Document:

EXHIBIT 10.13.9

 

ARCH
CAPITAL GROUP LTD.

Non-Qualified Stock Option Agreement

FOR GOOD AND VALUABLE
CONSIDERATION, receipt of which is hereby acknowledged, Arch Capital Group Ltd.
(the “Company”), a Bermuda company, hereby grants to Preston Hutchings, an employee
of a subsidiary of the Company on the date hereof (the “Option Holder”), the
option to purchase common shares, $0.01 par value per share, of the Company (“Shares”),
upon the following terms:

WHEREAS, the Option
Holder has been granted the following award in connection with his or her
retention as an employee and as compensation for services to be rendered; and
the following terms reflect the Company’s 2002 Long Term Incentive and Share
Award Plan (the “Plan”);

(a)           Grant.  The Option Holder is hereby granted an option
(the “Option”) to purchase 50,000 Shares (the “Option Shares”) pursuant to the
Plan, the terms of which are incorporated herein by reference.  The Option is granted as of July 1, 2005 (the
“Date of Grant”) and such grant is subject to the terms and conditions herein
and the terms and conditions of the applicable provisions of the Plan.  This Option shall not be treated as an
incentive stock option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended.  In the event of any
conflict between this Agreement and the Plan, the Plan shall control.

(b)           Status of Option Shares.  The Option Shares shall upon issue rank
equally in all respects with the other Shares.

(c)           Option Price.  The purchase price for the Option Shares shall
be, except as herein provided, $45.34 Option Share, hereinafter sometimes
referred to as the “Option Price,” payable immediately in full upon the
exercise of the Option.

(d)           Term of Option.  The Option may be exercised only during the
period (the “Option Period”) set forth in paragraph (f) below and shall remain
exercisable until the tenth anniversary of the Date of Grant.  Thereafter, the Option Holder shall cease to
have any rights in respect thereof.  The
right to exercise the Option shall be subject to sooner termination as provided
in paragraph (j) below.

(e)           No Rights of Shareholder.  The Option Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at
law or in equity.

(f)            Exercisability.  Except as otherwise set forth in paragraph
(j) below, the Option shall become exercisable as to one third of the Option
Shares on the Date of Grant, as to an additional one-third of the Option Shares
on the first anniversary of the Date of Grant, and as to the final one-third of
the Option Shares on the second anniversary of the Date of Grant, in each case
subject to paragraph (j) below.  Subject
to paragraph (j) below, the Option may be exercised at any time or from time to
time during the Option Period in regard to all or any portion of the Option
which is then exercisable, as may be adjusted pursuant to paragraph (g) below.

 

 

(g)           Adjustments for Recapitalization
and Dividends.  In the event that,
prior to the expiration of the Option, 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 Option Holder and preserve the value of the Option,
(i) there shall automatically be substituted for each Share subject to the
unexercised Option 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, and (ii) the
exercise price shall be increased or decreased proportionately so that the
aggregate purchase price for the Shares subject to the unexercised Option shall
remain the same as immediately prior to such event.

(h)           Nontransferability.  The Option, or any interest therein, may not
be assigned or otherwise transferred, disposed of or encumbered by the Option
Holder, other than by will or by the laws of descent and distribution.  During the lifetime of the Option Holder, the
Option shall be exercisable only by the Option Holder or by his or her guardian
or legal representative.  Notwithstanding
the foregoing, the Option may be transferred by the Option Holder to members of
his or her “immediate family” or to a trust or other entity established for the
exclusive benefit of solely one or more members of the Option Holder’s “immediate
family.”  Any Option held by the
transferee will continue to be subject to the same terms and conditions that
were applicable to the Option immediately prior to the transfer, except that
the Option will be transferable by the transferee only by will or the laws of
descent and distribution.  For purposes
hereof, “immediate family” means the Option Holder’s children stepchildren,
grandchildren, parents, stepparents, grandparents, spouse, siblings (including
half brother and sisters), in laws, and relationships arising because of legal
adoption.

(i)            Exercise of Option.  In order to exercise the Option, the Option
Holder shall submit to the Company an instrument in writing signed by the Option
Holder, specifying the whole number of Option Shares in respect of which the
Option is being exercised, accompanied by payment, in a manner acceptable to
the Company (which shall include a broker assisted exercise arrangement), of
the Option Price for the Option Shares for which the Option is being
exercised.  Payment to the Company in
cash or Shares already owned by the Option Holder (provided that the Option
Holder has owned such Shares for a minimum period of six months or has purchased
such Shares on the open market) and having a total Fair Market Value (as
defined below) equal to the exercise price, or in a combination of cash and
such Shares, shall be deemed acceptable for purposes hereof.  Option Shares will be issued accordingly by
the Company, and a share certificate dispatched to the Option Holder within 30
days.

