ARCH CAPITAL GROUP LTD
EXHIBIT 10.10.8
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<TYPE>EX-10.10(8)
<SEQUENCE>7
<FILENAME>a2073647zex-10_108.txt
<DESCRIPTION>EXHIBIT 10.10.8
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                                                                 Exhibit 10.10.8



                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT ("AGREEMENT") dated as of January 18, 2002 between
Arch Capital Group Ltd., a Bermuda corporation (the "COMPANY"), and John D.
Vollaro (the "EXECUTIVE").

         The parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.01. DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings set forth below:

         "BASE SALARY" has the meaning set forth in Section 4.01.

         "CAUSE" means (a) theft or embezzlement by the Executive with respect
to the Company or its Subsidiaries; (b) malfeasance or gross negligence in the
performance of the Executive's duties; (c) the Executive's conviction of any
felony or any misdemeanor involving moral turpitude; (d) willful or prolonged
absence from work by the Executive (other than by reason of disability due to
physical or mental illness) or failure, neglect or refusal by the Executive to
perform his duties and responsibilities; (e) continued and habitual use of
alcohol by the Executive to an extent which materially impairs the Executive's
performance of his duties; (f) the Executive's use of illegal drugs; (g) the
Executive's failure to use his best efforts to obtain, maintain or renew the
work permit described in Section 3.02 below; or (h) the material breach by the
Executive of any of the provisions contained in this Agreement, including,
without limitation, Section 11.01. Cause shall not exist with respect to items
(b), (d), (e), (f), (g) or (h) (other than, in the case of item (h), a breach of
Section 11.01) unless and until Executive has been given written notice
specifying in detail the circumstances giving rise to the alleged cause, and the
Executive shall have failed, within twenty (20) days after such notice, to
remedy (or, if such alleged cause cannot be remedied within twenty (20) days,
diligently commenced to remedy) the alleged cause.

         "CONFIDENTIAL INFORMATION" means information that is not generally
known to the public and that was or is used, developed or obtained by the
Company or its Subsidiaries in connection with their business. It shall not
include information (a) required to be disclosed by court or administrative
order or called for in a subpoena or discovery request regular on its face, (b)
lawfully obtainable from other sources or which is in the public domain through
no fault of the Executive; or (c) the disclosure of which is consented to in
writing by the Company.

         "DATE OF TERMINATION" has the meaning set forth in Section 5.06.

         "EMPLOYMENT PERIOD" has the meaning set forth in Section 2.01.
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         "GOOD REASON" means, without the Executive's written consent, (a)
change in his title or the material diminution of any material duties or
responsibilities of the Executive; (b) a material reduction in the Executive's
Base Salary or bonus opportunity; or (c) any material breach by the Company of
the provisions contained in this Agreement. Good Reason shall not exist with
respect to items (a), (b) or (c) unless and until the Company has been given
written notice specifying in detail the circumstances giving rise to the alleged
reason, and the Company shall have failed, within twenty (20) days after such
notice, to remedy (or, if such alleged reason cannot be remedied within twenty
(20) days, diligently commenced to remedy) the alleged reason.

         "INTELLECTUAL PROPERTY" has the meaning set forth in Section 7.01.

         "NOTICE OF TERMINATION" has the meaning set forth in Section 5.05.

         "NONCOMPETITION PERIOD" has the meaning set forth in Section 9.01.

         "NONSOLICITATION PERIOD" has the meaning set forth in Section 9.02.

         "PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, an estate, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.

         "PERMANENT DISABILITY" means those circumstances where the Executive is
unable to continue to perform the usual customary duties of his assigned job or
as otherwise assigned in accordance with the provisions of this Agreement 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
Executive (which approval shall not be unreasonably withheld). The determination
of any such physician shall be final and conclusive for all purposes of this
Agreement.

         "REIMBURSABLE EXPENSES" has the meaning set forth in Section 4.04.

