Document:

Exhibit 10.21

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (“Agreement”),
dated as of August 1, 2006, between Arch Insurance Group Inc., a Delaware corporation
(the “Company”), and Mark D. Lyons (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 Companies or their
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.

 

“Companies” means the Company and
Parent.

 

“Confidential Information” means
information that is not generally known to the public and that was or is used,
developed or obtained by the Companies or their 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 Companies.

 

“Date of Termination” has the meaning
set forth in Section 5.06.

 

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

 

“Good Reason” means, without the
Executive’s written consent, (a) the material diminution of any material
duties or responsibilities of the Executive without the same being 

 

 

corrected
within ten (10) days after being given written notice thereof; (b) a
material reduction in the Executive’s Base Salary; or (c) the Company
giving written notice pursuant to Section 5.01 of its intention not to
extend the Employment Period.

 

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

 

“Notice of Termination” has the meaning
set forth in Section 5.05.

 

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

 

“Parent” means Arch Capital Group Ltd.,
a Bermuda company.

 

“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.

 

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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 “Employment Period”).

 

ARTICLE 3

 

POSITION AND DUTIES

 

SECTION 3.01. Position and Duties.
During the Employment Period, the Executive shall serve as President and Chief Operating
Officer of the Company and shall have such responsibilities, powers and duties
as may from time to time be prescribed by the Chief Executive Officer and 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 or as may be
reasonably required by the conduct of the business of the Company.  During the Employment Period the Executive
shall devote substantially all of his working time and efforts to the business
and affairs of the Company. The Executive shall not directly or indirectly
render any services of a business, commercial or professional nature to any
other person or for-profit organization not related to the business of the
Companies or their Subsidiaries, whether for compensation or otherwise, without
prior written consent of the Company.

 

ARTICLE 4

 

BASE SALARY AND BENEFITS

 

SECTION 4.01. Base Salary.
During the Employment Period, the Executive’s base salary will be $500,000 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 Board of Directors 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.

 

SECTION 4.02. Bonuses. In
addition to the Base Salary, the Executive shall be eligible to participate in
an annual bonus plan on terms set forth from time to time by the Board of
Directors of the Company; provided, however, that the Executive’s
target annual bonus will be 100% of his Base Salary.

 

SECTION 4.03. Benefits. In
addition to the Base Salary, and any bonuses payable to the Executive pursuant
to this Agreement, the Executive shall be entitled to the following benefits
during the Employment Period:

 

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(a)           such
major medical, life insurance and disability insurance coverage as is, or may
during the Employment Period, be provided generally for other senior executive
officers of the Company as set forth from time to time in the applicable plan
documents;

 

(b)           a
maximum of four (4) weeks of paid vacation annually during the term of the
Employment Period; and

 

(c)           benefits
under any plan or arrangement available generally for the 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.

 

In addition, during the Employment Period, the Company shall reimburse
the Executive for reasonable housing costs in the New York Metropolitan area,
subject to the Company’s requirements with respect to reporting and documenting
expenses.

 

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.

 

ARTICLE 5

 

TERM AND TERMINATION

 

SECTION 5.01. Term. The
Employment Period will terminate on July 31, 2009; 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 Company 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 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. Unjustified Termination.
Except as otherwise provided in Section 5.03, if the Employment Period
shall be terminated prior to the expiration of the original term (or the
extension of the Employment Period pursuant to Section 5.01) by the
Executive for Good Reason or by the Company not for Cause (collectively, an “Unjustified Termination”) (it being understood that a
termination (a) for Cause, (b) as a result of the Executive’s
resignation or leaving his employment other than for Good Reason, or (c) as
a result of the death or Permanent Disability of the Executive shall not
constitute an Unjustified Termination), the Executive shall be paid solely
(except as provided in Section 5.04 below) the amount of his Base Salary,
provided the Executive shall be entitled to such payments only if the Executive
has not breached 

 

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and does not
breach the provisions of Sections 6.01, 7.01, 8.01, 9.01 or 9.02 and the
Executive has entered into and not revoked a general release of claims
reasonably satisfactory to the Company. Such amounts will be payable in equal
monthly installments for a period of twelve (12) months commencing on the first
month following the Date of Termination. In addition, promptly following an
Unjustified Termination, the Executive shall also be reimbursed all
Reimbursable Expenses incurred by the Executive prior to such Unjustified
Termination.

 

SECTION 5.03. Justified Termination.
If the Employment Period shall be terminated prior to the expiration of the original
term (or the extension of the Employment Period pursuant to Section 5.01) (a) for
Cause, (b) as a result of the Executive’s resignation or leaving of his
employment, other than for Good Reason, (c) as a result of the death or
Permanent Disability of the Executive, or (d) as a result of the Executive’s
provision of written notice not to extend the Employment Period under Section 5.01
(collectively, a “Justified  Termination”), the Executive shall be entitled to receive
solely (except as provided in Section 5.04 below) his Base Salary through
the Date of Termination and reimbursement of all Reimbursable Expenses incurred
by the Executive prior to such Justified Termination.

 

SECTION 5.04. Benefits.
Except as otherwise required by mandatory provisions of law, all of the
Executive’s rights to fringe and other benefits under this Agreement or
otherwise, if any, accruing after the termination of the Employment Period as a
result of a Justified Termination will cease upon such Justified Termination.
Notwithstanding the foregoing, if such Justified Termination is a result of a
Permanent Disability or if the Employment Period is terminated as a result of
an Unjustified Termination, the Executive shall continue to receive his major
medical insurance coverage benefits from the Company’s plan in effect at the
time of such termination for a period of twelve (12) months after the Date of
Termination.  To the extent permitted by
the then applicable plan document, the Executive’s 18-month COBRA eligibility
period will commence after such 12-month period.

 

SECTION 5.05. Notice of Termination.
Any termination by the Company for Permanent Disability or Cause or without
Cause or by the Executive for Good Reason 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 5.06. 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 for Good Reason, 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 (but in no event earlier than the date of the Notice
of Termination).

 

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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 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 Companies 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 Companies as now or hereinafter conducted (collectively, “Intellectual Property”), the Executive acknowledges that
such Intellectual Property is the sole and exclusive property of the Companies
and hereby assigns all right title and interest in and to such Intellectual
Property to the Companies. 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
Companies 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 Companies to protect the Companies’ 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 Companies, whether such requests occur
prior to or after termination of Executive’s employment hereunder).

 

ARTICLE 8

 

DELIVERY OF MATERIALS 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 Companies 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 

 

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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 Companies.

 

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 Companies, their Subsidiaries and
their respective predecessors, and that his services will be of special, unique
and extraordinary value to the Companies. 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 Companies or their 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 Companies or their 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 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.

 

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 Companies or their Subsidiaries to leave the employ of the Companies or
their Subsidiaries, or in any way interfere with the relationship between the
Companies or their Subsidiaries and any employee thereof or otherwise employ or
receive the services of any individual who was an employee of the Companies or
their 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 Companies or their Subsidiaries to cease doing business with the
Companies or their Subsidiaries.

 

SECTION 9.03. Enforcement.
If, at the enforcement of Sections 9.01 or 9.02, a court 

 

7

 

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
Companies contained in Sections 6.01, 7.01, 8.01, 9.01 or 9.02 could cause
irreparable harm to the Companies for which they would have no adequate remedy
at law. Accordingly, and in addition to any remedies which the Companies 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 Companies 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
Companies will have all rights and remedies set forth in this Agreement, all
rights and remedies which the Companies have been granted at any time under any
other agreement or contact and all of the rights which the Companies have under
any law. The Companies 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.

 

8

 

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 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.

  
	
   

  	
   

  	
   

  
	
  If
  to the Company:

  	
   

  	
  Arch
  Insurance Group Inc.

  
	
   

  	
   

  	
  1
  Liberty Plaza, 53rd Floor

  
	
   

  	
   

  	
  New
  York, New York 10006

  
	
   

  	
   

  	
  Attn:
  General Counsel

  

 

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 

 

9

 

withheld
pursuant to any applicable law or regulation.

 

SECTION 12.09. 409A.  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 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, the parties
hereto will negotiate in good faith to amend the Agreement in a manner that
preserves the original intent of the parties to the extent reasonably possible.

 

Notwithstanding any provision to the contrary in this Agreement, if the
Executive is deemed on the Date of Termination to be a “specified employee”
within the meaning of that term under Code Section 409A(a)(2)(B), then
with regard to any payment or the provisions of any benefit that is required to
be delayed pursuant to Code Section 409A(a)(2)(B), such payment or benefit
shall not be made or provided prior to the earlier of (i) the expiration
of the six (6)-month period measured from the date of his “separation from
service” (as such term is defined in Treasury Regulations issued under Code Section 409A),
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 and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them
herein.  Notwithstanding the foregoing,
to the extent that the foregoing applies to the provision of any ongoing
welfare benefits to the Executive that would not be required to be delayed if
the premiums therefor were paid by the Executive, the Executive shall pay the
full costs of premiums for such welfare benefits during the Delay Period and
the Company shall pay the Executive an amount equal to the amount of such
premiums paid by the Executive during the Delay Period promptly after its
conclusion.  In no case will compliance
with this Section by the Company constitute a breach of the Company’s
obligations under this Agreement.

 

SECTION 12.10. No Third Party Beneficiary.
This Agreement will not confer any rights or remedies upon any person other
than the Companies, the Executive and their respective heirs, executors, successors
and assigns.

 

SECTION 12.11. 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.

 

SECTION 12.12. 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.

 

10

 

SECTION 12.13. Survival.
Sections 6.01, 7.01, 8.01 and Articles 9, 10 and 12 will survive and continue
in full force in accordance with their terms notwithstanding any termination of
the Employment Period.

 

SECTION 12.14. GOVERNING LAW.
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

 

11

 

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

 

	
   

  	
  ARCH
  INSURANCE GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ralph E. Jones III

  
	
   

  	
  Printed
  Name:

  	
  Ralph
  E. Jones III

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Mark D. Lyons

  
	
   

  	
  Mark D.
  Lyons

  

 

12

 

AMENDMENT
TO EMPLOYMENT AGREEMENT

 

Amendment
(“Amendment”), dated as of November 24, 2008, to the Employment
Agreement, dated as of August 1, 2006 (the “Agreement”), between Arch
Insurance Group Inc., a Delaware corporation (the “Company”), and Mark D.
Lyons (the “Executive”). 
Capitalized terms used without definition herein have the meanings given
to them in the Agreement.

 

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

 

1.                                       The definition of “Good Reason” set forth in Section 1.01
shall be hereby amended and restated as follows:

 

“Good
Reason” means, without the Executive’s written consent and
subject to the timely notice requirement and the Company’s opportunity to cure
set forth in Section 5.05 below, (a) the material diminution of any
material duties or responsibilities of the Executive; or (b) a material
reduction in the Executive’s Base Salary.

 

2.                                       The last sentence of Section 4.03 shall
be hereby amended and restated as follows:

 

In
addition, during the Employment Period, the Company shall reimburse the Executive
for reasonable housing costs in the New York Metropolitan area, subject to the
Company’s requirements with respect to reporting and documenting expenses, and
such reimbursement shall be made promptly, but in no event later than the end
of the calendar year following the calendar year during which the expense was incurred
by the Executive.

 

 

3.                                       Section 5.02
shall be hereby amended and restated as follows:

 

SECTION 5.02. Unjustified Termination. Except as otherwise provided in Section 12.09,
if the Employment Period shall be terminated (i) at the end of the
Employment Period due to the Company giving written notice of non-extension
pursuant to Section 5.01 above, or (ii) prior to the expiration of
the original term (or the Employment Period as extended pursuant to Section 5.01)
by the Executive for Good Reason or by the Company not for Cause (such
terminations under clauses (i) and (ii) of this Section 5.02 are
collectively referred to as “Unjustified Terminations”),
the Executive shall be paid solely (except as provided in Section 5.04
below or as specifically provided in the Company’s Incentive Compensation Plan
or successor plan) an amount equal to his Base Salary, provided the Executive
shall be entitled to such payments only if the Executive has not breached and
does not breach the provisions of Sections 6.01, 7.01, 8.01, 9.01 or 9.02 and
the Executive has entered into a general release of claims reasonably
satisfactory to the Company on or before the date that is fifty (50) days
following the Date of Termination and does not revoke such release prior to the
end of the statutory

 

 

seven (7) day
revocation period.  Subject to Section 12.09
below, such amounts will be paid in twelve (12) equal installments, the first
two (2) of which shall be paid on the date that is two (2) months
following the Date of Termination and the next ten (10) of which will be
paid in ten (10) equal monthly installments commencing on the date that is
three (3) months following the Date of Termination and continuing on each
of the next nine (9) monthly anniversaries of the Date of
Termination.  In addition, promptly
following an Unjustified Termination, the Executive shall also be reimbursed
for all Reimbursable Expenses incurred by the Executive prior to such
Unjustified Termination.  Notwithstanding
any provision hereof to the contrary, in order for the Executive to terminate
the Employment Period for Good Reason, such termination of employment must
occur no later than sixty (60) days after the date the Executive gives written
notice in accordance with Section 5.05 below to the Company of the
occurrence of the event or condition that constitutes Good Reason.  Notwithstanding any provision of this
Agreement to the contrary, for purposes of this Section 5.02 and the last
sentence of Section 5.04, the Executive will be deemed to have terminated
his employment on the date of his “separation from service” (within the meaning
of Treasury Regulation Section 1.409A-1(h)) with the Company, the
Employment Period will be deemed to have ended on the date of his “separation
from service” with the Company, and the Date of Termination will be deemed to
be the date of his “separation from service” with the Company.

 

4.                                       The
penultimate sentence of Section 5.04 shall be hereby amended and restated
as follows:

 

Notwithstanding
the foregoing, if such Justified Termination is a result of a Permanent
Disability or if the Employment Period is terminated as a result of an Unjustified
Termination, the Executive shall continue to receive his major medical
insurance coverage benefits from the Company’s plan in effect at the time of
such termination for a period equal to the lesser of (i) twelve (12) months
after the Date of Termination, and (ii) until the Executive is provided by
another employer with benefits substantially comparable (with no pre-existing
condition limitations) to the benefits provided by such plan.

 

5.                                       Section 5.05
shall be hereby amended and restated as follows:

 

SECTION 5.05.  Notice of Termination and Opportunity to Cure.  Any termination by the Company for Permanent Disability or Cause
or without Cause or by the Executive for Good Reason 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 date the termination is to take effect (consistent with the terms of this
Agreement), the specific termination provision in this Agreement relied upon
and, for a termination for Permanent Disability or for Cause or for a
resignation for Good Reason, shall set forth in reasonable

 

2

 

detail the facts
and circumstances claimed to provide a basis for termination of employment
under the provision indicated.  It shall
be a condition precedent to the Executive’s right to terminate employment for
Good Reason that (i) the Executive shall first have given the Company
written notice that an event or condition constituting Good Reason has occurred
within ninety (90) days after such occurrence, and any failure to give such
written notice within such period will result in a waiver by the Executive of
his right to terminate for Good Reason as a result of such event or condition,
and (ii) a period of thirty (30) days from and after the giving of such
written notice shall have elapsed without the Company having effectively cured
or remedied such occurrence during such 30-day period, unless such occurrence
cannot be cured or remedied within thirty (30) days, in which case the period
for remedy or cure shall be extended for a reasonable time (not to exceed an
additional fifteen (15) days) provided that the Company has made and continues
to make a diligent effort to effect such remedy or cure.

 

6.                                       Section 5.06
shall be hereby amended and restated as follows:

 

SECTION 5.06.  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 by the Executive for
Good Reason, the date specified in the Notice of Termination consistent with
the terms hereof, (c) if the Employment Period terminates due to
expiration of the term of this Agreement, the date the term expires, and (d) if
the Employment Period is terminated for any other reason (including for Cause),
the date designated by the Company in the Notice of Termination.

 

7.                                       The third sentence included in Section 9.01
shall be hereby amended and restated in its entirety as follows:

 

Notwithstanding the
foregoing, the Noncompetition Period shall be twelve (12) months following the
Date of Termination if such termination is an Unjustified Termination or due to
the Executive giving written notice pursuant to Section 5.01 of his
intention not to extend the Employment Period.

 

8.                                       Section 12.09
shall be hereby amended and restated as follows:

 

SECTION 12.09.
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 12.09 shall subject the Company to any claim, liability,

 

3

 

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.

 

9.                                       Section 12.15
shall be hereby added at the end of the Agreement as follows:

 

SECTION 12.15. 
Excess Parachute Payments.

 

(a)           Notwithstanding any other provision
of this Agreement, in the event that the amount of payments or other benefits
payable to the Executive under this Agreement (including, without limitation,
the acceleration of any payment or the accelerated vesting of any payment or
other benefit), together with any payments,

 

4

 

awards
or benefits payable under any other plan, program, arrangement or agreement
maintained by the Company or one of its affiliates, would constitute an “excess
parachute payment” (within the meaning of Section 280G of the Code), the
payments under Section 5.02 of this Agreement shall be reduced (by the
minimum possible amounts) until no amount payable to the Executive under this
Agreement constitutes an “excess parachute payment” (within the meaning of Section 280G
of the Code); provided, however, that no such reduction shall be
made if the net after-tax payment (after taking into account federal, state,
local or other income, employment and excise taxes) to which the Executive
would otherwise be entitled without such reduction would be greater than the
net after-tax payment (after taking into account federal, state, local or other
income, employment and excise taxes) to the Executive resulting from the
receipt of such payments with such reduction.

 

(b)           All determinations required to be
made under this Section 12.15, including whether a payment would result in
an “excess parachute payment” and the assumptions to be utilized in arriving at
such determinations, shall be made by an accounting firm designated by the
Company (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and the Executive
as requested by the Company or the Executive. 
All fees and expenses of the Accounting Firm shall be borne solely by
the Company and shall be paid by the Company.  Absent manifest error, all determinations made
by the Accounting Firm under this Section 12.15 shall be final and binding
upon the Company and the Executive.

 

10.                                 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 New
York, 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.

 

5

 

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

 

	
   

  	
  ARCH INSURANCE GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin J. Nilsen

  
	
   

  	
  Name:

  	
  Martin J. Nilsen

  
	
   

  	
  Title:

  	
  Senior Vice President & General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark D. Lyons

  
	
   

  	
  Mark
  D. Lyons

  

 

6Exhibit 10.24

 

The
CORPORATEplan for RetirementSM

EXECUTIVE PLAN

 

Adoption Agreement

 

IMPORTANT NOTE

 

This document has not been approved
by the Department of Labor, the Internal Revenue Service or any other
governmental entity.  An Employer must
determine whether the plan is subject to the Federal securities laws and the
securities laws of the various states. 
An Employer may not rely on this document to ensure any particular tax
consequences or to ensure that the Plan is “unfunded and maintained primarily
for the purpose of providing deferred compensation to a select group of
management or highly compensated employees” under the Employee Retirement
Income Security Act with respect to the Employer’s particular situation.  Fidelity Management Trust Company, its
affiliates and employees cannot and do not provide legal or tax advice or
opinions in connection with this document. 
This document does not constitute legal or tax advice or opinions and is
not intended or written to be used, and it cannot be used by any taxpayer, for
the purposes of avoiding penalties that may be imposed on the taxpayer.  This document must be reviewed by the
Employer’s attorney prior to adoption.

