ARCH CAPITAL GROUP LTD.
20 Horseneck Lane
Greenwich, Connecticut 06830
June 9, 2000
Ms. Debra M. O'Connor
Debra O'Connor
14 Revere Road
Riverside, CT 06880
Dear Debra:
This letter confirms your and our agreement on the following terms:
1. Position & Responsibilities: Arch Capital Group Ltd. ("ACGL") shall
employ you to serve as a Senior Vice President, Controller and Treasurer, and
that in such capacity you shall report to the President and Chief Executive
Officer of ACGL. The term of your employment shall terminate upon notice by
either ACGL to you or by you to ACGL.
2. Compensation: Compensation for your services shall be at an annual base
salary rate of $169,800 (subject to upward adjustments by the Board of Directors
(the "Board") of ACGL), and an annual performance bonus opportunity to be
determined by the Board. The target rate for the annual bonus for 2000 and
thereafter shall be 40% of the base salary rate.
3. Additional Terms: You will be eligible to participate in employee
benefit programs of ACGL as are in effect from time to time, including medical,
dental, life insurance, short and long-term disability, 401(k), defined
contribution retirement, stock incentive plans and stock purchase plans, subject
to the respective terms and conditions of such plans.
You also will be entitled to certain vacation pay and paid holidays, as
outlined in and subject to ACGL's Employee Handbook.
Notwithstanding anything to the contrary in paragraph 2 above, if your
employment continues to (or ACGL terminates your employment other than for cause
before) the later of (1) March 1, 2001 or (2) the filing of ACGL's Annual Report
on Form 10-K for 2000, you shall receive your target annual bonus for 2000 and,
if applicable, 2001 (in each case, pro
-2-
rated based on the number of days you are employed during the year) plus
$50,000. Any amount payable under this paragraph shall be made within 10
business days after the determination thereof. "Cause" shall have the meaning
set forth in Section 3(ii) of the Change in Control Agreement referred to in the
next paragraph.
Following the sale of ACGL's reinsurance operations to Folksamerica
Reinsurance Company, you acknowledge receipt from ACGL of $505,897.30 under the
Change in Control Agreement, dated as of February 25, 1999 (the "Change in
Control Agreement"), between you and ACGL. Upon the execution of this letter,
and in consideration of such payment and the above, you acknowledge and agree
that all of ACGL's obligations under the Change in Control Agreement are
terminated in their entirety, and hereby release ACGL from such obligations,
except for those specified in Section 4(iv) and, solely in respect of such
Section 4(iv), Section 6 of the Change in Control Agreement. It is understood
that your obligations under Section 8 of the Change in Control Agreement shall
remain in full force and effect.
4. This letter supersedes all prior discussions and agreements between ACGL
and you with respect to the subject matter hereof and constitutes the entire
agreement among the parties relating thereto, shall be governed by the laws of
the State of Connecticut without regard to choice of law rules, and may be
executed in one or more counterparts.
Please confirm your agreement to the above by signing and returning the
enclosed duplicate of this letter.
Sincerely,
ARCH CAPITAL GROUP LTD.
By: /s/ Peter A. Appel
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Peter A. Appel
President and Chief Executive Officer
AGREED AND ACCEPTED
as of the date hereof:
/s/ Debra O'Connor
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Debra O'Connor