-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QtPms4QL/he2PjitNNLPWXZSB1nkzL1UIyQrLlfkNXa5sgd281YdfdO7YeDvgex+ AYA9pvDmkibUH0ogrG03gg== 0000950130-01-505780.txt : 20020412 0000950130-01-505780.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950130-01-505780 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20011130 GROUP MEMBERS: GE ASSET MANAGEMENT INCORPORATED GROUP MEMBERS: GE CAPITAL EQUITY INVESTMENTS LTD GROUP MEMBERS: GENERAL ELECTRIC CAPITAL CORPORATION GROUP MEMBERS: GENERAL ELECTRIC CAPITAL SERVICES INC GROUP MEMBERS: GENERAL ELECTRIC COMPANY GROUP MEMBERS: GENERAL ELECTRIC PENSION TRUST GROUP MEMBERS: INSURANCE PRIVATE EQUITY INVESTORS LLC GROUP MEMBERS: ORBITAL HOLDINGS LTD FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRUSTEES OF GENERAL ELECTRIC PENSION TRUST CENTRAL INDEX KEY: 0000902967 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 3003 SUMMER STREET STREET 2: P O BOX 7900 CITY: STAMFORD STATE: CT ZIP: 06904-7900 BUSINESS PHONE: 2033262300 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARCH CAPITAL GROUP LTD CENTRAL INDEX KEY: 0000947484 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 061424716 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-45257 FILM NUMBER: 1804451 BUSINESS ADDRESS: STREET 1: 20 HORSENECK LANE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038624300 MAIL ADDRESS: STREET 1: 20 HORSENECK LANE CITY: GREENWICH STATE: CT ZIP: 06830 FORMER COMPANY: FORMER CONFORMED NAME: RISK CAPITAL HOLDINGS INC DATE OF NAME CHANGE: 19950816 FORMER COMPANY: FORMER CONFORMED NAME: RISK CAPITAL RE INC DATE OF NAME CHANGE: 19950703 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ___)* Arch Capital Group Ltd. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) G0450A105 - -------------------------------------------------------------------------------- (CUSIP Number) Nancy E. Barton, Esq., General Electric Capital Corporation, 260 Long Ridge Road, Stamford, Connecticut 06927 Michael M. Pastore, GE Asset Management Incorporated, 3003 Summer Street, Stamford, Connecticut 06904 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 20, 2001 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. The information required on this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 2 of 174 Pages - ----------------------- ------------------- - -------- ------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Insurance Private Equity Investors, L.L.C. I.R.S. # - -------- ------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- ------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- ------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- ------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- ------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------- --------- --------------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- --------------------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 2,585,583 OWNED BY EACH --------- --------------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- --------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,585,583 - -------------------------- ------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,585,583 - -------------------------- ------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- ------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.73% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in Item 2)) - -------------------------- ------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------- -------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 3 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON General Electric Pension Trust I.R.S. #14-6015763 - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of New York - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES --------- ----------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,585,583 EACH REPORTING --------- ----------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,585,583 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,585,583 - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.73% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in Item 2)) - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* EP - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 4 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GE Asset Management Incorporated as Manager of Insurance Private Equity Investors, L.L.C. and as Investment Manager of GEPT (as defined below) I.R.S. #06-1238874 - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- ----------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 2,585,583 OWNED BY EACH --------- ----------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,585,583 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,585,583 - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.73% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in Item 2)). - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA, CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 5 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON General Electric Company I.R.S. #14-0689340 - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of New York - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- ----------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY Disclaimed (see 11 below) OWNED BY EACH --------- ----------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Disclaimed (see 11 below) --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficial ownership of all shares disclaimed by General Electric Company. - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X|Disclaimed (see 11 above) - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Not applicable (see 11 above). - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 6 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Orbital Holdings, Ltd. I.R.S. # - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- ----------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 517,116 OWNED BY EACH --------- ----------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 517,116 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 517,116 - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.86% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in Item 2)). - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 7 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GE Capital Equity Investments, Ltd. I.R.S. # - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- ----------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 517,116 OWNED BY EACH --------- ----------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 517,116 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 517,116 - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.86% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in Item 2)). - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 8 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON General Electric Capital Corporation I.R.S. #13-1500700 - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF --------- ----------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 517,116 OWNED BY EACH --------- ----------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 517,116 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 517,116 - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.86% (19.43% if aggregated with the shares beneficially owned by the other Reporting Persons (as defined in the Item 2)). - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------- ------------------- CUSIP No. G0450A105 Page 9 of 174 Pages - ----------------------- ------------------- - -------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON General Electric Capital Services, Inc. I.R.S. #06-1109503 - -------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX OF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - -------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - -------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------- --------- ----------------------------------------------------------------------------- 7 SOLE VOTING POWER Disclaimed (see 11 below) NUMBER OF SHARES --------- ----------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING --------- ----------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH Disclaimed (see 11 below) --------- ----------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------- --------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficial ownership of all shares disclaimed by General Electric Capital Services, Inc. - -------------------------- --------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X|Disclaimed (see 11 above) - -------------------------- --------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Not applicable (see 11 above) - -------------------------- --------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------- ---------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Item 1. Security and Issuer - ------- ------------------- This statement relates to the common shares, par value $.01 per share ("Common Shares") of Arch Capital Group Ltd., a Bermuda corporation (the "Issuer"), having its principal executive offices at 20 Horseneck Lane, Greenwich, CT 06830. Although no person identified in Item 2 has acquired any Common Shares, each of the persons filing this statement is deemed to be the beneficial owner of the Common Shares reported with respect to such person in Item 5 by virtue of its acquisition of beneficial ownership of the Issuer's Series A Convertible Preference Shares, par value $.01 per shares (the "Preference Shares") and the Issuer's Class A Warrants (the "Warrants"), convertible in or exercisable for Common Shares, as described herein. Item 2. Identity and Background - ------- ----------------------- This statement is filed on behalf of General Electric Company, a New York corporation ("GE"), GE Asset Management Incorporated, a Delaware corporation and a wholly owned subsidiary of GE ("GEAM"), General Electric Pension Trust, a New York common law trust ("GEPT"), Insurance Private Equity Investors, L.L.C., a Delaware limited liability company and a wholly owned subsidiary of GEPT ("Insurance"), General Electric Capital Services, Inc., a Delaware corporation and directly or indirectly 100% owned by GE ("GECS"), General Electric Capital Corporation, a Delaware corporation and a wholly owned subsidiary of GECS ("GECC"), GE Capital Equity Investments, Ltd., a Cayman Islands corporation and a wholly owned subsidiary of GECC ("GECEI") and Orbital Holdings, Ltd. a Cayman Islands corporation and a wholly owned subsidiary of GECEI ("Orbital"). GE, GEAM, GEPT, Insurance, GECS, GECC, GECEI and Orbital are sometimes referred to herein individually as a "Reporting Person" and collectively as the "Reporting Persons". Insurance, GEPT, GEAM, Orbital, GECEI, GECC and GECS each expressly disclaim that they are members of a "group". GECS disclaims beneficial ownership of all shares held by GECC and its subsidiaries. GE disclaims beneficial ownership of all shares and expressly disclaims that it is a member of a "group". The Reporting Persons have entered into a Joint Filing Agreement, dated November 30, 2001, attached hereto as Schedule I. Item 2(a), (b), (c) - ------------------- Insurance is a Delaware limited liability company and a wholly owned subsidiary of GEPT. GEPT is an employee benefit plan for the benefit of employees of GE. GEAM, a wholly owned subsidiary of GE, is a registered investment adviser and acts as Manager of Insurance and as Investment Manager of GEPT and may be deemed to be the beneficial owner of 2,585,583 Common Shares of the Issuer, beneficially owned by GEPT through its subsidiary Insurance. The address of the principal offices of GEPT, GEAM and Insurance is 3003 Summer Street, Stamford, Connecticut 06904. Orbital is a wholly owned subsidiary of GECEI, which in turn is a wholly owned subsidiary of GECC. GECC is a wholly owned subsidiary of GECS, which is directly or indirectly 100% owned by GE. GECC operates primarily in the financing industry and, to a lesser degree, in the life insurance and property/casualty insurance industries and maintains its principal executive offices at 260 Long Ridge Road, Stamford, Connecticut 06927. Orbital and GECEI maintain their respective principal executive offices at the same address. 