 

	
  Plan Number:
  44023

  	
  ECM NQ 2007 AA

  
	
  (07/2007)

  	
  12/3/2008 

  

 

Ó 2007 Fidelity Management & Research
Company

 

 

ADOPTION
AGREEMENT

ARTICLE
1

 

1.01         PLAN INFORMATION

 

(a)                                  Name of Plan:

 

This
is the Arch Capital Group (U.S.) Inc. Executive
Supplemental Non-Qualified Savings and Retirement Plan (the “Plan”).

 

(b)                                 Plan Status (Check
one.):

 

(1)                                  Adoption Agreement effective date:  11/15/2008.

 

(2)                                  The Adoption Agreement effective date is (Check (A) or check and complete (B)):

 

(A)                              o            A
new Plan effective date.

 

(B)                                x           An
amendment and restatement of the Plan.

 

(c)           Name of Administrator, if not the
Employer:

 

Arch
Capital Services Inc.

 

1.02        EMPLOYER

 

(a)           Employer Name:   Arch Capital Group (U.S.) Inc.

 

(b)                                 The term “Employer” includes the following
Related Employer(s)

(as defined in Section 2.01(a)(25))
participating in the Plan:

 

	
   

  	
  Arch
  Insurance Group Inc.

  
	
   

  	
  Arch
  Reinsurance Ltd.

  
	
   

  	
  Arch
  Capital Group Ltd.

  
	
   

  	
  Arch
  Reinsurance Company

  
	
   

  	
  Arch
  Capital Services Inc.

  
	
   

  	
  Arch
  Re Facultative Underwriters Inc.

  

 

1

 

1.03        COVERAGE

 

(Check (a) and/or (b).)

 

(a)                                  x  The
following Employees are eligible to participate in the Plan (Check (1) or (2)):

 

(1)   x      Only those Employees designated in writing by
the Employer, which writing is hereby incorporated herein.

(2)    ̈      Only those Employees in the eligible class
described below:

 

                                

       

 

(b)                                  ̈  The
following Directors are eligible to participate in the Plan (Check (1) or (2)):

 

(1)    ̈    Only those Directors designated in writing by the Employer, which
writing is hereby incorporated herein.

(2)    ̈    All Directors, effective as of the later of
the date in 1.01(b) or the date the Director becomes a Director.

 

(Note: 
A designation in Section 1.03(a)(1) or Section 1.03(b)(1) or
a description in Section 1.03(a)(2) must include the effective date
of such participation.)

 

1.04         COMPENSATION

 

(If Section 1.03(a) is selected, select (a) or
(b). If Section 1.03(b) is selected, complete (c))

 

For purposes of determining all contributions under the Plan:

 

(a)                                   ̈
Compensation shall be as defined, with respect to Employees, in the
                                                      
Plan maintained by the Employer:

 

(1)                       ̈  to the
extent it is in excess of the limit imposed under Code section 401(a)(17).

 

(2)                       ̈  notwithstanding the limit imposed under Code
section 401(a)(17).

 

2

 

(b)                                 x Compensation shall be as defined in Section 2.01(a)(9) with
respect to Employees (Check (1), and/or (2) below,
if, and as, appropriate):

 

	
  (1)

  	
  x

  	
  but
  excluding the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compensation
  earned up to the limits imposed by Internal Revenue Code
  Section 401(a)(17) as indexed; compensation arising out of the exercise
  of stock options or stock appreciation rights, restricted stock or restricted
  stock units or any other form of equity based compensation; tax gross up
  amounts.

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   ̈

  	
  but
  excluding bonuses, except those bonuses listed in the table in
  Section 1.05(a)(2).

  
	
   

  	
   

  	
   

  

(c)                                   ̈ Compensation shall be as defined in Section 2.01(a)(9)(c) with
respect to Directors, but  excluding the
following:

 

1.05         CONTRIBUTIONS
ON BEHALF OF EMPLOYEES

 

(a)                                  Deferral Contributions (Complete all that apply):

 

	
  (1)

  	
  x

  	
  Deferral
  Contributions. Subject to any minimum or maximum deferral amount provided
  below, the Employer shall make a Deferral Contribution in accordance with,
  and subject to, Section 4.01 on behalf of each Participant who has an executed
  salary reduction agreement in effect with the Employer for the applicable
  calendar year (or portion of the applicable calendar year).

  

 

	
   

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
  Deferral Contributions

  Type of Compensation

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Non-Bonus Compensation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  100

  	
   

  

 

(Note:  With respect to each type
of Compensation, list the minimum and maximum dollar amounts or
percentages as whole dollar amounts or whole number percentages.)

 

3

 

(2)          x         Deferral Contributions with respect to Bonus
Compensation only. The Employer requires Participants to enter into a special
salary reduction agreement to make Deferral Contributions with respect to one
or more Bonuses, subject to minimum and maximum deferral limitations, as
provided in the table below.

 

	
   

  	
   

  	
  Treated As

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
  Deferral Contributions

  Type of Bonus

  	
   

  	
  Performance

  Based

  	
   

  	
  Non-

  Performance

  Based

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Bonus
  Compensation

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  100

  	
   

  

 

(Note:  With respect to each type
of Bonus, list the minimum and maximum dollar amounts or percentages as whole
dollar amounts or whole number percentages. 
In the event a bonus identified as a Performance-based Bonus above does
not constitute a Performance-based Bonus with respect to any Participant, such
Bonus will be treated as a Non-Performance-based Bonus with respect to such
Participant.)

 

(b)                     Matching
Contributions (Choose (1) or (2) below,
and (3) below, as applicable):

 

(1)                            x       The Employer shall make a Matching
Contribution on behalf of each Employee Participant in an amount described
below:

 

(A)   ̈      % of the Employee Participant’s Deferral
Contributions for the calendar year.

 

(B)   ̈ The amount, if any, declared by the Employer in writing, which writing
is hereby incorporated herein.

 

(C)  x Other:

With respect to the Non-Bonus Compensation Deferral Contributions,
pursuant to Section 1.05(a)(1) above for the calendar year:  100% of the first 3% and 50% of the next 3%
of Non-Bonus Compensation.

 

(2)                             ̈        Matching Contribution Offset. For each
Employee Participant who has made elective contributions (as defined in 26 CFR
section 1.401(k)-6 (“QP Deferrals”)) of the maximum permitted under Code
section 402(g), or the maximum permitted under the terms of the
                                                      
Plan (the “QP”),  to the QP, the Employer
shall make a Matching  Contribution in an
amount equal to (A) minus (B) below:

 

4

 

(A)            The
matching contributions (as defined in 26 CFR section 1.401(m)-1(a)(2) (“QP
Match”)) that the Employee Participant would have received under the QP on the
sum of the Deferral Contributions and the Participant’s QP Deferrals,
determined as though—

 

·                  no
limits otherwise imposed by the tax law applied to such QP match; and

·                  the
Employee Participant’s Deferral Contributions had been made to the QP.

 

(B)              The
QP Match actually made to such Employee Participant under the QP for the
applicable calendar year.

 

Provided,
however, that the Matching Contributions made on behalf of any Employee
Participant pursuant to this Section 1.05(b)(2) shall be limited as
provided in Section 4.02 hereof.

 

(3)         x     Matching Contribution Limits (Check
the appropriate box (es)):

 

(A)  x     Deferral Contributions in excess of 6
% of the Employee Participant’s Compensation for the calendar year shall not be
considered for Matching Contributions.

 

(B)   ̈      Matching Contributions for each Employee
Participant for each calendar year shall be limited to $           .

 

(c)                                  Employer Contributions

 

(1) x      Fixed Employer Contributions. The Employer
shall make an Employer Contribution on behalf of each Employee Participant in
an amount determined as described below:

 

The Employer shall make an additional contribution on behalf of each
Employee Participant in an amount equal to 10% (ten percent) of the Employee
Participant’s Compensation for the calendar year, excluding bonuses and
commissions.

 

(2) x    Discretionary Employer Contributions. The
Employer may make Employer Contributions to the accounts of Employee
Participants in any amount (which  
amount may be zero), as determined by the Employer in its sole
discretion from time   to time in a
writing, which is hereby incorporated herein.

 

5

 

1.06        CONTRIBUTIONS
ON BEHALF OF DIRECTORS

 

(a)           ̈  Director Deferral Contributions

 

The
Employer shall make a Deferral Contribution in accordance with, and subject to,
Section 4.01 on behalf of each Director Participant who has an executed
deferral agreement in effect with the Employer for the applicable calendar year
(or portion of the applicable calendar year), which deferral agreement shall be
subject to any minimum and/or maximum deferral amounts provided in the table
below.

 

	
   

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
  Deferral Contributions

  Type of Compensation

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(Note:  With respect to each type
of Compensation, list the minimum and maximum dollar amounts or
percentages as whole dollar amounts or whole number percentages.)

 

(b)     Matching and Employer
Contributions:

 

(1)   ̈       Matching Contributions. The Employer shall
make a Matching Contribution on behalf of each Director Participant in an
amount determined as described below:

                                          

                                           

 

(2)   ̈                Fixed Employer Contributions.  The
Employer shall make an Employer Contribution on behalf of each Director
Participant in an amount determined as described below:

                                           

                                            

 

(3)   ̈                      Discretionary Employer Contributions. The
Employer may make Employer Contributions to the accounts of Director
Participants in any amount (which amount may be zero), as determined by the
Employer in its sole discretion from time to time, in a writing, which is
hereby incorporated herein.

 

6

 

1.07         DISTRIBUTIONS

 

The
form and timing of distributions from the Participant’s vested Account shall be
made consistent with the elections in this Section 1.07.

 

(a) (1)      Distribution
options to be provided to Participants

 

	
   

  	
   

  	
  (A)  Specified

  Date

  	
   

  	
  (B)  Specified

  Age

  	
   

  	
  (C)  Separation

  From Service

  	
   

  	
  (D)  Earlier of

  Separation or

  Age

  	
   

  	
  (E)  Earlier of

  Separation or

  Specified Date

  	
   

  	
  (F)  Disability

  	
   

  	
  (G)

  Change

  in

  Control

  	
   

  	
  (H)  Death

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deferral Contribution

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
  x Lump Sum x Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈

  Lump

  Sum

  	
   

  	
  x Lump Sum  ̈ Installments

  
	
  Matching Contributions

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
  x Lump Sum x Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈

  Lump

  Sum

  	
   

  	
  x Lump Sum  ̈ Installments

  
	
  Employer Contributions

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
  x Lump Sum x Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈ Lump Sum  ̈ Installments

  	
   

  	
   ̈

  Lump

  Sum

  	
   

  	
  x Lump Sum  ̈ Installments

  

 

(Note:  If the Employer elects
(F), (G), or (H)  above, the Employer must also elect (A), (B), (C), (D),
or (E) above, and the Participant must also elect (A), (B), (C), (D), or (E) above.  In the event the Employer elects only a single
payment trigger and/or payment method above, then such single payment trigger
and/or payment method shall automatically apply to the Participant.  If the employer elects to provide for payment
upon a specified date or age, and the employer applies a vesting schedule to
amounts that may be subject to such payment trigger(s), the employer must apply
a minimum deferral period, the number of years of which must be greater than
the number of years required for 100% vesting in any such amounts.  If the employer elects to provide for payment
upon disability and/or death, and the employer applies a vesting schedule to
amounts that may be subject to such payment trigger, the employer must also
elect to apply 100% vesting in any such amounts upon disability and/or death.)

 

(2)                  ̈        A Participant incurs a Disability when the
Participant (Check at least one if Section 1.07(a)(1)(F) or
if Section 1.08(e)(3) is elected):

 

	
  (A)

  	
   

  	
   ̈

  	
   

  	
  is unable to engage in any
  substantial gainful activity by reason of any medically determinable physical
  or mental impairment that can be expected to result in death or can be
  expected to last for a continuous period of not less than 12 months.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
   ̈

  	
   

  	
  is, by reason of any
  medically determinable physical or mental impairment that can be expected to
  result in death or can be expected to last for a continuous period of not
  less than 12 months, receiving income replacement

  

 

7

 

	
   

  	
   

  	
   

  	
   

  	
  benefits for a period of
  not less than 3 months under an accident and health plan covering employees
  of the Employer.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
   ̈

  	
   

  	
  is determined to be
  totally disabled by the Social Security Administration or the Railroad
  Retirement Board.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
   

  	
   ̈

  	
   

  	
  is determined to be
  disabled pursuant to the following disability insurance program:         the
  definition of disability under which complies with the requirements in
  regulations under Code section 409A.

  

 

(Note:  If more than one box
above is checked, then the Participant will have a Disability if he satisfies
at least one of the descriptions corresponding to one of such checked boxes.)

 

(3)                       x       Regardless of any payment trigger and, as
applicable, payment method, to which the Participant would otherwise be subject
pursuant to (1) above, the first to occur of the following Plan-level
payment triggers will cause payment to the Participant commencing pursuant to Section 1.07(c)(1) below
in a lump sum, provided such Plan-level payment trigger occurs prior to the
payment trigger to which the Participant would otherwise be subject.

 

	
  Payment Trigger

  
	
   

  
	
   

  	
  (A)

  	
   ̈

  	
   

  	
  Separation from Service
  prior to:

  
	
   

  	
   

  	
   

  	
   

  	
                                

  
	
   

  	
  (B)

  	
   ̈

  	
   

  	
  Separation from Service

  
	
   

  	
  (C)

  	
  x

  	
   

  	
  Death

  
	
   

  	
  (D)

  	
   ̈

  	
   

  	
  Change in Control

  

 

(b)         Distribution Election
Change

 

A  Participant

 

	
   

  	
  (1)  ̈

  	
  shall

  
	
   

  	
  (2) x

  	
  shall
  not

  

 

be
permitted to modify a scheduled distribution election in accordance with Section 8.01(b) hereof.

 

8

 

(c)                            Commencement of Distributions

 

(1)                                  Each lump sum distribution and the first
distribution in a series of installment payments (if applicable) shall commence
as elected in (A), (B) or (C) below:

 

(A) x             Monthly
on the 8th day of
the month which day next follows the applicable triggering event described in
1.07(a).

(B)  ̈                 Quarterly
on the            day of the
following months
                        ,
                            ,
                              ,
or                        
(list one month in each calendar quarter) which day next follows the applicable
triggering event described in 1.07(a).

(C)  ̈                 Annually
on the            day of
                        
(month) which day next follows the applicable triggering event described in
1.07(a).

 

(Note:  Notwithstanding the above: a six-month delay
shall be imposed with respect to certain distributions to Specified Employees;
a Participant who chooses payment on a Specified Date will choose a month, year
or quarter (as applicable) only, and payment will be made on the applicable
date elected in (A), (B) or (C) above that falls within such month,
year or quarter elected by the Participant.)

 

(2)                                        The commencement of distributions pursuant to
the events elected in Section 1.07(a)(1) and Section 1.07(a)(3) shall
be modified by application of the following:

 

(A)  ̈               Separation from Service Event Delay –
Separation from Service will be treated as not having occurred
for       months after the date of such
event.

 

(B)  ̈                 Plan Level Delay      all
distribution events (other than those based on Specified Date or Specified Age)
will be treated as not having occurred for
           days (insert
number of days but not more than 30).

 

(d)         Installment Frequency
and Duration

 

If
installments are available under the Plan pursuant to Section 1.07(a), a
Participant shall be permitted to elect that the installments will be paid (Complete 1 and 2 below):

 

(1)             at
the following intervals:

 

(A) x    Monthly commencing on the day elected in Section 1.07(c)(1).

(B) x     Quarterly commencing on the day elected in Section1.07(c)(1) (with
payments made at three-month intervals thereafter).

(C) x     Annually commencing on the day elected in Section 1.07(c)(1).

 

9

 

(2)        over
the following term(s) (Complete either (A) or
(B)):

 

(A) x                                                 Any term of whole years between 2
(minimum of 1) and 10 (maximum of 30).

 

(B)  ̈                                                     Any of the whole year terms selected below.

 

	
   

  	
   ̈ 1

  	
   

  	
   ̈ 2

  	
   

  	
   ̈ 3

  	
   

  	
   ̈ 4

  	
   

  	
   ̈ 5

  	
   

  	
   ̈ 6

  
	
   

  	
   ̈ 7

  	
   

  	
   ̈ 8

  	
   

  	
   ̈ 9

  	
   

  	
   ̈ 10

  	
   

  	
   ̈ 11

  	
   

  	
   ̈ 12

  
	
   

  	
   ̈ 13

  	
   

  	
   ̈ 14

  	
   

  	
   ̈ 15

  	
   

  	
   ̈ 16

  	
   

  	
   ̈ 17

  	
   

  	
   ̈ 18

  
	
   

  	
   ̈ 19

  	
   

  	
   ̈ 20

  	
   

  	
   ̈ 21

  	
   

  	
   ̈ 22

  	
   

  	
   ̈ 23

  	
   

  	
   ̈ 24

  
	
   

  	
   ̈ 25

  	
   

  	
   ̈ 26

  	
   

  	
   ̈ 27

  	
   

  	
   ̈ 28

  	
   

  	
   ̈ 29

  	
   

  	
   ̈ 30

  

 

(Note:  Only elect a term of one
year if Section 1.07(d)(1)(A) and/or Section 1.07(d)(1)(B) is
elected above.)

 

	
  (e)

  	
  Conversion
  to Lump Sum

  
	
   

  	
   

  	
   

  
	
   

  	
   ̈

  	
   

  	
  Notwithstanding
  anything herein to the contrary , if the Participant’s vested Account at the
  time such Account becomes payable to him hereunder does not exceed $ distribution
  of the Participant’s vested Account shall automatically be made in the form
  of a single lump sum at the time prescribed in Section 1.07(c)(1).

  
	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
  Distribution
  Rules Applicable to Pre-effective Date Accruals

  
	
   

  	
   

  
	
   

  	
  x

  	
   

  	
  Benefits
  accrued under the Plan (subject to Code section 409A) prior to the date in
  Section 1.01(b)(1) above are subject to distribution rules not
  described in Section 1.07(a) through (e), and such rules are
  described in Attachment A Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES.

  

 

10

 

1.08       VESTING
SCHEDULE

 

(a)                                  (1)           The Participant’s vested percentage in
Matching Contributions elected in Section 1.05(b)shall be based upon the
following schedule and unless Section 1.08(a)(2) is checked below
will be based on the elapsed time method as described in Section 7.03(b).

 

	
  Years of Service

  	
   

  	
  Vesting %

  	
   

  
	
  0

  	
   

  	
  100

  	
   

  

 

(2)           o  Vesting shall be based on the class year method as
described in Section 7.03(c).

 

(b)                                 (1)           The Participant’s vested percentage in
Employer Contributions elected in Section 1.05(c) shall be based upon the
following schedule and unless Section 1.08(b)(2) is checked below
will be based on the elapsed time  method
as described in Section 7.03(b).

 

	
  Years of Service

  	
   

  	
  Vesting %

  	
   

  
	
  0

  	
   

  	
  100

  	
   

  

 

(2)           o  Vesting shall be based on the class year
method as described in Section 7.03(c).

 

(c)            ̈  Years of Service shall exclude (Check one.):

 

(1)   ̈                for
new plans, service prior to the Effective Date as defined in Section 1.01(b)(2)(A).

 

(2)   ̈     for existing plans converting from another
plan document, service prior to the original 
Effective Date as defined in Section 1.01(b)(2)(B).

