Document:

Exhibit 10.4

 

ARCH CAPITAL GROUP LTD.

Restricted Share Agreement

 

THIS AGREEMENT,
dated as of February 26, 2004, between Arch Capital Group Ltd. (the “Company”),
a Bermuda company, and Constantine Iordanou (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 17,857
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 four equal annual installments, commencing on
the date hereof and thereafter on the first, second and third anniversaries
thereof.  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 or her death or Permanent
Disability (as defined in the Company’s Incentive Compensation Plan) or (ii)
due to termination (A) by the Company not for Cause (as defined in the
Company’s Incentive Compensation Plan) or (B) by the Employee for Good Reason
(as defined in the Employment Agreement, dated December 20,2001, between the Employee
and Arch Capital Group Ltd.), the Restricted Shares shall become immediately
vested in full upon such termination of employment.  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 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.  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.

 

(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(a) 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 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.

 

 

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/
  Constantine Iordanou

  	
   

  
	
   

  	
  Constantine
  IordanouExhibit 10.5

 

ARCH CAPITAL GROUP LTD.

 

Restricted Share Unit Agreement

 

THIS
AGREEMENT, dated as of February 26, 2004, between Arch Capital Group Ltd. (the
“Company”), a Bermuda company, and Ralph E. Jones, III (the “Employee”).

 

WHEREAS, the
Employee has been granted the following award 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 Share Units.  Pursuant
to the provisions of the Plan, the terms of which are incorporated herein by
reference, the Employee is hereby awarded 3,571 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
four equal annual installments, commencing on the date hereof and thereafter on
the first, second and third anniversaries thereof.  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.  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 Share
Units otherwise become vested (i) due to his or her death or Permanent
Disability (as defined in the Company’s Incentive Compensation Plan) or (ii)
due to termination (A) by the Company not for Cause (as defined in the
Company’s Incentive Compensation Plan) or (B) by the Employee for Good Reason
(as defined in the Employment Agreement, dated June 4, 2003, between the
Employee and Arch Insurance Group Inc.), the Restricted Share Units shall
become immediately vested in full upon such termination of employment.  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 Restricted Share
Units 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 Share Units shall be forfeited by
the Employee and become the property of the Company.  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.  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.

 

(c)           Distribution of Shares.  At
the time the Employee ceases to be an Employee of the Company for any reason,
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.

 

(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)           Adjustments for Recapitalization
and Dividends.  In the event that,
prior to the distribution of Shares pursuant to Section 2(c) above, 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 Employee and
preserve the value of the Award, there shall automatically be substituted for
each Share subject to the Award 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.

 

(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

 

2

 

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.  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.

Wessex House, 4th Floor

45 Reid Street

Hamilton HM 12 Bermuda 

Attn.: Secretary

 

3

 

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.

 

4

 

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/ Ralph E. Jones, III

  	
   

  
	
   

  	
  Ralph E. Jones, III

  

 

5

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