10 GECS has its principal executive offices at 260 Long Ridge Road, Stamford, Connecticut 06927. GE has its principal executive offices at is 3135 Easton Turnpike, Fairfield CT 06431. GE engages in providing a wide variety of industrial, commercial and consumer products and services. For information with respect to the identity and background of each (i) trustee of GEPT see Schedule II attached hereto; (ii) executive officer and director of GEAM see Schedule III attached hereto; (iii) executive officer and director of GE see Schedule IV attached hereto; (iv) director of Orbital see Schedule V attached hereto; (v) director of GECEI see Schedule VI attached hereto; (vi) executive officer and director of GECC see Schedule VII attached hereto; and (vii) executive officer and director of GECS see Schedule VIII attached hereto. Item 2 (d), (e) - --------------- During the last five years, neither any Reporting Person nor, to the best knowledge of each Reporting Person, any person identified in Schedules II through VIII has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such a proceeding was or is subject to a judgement, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 2(f) - --------- All Reporting Persons and, to the best knowledge of each Reporting Person, all persons identified in Schedule II through VIII are United States citizens, except that Paolo Fresco, a director of GE, is a citizen of Italy, Claudio X. Gonzalez, a director of GE, is a citizen of Mexico, Andrea Jung, a director of GE, is a citizen of Canada, Yoshiaki Fujimori, an executive officer of GE, is a citizen of Japan and Ferdinando Beccalli, a director of GECC and GECS, is a citizen of Italy. Item 3. Source and Amount of Funds and Other Consideration - ------- -------------------------------------------------- On November 20, 2001, Insurance and Orbital together with certain other investors signatories thereto, entered into Amendment No. 1 (the "Amendment") to a Subscription Agreement for Preference Shares and Warrants of the Issuer, entered into on October 24, 2001, among affiliates of Warburg Pincus ("Warburg") and affiliates of Hellman & Friedman ("H&F"), attached as exhibit 10.1.1 to Form 10-Q filed by the Issuer with the Securities and Exchange Commission on November 14, 2001 (the "Subscription Agreement"). Each of Insurance and Orbital entered into a letter agreement with Warburg, H&F and the Issuer on November 20, 2001 assigning to them Warburg's right to subscribe for Preference Shares and Warrants of the Issuer (the "Insurance Agreement" and the "Orbital Agreement" respectively, and together, the "Agreements"). Pursuant to the Amendment and the Agreements, (i) Insurance has acquired 2,338,186 Preference Shares and 247,397 Warrants for an aggregate purchase price of $50,000,000.00; and (ii) Orbital has acquired 467,637 Preference Shares and 49,479 Warrants for an aggregate purchase price of $10,000,000.00. A copy of each of the Amendment, the Insurance Agreement and the Orbital Agreement is attached hereto as Exhibit I, Exhibit II and Exhibit III, respectively. The funds used to pay for the Preference Shares and Warrants were obtained by (i) Insurance from capital contributions made by 11 GEPT from its cash on hand; and (ii) Orbital from capital contributions made by GECC and GECEI from their working capital. Item 4. Purpose of Transaction - ------- ---------------------- The Reporting Persons have acquired their Preference Shares and Warrants as an investment, in the regular course of business. The Reporting Persons intend to reexamine their investment in the Issuer from time to time and, depending on market considerations and other factors, may convert the Preference Shares or the Warrants or purchase or sell Common Shares, if appropriate opportunities to do so are available, on such terms and at such time as they consider advisable. The powers, rights and privileges of the holders of the Preference Shares are described in the Issuer's Certificate of Designations of Series A Convertible Preference Shares (the "Certificate") attached as Exhibit IV hereto. Each Preference Share is convertible at the option of the holder into Common Shares, subject to restrictions described below, at a one-to-one rate, with certain anti-dilution protections as more fully described in the Certificate. The Preference Shares are subject to mandatory conversion into Common Shares on the occurrence of the later of (a) (1) the approval by the holders of Common Shares and Preference Shares of (i) an amendment to bye-laws of the Issuer as provided in the Subscription Agreement, and (ii) the issuance of Common Shares upon conversion of the Preference Shares and the exercise of the Warrants issued in connection with the transaction described herein, in excess of 19.9% of the total number of Common Shares issued and outstanding on November 19, 2001 ("Requisite Shareholder Approval"); and (2) the approval by certain state regulatory authorities of the acquisition by the persons who are original signatories to the Subscription Agreement as "Purchaser" of greater than 9.9% of the total voting power of all shares of the Issuer entitled to vote generally in the election of directors ("Requisite Regulatory Approval"), and (b) 90 days following the consummation of the Final Adjustment (as defined in the Subscription Agreement) of the securities issued in this transaction as contemplated by the Subscription Agreement. The powers, rights and privileges of the holders of the Warrants are described in the Form of Warrant attached as Exhibit V hereto. The Warrants are exercisable at any time for a purchase price of $20 per Common Share and expire on September 19, 2002, subject to certain restrictions on exercise described below. Pursuant to a certain shareholders agreement, dated as of November 20, 2001, among the Issuer, Warburg, H&F, Insurance, Orbital and certain other investors (the "Shareholders Agreement"), attached as Exhibit VI hereto, the number of shares into which the Preference Shares and Warrants can be converted is restricted in order to keep the restrictions on voting described below in Item 6 effective. Pursuant to the Shareholders Agreement, Warburg and H&F will be entitled to have their representatives nominated to the board of directors of the Issuer. Immediately following the closing of the transaction, the size of the board of directors was decreased to nine directors, with one director designated by Warburg and one director designated by H&F. Effective as of 12:00 a.m. on the date immediately following the later of the dates on which the Requisite Shareholder Approval and the Requisite Regulatory Approval occur, the size of the board will be increased such that the board shall then and thereafter consist of 15 directors (such number not to be increased without the consent of 12 Warburg and H&F) and (i) four additional representatives designated by Warburg (five together with the initial director), and (ii) two additional representatives designated by H&F (three together with the initial director) will be appointed by the board to fill the vacancies on the board of directors. Neither Insurance nor Orbital has the right to appoint any director. The Reporting Persons expressly disclaim that they are members of a "group" with Warburg and H&F. Pursuant to the Subscription Agreement and the Amendment, changes were proposed to the bye-laws of the Issuer, subject to approval by the shareholders of the Issuer, to protect the Issuer from adverse tax consequences as a result of U.S. Persons investing in the Issuer. Subject to the foregoing, none of the following events has happened or is contemplated by the Reporting Persons: a). The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; b). An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; c). A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; d). Any other material change in the Issuer's business or corporate structure; e). Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; f). Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; g). A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or h). Any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer - ------- ------------------------------------ (a) Each of Insurance, GEPT and GEAM beneficially owns 2,585,583 Common Shares, representing 16.73%/1/ of the Common Shares. Each of Orbital, GECEI and GECC beneficially owns - ------------------------- /1/ This percentage is based on 15,453,741 Common Shares outstanding, calculated by combining the 12,868,158 outstanding Common Shares as of November 14, 2001, as reported in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 (the "Recent 10-Q"), with 2,585,583 Common Shares that Insurance will receive on conversion of the Preference Shares and Warrants. 13 517,116 Common Shares representing 3.86%/2/ of the Common Shares. Insurance, GEPT, GEAM, Orbital, GECEI, GECC and GECS each expressly disclaim that they are members of a "group" as such term is used in Section 13(d)(3) of the Exchange Act. If all of the Reporting Persons' Common Shares were aggregated, the Reporting Persons would beneficially own 3,102,699 Common Shares representing 19.43%/3/ of the Common Shares. (b) Insurance, GEAM and GEPT share the power to vote or direct the vote and power to dispose or direct the disposition of, 2,585,583 Common Shares, subject to the restrictions on voting described in Item 6 below. Orbital, GECEI and GECC share the power to vote or direct the vote and power to dispose or direct the disposition of, 517,116 Common Shares, subject to the restrictions on voting described in Item 6 below. Both GE and GECS disclaim any voting or dispositive power over the shares beneficially owned by GEPT, GEAM, Insurance, Orbital, GECC or GECEI. To the best knowledge of the Reporting Persons, no person other than the Reporting Persons has the power to vote or to direct the vote or to dispose or direct the disposition of any of the securities which they may be deemed to beneficially own. (c) No Reporting Person nor to the best knowledge of each Reporting Person, any person identified in Schedules II through VIII, beneficially owns any shares of Common Stock or has effected any transaction in shares of Common Stock during the preceding 60 days. (d) No other person except for the Reporting Persons are known to have the rights to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock beneficially owned by the Reporting Persons and covered by this Statement. