Document:

Exhibit 10.4 McElroy

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 

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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.  

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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.

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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.

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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     
Name:  Dawna Ferguson 
Title:  Secretary

/s/ David McElroy    
David McElroy

6Exhibit 10.2

Exhibit 10.2
CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENEDED.
THIRD AMENDMENT TO PRODUCT DISTRIBUTION AGREEMENT
This Third Amendment to Product Distribution Agreement (“Third Amendment”) amends that certain Product Distribution Agreement that was effective April 19, 2012, and amended March 25, 2013 and July 15, 2013 (the “Distribution Agreement”) between MiMedx Group, Inc. (the “Company”) and AvKARE, Inc. (“AvKARE”).
WHEREAS, the Company and AvKARE desire to amend the Distribution Agreement;
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and AvKARE agree that the Distribution Agreement shall be, and hereby is, amended as follows:
		
	1.
	Section 1.1 shall be deleted in its entirety and replaced with the following language:

“Subject to the terms and conditions set forth in this Agreement, Company appoints AvKARE, and AvKARE accepts such appointment, as Company’s authorized [*****] distributor for the sale of the Products in the Market.  AvKARE shall use best efforts to promote and sell the Products in the Market as set for the in this Agreement.  If Company desires to have new Products added to the Federal Supply Schedule, AvKARE shall use reasonable commercial efforts to add such new Products to the Federal Supply Schedule within a commercially reasonable amount of time of Company’s request and when such Products are added to the Federal Supply Schedule, the schedules to this Agreement shall be amended to include such new Products.  [*****]

		
	2.
	A new Section 1.8 shall be added to the Agreement as follows:

“Company and AvKARE shall mutually agree on what portion of Federal Supply Schedule sales shall be filled by AvKARE during the Extension Term (as defined below).  Company shall use commercially reasonable efforts to support those sales during the Extension Term.  The target sales are listed on Schedule 5, attached hereto.” 

		
	3.
	Section 18.1 shall be deleted in its entirety and replaced with the following language:

“This Agreement will have an initial term beginning on the Effective Date and ending on March 31, 2015.  Thereafter, an initial Extension Term shall begin, which shall be effective on April 1, 2015 and shall continue through June 30, 2016 unless otherwise terminated earlier in accordance with this Agreement.  During the initial Extension Term, the price for Products sold to AvKARE shall continue to be [*****] of AvKARE’s sales price for the Products to its Customer, such that AvKARE achieves a [*****] gross commission (the “Extension Term Commission”).  The Extension Term 

may be renewed in writing by mutual agreement of the parties for any period of time specified in such renewal.  [****]  Each party will provide supporting data to the other party concerning the applicable sales levels and inventories in order to assist with planning for and complying with the inventory sell-through process.  At the close of the initial Extension Term, Company and AvKARE will confer to determine the total Extension Term Commission made by AvKARE under this Agreement during the initial Extension Term.  If AvKARE has achieved at least [*****] in Extension Term Commission (the “Commission Target”), the parties will mutually agree to discontinue the Agreement.  If AvKARE has not achieved the Commission Target, the parties will renew the Extension Term on a month to month basis and shall proceed in accordance with Section 18.4 below.   In addition, at the close of the initial Extension Term the parties will jointly determine either: (a) if the parties continue the Agreement, what inventory, if any, should be repurchased by Company in order to achieve the appropriate inventory level going forward; or (b) if the parties discontinue the Agreement, an orderly repurchase by Company of any remaining inventory during the following 180 day period.  Any such repurchases shall be at the price paid by AvKARE for such Products.”  

		
	4.
	Section 18.3 shall be deleted in its entirety and replaced with the following language:

		
	a.
	This Agreement may be terminated by either party if the other party is in material breach of any provision of this Agreement and such breach is not cured within thirty (30) days following notice of such breach given to the breaching party in accordance with Section 19.4 below; provided, however, that the Agreement may be terminated immediately (with no advance notice and right to cure) if: (i) all of the Products are removed from the Federal Supply Schedule for any reason; or (ii) AvKARE’s governmental approval to sell on the Federal Supply Schedule is revoked; or (iii) the Company is otherwise unable to sell its Products for any reason.  If some, but not all, Products are removed from the Federal Supply Schedule or the Company is otherwise unable to sell some, but not all, Products on the Federal Supply Schedule, the affected Products will be removed from the Agreement, but the Agreement will otherwise continue in accordance with these terms for any remaining Products on the Federal Supply Schedule.  Termination of this Agreement under this subpart (a) shall not affect Company’s obligation to honor all Purchase Orders submitted to Company prior to such termination and to pay AvKARE full Referral Fees, if applicable, on all qualifying sales made prior to such termination, but Company shall not be obligated to pay any Referral Fees beyond the termination date unless termination is due to breach by Company.  

