Document:

Exhibit 10.1.9

 

EIGHTH LEASE MODIFICATION
AGREEMENT

 

EIGHTH
LEASE MODIFICATION AGREEMENT (hereinafter called this “Agreement”) dated
as of the 17th day of November, 2009 between BROOKFIELD PROPERTIES OLP CO. LLC,
having an office c/o Brookfield Financial Properties, L.P., Three World
Financial Center, 200 Vesey Street, 11th Floor, New York, New York 10281-1021
(hereinafter called “Landlord”), and ARCH INSURANCE COMPANY, a Missouri
corporation, having an office at One Liberty Plaza, 165 Broadway, New York, New
York 10006 (hereinafter called “Tenant”).

 

W I T N E S S E T H:

 

WHEREAS:

 

A.                                   Landlord and Tenant have heretofore
entered into a certain lease dated September 26, 2002, as amended by that
certain First Lease Modification Agreement (hereinafter called the “First
Modification”) dated as of May 7, 2003, by that certain Second Lease
Modification Agreement (hereinafter called the “Second Modification”)
dated as of July 31, 2003, by that certain Third Lease Modification
Agreement (hereinafter called the “Third Modification”) dated as of February 18,
2004, by that certain Fourth Lease Modification Agreement (hereinafter called
the “Fourth Modification”) dated as of May 13, 2004, by that
certain Substitution of Storage Space Agreement (hereinafter called the “Storage
Substitution Agreement”) dated as of September 30, 2004, by that
certain Fifth Lease Modification Agreement dated as of December 15, 2005
(hereinafter called the “Fifth Modification”); by that certain Sixth 

 

 

Lease Modification Agreement dated as of March 29,
2007 (hereinafter called the “Sixth Modification”) and by that certain
Consent to Sublease, Non-Disturbance Agreement and Seventh Lease Modification
Agreement dated as of July 21, 2008 (hereinafter called the “Seventh
Modification”; such lease, as the same has been and may hereafter be
further amended, being hereinafter called the “Lease”), with respect to
the entire rentable area of the sixteenth (16th), seventeenth (17th) and
fifty-third (53rd) floors (hereinafter called the “53rd Floor Premises”)
and certain storage space (hereinafter called the “2004 Storage Space”)
located on the concourse level (such space being hereinafter collectively
called the “Existing Premises”), in the building known as One Liberty
Plaza, 165 Broadway, New York, New York (hereinafter called the “Building”)
for a term expiring on January 31, 2014 (hereinafter called the “Expiration
Date”), or on such earlier date upon which the term may expire or be
terminated pursuant to any conditions of limitation or other provisions of the
Lease or pursuant to law; and

 

B.                                     Landlord and Tenant hereby desire to
modify the Lease to provide for the inclusion therein of additional space
located on the twenty-ninth (29th) floor of the Building (hereinafter called
the “29th Floor Premises”) and the extension of the term of the Lease
with respect only to the 53rd Floor Premises, the 2004 Storage Space and the
29th Floor Premises, upon and subject to the terms and conditions hereinafter
more particularly set forth.

 

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NOW,
THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       DEFINED TERMS. 
All capitalized terms contained in this Agreement and not otherwise
defined herein shall, for purposes hereof, have the same meanings ascribed to
them in the Lease.

 

2.                                       29TH FLOOR PREMISES. 
Effective during the period commencing on the date (hereinafter called
the “29th Floor Premises Inclusion Date”) upon which Landlord and Tenant
shall have executed this Agreement, a fully-executed counterpart of this
Agreement shall have been delivered to Tenant and Landlord shall have substantially
completed the work described on Exhibit A annexed hereto
(hereinafter called “Landlord’s 29th Floor Work”), or such earlier date
on which Landlord would have substantially completed Landlord’s 29th Floor Work
but for days of Demolition Delay (calculated on a day-for-day basis), and
ending on the last day of the month in which occurs the day immediately
preceding the ten (10) year, six (6) month anniversary of the 29th
Floor Premises Inclusion Date (hereinafter called the “Extended Expiration
Date”), there shall be added to and included in the Existing Premises the
following additional space in the Building, to wit:

 

The portion of the
twenty-ninth (29th) floor of the Building, substantially as shown hatched on
the floor plan annexed hereto as Exhibit B (hereinafter called the “29th
Floor Premises”), which Landlord and Tenant agree for 

 

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purposes hereof
shall be deemed to contain 19,781 
rentable square feet.

 

Landlord does hereby lease to Tenant and Tenant does
hereby hire from Landlord the 29th Floor Premises subject and subordinate to
all superior leases and superior mortgages as provided in the Lease and upon
and subject to all the covenants, agreements, terms and conditions of the Lease
as supplemented by this Agreement (other than Section 38.05 of the Lease,
Paragraphs 4, 5, 6 and 8 of the First Modification, Paragraphs 5, 6, 7(b), 8
and 10 of the Second Modification, Paragraphs 4, 5, 6, 7 and 8 of the Third
Modification, Paragraphs 4, 5 and 7 of the Fourth Modification, Paragraphs 4,
5, 7 and 8 of the Storage Substitution Agreement, Paragraphs 5, 6, 7 and 9 of
the Fifth Lease Modification, Paragraphs 5, 6, 7 and 9 of the Sixth Lease
Modification and Paragraph 8 of the Seventh Lease Modification).  From and after the 29th Floor Premises
Inclusion Date, the term “Premises” as defined in the Lease will be deemed to
include the Existing Premises and the 29th Floor Premises.  Tenant shall execute and deliver to Landlord
such documents that Landlord may reasonably request to acknowledge the
occurrence of the 29th Floor Premises Inclusion Date; provided, however, that
the failure of Landlord to request, or the failure of Tenant to execute, such
documentation shall have no effect whatsoever on the obligations of Tenant or
Landlord hereunder.

 

Landlord’s 29th Floor
Work shall be deemed to be substantially completed notwithstanding that minor or non-material details of construction,
mechanical adjustment or decoration are not finally completed, provided same do
not materially interfere with the ordinary conduct of Tenant’s business in the
Premises and provided 

 

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that
such minor or non-material details shall be completed by Landlord within a
reasonable time thereafter.  Promptly
after the completion of Landlord’s 29th Floor Work and Tenant’s request for PW1
Plan/Work Approval Application stamp, Landlord shall provide Tenant with an
ACP-5 Inspection Certificate.

