Document:

Exhibit 10.16

 

AMENDMENT TO

EMPLOYMENT AGREEMENT

 

AMENDMENT TO
EMPLOYMENT AGREEMENT (“Amendment”) dated December 31, 2008 between Arch
Capital Group Ltd., a Bermuda corporation (the “Company”), and Constantine
Iordanou (the “Executive”).

 

WHEREAS, the
Company and the Executive are parties to an Employment Agreement dated November 28,
2007 (the “Agreement”);

 

WHEREAS, the Company
and the Executive wish to amend the Agreement as set forth herein;

 

NOW, THEREFORE,
in consideration of the mutual covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Company and the Executive hereby agree as follows:

 

1.             The definition of “Good Reason” in Section 1.01
is amended by adding the following at the end of the paragraph:

 

“A termination of employment by the Executive following an event or
series of events described in clause (ii) of the second sentence of this
paragraph as a result of which an Acquiror other than a Permitted Person becomes
the beneficial owner of more than 50% of the total voting power of all
outstanding securities of the Company (a “Change in Control”) shall be
considered a termination of employment for Good Reason for purposes of this
Agreement only if such termination occurs within three months after the Change
in Control (or follows a diminution of duties or responsibilities or a material
breach described in the first sentence of this paragraph, as determined without
regard to clause (ii) of the second sentence of this paragraph).”

 

2.             Section 4.03(d) is
amended by adding the following at the end thereof:

 

“and such cost
shall be paid not later than the last day of the calendar year following the
calendar year for which the annual tax return is prepared.”

 

3.             Clause (ii) of the penultimate
sentence of Section 5.02 is amended to read as follows:

 

“(ii) an
amount per annum equal to 40% of the annual Base Salary during the period
beginning on the date of the Executive’s Permanent Disability up to the month
in which the Executive reaches age 65, offset by any proceeds scheduled to be
received by the Executive or his legal representative from any disability insurance
coverages provided by the Company or any of its affiliates, such amount to be
paid to the Executive in equal monthly installments beginning one month after
such termination of employment, provided, however, that all installments
otherwise

 

 

scheduled to
be made after the first anniversary of such termination shall instead be made
on such first anniversary.”

 

4.             The penultimate sentence of Section 5.03
is amended to read as follows:

 

“Subject to Section 13.10
below, such amount will be paid in eighteen (18) equal installments, the first nine
(9) of which will be paid monthly over nine (9) months commencing one
month after the Date of Termination and continuing monthly thereafter through
the ninth month following the month that includes the Date of Termination and
the last nine (9) of which will be paid in a lump sum on the nine-month
anniversary of the Date of Termination. 
(For example:  If the Date of
Termination is June 30, 2009, and the aggregate of the amounts described
in the preceding sentence is $3,600,000, $200,000 (one-eighteenth of
$3,600,000) shall be paid, subject to Section 13.10 below, in each of the
months of July through February, 2010, and $2,000,000 shall be paid on March 30,
2010.)”

 

5.             Clause (a) of the second
sentence of Section 9.01 is amended to read as follows:

 

“pay the
Executive an amount equal to two times the sum of the Base Salary and the
target annual bonus set forth in Section 4.02, as prorated for the period
selected by the Company if a period of less than eighteen months is identified
in the above-referenced election, with such amount to be paid, subject to Section 13.10
below, in eighteen (18) equal installments, the first twelve (12) of which will
be paid monthly over twelve (12) months commencing one month after the Executive’s
“separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h))
with the Company and continuing monthly thereafter through the month that
includes the first anniversary of the separation from service and the last six (6) of
which will be paid on the first anniversary of the separation from service),”

 

6.             The second sentence of Section 11.04
is amended to read in its entirety as follows:

 

“In addition,
the Company agrees to pay all legal fees which the Executive may reasonably
incur as a result of any dispute or contest by or with the Company regarding
the validity or enforceability of, or liability under, any provision of this
Agreement or otherwise in connection with the enforcement of this Agreement
following his “separation from service” (as defined below) with the Company,
unless the Company substantially prevails on all material causes of action in
the dispute or contest.”