         "SUBSIDIARY" or "SUBSIDIARIES" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (a) if a corporation, fifty (50) percent or more of the
total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or combination
thereof; or (b) if a partnership, limited liability company, association or
other business entity, fifty (50) percent or more of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes of this definition, a Person or Persons will
be deemed to

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have a fifty (50) percent or more ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons are allocated fifty (50) percent or more of partnership, limited
liability company, association or other business entity gains or losses or
control the managing director or member or general partner of such partnership,
limited liability company, association or other business entity.

                                    ARTICLE 2

                                   EMPLOYMENT

         SECTION 2.01. EMPLOYMENT. The Company shall employ the Executive, and
the Executive shall accept employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in Section 5.01 (the "EMPLOYMENT PERIOD").

                                    ARTICLE 3

                               POSITION AND DUTIES

         SECTION 3.01. POSITION AND DUTIES. Effective on the date hereof, the
Executive shall serve as Executive Vice President and Chief Financial Officer of
the Company and shall have such responsibilities, powers and duties as may from
time to time be prescribed by the Board of Directors of the Company; PROVIDED
that such responsibilities, powers and duties are substantially consistent with
those customarily assigned to individuals serving in such position at comparable
companies or as may be reasonably required by the conduct of the business of the
Company. During the Employment Period the Executive shall devote substantially
all of his working time and efforts to the business and affairs of the Company
and its Subsidiaries. The Executive shall not directly or indirectly render any
services of a business, commercial or professional nature to any other person or
for-profit organization not related to the business of the Company or its
Subsidiaries, whether for compensation or otherwise, without prior written
consent of the Company.

         SECTION 3.02. WORK PERMITS. The Executive shall use his best efforts to
obtain, maintain and renew a suitable (for the purposes of the Executive's
contemplated employment by the Company) work permit by the Bermuda government
authorities and any other permits required by any Bermuda government authority.
The Company shall be responsible for permit fees, and all other expenses,
including legal expenses, in connection with obtaining and maintaining such work
permit.

         SECTION 3.03. WORK LOCATION. While employed by the Company hereunder,
the Executive shall perform his duties (when not traveling or engaged elsewhere
in the performance of his duties) at the offices of the Company in Bermuda. The
Executive shall travel to such places on the business of the Company in such
manner and on such occasions as the Company may from time to time reasonably
require.
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         SECTION 3.04. RELOCATION. The Company shall reimburse the Executive for
all reasonable expenses incurred by him (i) in relocating his household items to
Bermuda; (ii) in establishing his residence in Bermuda, including costs of
temporary housing, leasing or brokerage fees and commissions, and transportation
from the United States and within Bermuda; and (iii) upon the termination of
Executive's employment for any reason, for the cost of relocating all of his
household items to the United States, and airfare for Executive and his family
to return to the United States, in each case, subject to the Company's
requirements with respect to reporting and documentation of such expenses.

                                    ARTICLE 4

                            BASE SALARY AND BENEFITS

         SECTION 4.01. BASE SALARY. During the Employment Period, the
Executive's base salary will be $400,000 per annum (the "BASE SALARY"). The Base
Salary will be payable bi-monthly on the 15th and last working day of each month
in arrears. Annually during the Employment Period, the Board of Directors of the
Company shall review with the Executive his job performance and compensation,
and if deemed appropriate by the Board of Directors of the Company, in its
discretion, the Executive's Base Salary may be increased. Normal hours of
employment are 8:30 a.m. to 5:00 p.m., Monday to Friday. The Executive's salary
has been computed to reflect that his regular duties are likely, from time to
time, to require more than the normal hours per week and the Executive shall not
be entitled to receive any additional remuneration for work outside normal
hours.

         SECTION 4.02. BONUSES. In addition to the Base Salary, the Executive
shall be eligible to participate in an annual bonus plan on terms set forth from
time to time by the Board of Directors of the Company; PROVIDED, HOWEVER, that
the Executive's target annual bonus will be 100% of his Base Salary.