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relations with Respect to - ------- -------------------------------------------------------------------- Securities of the Issuer ------------------------ Pursuant to the Certificate and the Shareholders Agreement, the voting rights of Reporting Persons will be restricted as follows: (a) until such time as any waiting period with respect to the acquisition of Preference Shares by Orbital and Insurance has been terminated or expired under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, including any extensions thereof, the Preference Shares held by such person shall not have any votes with respect to the election of directors; (b) prior to receipt of the Requisite Shareholder Approval, if the votes conferred by the shares acquired by any person as a result of the transaction described herein would otherwise represent more than 9.9% of the voting power of all shares entitled to vote, the vote of each Preference Share held by such person shall be reduced by whatever amount is necessary so that after any such reduction, the votes - --------------------- /2/ This percentage is based on 13,385,274 Common Shares outstanding, calculated by combining the 12,868,158 outstanding Common Shares in the Recent 10-Q, with 517,116 Common Shares that Orbital will receive on conversion of the Preference Shares and Warrants. /3/ This percentage is based on 15,970,857 Common Shares outstanding, calculated by combining the 12,868,158 outstanding Common Shares in the Recent 10-Q, with 3,102,699 Common Shares that the Reporting Persons will receive on conversion of the Preference Shares and Warrants. 14 conferred by the shares of such person, shall constitute 9.9% of the total voting power of all shares of the Issuer entitled to vote; (c) prior to the receipt of the Requisite Shareholder Approval, if the aggregate votes conferred by the Preference Shares then outstanding, together with any Common Shares issued upon conversion of any Preference Shares or upon exercise of any Warrants issued under the Subscription Agreement or the subscription agreement with the Issuer's management (including by operation of the anti-dilution adjustments in the Warrants), or issued in cancellation of the Warrants of the Issuer in connection with the transactions under the Subscription Agreement (together, the "Aggregate Potential Votes") would exceed 19.9% of the total votes entitled to be cast by the Common Shares issued and outstanding on November 19, 2001 (the "Total Base Votes"), then the vote of each Preference Share shall be reduced proportionately (in relation to the total number of Preference Shares then outstanding) so that, after giving effect to such reduction, the Aggregate Potential Votes do not exceed 19.9% of the Total Base Votes (it being understood that if both clause (b) and this clause (c) apply, clause (c) shall be applied first, then clause (b)); and (d) prior to the receipt of the Requisite Regulatory Approval, if the votes conferred by Common Shares and Preference Shares beneficially owned by a given person would otherwise represent more than 9.9% of the voting power of all shares entitled to vote, the vote of each Preference Share held by such person shall be reduced by whatever amount is necessary so that after any such reduction, the votes conferred by the Common Shares and Preference Shares beneficially owned by such person, shall constitute 9.9% of the total voting power of all shares entitled to vote. Pursuant to the Shareholders Agreement, Insurance and Orbital have the right to participate in any disposition by Warburg or H&F (but only if Warburg exercises its rights to participate in such disposition by H&F) of their Initial Shares (as defined therein) if the proceeds of such disposition are reasonably expected to exceed $50 million, pro rata based on the number of Initial Shares owned by Insurance and Orbital. In addition, certain entities have the right to participate in any disposition by Insurance and Orbital of their Initial Shares if the proceeds of such disposition are reasonably expected to exceed $50 million, pro rata based on the number of Initial Shares owned by such entities. Subject to the foregoing, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons or, to the best of their knowledge, any executive officer or director of any of them and any other person with respect to any securities of the Issuer, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Issuer, finders fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of parcels. Item 7. Material to Be Filed as Exhibits - ------- -------------------------------- Exhibit I Amendment No. 1 to Subscription Agreement, dated November 20, 2001, among the Issuer, Warburg, H&F, Insurance, Orbital and certain other investors signatories thereto. Exhibit II Letter Agreement, dated as of November 20, 2001, among Insurance, Warburg, H&F and the Issuer. Exhibit III Letter Agreement, dated as of November 20, 2001, among Orbital, Warburg, H&F and the Issuer. Exhibit IV Certificate of Designations of Series A Convertible Preference Shares of the Issuer. Exhibit V Form of Issuer's Class A Warrant. Exhibit VI Shareholders Agreement, dated as of November 20, 2001, among the Issuer, Warburg, H&F, Insurance, Orbital and certain other investors signatories thereto. Exhibit VII Power of Attorney of General Electric Capital Services, Inc., dated as of February 22, 2000. 15 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 INSURANCE PRIVATE EQUITY INVESTORS, L.L.C. By: GE Asset Management Incorporated, its Manager By: /s/ Michael M. Pastore ------------------------------------------------ Name: Michael M. Pastore Title: Vice President 16 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GENERAL ELECTRIC PENSION TRUST By: GE Asset Management Incorporated, its Investment Manager By: /s/ Michael M. Pastore --------------------------------------- Name: Michael M. Pastore Title: Vice President 17 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GE ASSET MANAGEMENT INCORPORATED By: /s/ Michael M. Pastore --------------------------------------- Name: Michael M. Pastore Title: Vice President 18 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GENERAL ELECTRIC COMPANY By: /s/ John H. Myers --------------------------------------- Name: John H. Myers Title: Vice President 19 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 ORBITAL HOLDINGS, LTD. By: /s/ Barbara J. Gould -------------------------------------- Name: Barbara J. Gould Title: Director 20 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GE CAPITAL EQUITY INVESTMENTS, LTD. By: /s/ Jonathan K. Sprole -------------------------------- Name: Jonathan K. Sprole Title: Director 21 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Jonathan K. Sprole ------------------------------------- Name: Jonathan K. Sprole Title: Department Operations Manager 22 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 30, 2001 GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Jonathan K. Sprole ---------------------------------------- Name: Jonathan K. Sprole Title: Attorney-in-Fact 23 Schedule I JOINT FILING AGREEMENT ---------------------- The undersigned parties hereby agree that the Schedule 13D filed herewith (and any amendments thereto) relating to the Common Shares of Arch Capital Group, Ltd. is being filed jointly with the Securities and Exchange Commission pursuant to Section 13-d-1(f) on behalf of each such person. Dated: November 30, 2001 INSURANCE PRIVATE EQUITY INVESTORS, L.L.C. By: GE Asset Management Incorporated, its Manager By: /s/ Michael M. Pastore --------------------------------------- Name: Michael M. Pastore Title: Vice President GENERAL ELECTRIC PENSION TRUST By: GE Asset Management Incorporated, its Investment Manager By: /s/ Michael M. Pastore --------------------------------------- Name: Michael M. Pastore Title: Vice President GE ASSET MANAGEMENT INCORPORATED By: /s/ Michael M. Pastore --------------------------------------- Name: Michael M. Pastore Title: Vice President GENERAL ELECTRIC COMPANY By: /s/ John H. Myers --------------------------------------- Name: John H. Myers Title: Vice President 24 ORBITAL HOLDINGS, LTD. By: /s/ Barbara J. Gould --------------------------------------- Name: Barbara J. Gould Title: Director GE CAPITAL EQUITY INVESTMENTS, LTD. By: /s/ Jonathan K. Sprole --------------------------------------- Name: Jonathan K. Sprole Title: Director GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Jonathan K. Sprole --------------------------------------- Name: Jonathan K. Sprole Title: Department Operations Manager GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Jonathan K. Sprole --------------------------------------- Name: Jonathan K. Sprole Title: Attorney-in-Fact 25 Schedule II General Electric Pension Trust The business address of each of the persons listed below is 3003 Summer Street, P.O. Box 7900, Stamford, Connecticut 06904. Trustees Present Principal Occupation - --------- ---------------------------- Eugene K. Bolton Executive Vice President of GEAM and Trustee of GEPT Michael J. Cosgrove Executive Vice President of GEAM and Trustee of GEPT John H. Myers Vice President of General Electric Company, Chairman of the Board and President GEAM and Trustee of GEPT Ralph R. Layman Executive Vice President of GEAM and Trustee of GEPT Alan M. Lewis Executive Vice President, General Counsel and Secretary of GEAM and Trustee of GEPT Robert A. MacDougall Executive Vice President of GEAM and Trustee of GEPT Donald W. Torey Executive Vice President of GEAM and Trustee of GEPT John J. Walker Executive Vice President - Chief Financial Officer of GEAM and Trustee of GEPT
