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Exhibit 10.1    
    

 
 

MEC Grundstücksentwicklungs GmbH
  Magna-Straße 1, 2522 Oberwaltersdorf    
    

To:

RAIFFEISENLANDESBANK

NIEDERÖSTERREICH-WIEN AG

Friedrich-Wilhelm-Raiffeisen-Platz 1

1020 Vienna 

Credit Offer:  

        We, MEC Grundstücksentwicklungs GmbH, Magna Straße 1, 2522 Oberwaltersdorf,
referred to as the "borrower" in the following, hereby offer you, the RAIFFEISENLANDESBANK NIEDERÖSTERREICH-WIEN AG, Friedrich-Wilhelm-Raiffeisen-Platz 1, 1020 Vienna,
referred to as the "lender" in the following, a credit offer based on the following conditions: 

Amount of credit:  

        The lender shall offer the borrower a single credit draw in the amount of 

 
 

EURO 15,000,000. —
  (in words: EURO fifteen million)    
    

Purpose of use:  

        Partial financing for the construction of an equestrian sport park in Ebreichsdorf. 

Interest rates/commissions:  

        The lender shall calculate an interest rate for the borrower based on a 3 or 6 month EURIBOR rate, plus 2.0%. For each interest period, the most recently
published 3 or 6 month EURIBOR rate (11:00 am) prior to the commencement of the interest period, shall prevail. 

        The
borrower must inform the lender no later than 3 banking days prior to the expiration of the current interest period, of the desired EURIBOR rate for the next interest period. As a
rule, if no information is received, or, if it is not received in a timely manner, the 3-month EURIBOR shall be used as the basis. 

        If
the preceding EURIBOR rate is no longer made public, the corresponding successor parameters apply. If these too are not made public, the arithmetical average of the rates, which are
set on a specific day by the reference banks that set the EURIBOR rate, is used as the basis to determine the interest rate. This regulation applies, even if not all of these reference banks specify
such interest rates. 

        Interest
rate adjustment deadlines are 1.1., 1.4., 1.7., and 1.10 of each year; interest due dates are 31.3., 30.6., 30.9., and 31.12. of each year. 

        The
calculation of interest is always done quarterly after the above mentioned interest due dates, based on a 360 day calendar. 

        Interest
and commissions, etc. accrued, must be settled by the borrower as prescribed, respectively, the lender has the right to charge these fees to the
borrower — to a main account as yet to be opened — this account shall be at the lender's disposal for this purpose. 

Duration and Repayment:  

        The credit in it's entirety shall be repaid by the borrower no later than 15.12.2006. Premature (partial) repayments without a penalty of any kind, are only
permitted on the respective interest due dates. 

        An
amount that has been repaid may not be drawn down again. 

Jurisdiction:  

        In any and all disputes arising out of this legal transaction, regardless of the amount, the borrower acknowledges that the jurisdiction as regards the subject
matter is Vienna. Austrian Law applies to this contractual relationship. 

Interest Rates and Settling of Accounts:  

        The borrower is obligated to pay the interest rate on the respective outstanding debt at the above-mentioned rate on the dates agreed to from the current account.
On 31.12 of each year, the lender shall settle the account and inform the borrower of the balance by means of an account statement. Provided the borrower does not expressly contest these statements in
writing within six weeks of receipt, the balance shall be considered correct. 

        The
lender shall be reimbursed for all charges and cash expenses associated with the credit agreement. Interest due and expenses shall be charged to the customer's credit account. 

        Independent
of the right of the lender to declare the loan due and payable, if payment is delayed on the part of the borrower, he is obligated to pay interest on arrears at the current
rate of 4.5% p.a. in addition to the interest rate agreed to. 