         SECTION 4.03. BENEFITS. In addition to the Base Salary, and any bonuses
payable to the Executive pursuant to this Agreement, the Executive shall be
entitled to the following benefits during the Employment Period:

                  (a) such major medical, life insurance and disability
         insurance coverage as is, or may during the Employment Period, be
         provided generally for other senior executive officers of the Company
         as set forth from time to time in the applicable plan documents;

                  (b) in addition to the usual public holidays and eight (8)
         paid days off for sick leave, a maximum of four (4) weeks of paid
         vacation annually during the term of the Employment Period (Section 11
         of the Bermuda Employment Act 2000 shall otherwise not apply to the
         Executive's employment hereunder);
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                  (c) benefits under any plan or arrangement available generally
         for the senior executive officers of the Company, subject to and
         consistent with the terms and conditions and overall administration of
         such plans as set forth from time to time in the applicable plan
         documents;

                  (d) the cost of preparation of annual tax returns and
         associated tax planning (up to a maximum of $7,500 annually), and an
         amount equal to the excess, if any, of the amount of income and
         employment taxes payable by Executive to Bermuda, Connecticut and any
         other governmental taxing authority over the amount that would have
         been payable by Executive had he resided in Connecticut for the entire
         calendar year; and

                  (e) other fringe benefits customarily provided to similarly
         situated senior executives residing in Bermuda.

         SECTION 4.04. EXPENSES. The Company shall reimburse the Executive for
all reasonable expenses incurred by him in the course of performing his duties
under this Agreement which are consistent with the Company's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, ("REIMBURSABLE EXPENSES"), subject to the Company's requirements with
respect to reporting and documentation of expenses.

         SECTION 4.05. STOCK OPTIONS AND RESTRICTED STOCK. On the date hereof,
the Company shall grant to the Executive an option to acquire 85,000 shares of
the Company's common stock at an exercise price equal to the closing market
price on the date hereof. The other terms of the stock option shall be as set
forth in the form of Stock Option Agreement attached hereto as EXHIBIT A. On the
date hereof, the Company shall also grant to the Executive 50,000 shares of
restricted common stock of the Company on the terms set forth in the form of
Restricted Stock Agreement attached hereto as EXHIBIT B. The stock option and
restricted stock awards provided for this Section 4.05 are made as an inducement
essential to the Executive's entering into the Agreement.

                                    ARTICLE 5

                              TERM AND TERMINATION

         SECTION 5.01. TERM. The Employment Period will terminate on the third
anniversary of the date hereof; PROVIDED THAT (a) the Employment Period shall
terminate prior to such date upon the Executive's death or Permanent Disability,
(b) the Employment Period may be terminated by the Company for any reason prior
to such date, and (c) the Employment Period may be terminated by the Executive
at any time prior to such date, if such termination shall be for Good Reason. In
addition, this Agreement will be automatically extended on the same terms and
conditions for successive one year periods following the original three (3) year
term until either the Company or the Executive, at least sixty (60) days prior
to the expiration of the

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original term or any extended term, shall give written notice of their intention
not to renew the Agreement.

         SECTION 5.02. UNJUSTIFIED TERMINATION. Except as otherwise provided in
Section 5.03, if the Employment Period shall be terminated prior to the
expiration of the third anniversary of the date hereof (or the end of the
Employment Period as extended pursuant to Section 5.01) by the Executive for
Good Reason or by the Company not for Cause (collectively, an "UNJUSTIFIED
TERMINATION"), the Executive shall be paid solely (except as provided in Section
5.04 below) an amount equal to the greater of (i) eighteen (18) months of the
Base Salary and (ii) the total remaining Base Salary for the Employment Period
which would have been paid to the Executive under this Agreement if the
Employment Period had not been terminated by the Executive for Good Reason or by
the Company not for Cause, provided the Executive shall be entitled to such
payments only if the Executive has not breached and does not breach the
provisions of Sections 6.01, 7.01, 8.01, 9.01 or 9.02 and the Executive has
entered into and not revoked a general release of claims reasonably satisfactory
to the Company. Such amounts will be payable in equal monthly installments
commencing on the first month anniversary of the Date of Termination. In
addition, promptly following an Unjustified Termination, the Executive shall
also be reimbursed all Reimbursable Expenses incurred by the Executive prior to
such Unjustified Termination.