 

In addition to Landlord’s 29th Floor Work, Landlord, (i) concurrently
with the performance by Tenant of Tenant’s 29th Floor Work, shall perform a
cosmetic refurbishment of the core restrooms of the twenty-ninth (29th) floor
of the Building and (ii) reasonably promptly following the completion by
Tenant of Tenant’s 29th Floor Work and the taking of occupancy by Tenant of the
29th Floor Premises for the conduct of its business, shall perform a cosmetic
refurbishment of the common corridor of the twenty-ninth (29th) floor of the
Building.  The scope of the corridor
refurbishment shall consist of new Building-standard paint and carpet, and the
scope of the refurbishment of the core restrooms shall consist of new ceilings
and lighting, vanities, stall enclosures and a cleaning, sealing and grouting
of existing tile.  The performance by
Landlord of the refurbishment work discussed in this paragraph shall not be a
precondition to the occurrence of the 29th Floor Premises Inclusion Date, and
Tenant shall not be entitled to any diminution of any of its obligations under
the Lease, as modified hereby, as a result of any inconvenience caused to
Tenant by the performance of such refurbishment work.

 

Subject to a day-for-day extension due to any delays
caused by casualty, condemnation, the acts of Tenant or Tenant’s agents, contractors
or employees, and/or events of a nature described in Section 35.04(a) of
the Lease, if the 29th Floor Premises Inclusion Date does 

 

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not occur by the five (5) month anniversary of
the date hereof (hereinafter called the “Outside Termination Date”),
then Tenant shall have the right to give a notice to Landlord (hereinafter
called a “Termination Notice”) within ten (10) Business Days after
the Outside Termination Date (time being of the essence with respect to giving
of such Termination Notice) to the effect that Tenant is electing to terminate
the Lease with respect only to the 29th Floor Premises.  If Tenant timely gives a Termination Notice
and Landlord does not cause the 29th Floor Premises Inclusion Date to occur
within thirty (30) days thereafter, then: (i) this Agreement shall
terminate and be of no force or effect, (ii) neither party shall have any
further obligation or liability to the other under this Agreement (except that
the provisions of Paragraph 13 hereof shall survive such termination of this
Agreement) and (iii) the Lease shall continue in full force and effect,
unmodified by this Agreement.

 

Notwithstanding anything to the contrary contained
herein or in Paragraph 1 of Exhibit A annexed hereto, Landlord’s
demolition of the Premises shall be performed in accordance with a demolition
plan submitted by Tenant within a reasonable period of time after the execution
and delivery of this Agreement, and reasonably approved by Landlord, provided
that Tenant shall reimburse Landlord, as Additional Charges, for the
incremental additional costs, if any, incurred by Landlord in performing a
selective demolition (herein called a “Selective Demolition”) as opposed to a
complete demolition of the 29th Floor Premises and each additional day, if any,
that it takes Landlord to perform a Selective Demolition as opposed to a
complete demolition shall constitute a Demolition Delay (as such term is
hereinafter defined).  Landlord shall use
commercially 

 

6

 

reasonable efforts to approve or disapprove the
demolition plan submitted by Tenant within two (2) Business Days following
its receipt by Landlord.  Each of the
following shall constitute a Demolition Delay: (i) each day following the
date hereof beyond which Tenant submits for Landlord’s approval its proposed
demolition plan, (ii) each day consumed by Landlord’s review of Tenant’s
demolition plan, Tenant’s preparation of a revised demolition plan if its initial
demolition plan is disapproved, and Landlord’s review of any such revised
demolition plan, and (iii) each day that Landlord is delayed due to the
performance of a Selective Demolition as opposed to a complete demolition.  Notwithstanding the foregoing, if Tenant has
not submitted a proposed demolition plan within thirty (30) days following the
date hereof, Landlord will proceed with a complete demolition of the 29th Floor
Premises and there will be deemed to have occurred thirty (30) days of
Demolition Delay.

 

3.                                       53RD FLOOR/STORAGE SPACE EXTENSION. 
The term of the Lease with respect only to the 53rd Floor Premises and
the 2004 Storage Space (which is currently scheduled to expire on January 31,
2014) is hereby extended for the period commencing on February 1, 2014
(hereinafter called the “53rd Floor/Storage Space Adjustment Date”) and
ending on the Extended Expiration Date, or on such earlier date upon which said
term may expire or be terminated pursuant to any conditions of limitation or
other provisions of the Lease or pursuant to law.   The period commencing on the 53rd
Floor/Storage Space Adjustment Date and ending on the Extended Expiration Date
is hereinafter called the “53rd Floor/Storage Space Extension Term”.  During the 53rd Floor/Storage Space Extension
Term, the 53rd Floor Premises shall be deemed to 

 

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consist of 47,597 rentable square feet and the 2004
Storage Space shall be deemed to consist of 3,909 rentable square feet.

 

4.                                       LEASE MODIFICATION.

 

(a)                                  Effective during the period commencing on
the 29th Floor Premises Inclusion Date and ending on the Extended Expiration
Date, the Lease shall be modified as follows:

 

(i)                                     The Fixed Rent payable by Tenant pursuant
to Section 1.04(a) of the Lease shall be increased by the following
amounts during the following periods on account of the inclusion of the 29th
Floor Premises:

 

(x)                                   NINE HUNDRED NINE THOUSAND NINE HUNDRED
TWENTY-SIX AND 00/100 ($909,926.00) DOLLARS per annum [or $75,827.17 per
month], calculated on an annual basis at the rate of $46.00 per rentable square
foot, during the period commencing on the 29th Floor Premises Inclusion Date
and ending on the day immediately preceding the fifth (5th) anniversary of the
29th Floor Premises Inclusion Date; and

 

(y)                                 ONE MILLION EIGHT THOUSAND EIGHT HUNDRED
THIRTY-ONE AND 00/100 ($1,008,831.00) DOLLARS per annum [or $84,069.25 per
month], calculated on an annual basis at the rate of $51.00 per rentable square
foot, during the period commencing on the fifth (5th) anniversary of the 29th
Floor Premises Inclusion Date and ending on the Extended Expiration Date.