Declaring the loan due and payable:  

        The lender has the right to declare the loan due and payable, if 

	a)
	the
borrower's business situation or collateral has deteriorated or changed, which jeopardizes the ability to retrieve the loan,

	b)
	the
borrower has made false claims vis-à-vis the lender, which have had a major impact on the lender's decision to award credit,

	c)
	the
credit is used for purposes other than originally intended,

	d)
	if
the borrower does not fully meet or does not meet in a timely manner, even one of the significant obligations in the document at hand or as outlined in the lender's General Terms
and Conditions, thus jeopardizing loan repayment or the value of the collateral or other significant interests of the lender. 

        The
right to declare a loan due and payable remains, even if the lender does not avail himself of his right immediately, that is, if he accepts payments in the interim. Under the same
circumstances, the due date entered remains valid. 

Other Terms:  

	1.
	The
place of fulfillment is the business premise of the lender.

	2.
	The
borrower shall inform the lender immediately of any additional loan agreements or leasing and factoring agreements entered into.

	3.
	The
borrower must inform the lender of any significant changes to his business or legal situation immediately and must present a certified year-end financial statement
(including attachments and statement of affairs) within six months following the date of the balance sheet. If these documents are not made available within nine months following the date of the
balance sheet and, once this time period has expired, the lender has the right, notwithstanding the other standard terms of this loan agreement, to increase the interest rate of this loan by 0.5%
points, for the length of the delay. A Certified Accountant appointed by the lender and/or the borrower, shall examine the business and accounting records, at the expense of the borrower.

	4.
	All
incoming payments to the lender for the borrower, can be used by the lender to offset the borrower's public liabilities.

	5.
	In
all other matters, the lender's current General Terms and Conditions apply, the approval of which is hereby confirmed by the borrower.

	6.
	The
lender has the right, but is not obligated, to give third parties, who have provided collateral for this loan agreement, information about the loan agreement.

	7.
	The
borrower agrees that all data concerning him and which becomes known to him within the framework of this business relationship, shall be forwarded in accordance with bank
practices, specifically in the interest of the protection of creditors or in order to complete banking or leasing transactions. This authorization also pertains to the forwarding of data for business
reasons within the bank. This authorization also applies to general information pertaining to the status of the business. 

Collateral:  

        In order to secure all claims, which could arise from this loan agreement, the borrower promises to undertake the following prior to adding the credit: 

	•
	MI
Developments Inc., 455 Magna Dr., Aurora, Ontario, Canada, shall submit a Comfort Letter to the lender,

	•
	To
pledge or to have pledged, the real estate properties EZZ 1958, 1959 and 1960, each KG 04102, GB Ebreichsdorf for the maximum amount of EURO
17,000,000. — to the lender as security. In the event that the law of liens and pledges is incorporated, EZ 1959 shall rank first, EZ 1958 shall rank second,
according to a pledge to be created for the maximum amount of EURO 17,400,000.00 for the benefit of an as yet unknown creditor. 

        By
delivering the Pledge, the borrower offers the lender an irrevocable pledge on the above-mentioned properties as security (that is, to settle obligatory and legal transactions by
creating a lien). This offer is binding until this loan agreement expires and all current and future claims of the lender have been met as per this loan agreement. The lender is authorized at any
time, to accept this offer by way of a separate written declaration, that is, by countersigning the Pledge and having the law of liens and pledges entered into the books. Upon request of the lender,
the Pledge shall be replaced by another — form and content to be approved by the lender — whereby nothing has been changed,
however, with respect to the above-mentioned maximum amount and the claim to be secured thereby. 

        The
borrower shall assure the lender that he has not pledged any of the properties, which could be incorporated by a third party, for the benefit of a third party (apart from the as yet
unknown creditor pertaining to Property EZ 1958). In the event that the borrower creates a Pledge for the benefit of third parties in the future, or, if a pledge for the benefit of a third party
contains the pledged chattel, which could be incorporated by the third party, the borrower is obligated to guarantee the lender first, respectively second ranking, with respect to Property EZ 1958, in
the journal in the appropriate manner. 