 

(Note:  Do not elect to apply this Section 1.08(c) if
vesting is based only on the class year method.)

 

	
   

  	
  (d)

  	
   ̈

  	
   

  	
  Notwithstanding anything
  to the contrary herein, a Participant will forfeit his Matching Contributions
  and Employer Contributions (regardless of whether vested) upon the occurrence
  of the following event(s):

  
	
   

  	
   

  	
                                

  
	
   

  	
   

  	
                                   

  

 

(Note:
Contributions with respect to Directors, which are 100% vested at all times,
are subject to the rule in this subsection (d).)

 

11

 

(e)                                  A Participant will be 100% vested in his
Matching Contributions and Employer Contributions upon (Check the appropriate box(es)):

 

	
   

  	
  (1)  ̈

  	
   

  	
  Retirement
  eligibility is the date the Participant attains age 0 and completes 0
  Years of Service, as defined in Section 7.03(b).

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)  ̈

  	
   

  	
  Death.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)  ̈

  	
   

  	
  The
  date on which the Participant becomes disabled, as determined under Section 1.07(a)(2).(Note:
  Participants will automatically vest upon Change in Control if
  Section 1.07(a)(1)(G) is elected.)

  

 

(f)                                     ̈    Years of Service in Section 1.08 (a)(1) and
Section 1.08 (b)(1) shall include service with the following
employers:

                                     

                                    

 

1.09       INVESTMENT
DECISIONS

 

A Participant’s Account shall be treated as invested in the Permissible
Investments as directed by the Participant unless otherwise provided below:

                               

                                

 

1.10       ADDITIONAL
PROVISIONS

 

The Employer may elect
Option below and complete the Superseding Provisions Addendum to describe
overriding provisions that are not otherwise reflected in this Adoption
Agreement.

 

x          The Employer has completed the Superseding Provisions Addendum to
reflect the provisions of the Plan that supersede provisions of this Adoption
Agreement and/or the Basic Plan Document.

 

12

 

EXECUTION PAGE

(Fidelity’s Copy)

 

IN
WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed
this 4th day of
December, 2008.

 

 

	
   

  	
  Employer

  	
  Arch
  Capital Group (U.S.) Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Fred S. Eichler

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
  SVP &
  CFO

  

 

13

 

EXECUTION PAGE

(Employer’s Copy)

 

IN
WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed
this 4th day of
December, 2008.

 

 

	
   

  	
  Employer

  	
  Arch
  Capital Group (U.S.) Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Fred S. Eichler

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
  SVP &
  CFO

  

 

14

 

 AMENDMENT EXECUTION PAGE

(Fidelity’s Copy)

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  
	
   

  	
   

  	
   

  
	
  Employer:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc.

  

 

(Note: These execution pages are to be
completed in the event the Employer modifies any prior election(s) or
makes a new election(s) in this Adoption Agreement.  Attach the amended page(s) of the
Adoption Agreement to these execution pages.)

 

The following section(s) of the Plan are hereby amended effective
as of the date(s) set forth below:

 

	
  Section Amended

  	
   

  	
  Effective Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed on the date below.

 

 

	
   

  	
  Employer:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

15

 

 AMENDMENT EXECUTION PAGE

(Employer’s Copy)

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  
	
   

  	
   

  	
   

  
	
  Employer:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc.

  

 

(Note: These execution pages are to be
completed in the event the Employer modifies any prior election(s) or
makes a new election(s) in this Adoption Agreement. Attach the amended
page(s) of the Adoption Agreement to these execution pages.)

 

	
  Section Amended

  	
   

  	
  Effective Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed on the date below.

 

 

	
   

  	
  Employer:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

16

 

 ATTACHMENT A

 

Re:   409A GRANDFATHER AND PRE
EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  

 

1.  Grandfathered Plan Benefits.  It is intended that benefits that were
accrued and vested under the Plan on December 31, 2004 will satisfy the
grandfather provisions of Section 409A of the Code so that such benefits
(together with earnings thereon, determined in accordance with Section 409A
of the Code) (collectively, “Pre Effective Date Accruals”) will not be subject
to Section 409A of the Code.  No
amendment to this Plan made after October 3, 2004 will apply to such Pre
Effective Date Accruals unless the amendment specifically provides that it
applies thereto; provided, however, that amendments changing notional
investment measures for benefits under the Plan shall apply to Pre Effective
Date Accruals so long as such amendments do not constitute a material modification
for purposes of Section 409A of the Code and do not cause such Pre
Effective Date Accruals to lose their grandfathered status under Section 409A
of the Code.  Without limiting the
generality of the foregoing, Pre Effective Date Accruals will be distributed in
accordance with the distribution rules in effect under the Plan on October 3,
2004.

 

2.  Grandfathered Benefits Under Arch Deferred
Compensation Plan.  It is intended
that benefits that were accrued and vested on December 31, 2004 under the
Arch Deferred Compensation Plan (the “Arch Plan”), which has been merged with
and into the Plan, will satisfy the grandfather provisions of Section 409A
of the Code so that such benefits (together with earnings thereon, determined
in accordance with Section 409A of the Code) (collectively, “Arch Plan Pre
Effective Date Accruals”) will not be subject to Section 409A of the
Code.  No amendment to this Plan or the
Arch Plan made after October 3, 2004 will apply to such Arch Plan Pre
Effective Date Accruals unless the amendment specifically provides that it
applies thereto; provided, however, that amendments changing notional
investment measures for benefits under the Arch Plan shall apply to Arch Plan
Pre Effective Date Accruals so long as such amendments do not constitute a
material modification for purposes of Section 409A of the Code and do not
cause such Arch Plan Pre Effective Date Accruals to lose their grandfathered
status under Section 409A of the Code. 
Without limiting the generality of the foregoing, Arch Plan Pre
Effective Date Accruals will be distributed in accordance with the distribution
rules in effect under the Arch Plan on October 3, 2004.

 

17

 

ATTACHMENT B

 

Re:  SUPERSEDING PROVISIONS

for

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  

 

(a)   Superseding
Provision(s) — The following provisions supersede other provisions of this
Adoption Agreement and/or the Basic Plan Document as described below:

 

1.  Section 1.01(b) shall be replaced
in its entirety with the following:

 

(b)                                 Plan Status (Check
one.):

 

(1)                                  Adoption Agreement effective date:  11/15/2008.

 

(2)                                  The Adoption Agreement effective date is (Check (A) or check and complete (B)):

 

(A)    ̈    A
new Plan effective date.

 

(B)   x    An
amendment and restatement of the Plan.

 

(3)                                  Attachment A sets forth special effective
date and grandfather rules under the Plan for purposes of Section 409A
of the Code.

 

2.  Section 1.05(a)(2) shall be
replaced in its entirety with the following:

 

(2)          x          Deferral Contributions with respect to Bonus
Compensation* only. The Employer requires Participants to enter into a special
salary reduction agreement to make Deferral Contributions with respect to one
or more Bonuses, subject to minimum and maximum deferral limitations, as
provided in the table below.

 

*Determined
without excluding compensation earned up to the limits imposed by Section 401(a)(17).

 

	
  Deferral Contributions

  Type of Bonus

  	
   

  	
  Treated As

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
   

  	
  Performance

  Based

  	
   

  	
  Non-

  Performance

  Based

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Bonus Compensation

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  100

  	
   

  

 

(Note:  With respect to each type
of Bonus, list the minimum and maximum dollar amounts or percentages as whole
dollar amounts or whole number percentages. 
In the event a bonus

 

18

 

identified as a Performance-based Bonus above does not constitute a
Performance-based Bonus with respect to any Participant, such Bonus will be
treated as a Non-Performance-based Bonus with respect to such Participant.)

 

3.  Section 1.05(b)(3) shall be
replaced in its entirety with the following:

 

(3)                            x                 Matching Contribution Limits (Check the appropriate box (es)):

 

(A)  x               Deferral
Contributions in excess of 6 % of the Employee Participant’s Non-Bonus
Compensation for the calendar year shall not be considered for Matching
Contributions.  Bonus contributions for
the calendar year shall not be considered for Matching Contributions.

 

(B)   ̈                   Matching Contributions for each Employee Participant for each calendar
year shall be limited to $               .

 

4.  Section 1.07(f) shall be replaced
in its entirety with the following:

 

(f)                        Distribution Rules Applicable to
Pre-effective Date Accruals

 

x        Benefits accrued and vested under the Plan on December 31, 2004,
together with earnings thereon determined in accordance with Section 409A
of the Code, are subject to distribution rules not described in
Section 1.07(a) through (e), and such rules are described in
Attachment A Re: 409A GRANDFATHER AND PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION
RULES.

 

5  New Section 7.09 of the Basic Plan
Document is hereby added immediately following Section 7.08 to read as
follows:

 

“7.09 Obligor. 
Notwithstanding any provision of the Plan to the contrary, benefits
payable under the Plan to a Participant or his or her Beneficiary shall be the
obligation of the Employer who actually employs (or, in the case a Participant
who is no longer employed by an Employer, last employed) the Participant;
provided, however, that in the event the Participant’s employer fails to make a
payment of benefits to the Participant or his or her Beneficiary when due under
the terms of the Plan, Arch Capital Group, Ltd. (the parent company of the
Employers) shall be obligated to make such benefit payments in accordance with
the terms of the Plan.”

 

(b)        Superseding
Provisions Applicable Only to Class A Participants—The following
provisions supersede other provisions of this Adoption Agreement and/or the
Basic Plan Document as described below but only as applied to Class A
Participants:

 

19

 

1.  For
purposes of this Plan, “Class A Participants” shall be those Employees
designated in writing by the Employer as Class A Participants, which
writing is hereby incorporated herein.

 

2.  Section 1.05(a)(1) shall
be replaced in its entirety with the following solely in the case of Class A
Participants:

 

(1)          x                             Deferral Contributions*.  Subject to any minimum or maximum deferral
amount provided below, the Employer shall make a Deferral Contribution in
accordance with, and subject to, Section 4.01 on behalf of each
Participant who has an executed salary reduction agreement in effect with the
Employer for the applicable calendar year (or portion of the applicable
calendar year).

 

*Determined
without excluding compensation earned up to the limits imposed by Section 401(a)(17).

 

	
  Deferral Contributions

  Type of Compensation

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Non-Bonus
  Compensation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  50

  	
   

  

 

(Note:  With respect to each type
of Compensation, list the minimum and maximum dollar amounts or percentages as
whole dollar amounts or whole number percentages.)

 

3.  Section 1.05(b) shall be replaced
in its entirety solely in the case of Class A Participants by not checking
any boxes therein.  Accordingly, no
matching contributions shall be made in respect of Class A Participants.

 

4.  Section 1.05(c)(1) shall be replaced
in its entirety solely in the case of Class A Participants by not checking
the box therein.  Accordingly, fixed
Employer Contributions shall not be made in respect of Class A
Participants.

 

(c)         Plan Merger.  Effective as of December 15,
2008, the Arch Deferred Compensation Plan is hereby merged with and into this
Plan and, after such time, all benefits accrued under the Arch Deferred
Compensation Plan shall be governed by and payable in accordance with the terms
of this Plan, subject to the applicable grandfather provisions set forth in
Attachment A to this Plan; provided, however, that, subject to the
transition election provisions set forth in (d) below, benefits under the
Arch Deferred Compensation Plan that were accrued at the time of its merger with
and into this Plan, as well as any additional benefits for participants under
the Arch Deferred Compensation Plan from deferrals of compensation for calendar
year 2008 (including any bonus for calendar year 2008 and prior years paid
during calendar year 2009) that are made pursuant to a deferral election
previously made under the Arch Deferred Compensation Plan, shall be paid in the
form of the applicable distribution elections in effect under the Arch Deferred
Compensation Plan at the time of the merger.

 

20

 

(d)        Transition Distribution Elections. 
Notwithstanding anything in this Plan to the contrary, each Participant
may elect, with respect to benefits under the Plan (other than (A) amounts
deferred for calendar year 2009 and later years, which are covered in the
second paragraph of this paragraph (d), and (B) “Pre-Effective Date
Accruals” or “Arch Plan Pre-Effective Date Accruals” (as such terms are defined
in Attachment A to this Plan)), including benefits merged into the Plan from
the Arch Deferred Compensation Plan that do not constitute “Arch Plan
Pre-Effective Date Accruals”, to change their distribution elections with
respect to such portion of their account (including any notional earnings
credited to such benefits under the Plan), provided that (i) no such
election may be made in calendar year 2008 to cause a distribution to occur in
calendar year 2008 that would not otherwise have occurred in calendar year
2008; (ii) no such election may be made in calendar year 2008 to cause a
distribution scheduled to occur in calendar year 2008 to occur in a later year;
(iii) such election shall not be made after December 19, 2008 and it
shall be irrevocable; (iv) any such new distribution election must be in
the form of (X) a single lump sum in cash or (Y) a systematic cash
withdrawal plan in annual, monthly, or quarterly installments over a period of
years not to exceed ten years, in either case beginning either (I) upon
separation from service of the Participant with the Company (II) upon the
earlier of a date specified by the Participant in his or her election or
separation from service of the Participant with the Company, or (III) in
the case of a Participant whose separation from service has occurred before December 1,
2008, upon a date specified by the Participant in his or her election; and (v) any
such new distribution election shall be made in the manner set forth in the
Plan;

 

Notwithstanding
anything in this Plan to the contrary, each Participant may elect, with respect
to benefits under the Plan attributable to amounts deferred for calendar year
2009 and later years (which distribution election shall apply to the
distribution of bonus amounts that, absent a deferral under the Plan, would
have been paid in calendar years after 2009) to change their distribution
elections with respect to such portion of their account (including any notional
earnings credited to such benefits under the Plan), provided that (i) no
such election may be made in calendar year 2008 to cause a distribution to
occur in calendar year 2008 that would not otherwise have occurred in calendar
year 2008; (ii) no such election may be made in calendar year 2008 to
cause a distribution scheduled to occur in calendar year 2008 to occur in a later
year; (iii) such election shall not be made after December 19, 2008
and it shall be irrevocable; (iv) any such new distribution election must
be for a form of distribution permitted by the Plan; and (v) any such new
distribution election shall be made in the manner set forth in the Plan.

 

It
is intended that this paragraph (d) be operated in accordance with Q&A
A-19(c) of Internal Revenue Service Notice 2005-1, Section XI(C) of
the preamble to Proposed Treasury Regulations under Section 409A dated October 4,
2005 (Application of Section 409A to Nonqualified Deferred Compensation
Plans), and Section 3.02 of Internal Revenue Service Notice 2007-86.

 

(e)         Transition Deferral Elections. 
Notwithstanding anything in this Plan to the contrary, each Participant
who has participated in the “formula approach” portion of Arch’s Incentive
Compensation Plan and, as a result, has bonuses that are determined based on
performance, over a multiyear development period, of policies, binders or
contracts of insurance or reinsurance having an inception or renewal date
during a particular calendar year (a “Policy Year”), may make an election to
defer a percentage of such Participant’s bonuses that are otherwise paid after
calendar year 2009 and are attributable to Policy Years prior to calendar year
2009 (including carryforwards from such Policy Years), provided that the
election must be made on or prior to December 19, 2008 and (except as
otherwise set forth in Section 4.01(c) of the Plan) it shall be
irrevocable.  Failure of such a
Participant to make a deferral election under this

 

21

 

paragraph
(e) shall result in such bonus amounts not being deferred under the
Plan.  However, for the avoidance of
doubt, such Participant’s bonus deferral elections made prior to June 30,
2008 for bonus payable in 2009 shall apply to bonus amounts otherwise payable
in 2009, without regard to which Policy Years they are attributable.

 

(f)           Formula Approach Bonus Deferral Elections.  For
the avoidance of doubt, each Participant who participates in the “formula
approach” portion of Arch’s Incentive Compensation Plan and, as a result, has
bonuses that are determined based on performance, over a multiyear development
period, of policies, binders or contracts of insurance or reinsurance having an
inception or renewal date during a particular calendar year (a “Policy Year”)
may make an election prior to the beginning of the Policy Year to defer a
percentage of such Participant’s bonus that is attributable to the Policy Year,
whether it is paid in the year immediately following the Policy Year or at any
later time based on further performance during the applicable development
period.  Such a deferral election shall,
except as otherwise set forth in Section 4.01(c) of the Plan, be
irrevocable and shall apply to all bonus payments for the applicable Policy
Year, including any carryforwards from the Policy Year.  Failure of a Participant to make a deferral
election in accordance with this paragraph (f) for bonus paid for a Policy
Year shall result in no deferral under the Plan for bonus from such Policy
Year.

 

22

 

ATTACHMENT A

 

Re:   409A GRANDFATHER AND PRE
EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  

 

1.  Grandfathered Plan Benefits.  It is intended that benefits that were
accrued and vested under the Plan on December 31, 2004 will satisfy the
grandfather provisions of Section 409A of the Code so that such benefits
(together with earnings thereon, determined in accordance with Section 409A
of the Code) (collectively, “Pre Effective Date Accruals”) will not be subject
to Section 409A of the Code.  No
amendment to this Plan made after October 3, 2004 will apply to such Pre
Effective Date Accruals unless the amendment specifically provides that it
applies thereto; provided, however, that amendments changing notional
investment measures for benefits under the Plan shall apply to Pre Effective
Date Accruals so long as such amendments do not constitute a material
modification for purposes of Section 409A of the Code and do not cause
such Pre Effective Date Accruals to lose their grandfathered status under Section 409A
of the Code.  Without limiting the
generality of the foregoing, Pre Effective Date Accruals will be distributed in
accordance with the distribution rules in effect under the Plan on October 3,
2004.

 

2.  Grandfathered Benefits Under Arch Deferred
Compensation Plan.  It is intended
that benefits that were accrued and vested on December 31, 2004 under the
Arch Deferred Compensation Plan (the “Arch Plan”), which has been merged with
and into the Plan, will satisfy the grandfather provisions of Section 409A
of the Code so that such benefits (together with earnings thereon, determined
in accordance with Section 409A of the Code) (collectively, “Arch Plan Pre
Effective Date Accruals”) will not be subject to Section 409A of the
Code.  No amendment to this Plan or the
Arch Plan made after October 3, 2004 will apply to such Arch Plan Pre
Effective Date Accruals unless the amendment specifically provides that it
applies thereto; provided, however, that amendments changing notional
investment measures for benefits under the Arch Plan shall apply to Arch Plan
Pre Effective Date Accruals so long as such amendments do not constitute a
material modification for purposes of Section 409A of the Code and do not
cause such Arch Plan Pre Effective Date Accruals to lose their grandfathered
status under Section 409A of the Code. 
Without limiting the generality of the foregoing, Arch Plan Pre
Effective Date Accruals will be distributed in accordance with the distribution
rules in effect under the Arch Plan on October 3, 2004.

 

 

ATTACHMENT
B

 

Re:  SUPERSEDING PROVISIONS

for

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  

 

(a)         Superseding Provision(s) — The following
provisions supersede other provisions of this Adoption Agreement and/or the
Basic Plan Document as described below:

 

1.  Section 1.01(b) shall be replaced
in its entirety with the following:

 

(b)                                 Plan Status (Check
one.):

 

(1)                                  Adoption Agreement effective date:  11/15/2008.

 

(2)                                  The Adoption Agreement effective date is (Check (A) or check and complete (B)):

 

(A)    ̈   A new Plan effective date.

 

(B)   x   An
amendment and restatement of the Plan.