Citizenship of All Trustees --------------------------- U.S.A. 26 Schedule III Insurance Private Equity Investors, L.L.C. The Manager of Insurance Private Equity Investors, L.L.C. is GE Asset Management Incorporated (a Delaware corporation). Its principal place of business is 3003 Summer Street, P.O. Box 7900, Stamford, Connecticut 06904. GE Asset Management Incorporated The business address of each of the persons listed below is 3003 Summer Street, P.O. Box 7900, Stamford, Connecticut 06904. Directors Present Principal Occupation - --------- ---------------------------- Eugene K. Bolton Executive Vice President of GEAM and Trustee of GEPT Michael J. Cosgrove Executive Vice President of GEAM and Trustee of GEPT John H. Myers Vice President of General Electric Company, Chairman of the Board and President GEAM and Trustee of GEPT Ralph R. Layman Executive Vice President of GEAM and Trustee of GEPT Alan M. Lewis Executive Vice President, General Counsel and Secretary of GEAM and Trustee of GEPT Robert A. MacDougall Executive Vice President of GEAM and Trustee of GEPT Geoffrey R. Norman Executive Vice President of GEAM and Trustee of GEPT Donald W. Torey Executive Vice President of GEAM and Trustee of GEPT John J. Walker Executive Vice President - Chief Financial Officer of GEAM and Trustee of GEPT
Citizenship of all Directors ---------------------------- U.S.A 27 Executive Officers Present Principal Occupation - ------------------ ---------------------------- John H. Myers Chairman of the Board and President Eugene K. Bolton Executive Vice President - Domestic Equity Investments Michael J. Cosgrove Executive Vice President - Sales and Marketing Ralph R. Layman Executive Vice President - International Equity Investments Alan M. Lewis Executive Vice President - General Counsel and Secretary Robert A. MacDougall Executive Vice President - Fixed Income Geoffrey R. Norman Executive Vice President - Marketing Donald W. Torey Executive Vice President - Real Estate and Private Equities John J. Walker Executive Vice President - Chief Financial Officer Anthony J. Sirabella Senior Vice President - Chief Information Officer Christopher D. Brown Senior Vice President - Equity Portfolios David B. Carlson Senior Vice President - Equity Portfolios Jane E. Hackney Senior Vice President - Equity Investments Peter J. Hathaway Senior Vice President - Equity Portfolios Damian J. Maroun Senior Vice President - Equity Trading Paul C. Reinhardt Senior Vice President - Equity Portfolios Richard L. Sanderson Senior Vice President - Equity Research Christopher W. Smith Senior Vice President - Equity Investments Ralph E. Whitman Senior Vice President - Equity Portfolios Nancy A. Ward Vice President - Client Portfolio Manager - Domestic Equities Gerald L. Igou Vice President - Equity Investments Mark A. Mitchell Vice President - Equity Investments John H. Schaetzl Vice President - Equity Investments Brian Hopkinson Senior Vice President - International Equity Portfolios Daizo Motoyoshi Senior Vice President - International Equity Portfolios Michael J. Solecki Senior Vice President - International Equity Portfolios Judith A. Studer Senior Vice President - International Equity Portfolios Peter Gillespie Vice President - International Equity Portfolios
28 T. Brent Jones Vice President - International Equity Portfolios Paul Nestro Vice President - International Equity Portfolios Makoto F. Sumino Vice President - International Equity Portfolios Robert W. Aufiero Vice President - Fixed Income Kathleen S. Brooks Vice President - Fixed Income Paul M. Colonna Vice President - Fixed Income William M. Healey Vice President - Fixed Income Craig M. Varrelman Vice President - Client Portfolio Manager - Fixed Income Michael J. Caufield Senior Vice President - Municipal Bonds Robert R. Kaelin Senior Vice President - Municipal Bonds Susan M. Courtney Vice President - Municipal Bonds Stella V. Lou Vice President - Municipal Bonds Michael A. Sullivan Vice President - Municipal Bonds James M. Mara Senior Vice President - International Private Equities Wolfe H. Bragin Vice President - Private Equities Andreas T. Hildebrand Vice President - Private Equities Patrick J. McNeela Vice President - Private Equities David W. Wiederecht Vice President - Private Equities Philip A. Riordan Senior Vice President - Real Estate B. Bradford Barrett Vice President - Real Estate Robert P. Gigliotti Vice President - Real Estate Preston R. Sargent Vice President - Real Estate Timothy M. Morris Vice President - Risk Management Sandra J. O'Keefe Vice President - Financial Planning & Analysis William F. Ruoff, III Vice President - Quality Michael J. Tansley Vice President & Controller Matthew J. Simpson Senior Vice President, Gen. Counsel - Investment Services & Asst. Secretary Paul J. Crispino Vice President - Tax Counsel Judith M. Bandler Vice President - Benefits Counsel Marc R. Bryant Vice President - Assoc. Gen. Counsel & Asst. Secretary Jeanne M. La Porta Vice President - Assoc. Gen. Counsel & Asst. Secretary Michael M. Pastore Vice President - Assoc. Gen. Counsel & Asst. Secretary
29 Scott A. Silberstein Vice President - Assoc. Gen. Counsel & Asst. Secretary Michael J. Strone Vice President - Assoc. Gen. Counsel & Asst. Secretary Anthony H. Zacharski Vice President - Assoc. Gen. Counsel & Asst. Secretary
Citizenship of all Executive Officers ------------------------------------- U.S.A 30 Schedule IV General Electric Company
DIRECTORS PRESENT PRESENT NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION - ---- ---------------- -------------------- J.I.Cash, Jr. Harvard Business School Professor of Business Morgan Hall Administration-Graduate Soldiers Field Road School of Business Boston, MA 02163 Administration, Harvard University S.S. Cathcart 222 Wisconsin Avenue Retired Chairman, Suite 103 Illinois Tool Works Lake Forest, IL 60045 D.D. Dammerman General Electric Company Vice Chairman of the Board and 3135 Easton Turnpike Executive Officer, General Fairfield, CT 06431 Electric Company; Chairman, General Electric Capital Services, Inc. P. Fresco Fiat SpA Chairman of the Board, via Nizza 250 Fiat SpA 10126 Torino, Italy A. M. Fudge 555 South Broadway Former Executive Vice President, Tarrytown, NY 10591 Kraft Foods, Inc. C.X. Gonzalez Kimberly-Clark de Mexico, Chairman of the Board S.A. de C.V. and Chief Executive Officer, Jose Luis Lagrange 103, Kimberly-Clark de Mexico, Tercero Piso S.A. de C.V. Colonia Los Morales Mexico, D.F. 11510, Mexico J.R. Immelt General Electric Company Chairman of the Board and Chief 3135 Easton Turnpike Executive Officer, Fairfield, CT 06431 General Electric Company A. Jung Avon Products, Inc. President and Chief 1345 Avenue of the Americas Executive Officer, New York, NY 10105 Avon Products, Inc. K.G. Langone Invemed Associates, Inc. Chairman, President and Chief 375 Park Avenue Executive Officer, New York, NY 10152 Invemed Associates, Inc.
31 R.B. Lazarus Ogilvy & Mather Worldwide Chairman and Chief Executive 309 West 49th Street Officer, Ogilvy & Mather Worldwide New York, NY 10019-7316 S.G. McNealy Sun Microsystems, Inc. Chairman, President and Chief 901 San Antonio Road Executive Officer, Palo Alto, CA 94303-4900 Sun Microsystems, Inc. G.G. Michelson Federated Department Stores Former Member of the 151 West 34th Street Board of Directors, New York, NY 10001 Federated Department Stores S. Nunn King & Spalding Partner, King & Spalding 191 Peachtree Street, N.E. Atlanta, Georgia 30303 R.S. Penske Penske Corporation Chairman of the Board 13400 Outer Drive, West and President, Penske Detroit, MI 48239-4001 Corporation F.H.T. Rhodes Cornell University President Emeritus, 3104 Snee Building Cornell University Ithaca, NY 14853 G. L. Rogers General Electric Company Vice Chairman of the Board and 3135 Easton Turnpike Executive Officer, General Fairfield, CT 06431 Electric Company A.C. Sigler Champion International Retired Chairman of the Corporation Board and CEO and former 1 Champion Plaza Director, Champion International Stamford, CT 06921 International Corporation D.A. Warner III J. P. Morgan & Co., Inc. Chairman of the Board, President, & Morgan Guaranty Trust Co. and Chief Executive Officer, 60 Wall Street J.P. Morgan & Co. New York, NY 10260 Incorporated and Morgan Guaranty Trust Company R. C. Wright National Broadcasting Company, Inc. Vice Chairman of the Board and 30 Rockefeller Plaza Executive Officer, General New York, NY 10112 Electric Company; Chairman and Chief Executive Officer, National Broadcasting Company, Inc.
32 Citizenship of Directors ------------------------ P. Fresco Italy C. X. Gonzalez Mexico Andrea Jung Canada All Others U.S.A. 33 EXECUTIVE OFFICERS
PRESENT PRESENT NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION - ---- ---------------- -------------------- J.R. Immelt General Electric Company Chairman of the Board and Chief 3135 Easton Turnpike Executive Officer Fairfield, CT 06431 P.D. Ameen General Electric Company Vice President and Comptroller 3135 Easton Turnpike Fairfield, CT 06431 J.R. Bunt General Electric Company Vice President and Treasurer 3135 Easton Turnpike Fairfield, CT 06431 D.C. Calhoun General Electric Company Senior Vice President - 1 Neumann Way GE Aircraft Engines Cincinnati, OH 05215 J.P. Campbell General Electric Company Vice President - Appliance Park GE Appliances Louisville, KY 40225 W.J. Conaty General Electric Company Senior Vice President - 3135 Easton Turnpike Human Resources Fairfield, CT 06431 D.D. Dammerman General Electric Company Vice Chairman of the Board and 3135 Easton Turnpike Executive Officer, General Fairfield, CT 06431 Electric Company; Chairman, General Electric Capital Services, Inc. S. C. Donnelly General Electric Company Senior Vice President - P. O. Box 8 Corporate Research Schenectady, NY 12301 and Development M. J. Espe General Electric Company Senior Vice President - Nela Park GE Lighting Cleveland, OH 44112 Y. Fujimori General Electric Company Senior Vice President - 1 Plastics Avenue GE Plastics Pittsfield, MA 01201 B.W. Heineman, Jr. General Electric Company Senior Vice President - 3135 Easton Turnpike General Counsel and Secretary Fairfield, CT 06431
34 J.M. Hogan General Electric Company Senior Vice President - P.O. Box 414 GE Medical Systems Milwaukee, WI 53201 J. Krenicki, Jr. General Electric Company Vice President - 2901 East Lake Road GE Transportation Systems Erie, PA 16531 R.W. Nelson General Electric Company Vice President - 3135 Easton Turnpike Corporate Financial Planning Fairfield, CT 06431 and Analysis G.M. Reiner General Electric Company Senior Vice President - 3135 Easton Turnpike Chief Information Officer Fairfield, CT 06431 J. G. Rice General Electric Company Senior Vice President - 1 River Road GE Power Systems Schenectady, NY 12345 G.L. Rogers General Electric Company Vice Chairman of the Board 3135 Easton Turnpike and Executive Officer Fairfield, CT 06431 K.S. Sherin General Electric Company Senior Vice President - Finance 3135 Easton Turnpike and Chief Financial Officer Fairfield, CT 06431 L.G. Trotter General Electric Company Senior Vice President - 41 Woodford Avenue GE Industrial Systems Plainville, CT 06062 W. A. Woodburn General Electric Company Senior Vice President - 41 Woodford Avenue GE Specialty Chemicals Plainville, CT 06062 R. C. Wright National Broadcasting Company, Inc. Vice Chairman of the Board and 30 Rockefeller Plaza Executive Officer, General New York, NY 10112 Electric Company; Chairman and Chief Executive Officer, National Broadcasting Company, Inc.
