Exhibit 10.1


 


AGREEMENT


 


This Agreement
(the “Agreement”) is entered into on this 5th day of December, 2005, between Arch
Capital Group Ltd. (“ACGL”) and its past and present affiliates and
susidiaries, including but not limited to Arch Reinsurance Ltd (collectively,
the “Company”), and Dwight R. Evans (the “Executive”).


 


The Executive
and the Company agree as follows:


 


1.                                       The employment
relationship between the Executive and the Company will terminate on December 5,
2005 (the “Termination Date”).  Effective
on the Termination Date, the Executive hereby resigns all officer and employee
positions with the Company and its subsidiaries.


 


2.                                       Following the
completion of the 7-day revocation period referred to in paragraph 20 below,
the Executive will receive a payment from the Company in the amount of $4,914,000.


 


3.                                       Medical, dental,
and vision benefits will remain in effect for the Executive and his covered
dependents until the first anniversary of the Termination Date.  The insurance coverage shall be provided on
the same basis as provided to active employees of the Company in accordance
with the terms and provisions of each applicable plan as in effect from time to
time, including any contribution required to be made by the Executive toward
such coverage.  Thereafter, in accordance
with applicable law, the Executive will be offered coverage through COBRA at
the Executive’s sole expense.


 


4.                                       Except as set
forth in paragraph 3 above, the Executive will cease participation in all
employee benefit plans and arrangements of the Company as of the Termination
Date.  The Executive’s rights with
respect to his accrued benefits as of the Termination Date under the Company’s Employee
Retirement Plan and the Company’s Executive Supplemental Non-Qualified Savings
and Retirement Plan are as set forth in the applicable plan documents.  Other than as expressly set forth in this
Agreement, the Executive will have no continuing rights under any employee
benefit plan or arrangement of the Company following the Termination Date.


 


5.                                       Schedule I
provides a list of all options to purchase common shares of ACGL and restricted
common shares of ACGL granted to the Executive, which will remain subject to
the applicable award agreements.  For
reference, Schedule I outlines certain principal terms of the
awards, including vesting terms and, with respect to options, the exercise
price and exercise period.


 





















 


6.                                       As of the
Termination Date, the Company will assume all the Executive’s responsibilities
in connection with the apartment lease in Bermuda, which was assigned to the
Executive on March 30, 2005.  The
Executive will vacate the premises covered by such lease within two months of
the Termination Date.  The Company, in
any event, will continue to pay the costs under such lease and utilities and
cleaning services until the expiration or cancellation of said lease by the
Landlord and the Company will not seek repayment for same from the Executive.


 


7.                                       Following the
completion of the 7-day revocation period referred to in paragraph 20 below, in
addition to the payment provided for in paragraph 2 above: (a) the
Executive will be receive the following payments:  (i) $17,628.21 as payment of unused
vacation days; and (ii) $14,804.47 as reimbursement of all outstanding
expenses incurred by the Executive through Termination Date; and (b) in
accordance with Bermuda immigration regulations, the Executive’s work permit
will be returned to Bermuda immigration authorities, together with a letter in
the form of Schedule II hereto.


 


8.                                       The Company
shall reimburse the Executive for all reasonable expenses incurred by him for
the cost of relocating all of his household items to the United States, and the
cost of two round trip airline tickets for the Executive and his spouse for
travel between Bermuda and the United States to oversee such relocation, in
each case, subject to the Company’s requirements with respect to the Executive’s
reporting and documentation of such expenses.


 


9.                                       On or after June 1,
2006, the Company shall reimburse the Executive in an aggregate amount not to
exceed $10,000 for both the (a) reasonable professional fees and related
expenses incurred by him in preparation of his annual tax return for calendar
year 2005 and (b) reasonable professional fees and expenses (if any)
incurred by him in connection with a tax audit to the extent directly relating
to the Executive’s status as an employee of the Company and its subsidiaries
for the period from November 20, 2001 through the Termination Date.


