Exhibit 10.2


 


NON-CORE BUSINESS PAYMENT AGREEMENT


 


This Non-Core
Business Payment Agreement (the “Agreement”) is entered into on this 4th day of
August, 2003, between Arch Capital Group Ltd. (the “Company”) and Peter Appel
(the “Executive”).


 


For good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Executive and the Company agree as follows:


 


1.             The Executive will
be paid an amount equal to $1,500,000 if, and only if, the aggregate of the
Realized Values of all of the Non-Core Assets equals or exceeds the aggregate
of the Adjusted Closing Book Values of all of the Non-Core Assets, computed as
of the Test Date.


 


2.             The Executive will
also be paid an amount equal to 15% of the net excess, if any, of the Realized
Value over the Adjusted Closing Book Value of all of the Non-Core Assets,
computed as of the Test Date; provided, however that any amount
payable under this paragraph 2 shall not exceed $1,500,000 (such that the
aggregate amount payable under paragraphs 1 and 2 of this Agreement shall not exceed
$3 million).


 


3.             The amount, if any,
payable under this Agreement shall be paid within 30 days following the date
all of the computations of excesses of Realized Values over Adjusted Closing
Book Values of the Non-Core Assets are finally determined for purposes of
computing the Adjustment Basket under the Subscription Agreement made as of
October 24, 2001 between the Company and the Purchasers thereunder (the
“Subscription Agreement”).


 

















 


4.             All capitalized
terms used herein but not defined shall have the meanings given to them in the
Subscription Agreement; provided, however, that for all purposes
under this Agreement and under the Subscription Agreement “Realized Value”
shall not be reduced by the amount, if any, payable under this Agreement.


 


5.             The Company shall
cause the Executive to be provided, through December 31, 2003, access to office
equipment for his home office and secretarial support as reasonably necessary
in connection with the Executive’s activities in assisting with the disposition
of the Non-Core Assets.  The Company
shall reimburse the Executive, or cause the Executive to be reimbursed, for the
reasonable business expenses incurred by him in connection with the disposition
of the Non-Core Assets which are consistent with the Company’s expense
reimbursement policies in effect from time to time, including reasonably
necessary travel and lodging expenses, subject to the Company’s requirements
with respect to reporting and documentation of expenses.  Promptly after December 31, 2003 upon the
request of the Company, the Executive shall return all of the Company’s and its
subsidiaries’ property in the Executive’s possession, including, but not
limited to, the Company’s and its subsidiaries’ office equipment, software and
peripherals and originals or copies of books, records, or other information
pertaining to the business of the Company and its subsidiaries.  Such return may be effected by the
Executive’s making the property available at his home for retrieval by the
Company.


 


6.             All amounts payable
hereunder shall be reduced by amounts required to be withheld for income,
employment, social security or other taxes.


 


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7.             This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without reference to the principles of conflict of laws thereof.


 


8.             This Non-Core
Business Payment Agreement and the Agreement between the Executive and the
Company of even date herewith represent the complete agreement between the Executive
and the Company concerning the subject matter in such agreements, and they
supersede all prior agreements or understandings, written or oral.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.


 


9.             Each of the
paragraphs contained in this Agreement shall be enforceable independently of
every other paragraph in this Agreement, and the invalidity or unenforceability
of any paragraph shall not invalidate or render unenforceable any other
paragraph contained in this Agreement.


 


10.           The Company will
require any successor or assignee, whether direct or indirect, by purchase,
merger, consolidation or otherwise, of all, or substantially all, of the business
and/or assets of the Company to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if such succession or assignment had not taken place.


 


11.           This Agreement shall
inure to the benefit of and be enforceable by the Executive’s personal and
legal representatives, executors, administrators, heirs, distributees, devisees
and legatees.  If the Executive dies
while any amounts are still payable to him 


 


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hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive’s devisee,
legatee, or other designee or, if there be no such designee, to the Executive’s
estate.


 


The parties to
this Agreement have executed this Agreement on the day and year first written
above.


 


	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robert Clements

  	
   

  
	
   

  	
  Name:

  	
  Robert Clements

  
	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
  PETER APPEL

  
	
   

  	
   

  
	
   

  	
          /s/
  Peter Appel

  	
   

  
					



 


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