Citizenship of All Executive Officers ------------------------------------- Yoshiaki Fujimori Japan All Others U.S.A. 35 Schedule V Orbital Holdings, Ltd. DIRECTORS
PRESENT PRESENT NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION - ---- ---------------- -------------------- Barbara J. Gould GE Capital Equity Investments, Inc. Managing Director, GE Capital Equity 260 Long Ridge Road Investments, Inc. Stamford, CT 06927 Ian Sharpe GE Capital Equity Investments, Inc. Tax Director, GE Capital Equity 260 Long Ridge Road Investments, Inc. Stamford, CT 06927 Ade Omisore GE Capital Equity Investments, Inc. Vice President, GE Capital Equity 260 Long Ridge Road Investments, Inc. Stamford, CT 06927
Citizenship of all Directors ---------------------------- U.S.A. 36 Schedule VI GE Capital Equity Investments, Ltd. DIRECTORS
PRESENT PRESENT NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION - ---- ---------------- -------------------- Stephen S. Charles GE Capital Equity Investments, Inc. Managing Director, GE Capital Equity 260 Long Ridge Road Investments, Inc. Stamford, CT 06927 Daniel Janki GE Capital Equity Investments, Inc. Senior Vice President, Chief Financial 260 Long Ridge Road Officer, GE Capital Equity Stamford, CT 06927 Investments, Inc. Jonathan K. Sprole GE Capital Equity Investments, Inc. Managing Director, General Counsel, 260 Long Ridge Road GE Capital Equity Investments, Inc. Stamford, CT 06927 Gordon Chan GE Capital International Finance Manager of Accounting and Finance, (Bermuda) Ltd., GE Capital International Finance Falconer House, 108 Pitts Bay Road (Bermuda) Ltd. PO Box HM 403 Hamilton, HM BX, Bermuda
Citizenship of all Directors ---------------------------- U.S.A. 37 Schedule VII General Electric Capital Corporation Directors Citizenship Principal Occupation Nancy E. Barton USA Senior Vice President, General Counsel and Director Secretary GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ferdinando Beccalli Italy Executive Vice President Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James R. Bunt USA Vice President and Treasurer Director GE Company 3135 Easton Turnpike Fairfield, CT 06431 David L. Calhoun USA Chief Executive Officer Director GE Aircraft Engines 1 Neumann Way Cincinnati, OH 45215 Dennis D. Dammerman USA Vice Chairman and Executive Officer Director GE Company 3135 Easton Turnpike Fairfield, CT 06431 Scott C. Donnelly USA Senior Vice President Director General Electric CR&D One Research Circle Niskayuna, NY Michael D. Fraizer USA President & CEO Director GE Financial Assurance 6604 W. Broad Street Richmond, VA 23230 Benjamin W. Heineman USA Senior Vice President, General Counsel and Director Secretary GE Company 3135 Easton Turnpike Fairfield, CT 06431
38 Jeffrey R. Immelt USA Chairman and Chief Executive Officer Director General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 John H. Myers USA Chairman and President Director GE Investment Corporation 3003 Summer Street, 7th Fl. Stamford, CT 06905 Denis J. Nayden USA Chairman and CEO Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Michael A. Neal USA President and COO Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James A. Parke USA Vice Chairman & Chief Financial Officer Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ronald R. Pressman USA Chairman, President & CEO Director Employers Reinsurance Corporation 5200 Metcalf Overland Park, KS 66204 Gary M. Reiner USA Sr. Vice President & Chief Information Officer Director General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 John M. Samuels USA Vice President and Senior Counsel, Corporate Director Taxes General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 Keith S. Sherin USA Senior Vice President, Finance & Chief Financial Director Officer General Electric Company 3135 Easton Turnpike Fairfield, CT 06431
39 Edward D. Stewart USA Executive Vice President Director GE Capital Corporation 1600 Summer Street Stamford, CT 06927 Robert C. Wright USA President and Chief Executive Officer Director NBC 30 Rockefeller Plaza, 52nd Floor New York, NY 10112
40 Executive Officers Citizenship Principal Occupation Denis J. Nayden USA Chairman and CEO Chairman and Chief Executive Officer GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Michael A. Neal USA President and COO President and Chief Operating Officer GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James A. Parke USA Vice Chairman & Chief Financial Vice Chairman and Officer Chief Financial Officer GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ferdinando Beccalli Italy Executive Vice President Executive Vice President General Electric Capital 260 Long Ridge Road Stamford, CT 06927 Edward D. Stewart USA Executive Vice President Executive Vice President GE Capital Corporation 1600 Summer Street Stamford, CT 06927 Nancy E. Barton USA Senior Vice President, General Senior Vice President, Counsel and Secretary General Counsel and Secretary GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James A. Colica USA Senior Vice President, Global Risk Senior Vice President Management GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Richard D'Avino USA Senior Vice President, Taxes Senior Vice President, Taxes GE Capital Corporation 777 Long Ridge Road Stamford, CT 06927 Robert L. Lewis USA Senior Vice President, Structured Senior Vice President Finance Group GE Capital Corporation 120 Long Ridge Road
41 Stamford, CT 06927 David R. Nissen USA Senior Vice President, Global Senior Vice President Consumer Finance GE Capital Corporation 1600 Summer Street Stamford, CT 06927 Marc J. Saperstein USA Senior Vice President, Human Senior Vice President Resources General Electric Capital 260 Long Ridge Road Stamford, CT 06927 Jeffrey S. Werner USA Sr. Vice President, Corp. Treasury & Senior Vice President Global Funding Op. GE Capital Corporation 201 High Ridge Road Stamford, CT 06927 Joan C. Amble USA Vice President and Controller Vice President and Controller GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927
42 Schedule VIII General Electric Capital Services, Inc. Directors Citizenship Principal Occupation Nancy E. Barton USA Senior Vice President, General Director Secretary Counsel and GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ferdinando Beccalli Italy Executive Vice President Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James R. Bunt USA Vice President and Treasurer Director GE Company 3135 Easton Turnpike Fairfield, CT 06431 David L. Calhoun USA Chief Executive Officer Director GE Aircraft Engines 1 Neumann Way Cincinnati, OH 45215 Dennis D. Dammerman USA Vice Chairman and Executive Director Officer GE Company 3135 Easton Turnpike Fairfield, CT 06431 Scott C. Donnelly USA Senior Vice President Director General Electric CR&D One Research Circle Niskayuna, NY Michael D. Fraizer USA President & CEO Director GE Financial Assurance 6604 W. Broad Street Richmond, VA 23230 Benjamin W. Heineman, USA Senior Vice President, General Director Counsel and Secretary GE Company 3135 Easton Turnpike Fairfield, CT 06431
43 Jeffrey R. Immelt USA Chairman and Chief Executive Officer Director General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 John H. Myers USA Chairman and President Director GE Investment Corporation 3003 Summer Street, 7th Fl. Stamford, CT 06905 Denis J. Nayden USA Chairman and CEO Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Michael A. Neal USA President and COO Director GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James A. Parke USA Vice Chairman & Chief Financial Director Officer GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ronald R. Pressman USA Chairman, President & CEO Director Employers Reinsurance Corporation 5200 Metcalf Overland Park, KS 66204 Gary M. Reiner USA Sr. Vice President & Chief Director Information Officer General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 John M. Samuels USA Vice President and Senior Counsel, Director Corporate Taxes General Electric Company 3135 Easton Turnpike Fairfield, CT 06431 Keith S. Sherin USA Senior Vice President, Finance & Director Chief Financial Officer General Electric Company 3135 Easton Turnpike Fairfield, CT 06431
44 Edward D. Stewart USA Executive Vice President Director GE Capital Corporation 1600 Summer Street Stamford, CT 06927 Robert C. Wright USA President and Chief Executive Director Officer NBC 30 Rockefeller Plaza, 52nd Floor New York, NY 10112
45 Executive Officers Citizenship Principal Occupation Dennis D. Dammerman USA Vice Chairman and Executive Chairman of the Board Officer GE Company 3135 Easton Turnpike Fairfield, CT 06431 Denis J. Nayden USA Chairman and CEO President GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 James A. Parke USA Vice Chairman & Chief Financial Executive Vice President and Officer Chief Financial Officer GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ferdinando Beccalli Italy Executive Vice President Executive Vice President General Electric Capital 260 Long Ridge Road Stamford, CT 06927 Michael D. Fraizer USA President & CEO Executive Vice President GE Financial Assurance 6604 W. Broad Street Richmond, VA 23230 Michael A. Neal USA President and COO Executive Vice President GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Ronald R. Pressman USA Chairman, President & CEO Executive Vice President Employers Reinsurance Corporation 5200 Metcalf Overland Park, KS 66204 Edward D. Stewart USA Executive Vice President Executive Vice President GE Capital Corporation 1600 Summer Street Stamford, CT 06927 Nancy E. Barton USA Senior Vice President, General Senior Vice President, Counsel and Secretary General Counsel and Secretary GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927
46 James A. Colica USA Senior Vice President, Global Risk Senior Vice President Management GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Richard D'Avino USA Senior Vice President, Taxes Senior Vice President, Taxes GE Capital Corporation 777 Long Ridge Road Stamford, CT 06927 Marc J. Saperstein USA Senior Vice President, Human Senior Vice President Resources General Electric Capital 260 Long Ridge Road Stamford, CT 06927 Jeffrey S. Werner USA Sr. Vice President, Corp. Treasury & Senior Vice President Global Funding Op. GE Capital Corporation 201 High Ridge Road Stamford, CT 06927 Joan C. Amble USA Vice President and Controller Vice President and Controller GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Barbara E. Daniele USA Vice President and Senior Litigation Vice President and Senior Counsel Litigation Counsel GE Capital Corporation 260 Long Ridge Road Stamford, CT 06927 Steven F. Kluger USA Vice President, Capital Markets Vice President Services GE Capital Corporation 3001 Summer Street Stamford, CT 06927