 

7.             Section 13.10 is amended to
read in its entirety as follows:

 

“(a)  It is intended that this Agreement will comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and any
regulations and guidelines promulgated thereunder (collectively, “Section 409A”)
and Section 457A of the Code, to the extent the Agreement is subject
thereto, and the

 

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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 or Section 457A, 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.  No action or failure to act
pursuant to this Section 13.10 shall subject the Company to any claim,
liability, or expense, and the Company shall not have any obligation to
indemnify or otherwise protect the Executive from the obligation to pay any
taxes, interest or penalties pursuant to Section 409A.

 

(b)  Notwithstanding any provision to the contrary in this
Agreement, if the Executive is deemed on the date of his “separation from
service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the
Company to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)),
then with regard to any payment or benefit that is considered deferred
compensation under Section 409A payable on account of a “separation from
service” 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 or benefit shall be made or provided on the date
that is the earlier of (i) the expiration of the six (6)-month period
measured from the date of the Executive’s “separation from service,” or (ii) the
date of the Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all
payments and benefits delayed pursuant to this Section 13.10 (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Executive in a lump
sum and any remaining payments and benefits due under this Agreement shall be
paid or provided in accordance with the normal payment dates specified for them
herein.

 

(c)  With respect to any reimbursement or in-kind benefit
arrangements of the Company and its subsidiaries that constitute deferred compensation
for purposes of Section 409A, except as otherwise permitted by Section 409A,
the following conditions shall be applicable: (i) the amount eligible for
reimbursement, or in-kind benefits provided, under any such arrangement in one
calendar year may not affect the amount eligible for reimbursement, or in-kind
benefits to be provided, under such arrangement in any other calendar year
(except that the health and dental plans may impose a limit on the amount that
may be reimbursed or paid), (ii) any reimbursement must be made on or
before the last day of the calendar year following the calendar year in which
the expense was incurred, and (iii) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit.  Whenever a payment under this Agreement specifies
a payment period with reference to a number of days (e.g., “payment
shall be made within thirty (30) days after termination of employment”), the
actual date of payment within the specified period shall be within the sole
discretion of the Company.  Whenever
payments under this Agreement are to be made in installments, each such
installment shall be deemed to be a separate payment for purposes of Section 409A.”

 

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8.             Except as set forth herein, the
Agreement shall continue in full force and effect in accordance with its terms.

 

9.             All questions concerning the
construction, validity and interpretation of this Amendment and the Agreement shall
be construed and governed in accordance with the laws of the State of New York,
without reference to the principles of conflict of laws thereof.

 

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

 

4

 

IN WITNESS
WHEREOF, the parties hereto have executed this Amendment on the date first
above written.

 

	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Preston Hutchings

  
	
   

  	
  Printed Name:

  	
  W. Preston Hutchings

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Constantine Iordanou

  
	
   

  	
  Constantine Iordanou

  

 

5Exhibit 10.19

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT
AGREEMENT (“Agreement”) dated as of December 2,
2008 between Arch Capital Group Ltd., a Bermuda corporation (the “Company”), and Paul B. Ingrey (the “Executive”).

 

The
parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

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

 

“Base Salary”  has the
meaning set forth in Section 4.01.

 

“Cause”  means (a) theft
or embezzlement by the Executive with respect to the Company or its
Subsidiaries; (b) malfeasance or gross negligence in the performance of
the Executive’s duties; (c) the commission by the Executive of any felony
or any crime involving moral turpitude; (d) willful or prolonged absence
from work by the Executive (other than by reason of disability due to physical
or mental illness) or failure, neglect or refusal by the Executive to perform
his duties and responsibilities without the same being corrected within ten (10) days
after being given written notice thereof; (e) continued and habitual use
of alcohol by the Executive to an extent which materially impairs the Executive’s
performance of his duties without the same being corrected within ten (10) days
after being given written notice thereof; (f) the Executive’s use of
illegal drugs without the same being corrected within ten (10) days after
being given written notice thereof; or (g)  the material breach by the
Executive of any of the covenants contained in this Agreement.

 

“Confidential Information” means information that is not
generally known to the public and that was or  is
used, developed or obtained by the Company or its Subsidiaries in connection
with their business.  It shall not
include information (a) required to be disclosed by court or
administrative order, (b) lawfully obtainable from other sources or which
is in the public domain through no fault of the Executive; or (c) the
disclosure of which is consented to in writing by the Company.