        The
acceptance of this credit offer shall be the provision of credit by your institution to our account in the above-mentioned amount without any further correspondence. 

        This
offer is valid until 31.03.2004. 

        Oberwaltersdorf,
5/3/04 

[signature]                [signature]                [signature]

 
 

PLEDGE    
    

The

RAIFFEISENLANDESBANK NIEDERÖSTERREICH WIEN AG

Friedrich-Wilhelm-Raiffeisen-Platz 1, 1020 Vienna 

(referred
to as the "lender" in the following), has a business relationship with 

MEC
Grundstücksentwickklungs GmbH

Magna-Straße 1

2522 Oberwaltersdorf 

(referred
to as the "borrower" in the following), whereby it has facilitated and continues to facilitate credit. In order to secure all claims on primary and secondary liabilities up to a maximum
amount of 

 
 

EURO 17,000,000. — (EURO seventeen million)    
    

which
the lender has certified domestically vis-à-vis the borrower/s, for loans already facilitated and to be facilitated in the future, credit, liability credit
or credit guarantees which the lender has accrued and shall accrue in future, 

MEC
Grundstückentwicklungs GmbH

Magna-Straße 1

2522 Oberwaltersdorf 

hereby
pledges to the lender the following properties or portions thereof in its possession: 

EZ 1959 Municipal Land Registry 04102 in the Local Jurisdiction of Ebreichsdorf

EZ 1958 Municipal Land Registry 04102 in the Local Jurisdiction of Ebreichsdorf

EZ 1960 Municipal Land Registry 04102 in the Local Jurisdiction of Ebreichsdorf,  

along with all actual and legal accessories pertaining thereto, and hereby grants his (her) irrevocable consent that, based on this official document, (simultaneously) the law
of liens and pledges be incorporated on the above-mentioned real estate property/ies or portions thereof, for these credit claims to the borrower/s up to a maximum amount of 

EURO 17,000,000. — (EURO seventeen million)

without
his (her) continued knowledge and approval, but at his (her) expense, in favour of the RAIFFEISENLANDESBANK NIEDERÖSTERREICH-WIEN AG 

and
that hereby, 

EZ 1959 Municipal Land Registry 04102 in the Local Jurisdiction of Ebreichsdorf

is
designated the principal collateral and the remaining property/ies or portions thereof pledged are designated secondary collateral. 

Agreement on Jurisdiction:  

        In all legal disputes arising from this agreement, the property owner/s acknowledge that, irrespective of the amount, the Court in Vienna has the jurisdiction in
this matter. This agreement shall be governed by and construed in accordance with the laws of Austria. 

        It
is maintained that the above-mentioned certifications are legally generated as well as legally attested certifications to be understood in terms of the fees required by law. 

        Based
on the fees required by law, it is maintained that the pledge be issued legally in terms of the fees required by law: this pledge only becomes legally binding, once it is signed by
both parties to a contract. 

        Furthermore,
based on the fees required by law, it is maintained that this law of liens and pledges serves, among other things, to secure the signed and certified loan agreement (which
was offered in a letter dated 05.03.2004, prior to signing this pledge agreement in terms of the current fees required by law). 

Other Terms:  

	1.
	Supplementary
liabilities consist of interest, interest on arrears, commissions and expenses, interest that has been in arrears for over three years in the event of an executed writ,
interest payments allocated above and beyond the highest interest bid and matured interest, as well as accrued costs, expenses, fees and taxes incurred due to the establishment, the existence, the
consolidation or termination of this secured credit agreement by a concrete mortgage, is the responsibility of the borrower. This pertains specifically to all legal fees, collection fees, costs of
composition proceedings (to avoid bankruptcy), litigation fees, execution fees, appraisal fees, intabulation costs, cancellation and transfer fees and costs involved in undertaking valuations,
auctions and proceedings for the distribution of assets, bankruptcy proceedings, as well as legal representation, regardless whether these costs are of a legal or non-legal nature and all
other claims arising out of secondary liabilities, which the lender is, or will be, authorized to charge the borrower/s based on this official document.