         SECTION 5.03. JUSTIFIED TERMINATION. If the Employment Period shall be
terminated prior to the expiration of the third anniversary of the date hereof
(or the end of the Employment Period as extended pursuant to Section 5.01) (a)
for Cause, (b) as a result of the Executive's resignation or leaving of his
employment, other than for Good Reason, (c) as a result of the death or
Permanent Disability of the Executive, or (d) as a result of the Company's or
the Executive's provision of written notice not to extend the Employment Period
under Section 5.01 (collectively, a "JUSTIFIED TERMINATION"), the Executive
shall be entitled to receive solely (except as provided in the next sentence and
in Section 5.04 below) his Base Salary through the Date of Termination and
reimbursement of all Reimbursable Expenses incurred by the Executive prior to
such Justified Termination. If the termination is by reason of the death or
Permanent Disability of the Executive, the Executive also shall be entitled to
receive his annual bonus prorated through the Date of Termination (offset by any
proceeds received from any insurance coverages provided by the Company or any of
its affiliates). For such purposes, the annual bonus shall not be less than the
average annual bonus received for the preceding three years (if Executive has
not yet received bonuses for three years, he shall receive a prorated portion of
the average of the bonuses received, if any, but not less than a prorated
portion of 90% of his Base Salary).

         SECTION 5.04. BENEFITS. Except as otherwise required by mandatory
provisions of law, all of the Executive's rights to fringe and other benefits
under this Agreement or otherwise, if any, accruing after the termination of the
Employment Period as a result of a Justified Termination will cease upon such
Justified Termination. Notwithstanding the foregoing, if such Justified
Termination is a result of a Permanent Disability or if the Employment Period is
terminated as a result of an Unjustified Termination, the Executive shall
continue to receive

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his major medical insurance coverage benefits from the Company's plan in effect
at the time of such termination for a period of twelve (12) months after the
Date of Termination.

         SECTION 5.05. NOTICE OF TERMINATION. Any termination by the Company for
Permanent Disability or Cause or without Cause or by the Executive for Good
Reason shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of employment under the provision
indicated.

         SECTION 5.06. DATE OF TERMINATION. "DATE OF TERMINATION" shall mean (a)
if the Employment Period is terminated as a result of a Permanent Disability,
five (5) days after a Notice of Termination is given, (b) if the Employment
Period is terminated for Good Reason, the date specified in the Notice of
Termination, and (c) if the Employment Period is terminated for any other reason
(including for Cause), the date designated by the Company in the Notice of
Termination.

                                    ARTICLE 6

                            CONFIDENTIAL INFORMATION

         SECTION 6.01. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. The
Executive will not disclose or use at any time during or after the Employment
Period any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except to the extent that
such disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive pursuant to this Agreement.
Under all circumstances and at all times, the Executive will take all
appropriate steps to safeguard Confidential Information in his possession and to
protect it against disclosure, misuse, espionage, loss and theft.

                                    ARTICLE 7

                              INTELLECTUAL PROPERTY

         SECTION 7.01. OWNERSHIP OF INTELLECTUAL PROPERTY. In the event that the
Executive as part of his activities on behalf of the Company generates, authors
or contributes to any invention, design, new development, device, product,
method of process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not
comprising Confidential Information) or any other form of Confidential
Information relating directly or indirectly to the business of the Company as
now or hereinafter conducted (collectively, "INTELLECTUAL PROPERTY"), the
Executive acknowledges that such Intellectual Property is the sole and exclusive
property of the Company and hereby assigns all right title and interest in and
to such Intellectual Property to the Company. Any copyrightable

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work prepared in whole or in part by the Executive during the Employment Period
will be deemed "a work made for hire" under Section 201(b) of the Copyright Act
of 1976, as amended, and the Company will own all of the rights comprised in the
copyright therein. The Executive will promptly and fully disclose all
Intellectual Property and will cooperate with the Company to protect the
Company's interests in and rights to such Intellectual Property (including
providing reasonable assistance in securing patent protection and copyright
registrations and executing all documents as reasonably requested by the
Company, whether such requests occur prior to or after termination of
Executive's employment hereunder).