 

(3)                                  Attachment A sets forth special effective
date and grandfather rules under the Plan for purposes of Section 409A
of the Code.

 

2.  Section 1.05(a)(2) shall be
replaced in its entirety with the following:

 

(2)   x         Deferral Contributions with respect to Bonus
Compensation* only. The Employer requires Participants to enter into a special
salary reduction agreement to make Deferral Contributions with respect to one
or more Bonuses, subject to minimum and maximum deferral limitations, as
provided in the table below.

 

*Determined
without excluding compensation earned up to the limits imposed by Section 401(a)(17).

 

	
  Deferral Contributions

  Type of Bonus

  	
   

  	
  Treated As

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
   

  	
  Performance

  Based

  	
   

  	
  Non-

  Performance

  Based

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Bonus Compensation

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  100

  	
   

  

 

(Note:  With respect to each type
of Bonus, list the minimum and maximum dollar amounts or percentages as whole
dollar amounts or whole number percentages. 
In the event a bonus identified as a Performance-based Bonus above does
not constitute a Performance-based Bonus with respect to any Participant, such
Bonus will be treated as a Non-Performance-based Bonus with respect to such
Participant.)

 

1

 

3.  Section 1.05(b)(3) shall be
replaced in its entirety with the following:

 

(3)                            x                 Matching Contribution Limits (Check the appropriate box (es)):

 

(A)  x               Deferral
Contributions in excess of 6 % of the Employee Participant’s Non-Bonus
Compensation for the calendar year shall not be considered for Matching
Contributions.  Bonus contributions for
the calendar year shall not be considered for Matching Contributions.

 

(B)   ̈                   Matching Contributions for each Employee Participant for each calendar
year shall be limited to $               .

 

4.  Section 1.07(f) shall be replaced
in its entirety with the following:

 

(f)                        Distribution Rules Applicable to
Pre-effective Date Accruals

 

x        Benefits accrued and vested under the Plan on December 31, 2004,
together with earnings thereon determined in accordance with Section 409A
of the Code, are subject to distribution rules not described in
Section 1.07(a) through (e), and such rules are described in
Attachment A Re: 409A GRANDFATHER AND PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION
RULES.

 

5  New Section 7.09 of the Basic Plan
Document is hereby added immediately following Section 7.08 to read as
follows:

 

“7.09 Obligor. 
Notwithstanding any provision of the Plan to the contrary, benefits
payable under the Plan to a Participant or his or her Beneficiary shall be the
obligation of the Employer who actually employs (or, in the case a Participant
who is no longer employed by an Employer, last employed) the Participant;
provided, however, that in the event the Participant’s employer fails to make a
payment of benefits to the Participant or his or her Beneficiary when due under
the terms of the Plan, Arch Capital Group, Ltd. (the parent company of the
Employers) shall be obligated to make such benefit payments in accordance with
the terms of the Plan.”

 

(b)        Superseding
Provisions Applicable Only to Class A Participants—The following
provisions supersede other provisions of this Adoption Agreement and/or the
Basic Plan Document as described below but only as applied to Class A
Participants:

 

1.  For
purposes of this Plan, “Class A Participants” shall be those Employees
designated in writing by the Employer as Class A Participants, which
writing is hereby incorporated herein.

 

2

 

2.  Section 1.05(a)(1) shall
be replaced in its entirety with the following solely in the case of Class A
Participants:

 

(1)          x                             Deferral Contributions*.  Subject to any minimum or maximum deferral
amount provided below, the Employer shall make a Deferral Contribution in
accordance with, and subject to, Section 4.01 on behalf of each
Participant who has an executed salary reduction agreement in effect with the
Employer for the applicable calendar year (or portion of the applicable
calendar year).

 

*Determined
without excluding compensation earned up to the limits imposed by Section 401(a)(17).

 

	
  Deferral Contributions

  Type of Compensation

  	
   

  	
  Dollar Amount

  	
   

  	
  % Amount

  	
   

  
	
   

  	
  Min

  	
   

  	
  Max

  	
   

  	
  Min

  	
   

  	
  Max

  	
   

  
	
  Non-Bonus
  Compensation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  50

  	
   

  

 

(Note:  With respect to each type
of Compensation, list the minimum and maximum dollar amounts or percentages as
whole dollar amounts or whole number percentages.)

 

3.  Section 1.05(b) shall
be replaced in its entirety solely in the case of Class A Participants by
not checking any boxes therein. 
Accordingly, no matching contributions shall be made in respect of Class A
Participants.

 

4.  Section 1.05(c)(1) shall
be replaced in its entirety solely in the case of Class A Participants by
not checking the box therein. 
Accordingly, fixed Employer Contributions shall not be made in respect
of Class A Participants.

 

(c)         Plan Merger.  Effective as of December 15, 2008, the Arch
Deferred Compensation Plan is hereby merged with and into this Plan and, after
such time, all benefits accrued under the Arch Deferred Compensation Plan shall
be governed by and payable in accordance with the terms of this Plan, subject
to the applicable grandfather provisions set forth in Attachment A to this
Plan; provided, however, that, subject to the transition election
provisions set forth in (d) below, benefits under the Arch Deferred
Compensation Plan that were accrued at the time of its merger with and into
this Plan, as well as any additional benefits for participants under the Arch
Deferred Compensation Plan from deferrals of compensation for calendar year
2008 (including any bonus for calendar year 2008 and prior years paid during
calendar year 2009) that are made pursuant to a deferral election previously
made under the Arch Deferred Compensation Plan, shall be paid in the form of
the applicable distribution elections in effect under the Arch Deferred
Compensation Plan at the time of the merger.

 

(d)        Transition Distribution Elections.  Notwithstanding anything in this Plan to the
contrary, each Participant may elect, with respect to benefits under the Plan
(other than (A) amounts deferred for calendar year 2009 and later years,
which are covered in the second paragraph of this paragraph (d), and (B) “Pre-Effective
Date Accruals” or “Arch Plan Pre-Effective Date Accruals” (as such terms are
defined in Attachment A to this Plan)), including benefits merged

 

3

 

into the Plan from the Arch Deferred Compensation Plan that do not
constitute “Arch Plan Pre-Effective Date Accruals”, to change their
distribution elections with respect to such portion of their account (including
any notional earnings credited to such benefits under the Plan), provided that (i) no
such election may be made in calendar year 2008 to cause a distribution to
occur in calendar year 2008 that would not otherwise have occurred in calendar
year 2008; (ii) no such election may be made in calendar year 2008 to
cause a distribution scheduled to occur in calendar year 2008 to occur in a
later year; (iii) such election shall not be made after December 19,
2008 and it shall be irrevocable; (iv) any such new distribution election
must be in the form of (X) a single lump sum in cash or (Y) a
systematic cash withdrawal plan in annual, monthly, or quarterly installments
over a period of years not to exceed ten years, in either case beginning either
(I) upon separation from service of the Participant with the Company (II) upon
the earlier of a date specified by the Participant in his or her election or
separation from service of the Participant with the Company, or (III) in
the case of a Participant whose separation from service has occurred before December 1,
2008, upon a date specified by the Participant in his or her election; and (v) any
such new distribution election shall be made in the manner set forth in the
Plan;

 

Notwithstanding anything in this Plan to the contrary, each Participant
may elect, with respect to benefits under the Plan attributable to amounts
deferred for calendar year 2009 and later years (which distribution election
shall apply to the distribution of bonus amounts that, absent a deferral under
the Plan, would have been paid in calendar years after 2009) to change their
distribution elections with respect to such portion of their account (including
any notional earnings credited to such benefits under the Plan), provided that (i) no
such election may be made in calendar year 2008 to cause a distribution to
occur in calendar year 2008 that would not otherwise have occurred in calendar
year 2008; (ii) no such election may be made in calendar year 2008 to
cause a distribution scheduled to occur in calendar year 2008 to occur in a
later year; (iii) such election shall not be made after December 19,
2008 and it shall be irrevocable; (iv) any such new distribution election
must be for a form of distribution permitted by the Plan; and (v) any such
new distribution election shall be made in the manner set forth in the Plan.

 

It is intended that this paragraph (d) be operated in accordance
with Q&A A-19(c) of Internal Revenue Service Notice 2005-1, Section XI(C) of
the preamble to Proposed Treasury Regulations under Section 409A dated October 4,
2005 (Application of Section 409A to Nonqualified Deferred Compensation
Plans), and Section 3.02 of Internal Revenue Service Notice 2007-86.

 

(e)         Transition Deferral Elections.  Notwithstanding anything in this Plan to the
contrary, each Participant who has participated in the “formula approach”
portion of Arch’s Incentive Compensation Plan and, as a result, has bonuses
that are determined based on performance, over a multiyear development period,
of policies, binders or contracts of insurance or reinsurance having an
inception or renewal date during a particular calendar year (a “Policy Year”),
may make an election to defer a percentage of such Participant’s bonuses that
are otherwise paid after calendar year 2009 and are attributable to Policy Years
prior to calendar year 2009 (including carryforwards from such Policy Years),
provided that the election must be made on or prior to

 

4

 

December 19, 2008 and (except as otherwise set forth in Section 4.01(c) of
the Plan) it shall be irrevocable. 
Failure of such a Participant to make a deferral election under this
paragraph (e) shall result in such bonus amounts not being deferred under
the Plan.  However, for the avoidance of
doubt, such Participant’s bonus deferral elections made prior to June 30,
2008 for bonus payable in 2009 shall apply to bonus amounts otherwise payable
in 2009, without regard to which Policy Years they are attributable.

 

(f)            Formula
Approach Bonus Deferral Elections. 
For the avoidance of doubt, each Participant who participates in the “formula
approach” portion of Arch’s Incentive Compensation Plan and, as a result, has
bonuses that are determined based on performance, over a multiyear development
period, of policies, binders or contracts of insurance or reinsurance having an
inception or renewal date during a particular calendar year (a “Policy Year”)
may make an election prior to the beginning of the Policy Year to defer a
percentage of such Participant’s bonus that is attributable to the Policy Year,
whether it is paid in the year immediately following the Policy Year or at any
later time based on further performance during the applicable development
period.  Such a deferral election shall,
except as otherwise set forth in Section 4.01(c) of the Plan, be
irrevocable and shall apply to all bonus payments for the applicable Policy
Year, including any carryforwards from the Policy Year.  Failure of a Participant to make a deferral
election in accordance with this paragraph (f) for bonus paid for a Policy
Year shall result in no deferral under the Plan for bonus from such Policy
Year.

 

(g)         Special Employer Contribution.  Effective December 15, 2008, for
services performed prior to such date, the Employer credited a special one-time
Employer Contribution in an amount equal to $2,466,526 to the account of
Constantine Iordanou, a Participant, in accordance with Section 1.05(c)(2) of
the Plan Adoption Agreement, and such Employer Contribution is vested in full.

 

5

 

AMENDMENT EXECUTION PAGE

(Fidelity’s Copy)

 

 

	
  Plan
  Name:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc. Executive Supplemental Non-Qualified Savings and
  Retirement Plan (the “Plan”)

  
	
   

  	
   

  	
   

  
	
  Employer:

  	
   

  	
  Arch
  Capital Group (U.S.) Inc.

  

 

(Note: These execution pages are to be
completed in the event the Employer modifies any prior election(s) or
makes a new election(s) in this Adoption Agreement.  Attach the amended page(s) of the
Adoption Agreement to these execution pages.)

 

The following section(s) of the Plan are hereby amended effective
as of the date(s) set forth below:

 

	
  Section Amended

  	
   

  	
  Effective Date

  
	
  Attachment B

  	
   

  	
  December 15, 2008

  

 

IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed on the date below.

 

	
   

  	
  Employer:
  

  	
  /s/
  Martin Nilsen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  Martin Nilsen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:
  SVP and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:
  December 11, 2008

  

 

 

TRUST AGREEMENT

 

Between

 

 

Arch Capital Group (U.S.)
Inc.

 

And

 

FIDELITY MANAGEMENT TRUST
COMPANY

 

 

Arch Capital Group (US)
Inc.  Exec. Supplemental Non-Qualified

Savings and Retirement Plan Trust

 

 

Dated as of November 15, 2008

 

	
  Plan Number:44023

  	
   

  	
  ECM NQ 2007 TA

  
	
  (07/2007)

  	
   

  	
  2/12/2009

  
	
  Ó  2007
  Fidelity Management & Research Company

  

 

 

TABLE OF
CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  Trust

  	
   

  	
  3

  
	
   

  	
  (a) Establishment

  	
   

  	
   

  
	
   

  	
  (b) Grantor
  Trust

  	
   

  	
   

  
	
   

  	
  (c) Trust
  Assets

  	
   

  	
   

  
	
   

  	
  (d) Non-Assignment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  Payments to Sponsor

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  Disbursement

  	
   

  	
  4

  
	
   

  	
  (a) Directions
  from Sponsor

  	
   

  	
   

  
	
   

  	
  (b) Limitations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  Investment of Trust

  	
   

  	
  4

  
	
   

  	
  (a) Selection
  of Investment Options

  	
   

  	
   

  
	
   

  	
  (b) Available
  Investment Options

  	
   

  	
   

  
	
   

  	
  (c) Investment
  Directions

  	
   

  	
   

  
	
   

  	
  (d) Funding
  Mechanism

  	
   

  	
   

  
	
   

  	
  (e) Mutual
  Funds

  	
   

  	
   

  
	
   

  	
  (f) Trustee
  Powers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  Recordkeeping and Administrative Services to Be Performed

  	
   

  	
  7

  
	
   

  	
  (a) Accounts

  	
   

  	
   

  
	
   

  	
  (b) Inspection
  and Audit

  	
   

  	
   

  
	
   

  	
  (c) Notice
  of Plan Amendment

  	
   

  	
   

  
	
   

  	
  (d) Returns,
  Reports and Information

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  Compensation and Expenses

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  Directions and Indemnification

  	
   

  	
  8

  
	
   

  	
  (a) Directions
  from Sponsor

  	
   

  	
   

  
	
   

  	
  (b) Directions
  from Participants

  	
   

  	
   

  
	
   

  	
  (c) Indemnification

  	
   

  	
   

  
	
   

  	
  (d) Survival

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  Resignation or Removal of Trustee

  	
   

  	
  9

  
	
   

  	
  (a) Resignation
  and Removal

  	
   

  	
   

  
	
   

  	
  (b) Termination

  	
   

  	
   

  
	
   

  	
  (c) Notice
  Period

  	
   

  	
   

  
	
   

  	
  (d) Transition
  Assistance

  	
   

  	
   

  
	
   

  	
  (e) Failure
  to Appoint Successor

  	
   

  	
   

  

 

i

 

TABLE OF
CONTENTS

(Continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  10

  	
  Successor Trustee

  	
   

  	
  10

  
	
   

  	
  (a) Appointment

  	
   

  	
   

  
	
   

  	
  (b) Acceptance

  	
   

  	
   

  
	
   

  	
  (c) Corporate
  Action

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  Resignation, Removal, and Termination Notices

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  Duration

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  Insolvency of Sponsor

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  Amendment or Modification

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  Electronic Services

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  General

  	
   

  	
  13

  
	
   

  	
  (a) Performance
  by Trustee, its Agent or Affiliates

  	
   

  	
   

  
	
   

  	
  (b) Entire
  Agreement

  	
   

  	
   

  
	
   

  	
  (c) Waiver

  	
   

  	
   

  
	
   

  	
  (d) Successors
  and Assigns

  	
   

  	
   

  
	
   

  	
  (e) Partial
  Invalidity

  	
   

  	
   

  
	
   

  	
  (f) Section Headings

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  Assignment

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  18 

  	
  Force Majeure

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  19 

  	
  Confidentiality

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  20 

  	
  Situs of Trust Assets

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  21 

  	
  Governing Law

  	
   

  	
  15

  
	
   

  	
  (a) Massachusetts
  Law Controls

  	
   

  	
   

  
	
   

  	
  (b) Trust
  Agreement Controls

  	
   

  	
   

  

 

ii

 

TRUST AGREEMENT, dated as of the 15th day of November 2008, between Arch
Capital Group (U.S.) Inc., a Delaware corporation, having an office at One
Liberty Plaza, New York, NY 10006 (the “Sponsor”), and FIDELITY MANAGEMENT TRUST COMPANY, a
Massachusetts trust company, having an office at 82 Devonshire Street, Boston,
Massachusetts 02109 (the “Trustee”).

 

WITNESSETH:

 

WHEREAS, the Sponsor is the sponsor
of the Plan; and

 

WHEREAS, the Sponsor wishes to
restate, in its entirety, by entering into this Agreement, the irrevocable
trust originally established on December 18, 1995, with regard to the Plan
and to contribute to the Trust assets that shall be held therein, subject to
the claims of Sponsor’s creditors in the event of Sponsor’s Insolvency, as
herein defined, until paid to Participants and their beneficiaries in such
manner and at such times as specified in the Plan;

 

WHEREAS, it is the intention of the
parties that the Trust shall not affect the status of the Plan as an unfunded
plan maintained for the purpose of providing deferred compensation for a select
group of management or highly compensated employees for purposes of Title I of
the Employee Retirement Income Security Act of 1974 (“ERISA”);

 

WHEREAS, it is the intention of the
Sponsor to make contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the Plan; and

 

WHEREAS, the Trustee is willing to
hold and invest the aforesaid assets in trust among several investment options
selected by the Sponsor.

 

NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants and agreements set forth below, the
Sponsor and the Trustee agree as follows:

 

Section 1. 
Definitions.  The
following terms as used in this Trust Agreement have the meanings indicated
unless the context clearly requires otherwise:

 

(a)                      “Agreement” shall
mean this Trust Agreement, as the same may be amended and in effect from time
to time.

 

(b)                     “Business Day” shall
mean any day on which the New York Stock Exchange (NYSE) is open.

 

(c)                      “Code” shall mean the
Internal Revenue Code of 1986, as it has been or may be amended from 

 

1

 

time to time.

 

(d)                     “ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as it has been or may be
amended from time to time.

 

(e)                      “Fidelity Mutual Fund”
shall mean any investment company advised by Fidelity Management &
Research Company or any of its affiliates.

 

(f)                        “Insolvency” shall
mean that the Sponsor is or has become insolvent as defined in Section 13(a).

 

(g)                     “Mutual Fund” shall
refer both to Fidelity Mutual Funds and Non-Fidelity Mutual Funds.

 

(h)                     “Non-Fidelity Mutual Fund”
shall mean certain investment companies not advised by Fidelity Management &
Research Company or any of its affiliates.

 

(i)                         “Participant” shall
mean, with respect to the Plan, any individual who has accrued a benefit under
the Plan, which has not yet been fully distributed and/or forfeited, and shall
include the designated beneficiary(ies) with respect to the benefit of such an
individual until such benefit has been fully distributed and/or forfeited.

 

(j)                         “Permissible Investment”
shall mean any of the investments specified by the Sponsor as available for
investment of assets of the Trust and agreed to by the Trustee. The Permissible
Investments shall be listed in the Service Agreement.

 

(k)                      “Plan” shall mean the
plan or plans described in the Service Agreement.

 

(l)                         “Reconciliation
Period” shall mean the period beginning on the date of the initial transfer
of assets to the Trust and ending on the date of the completion of the
reconciliation of Participant records.

 

(m)                   “Reporting Date”
shall mean the last day of each calendar quarter, the date as of which the
Trustee resigns or is removed pursuant to this Agreement and the date as of
which this Agreement terminates pursuant to Section 9 hereof.