47 EX-99.I 3 dex99i.txt AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT EXHIBIT I EXECUTION COPY AMENDMENT NO. 1 Reference is made to the Subscription Agreement dated as of October 24, 2001 (the "Agreement") by and between Arch Capital Group Ltd., a company organized under the laws of Bermuda (the "Company"), and Warburg Pincus Private Equity VIII, L.P., Warburg Pincus International Partners, L.P., Warburg Pincus Netherlands International Partners I, C.V., Warburg Pincus Netherlands International Partners II, C.V. (the "Original Warburg Signatories"), and HFCP IV (Bermuda), L.P. (the "Original H&F Signatory"). Capitalized terms used without definition herein have the meanings given to them in the Agreement. This amendment ("Amendment") to the Agreement is made as of November 20, 2001, among the Original Warburg Signatories, Warburg, the Original H&F Signatory, H&F, the Management Purchasers, Trident, GE and Farallon. WHEREAS, the Original Warburg Signatories have assigned their rights and obligations under the Subscription Agreement with respect to the purchase of a portion of the Securities thereunder to the Warburg entities listed in Schedule 1 hereto (such Warburg assignees, together with Warburg Pincus Netherlands International Partners I, C.V. and Warburg Pincus Netherlands International Partners II, C.V., being referred to herein as "Warburg"); WHEREAS, the Original H&F Signatory has assigned its rights and obligations under the Subscription Agreement with respect to the purchase of a portion of the Securities thereunder to the H&F entities listed in Schedule 2 hereto (such H&F assignees, together with the Original H&F Signatory, being referred to herein as "H&F") WHEREAS, the Company and the purchasers named therein (the "Management Purchasers") have entered into a Management Subscription Agreement, dated as of October 24, 2001 (the "Management Subscription Agreement"), pursuant to the terms of which, among other things, the Company shall issue and sell to the Management Purchasers, and the Management Purchasers shall acquire from the Company, certain Securities; WHEREAS, the Company, the Original Warburg Signatories, the Original H&F Signatory and Trident have entered into a letter agreement, dated as of November 8, 2001 (the "Trident Assignment Agreement") pursuant to the terms of which, among other things, the Original Warburg Signatories assigned to Trident their right, and Trident assumed from the Original Warburg Signatories their obligation, under the Subscription Agreement to purchase certain Securities; WHEREAS, the Company, the Original Warburg Signatories and the Original H&F Signatory have entered into letter agreements, dated as of November 20, 2001, with Orbital Holdings, Ltd. and Insurance Private Equity Investors, L.L.C. (collectively, the "GE Assignment Agreement"), pursuant to the terms of which, among other things, the Original -2- Warburg Signatories assigned to GE their right, and GE assumed from the Original Warburg Signatories their obligation, under the Subscription Agreement to purchase certain Securities; WHEREAS, the Company, the Original Warburg Signatories, the Original H&F Signatory and Farallon have entered into a letter agreement, dated as of November 20, 2001 (the "Farallon Assignment Agreement"), pursuant to the terms of which, among other things, the Original H&F Signatory assigned to Farallon its right, and Farallon assumed from the Original H&F Signatory its obligation, under the Subscription Agreement to purchase certain Securities; WHEREAS, the parties hereto desire to acknowledge and reflect certain amendments to the Subscription Agreement and certain Exhibits thereto. For good and valid consideration, the receipt of which is hereby acknowledged, the Company and each of the Purchasers agree as follows: amendmentS to subscription agreement 1. The legend set forth in Section D.1.(d) of the Agreement is amended and restated as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, OFFERED OR SOLD EXCEPT (A) IN COMPLIANCE WITH THE PROVISIONS OF A CERTAIN SUBSCRIPTION AGREEMENT AND A CERTAIN SHAREHOLDERS AGREEMENT AND (B) PURSUANT TO (1) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (B)(2) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF WACHTELL, LIPTON, ROSEN & KATZ, OR SUCH OTHER COUNSEL AS IS REASONABLY SATISFACTORY TO ARCH CAPITAL GROUP LTD., TO THE EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE." 2. The representations and warranties made by the Company in the Agreement shall be deemed made also as of the Closing Date (except that representations and warranties made as of another date shall be true and accurate as of such other date). 3. The definitions of "Estimated Per Share Price" and "Per Share Price" in Schedule A are amended to substitute "as of the close of business on the third business day preceding the Closing Date" for "as of the business day immediately preceding the Closing Date". It is -3- understood that for purposes of the Mark to Market Procedures, and any adjustments based on those procedures, the close of business on the third business day preceding the Closing Date should be used (including, without limitation, for purposes of Section B.1(a) and B.1(c)(iii) of the Agreement) rather than the day prior to the Closing Date, or the Closing Date. 4. (a) The parties hereto acknowledge and agree that the Company has not liquidated its investment portfolio prior to Closing in accordance with the first sentence of Section D.4(e). From and after Closing, and prior to the time of the audit adjustment contemplated by Section B.1 (the "Audit Adjustment"), the Company will sell the portion of its investment portfolio not theretofore sold which is listed in Schedule 3 hereto. With respect to such sales from and after Closing and prior to the audit adjustment, in calculating the Per Share Price, the actual prices realized upon the sale of such securities shall be used in the Mark to Market Procedures, in lieu of the estimated fair value of such securities as of the close of business on the third business day immediately preceding the Closing Date. (b) The parties hereto acknowledge that for purposes of calculating the Estimated Per Share Price, the Mark to Market Procedures were performed using closing sales prices instead of closing bid prices and that to adjust for such variance a "Bid/Ask Spread Adjustment" was included in the Mark to Market Procedures as set forth in Schedule 4(A) hereto. Such adjustment is hereby deemed to modify the Mark to Market Procedures set forth in Schedule A to the Agreement. For purposes of the Audit Adjustment, and subject to clause (a) of this Section 4, the Mark to Market Procedures shall also use closing sales prices (instead of closing bid prices) and such "Bid/Ask Spread Adjustment" shall be applied, on the same percentage basis, by the Pricing Service in performing the Audit Adjustment under Section B.1(a), it being understood that the Purchasers have not accepted the closing sales prices underlying in Schedule 4(A) as binding, and the Pricing Service shall, among other things, verify such prices in the Audit Adjustment. (c) The parties acknowledge the Schedule 4(B) hereto sets forth the number of Preference Shares and Class A Warrants to be issued to each Purchaser at Closing based on the Estimated Per Share Purchase Price. 5. The Company acknowledges that it will arrange for the listing of the Common Shares issuable upon conversion or exercise of the Preference Shares and Warrants on the Nasdaq Stock Market, to the extent not so listed (it being understood that, prior to the Requisite Shareholder Approval, the Company shall not be obligated to list more Common Shares than it is then permitted to issue under applicable Nasdaq rules). 6. The parties hereto acknowledge that (a) in the event that Section E.3 becomes applicable, and the Purchasers are entitled to preference shares and warrants of Newco bearing "identical rights and privileges", such securities shall not include the voting limitations imposed under Sections (f)(3)(B) or (C) of the Certificate for Preference Shares pending Requisite Shareholder Approval or Requisite Regulatory Approval to the extent such -4- approvals are not required for the issuance or acquisition of Newco securities and (b) from and after the Closing the reference to "original signatories" in Section E.6 shall mean Warburg and H&F as defined herein. 7. Schedule A of the Agreement is amended to add the following: "Farallon" shall mean Farallon Capital Partners, L.P., Farallon Capital Institutional Partners II, L.P., Farallon Capital Institutional Partners III, L.P., and RR Capital Partners, L.P. collectively, with each individually being a "Farallon Purchaser". "GE" shall mean Orbital Holdings, Ltd. and Insurance Private Equity Investors, L.L.C., collectively, with each individually being a "GE Purchaser" "Requisite Regulatory Approval" has the meaning given to such term in the Certificate. "Requisite Shareholder Approval" has the meaning given to such term in the Certificate. "Trident" shall mean Trident II, L.P., Marsh & McLennan Capital Professionals Fund, L.P., and Marsh & McLennan Employee's Securities Company, L.P., collectively, with each individually a "Trident Purchaser." 8. The parties agree that (a) effective as of the Closing, the only Class A Warrants outstanding will be held by The Trident Partnership, L.P. and Taracay Investors and the only Class B Warrants outstanding will be held by Robert Clements (or members of his family or trusts established for his or his family's benefit) and (b) there is no adjustment under section 3.1 of the Class A Warrants of the Company or under section 4.1 of the Class B Warrants of the Company in connection with the grants set forth on Schedule 5 hereto, or the issuance of the Preference Shares, the Warrants, or the Common Shares issuable upon conversion or exercise thereof, under the Subscription Agreement or the Management Subscription Agreements. 9. The definition of Non-Core Assets is amended to add a clause (f): "(f) all commitments to Innovative Coverage Concepts LLC." 10. The Company shall, as promptly as practicable, adopt a policy and establish procedures designed to ensure that the Company and its subsidiaries shall not act in violation of the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. Section 78dd-1, et seq.), as if it were applicable to the Company. 11. Upon execution hereof, each of Trident, GE and Farallon shall become "Purchasers" under the Subscription Agreement, with such rights and obligations as may be -5- set forth therein, subject in each case to the terms of the GE Assignment Agreement, the Trident Assignment Agreement or the Farallon Assignment Agreement, as may be applicable. AMENDMENTS TO EXHIBITS TO SUBSCRIPTION AGREEMENT 12. The form of Certificate attached as Exhibit I to the Subscription Agreement will be replaced by the form attached hereto. 13. The form of Warrant attached as Exhibit II to the Subscription Agreement will be replaced by the form attached hereto. 