 

(ii)                                  With respect to the Additional Charges
payable pursuant to Article 3 of the Lease (hereinafter called the “Basic
Escalation Payments”) with respect to the Existing Premises, there shall be
computed, in addition to the Basic Escalation Payments,

 

8

 

escalation payments with respect to increases on
account of Taxes and Operating Expenses attributable to the 29th Floor
Premises.  Additional Charges with
respect to Taxes and Operating Expenses with respect to the 29th Floor Premises
shall be computed in the same manner as adjustments of rent with respect to
Taxes and Operating Expenses for the purpose of the Basic Escalation Payments,
except that for the purpose of such computations with respect to the 29th Floor
Premises:

 

(x)                                   The “Base Operating Amount”, as such term
is defined in Section 3.01(a) of the Lease shall mean the Operating
Expenses incurred for the Operating Year commencing on January 1, 2010;

 

(y)                                 The “Base Tax Amount”, as such term is
defined in Section 3.01(b) of the Lease, shall mean one-half of the
sum of (x) the Taxes for the Tax Year commencing July 1, 2009 and (y) the
Taxes for the Tax Year commencing July 1, 2010, both as finally
determined; and

 

(z)                                   “Tenant’s Share”, as such term is defined
in Section 3.01(i) of the Lease, shall mean 0.87 (0.87%) percent with
respect to 29th Floor Premises.

 

(iii)                               Electrical service shall be supplied to the 29th Floor
Premises on a submetered basis in accordance with the terms and provisions of Article 14
of the Lease, except that for purposes hereof, the words “seven (7) watts”
set forth in the first (1st) and second (2nd) sentences of Section 14.08
of the Lease shall be deleted and replaced with the words “six (6) watts”,
and Tenant agrees to purchase from Landlord or from a meter company designated
by Landlord all electricity consumed, used or to be used in the 29th Floor
Premises in accordance with said Article 14.

 

(b)                                 Effective during the period commencing on
the 53rd Floor/Storage Space Adjustment Date (i.e., February 1, 2014) and
ending on the Extended Expiration Date, the Lease shall be modified as follows:

 

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(i)                                     The Fixed Rent payable by Tenant pursuant
to Section 1.04(a) of the Lease with respect to the 53rd Floor
Premises only shall be increased to the sum of TWO MILLION EIGHT HUNDRED
FIFTY-FIVE THOUSAND EIGHT HUNDRED TWENTY AND 00/100 ($2,855,820.00) DOLLARS per
annum [or $237,985.00 per month], calculated on an annual basis at the rate of
$60.00 per rentable square foot.

 

(ii)                                  For the purposes of calculating the
Additional Charges payable by Tenant pursuant to Article 3 of the Lease
with respect to the 53rd Floor Premises, the following terms shall apply:

 

(x)                                   The “Base Operating Amount”, as such term
is defined in Section 3.01(a) of the Lease, shall mean the Operating
Expenses incurred for the Operating Year commencing on January 1, 2014;
and

 

(y)                                 The “Base Tax Amount”, as such term is
defined in Section 3.01(b) of the Lease, shall mean one-half of the
sum of (x) the Taxes for the Tax Year commencing July 1, 2013 and (y) the
Taxes for the Tax Year commencing July 1, 2014, both as finally determined.

 

(iii)                               The provisions of Paragraphs 3 and 4 of the Storage
Substitution Agreement shall continue to apply to the calculation of Fixed
Rent, Additional Charges and the Substituted Storage Space Electric Factor for
the 2004 Storage Space, except that (x) the Fixed Rent payable for the
2004 Storage Space shall be increased to ONE HUNDRED TWENTY-FIVE THOUSAND
EIGHTY-EIGHT AND 00/100 ($125,088.00) DOLLARS per annum or TEN THOUSAND FOUR
HUNDRED TWENTY-FOUR AND 00/100 ($10,424.00) DOLLARS per month and (y) the “Base
Tax Amount” with respect to Substituted Storage Space shall mean one-half of
the sum

 

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of (x) the Taxes for the Tax Year commencing July 1,
2013 and (y) the Taxes for the Tax Year commencing July 1, 2014, both
as finally determined.

 

5.             29TH FLOOR PREMISES RENT
ABATEMENT. Notwithstanding the foregoing provisions of Paragraph 4(a)(i) above,
provided that Tenant is not then in default, after notice and the expiration of
any applicable cure periods, under any of the terms, provisions or conditions
of the Lease (as modified hereby), the increase in the Fixed Rent payable
hereunder with respect to the 29th Floor Premises only shall be abated during
the one hundred eighty (180) day period (hereinafter called the “29th Floor
Premises Abatement Period”) commencing on the 29th Floor Premises Inclusion
Date; provided that Tenant shall pay the Additional Charges with respect to the
29th Floor Premises during the 29th Floor Premises Abatement Period, including,
without limitation, the Additional Charges attributable to Tenant’s consumption
of electricity in the 29th Floor Premises pursuant to Paragraph 4(a)(iii) above.  There shall be no abatement of the Fixed Rent
or Additional Charges with respect to the 53rd Floor Premises or any other
portion of the Existing Premises.

 

6.             CONDITION OF 29TH FLOOR
PREMISES, 53RD FLOOR PREMISES and 2004 STORAGE SPACE.  Except as set forth in Paragraph 2 hereof
(with respect only to the 29th Floor Premises), Tenant agrees to accept
possession of the 29th Floor Premises, the 53rd Floor Premises and the 2004
Storage Space “as is” in the condition and state of repair in which they exist
as of the date hereof and understands and agrees that Landlord is not required
to perform any work, supply any materials, incur any 

 

11

 

expense or, except as set forth in Paragraph 7 hereof,
provide any allowance or contribution in connection with preparing the 29th
Floor Premises, the 53rd Floor Premises and/or the 2004 Storage Space for
Tenant’s occupancy.  Tenant hereby
acknowledges that it is already in possession of the 53rd Floor Premises and
the 2004 Storage Space.