 

(n)                     “Service Agreement”
shall mean the agreement between the Trustee and the Sponsor for the Trustee,
through certain affiliates and related companies, to provide administrative and
recordkeeping services for the Plan.

 

(o)                     “Sponsor” shall mean
Arch Capital Group (U.S.) Inc., as identified in the first paragraph of this
Agreement, or any successor to all or substantially all of its businesses
which, by agreement, operation of law or otherwise, assumes the responsibility
of the Sponsor under this Agreement.

 

(p)                     “Trust” shall mean
the Arch Capital Group (U.S.) Inc.  Exec.
Supplemental Non-Qualified Savings and Retirement Plan Trust, being the trust
restated by the Sponsor and the Trustee pursuant to the provisions of the
Agreement.

 

(q)                     “Trustee” shall mean
Fidelity Management Trust Company, a Massachusetts trust company and any
successor to all or substantially all of its trust business.  The term Trustee shall also include any
successor trustee appointed pursuant to this Agreement to the extent such
successor agrees to serve as Trustee under the Agreement.

 

2

 

Section 2. 
Trust.

 

(a)                Establishment.  The Sponsor hereby establishes the Trust with
the Trustee.  The Trust shall consist of
an initial contribution of money or other property acceptable to the Trustee in
its sole discretion, made by the Sponsor or transferred from a previous
trustee, such additional sums of money as shall from time to time be delivered
to the Trustee, all investments made therewith and proceeds thereof, and all
earnings and profits thereon, less the payments that are made by the Trustee as
provided herein, without distinction between principal and income.  The Trustee hereby accepts the Trust on the
terms and conditions set forth in this Agreement.  In accepting this Trust, the Trustee shall be
accountable for the assets received by it, subject to the terms and conditions
of the Agreement.

 

(b)               Grantor Trust.  The Trust is intended to be a grantor trust,
of which the Sponsor is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Code, and shall be construed
accordingly.

 

(c)                Trust Assets.  The principal of the Trust, and any earnings
thereon shall be held separate and apart from other funds of the Sponsor and
shall be used exclusively for the uses and purposes of Participants and general
creditors as herein set forth. 
Participants and their beneficiaries shall have no preferred claim on, or
any beneficial ownership interest in, any assets of the Trust.  Any rights created under the Plan and the
Agreement shall be mere unsecured contractual rights of Participants and their
beneficiaries against the Sponsor.  Any
assets held by the Trust will be subject to the claims of the Sponsor’s general
creditors under federal and state law in the event of Insolvency, as defined in
this Agreement.

 

(d)               Non-Assignment.  Benefit payments to Participants and their
beneficiaries from the Trust may not be anticipated, assigned (either at law or
in equity), alienated, pledged, encumbered, or subjected to attachment,
garnishment, levy, execution, or other legal or equitable process.  Nothwithstanding anything in this Agreement
to the contrary, the Sponsor can direct the Trustee to disperse monies pursuant
to a domestic relations order as defined in Code section 414(p)(1)(B) in
accordance with Section 4(a).

 

Section 3.  Payments to Sponsor.  Except as provided under the Agreement, the
Sponsor shall have no right to retain or divert to others any of the Trust
assets before all benefit payments have been made to the Participants and their
beneficiaries pursuant to the terms of the Plan.  The Sponsor may direct the Trustee in writing
to pay the Sponsor any amount in excess of the amount needed to pay all of the
benefits accrued under the Plan as of the date of such payment.

 

3

 

Section 4. 
Disbursements.

 

(a)          Directions from
Sponsor.

 

(i)                           If the Service
Agreement provides that the Trustee will make distributions of Plan benefits
directly to Participants and beneficiaries, the Trustee shall disburse monies
to Participants and their beneficiaries for benefit payments in the amounts
that the Sponsor directs from time to time in writing.  The Trustee shall have no responsibility to
ascertain whether the Sponsor’s direction complies with the terms of the Plan
or of any applicable law.  The Trustee
shall be responsible for federal or state income tax reporting or withholding
with respect to such Plan benefits.  The
Trustee shall not be responsible for tax reporting or withholding of FICA
(Social Security and Medicare), any federal or state unemployment, or local tax
with respect to Plan distributions.

 

(ii)                        If
the Service Agreement provides that the Sponsor shall be responsible for making
distributions of benefits to Participants and beneficiaries, then the Trustee
shall disburse monies to the Sponsor for benefit payments in the amounts that
the Sponsor directs from time to time in writing.  The Trustee shall have no responsibility to
ascertain whether the Sponsor’s direction complies with the terms of the Plan
or any applicable law.  The Trustee shall
not be responsible for:  (1) making
benefit payments to Participants under the Plan; or, (2)  any federal,
state or local tax reporting or withholding of any kind with respect to such
Plan benefits.

 

(b)         Limitations.  The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust
at the time of the disbursement.

 

Section 5. 
Investment of Trust.

 

(a)          Selection of
Investment Options.  The Trustee
shall have no responsibility for the selection of investment options under the
Trust and shall not render investment advice to any person in connection with
the selection of such options.

 

(b)         Available
Investment Options.  The Sponsor
shall direct the Trustee as to what investment options the Trust shall be
invested in (i) during the Reconciliation Period, and (ii) following
the Reconciliation Period, subject to the following limitations.  The Sponsor may include only Permissible
Investments as described in the Service Agreement; provided, however, that the
Trustee shall not be considered a fiduciary with investment discretion.  The Sponsor may add or remove investment
options with the consent of the Trustee and upon mutual amendment of the
Service Agreement to reflect such additions.

 

4

 

(c)          Investment Directions.  In order to provide for an accumulation of
assets comparable to the contractual liabilities accruing under the Plan, the
Sponsor may direct the Trustee in writing to invest the assets held in the
Trust to correspond to the hypothetical investments made for Participants in
accordance with their direction under the Plan.

 

(d)         Funding
Mechanism.  The Sponsor’s
designation of available investment options under paragraphs (a) and (b) above,
the maintenance of accounts for each Participant under the Plan and the
crediting of investments to such accounts, and the exercise by Participants of
any powers relating to investments under this Section 5 are solely for the
purpose of providing a mechanism for measuring the obligation of the Sponsor to
any particular Participant under the Plan. 
As further provided in the Agreement, no Participant or beneficiary will
have any preferential claim to or beneficial ownership interest in any asset or
investment held in the Trust, and the rights of any Participant and his or her
beneficiaries under the Plan and the Agreement are solely those of an unsecured
general creditor of the Sponsor with respect to the benefits of the Participant
under the Plan.

 

(e)          Mutual Funds.  The Sponsor hereby acknowledges that it has
received from the Trustee a copy of the prospectus for each Mutual Fund
selected by the Sponsor as a Permissible Investment.  Trust investments in Mutual Funds shall be
subject to the following limitations:

 

(i)                           Execution of
Purchases and Sales.  Purchases
and sales of Permissible Investments (other than for Exchanges) shall be made
on the date on which the Trustee receives from the Sponsor in good order all
information and documentation necessary to accurately effect such purchases and
sales (or in the case of a purchase, the subsequent date on which the Trustee
has received a wire transfer of funds necessary to make such purchase). 
Exchanges of Permissible Investments shall be made on the
same Business Day that the Trustee receives a proper direction if received
before market close (generally 4:00 p.m. eastern time); if the direction
is received after market close (generally 4:00 p.m. eastern time), the
exchange shall be made the following Business Day.

 

(ii)                        Voting.  At the time of mailing of notice of each
annual or special stockholder’s meeting of any Mutual Fund, the Trustee shall
send a copy of the notice and all proxy solicitation materials to the Sponsor,
together with a voting direction form for return to the Trustee or its
designee.  The Trustee shall vote the
shares held in the Trust in the manner as directed by the Sponsor.  The Trustee shall not vote shares for which
it has received no corresponding directions from the Sponsor.  The Sponsor shall also have the right to
direct the Trustee as to the manner in which all shareholder rights, other than
the right to vote, shall be exercised. 
The Trustee shall have no duty to solicit directions from the Sponsor.

 

5

 

(f)            Trustee Powers.  The Trustee shall have the following powers
and authority:

 

(i)                           Subject to
paragraphs (b), (c) and (d) of this Section 5, to sell,
exchange, convey, transfer, or otherwise dispose of any property held in the
Trust, by private contract or at public auction.  No person dealing with the Trustee shall be
bound to see to the application of the purchase money or other property
delivered to the Trustee or to inquire into the validity, expediency, or
propriety of any such sale or other disposition.

 

(ii)                        To cause any
securities or other property held as part of the Trust to be registered in the
Trustee’s own name, in the name of one or more of its nominees, or in the
Trustee’s account with the Depository Trust Company of New York and to hold any
investments in bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust.

 

(iii)                     To keep that
portion of the Trust in cash or cash balances as the Sponsor may, from time to
time, deem to be in the best interest of the Trust.

 

(iv)                  To make,
execute, acknowledge, and deliver any and all documents of transfer or
conveyance and to carry out the powers herein granted.

 

(v)                       To settle,
compromise, or submit to arbitration any claims, debts, or damages due to or
arising from the Trust; to commence or defend suits or legal or administrative
proceedings; to represent the Trust in all suits and legal and administrative
hearings; and to pay all reasonable expenses arising from any such action, from
the Trust if not paid by the Sponsor.

 

(vi)                    To employ
legal, accounting, clerical, and other assistance as may be required in
carrying out the provisions of this Agreement and to pay their reasonable
expenses and compensation from the Trust if not paid by the Sponsor.

 

(vii)                 To do all other
acts although not specifically mentioned herein, as the Trustee may deem
necessary to carry out any of the foregoing powers and the purposes of the
Trust.

 

Notwithstanding any powers granted to the Trustee pursuant to the
Agreement or to applicable law, the Trustee shall not have any power that could
give the Trust the objective of carrying on a business and dividing the gains
therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.

 

6

 

Section 6.  Recordkeeping and Administrative Services
to Be Performed.

 

(a)                Accounts.  The Trustee shall keep accurate accounts of
all investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust periodically and on the
date on which the Trustee resigns or is removed as provided in the Agreement or
is terminated as provided in the Agreement. 
Within thirty (30) days following each Reporting Date or within sixty
(60) days in the case of a Reporting Date caused by the resignation or removal
of the Trustee, or the termination of the Agreement, the Trustee shall file
with the Sponsor a written account setting forth all investments, receipts,
disbursements, and other transactions effected by the Trustee between the
Reporting Date and the prior Reporting Date, and setting forth the value of the
Trust as of the Reporting Date.  Except
as otherwise required under applicable law, upon the expiration of six (6) months
from the date of filing such account with the Sponsor, the Trustee shall have
no liability or further accountability to anyone with respect to the propriety
of its acts or transactions shown in such account, except with respect to such
acts or transactions as to which the Sponsor shall within such six (6) month
period file with the Trustee written objections.

 

(b)               Inspection and
Audit.  All records generated by the
Trustee in accordance with paragraphs (a) shall be open to inspection and
audit, during the Trustee’s regular business hours prior to the termination of
the Agreement, by the Sponsor or any person designated by the Sponsor.

 

(c)                Effect of Plan
Amendment.  The Sponsor
must deliver to the Trustee a copy of any amendment to the Plan as soon as
administratively feasible following the amendment’s adoption and the Sponsor
must provide the Trustee on a timely basis with all additional information the
Sponsor deems necessary for the Trustee to perform the its duties hereunder as
well as such other information as the Trustee may reasonably request.

 

(d)               Returns,
Reports and Information. 
Except as set forth in the Service Agreement, the Sponsor shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust by law. 
The Trustee shall provide the Sponsor with such information as the
Sponsor may reasonably request to make these filings.  The Sponsor shall also be responsible for
making any disclosures to Participants required by law.

 

Section 7. 
Compensation and Expenses.  Sponsor shall pay to Trustee, within thirty
(30) days of receipt of the Trustee’s bill, the fees for services in accordance
with the Service Agreement.  All fees for
services are specifically outlined in the Service Agreement and are based on
any assumptions identified

 

7

 

therein.

 

All expenses of the Trustee relating directly to the acquisition and
disposition of investments constituting part of the Trust, and all taxes of any
kind whatsoever that may be levied or assessed under existing or future laws
upon or in respect of the Trust or the income thereof, shall be a charge
against and paid from the appropriate Participants’ accounts.

 

Section 8. 
Directions and Indemnification.

 

(a)                Directions from
Sponsor.  Whenever the Sponsor provides
a direction to the Trustee, the Trustee shall not be liable for any loss, or by
reason of any breach, arising from the direction if the direction is contained
in a writing (or is oral and immediately confirmed in a writing) signed by any
individual whose name and signature have been submitted (and not withdrawn) in
writing to the Trustee by the Sponsor in the manner described in the Service
Agreement, provided the Trustee reasonably believes the signature of the
individual to be genuine.  Such direction
may be made via electronic data transfer (“EDT”) in accordance with procedures
agreed to by the Sponsor and the Trustee; provided, however, that the Trustee
shall be fully protected in relying on such direction as if it were a direction
made in writing by the Sponsor.  The
Trustee shall have no responsibility to ascertain any direction’s (i) accuracy,
(ii) compliance with the terms of the Plan or any applicable law, or (iii) effect
for tax purposes or otherwise.

 

(b)               Directions from
Participants.  The Trustee
shall not be liable for any loss resulting from any Participant’s exercise or
non-exercise of rights under this Agreement to direct the investment of the
hypothetical assets in the Participant’s accounts.

 

(c)                Indemnification.  The Sponsor shall indemnify the Trustee
against, and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys’ fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or the Trust, excepting only any and all loss,
etc., arising solely from the Trustee’s negligence or bad faith.

 

                                                                        (d)               Survival.  The provisions of this Section 8 shall
survive the termination of this Agreement.

 

8

 

Section 9. 
Resignation or Removal of Trustee.

 

(a)                Resignation
and Removal.

 

(i) The
Trustee may resign at any time in accordance with the notice provisions set
forth below.

 

(ii) The
Sponsor may remove the Trustee at any time in accordance with the notice
provisions set forth below.

 

(b)               Termination.  The Agreement may be terminated at any time
by the Sponsor upon prior written notice to the Trustee in accordance with the
notice provisions set forth below.

 

(c)                Notice
Period. In the event either party desires to terminate the Agreement or any
Services hereunder, the party shall provide at least sixty-(60) days prior
written notice of the termination date to the other party; provided, however,
that the receiving party may agree, in writing, to a shorter notice period.

 

(d)               Transition
Assistance. In the event of termination of the Agreement, if requested by Sponsor,
the Trustee shall assist Sponsor in developing a plan for the orderly
transition of the Plan data, cash and assets then constituting the Trustee and
recordkeeping services provided by the Trustee hereunder to Sponsor or its
designee. The Trustee shall provide such assistance for a period not extending
beyond sixty (60) days from the termination date of this Agreement.  The Trustee shall provide to Sponsor, or to
any person designated by Sponsor, at a mutually agreeable time, one file of the
Plan data prepared and maintained by the Trustee in the ordinary course of
business, in the Trustee’s format.  The
Trustee may provide other or additional transition assistance as mutually
determined for additional fees, which shall be due and payable by the Sponsor
prior to any termination of the Agreement.

 

(e)                Failure to
Appoint Successor.  If, by the termination date, the Sponsor has
not notified the Trustee in writing as to the individual or entity to which the
assets and cash are to be transferred and delivered, the Trustee may bring an
appropriate action or proceeding for leave to deposit the assets and cash in a
court of competent jurisdiction.  The
Trustee shall be reimbursed by the Sponsor for all costs and expenses of the
action or proceeding including, without limitation, reasonable attorneys’ fees
and disbursements.

 

Section 10. 
Successor Trustee.

 

(a)                Appointment.  If the office of Trustee becomes vacant for
any reason, the Sponsor may in writing appoint a successor trustee under this
Agreement.  The successor trustee shall
have all of the rights, powers, privileges, obligations, duties, liabilities,
and immunities granted to the Trustee under

 

9

 

the Agreement.  After a successor
trustee accepts appointment, a prior trustee shall not be liable for the acts
or omissions of the Trustee with respect to the Trust occurring after the time
of the appointment.

 

(b)               Acceptance.  When the successor trustee accepts its appointment
under the Agreement, title to the Trust assets shall immediately vest in the
Trustee without any further action on the part of the prior trustee.  The prior trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably may
be requested in writing by the Sponsor or the Trustee to evidence the vesting
of title to all Trust assets in the Trustee or to deliver all Trust assets to
the Trustee.

 

(c)                Corporate
Action.  Any successor of the Trustee,
through sale or transfer of the business or trust department of the Trustee, or
through reorganization, consolidation, or merger, or any similar transaction,
shall, upon consummation of the transaction, become the Trustee under this
Agreement.

 

Section 11. 
Resignation, Removal, and Termination Notices.  All notices of resignation, removal, or
termination under this Agreement must be in writing and mailed to the party to
which the notice is being given by certified or registered mail, return receipt
requested, to the Sponsor at the address designated in the Service Agreement,
and to the Trustee c/o Fidelity Investments - ECM Client Services Relationship
Manager, P.O. Box 770001, Cincinnati, OH 45277-0026, or to such other
addresses as the parties have notified each other of in the foregoing manner.

 

Section 12. 
Duration.  The
Trust shall continue in effect without limit as to time, subject, however, to
the provisions of the Agreement relating to amendment, modification, and
termination thereof.

 

Section 13. 
Insolvency of Sponsor.

 

                              (a)            Trustee shall cease
disbursement of funds for payment of benefits to Participants and their
beneficiaries if the Sponsor is Insolvent. 
Sponsor shall be considered “Insolvent” for purposes of the Agreement if
(i) Sponsor is unable to pay its debts as they become due, or (ii) Sponsor
is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.

 

                              (b)           All times during the
continuance of the Trust, the principal and income of the Trust shall be
subject to claims of general creditors of the Sponsor under federal and state
law as set forth below.

 

(i)               The Board of Directors (or
other body governing the entity under state law) and the Chief Executive
Officer of the Sponsor shall have the duty to inform the Trustee in writing of
the

 

10

 

Sponsor’s Insolvency.  If a
person claiming to be a creditor of the Sponsor alleges in writing to the
Trustee that the Sponsor has become Insolvent, the Trustee shall determine
whether the Sponsor is Insolvent and, pending such determination, the Trustee
shall discontinue disbursements for payment of benefits to Participants or
their beneficiaries.

 

(ii)            Unless the Trustee has
actual knowledge of the Sponsor’s Insolvency, or has received notice from the
Sponsor or a person claiming to be a creditor alleging that the Sponsor is
Insolvent, the Trustee shall have no duty to inquire whether the Sponsor is
Insolvent.  The Trustee may in all events
rely on such evidence concerning the Sponsor’s solvency as may be furnished to
the Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Sponsor’s solvency.

 

(iii)         If at any time the Trustee
has determined that the Sponsor is Insolvent, the Trustee shall discontinue
disbursements for payments to Participants or their beneficiaries and shall
hold the assets of the Trust for the benefit of the Sponsor’s general
creditors.  Nothing in this Agreement
shall in any way diminish any rights of Participants or their beneficiaries to
pursue their rights as general creditors of the Sponsor with respect to
benefits due under the Plan or otherwise.