The Company shall not be
required to issue fractional Shares upon the exercise of the Option. If any
fractional interest in a Share would be deliverable upon the exercise of the Option
in whole or in part but for the provisions of this paragraph, the Company, in
lieu of delivering any such fractional share therefor, shall pay a cash
adjustment therefor in an amount equal to their Fair Market Value (or if any
Shares are not publicly traded, an amount equal to the book value per share at
the end of the most recent fiscal quarter) multiplied by the fraction of the

 

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fractional share which
would otherwise have been issued hereunder. 
Anything to the contrary herein notwithstanding, the Company shall not
be obligated to issue any Option Shares hereunder if the issuance of such
Option Shares would violate the provision of any applicable law, in which event
the Company shall, as soon as practicable, take whatever action it reasonably
can so that such Option Shares may be issued without resulting in such
violations of law.  For purposes hereof,
Fair Market Value shall mean the mean between the high and low selling prices
per Share on the immediately preceding date (or, if the Shares were not traded
on that day, the next preceding day that the Shares were traded) on the principal
exchange on which the Shares are traded, as such prices are officially quoted
on such exchange.

(j)            Termination of Service.  In the event the Option Holder ceases to be
an employee of the Company due to his death or Permanent Disability (as defined
in the Company’s Incentive Compensation Plan), the Option, to the extent not
already exercisable in full, shall become immediately exercisable in full and
shall continue to be exercisable by the Option Holder (or his Beneficiary or
estate in the event of his death) for a period of three years following such
termination of employment (but not beyond the Option Period).  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) after the attainment of Retirement Age (as defined
in the Company’s Incentive Compensation Plan), the Option shall continue to become
exercisable on the schedule set forth in paragraph (f) above so long as the
Option Holder 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”) and shall continue
to be exercisable by the Option Holder (or his Beneficiary or estate in the
event of his death) for the remainder of the Option Period.  In the event the Option Holder engages in a
Competitive Activity, the Option, to the extent then exercisable, may be
exercised for 30 days following the date on which the Option Holder engages in
such Competitive Activity (but not beyond the Option Period).  In the event that the Option Holder ceases to
be an employee of the Company for any other reason, except due to a termination
of the Option Holder’s employment by the Company for Cause, the Option, to the
extent then exercisable, may be exercised for 90 days following termination of
employment (but not beyond the Option Period). 
In the event of a termination of the Option Holder’s employment for
Cause, the Option shall immediately cease to be exercisable and shall be immediately
forfeited.  To the extent the Option is
not exercisable at the time of termination of employment or the time the Option
Holder enters into a Competitive Activity, as the case may be, the Option shall
be immediately forfeited.  For purposes of
this Option, service with any of the Company’s Subsidiaries (as defined in the
Plan) shall be considered to be service with the Company.

(k)           Obligations as to Capital.  The Company agrees that it will at all times
maintain authorized and unissued share capital sufficient to fulfill all of its
obligations under the Option.

(l)            Transfer of Shares.  The Option, the Option Shares, or any
interest in either, 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

 

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and restrictions as set
forth in the governing instruments of the Company, applicable United States
federal and state securities laws and the terms and conditions hereof.

(m)          Expenses of Issuance of Option
Shares.  The issuance of stock
certificates upon the exercise of the Option in whole or in part, shall be
without charge to the Option Holder.  The
Company shall pay, and indemnify the Option Holder from and against any
issuance, stamp or documentary taxes (other than transfer taxes) or charges
imposed by any governmental body, agency or official (other than income taxes)
by reason of the exercise of the Option in whole or in part or the resulting
issuance of the Option Shares.

(n)           Withholding.  No later than the date of exercise of the
Option granted hereunder, the Option Holder 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 upon the
exercise of such Option 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 Option Holder, federal, state and local taxes of any kind required
by law to be withheld upon the exercise of such Option.

(o)           References.  References herein to rights and obligations
of the Option Holder shall apply, where appropriate, to the Option Holder’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 Option.

(p)           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 Option
Holder:

 

The last address delivered to the Company by the Option Holder in the
manner set forth herein.

(q)           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 thereof.

 

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(r)            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.

(s)           Counterparts.  This agreement may be executed in two
counterparts, each of which shall constitute one and the same instrument.

 

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                                IN
WITNESS WHEREOF, the undersigned have executed this agreement as of the Date of
Grant.