 

7.             TENANT’S 29TH FLOOR PREMISES
WORK; 29TH FLOOR PREMISES WORK CREDIT; 53RD FLOOR PREMISES WORK CREDIT.

 

(a)           Tenant hereby covenants and agrees
that Tenant shall, at Tenant’s sole cost and expense, and in a good and
workmanlike manner, make and complete the work and installations to be
performed by Tenant to prepare the 29th Floor Premises for Tenant’s occupancy
in such manner so that the 29th Floor Premises will be reasonably
comparable in character and quality to other Class A office space in
downtown Manhattan, New York (hereinafter called “Tenant’s 29th Floor Premises Work”) and to
prepare the 53rd Floor Premises for Tenant’s continued occupancy in such a
manner so that the 53rd Floor Premises will be reasonably comparable in
character and quality to other Class A office space in downtown Manhattan,
New York (hereinafter
called “Tenant’s 53rd Floor Premises Work”) in accordance with the
provisions set forth in Articles 11 and 38 of the Lease (other than the
provisions of Section 38.05 thereof), except that for purposes hereof, all
references therein to the term “Tenant’s Work” shall be deemed to mean Tenant’s
29th Floor Premises Work and/or  Tenant’s 53rd
Floor Premises Work, as applicable, and the term “Premises” shall be deemed to
mean the 29th Floor Premises and/or the 53rd Floor Premises, as applicable.

 

12

 

(b)(i)       Landlord shall allow Tenant a work
allowance in the aggregate amount of up to ONE MILLION TWO HUNDRED EIGHTY-FIVE
THOUSAND SEVEN HUNDRED SIXTY-FIVE AND 00/100 ($1,285,765.00) DOLLARS
(hereinafter called the “29th Floor Premises Work Credit”), which 29th
Floor Premises Work Credit shall be applied solely against the cost and expense
of the actual construction work to be performed by Tenant in connection with
Tenant’s 29th Floor Premises Work or other Alterations made by Tenant to the
Premises leased to Tenant pursuant to the Lease from time-to-time; provided,
however, that Tenant may apply up to an aggregate of ten (10%) percent of the
amount of the 29th Floor Premises Work Credit for so-called “soft costs,”
including, without limitation, design consultant’s, architect’s and engineering
fees (hereinafter collectively called “Soft Costs”), incurred by Tenant
in connection with the performance of Tenant’s 29th Floor Premises Work or
other Alterations made by Tenant to the Premises.  In the event that the cost and expense of
such actual construction work and Soft Costs shall exceed the amount of the
29th Floor Premises Work Credit, Tenant shall be entirely responsible for such
excess.  If Tenant does not use all or
any part of the 29th Floor Premises Work Credit for Tenant’s 29th Floor
Premises Work or other Alterations made by Tenant to the Premises and Soft
Costs in connection therewith, then the 29th Floor Premises Work Credit shall
be reduced accordingly on the Extended Expiration Date.

 

(ii)           Landlord shall allow Tenant a work allowance in the
aggregate amount of up to NINE HUNDRED FIFTY-ONE THOUSAND NINE HUNDRED FORTY AND
00/100 ($951,940.00) DOLLARS (hereinafter called the “53rd Floor

 

13

 

Premises Work Credit”), which 53rd Floor Premises Work Credit shall be
applied against the cost and expense of the actual construction work to be
performed by Tenant in connection with Tenant’s 53rd Floor Premises Work or
other Alterations made by Tenant to the Premises leased to Tenant pursuant to
the Lease from time-to-time; provided, however, that Tenant may apply up to an
aggregate of ten (10%) percent of the amount of the 53rd Floor Premises Work
Credit for Soft Costs incurred by Tenant in connection with the performance of
Tenant’s 53rd Floor Premises Work or other Alterations made by Tenant to the
Premises.  In the event that the cost and
expense of such actual construction work and Soft Costs shall exceed the amount
of the 53rd Floor Premises Work Credit, Tenant shall be entirely responsible
for such excess.  If Tenant does not use
all or any part of the 53rd Floor Premises Work Credit for Tenant’s 53rd Floor
Premises Work or other Alterations made by Tenant to the Premises and Soft
Costs in connection therewith, then the 53rd Floor Premises Work Credit shall
be reduced accordingly on the Extended Expiration Date.

 

(iii)          Provided
that Tenant is not in default of any of the monetary or material non-monetary
terms and conditions of the Lease, the 29th Floor Premises Work Credit and the
53rd Floor Premises Work Credit, respectively, shall be payable by Landlord to
Tenant in installments as Tenant’s 29th Floor Premises Work and Tenant’s 53rd
Floor Premises Work or other Alterations made by Tenant to the Premises,
respectively, progresses; but in no event shall such installments be payable
more frequently than monthly.  Nothing
contained herein shall be deemed to prohibit Tenant from commencing Tenant’s
53rd Floor Premises Work prior to the 53rd Floor/Storage

 

14

 

Space Adjustment Date. 
Prior to the payment of any such installment of the 29th Floor Premises
Work Credit or 53rd Floor Premises Work Credit, Tenant shall deliver to
Landlord a written request for disbursement (each being hereinafter called a “Tenant
Requisition”), which shall be accompanied by: (1) paid invoices from
the contractors and subcontractors performing the portion of Tenant’s 29th
Floor Premises Work or Tenant’s 53rd Floor Premises Work or other Alterations
made by Tenant to the Premises (as the case may be) referenced in such Tenant
Requisition, (2) a certificate signed by Tenant’s architect and an officer
of Tenant certifying that the portions of Tenant’s 29th Floor Premises Work or
Tenant’s 53rd Floor Premises Work or other Alterations made by Tenant to the
Premises (as the case may be) represented by the aforesaid invoices and
referenced in such Tenant Requisition has been satisfactorily completed in
accordance with Tenant’s final plans with respect thereto, as approved by
Landlord, and (3) partial lien waivers (in recordable form and form
satisfactory to Landlord) from the contractors, subcontractors and all
materialmen who shall have performed any such work releasing Tenant from all
liability for the same.  Landlord shall
be permitted to retain from each disbursement an amount equal to five (5%)
percent of the amount requested to be disbursed by Tenant.  The aggregate amount of the retainages shall
be paid by Landlord to Tenant upon completion of Tenant’s 29th Floor Premises
Work or Tenant’s 53rd Floor Premises Work or such other Alterations made by
Tenant to the Premises, as applicable, and upon receipt from Tenant of (i) a
certificate signed by Tenant’s architect and an officer of Tenant certifying
that Tenant’s 29th Floor Premises Work or Tenant’s 53rd Floor Premises Work or
such other Alterations made by Tenant to the Premises, as 