 


10.                                 As contemplated by the
Employment Agreement, dated as of October 23, 2001 (as amended), between
the Company and the Executive (the “Employment Agreement”), and in
consideration of the above, the sufficiency of which the Executive hereby
acknowledges, the Executive, on behalf of the Executive and the Executive’s
heirs, executors and assigns hereby releases and forever discharges the Company
and its members, shareholders, parents, affiliates, subsidiaries, divisions,
any and all current and former directors, officers, employees, agents, and
contractors and their heirs and assigns, and any and all employee pension
benefit or welfare benefit plans of the Company, including current and former
trustees and administrators of such employee pension benefit and welfare
benefit plans, from all claims, charges, or demands, in law or in equity,
whether known or unknown, which may have existed or which may now exist from
the beginning of time to the date of this Agreement, including, without
limitation, any claims the Executive may have arising from or relating to the Executive’s
employment or termination from employment with the Company, including a release
of any rights or claims the Executive may have under Title VII of the Civil
Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which
prohibit discrimination in employment based upon race, color, sex, religion and
national origin); the Americans with Disabilities Act of 1990, as amended, and
the Rehabilitation Act of 1973 (which prohibit discrimination based upon
disability); the Family and Medical Leave Act of 1993 (which prohibits
discrimination based on requesting or taking a family or medical leave); the
Equal Pay Act, as amended, 29 U.S.C. §206(d)(1); the Fair Labor Standards 


 


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Act of 1938, as amended; Section 1981 of the Civil Rights Act of
1866 (which prohibits discrimination based upon race); Section 1985(3) of
the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate);
the Employee Retirement Income Security Act of 1974, as amended; any other
federal, state or local laws against discrimination; or any other federal,
state, or local statute, or common law relating to employment, wages, hours, or
any other terms and conditions of employment. 
This includes a release by the Executive of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Executive’s employment with or termination from the Company.  This release also includes a release of any
claims for age discrimination under the Age Discrimination in Employment Act,
as amended (“ADEA”).  The ADEA requires
that the Executive be advised to consult with an attorney before the Executive
waives any claim under ADEA.  In
addition, the ADEA provides the Executive with at least 21 days to decide
whether to waive claims under ADEA and seven days after the Executive signs the
Agreement to revoke that waiver.  This
release does not release the Company from any obligations due to the Executive (i) under
this Agreement, (ii) under the Executive’s stock option and restricted
share agreements, or (iii) for indemnification in accordance with the
Company’s By-Laws and as provided for in paragraph 15A of this Agreement.


 


11.                                 As of the Termination
Date, Section 9.01 (non-competition) and Section 9.02(b) (non-solicitation
of customers) set forth in the Employment Agreement shall be hereby terminated.  The Executive acknowledges, and hereby
confirms, that his agreements set forth in Sections 6.01 (non-disclosure), 7.01
(intellectual property), 8.01 (delivery of materials upon termination) and 9.02(a) (non-solicitation
of employees) set forth in the Employment Agreement shall continue in effect in
accordance with their terms.


 


12.                                 This Agreement is not
an admission by either the Executive or the Company of any wrongdoing or
liability.


 


13.                                 The Executive
understands and agrees that the consideration provided for in paragraph 2 herein
is more than the Executive would otherwise be entitled to under the Company’s
existing plans and policies.


 


14.                                 The Executive waives
any right to reinstatement or future employment with the Company following the
Executive’s separation from the Company on the Termination Date.


 


15.                                 The Executive shall,
at the reasonable request of the Company, reasonably assist and cooperate with
the Company in the defense and/or investigation of any third party claim or any
investigation or proceeding, whether actual or threatened, including, without
limitation, participating as a witness in any litigation, arbitration, hearing
or other proceeding between the Company and a third party or any government
body.  The Company shall reimburse the
Executive for all reasonable out-of-pocket expenses incurred by him in
connection with such assistance, including, without limitation, travel and
lodging expenses.


 


15A.                       To the extent the Company’s liability
insurance does not fully indemnify and provide a defense to the Executive for
claims, demands, liabilities, damages, losses and expenses arising out of
Executive’s employment with the Company and/or his service as a director 


 