 

(iv)        Trustee shall resume
disbursements for the payment of benefits to Participants or their
beneficiaries in accordance with this Agreement only after the Trustee has
determined that the Sponsor is not Insolvent (or is no longer Insolvent).

 

(c)                If the Sponsor
permits the employees of another member of the same controlled group (as
defined in IRC Section 414(b) or (c)) to participate in the Plan, all
of the assets held by the Trust will be subject to the claims of the general
creditors of both the Sponsor and all of such participating affiliates and, for
purposes of Section 13(a), the Sponsor is considered Insolvent if any such
affiliate meets the definition of Insolvent.

 

(d)               Provided that
there are sufficient assets, if the Trustee discontinues the payment of
benefits from the Trust pursuant to Section 13(a) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to
Participants or their beneficiaries by the Sponsor in lieu of the payments
provided for hereunder during any such period of discontinuance.

 

Section 14. 
Amendment or Modification.  This Agreement may be amended or modified at
any time and from time to time only by an instrument executed by both the
Sponsor and the Trustee.

 

11

 

Section 15.  Electronic
Services.

 

(a)                The Trustee may provide
communications and services (“Electronic Services”) and/or software products (“Electronic
Products”) via electronic media, including, but not limited to Fidelity Plan
Sponsor WebStation.  The Sponsor and its
agents agree to use such Electronic Services and Electronic Products only in
the course of reasonable administration of or participation in the Plan and to
keep confidential and not publish, copy, broadcast, retransmit, reproduce,
commercially exploit or otherwise re disseminate the Electronic Products or
Electronic Services or any portion thereof without the Trustee’s written
consent, except, in cases where the Trustee has specifically notified the
Sponsor that the Electronic Products or Services are suitable for delivery to
Participants, for non-commercial personal use by the Participants or
beneficiaries with respect to their participation in the Plan or for their
other retirement planning purposes.

 

(b)               The Sponsor shall be responsible for
installing and maintaining all Electronic Products, (including any programming
required to accomplish the installation) and for displaying any and all content
associated with Electronic Services on its computer network and/or intranet so
that such content will appear exactly as it appears when delivered to the
Sponsor.  All Electronic Products and
Services shall be clearly identified as originating from the Trustee or its
affiliate.  The Sponsor shall promptly
remove Electronic Products or Services from its computer network and/or
intranet, or replace the Electronic Products or Services with updated products
or services provided by the Trustee, upon written notification (including
written notification via facsimile) by the Trustee.

 

(c)                All Electronic Products shall
be provided to the Sponsor without any express or implied legal warranties or
acceptance of legal liability by the Trustee, and all Electronic Services shall
be provided to the Sponsor without acceptance of legal liability related to or
arising out of the electronic nature of the delivery or provision of such
Services.  Except as otherwise stated in
this Agreement, no rights are conveyed to any property, intellectual or
tangible, associated with the contents of the Electronic Products or Services
and related material. The Trustee hereby grants to the Sponsor a non-exclusive,
non-transferable revocable right and license to use the Electronic Products and
Services in accordance with the terms and conditions of the Agreement.

 

(d)               To the extent that any
Electronic Products or Services utilize Internet services to transport data or
communications, the Trustee will take, and the Sponsor agrees to follow, reasonable
security precautions, however, the Trustee disclaims any liability for
interception of any such data or communications. The Trustee reserves the right
not to accept data or communications transmitted via electronic media by the
Sponsor or a third party if it determines that the media does not provide
adequate data security, or if it is not administratively feasible for the
Trustee to use the data security provided. The

 

12

 

Trustee shall not be responsible
for, and makes no warranties regarding access, speed or availability of
Internet or network services, or any other service required for electronic
communication.  The Trustee shall not be
responsible for any loss or damage related to or resulting from any changes or
modifications to the Electronic Products or Services after delivering it to the
Sponsor.

 

Section 16. 
General.

 

(a)                Performance by Trustee, its
Agents or Affiliates.  The
Sponsor acknowledges and authorizes that the services to be provided under the
Agreement shall be provided by the Trustee, its agents or affiliates, including
but not limited to Fidelity Investments Institutional Operations Company, Inc.
or its successor, and that certain of such services may be provided pursuant to
one or more other contractual agreements or relationships.

 

(b)               Entire Agreement.  This Agreement contains all of the terms
agreed upon between the parties with respect to the subject matter hereof.

 

(c)                Waiver.  No waiver by either party of any failure or
refusal to comply with an obligation hereunder shall be deemed a waiver of any
other or subsequent failure or refusal to so comply.

 

(d)               Successors and Assigns.  The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.

 

(e)                Partial Invalidity.  If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of the Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of the Agreement shall be valid and enforceable to the
fullest extent permitted by law.

 

(f)                  Section Headings.  The headings of the various sections,
subsections and paragraphs of this Agreement have been inserted only for the
purposes of convenience and are not part of the Agreement and shall not be
deemed in any manner to modify, explain, expand or restrict any of the
provisions of the Agreement.

 

Section 17.  Assignment.  This Agreement, and any of its
rights and obligations hereunder, may not be assigned by any party without the
prior written consent of the other party(ies), and such consent may be withheld
in any party’s sole discretion. 
Notwithstanding the foregoing, Trustee may assign this Agreement in
whole or in part, and any of its rights and obligations hereunder, to a
subsidiary or affiliate

 

13

 

of Trustee without consent of the Sponsor.  All provisions in the Agreement shall extend
to and be binding upon the parties hereto and their respective successors and
permitted assigns.

 

Section 18.  Force
Majeure. 
No party shall be deemed in default of the Agreement to the extent that
any delay or failure in performance of its obligation(s) results, without
its fault or negligence, from any cause beyond its reasonable control, such as
acts of God, acts of civil or military authority, embargoes, epidemics, war,
riots, insurrections, fires, explosions, earthquakes, floods, unusually severe
weather conditions, power outages or strikes. 
This clause shall not excuse any of the parties to the Agreement from
any liability which results from failure to have in place reasonable disaster
recovery and safeguarding plans adequate for protection of all data each of the
parties to the Agreement are responsible for maintaining for the Plan.

 

Section 19.  Confidentiality.  Both
parties to this Agreement recognize that in the course of implementing and
providing the services described herein, each party may disclose to the other
confidential information.  All such
confidential information, individually and collectively, and other proprietary
information disclosed by either party shall remain the sole property of the
party disclosing the same, and the receiving party shall have no interest or
rights with respect thereto if so designated by the disclosing party to the
receiving party.  Each party agrees to
maintain all such confidential information in trust and confidence to the same
extent that it protects its own proprietary information, and not to disclose
such confidential information to any third party without the written consent of
the other party.  Each party further
agrees to take all reasonable precautions to prevent any unauthorized
disclosure of confidential information. 
In addition, each party agrees not to disclose or make public to anyone,
in any manner, the terms of the Agreement, except as required by law, without
the prior written consent of the other party.

 

Section 20. 
Situs of Trust Assets.  The Sponsor and
the Trustee agree that no assets of the Trust shall be located or transferred
outside of the United States.

 

Section 21.           Governing
Law.

 

(a)                Massachusetts Law Controls.  This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust.  The validity,
construction, effect, and administration of the Agreement shall be governed by
and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, except to the extent those laws are superseded under Section 514
of ERISA.

 

14

 

(b)               Trust Agreement
Controls.  The Trustee
is not a party to the Plan, and in the event of any conflict between the
provisions of the Plan and the provisions of the Agreement, the provisions of
the Agreement shall control.

 

15

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.

 

	
   

  	
  Plan Sponsor Name:

  	
  Arch Capital Group (U.S.) Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Fred S. Eichler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred
  Eichler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  December 4,
  2008

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIDELITY MANAGEMENT TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Gregory M. Perkins

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory
  M. Perkins

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  December 23,
  2008

  

 

16

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.

 

	
   

  	
  Plan Sponsor Name:

  	
  Arch Capital Group (U.S.) Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Fred S. Eichler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred
  Eichler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  December 4,
  2008

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIDELITY MANAGEMENT TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Gregory M. Perkins

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory
  M. Perkins

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  December 23,
  2008

  

 

17

 

FIRST AMENDMENT TO THE

Arch Capital Group (U.S.) Inc.  Exec. Supplemental Non-Qualified Savings and
Retirement Plan Trust

 

WHEREAS,  Arch Capital Group (US) Inc. (the “Corporation”) has
adopted the Arch Capital Group (U.S.) Inc.  Exec. Supplemental Non-Qualified Savings and
Retirement Plan  (the “Plan”), which has been
amended from time to time and which was most recently restated by the adoption
of The CORPORATEplan for  RetirementSM Executive Plan, Fidelity Basic Plan Document
by executing an Adoption Agreement effective November 15,
2008; and

 

WHEREAS, in connection with the
adoption of the Plan, the Corporation entered into a Arch Capital Group (US) Inc.  Exec.
Supplemental Non-Qualified Savings and Retirement Plan  Trust with Fidelity Management Trust Company (“FMTC”) (the “Trust
Agreement”); and

 

WHEREAS, Section 14 of the Trust
Agreement provides for the amendment of the Trust Agreement by a written
instrument signed by the Corporation and FMTC, and

 

WHEREAS, the Corporation desires to
make certain amendments to the Trust Agreement,

 

NOW THEREFORE, the Trust Agreement is
hereby amended as follows:

 

1.  The fifth paragraph on page 1
shall be replaced with the following:

 

WHEREAS, it is the intention of the
Sponsor to make contributions, or cause contributions to be made to the Trust
to provide a source of funds to assist in the meeting of liabilities under the
Plan; and

 

2.  Section 2(c) shall
be replaced in its entirety with the following:

 

 (c)                                                       Trust Assets.  The principal of the Trust, and any earnings
thereon shall be held separate and apart from other funds of the Sponsor and
shall be used exclusively for the uses and purposes of Participants and general
creditors as herein set forth. 
Participants and their beneficiaries shall have no preferred claim on,
or any beneficial ownership interest in, any assets of the Trust.  Any rights created under the Plan and the
Agreement shall be mere unsecured contractual rights of Participants and their
beneficiaries as set forth in the Plan. 
Any assets held by the Trust will be subject to the claims of the
Sponsor’s general creditors under federal and state law in the event of Insolvency,
as defined in this Agreement.

 

1

 

3.  Sections 5(c), 5(d) and
5(e)(ii) shall be replaced in their entirety with the following:

 

Section 5. 
Investment of Trust.

 

(c)                                  Investment
Directions.  In order to
provide for an accumulation of assets comparable to the contractual liabilities
accruing under the Plan, the Sponsor may direct the Trustee in writing to
invest the assets held in the Trust to correspond to the notional investments
made for Participants in accordance with their direction under the Plan.

 

(d)                                                         Funding
Mechanism.  The Sponsor’s
designation of available investment options under paragraphs (a) and (b) above,
the maintenance of accounts for each Participant under the Plan and the
crediting of investments to such accounts, and the exercise by Participants of
any powers relating to notional investments are solely for the purpose of
providing a mechanism for measuring the obligation of the Sponsor to any
particular Participant under the Plan. 
As further provided in the Agreement, no Participant or beneficiary will
have any preferential claim to or beneficial ownership interest in any asset or
investment held in the Trust, and the rights of any Participant and his or her
beneficiaries under the Plan and the Agreement are solely those of an unsecured
general creditor of the Sponsor with respect to the benefits of the Participant
under the Plan.

 

(ii)                                                          Voting.  At the time of mailing of notice of each
annual or special stockholders’ meeting of any Mutual Fund, the shares of which
are held by the Trust, the Trustee shall send a copy of the notice and all
proxy solicitation materials to the Sponsor, together with a voting direction
form for return to the Trustee or its designee. 
The Trustee shall vote the shares held in the Trust in the manner as
directed by the Sponsor.  The Trustee
shall not vote shares for which it has received no corresponding directions
from the Sponsor.  The Sponsor shall also
have the right to direct the Trustee as to the manner in which all shareholder
rights, other than the right to vote, shall be exercised.  The Trustee shall have no duty to solicit
directions from the Sponsor.

 

4.  Section 7 shall be
replaced in its entirety with the following:

 

Section 7. 
Compensation and Expenses.  Sponsor shall pay to Trustee, within thirty
(30) days of receipt of the Trustee’s bill, the fees for services in accordance
with the Service Agreement.  All fees for
services are specifically outlined in the Service Agreement and are based on
any assumptions identified therein.

 

All expenses of the Trustee relating directly to the acquisition and
disposition of investments constituting part of the Trust, and all taxes of any
kind whatsoever that may be levied or assessed under existing or future laws
upon or in respect of the Trust or the income thereof, shall be a charge
against and paid from the appropriate Participants’ accounts, unless paid by
the Sponsor.

 

2

 

5.  Sections 8(b) and 8(c) shall
be replaced in their entirety with the following:

 

Section 8. 
Directions and Indemnification.

 

(b)                                                         Directions from
Participants.  The Trustee
shall not be liable for any loss resulting from any Participant’s exercise or
non-exercise of any rights under this Agreement to direct the notional
investment of the notional assets in the Participant’s accounts.

 

(c)                                                          Indemnification.  The Sponsor shall indemnify the Trustee
against, and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys’ fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or the Trust, excepting only any and all loss,
etc., arising from the Trustee’s negligence or bad faith.

 

6.  Section 19 shall be
replaced in its entirety with the following:

 

Section 19.  Confidentiality.  Both parties to this Agreement
recognize that in the course of implementing and providing the services
described herein, each party may disclose to the other confidential
information.  All such confidential
information, individually and collectively, and other proprietary information
disclosed by either party shall remain the sole property of the party
disclosing the same, and the receiving party shall have no interest or rights
with respect thereto if so designated by the disclosing party to the receiving
party.  Each party agrees to maintain all
such confidential information in trust and confidence to the same extent that
it protects its own proprietary information, and not to disclose such
confidential information to any third party without the written consent of the
other party.  Each party further agrees
to take all reasonable precautions to prevent any unauthorized disclosure of
confidential information.

 

3

 

IN WITNESS WHEREOF, the Corporation and  FMTC have caused this amendment to be
executed this 4th day of December, 2008, by their duly authorized officer.

 

 

	
   

  	
   

  	
  Arch Capital Group (US) Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Fred S. Eichler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  SVP & CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIDELITY MANAGEMENT TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gregory M. Perkins

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signature

  
					

 

4

 

The CORPORATEplan for
RetirementSM

EXECUTIVE PLAN

 

BASIC PLAN
DOCUMENT

 

IMPORTANT
NOTE

 

This document has not been approved by the Department of Labor, the
Internal Revenue Service or any other governmental entity.  The Employer must determine whether the plan
is subject to the Federal securities laws and the securities laws of the
various states.  The Employer may not
rely on this document to ensure any particular tax consequences or to ensure
that the Plan is “unfunded and maintained primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees” under the Employee Retirement Income Security Act with
respect to the Employer’s particular situation. 
Fidelity Management Trust Company, its affiliates and employees cannot
and do not provide legal or tax advice or opinions in connection with this
document.  This document does not
constitute legal or tax advice or opinions and is not intended or written to be
used, and it cannot be used by any taxpayer, for the purposes of avoiding
penalties that may be imposed on the taxpayer. 
This document must be reviewed by the Employer’s attorney prior
to adoption.

 

	
  (07/2007)

  	
  ECM NQ 2007 BPD

  
	
   

  
	
  Ó 2007 Fidelity Management & Research Company

  

 

 

CORPORATEplan
for Retirement EXECUTIVE

BASIC PLAN
DOCUMENT

 

	
  ARTICLE 1

  
	
  ADOPTION AGREEMENT

  
	
   

  
	
  ARTICLE 2

  
	
  DEFINITIONS

  
	
   

  
	
  2.01 - Definitions

  
	
   

  
	
  ARTICLE 3

  
	
  PARTICIPATION

  
	
   

  
	
  3.01 - Date of Participation

  
	
  3.02 - Participation Following a Change in
  Status

  
	
   

  
	
  ARTICLE 4

  
	
  CONTRIBUTIONS

  
	
   

  
	
  4.01 - Deferral Contributions

  
	
  4.02 - Matching Contributions

  
	
  4.03 - Employer Contributions

  
	
  4.04 - Election Forms

  
	
   

  
	
  ARTICLE 5

  
	
  PARTICIPANTS’ ACCOUNTS

  
	
   

  
	
  ARTICLE 6

  
	
  INVESTMENT OF ACCOUNTS

  
	
   

  
	
  6.01 - Manner of Investment

  
	
  6.02 - Investment Decisions, Earnings and
  Expenses

  
	
   

  
	
  ARTICLE 7

  
	
  RIGHT TO BENEFITS

  
	
   

  
	
  7.01 - Retirement

  
	
  7.02 - Death

  
	
  7.03 - Separation from Service

  
	
  7.04 - Vesting after Partial Distribution

  
	
  7.05 - Forfeitures

  
	
  7.06 - Change in Control

  
	
  7.07 - Disability

  
	
  7.08 - Directors

  
	
   

  
	
  ARTICLE 8

  
	
  DISTRIBUTION OF BENEFITS

  
	
   

  
	
  8.01 — Events Triggering and Form of
  Distributions

  
	
  8.02 - Notice to Trustee

  
	
  8.03 — Unforeseeable Emergency Withdrawals

  

 

i

 

	
  ARTICLE 9

  
	
  AMENDMENT AND TERMINATION

  
	
   

  
	
  9.01 - Amendment by Employer

  
	
  9.02 - Termination

  
	
   

  
	
  ARTICLE 10

  
	
  MISCELLANEOUS

  
	
   

  
	
  10.01 - Communication to Participants

  
	
  10.02 - Limitation of Rights

  
	
  10.03 - Nonalienability of Benefits

  
	
  10.04 - Facility of Payment

  
	
  10.05 — Plan Records

  
	
  10.06 - USERRA

  
	
  10.07 - Governing Law

  
	
   

  
	
  ARTICLE 11

  
	
  PLAN ADMINISTRATION

  
	
   

  
	
  11.01 - Powers and Responsibilities of the
  Administrator

  
	
  11.02 - Claims and Review Procedures

  

 

ii

 

PREAMBLE

 

It is the intention of the Employer to
establish herein an unfunded plan maintained solely for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees as provided in ERISA. 
The Employer further intends that this Plan comply with Code section
409A, and the Plan is to be construed accordingly.

 

If the Employer has previously maintained the
Plan described herein pursuant to a previously existing plan document or
description, the Employer’s adoption of this Plan document is an amendment and
complete restatement of, and supersedes, such previously existing document or
description with respect to benefits accrued or to be paid on or after the
effective date of this document (except to the extent expressly provided
otherwise herein).

 

Article 1.  Adoption Agreement.

 

Article 2.  Definitions.

 

2.01.  Definitions.

 

(a)   Wherever used herein, the following terms have the
meanings set forth below, unless a different meaning is clearly required by the
context:

 

(1)  “Account”
means an account established on the books of the Employer for the purpose of
recording amounts credited to a Participant and any income, expenses, gains, or
losses attributable thereto.

 

(2)   “Active Participant” means a
Participant who is eligible to accrue
benefits under a plan (other than earnings on amounts previously deferred)
within the 24-month period ending on the date the Participant becomes a
Participant under Section 3.01. 
Notwithstanding the above, however, a Participant is not an Active
Participant if he has been paid all amounts deferred under the plan, provided
that he was, on and before the date of the last payment, ineligible to continue
or to elect to continue to participate in the plan for periods after such last
payment (other than through an election of a different time and form of payment
with respect to the amounts paid).