 

15

 

applicable, has been satisfactorily completed in
accordance with Tenant’s final plans with respect thereto, (ii) final “as-built”
drawings as required pursuant to Section 11.08 of the Lease, as well as
CAD files on diskette and by e-mail in AutoCAD.DWG format or compatible DXF
format and PDF files on diskette and by e-mail in JPG or TIFF format, showing
the exact nature and location of Tenant’s 29th Floor Premises Work or Tenant’s
53rd Floor Premises Work or such other Alterations made by Tenant to the
Premises, as applicable, and all sign-offs, inspection certificates and any
permits required to be issued by the New York City Building Department, Fire
Department and by any other governmental entities having jurisdiction thereover
with respect to the 29th Floor Premises and the 53rd Floor Premises or such
other Alterations made by Tenant to the Premises, as applicable, and (iii) final lien
waivers (in recordable form and form satisfactory to Landlord) from all contractors and subcontractors
performing Tenant’s 29th Floor Premises Work or Tenant’s 53rd Floor Premises
Work or other Alterations made by Tenant to the Premises, as applicable, and a general
release from Tenant’s general contractor, releasing Landlord and Tenant from all liability for
same.  Any files to be delivered to
Landlord by e-mail as set forth in clause (ii) of the preceding sentence
shall be sent to: 
Tenant.Plan@brookfieldproperties.com. 
Landlord and Tenant acknowledge and agree that the amount of the 53rd
Floor Premises Work Credit has been calculated on the assumption that Landlord
will not be required to pay any portion thereof to Tenant prior to February 1,
2014.  Nonetheless, Tenant shall be
entitled to draw upon the 53rd Floor Premises Work Credit from time to time in
accordance with the terms hereof at any time following the date hereof, up to
the then net present value (calculated

 

16

 

with an 7% discount factor, compounded monthly) of (x) with
respect to the first such draw, the 53rd Floor Premises Work Credit and (y) with
respect to subsequent draws, the “Allowance Balance” (as such term is defined
below) in accordance with the terms and conditions of this Section 7(b). If
Tenant elects to draw upon the 53rd Floor Premises Work Credit, Tenant shall
submit such draw request to Landlord in accordance with the provisions of this Section 7(b) (the
date on which such request is paid by Landlord is hereinafter called the “Draw
Date”) indicating the amount requested by Tenant less the retainage that
Landlord is permitted to withhold (hereinafter called the “Draw Request
Amount”). As of the Draw Date, the Draw Request Amount shall be converted
to its equivalent dollar amount as of February 1, 2014 by applying a
future value rate of 7% per annum compounded monthly (each such converted
amount being hereinafter called the “2014 Converted Draw Amount”).  Landlord shall pay the Draw Request Amount
(or, if the Draw Request Amount exceeds the net present value of the Allowance
Balance, the net present value of the Allowance Balance), and the 53rd Floor
Premises Work Credit shall thereupon be reduced by the applicable 2014
Converted Draw Amount (following each such reduction, the remaining portion of
the 53rd Floor Premises Work Credit, if any, shall be hereinafter called the “Allowance
Balance”). Commencing on February 1, 2014, Tenant shall be entitled to
draw up to the actual dollar amount of the Allowance Balance without first
converting the Draw Request Amount to a 2014 Converted Draw Amount.

 

(iv)          At
any and all times during the progress of Tenant’s 29th Floor Premises Work or
Tenant’s 53rd Floor Premises Work, representatives of Landlord shall

 

17

 

have the right of access to the 29th Floor Premises
and the 53rd Floor Premises, as applicable, and inspection thereof and Landlord
shall have the right to withhold payment of any portion of the 29th Floor
Premises Work Credit or 53rd Floor Premises Work Credit representing the
reasonably estimated cost of any such work not being performed in a manner
reasonably satisfactory to Landlord; provided, however, that Landlord shall
incur no liability, obligation or responsibility to Tenant or any third party
by reason of such access and inspection.

 

(v)           The
29th Floor Premises Work Credit and the 53rd Floor Premises Work Credit are
being given for the benefit of the Named Tenant, any successor to the Named
Tenant by merger, acquisition, reorganization or sale of substantially all of
the assets of the Named Tenant, and any Affiliate of the Named Tenant to which
the Lease may be assigned.  No other
third party shall be permitted to make any claims against Landlord or Tenant
with respect to any portion of the 29th Floor Premises Work Credit or the 53rd
Floor Premises Work Credit.

 

8.             EXTENSION OPTION.  Tenant shall have the right to extend the
term of the Lease with respect to all, but not less than all, of the Premises
demised by the Lease as of the Extended Expiration Date for one (1) additional
term of five (5) years commencing on the day immediately following the
Extended Expiration Date, subject to, and upon all of the terms and conditions
set forth in Article 36 of the Lease.

 

9.             RIGHT OF FIRST OFFER.  The Lease is hereby amended to include Article 41
(“Right of First Offer”) annexed hereto as Exhibit C  and made a part hereof.

 

18

 

10.           ADDITIONAL
LEASE MODIFICATIONS.

 

(a)           The fourth (4th) sentence of Section 7.07 of the
Lease is hereby amended to read as follows: “Said options may be exercised by
Landlord by notice to Tenant at any time within thirty (30) days after such
notice has been received by Landlord and Landlord shall have received all other
information required to be furnished to Landlord pursuant to the provisions of
this Article 7, and during such thirty (30) day period Tenant shall not
assign this lease or sublet such space to any person.”

 

(b)           Section 7.11(e) of the Lease is hereby modified
to read as follows:  “Provided that
Landlord shall have space comparable in size then available, or to become
available, for leasing in the Building; within nine (9) months from the
effective date of the proposed assignment or subletting, as the case may be,
the proposed assignee or sublessee is not a person with whom Landlord is then
engaged in discussions to lease or is negotiating to lease space in the
Building;”

 

(c)           The following sentence is hereby added at the end of Section 7.11(j) of
the Lease: “Landlord shall be deemed to have approved any proposed broker’s
flyer to which Landlord has not reasonably objected within five (5) Business
Days following Landlord’s receipt thereof, and there shall be no distribution
by or on behalf of Tenant of any such proposed broker’s flyer to third parties
prior to the expiration of such five (5) Business Day period.