 

“Date of Termination”  has the
meaning set forth in Section 5.03.

 

“Employment Period”  has the
meaning set forth in Section 2.01.

 

 

“Intellectual Property”  has the
meaning set forth in Section 7.01.

 

“Notice of Termination”  has the
meaning set forth in Section 5.02.

 

“Noncompetition Period”  has the meaning
set forth in Section 9.01.

 

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

 

“Permanent Disability”  means those
circumstances where the Executive is unable to continue to perform the usual
customary duties of his assigned job or as otherwise assigned in accordance
with the provisions of this Agreement for a period of six (6) months in any
twelve (12) month period because of physical, mental or emotional incapacity
resulting from injury, sickness or disease. 
Any questions as to the existence of a Permanent Disability shall be determined
by a qualified, independent physician selected by the Company and approved by
the Executive (which approval shall not be unreasonably withheld).  The determination of any such physician shall
be final and conclusive for all purposes of this Agreement.

 

“Reimbursable Expenses”  has the
meaning set forth in Section 4.04.

 

“Subsidiary” or “Subsidiaries”
means, with respect to any Person, any corporation, partnership, limited
liability company, association or other business entity of which (a) if a
corporation, fifty (50) percent or more of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or combination thereof; or (b) if a
partnership, limited liability company, association or other business entity,
fifty (50) percent or more of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination
thereof.  For purposes of this definition,
a Person or Persons will be deemed to have a fifty (50) percent or more
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons are allocated fifty (50)
percent or more of partnership, limited liability company, association or other
business entity gains or losses or control the managing director or member or
general partner of such partnership, limited liability company, association or
other business entity.

 

2

 

ARTICLE 2

 

EMPLOYMENT

 

SECTION 2.01.  Employment.  The Company shall employ the
Executive, and the Executive shall accept employment with the Company, upon the
terms and conditions set forth in this Agreement for the period beginning on
the date hereof and ending as provided in Section 5.01.  The period beginning on the date hereof and
ending as provided in Section 5.01 is referred to herein as the “Employment
Period.”

 

ARTICLE 3

 

POSITION AND DUTIES

 

SECTION 3.01.  Position and Duties.  The Executive shall serve as Chairman
of the Company and senior advisor to the Chief Executive Officer of the Company,
reporting to the Board of Directors of the Company.  As part of such engagement,
the Executive shall not be required to be involved in any aspect of the
operation or day-to-day management of the Company.

 

ARTICLE 4

 

BASE SALARY AND BENEFITS

 

SECTION 4.01.  Base Salary.  During the Employment Period, the
Executive’s base salary (the “Base Salary”)
will be paid at the rate of (a) $750,000 per annum from the date hereof through
October 23, 2004 and (b) $250,000 per annum from October 24,
2004 through the remainder of the Employment Period.  The Base Salary will be
payable monthly on the 15th day of each month, two weeks in
arrears and two weeks in advance.  The Executive acknowledges that, as an
officer of the Company, he will not be entitled to any additional compensation
for his service as a member of the Board of Directors of the Company.

 

SECTION 4.02.  Benefits.  In addition to the Base Salary,
the Executive shall be entitled to benefits under any plan or arrangement
available generally for senior executive officers of the Company, subject to
and consistent with the terms and conditions and overall administration of such
plans as set forth from time to time in the applicable plan documents.

 

SECTION 4.03.  Expenses.  The Company shall reimburse the
Executive for all reasonable expenses incurred by him (including first class
airfare) in the course of performing his duties under this Agreement which are
consistent with the Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, (“Reimbursable

 

3

 

Expenses”),  subject to the
Company’ requirements with respect to reporting and documentation
of expenses.  In addition, upon the
Executive’s reasonable request, any private aircraft owned or leased by the
Company or its Subsidiaries from time to time (if any) shall be made available
to him during the Employment Period at the Company’s expense for travel between
Bermuda and the Executive’s private residence.

 

ARTICLE 5

 

TERM AND TERMINATION

 

SECTION 5.01. 
Term. 
The Employment Period shall continue for an indefinite period until
terminated (a) by either party by providing at least six months’ prior
written notice to the other party, provided that such notice may not be given
prior to October 24, 2007, such notice to be effective six months
thereafter, (b) upon the Executive’s death or Permanent Disability, or (c) by
the Company for Cause.