 

(A)      For purposes of Section 4.01(d), as used in
the first paragraph of the definition of “Active Participant” above, “plan”
means an account balance plan (or portion thereof) of the Employer or a Related
Employer subject to Code section 409A pursuant to which the Participant is
eligible to accrue benefits only if the Participant elects to defer
compensation thereunder, and the “date the Participant becomes a Participant
under Section 3.01” refers only to the date the Participant becomes a
Participant with respect to Deferral Contributions.

 

(B)       For purposes of Section 8.01(a)(2), as used
in the first paragraph of the definition of “Active Participant” above, “plan”
means an account balance plan (or portion thereof) of the Employer or a Related
Employer subject to Code section 409A pursuant to which the Participant is
eligible to accrue benefits without any election by the Participant to defer
compensation thereunder, and the “date the Participant becomes a Participant
under Section 3.01” refers only to the date the Participant becomes a
Participant with respect to Matching or Employer Contributions.

 

1

 

(3)  “Administrator”
means the Employer adopting this Plan (but excluding Related Employers) or
other person designated by the Employer in Section 1.01(c).

 

(4)  “Adoption
Agreement” means Article 1, under which the Employer establishes and
adopts or amends the Plan and selects certain provisions of the Plan.  The provisions of the Adoption Agreement are
an integral part of the Plan.

 

(5)  “Beneficiary”
means the person or persons entitled under Section 7.02 to receive
benefits under the Plan upon the death of a Participant.

 

(6)  “Bonus”
means any Performance-based Bonus or any Non-performance-based Bonus as listed
and identified in the table in Section 1.05(a)(2) hereof.

 

(7)   “Change in Control” means a change in control
with respect to the applicable corporation, as defined in 26 CFR section
1.409A-3(i)(5).  For purposes of this
definition “applicable corporation” means:

 

(A)  The
corporation for which the Participant is performing services at the time of the
change in control event;

 

(B)   The
corporation(s) liable for payment hereunder (but only if either the
accrued benefit hereunder is attributable to the performance of service by the
Participant for such corporation(s) or there is a bona fide business
purpose for such corporation(s) to be liable for such payment and, in
either case, no significant purpose of making such corporation(s) liable
for such benefit is the avoidance of Federal income tax); or

 

(C)   A
corporate majority shareholder of one of the corporations described in (A) or
(B) above or any corporation in a chain of corporations in which each
corporation is a majority shareholder of another corporation in the chain,
ending in a corporation identified in (A) or (B) above.

 

(8)    “Code” means the Internal Revenue Code of
1986, as amended from time to time.

 

(9)    “Compensation” means for purposes of Article 4:

 

(A)  If the Employer elects Section 1.04(a), such term as
defined in such Section 1.04(a).

 

(B)   If
the Employer elects Section 1.04(b), wages as defined in Code section 3401(a) and
all other payments of compensation to an Employee by the Employer (in the
course of the Employer’s trade or business) for which the Employer is required
to furnish the Employee a written statement under Code sections 6041(d) and
6051(a)(3), excluding any items elected by the Employer in Section 1.04(b),
reimbursements or other expense allowances, fringe benefits (cash and
non-cash), moving expenses, deferred compensation and welfare benefits, but
including amounts that are not includable in the gross income of the Employee
under a salary reduction agreement by reason of the application of Code section
125, 132(f)(4), 402(e)(3), 402(h) or 403(b).  Compensation shall be determined without
regard to any rules under Code section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code section 3401(a)(2)).

 

2

 

(C)   If
the Employer elects Section 1.04(c), any and all monetary remuneration
paid to the Director by the Employer, including, but not limited to, meeting
fees and annual retainers, and excluding items listed in Section 1.04(c).

 

For purposes of this Section 2.01(a)(9),
Compensation shall also include amounts deferred pursuant to an election under Section 4.01.

 

(10) “Deferral Contribution” means a hypothetical
contribution credited to a Participant’s Account as the result of the
Participant’s election to reduce his Compensation in exchange for such credit,
as described in Section 4.01.

 

(11)  “Director” means a person, other than an
Employee, who is elected or appointed as a member of the board of directors of
the Employer, with respect to a corporation, or to an analogous position with
respect to an entity that is not a corporation.

 

(12)  “Disability” is described in Section 1.07(a)(2).

 

(13)  “Employee” means any employee of the
Employer.

 

(14)  “Employer” means the employer named in Section 1.02(a) and
any Related Employers listed in Section 1.02(b).

 

(15) “Employer Contribution” means a
hypothetical contribution credited to a Participant’s Account under the Plan as
a result of the Employer’s crediting of such amount, as described in Section 4.03.

 

(16) “Employment
Commencement Date” means the date on which the Employee commences employment
with the Employer.

 

(17)  “ERISA”
means the Employee Retirement Income Security Act of 1974, as from time to time
amended.

 

(18)   “Inactive
Participant” means a Participant who is not an Employee or Director.

 

(19) “Matching Contribution” means a
hypothetical contribution credited to a Participant’s Account under the Plan as
a result of the Employer’s crediting of such amount, as described in Section 4.02.

 

(20)  “Non-performance-based Bonus” means any Bonus
listed under the column entitled “non-performance based” in Section 1.05(a)(2).

 

(21)  “Participant” means any Employee or Director
who participates in the Plan in accordance with Article 3 (or formerly
participated in the Plan and has an amount credited to his Account).

 

(22)  “Performance-based Bonus” means any Bonus
listed under the column entitled “performance based” in Section 1.05(a)(2),
which constitutes compensation, the amount of, or entitlement to, which is
contingent on the satisfaction of pre-established organizational or individual
performance criteria relating to a performance period of at least 12
consecutive months and which is further defined in 26 CFR section 1.409A-1(e).

 

(23)  “Permissible Investment” means the
investments specified by the Employer as available for hypothetical investment
of Accounts.  The Permissible Investments
under the Plan are listed in the Service Agreement, and the provisions of the
Service Agreement listing the Permissible Investments are hereby incorporated
herein.

 

3

 

(24)  “Plan”
means the plan established by the Employer as set forth herein as a new plan or
as an amendment to an existing plan, such establishment to be evidenced by the
Employer’s execution of the Adoption Agreement, together with any and all
amendments hereto.

 

(25)  “Related
Employer” means any employer other than the Employer named in Section 1.02(a),
if the Employer and such other employer are members of a controlled group of
corporations (as defined in Code section 414(b)) or trades or businesses
(whether or not incorporated) under common control (as defined in Code section
414(c)).

 

(26)  “Separation
from Service” means the date the Participant retires or otherwise has a
termination of employment (or a termination of the contract pursuant to which
the Participant has provided services as a Director, for a Director
Participant) with the Employer and all Related Employers, as further defined in
26 CFR section 1.409A-1(h); provided, however, that

 

(A)       For purposes of this paragraph (26), the
definition of “Related Employer” shall be modified as follows:

 

(i)         In applying Code section 1563(a)(1), (2) and
(3) for purposes of determining a controlled group of corporations under
Code section 414(b), the phrase “at least 50%” shall be used instead of “at
least 80 percent” each place “at least 80 percent” appears in Code section
1563(a)(1), (2) and (3); and

 

(ii)        In applying 26 CFR section 1.414(c)-2 for
purposes of determining trades or business (whether or not incorporated) under
common control for purposes of Code section 414(c), the phrase “at least 50%”
shall be used instead of “at least 80 percent” each place “at least 80 percent”
appears in 26 CFR section 1.414(c)-2.

 

(B)       In the event a Participant provides services to
the Employer or a Related Employer as an Employee and a Director,

 

(i)        The Employee Participant’s services as a
Director are not taken into account in determining whether the Participant has
a Separation from Service as an Employee; and

 

 (ii)       The Director Participant’s
services as an Employee are not taken into account in determining whether the
Participant has a Separation from Service as a Director

 

provided that this Plan is not aggregated
with a plan subject to Code section 409A in which the Director Participant
participates as an employee of the Employer or a Related Employer or in which
the Employee Participant participates as a director (or a similar position with
respect to a non-corporate entity) of the Employer or a Related Employer, as
applicable, pursuant to 26 CFR section 1.409A-1(c)(2)(ii).

 

(27)  “Service
Agreement” means the agreement between the Employer and Trustee regarding the
arrangement between the parties for recordkeeping services with respect to the
Plan.

 

(28)  “Specified
Employee,” (unless defined by the Employer in a separate writing, in which case
such writing is hereby incorporated herein) means a Participant who meets the
requirements in 26 CFR section 1.409A-1(i) applying the default definition
components provided in such regulation (those that would apply absent
elections, as described in 26 CFR section 1.409A-1(i)(8)), including an
identification date of December 31. 
In the event that such default definition components are applicable, the
Employer has elected Section 1.01(b)(2) and, immediately prior to the
date in Section 1.01(b)(2), the Plan applied an identification date (the “prior
date”) other than the December 31, the prior date shall continue to apply,
and December 31 shall not apply, until the date that is 12 months after the
date in Section 1.01(b)(2).

 

4

 

(29)  “Trust”
means the trust created by the Employer, pursuant to the Trust agreement
between the Employer and the Trustee, under which assets are held,
administered, and managed, subject to the claims of the Employer’s creditors in
the event of the Employer’s insolvency, until paid to Participants and their
Beneficiaries as specified in the Plan.

 

(30)  “Trust
Fund” means the property held in the Trust by the Trustee.

 

(31)  “Trustee”
means the individual(s) or entity appointed by the Employer under the
Trust agreement.

 

(32)  “Unforeseeable
Emergency” is as defined in 26 CFR section 1.409A-3(i)(3)(i).

 

(33)  “Year
of Service” is as defined in Section 7.03(b) for purposes of the
elapsed time method and in Section 7.03(c) for purposes of the class
year method.

 

(b)  Pronouns used in the Plan are
in the masculine gender but include the feminine gender unless the context
clearly indicates otherwise.

 

Article 3.  Participation.

 

3.01.  Date
of Participation.  An
Employee or Director becomes a Participant on the date such Employee’s or
Director’s participation becomes effective (as described in Section 1.03).

 

3.02.  Participation
following a Change in Status.

 

(a)   If
a Participant ceases to be an Employee or Director and thereafter resumes the
same status he had as a Participant during his immediately previous
participation in the Plan (as an Employee if previously a Participant as an
Employee and as a Director if previously a Participant as a Director), he will
again become a Participant immediately upon resumption of such status, provided, however, that if such Participant
is a Director, he is an eligible Director upon resumption of such status
(as defined in Section 1.03(b)), and provided, further, that if such
Participant is an Employee, he is an eligible Employee upon resumption of such
status (as defined in Section 1.03(a)). 
Deferral Contributions to such Participant’s Account thereafter, if any,
shall be subject to (1) or (2) below.

 

(1) If the Participant resumes such status during a period for which such
Participant had previously made a valid deferral election pursuant to Section 4.01,
he shall immediately resume such Deferral Contributions.  Deferral Contributions applicable to periods
thereafter shall be made pursuant to the election and other rules described
in Section 4.01.

 

(2) If the Participant resumes such status after the period described in the
first sentence of paragraph (1) of this Section 3.02, any Deferral
Contributions with respect to such Participant shall be made pursuant to the
election and other rules described in Section 4.01.

 

(b) When an individual who is a
Participant due to his status as an eligible Employee (as defined in Section 1.03(a))
continues in the employ of the Employer or Related Employer but ceases to be an
eligible Employee, the individual shall not receive an allocation of Matching
or Employer Contributions for the period during which he is not an eligible
Employee.  Such Participant shall continue
to make Deferral Contributions throughout the remainder of the applicable
period (as described in Section 4.01) in which such change in status
occurs, if, and as, applicable.

 

5

 

(c) When an individual who is a
Participant due to his status as an eligible Director (as defined in Section 1.03(b))
continues his directorship with the Employer or a Related Employer but ceases
to be an eligible Director, the individual shall not receive an allocation of
Matching or Employer Contributions for the period during which he is not an
eligible Director.  Such Participant
shall continue to make Deferral Contributions throughout the remainder of the
applicable period (as described in Section 4.01) in which such change in
status occurs, if, and as, applicable.

 

Article 4.  Contributions.

 

4. 01  Deferral Contributions.  If elected by the Employer pursuant to Section 1.05(a) and/or
1.06(a), a Participant described in such applicable Section may elect to
reduce his Compensation by a specified percentage or dollar amount.  The Employer shall credit an amount to the
Participant’s Account equal to the amount of such reduction.  Except as otherwise provided in this Section 4.01,
such election shall be effective to defer Compensation relating to all services
performed in the calendar year beginning after the calendar year in which the
Participant executes the election.  Under
no circumstances may a salary reduction agreement be adopted retroactively.  If the Employer has elected to apply Section 1.05(a)(2),
no amount will be deducted from Bonuses unless the Participant has made a
separate deferral election applicable to such Bonuses.  A
Participant’s election to defer Compensation may be changed at any time before
the last permissible date for making such election, at which time such election
becomes irrevocable.  Notwithstanding
anything herein to the contrary, the conditions under which a Participant may
make a deferral election as provided in the applicable salary reduction agreement
are hereby incorporated herein and supersede any otherwise inconsistent Plan
provision.

 

(a)   Performance Based Bonus.  With respect to a Performance-based Bonus, a
separate election made pursuant to Section 1.05(a)(2) will be
effective to defer such Bonus if made no later than 6 months before the end of
the period during which the services on which such Performance-based Bonus is
based are performed.

 

(b)   Fiscal Year Bonus. With respect to a
Bonus relating to a period of service coextensive with one or more consecutive
fiscal years of the Employer, of which no amount is paid or payable during the
service period, a separate election pursuant to Section 1.05(a)(2) will
be effective to defer such Bonus if made no later than the close of the
Employer’s fiscal year next preceding the first fiscal year in which the
Participant performs any services for which such Bonus is payable.

 

(c)   Cancellation of Salary Reduction Agreement.

 

(1)   The Administrator may cancel a Participant’s salary
reduction agreement pursuant to the provisions of 26 CFR section 1.409A-3(j)(4)(viii) in
connection with the Participant’s Unforeseeable Emergency.  To the extent required pursuant to the
application of 26 CFR section 1.401(k)-1(d)(3) (or any successor thereto),
a Participant’s salary reduction agreement shall be automatically cancelled.

 

(2)   The Administrator may cancel a Participant’s salary
reduction agreement pursuant to the provisions of 26 CFR section
1.409A-3(j)(4)(xii) in connection with the Participant’s disability.  Such cancellation must occur by the later of
the end of the Participant’s taxable year or the 15th day of the third month following the date the
Participant incurs a disability.  For
purposes of this paragraph (2), a disability is any medically determinable physical
or mental impairment resulting in the Participant’s inability to perform the
duties of his or her position or any substantially similar position, where such
impairment can be expected to result in death or can be expected to last for a
continuous period of not less than six months.

 

6

 

In no event may the Participant, directly or
indirectly, elect such a cancellation.  A
cancellation pursuant to this subsection (c) shall apply only to
Compensation not yet earned.

 

(d)   Initial
Deferral Election.  
Notwithstanding the above, if the Participant is not an Active
Participant, the Participant may make an election to defer Compensation within
30 days after the Participant becomes a Participant, which election shall be
effective with respect to Compensation payable for services performed during
the calendar year (or other deferral period described in (a) or (b) above,
as applicable) and after the date of such election.  For Compensation that is earned based upon a
specified performance period (e.g., an annual bonus) an election pursuant to
this subsection (d) will be effective to defer an amount equal to the
total amount of the Compensation for the performance period multiplied by the
ratio of the number of days remaining in the performance period after the
election over the total number of days in the performance period.

 

4.02.  Matching Contributions.  If so provided by the Employer in Section 1.05(b) and/or
1.06(b)(1), the Employer shall credit a Matching Contribution to the Account of
each Participant entitled to such Matching Contribution.  The amount of the Matching Contribution shall
be determined in accordance with Section 1.05(b) and/or 1.06(b)(1),
as applicable, provided, however, that the Matching Contributions credited to
the Account of a Participant pursuant to Section 1.05(b)(2) shall be
limited pursuant to (a) and (b) below:

 

(a) The sum of Matching
Contributions made on behalf of a Participant pursuant to Section 1.05(b)(2) for
any calendar year and any other benefits the Participant accrues pursuant to
another plan subject to Code section 409A as a result of such Participant’s
action or inaction under a qualified plan with respect to elective deferrals
and other employee pre-tax contributions subject to the contribution
restrictions under Code section 401(a)(30) or 402(g) shall not result in
an increase in the amounts deferred under all plans subject to Code section
409A in which the Participant participates in excess of the limit with respect
to elective deferrals under Code section 402(g)(1)(A), (B) and (C) in
effect for the calendar year in which such action or inaction occurs; and

 

(b) The Matching
Contributions made on behalf of a Participant pursuant to Section 1.05(b)(2) shall
never exceed 100% of the matching amounts that would be provided under the
qualified employer plan identified in Section 1.05(b)(2) absent any
plan-based restrictions that reflect limits on qualified plan contributions
under the Code.

 

4.03. Employer Contributions.   If so provided by
the Employer in Section 1.05(c)(1) and/or 1.06(b)(2), the Employer
shall make an Employer Contribution to be credited to the Account of each
Participant entitled thereto in the amount provided in such Section(s).  If so provided by the Employer in Section 1.05(c)(2) and/or
1.06(b)(3), the Employer may make an Employer Contribution to be credited to
the Account maintained on behalf of any Participant in such an amount as the
Employer, in its sole discretion, shall determine, subject to the provisions of
the applicable Section.

 

4.04. Election Forms.   Notwithstanding anything herein to the
contrary, the terms of an election form with respect to the conditions under
which a Participant may make any election hereunder, as provided in such form
(whether electronic or otherwise) are hereby incorporated herein and supersede
any otherwise inconsistent Plan provision.

 

Article 5.  Participants’ Accounts.  The Administrator
will maintain an Account for each Participant, reflecting hypothetical
contributions credited to the Participant, along with hypothetical earnings,
expenses, gains and losses, pursuant to the terms hereof.  A hypothetical contribution shall be credited
to the Account of a Participant on the date determined by the Employer and
accepted by the Plan recordkeeper.  The
Administrator will maintain such other accounts and records as it deems
appropriate to the discharge of its duties under the Plan.

 

7

 

Article 6.  Investment of
Accounts.

 

6.01.  Manner
of Investment. 
All amounts credited to the Accounts of Participants shall be treated as
though invested and reinvested only in Permissible Investments.

 

6.02.  
Investment Decisions, Earnings and Expenses.  Investments in which
the Accounts of Participants shall be treated as invested and reinvested shall
be directed by the Employer or by each Participant, or both, in accordance with
Section 1.09.  All dividends,
interest, gains, and distributions of any nature that would be earned on a
Permissible Investment will be credited to the Account as though reinvested in
additional shares of that Permissible Investment.  Expenses that would be
attributable to such investments shall be charged to the Account of the
Participant.

 

Article 7.   Right to Benefits.

 

7.01.  Retirement.  If provided by the Employer in Section 1.08(e)(1),
the Account of a Participant or an Inactive Participant who attains retirement
eligibility prior to a Separation from Service will be 100% vested.

