Exhibit 10
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT ("AGREEMENT"), effective as of
November 8, 2000 by and between ARCH CAPITAL GROUP LTD., a Bermuda company
("ARCH BERMUDA"), and ARCH CAPITAL GROUP (U.S.) INC., a Delaware corporation and
an indirectly wholly owned subsidiary of Arch Bermuda ("ARCH DELAWARE").
WHEREAS, Arch Bermuda desires to receive administrative services from
Arch Delaware and Arch Delaware desires to provide administrative services on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, Arch Bermuda and Arch Delaware agree as follows:
SECTION 1. ENGAGEMENT
Arch Bermuda hereby engages Arch Delaware to provide administrative and
clerical support services, and Arch Delaware agrees to provide administrative
and clerical support services to Arch Bermuda on the terms and conditions set
forth herein.
SECTION 2. SERVICES OF ARCH DELAWARE
Arch Delaware agrees during the term of this Agreement to provide
various administrative and clerical support services, including but not limited
to:
(a) bookkeeping and accounting services;
(b) financial reporting;
(c) federal, state and local tax returns;
(d) audit management;
(e) payroll and medical benefit administration;
(f) bill processing;
(g) print shop and copying services;
(h) office maintenance services;
(i) purchasing services for office equipment and supplies;
(j) arranging of separate insurance coverage (property and liability);
(k) cash management (management fees receipts, funds, wiring, etc.);
(l) administrative staff hiring services;
(m) accounts payable/employee reimbursement;
(n) computer software/hardware support and maintenance;
(o) telephone/voice mail/information systems;
(p) legal/compliance; and
(q) LAN services.
SECTION 3. COMPENSATION
Arch Bermuda agrees to pay to Arch Delaware as compensation for its
services under this Agreement a fee equal to its actual costs, including charges
of third parties, incurred in providing the services hereunder payable quarterly
in arrears. The parties agree that the amount of compensation may be adjusted as
necessary to comply with the arm's length standard as required under U.S.
transfer pricing provisions, i.e., Internal Revenue Code Section 482.
SECTION 4. PAYROLL
Any person employed by Arch Bermuda shall be maintained on the payroll
of Arch Delaware. Arch Bermuda agrees to reimburse Arch Delaware for salary or
wages (including, but not limited to, vacation pay, payments received during a
paid leave of absence, and retention incentives) and employee benefits paid or
payable by Arch Delaware to each such person to the extent such salary, wages or
employee benefits are attributable to services performed by each such person for
or on behalf of Arch Bermuda. The allocation of such costs between Arch Delaware
and Arch Bermuda shall be made on a basis mutually acceptable to Arch Delaware
and Arch Bermuda as may be agreed to from time to time. The foregoing
allocations shall be reflected on Arch Delaware's books for each payroll cycle.
Arch Delaware shall be responsible for satisfying all employment-related
obligations in respect of persons employed by Arch Delaware, including without
limitation any employment taxes imposed on the employer, and shall be
compensated for its actual costs in satisfying such obligations to the extent
such costs are attributable to services by such persons for or on behalf of Arch
Bermuda.
SECTION 5. TERM
This Agreement shall be in effect for a period of one year from the
date hereof, provided that this Agreement shall automatically be extended for
consecutive one-year periods until such time as one party provides the other
party with thirty days' written notice of its intention to terminate this
Agreement.
SECTION 6. INDEMNIFICATION
Arch Bermuda agrees to indemnify and hold harmless Arch Delaware, its
directors, officers, employees, shareholders, agents and majority owned
subsidiaries from and against any and all loss, liability, claims, causes of
action costs, damages, and expenses (including attorneys' fees) arising from the
performance of this Agreement (collectively, "LOSSES"), except Losses arising as
a result of gross negligence or intentional wrongdoing.
SECTION 7. INDEPENDENT CONTRACTOR STATUS
The parties agree that Arch Delaware shall perform services hereunder
as an independent contractor, retaining control over the responsibility for its
own operations and personnel. Neither Arch Delaware nor its officers or
employees shall be considered employees or agents of Arch Bermuda as a result of
this Agreement, nor shall any such person (a) represent himself, herself or
itself as an agent or representative of Arch Bermuda having any power or
authority to incur any obligation of any nature, express or implied, on behalf
of Arch Bermuda or (b) have the authority to contract in the name of or bind
Arch Bermuda, except as expressly agreed to in writing by Arch Bermuda;
provided, however, that if any such person is serving as an officer or
authorized agent of Arch Bermuda, such person shall have all authority as an
officer or authorized agent of Arch Bermuda to contract in the name of or bind
Arch Bermuda notwithstanding any other provision of this Agreement.
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SECTION 8. ENTIRE AGREEMENT; MODIFICATION
This Agreement (i) contains the complete and entire understanding and
agreement of the parties with respect to the subject matter hereof, (ii)
supersedes all prior and contemporaneous understandings, conditions and
agreements, oral or written, express or implied, with respect to the engagement
of Arch Delaware for management services, and (iii) may not be modified except
by an instrument in writing executed by Arch Delaware and Arch Bermuda.
SECTION 9. WAIVER OF BREACH
The waiver by any party of a breach of any provision of this Agreement
by any other party shall not operate or be construed as a waiver of any
subsequent breach of that provision or any other provision hereby.
SECTION 10. ASSIGNMENT
Neither Arch Delaware nor Arch Bermuda may assign its respective rights
or obligations under this Agreement without the express written consent of the
other party.
SECTION 11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Bermuda, without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date written above.
ARCH CAPITAL GROUP LTD.
By: /s/ LOUIS T. PETRILLO
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Name: Louis T. Petrillo
Title: Senior Vice President, General
Counsel & Secretary
ARCH CAPITAL GROUP (U.S.) INC.
By: /s/ DEBRA M. O'CONNOR
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Name: Debra M. O'Connor
Title: Senior Vice President, Controller
& Treasurer
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