		
	b.
	Either party may terminate this Agreement without cause at any time upon one hundred eighty (180) days’ written notice to the other party specifying the date of termination.  Upon receipt of request for termination until the effective date of termination, Company agrees to honor all Purchase Orders submitted to Company and to pay AvKARE full Referral Fees on all qualifying sales made during such period, and, in the event the termination is initiated by the Company, the Referral Fee Tail, as specified in Schedule 6.  

		
	c.
	Regardless of the reason for termination, the following sections shall survive termination or expiration of this Agreement:  7, 8, 9, 12, 13, 14, 16, and 19.5.”  

		
	5.
	Section 18.4 shall be deleted in its entirety and replaced with the following:

“If the parties exercise an Extension Term renewal, AvKARE shall receive a referral fee equal to a percentage of MiMedx’s Gross Sales of Products to each Prospect during any such renewal period as set forth on Schedule 6 hereto (the “Referral Fees”).  The Extension Term renewal shall continue on a month to month basis until the total of AvKARE’s Extension Term Commission and Referral Fees, combined, reaches [*****].  For purposes of this Section 18.4, ‘Gross Sales’ shall mean [*****]. If any monies on which Referral Fees are paid are subsequently refunded or credited back to the Prospect, the amount of such Referral Fees shall be credited against and deducted from future Referral Fee payments under this Agreement.  If the Referral Fees for the month in which such overpayment is credited are less than the amount of the credit, AvKARE will refund the difference to the Company within thirty (30) days of the Company’s request.” 

		
	6.
	Section 18.5 shall be deleted in its entirety and replaced with the following language:

“a.    If AvKARE terminates this Agreement with cause pursuant to Section 18.3(a) above, or if the Company terminates this Agreement without cause pursuant to Section 18.3(b), above, the Company will, for a period of one hundred twenty (120) days after the termination date, continue to sell the Products in AvKARE’s inventory.  At the end of such period, the Company shall repurchase any remaining inventory of Products from AvKARE at the price paid by AvKARE for such Products.  If the total amount of Extension Term Commission, Referral Fees, and other commission achieved from the 120 day sell off period under this Section 18.5(a) falls short of [*****], Company shall pay to AvKARE a termination fee equal to the difference between [*****] and the actual commission and Referral Fees achieved by AvKARE as determined above. 
b.    If AvKARE terminates this Agreement without cause pursuant to Section 18.3(b) above, or if the Company terminates this Agreement with cause pursuant to Section 18.3(a) above, the Company will have one hundred eighty (180) days after the termination date to continue to sell the Products in AvKARE’s inventory.  At the end of such period, the Company shall repurchase any remaining inventory of Products from AvKARE at the price paid by AvKARE for such Products.”
		
	7.
	Schedule 1, “The Products,” shall be deleted and replaced with the attached modified Schedule 1.

		
	8.
	Schedule 2, “The Market,” shall be deleted and replaced with the attached modified Schedule 2.

		
	9.
	In all other respects, the Distribution Agreement is and shall remain in full force and effect in accordance with its terms.

IN WITNESS WHEREOF,  the undersigned have executed this Third Amendment to Product Distribution Agreement.

MiMedx Group, Inc.                    AvKARE, Inc.

/s/ William C. Taylor                    /s/  Troy A. Mizell
By: William C. Taylor                    By: Troy A. Mizell
Its: President & COO                    Its: President & CEO
Date: April 16, 2015                    Date:  April 17, 2015

Schedule 1
The Products
[*****]

Schedule 2
The Market
AvKARE’s Sales Territory shall consist of [*****].

Schedule 5
Target FSS sales levels during Extension Term
The following are the target FSS sales levels for AvKARE during the Extension Term.  
[*****]

Schedule 6
Referral Fees, Prospects, Referral Fee Tail
During any renewal of the Extension Term, AvKARE shall receive Referral Fees equaling [*****] of Gross Sales per month on sales to the Prospects listed below, not to exceed [*****] per month:
[*****]
During any renewal of the Extension Term, in the event that Company terminates this Agreement pursuant to subpart (b) of Section 18.3 or AvKARE terminates this Agreement for breach pursuant to subpart (a) of Section 18.3, a Referral Fee Tail shall also be payable, which shall consist of a continuation of the Referral Fees following the effective date of termination and continuing through the date on which the total of AvKARE’s Extension Term Commission and Referral Fees, combined, reaches [*****] million.

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