 

19

 

(d)           The following words are hereby added to the end of the
last sentence of Section 7.12(a) of the Lease: “, except that for
purposes of this Section 7.12(a), the references to thirty (30) days in
the fourth sentence of said Section 7.07 shall be deemed replaced by
references to twenty (20) days.”

 

(e)           From and after the date hereof, but only for so long as
the tenant under the Lease is the Named Tenant, the provisions of Section 11.03
of the Lease shall be of no force or effect.

 

(f)            The third sentence of Section 11.05 of the Lease is
hereby amended to read as follows: “Alterations shall be performed by contractors
and subcontractors first approved by Landlord, which approval shall not be
unreasonably withheld or delayed; provided that Tenant shall use only
contractors designated by Landlord for work that involves the Building’s Class E
fire protection system.

 

(g)           From and after the 29th Floor Premises Inclusion Date, the
reference in Section 37.01(a)(ii) of the Lease to 2.1% shall be
deemed replaced by 2.97%.

 

11.           SERVICE
PROVIDER.  If Landlord or any
affiliate of Landlord has elected to qualify as a real estate investment trust
(a “REIT”), any service required or permitted to be performed by
Landlord pursuant to the Lease, the charge or cost of which may be treated as
impermissible tenant service income under the laws governing a REIT, may be
performed by a taxable REIT subsidiary that is affiliated with either Landlord
or Landlord’s property manager, an independent contractor of Landlord or
Landlord’s

 

20

 

property manager (the “Service
Provider”).  If Tenant is subject to
a charge under the Lease for any such service, then, at Landlord’s direction,
Tenant will pay such charge either to Landlord for further payment to the
Service Provider or directly to the Service Provider, and, in either case, (i) Landlord
will credit such payment against any charge for such service made by Landlord
to Tenant under the Lease, and (ii) such payment to the Service Provider
will not relieve Landlord from any obligation under the Lease concerning the
provisions of such service.

 

12.                                 BROKER.  Landlord and
Tenant each covenant, warrant and represent that no broker or agent except CB
Richard Ellis, Inc. (hereinafter called the “Broker”) was
instrumental in bringing about or consummating this Agreement and that neither
had any conversations or negotiations with any broker or agent except the
Broker concerning this Agreement.  Tenant
agrees to indemnify and hold harmless Landlord against and from any claims for
any brokerage commissions and all costs, expenses and liabilities in connection
therewith, including, without limitation, reasonable attorneys’ fees and
expenses, arising out of any conversations or negotiations had by Tenant with
any broker or agent other than the Broker with respect to this Agreement.  Landlord agrees to indemnify and hold
harmless Tenant against and from any claims for any brokerage commissions and
all costs, expenses and liabilities in connection therewith, including, without
limitation, reasonable attorneys’ fees and expenses, arising out of
conversations or negotiations had by Landlord with any broker or agent other
than the Broker with respect to this Agreement. 
Landlord agrees that it shall pay to the Broker any 

 

21

 

commission or compensation to which the Broker may be
entitled in connection with this Agreement pursuant to a separate agreement
between Landlord and the Broker.

 

13.                                 RATIFICATION OF LEASE TERMS. 
Except as modified by this Agreement, the Lease and all of the
covenants, agreements, terms and conditions thereof shall remain in full force
and effect and are hereby ratified and confirmed in all respects.

 

14.                                 BINDING EFFECT. 
The covenants, agreements, terms, provisions and conditions contained in
this Agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and, except as otherwise provided in the
Lease, their respective assigns.

 

15.                                 WRITTEN MODIFICATIONS. 
This Agreement may not be changed, modified or terminated orally, but
only by an agreement in writing signed by both Landlord and Tenant.

 

16.                                 GOVERNING LAW. 
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York (without giving regard to any conflicts of
law provisions thereof).

 

17.                                 COUNTERPARTS. 
This Agreement may be executed in any number of counterparts, each of
which shall, when executed, be deemed to be an original and all of which shall
be deemed to be one and the same instrument.

 

[REMAINDER OF THIS PAGE
IS INTENTIONALLY LEFT BLANK]

 

22

 

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

 

	
   

  	
  BROOKFIELD PROPERTIES OLP CO.
  LLC, Landlord

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sara B. Queen

  
	
   

  	
   

  	
  Name: Sara B. Queen

  
	
   

  	
   

  	
  Title: Senior Asset
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARCH INSURANCE COMPANY, a
  Missouri corporation, Tenant

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis R. Brand

  
	
   

  	
   

  	
  Dennis R. Brand

  
	
   

  	
   

  	
  Executive Vice
  President & Chief Administrative Officer

  

 

23

 

ACKNOWLEDGEMENTS

 

	
  STATE OF NEW YORK

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.:

  	
   

  
	
  COUNTY OF NEW YORK

  	
  )

  	
   

  	
   

  

 

 

On the      day of November in
the year 2009, before me, the undersigned, a Notary Public in and for said
state, personally appeared
                                      ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s) acted,
executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

	
  STATE OF NEW YORK

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.:

  	
   

  
	
  COUNTY OF NASSAU

  	
  )

  	
   

  	
   

  

 

 

On the      day of November in
the year 2009, before me, the undersigned, a Notary Public in and for said
state, personally appeared
                                      ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s) acted,
executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public, Peter J. Calleo, Esq.

  

 

24

 

EXHIBIT A

 

LANDLORD’S 29TH FLOOR
WORK

 

1.                                       Deliver the 29th Floor Premises demolished
and in broom clean condition.

 

2.                                       Provide temporary sprinkler coverage in
accordance with applicable code requirements for demolished space.

 

3.                                       Install a main HVAC Trunk Duct at the
core of the 29th floor with required dampers for connection by Tenant.

 

4.                                       Fireproof all exposed steel in accordance
with applicable code requirements.

 

5.                                       Furnish Tenant with the ability, at
Tenant’s sole cost and expense, to tie-in to the Building’s cold water supply
(3⁄4 inch piping) at the core of the Building on the 29th floor.