14. The form of Bye-law amendment attached as Exhibit III to the Subscription Agreement will be replaced by the form attached hereto. 15. The form of Shareholders Agreement attached as Exhibit IV to the Subscription Agreement will be replaced by the form attached hereto. DISCLOSURE SCHEDULE Item 5 of the Disclosure Schedule to the Agreement is replaced with Schedule 5 hereto. ACKNOWLEDGEMENTS BY ASSIGNEES 16. Trident acknowledges that from and after the Closing, references to "Warburg" and "H&F" in the Trident Assignment Agreement shall mean Warburg and H&F as defined herein, in lieu of the Original Warburg Signatories and the Original H&F Signatory, respectively. 17. GE acknowledges that from and after the Closing, references to "Warburg" and "H&F" in the GE Assignment Agreement shall mean Warburg and H&F as defined herein, in lieu of the Original Warburg Signatories and the Original H&F Signatory, respectively. 18. Farallon acknowledges that from and after the Closing, references to "Warburg" and "H&F" in the Farallon Assignment Agreement shall mean Warburg and H&F as defined herein, in lieu of the Original Warburg Signatories and the Original H&F Signatory, respectively. 19. The Management Purchasers acknowledge that from and after the Closing, references to "Warburg" and "H&F" in the Management Subscription Agreement shall mean Warburg and H&F as defined herein, in lieu of the Original Warburg Signatories and the Original H&F Signatories, respectively. -6- MISCELLANEOUS 20. The validity and effects of this Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York. 21. This Amendment may be executed in any number of counterparts, each of which shall be considered an original and all of which together shall be deemed to be one and the same instrument. [Signature pages follow] IN WITNESS WHEREOF, each Party has executed this Amendment as of the date first above-written. WARBURG PINCUS PRIVATE EQUITY VIII, L.P., WARBURG PINCUS INTERNATIONAL PARTNERS, L.P., WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V. WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS II, C.V. By: Warburg, Pincus & Co., its General Partner By: /s/ Kewsong Lee ----------------------------------- Name: Kewsong Lee Title: Partner WARBURG PINCUS (BERMUDA) PRIVATE EQUITY VIII, L.P. By: Warburg Pincus (Bermuda) Private Equity Ltd., its General Partner, By: /s/ Kewsong Lee ----------------------------------- Name: Kewsong Lee Title: Partner WARBURG PINCUS (BERMUDA) INTERNATIONAL PARTNERS, L.P. By: Warburg Pincus (Bermuda) International Ltd., its General Partner, By: /s/ Kewsong Lee ----------------------------------- Name: Kewsong Lee Title: Partner HFCP IV (BERMUDA), L.P., By: H&F Investors IV (Bermuda), L.P. By: H&F Corporate Investors IV (Bermuda) Ltd. its General Partner, By: /s/ David R. Tunnell ------------------------------ Name: David R. Tunnell Title: Authorized Signatory H&F INTERNATIONAL PARTNERS IV-A (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ------------------------------ Name: David R. Tunnell Title: Authorized Signatory H&F INTERNATIONAL PARTNERS IV-B (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ---------------------------------- Name: David R. Tunnell Title: Authorized Signatory H&F EXECUTIVE FUND IV (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ---------------------------------- Name: David R. Tunnell Title: Authorized Signatory FARALLON CAPITAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ----------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Partners, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry --------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Institutional Partners II, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry --------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Institutional Partners III, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 RR CAPITAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ------------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for RR Capital Partners, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 TRIDENT II, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth ----------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Trident II, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 MARSH & MCLENNAN CAPITAL PROFESSIONALS FUND, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth --------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Marsh & McLennan Capital Professionals Fund, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 MARSH & MCLENNAN EMPLOYEES' SECURITIES COMPANY, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth ----------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Marsh & McLennan Employees' Securities Company, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 INSURANCE PRIVATE EQUITY INVESTORS, L.L.C. By: GE Asset Management Incorporated, its Manager, By: /s/ Patrick McNeela ------------------------------------ Name: Patrick McNeela Title: Vice President Notice Information for Insurance Private Equity Investors, L.L.C.: c/o GE Asset Management Incorporated 3003 Summer Street Stamford, CT 06905 Attention: Michael M. Pastore, Esq. ORBITAL HOLDINGS, LTD. By: /s/ Lorraine Hliboki ------------------------------------- Name: Lorraine Hliboki Title: Attorney-in-fact Notice Information for Orbital Holdings, Ltd.: c/o GE Capital 120 Longridge Rd. Stamford, CT 06927 SOUNDVIEW PARTNERS LP By: Robert Clements, its General Partner By: /s/ Robert Clements -------------------------------- Name: Robert Clements Title: General Partner OTTER CAPITAL LLC By: John Pasquesi, its Managing Member By: /s/ John Pasquesi ------------------------------- Name: John Pasquesi Title: Managing Member PETER A. APPEL By: /s/ Peter A. Appel ------------------------------- Name: Peter A. Appel PAUL B. INGREY By: /s/ Paul B. Ingrey ------------------------------- Name: Paul B. Ingrey DWIGHT R. EVANS By: /s/ Dwight R. Evans ------------------------------- Name: Dwight R. Evans MARC GRANDISSON By: /s/ Marc Grandisson ------------------------------- Name: Marc Grandisson For purposes of Section A.8. only: TARACAY INVESTORS By: Robert Clements, Managing Partner By: /s/ Robert Clements --------------------------------- Name: Robert Clements For purposes of Section A.8. only: THE TRIDENT PARTNERSHIP, L.P. By: Trident Corp., its General Partner By: /s/ Martine Purssell --------------------------------- Name: Martine Purssell Title: Assistant Secretary S-2 Accepted and agreed to as of the date first above-written. ARCH CAPITAL GROUP LTD. By: /s/ Peter A. Appel ---------------------------- Name: Peter A. Appel Title: President and Chief Executive Officer SCHEDULE 1 Warburg Pincus (Bermuda) Private Equity VIII, L.P. Warburg Pincus (Bermuda) International Partners, L.P. SCHEDULE 2 H & F International Partners IV - A (Bermuda), L.P. H & F International Partners IV -B (Bermuda), L.P. H & F Executive Fund IV (Bermuda), L.P. EX-99.II 4 dex99ii.txt LETTER AGREEMENT AMONG INSURANCE, WARBURG EXHIBIT II EXECUTION COPY ARCH CAPITAL GROUP LTD. 20 Horseneck Lane Greenwich, CT 06830 November 20, 2001 Insurance Private Equity Investors, L.L.C. Warburg Pincus Private Equity VIII, L.P. (the "GE Private Equity Purchaser") Warburg Pincus International Partners, L.P. c/o GE Asset Management Incorporated Warburg Pincus Netherlands International 3003 Summer Street Partners I, C.V. Stamford, CT 06905 Warburg Pincus Netherlands International Partners II, C.V. (collectively, "Warburg") 466 Lexington Avenue New York, NY 10017 HFCP IV (Bermuda), L.P. ("H&F") c/o Hellman & Friedman LLC One Maritime Plaza Suite 1200 San Francisco, CA 94111
Ladies and Gentlemen: This letter agreement (this "Agreement") confirms the agreement reached today among each of the parties signatories hereto regarding the participation of the GE Private Equity Purchaser in the purchase of a portion of the Securities, as contemplated by, and on the terms set forth in, this Agreement and the Subscription Agreement dated as of October 24, 2001, as amended (the "Subscription Agreement") by and among Arch Capital Group Ltd. ("Arch"), Warburg and H&F (the "Original Signatories"), and certain other matters in connection therewith. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Subscription Agreement. 1. Investment by GE Purchaser. Warburg hereby assigns, without recourse or warranty by it, to the GE Private Equity Purchaser (as set forth in Schedule 1 hereto) the right, and obligation, to purchase an aggregate of $50,000,000 of the Securities on the terms and conditions set forth in the Subscription Agreement (except as explicitly modified hereby), as a Purchaser (as defined in the Subscription Agreement). The GE Private Equity Purchaser acknowledges that its investment will be required to be made on the Closing -2- Date, simultaneously with the investments being made by the Original Signatories. The GE Private Equity Purchaser shall become a "Purchaser" under the Subscription Agreement and an "Investor" under the Shareholders Agreement (solely for purposes of Sections 3.4, 5.1, 5.2 and 5.3 and Articles II, IV and VIII thereof, and the provisions implementing the provisions described in paragraph 2 below); provided that: (a) Warburg and H&F shall jointly have the sole right (on behalf of themselves and all other Purchasers) to make any and all determinations with respect to, or to take any and all actions necessary to effectuate the provisions of, Section B of the Subscription Agreement (including the right to approve any amendment or acceleration of, or to waive compliance by Arch with, any of the terms thereof), provided that the consequences of such determinations and actions by Warburg and H&F do not apply differently to the GE Private Equity Purchaser than to Warburg and H&F (or, if they apply differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Private Equity Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (b) Warburg and H&F shall have the sole right to determine whether each condition for the Purchasers contained in Section C of the Subscription Agreement is satisfied; (c) the failure of the conditions set forth in Section C.2 of the Subscription Agreement due to any breach by the GE Private Equity Purchaser of any representation, warranty or covenant shall not affect the obligation of the Company to sell the Securities on the Closing Date to either Warburg or H&F; (d) the GE Private Equity Purchaser shall be subject to Section D.1 and D.2 of the Subscription Agreement, including the covenants thereunder; (e) the GE Private Equity Purchaser shall have no rights (including no right to consent to any action proposed to be taken by Arch under, or any right to waive compliance by Arch with, any covenant or agreement) as a "Purchaser" under Section D.4 of the Subscription Agreement, it being