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of the Company, the Company hereby agrees that
it shall indemnify, defend and hold the Executive harmless to the fullest
extent permitted by the law from and against any and all claims, demands,
liabilities, damages, losses and expenses (including Executive’s reasonable
attorneys’ fees and disbursements) arising out of Executive’s employment with
the Company and/or his service as a director, except to the extent arising out
of or based on fraud, theft, other violation of law or willful misconduct of
the Executive, if and as determined by a court of competent jurisdiction.  The rights of indemnification provided herein
shall not be deemed exclusive of any other rights to which the Executive may be
entitled under the Company’s By-Laws or Certificate of Incorporation and shall
inure to the benefit of the Executive’s heirs, executors and
administrators.  Subject to the
foregoing, reasonable costs and expenses incurred by the Executive (including
attorneys’ fees and disbursements referred to above) in connection with an
event for which indemnification is required hereunder shall be paid within
ninety (90) days following receipt by the Company of (i) a written request
for payment, (ii) appropriate documentation evidencing the incurrence,
including the amount and description of the costs and expenses for which
payment is sought, and (iii) an undertaking by or on behalf of the
Executive to repay the amounts advanced if it should ultimately be determined
that the Executive is not entitled to be indemnified against such expenses
pursuant to this Agreement.


 


16.                                 The Executive agrees
not to make any oral or written statements or otherwise engage in any act that
is intended or may reasonably be expected to harm the reputation, business,
prospects or operations of the Company, its officers, directors, stockholders
or employees or any persons related to the foregoing.


 


17.                                 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.


 


18.                                 This Agreement
represents the complete agreement between the Executive and the Company
concerning the subject matter in this Agreement, 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.


 


19.                                 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.


 


20.                                 It is further
understood that, for a period of 7 days following the execution of this
Agreement, the Executive may revoke this Agreement.  Any such revocation must be effected by
delivery of a written notification of revocation of the Agreement to the Chief
Financial Officer of ACGL prior to the end of such 7 day revocation period.  In the event that the Agreement is revoked by
the Executive, the Company shall have no obligations under the Agreement, no
amounts will be payable under the Agreement, and this Agreement shall be deemed
to be void ab  initio and of no force or effect.


 


21.                                 This Agreement has
been entered into voluntarily and not as a result of coercion, duress, or undue
influence.  The Executive acknowledges
that the Executive has read and fully understands the terms of this Agreement
and has been advised to consult with an 


 


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attorney before executing this Agreement.  Additionally, the Executive acknowledges that
the Executive has been afforded the opportunity of at least 21 days to consider
this Agreement.


 


22.                                 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 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/
  Constantine Iordanou

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Constantine
  Iordanou

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DWIGHT R.
  EVANS

  
	
   

  	
   

  
	
   

  	
  /s/ Dwight
  R. Evans

  	
   

  
						



 


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SCHEDULE I


 


Schedule of the Share-Based Awards


 


1.                                      Restricted
Common Shares


 


	
  Grant Date

  	
   

  	
  Shares

  	
   

  	
  Vesting

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10/23/01

  	
   

  	
  50,000

  	
   

  	
  Fully vested

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2/20/03

  	
   

  	
  4,770

  	
   

  	
  3,578
  vested; balance of 1,192 would vest on Termination Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2/26/04

  	
   

  	
  4,024

  	
   

  	
  2,012
  vested; balance of 2,012 would vest on Termination Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/22/04

  	
   

  	
  6,000

  	
   

  	
  4,000
  vested; balance of 2,000 would vest on Termination Date

  



 


2.                                      Stock
Options


 


	
  Grant Date

  	
   

  	
  Options

  	
   

  	
  Vesting

  	
   

  	
  Exercise Prices

  	
   

  	
  Exercise Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10/23/01

  	
   

  	
  100,000

  	
   

  	
  Fully vested

  	
   

  	
  $

  	
  20.00

  	
   

  	
  90 days after Termination Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6/27/02

  	
   

  	
  25,000

  	
   

  	
  Fully vested

  	
   

  	
  $

  	
  27.10

  	
   

  	
  90 days after Termination Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/22/04

  	
   

  	
  40,000

  	
   

  	
  26,667 vested; balance of 13,333 would vest
  on Termination Date

  	
   

  	
  $

  	
  39.00

  	
   

  	
  Three years after Termination Date

  



 










*                                         The
above summary reflects the terms of the applicable award agreements between ACGL
and the Executive.


 





















 


SCHEDULE II


 


Form of
Letter to Bermuda Immigration Authorities


 


The last date
of Mr. Dwight Evan’s employment with Arch Capital Group Ltd. was December 5,
2005.  Please be advised that Arch Capital
Group Ltd. and its affiliates have no objection to Mr. Evans seeking
alternative employment in Bermuda, effective immediately.