by a qualified, independent physician
selected by the Company and approved by the Employee (which approval shall not
be unreasonably withheld).  The
determination of any such physician shall be final and conclusive for all purposes
of this Agreement.

(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

 

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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 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 
                Executive 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.

 

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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:

  	
  /s/ Dawna Ferguson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Preston Hutchings

  
	
  Preston Hutchings

  

 

 

 

5EXHIBIT 10.13.7

 

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 Marc
Grandisson, 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 2002
Long Term Incentive and Share Award Plan (the “Plan”);

 

(a)                       Grant.  The Option Holder is hereby granted an option
(the “Option”) to purchase 80,000 Shares (the “Option Shares”) pursuant to the
Plan, the terms of which are incorporated herein by reference.  The Option is granted as of November 15,
2005 (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, $55.04 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 on
December 31, 2008, 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 in writing
signed by the Option Holder, 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 (as defined below) 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 (or if any Shares are not publicly traded, an amount equal to the book
value per share at the end of the most recent fiscal quarter) multiplied by the
fraction of the fractional share which would otherwise have been issued
hereunder.  Anything to the contrary
herein notwithstanding, the Company shall not be obligated to issue any Option
Shares hereunder if the

 

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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 Option Shares may be issued without resulting in such violations
of law.  For purposes hereof, Fair Market
Value shall mean the mean between the high and low selling prices per Share on
the immediately preceding date (or, if the Shares were not traded on that day,
the next preceding day that the Shares were traded) on the principal exchange
on which the Shares are traded, as such prices are officially quoted on such
exchange.

 

(j)                          Termination
of Service.  In the event the Option
Holder ceases to be an employee of the Company (a) due to his death or
Permanent Disability (as defined in the Company’s Incentive Compensation Plan),
or (b) due to termination (x) by the Company not for Cause (as defined in
the Company’s Incentive Compensation Plan) or (y) by the Option Holder for Good
Reason (as defined in the Employment Agreement, dated as of October 23,
2001 (as amended), between the Option Holder, Arch Reinsurance Ltd. and the
Company), the Option, to the extent not already exercisable in full, shall
become immediately exercisable in full and shall continue to be exercisable by
the Option Holder (or his Beneficiary or estate in the event of his death) for
a period of three years following such termination of employment (but not
beyond the Option Period).  In the event
of termination of employment (other than by the Company for Cause) after the
attainment of Retirement Age (as defined in the Company’s Incentive
Compensation Plan), the Option shall continue to vest on the schedule set
forth in paragraph (f) above so long as the Option Holder 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”) and shall continue to be exercisable by
the Option Holder (or his Beneficiary or estate in the event of his death) at
any time during the Option Period.  In
the event the Option Holder engages in a Competitive Activity, the Option, to
the extent then exercisable, may be exercised for 30 days following the date on
which the Option Holder engages in such Competitive Activity (but not beyond
the Option Period).  In the event that
the Option Holder ceases to be an employee of the Company for any other reason,
except due to a termination of the Option Holder’s employment by the Company
for Cause (as defined in the Company’s Incentive Compensation Plan), the
Option, to the extent then exercisable, may be exercised for 90 days following
termination of employment (but not beyond the Option Period).  In the event of a termination of the Option
Holder’s employment for Cause, the Option shall immediately cease to be
exercisable and shall be immediately forfeited. 
To the extent the Option is not exercisable at the time of termination
of employment, the Option shall be immediately forfeited.  For purposes of this Option, service with any
of the Company’s Subsidiaries (as defined in the Plan) shall be considered to
be service with the Company.

 

(k)                       Obligations
as to Capital.  The Company agrees
that it will at all times maintain authorized and unissued share capital
sufficient to fulfill all of its obligations under the Option.

 

(l)                          Transfer
of Shares.  The Option, the Option
Shares, or any interest in either, 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

 

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and restrictions as set
forth in the governing instruments of the Company, applicable United States
federal and state securities laws and the terms and conditions hereof.

 

(m)                    Expenses
of Issuance of Option Shares.  The
issuance of stock certificates upon the exercise of the Option in whole or in
part, shall be without charge to the Option Holder.  The Company shall pay, and indemnify the
Option Holder 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) by reason of the exercise of the Option in
whole or in part or the resulting issuance of the Option Shares.

 

(n)                      Withholding.  No later than the date of exercise of the
Option granted hereunder, the Option Holder 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 upon the
exercise of such Option 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 Option Holder, federal, state and local taxes of any kind required
by law to be withheld upon the exercise of such Option.

 

(o)                      References.  References herein to rights and obligations
of the Option Holder shall apply, where appropriate, to the Option Holder’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 Option.

 

(p)                      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

45
Reid Street

Hamilton
HM 12 Bermuda 

Attn:  Secretary

 

If to
the Option Holder:

 

The
last address delivered to the Company by the Option Holder in the manner set
forth herein.

 

(q)                      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 thereof.

 

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(r)                         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.

 

(s)                       Counterparts.  This agreement may be executed in two
counterparts, each of which shall constitute one and the same instrument.

 

5

 

IN
WITNESS WHEREOF, the undersigned have executed this agreement as of the Date of
Grant.

 

	
   

  	
  ARCH CAPITAL
  GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  John D. Vollaro

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Marc Grandisson

  	
   

  
	
   

  	
  Marc Grandisson

  

 

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