 

	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
       /s/
  Dawna Ferguson

  
	
   

  	
   

  
	
   

  	
   

  
	
       /s/
  Preston Hutchings

  
	
  Preston Hutchings

  

 

 

 

6EXHIBIT 10.15.16

 

AMENDMENT TO EMPLOYMENT
AGREEMENT

 

Amendment (“Amendment”), dated November 16, 2005,
to the Employment Agreement, dated as of October 23, 2001 (the “Agreement”),
among, Arch Capital Group Ltd., a Bermuda company (“Parent”), Arch Reinsurance
Ltd, a Bermuda company (“Arch Re”), and Marc Grandisson (the “Executive”).  Capitalized terms used without definition
herein have the meanings given to them in the Agreement.

 

WHEREAS, the Executive has been appointed by the Board
of Parent to serve as the Chairman and Chief Executive Officer of Arch
Worldwide Reinsurance Group;

 

NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein, the
parties have agreed to amend the Agreement as follows:

 

1.     Parent
hereby assumes all of Arch Re’s rights and obligations under the Agreement; all
references in the Agreement to the “Company” and “Companies” shall be to
Parent; and Arch Re is released from all of its obligations under the
Agreement.

 

2.     The
first sentence of Section 3.01 shall be hereby amended and restated as follows:

 

“During the Employment
Period, the Executive shall serve as Chairman and Chief Executive Officer of Arch
Worldwide Reinsurance Group and Chairman of the Board of Directors of Arch Re and
shall have such responsibilities, powers and duties as may from time to time be
prescribed by the Board of Directors of the Company; provided that
such responsibilities, powers and duties are substantially consistent with
those customarily assigned to individuals serving in such position at
comparable companies.”

 

3.     The
first three sentences of Section 4.01 shall be hereby amended and restated as
follows:

 

“During the
Employment Period, the Executive’s base salary will be $625,000 per annum (the “Base Salary”).  The
Base Salary will be payable bi-monthly on the 15th and last working day of each
month in arrears.  Annually during the
Employment Period the Chief Executive Officer of the Company shall review with
the Executive his job performance and compensation, and if deemed appropriate
by the Board of Directors of the Company, in its discretion, the Executive’s
Base Salary may be increased.”

 

4.     SECTION
4.04 shall be hereby amended and restated as follows:

 

“SECTION 4.04.  Expenses.  The Company
shall reimburse the Executive for all reasonable expenses incurred by him 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
Expenses”), subject to the
Company’s requirements with respect to reporting and
documentation of expenses.  In addition,
the Company will reimburse

 

 

the Executive, on an
after-tax basis, for his reasonable expenses incurred in traveling between Bermuda
and Canada.”

 

5.     SECTION
4.06 shall be hereby added to the Agreement as follows:

 

“SECTION 4.06.  Stock Options and Restricted Stock. 
On November 15, 2005, the Company previously granted to the
Executive an option to acquire 80,000 shares of the Company’s common stock at
an exercise price equal to the closing market price on the date of grant.  The other terms of the stock option are as set
forth in the Stock Option Agreement attached hereto as Exhibit A.  On November 15, 2005, the Company previously granted
to the Executive 50,000 restricted common shares of the Company on the terms
set forth in the Restricted Stock Agreement attached hereto as Exhibit B.”

 

5.     SECTION
5.01 shall be hereby amended and restated as follows:

 

“SECTION 5.01.  Term.  The Employment
Period will terminate on December 31, 2008; provided  that (a) the
Employment Period shall terminate prior to such date upon the Executive’s death
or Permanent Disability, (b) the Employment Period may be terminated by the
Companies for any reason prior to such date, and (c) the Employment Period may
be terminated by the Executive at any time prior to such date, if such termination
shall be for Good Reason.  In addition,
this Agreement will be automatically extended on the same terms and conditions
for successive one year periods following the original term until either the
Companies 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.”

 

6.     SECTION
5.02 shall be hereby amended as follows:

 

The phrase “third
anniversary of the date hereof” shall be hereby replaced by the following:  “original term.”

 

7.     SECTION
5.03 shall be hereby amended as follows:

 

The phrase “third anniversary
of the date hereof” shall be hereby replaced by the following:  “original term.”

 

8.     All
other provisions of the Agreement shall remain in full force and effect.  This amendment shall be governed by and construed
in accordance with the laws of Bermuda, without giving effect to principles of
conflict of laws, and may be executed in two or more counterparts, each of
which shall constitute one and the same instrument.

 

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

 

	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ John D.
  Vollaro

  	
   

  
	
   

  	
  Printed Name:

  	
    John D.
  Vollaro

  	
   

  
	
   

  	
  Title:

  	
    Executive
  Vice President and CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARCH REINSURANCE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Tim
  Peckett

  	
   

  
	
   

  	
  Printed Name:

  	
    Tim Peckett

  	
   

  
	
   

  	
  Title:

  	
    General
  Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Marc Grandisson

  	
   

  
	
   

  	
  Marc Grandisson

  
									

 

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