 

SECTION 5.01.  Notice of Termination.  Any termination by the Company for Permanent
Disability or Cause shall be communicated by written Notice of Termination to
the other party hereto.  For purposes of
this Agreement, a “Notice of Termination”
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment under
the provision indicated.

 

SECTION 5.02.  Date of Termination.  “Date of
Termination”  shall mean (a) if
the Employment Period is terminated as a result of a Permanent Disability, five
(5) days after a Notice of Termination is given, (b) if the
Employment Period is terminated pursuant to Section 5.01(a), the date
specified in the Notice of Termination, and (c) if the Employment Period
is terminated for any other reason (including for Cause), the date designated
by the Company in the Notice of Termination.

 

ARTICLE 6

 

CONFIDENTIAL INFORMATION

 

SECTION 6.01.  Nondisclosure and Nonuse
of Confidential Information.  The
Executive will not disclose or use at any time during or after the Employment
Period any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except to the extent that
such disclosure or use is directly related to and required by the Executive’s
performance of duties assigned to the Executive pursuant to this
Agreement.  Under all circumstances and
at all times, the Executive will take all appropriate 

 

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steps to safeguard
Confidential Information in his possession and to protect it against disclosure,
misuse, espionage, loss and theft.

 

ARTICLE 7

 

INTELLECTUAL PROPERTY

 

SECTION 7.01.  Ownership of Intellectual
Property.  In the event that
the Executive as part of his activities on behalf of the Company generates,
authors or contributes to any invention, design, new development, device,
product, method of process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not
comprising Confidential Information) or any other form of Confidential
Information relating directly or indirectly to the business of the Company as
now or hereinafter conducted (collectively, “Intellectual
Property”), the Executive acknowledges that such Intellectual
Property is the sole and exclusive property of the Company and hereby assigns
all right title and interest in and to such Intellectual Property to the Company.  Any copyrightable work prepared in whole or
in part by the Executive during the Employment Period will be deemed “a work
made for hire” under Section 201(b) of the Copyright Act of 1976, as
amended, and the Company will own all of the rights comprised in the copyright
therein.  The Executive will promptly and
fully disclose all Intellectual Property and will cooperate with the Company to
protect the Company’s interests in and rights to such Intellectual Property
(including providing reasonable assistance in securing patent protection and
copyright registrations and executing all documents as reasonably requested by
the Company, whether such requests occur prior to or after termination of
Executive’s employment hereunder).

 

ARTICLE 8

 

DELIVERY OF MATERLALS UPON
TERMINATION OF EMPLOYMENT

 

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

 

5

 

ARTICLE
9

 

NONCOMPETITION
AND NONSOLICITATION

 

SECTION 9.01.  Noncompetition.  The Executive acknowledges that during his employment
with the Company, he will become familiar with trade secrets and other
Confidential Information concerning the Company, their Subsidiaries and their
respective predecessors, and that his services will be of special, unique and
extraordinary value to the Company.  In
addition, the Executive hereby agrees that at any time during the Employment
Period, and for a period ending two (2) years after the Date of
Termination (the “Noncompetition Period”),
he will not directly or indirectly own, manage, control, participate in,
consult with, render services for or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries as such
businesses exist or are in process or being planned as of the Date of Termination,
within any geographical area in which the Company or its Subsidiaries engage or
plan to engage in such businesses. 
Notwithstanding the foregoing, the Noncompetition Period shall end twelve
(12) months following the Date of Termination if such termination is by the
Company without Cause or due to the Executive giving written notice pursuant to
Section 5.01 of his intention not to extend the Employment Period.  It shall not be considered a violation of
this Section 9.01 for the Executive (i) to be a passive owner of not
more than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as the Executive has no active participation in the
business of such corporation, or (ii) to serve as a nonemployee director
of Fairfax Financial Holdings or its subsidiary Odyssey Reinsurance.

 

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

 

SECTION 9.03.  Enforcement.  If, at the enforcement of Sections 9.01 or
9.02, a court holds that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable 

 

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under such
circumstances will be substituted for the stated duration, scope or area and
that the court will be permitted to revise the restrictions contained in this Section 9
to cover the maximum duration, scope and area permitted by law.