                                    ARTICLE 8

              DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT

         SECTION 8.01. DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
requested by the Company, from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within his control (including written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company, will provide the
Company with written confirmation that all such materials have been delivered to
the Company.

                                    ARTICLE 9

                       NONCOMPETITION AND NONSOLICITATION

         SECTION 9.01. NONCOMPETITION. The Executive acknowledges that during
his employment with the Company, he will become familiar with trade secrets and
other Confidential Information concerning the Company, its Subsidiaries and
their respective predecessors, and that his services will be of special, unique
and extraordinary value to the Company. In addition, the Executive hereby agrees
that at any time during the Employment Period, and for a period ending two (2)
years after the termination of the Executive's employment if such termination is
for Cause or as a result of the Executive's resignation or leaving employment
not for Good Reason (the "NONCOMPETITION PERIOD"), he will not directly or
indirectly own, manage, control, participate in, consult with, render services
for or in any manner engage in any business competing with the businesses of the
Company or its Subsidiaries as such businesses exist or are in process or being
planned as of the date of termination, within any geographical area in which the
Company or its Subsidiaries engage or plan to engage in such businesses.
Notwithstanding the foregoing, if such termination is by the Company without
Cause or by the Executive for Good Reason, the Noncompetition Period shall
extend for the period during which severance is paid under Section 5.02. If such
termination is due to the Company or the Executive giving written notice
pursuant to Section 5.01 of their intention not

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to extend the Employment Period, the Noncompetition Period shall be for a period
of up to twenty four (24) months following the date of termination if the
Company elects in writing to pay the Executive the sum of Base Salary and target
annual bonus set forth in Section 4.02 for such period, such amount to be
payable in monthly installments over such period. It shall not be considered a
violation of this Section 9.01 for the Executive to be a passive owner of not
more than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as the Executive has no active participation in the
business of such corporation.

         SECTION 9.02. NONSOLICITATION. The Executive hereby agrees that (a)
during the Employment Period and for a period of two (2) years after the
termination of Executive's employment (the "NONSOLICITATION PERIOD") the
Executive will not, directly or indirectly through another entity, induce or
attempt to induce any employee of the Company or its Subsidiaries to leave the
employ of the Company or its Subsidiaries, or in any way interfere with the
relationship between the Company or its Subsidiaries and any employee thereof or
otherwise employ or receive the services of any individual who was an employee
of the Company or its Subsidiaries at any time during such Nonsolicitation
Period or within the six-month period prior thereto and (b) during the
Nonsolicitation Period, the Executive will not induce or attempt to induce any
customer, supplier, client, insured, reinsured, reinsurer, broker, licensee or
other business relation of the Company or its Subsidiaries to cease doing
business with the Company or its Subsidiaries.

         SECTION 9.03. ENFORCEMENT. If, at the enforcement of Sections 9.01 or
9.02, a court holds that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances will be
substituted for the stated duration, scope or area and that the court will be
permitted to revise the restrictions contained in this Section 9 to cover the
maximum duration, scope and area permitted by law.

                                   ARTICLE 10

                                EQUITABLE RELIEF

         SECTION 10.01. EQUITABLE RELIEF. The Executive acknowledges that (a)
the covenants contained herein are reasonable, (b) the Executive's services are
unique, and (c) a breach or threatened breach by him of any of his covenants and
agreements with the Company contained in Sections 6.01, 7.01, 8.01, 9.01 or 9.02
could cause irreparable harm to the Company for which they would have no
adequate remedy at law. Accordingly, and in addition to any remedies which the
Company may have at law, in the event of an actual or threatened breach by the
Executive of his covenants and agreements contained in Sections 6.01, 7.01,
8.01, 9.01 or 9.02, the Company shall have the absolute right to apply to any
court of competent jurisdiction for such injunctive or other equitable relief as
such court may deem necessary or appropriate in the circumstances.
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                                   ARTICLE 11

                                 REPRESENTATIONS

         SECTION 11.01. EXECUTIVE REPRESENTATIONS. The Executive hereby
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by the Executive does not and will not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or by
which he is bound, (b) the Executive is not a party to or bound by any
employment agreement, noncompetition agreement or confidentiality agreement with
any other Person that affects his right or ability to perform the duties
contemplated by this Agreement and (c) upon the execution and delivery of this
Agreement by the Company, this Agreement will be the valid and binding
obligation of the Executive, enforceable in accordance with its terms.