	2.
	The
owner/s of the real estate property is/are obligated to maintain proper ongoing fire insurance, commensurate with value, for all of the structures, buildings, equipment and
facilities, which constitute part of this pledge, and not to change or amend the insurance contract with respect to the insurance of the real estate property that is the subject of the contract during
the course of the loan agreement, without the approval of the lender. Furthermore, to pay the insurance premiums in a timely manner and to be able to present the lender with proof of these premium
payments upon request. In the event that the premiums are not paid by the owner/s of the real estate property, the lender has the right to pay these premiums at the expense of the borrower/s or
owner/s of the real estate property. The owner of the real estate property is obligated to inform the lender immediately if an insurance contingency has occurred and to reach an agreement with him
regarding payment of damages.

	3.
	The
owner/s of the real estate property is/are obligated to pay, as prescribed according to current and future laws, all taxes, stamp duties and legal fees or other public taxes,
including all surcharges which are prescribed to the pledged real estate properties or portions thereof, or to the companies operating commercial business on these properties, as well as all other
transfer fees prescribed to these real estate properties or portions thereof, as well as other claims to capital on the pledge preceding in rank, interest and other supplementary fees in the event of
maturity and to be able to prove payment thereof to the lender upon request. 

	4.
	The
lender is authorized to gather information on the status of the property/ies pledged, as well as on the construction status of the building/s, as often as deemed necessary and in
the manner deemed suitable to him at the expense of the borrower/s or property owner/s.

	5.
	The
owner/s of the real estate property/ies is/are obligated to inform the lender without delay of any significant changes to the pledged real estate property/ies or portions thereof,
that is, by pledging, selling, donating, transferring, leasing, renting, erecting buildings in terms of Section 435 ABGB or by granting any rights to third parties.

	6.
	The
owner/s of the real estate property waives/e the right, as per Section 201 EO, to apply for the initiation of sequestration proceedings instead of foreclosure
proceedings and is/are in agreement that, in the event that the law of liens and pledges is enforced, the pledged property/ies or portions thereof can be realized by court order.

	7.
	If
the owner/s of the real estate property are entrepreneurs in terms of the Sales Tax Law, and, in the event that the law of liens and pledges is enforced by means of sale by court
order, the lender has the right to deduct the sale proceeds by issuing a credit, provided he is subject to sales tax according to Section 11, Par. 8 of the Sales Tax Law.

	8.
	The
lender is not obligated to inform the real estate property owner/s of the respective status of the outstanding claim; the real estate property owner/s may gather this information
by looking at the borrower's bank statements.

	9.
	In
all other matters, the current version of the lender's General Terms and Conditions applies, which the owner/s of the real estate properties hereby acknowledge.

	10.
	It
is expressly maintained that all costs or fees of any kind incurred for this official document are the sole responsibility of the property owner. 

Oberwaltersdorf,
05.03.2004 

MEC
Grundstücksentwicklungs GmbH 

[signatures]

Registration number of Certification: 378/2004  

        The authenticity of this document issued by Prof. Eng. Dr. Heinrich Eichenauer, employed as the General
Manager, 2522 Oberwaltersdorf, Magna Straße 1, and Mr. Rudolf Krumpeck, Magister, a signing officer, employed at 2522
Oberwaltersdorf, Magna Straße 1 of MEC Grundstücksentwicklungs GmbH, headquartered in Oberwaltersdorf, is hereby
confirmed. 

        At
the same time, I confirm, as per Section 89 a of the Notary's Office, and based on today's perusal of the company register at the Provincial Court of Vienna Neustadt that as
the General Manager, Dr. Heinrich Eichenauer, Prof. Eng. and Mr. Rudolf Krumpeck as the
signing officer, are authorized and have the legal joint power of attorney to sign on behalf of MEC Grundstücksentwicklungs GmbH,
FN 135317x in the above-mentioned company register, headquartered in Oberwaltersdorf. 