 

ARTICLE 10

 

EQUITABLE RELIEF

 

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

 

ARTICLE 11

 

EXECUTIVE REPRESENTATIONS

 

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

 

ARTICLE 12

 

MISCELLANEOUS

 

SECTION 12.01.  Remedies.  The Company will have all rights
and remedies set forth in this Agreement, all rights and remedies which the
Company have been granted at any time under any other agreement or contact and
all of the rights which the Company have under any law.  The Company will be entitled to enforce such
rights specifically, without posting a bond or other security, to recover
damages by reason of any breach of any provision of this Agreement

 

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and to exercise
all other rights granted by law.  There
are currently no disciplinary or grievance procedures in place, there is no
collective agreement in place, and there is no probationary period.

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  If to the Executive:

  	
   

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

  

 

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  If to the Company:

  	
   

  	
  Arch Capital Group Ltd.

  
	
   

  	
   

  	
  45 Reid Street

  
	
   

  	
   

  	
  Hamilton HM 12

  
	
   

  	
   

  	
  Bermuda

  

 

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

 

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

 

SECTION 12.09.  No Third Party
Beneficiary.  This Agreement
will not confer any rights or remedies upon any person other than the Company,
the Executive and their respective heirs, executors, successors and assigns.

 

SECTION 12.10.  Entire Agreement.  This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements or representations
by or among the parties, written or oral, that may have related in any way to
the subject matter hereof, including the Agreement, dated as of October 23,
2001, among the Executive, the Company and Arch Reinsurance Ltd.  This Agreement shall serve as a written
statement of employment for purposes of Section 6 of the Bermuda Employment
Act 2000.

 

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

 

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

 

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

 

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SECTION 12.14.
409A and 457A. 
It is intended that this Agreement will comply with Sections
409A and 457A of the Internal Revenue Code of 1986, as amended (the “Code”) (and any regulations and guidelines issued
thereunder), to the extent the Agreement is 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 or Section 457A, 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.  No action or failure to act,
pursuant to this Section 12.14 shall subject the Company to any claim, liability,
or expense, and the Company shall not have any obligation to indemnify or
otherwise protect the Executive from the obligation to pay any taxes, interest
or penalties pursuant to Section 409A or Section 457A of the Code.

 

Notwithstanding
any provision to the contrary in this Agreement, if the Executive is deemed on
the date of his “separation from service” (within the meaning of Treasury Regulation
Section 1.409A-1(h)) to be a “specified employee” within the meaning of
that term under Section 409A(a)(2)(B) of the Code, 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 the applicable provisions of Treasury Regulation
Section 1.409A-1(b)(9)(iii)), the portion, if any, of such payment so
required to be delayed shall not be made prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of his “separation
from service” or (ii) the date of his death (the “Delay Period”).  Upon the expiration of the Delay Period, all
payments and benefits delayed pursuant to this Section (whether they would
have otherwise been payable in a single sum or in installments in the absence
of such delay) shall be paid or reimbursed to the Executive 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.  Whenever payments under this Agreement are to
be made in installments, each such installment shall be deemed to be a separate
payment for purposes of Section 409A of the Code.  In
no case will compliance with this Section by the Company constitute a
breach of the Company’s obligations under this Agreement.

 

With respect to any
reimbursement or in-kind benefit arrangements of the Company and its
subsidiaries that constitute deferred compensation for purposes of Section 409A,
except as otherwise permitted by Section 409A, the following conditions
shall be applicable: (i) the amount eligible for reimbursement, or in-kind
benefits provided, under any such arrangement in one calendar year may not
affect the amount eligible for reimbursement, or in-kind benefits to be
provided, under such arrangement in any other calendar year (except that the
health and dental plans may impose a limit on the amount that may be reimbursed
or paid), (ii) any reimbursement must be made on or before the last day of
the calendar year following the calendar year in which the expense was
incurred, and (iii) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit.

 

10

 

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

 

	
   

  	
  ARCH
  CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Constantine Iordanou

  
	
   

  	
  Name:

  	
  Constantine
  Iordanou

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul B. Ingrey

  
	
   

  	
  Paul
  B. Ingrey

  

 

11

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