 

6.                                       Provide Tenant with one point of input to
and one point of output from the Building’s Class E System on the 29th
Floor of the Building; provided that Tenant shall be responsible for all costs
in connection therewith, including without limitation, the cost of tying in and
re-programming the system, with all such work to be performed by Landlord’s
designated contractor.

 

7.                                       Scrape and patch the floor, columns and
demising walls of the 29th Floor Premises to accommodate a standard office build
out in a manner consistent with industry standards.

 

A1

 

EXHIBIT B

 

FLOOR PLAN OF 29TH FLOOR
PREMISES

 

[To be attached]

 

B1

 

EXHIBIT C

 

RIGHT OF FIRST OFFER

 

ARTICLE 41

 

Right of First Offer

 

41.01.                  (a)                                  Provided and on condition that (i) following
the date hereof, Landlord shall have entered into a lease with respect to the
Offering Space, (ii) Tenant is not in monetary or material non-monetary
default under the terms and conditions of this lease either as of the date of
the giving of “Tenant’s Acceptance Notice” or the “Offering Space Inclusion
Date” (as such terms are hereinafter defined), which requirement Landlord may
waive in its sole and absolute discretion, (iii) the Named Tenant shall,
as of the Offering Space Inclusion Date and the date on which Tenant accepts
Landlord’s offer, be in actual occupancy of not less than seventy-five (75%)
percent of the rentable square foot area of the Premises (provided, however,
that such occupancy requirement may be waived by Landlord at any time in its
sole discretion), and (iv) as of the Offering Space Inclusion Date, there
shall be not less than five (5) years remaining in the term of this lease
(as such term may have been extended if Tenant has exercised the extension
option set forth in Paragraph 8 of the Eighth Lease Modification Agreement
prior to or simultaneously with the giving of Tenant’s Acceptance Notice), then
if at any time during the term of this lease, but following the initial leasing
thereof by Landlord following the date hereof, the balance of the twenty-ninth
(29th) floor of the Building or any portion thereof (the “Offering Space”)
shall become available for leasing to anyone other than the current tenant or
occupant thereof (or any affiliate, assignee or subtenant of same) (each of
such entities being hereinafter called an “Existing Tenant”), then Landlord,
subject to the provisions of Section 41.07 hereof, and subject to the
rights of any Existing Tenant of any portion of the Offering Space to extend
the term of its lease with respect thereto (regardless of whether such election
is made pursuant to any provision included within such tenant’s lease), shall
offer to Tenant the right to include such Offering Space within the Premises
upon all the terms and conditions of this lease (other than any provision of
this lease providing for a work allowance, or any landlord work, free rent
period or any other tenant concession, or any terms and conditions of this
lease which are clearly intended to apply to portions of the Premises other
than the Offering Space), except that:

 

(i)                                     The Fixed Rent with respect to such
Offering Space shall be at a rate equal to the fair market rent for such
Offering Space, which shall be determined by Landlord as of the date of the
giving of the Offer Notice (as hereinafter defined) and shall be set forth in a
written notice to Tenant. For purposes of determining the fair market rent for
the Offering Space, the determination shall take into account all then relevant
factors;

 

(ii)                                  Effective as of the Offering Space
Inclusion Date, for purposes of calculating Tenant’s Operating Payments and
Tenant’s Tax Payments attributable to the

 

C1

 

Offering Space, (x) the Base Operating Year shall
be the calendar year in which occurs the Offering Space Inclusion Date, (y) the
Base Tax Amount shall be the Taxes, as finally determined, for the last
complete Tax Year ending immediately prior to the occurrence of the Offering
Space Inclusion Date, and (z) Tenant’s Share attributable to the Offering
Space shall be deemed to be the fraction, expressed as a percentage, the
numerator of which shall be the number of rentable square feet included within
the Offering Space in question, and the denominator of which shall be the
number of rentable square feet included within the Building, based on Landlord’s
then-current standards of measurement.

 

(b)                                 Such offer pursuant to this Article 41
shall be made by Landlord to Tenant in a written notice (herein called the “Offer
Notice”), which offer shall designate the space being offered and shall specify
the Fixed Rent payable with respect to such Offering Space, determined in
accordance with the provisions of Section 41.01(a) hereof, and the
anticipated Offering Space Inclusion Date as reasonably estimated by Landlord
in good faith; provided, however, that if Landlord’s Offer Notice is given more
than six (6) months prior to the anticipated Offering Space Inclusion
Date, then (i) Landlord’s Offer Notice shall not specify Landlord’s
determination of the Fixed Rent with respect to the Offering Space which is the
subject of such Offer Notice and (ii) Landlord shall give Tenant a
separate notice (the “Offering Rent Notice”) specifying Landlord’s
determination of the Fixed Rent for such Offering Space not sooner than six (6) months
and not later than three (3) months prior to the anticipated Offering
Space Inclusion Date.

 

41.02.                  (a)                                  Tenant may accept the offer set forth in
the Offer Notice by delivering to Landlord an unconditional acceptance in
writing (herein called “Tenant’s Acceptance Notice”) of such offer within ten (10) days
after delivery by Landlord of the Offer Notice to Tenant. Such Offering Space
covered by such Offer Notice shall be added to and included in the Premises on
the later to occur of (i) the day that Tenant exercises its option as
aforesaid, or (ii) the date such Offering Space shall become available for
Tenant’s possession (herein called the “Offering Space Inclusion Date”). Time
shall be of the essence with respect to the giving of Tenant’s Acceptance
Notice.

 

(b)                                 If Tenant does not accept (or fails to
timely accept) an offer made by Landlord pursuant to the provisions of this Article 41
with respect to any Offering Space, then Landlord shall be under no further
obligation with respect to such Offering Space by reason of this Article 41,
and Tenant shall have forever waived and relinquished its right to such
Offering Space, and Landlord shall at any and all times thereafter be entitled
to lease such Offering Space to others at such rental and upon such terms and
conditions as Landlord in its sole discretion may desire whether such rental
terms, provisions and conditions are the same as those offered to Tenant or
more or less favorable, and Tenant shall, within five (5) days after
Landlord’s request therefor, deliver an instrument in form reasonably
satisfactory to Landlord confirming the aforesaid waiver, but no such
instrument shall be necessary to make the provisions hereof effective.