        Ebreichsdorf,
05.03.2004 (fifteenth of March two thousand and four). — 

	[stamp: Fee paid to the

Dept. of Finance

of Euro 13. —

Dr. Hans Zak

Notary Public

Ebreichsdorf]	 	[Seal: Dr. Hans ZAK

Notary Public

Ebreichsdorf, N.O.]	 	[signature]

stamp: Notary Public

[Seal: Dr. Hans ZAK

Notary Public

Ebreichsdorf, N.O.]

QuickLinks

Exhibit 10.1

MEC Grundstücksentwicklungs GmbH Magna-Straße 1, 2522 Oberwaltersdorf

EURO 15,000,000. — (in words: EURO fifteen million)

PLEDGE

EURO 17,000,000. — (EURO seventeen million)Exhibit
10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (“Agreement”)
dated as of April 6, 2004 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 Vice 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 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 will terminate on October 24, 2007 unless
terminated earlier (a) by either party at October 24, 2005 or
October 24, 2006 by providing at least 60 days’ prior written notice to
the other party, (b) upon the Executive’s death or Permanent Disability, or (c)
by the Company for Cause.  In addition,
this Agreement will be automatically extended on the same terms and conditions
for successive one year periods following such original term until either the
Company or the Executive, at least sixty (60) days prior to the expiration of
the original term or any extended term, shall give written notice of their
intention not to renew the Agreement.

 

SECTION 5.02. 
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 5.03. 
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

 

4

 

required by the
Executive’s performance of duties assigned to the Executive pursuant to this
Agreement.  Under all circumstances and
at all times, the Executive will take all appropriate steps to safeguard
Confidential Information in his possession and to protect it against disclosure,
misuse, espionage, loss and theft.

 

ARTICLE 7

 

INTELLECTUAL PROPERTY

 

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

 

5

 

material and, if
requested by the Company, will provide the Company with written confirmation
that all such materials have been delivered to the Company.

 

ARTICLE 9

 

NONCOMPETITION
AND NONSOLICITATION

 

SECTION 9.01. 
Noncompetition.  The Executive acknowledges that
during his employment with the Company, he will become familiar with trade
secrets and other Confidential Information concerning the Company, 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 (if such termination is for Cause or as a
result of the Executive’s resignation or leaving employment not for Good Reason)
(the “Noncompetition
Period”), he will not directly or indirectly own, manage, control,
participate in, consult with, render services for or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries
as such businesses exist or are in process or being planned as of the Date of
Termination, within any geographical area in which the Company or its
Subsidiaries engage or plan to engage in such businesses.  Notwithstanding the foregoing, the
Noncompetition Period shall be twelve (12) months following the Date of
Termination if such termination is by the Company without Cause, by the Executive
for Good Reason or due to the Executive giving written notice pursuant to
Section 5.01 of his intention not to extend the Employment Period; provided
however, that in such circumstances, the Noncompetition Period may be
extended up to a period of eighteen (18) months following the Date of
Termination by the Company if it elects in writing to pay the Executive his
Base Salary for the additional six (6) month period, such amount to be payable
in monthly installments over the additional six (6) month 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)

 

6

 

during the
Nonsolicitation Period, the Executive will not induce or attempt to induce any
customer, supplier, client, insured, reinsured, reinsurer, broker, licensee or
other business relation of the Company or its Subsidiaries to cease doing
business with the Company or its Subsidiaries.

 

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

 

ARTICLE 10

 

EQUITABLE RELIEF

 

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

 

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.

 

7

 

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 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

 

8

 

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.

  
	
   

  	
   

  	
   

  
	
  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.

 

9

 

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.

 

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

  
	
   

  	
  Printed
  Name:

  	
  Constantine
  Iordanou

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul B. Ingrey

  
	
   

  	
  Paul
  B. Ingrey

  
					

 

11

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