 

7.02.  Death.  If provided by the Employer in Section 1.08(e)(2),
the Account of a Participant or former Participant who dies before the
distribution of his entire Account will be 100% vested, provided that at the
time of his death he is earning Years of Service.

 

A Participant may designate a Beneficiary or
Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries,
by giving notice to the Administrator on a form designated by the
Administrator.  If more than one person
is designated as the Beneficiary, their respective interests shall be as
indicated on the designation form.

 

A copy of the death certificate or other
sufficient documentation must be filed with and approved by the
Administrator.  If upon the death of the
Participant there is, in the opinion of the Administrator, no designated
Beneficiary for part or all of the Participant’s Account, such amount will be
paid to his surviving spouse or, if none, to his estate (such spouse or estate
shall be deemed to be the Beneficiary for purposes of the Plan).  If a Beneficiary dies after benefits to such
Beneficiary have commenced, but before they have been completed, and, in the
opinion of the Administrator, no person has been designated to receive such
remaining benefits, then such benefits shall be paid to the deceased
Beneficiary’s estate.

 

A distribution to a Beneficiary of a
Specified Employee is not considered to be a payment to a Specified Employee
for purposes of Sections 1.07 and 8.01(e).

 

7.03.  Separation
from Service.

 

(a)   General.  If provided by the Employer in Section 1.08,
and subject to Section 1.08(e)(2), if a Participant has a Separation from
Service, he will be entitled to a benefit equal to (i) the vested
percentage(s) of the value of the Matching and Employer Contributions
credited to his Account, as adjusted for income, expense, gain, or loss, such
percentage(s) determined in accordance with the vesting schedule(s) and
methodology selected by the Employer in Section 1.08, and (ii) the
value of the Deferral Contributions to his Account as adjusted for income,
expense, gain, or loss.  The amount
payable under this Section 7.03 will be distributed in accordance with Article 8.

 

8

 

(b)   Elapsed Time Vesting.   Unless otherwise provided by the Employer in
Section 1.08, vesting shall be determined based on the elapsed time
method.  For purposes of the elapsed time
method, “Years of Service” means, with respect to any Participant or Inactive
Participant, the number of whole years of his periods of service with the
Employer and any Related Employers (as defined in Section 2.01(a)(26)(A)),
subject to any exclusion elected by the Employer in Section 1.08(c).  A Participant or Inactive Participant will
receive credit for the aggregate of all time period(s) commencing with his
Employment Commencement Date and ending on the date a break in service begins,
unless any such years are excluded by Section 1.08(c).  A Participant or Inactive Participant will
also receive credit for any period of severance of less than 12 consecutive
months.  Fractional periods of a year
will be expressed in terms of days.

 

A break in service is a period of severance
of at least 12 consecutive months.  A “period
of severance” is a continuous period of time beginning on the date the
Participant or Inactive Participant incurs a Separation from Service, or if
earlier, the 12-month anniversary of the date on which the Participant or
Inactive Participant was otherwise first absent from service.

 

Notwithstanding the above, the Employer shall
comply with any service crediting rules to the extent required by
applicable law.

 

(c)   Class Year Vesting.  If
provided by the Employer in Section 1.08, a Participant’s or Inactive
Participant’s vested percentage in the Matching Contributions and/or Employer
Contributions portion(s) of his Account shall be determined pursuant to
the class year method.  Pursuant to such
method, amounts attributable to the applicable contribution types are assigned
to “class years” established in the records of the Plan.  Such class years are years (calendar or
non-calendar) to which the contribution is assigned by the Administrator, as
described in the Service Agreement between the Trustee and the Employer.  The Participant’s or Inactive Participant’s
vested percentage in amounts attributable to a particular contribution is
determined from the beginning of the applicable class year to the date the
Participant or Inactive Participant incurs a Separation from Service.  For purposes of the class year method, a
Participant or Inactive Participant is credited with a Year of Service on the
first day of each such class year.

 

7.04.  Vesting
after Partial Distribution.  If a distribution from a Participant’s
Account has been made to him at a time when his Account is less than 100%
vested, the vesting schedule in Section 1.08 will thereafter apply only to
amounts in his Account attributable to Matching Contributions and Employer
Contributions credited after such distribution. 
The balance of his Account attributable to Matching Contributions and
Employer Contributions immediately after such distribution will be subject to
the following for the purpose of determining his interest therein.

 

At any relevant time prior to a forfeiture of any portion thereof under
Section 7.05, a Participant’s nonforfeitable interest in the portion of
his Account described in the sentence immediately above will be equal to P(AB +
(RxD))-(RxD), where P is the nonforfeitable percentage at the relevant time
determined under Section 1.08; AB is the account balance of such portion
at the relevant time; D is the amount of the distribution; and R is the ratio
of the account balance of such portion at the relevant time to the account
balance of such portion after distribution. 
Following a forfeiture of any portion of such portion under Section 7.05
below, any balance with respect to such portion will remain fully vested and
nonforfeitable.

 

7.05.  Forfeitures.  Once payments are to commence to a
Participant or Inactive Participant hereunder, the portion of such Account
subject to the same payment commencement date but not yet vested, if any,
(determined by his vested percentage at such payment commencement date) will be
forfeited by him

 

7.06.  Change
in Control. 
If the Employer has elected to apply Section 1.07(a)(3)(D), then,
upon a Change in Control, notwithstanding any other provision of the Plan to
the contrary, all Participant Accounts shall be 100% vested.

 

9

 

7.07.  Disability.  If the Employer has elected to apply Section 1.08(e)(3),
then, upon the date a Participant incurs a Disability, as defined in Section 1.07(a)(2),
notwithstanding any other provision of the Plan to the contrary, all Accounts
of such Participant shall be 100% vested.

 

7.08.  Directors.  Notwithstanding any other provision of the
Plan to the contrary, all Accounts of a Participant who is a Director shall be
100% vested at all times, including Accounts attributable to the Participant’s
service as an Employee, if any.

 

Article 8.  Distribution of Benefits.

 

8.01  Events Triggering, and Form of, Distributions.

 

(a)          Events triggering the
distribution of benefits and the form of such distributions are described in Section 1.07(a),
pursuant to the Employer’s election and/or the Participant’s election, as
applicable.

 

(1)        With respect to the form
and time of distribution of amounts attributable to a Deferral Contribution, a
Participant election must be made no later than the time by which the
Participant must elect to make a Deferral Contribution, as described in Section 4.01.

 

(2)        With respect to the form
and time of distribution of amounts attributable to Matching or Employer
Contributions, a Participant election must be made no later than the time by
which a Participant would be required to make a Deferral Contribution as
described in Section 4.01 with respect to the calendar year for which the
Matching and/or Employer Contributions are credited.  For purposes of applying Section 4.01(d) “Active
Participant” shall have the meaning assigned in Section 2.01(a)(2)(B).

 

(3)        Notwithstanding anything
herein to the contrary, an election choosing a distribution trigger and payment
method pursuant to Section 1.07(a)(1) will only be effective with
respect to amounts attributable to contributions credited to the Participant’s
Account for the calendar year (or other deferral period described in 4.01(a) or
(b)) to which such election relates. 
Amounts attributable to contributions credited to a Participant’s
account prior to the effective date of any new election will not be affected
and will be paid in accordance with the otherwise applicable election.

 

(b)         If the Employer elects to
permit a distribution election change pursuant to Section 1.07(b), then
any such distribution election change must satisfy (1) through (3) below:

 

(1)         Such election may not take
effect until at least 12 months after the date on which such election is made.

 

(2)         In the case of an election
related to a payment not on account of Disability, death or the occurrence of
an Unforeseeable Emergency, the payment with respect to which such election is
made must be deferred for a period of not less than five years from the date
such payment would otherwise have been paid (or in the case of installment
payments, five years from the date the first amount was scheduled to be paid).

 

10

 

(3)  Any election
related to a payment at a specified time or pursuant to a fixed schedule may
not be made less than 12 months prior to the date the payment is scheduled to
be paid (or in the case of installment payments, 12 months prior to the date
the first amount was scheduled to be paid).

 

With
respect to any initial distribution election, a Participant shall in no event
be permitted to make more than one distribution election change.

 

(c)  A Participant’s
entitlement to installments will not be treated as an entitlement to a series
of separate payments.

 

(d)  If the Plan does not
provide for Plan-level payment triggers pursuant to Section 1.07(a)(3),
and the Participant does not designate in the manner prescribed by the
Administrator the method of distribution, and/or the distribution trigger (if
and as required), such method of distribution shall be a lump sum at Separation
from Service.

 

(e)  Notwithstanding
anything herein to the contrary, with respect to any Specified Employee, if the
applicable payment trigger is Separation from Service, then payment shall not
commence before the date that is six months after the date of Separation from
Service (or, if earlier, the date of death of the Specified Employee, pursuant
to Section 7.02).  Payments to which
a Specified Employee would otherwise be entitled during the first six months
following the date of Separation from Service are delayed by six months.

 

(f)  Notwithstanding
anything herein to the contrary, the Administrator may, in its discretion,
automatically pay out a Participant’s vested Account in a lump sum, provided
that such payment satisfies the requirements in (1) through (3) below:

 

(1)   Such
payment results in the termination and liquidation of the entirety of the
Participant’s interest under the plan (as defined in 26 CFR section
1.409A-1(c)(2)), including all agreements, methods, programs, or other
arrangements with respect to which deferrals of compensation are treated as
having been deferred under a single nonqualified deferred compensation plan
under 26 CFR section 1.409A-1(c)(2);

 

(2)   Such payment is not greater
than the applicable dollar amount under Code section 402(g)(1)(B); and

 

(3)   Such exercise of Administrator
discretion is evidenced in writing no later than the date of such payment.

 

(g)  Notwithstanding
anything herein to the contrary, the Administrator may, in its discretion,
delay a payment otherwise required hereunder to a date after the designated
payment date due to any of the circumstances described in (1) through (4) below,
provided that the Administrator treats all payments to similarly situated
Participants on a reasonably consistent basis.

 

(1)   In
the event the Administrator reasonably anticipates that, if the payment were
made as scheduled, the Employer’s deduction with respect to such payment would
not be permitted due to the application of Code section 162(m), provided the
delay complies with the conditions in 26 CFR section 1.409A-2(b)(7)(i).

 

(2)   In
the event the Administrator reasonably anticipates that the making of such
payment will violate Federal securities laws or other applicable law, provided
the delay complies with the conditions in 26 CFR section 1.409A-2(b)(7)(ii).

 

(3)   Upon such other events and
conditions as the Commissioner of the Internal Revenue Service may prescribe in
generally applicable guidance published in the Internal Revenue Bulletin.

 

11

 

(4)   Upon a change in control event,
provided the delay complies with conditions in 26 CFR section
1.409A-3(i)(5)(iv).

 

(h)  Notwithstanding
anything herein to the contrary, the Administrator may provide an election to
change the time or form of a payment hereunder to satisfy the requirements of
the Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended, 38 USC sections 4301 through 4344.

 

8.02.  Notice
to Trustee. 
The Administrator will provide direction to the Trustee, as provided in
the Trust agreement, whenever any Participant or Beneficiary is entitled to
receive benefits under the Plan.  The
Administrator’s notice shall indicate the form, amount and frequency of
benefits that such Participant or Beneficiary shall receive.

 

8.03.  Unforeseeable
Emergency Withdrawals.  Notwithstanding anything herein to the
contrary, a Participant may apply to the Administrator to withdraw some or all
of his Account if such withdrawal is made on account of an Unforeseeable
Emergency as determined by the Administrator in accordance with the
requirements of and subject to the limitations provided in 26 CFR section
1.409A-3(i)(3).

 

Article 9.  Amendment and Termination.

 

9.01  Amendment
by Employer. 
The Employer reserves the authority to amend the Plan in its
discretion.  Any such amendment
notwithstanding, no Participant’s Account shall be reduced by such amendment
below the amount to which the Participant would have been entitled if he had
voluntarily left the employ of the Employer immediately prior to the date of
the change.

 

9.02.  Termination.  The Employer has no obligation or liability
whatsoever to maintain the Plan for any length of time and may terminate the
Plan at any time by written notice delivered to the Trustee without any
liability hereunder for any such discontinuance or termination.  Such termination shall comply with 26 CFR
section 1.409A-3(j)(4)(ix) and other applicable guidance.

 

Article 10.  Miscellaneous.

 

10.01. 
Communication to Participants.  The Plan will be communicated to all
Participants by the Employer promptly after the Plan is adopted.

 

10.02. 
Limitation of Rights.  Neither the establishment of the Plan and the
Trust, nor any amendment thereof, nor the creation of any fund or account, nor
the payment of any benefits, will be construed as giving to any Participant or
other person any legal or equitable right against the Employer, Administrator
or Trustee, except as provided herein; in no event will the terms of employment
or service of any individual be modified or in any way affected hereby.

 

10.03. 
Nonalienability of Benefits.  The benefits provided hereunder will not be
subject to alienation, assignment, garnishment, attachment, execution or levy
of any kind, either voluntarily or involuntarily, and any attempt to cause such
benefits to be so subjected will not be recognized, except to such extent as
may be required by law and as provided pursuant to a domestic relations order
(defined in Code section 414(p)(1)(B)), as determined by the Administrator.  Pursuant to a domestic relations order,
payments may be accelerated to a time sooner, and pursuant to a schedule more
rapid, than the time and schedule applicable in the absence of the domestic
relations order, provided that such payment pursuant to such order is not made to
the Participant and provided further that this provision shall not be construed
to provide the Participant discretion regarding whether such payment time or
schedule will be accelerated.

 

12

 

10.04. 
Facility of Payment.  In the event the Administrator determines, on
the basis of medical reports or other evidence satisfactory to the
Administrator, that the recipient of any benefit payments under the Plan is
incapable of handling his affairs by reason of minority, illness, infirmity or
other incapacity, the Administrator may disburse such payments, or direct the
Trustee to disburse such payments, as applicable, to a person or institution
designated by a court which has jurisdiction over such recipient or a person or
institution otherwise having the legal authority under State law for the care
and control of such recipient.  The
receipt by such person or institution of any such payments shall be complete
acquittance therefore, and any such payment to the extent thereof, shall
discharge the liability of the Trust for the payment of benefits hereunder to
such recipient.

 

10.05.      Plan
Records.  The Administrator shall maintain the records
of the Plan on a calendar-year basis.

 

10.06.              USERRA.  Notwithstanding
anything herein to the contrary, the Administrator shall permit any Participant
election and make any payments hereunder required by the Uniformed
Services Employment and Reemployment Rights Act of 1994, as amended, 38 USC
4301-4334.

 

10.07.              Governing Law.  The Plan and the accompanying Adoption
Agreement will be construed, administered and enforced according to ERISA, and
to the extent not preempted thereby, the laws of the State in which the
Employer has its principal place of business, without regard to the conflict of
laws principles of such State.

 

Article 11.  Plan Administration.

 

11.01. 
Powers and Responsibilities of the Administrator.  The Administrator has the full power and the
full responsibility to administer the Plan in all of its details, subject, however,
to the applicable requirements of ERISA. 
The Administrator’s powers and responsibilities include, but are not
limited to, the following:

 

(a)          To make and enforce such rules and
regulations as it deems necessary or proper for the efficient administration of
the Plan;

 

(b)         To interpret the Plan, its interpretation
thereof in good faith to be final and conclusive on all persons claiming
benefits under the Plan;

 

(c)          To decide all questions concerning the Plan
and the eligibility of any person to participate in the Plan;

 

(d)         To administer the claims and review procedures
specified in Section 11.02;

 

(e)          To compute the amount of benefits which will
be payable to any Participant, former Participant or Beneficiary in accordance
with the provisions of the Plan;

 

(f)            To determine the person or persons to whom
such benefits will be paid;

 

(g)         To authorize the payment of benefits;

 

(h)         To appoint such agents, counsel, accountants,
and consultants as may be required to assist in administering the Plan; and

 

(i)             By written instrument, to allocate and
delegate its responsibilities, including the formation of an administrative
committee to administer the Plan.

 

13

 

11.02. 
Claims and Review Procedures.

 

(a)          Claims Procedure.  If any person believes he is being denied any
rights or benefits under the Plan, such person may file a claim in writing with
the Administrator.  If any such claim is
wholly or partially denied, the Administrator will notify such person of its
decision in writing.  Such notification
will contain (i) specific reasons for the denial, (ii) specific
reference to pertinent Plan provisions, (iii) a description of any
additional material or information necessary for such person to perfect such
claim and an explanation of why such material or information is necessary, and (iv) information
as to the steps to be taken if the person wishes to submit a request for
review, including a statement of the such person’s right to bring a civil
action under ERISA section 502(a) following as adverse determination upon
review.  Such notification will be given
within 90 days after the claim is received by the Administrator (or within 180
days, if special circumstances require an extension of time for processing the
claim, and if written notice of such extension and circumstances is given to
such person within the initial 90-day period).

 

If the claim concerns disability benefits
under the Plan, the Plan Administrator must notify the claimant in writing
within 45 days after the claim has been filed in order to deny it.  If special circumstances require an extension
of time to process the claim, the Plan Administrator must notify the claimant
before the end of the 45-day period that the claim may take up to 30 days
longer to process.  If special
circumstances still prevent the resolution of the claim, the Plan Administrator
may then only take up to another 30 days after giving the claimant notice
before the end of the original 30-day extension.  If the Plan Administrator gives the claimant
notice that the claimant needs to provide additional information regarding the
claim, the claimant must do so within 45 days of that notice.

 

(b)         Review Procedure.  Within 60 days after the date on which a
person receives a written notice of a denied claim (or, if applicable, within
60 days after the date on which such denial is considered to have occurred),
such person (or his duly authorized representative) may (i) file a written
request with the Administrator for a review of his denied claim and of
pertinent documents and (ii) submit written issues and comments to the
Administrator.  This written request may
include comments, documents, records, and other information relating to the
claim for benefits.  The claimant shall
be provided, upon the claimant’s request and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant to
the claim for benefits.  The review will
take into account all comments, documents, records, and other information submitted
by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.  The Administrator will
notify such person of its decision in writing. 
Such notification will be written in a manner calculated to be
understood by such person and will contain specific reasons for the decision as
well as specific references to pertinent Plan provisions.  The decision on review will be made within 60
days after the request for review is received by the Administrator (or within
120 days, if special circumstances require an extension of time for processing
the request, such as an election by the Administrator to hold a hearing, and if
written notice of such extension and circumstances is given to such person
within the initial 60-day period). The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Plan expects to render the determination on review.

 

If the initial claim was for disability
benefits under the Plan and has been denied by the Plan Administrator, the
claimant will have 180 days from the date the claimant received notice of the
claim’s denial in which to appeal that decision.  The review will be handled completely independently
of the findings and decision made regarding the initial claim and will be
processed by an individual who is not a subordinate of the individual who
denied the initial claim.  If the claim
requires medical judgment, the individual handling the appeal will consult with
a medical professional whom was not consulted regarding the initial claim and
who is not a subordinate of anyone consulted regarding the initial claim and
identify that medical professional to the claimant.

 

14

 

The Plan Administrator shall provide the
claimant with written notification of a plan’s benefit determination on
review.  In the case of an adverse
benefit determination, the notification shall set forth, in a manner calculated
to be understood by the claimant — the specific reason or reasons for the
adverse determinations, reference to the specific plan provisions on which the
benefit determination is based, a statement that the claimant is entitled to
receive, upon the claimant’s request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to the
claim for benefits.

 

15

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