 

C2

 

41.03.                  If any Offering Space shall not be
available for Tenant’s occupancy on the anticipated Offering Space Inclusion
Date set forth in the Offer Notice for any reason including, but not limited
to, the holding over of the prior tenant, then Landlord and Tenant agree that
the failure to have such Offering Space available for occupancy by Tenant shall
in no way affect the validity of this lease or the inclusion of such Offering
Space in the Premises or the obligations of Landlord or Tenant hereunder, nor
shall the same be construed in any way to extend the term of this lease, and
for the purpose of this Article 41 the Offering Space Inclusion Date shall
be deferred to and shall be the date such Offering Space is available for
Tenant’s occupancy unleased and free of tenants or other occupants. The
provisions of this Section 41.03 are intended to constitute “an express
provision to the contrary” within the meaning of Section 223-a of the New
York Real Property Law.

 

41.04.                  In the event that Tenant gives a Tenant’s
Acceptance Notice in accordance with the provisions of Section 41.02(a) hereof
and Tenant disputes the fair market rent of the Offering Space as determined by
Landlord pursuant to Section 41.01(a)(i) hereof, then at any time on
or before the date occurring thirty (30) days after Tenant has received the
Offer Notice, Tenant may initiate the arbitration process provided for in Section 36.02
hereof, and such provisions shall apply to the determination of the fair market
rent for the Offering Space, except to the extent that such provisions are
clearly inapplicable (e.g., the caveat contained in the last two (2) lines
of Section 36.02(a)). If Tenant fails to initiate the arbitration process
within such thirty (30) day period, time being of the essence, then Landlord’s
determination of the fair market rent set forth in the Offer Notice shall be
conclusive and binding on Tenant. In the event Tenant initiates the aforesaid
arbitration process and, as of the Offering Space Inclusion Date, the amount of
the fair market rent for the Offering Space has not been determined, Tenant
shall pay the amount determined by Landlord to be the fair market rent for the
Offering Space and when the determination has actually been made, an
appropriate retroactive adjustment shall be made as of the Offering Space
Inclusion Date, if necessary. In the event that such determination shall result
in an overpayment by Tenant of any Fixed Rent, such overpayment shall be paid
by Landlord to Tenant promptly after such determination (and if such
determination shall result in an underpayment by Tenant of any Fixed Rent,
Tenant shall pay any such amounts to Landlord promptly following such
determination).

 

41.05.                  Tenant agrees to accept any Offering
Space in its condition and state of repair existing as of the Offering Space
Inclusion Date and understands and agrees that Landlord shall not be required
to perform any work, supply any materials or incur any expense to prepare such
space for Tenant’s occupancy. Tenant shall prepare any Offering Space included
in the Premises for Tenant’s occupancy, at Tenant’s sole cost and expense, and
in accordance with all of the terms and conditions of this lease including the
provisions of Article 11 hereof, except that Tenant shall receive no work
allowance with respect to any Offering Space.

 

C3

 

41.06.                  The termination of this lease during the
term of this lease shall also terminate and render void all of Tenant’s options
or elections under this Article 41 whether or not the same shall have been
exercised; and nothing contained in this Article 41 shall prevent Landlord
from exercising any right or action granted to or reserved by Landlord in this
lease to terminate this lease. None of Tenant’s options or elections set forth
in this Article 41 may be severed from this lease or separately sold,
assigned or transferred.

 

41.07.                  Notwithstanding any language to the
contrary contained in this Article 41, Tenant hereby acknowledges and
agrees that its right to lease any Offering Space pursuant to the terms and
provisions of this Article 41 shall be subject and subordinate to (i) any
rights granted by Landlord with respect to all or any portion of the Offering
Space as of the date hereof to any other tenant of the Building by way of
option, right of first offer, right of first refusal or otherwise and (ii) any
Existing Tenant’s election to extend the term of its lease (without regard to whether
such tenant has any rights with respect to the Offering Space contained in its
lease). To the best of Landlord’s knowledge, no rights of the nature described
in clause (i) of the immediately preceding sentence are in force or effect
as of the date hereof.

 

41.08.                  Notwithstanding any language to the
contrary contained in this lease, Landlord and Tenant agree that the rights
contained in this Article 41 are for the sole benefit of the Named Tenant
and Landlord shall not be obligated to make any offer described in this Article 41
to any person or entity other than the Named Tenant, nor shall any person or
entity other than the Named Tenant (or Landlord or Landlord’s designee if
Landlord or its designee shall receive an assignment of this lease pursuant to
the provisions of Section 7.07 hereof) be entitled to exercise any right
granted by this Article 41.

 

C4Exhibit 10.10.11

 

ARCH
CAPITAL GROUP LTD.

 

Restricted
Share Unit Agreement

 

THIS AGREEMENT, dated as of May 6, 2009,
between Arch Capital Group Ltd. (the “Company”), a Bermuda company, and Mark
Lyons (the “Employee”).

 

WHEREAS, the Employee has been granted the
following award under the Company’s 2007 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 7,600
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) 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 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.

 

(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 August 1, 2006, as amended, 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; provided that, in the event of a Redundancy (as
defined below), the Committee, in its sole discretion, may, in accordance with
its authority under the Plan, determine that the Restricted Share Units, to the
extent not vested, shall become vested upon such termination of employment.

 

(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 

 

2

 

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; (C) Warburg
Pincus or any of its subsidiaries or any investment funds managed or controlled
by Warburg Pincus or any of its subsidiaries; or (D) any group (as defined
in Rule 13b-3 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.

 

(vii)         “Redundancy” shall
mean termination of employment by the Company due to its need to reduce the
size of its workforce, including due to closure of a business or a particular
workplace or change in business process.  Whether a termination of employment
is due to a “redundancy” shall be determined by the Committee in its sole and 

 

3

 

absolute
discretion, such determination being final and binding on all parties hereto
and all persons claiming through, in the name of or on behalf of such parties.

 

(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)           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 shall 

 

4

 

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 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

 

If to the Employee:

 

To the
last address delivered to the Company by the 

Employee in the manner set forth herein.

 

5

 

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.

 

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 this Agreement, the Employee’s
employment will be deemed to have terminated on the date of 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
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.  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.

 

6

 

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/ Mark D.
  Lyons

  
	
   

  	
  Mark D. Lyons

  

 

7

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