         SECTION 11.02. COMPANY REPRESENTATIONS. The Company hereby represents
and warrants to the Executive that (a) all acts required to be taken to
authorize, deliver and perform this Agreement and the obligations of the Company
provided for hereunder have been duly taken; and (b) upon the execution and
delivery of this Agreement by the Company, this Agreement will be valid and
binding obligation of the Company, enforceable in accordance with its terms.

                                   ARTICLE 12

                                  MISCELLANEOUS

         SECTION 12.01. REMEDIES. The Company will have all rights and remedies
set forth in this Agreement, all rights and remedies which the Company has been
granted at any time under any other agreement or contact and all of the rights
which the Company has under any law. The Company will be entitled to enforce
such rights specifically, without posting a bond or other security, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. There are currently no disciplinary or
grievance procedures in place, there is no collective agreement in place, and
there is no probationary period.

         SECTION 12.02. CONSENT TO AMENDMENTS. The provisions of this Agreement
may be amended or waived only by a written agreement executed and delivered by
the Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.

         SECTION 12.03. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not, PRO-
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VIDED that the Executive may not assign his rights or delegate his obligations
under this Agreement without the written consent of the Company.

         SECTION 12.04. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

         SECTION 12.05. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all of which counterparts taken
together will constitute one and the same agreement.

         SECTION 12.06. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

         SECTION 12.07. NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally to the recipient, two (2) business days after the date when sent to
the recipient by reputable express courier service (charges prepaid) or four (4)
business days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the Executive and to the
Company at the addresses set forth below.

         If to the Executive:       To the last address delivered to the Company
                                    by the Executive in the manner set forth
                                    herein.

         Copies (which shall not constitute notice) of notices to the Executive
         shall also be sent to:

                                    Shiff & Tisman
                                    280 Madison Avenue
                                    New York, NY  10016

                                    Attention:  Stephen E. Tisman, Esq.

         If to the Company:         Arch Capital Group Ltd.
                                    Executive Offices:
                                    20 Horseneck Lane
                                    Greenwich, CT 06830

                                    Attn: General Counsel
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         Copies (which shall not constitute notice) of notices to the Company
         shall also be sent to:

                                    Cahill Gordon & Reindel
                                    80 Pine Street
                                    New York, NY  10005

                                    Attn: Immanuel Kohn, Esq.

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

         SECTION 12.08. WITHHOLDING. The Company may withhold from any amounts
payable under this Agreement such federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

         SECTION 12.09. NO THIRD PARTY BENEFICIARY. This Agreement will not
confer any rights or remedies upon any person other than the Company, the
Executive and their respective heirs, executors, successors and assigns.

         SECTION 12.10. ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the parties
and supersedes any prior understandings, agreements or representations by or
among the parties, written or oral, that may have related in any way to the
subject matter hereof. This Agreement shall serve as a written statement of
employment for purposes of Section 6 of the Bermuda Employment Act 2000.

         SECTION 12.11. CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any reference to any federal, state, local or foreign statute or law will be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The use of the word "INCLUDING" in this
Agreement means "including without limitation" and is intended by the parties to
be by way of example rather than limitation.

         SECTION 12.12. SURVIVAL. Sections 6.01, 7.01, 8.01 and Articles 9, 10
and 12 will survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.

         SECTION 12.13. GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY
THE INTERNAL LAW OF BERMUDA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

<Page>
                                      -13-


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

                                       ARCH CAPITAL GROUP LTD.


                                       By: /s/ Louis T. Petrillo
                                          --------------------------------------
                                       Printed Name: Louis T. Petrillo
                                                    ----------------------------
                                       Title: Senior Vice President,
                                              General Counsel & Secretary
                                             -----------------------------------

                                       /s/ John D. Vollaro
                                       -----------------------------------------
                                       John D. Vollaro

</TEXT>
</DOCUMENT>