acknowledged that each GE Private Equity Purchaser shall, however, have the obligations of a "Purchaser" under Sections D.4(d), (g) and (i) thereof; provided that any information provided to the Company pursuant to Section D.4(g) shall be held confidentially and not used for any purpose other than as set forth in Section D.4(g); (f) the GE Private Equity Purchaser shall not be considered an "original signatory" to the Subscription Agreement for purposes of Section E.6 thereof, provided that no amendment, modification or waiver of Section E of the -3- Subscription Agreement shall affect the GE Private Equity Purchaser differently than Warburg and H&F (or, if they affect them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Private Equity Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (g) no consent of the GE Private Equity Purchaser shall be required to effect any modification or amendment to the Subscription Agreement (including, without limitation, Schedules A and B, and Exhibits I, II and III thereto), unless such amendment or modification affects the GE Private Equity Purchaser differently than Warburg and H&F (or, if they affect them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Private Equity Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (h) the GE Private Equity Purchaser shall have no rights under Section F.2 (except the right to be reimbursed by the Company, together with the other GE Private Equity Purchaser, for up to an aggregate of up to $50,000 in counsel fees), and no right to assign under Section F.4, of the Subscription Agreement (except that the GE Private Equity Purchaser may assign its rights and obligations under the Subscription Agreement in connection with a transfer of Securities to (i) any person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by or under common control with, such GE Private Equity Purchaser, (ii) an entity over which such GE Private Equity Purchaser has management rights, or (iii) if such GE Private Equity Purchaser is affiliated with a trustee of a pension trust, to a successor trustee or trust, in each case so long as such transferee becomes a party to, and bound by, this Agreement, Amendment No. 1 to the Subscription Agreement and the Shareholders Agreement (a "Permitted Transferee"); (i) Amendment No. 1 to the Subscription Agreement will contain a covenant by the Company to conduct its business in compliance with law including, without limitation, the Foreign Corrupt Practices Act; (j) so long as the GE Private Equity Purchaser owns any equity interest in the Company, the Company agrees to furnish to the GE Private Equity Purchaser a copy of its annual and quarterly reports filed under the Securities and Exchange Act of 1934; and (k) for the avoidance of doubt, the GE Private Equity Purchaser shall become parties to the Shareholders Agreement as an "Investor" solely for purposes of Sections 3.4, 5.1, 5.2 and 5.3 and Articles II, IV and VIII thereof and the -4- provisions thereof implementing the provisions of paragraph 2 below; it being further understood that Warburg and H&F can consent on behalf of all other Investors to (A) any amendment or modification whatsoever of the Sections of the Shareholders Agreement that do not apply to the GE Private Equity Purchaser and (B) any amendment or modification of the Sections of the Shareholders Agreement that do apply to the GE Private Equity Purchaser, so long as in the case of clause (B), such amendment or modification does not affect the GE Private Equity Purchaser differently than Warburg and H&F (or, if it affects them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement or the Shareholders Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Private Equity Purchaser or more favorable to Warburg and H&F as a result of such determination or action). 2. Registration; Tag-Along. Arch, the Original Signatories and the GE Private Equity Purchaser agree that the Shareholders Agreement will be amended and restated to provide that: (a) if the GE Private Equity Purchaser exercises its right under Section 4.3 thereof, any cutback pursuant to Section 4.4 thereof will treat the GE Private Equity Purchaser at least as favorably as Warburg and H&F (i.e., the GE Private Equity Purchaser will have priority under clause (b), and not under clause (c), thereof); (b) Warburg and H&F agree that in the case of a Warburg Demand or an H&F Demand involving an underwritten public offering, when selecting an underwriter, the consent of the General Electric Pension Trust will be required for the selection of any underwriter in which the General Electric Company has a direct or indirect interest of 5% or more if the GE Private Equity Purchaser will be a participating seller in the offering; (c) the GE Private Equity Purchasers will have the obligations of a Selling Investor (considered together for the purpose of determining whether the Selling Investor has met the $50 million threshold), and the rights of a Tag-Along Investor, under Section 5.1 thereof; provided that (1) each Investor participating in a transaction under Section 5.1 shall only be responsible for its pro rata portion of any indemnification (except in respect of representations specifically relating to such Investor) and (2) in the event that H&F is a Selling Investor, the GE Private Equity Purchasers shall only be permitted to elect to participate as a Tag-Along Investor if Warburg so elects; (c) the GE Private Equity Purchaser shall be subject to the restrictions of Section 5.2 of the Shareholders Agreement with respect to the Securities -5- acquired by it under the Subscription Agreement and any securities acquired in respect thereof, to the same extent that Warburg and H&F are restricted with respect to the Securities acquired by them under the Subscription Agreement and any securities acquired in respect thereof, provided that the GE Private Equity Purchaser will be permitted to transfer Securities to a Permitted Transferee. "Tag-Along Investor," "Third Party Sale" and "Selling Investor" have the meanings given to them in the Shareholders Agreement and to the extent necessary the term "Tag-Along Investor" shall be deemed to include more than one party. 3. Further Assurances. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary or desirable under applicable legal requirements, to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement, the parties hereto shall use their reasonable best efforts to take or cause to be taken all such necessary or desirable action and execute, and deliver and file, or cause to be executed, delivered and filed, all necessary or desirable documentation. The GE Private Equity Purchaser agrees (to the full extent of their current or future ownership of securities of Arch) to vote in favor of all matters to be submitted to shareholders of Arch in connection with the foregoing or the transactions contemplated by the Subscription Agreement (and the grants of any shares or options contemplated thereby or in connection therewith). Each of the parties will consult with each other with respect to the issuance of any press release or public announcement with respect to the foregoing. 4. Notices. All notices or other communications given or made hereunder shall be validly given or made if in writing and delivered by facsimile transmission or in person at, or mailed by registered or certified mail, return receipt requested, postage prepaid, to, the addresses (and shall be deemed effective at the time of receipt thereof): (a) If to Arch: Arch Capital Group Ltd. 20 Horseneck Lane Greenwich, CT 06830 Attention: Peter Appel, President and Chief Executive Officer Facsimile: (203) 861-7240 -6- (b) If to the GE Private Equity Purchaser: c/o GE Asset Management Incorporated 3003 Summer Street Stamford, CT 06905 Attention: Michael M. Pastore, Esq. or to such other address as the party to whom notice is to be given may have previously furnished notice in writing to the other in the manner set forth above. A notice hereunder shall not be deemed given until copies thereof are given as contemplated above. Notices to all other parties hereto shall be given in accordance with the Subscription Agreement. 5. Entire Agreement; Amendment. This Agreement, together with the Subscription Agreement, Amendment No. 1 to the Subscription Agreement (including the exhibits thereto) the Shareholders Agreement contains all of the terms agreed upon by the parties with respect to the subject matter hereof. This Agreement may be amended or the provisions thereof waived only by a written instrument signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. 6. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not constitute a part hereof. 7. Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party without the prior written consent of the other party; provided that this Agreement may be assigned by a Purchaser consistent with an assignment in accordance with Section F.4 of the Subscription Agreement and Section 1(h) of this Agreement, so long as the assignee executes an agreement in the form of this Agreement. 8. Severability. In the event that any provision or any part of this Agreement is held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall not effect the validity or enforceability of any other provision or part thereof. 9. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the substantive laws of the State of New York, without giving effect to principles of conflicts of laws. -7- 10. Counterparts. This Agreement and any instrument delivered in connection herewith may be executed in any number of counterparts with the same effect as if the signatures on all counterparts are upon the same instrument. [Signature pages follow] -8- Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the duplicate enclosed copy of this Agreement. Very truly yours, ARCH CAPITAL GROUP LTD. By: /s/ Louis Petrillo ------------------------------ Name: Louis Petrillo Title: Secretary Agreed to and Accepted As of the Date First Above Written: INSURANCE PRIVATE EQUITY INVESTORS, L.L.C. By: GE Asset Management Incorporated, its Manager, By: /s/ Patrick McNeela ---------------------------------------- Name: Patrick McNeela Title: Vice President Notice Information for Insurance Private Equity Investors, L.L.C.: c/o GE Asset Management Incorporated 3003 Summer Street Stamford, CT 06905 Attention: Michael M. Pastore, Esq. -9- HFCP IV (BERMUDA), L.P. By: H&F Investors (Bermuda) IV, L.P., its General Partner By: H&F Corporate Investors IV (Bermuda), Ltd. its General Partner By: /s/ David R. Tunnell ---------------------------------- Name: David R. Tunnell Title: Authorized Signatory WARBURG PINCUS PRIVATE EQUITY VIII, L.P. WARBURG PINCUS INTERNATIONAL PARTNERS, L.P. WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V. WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS II, C.V. By: Warburg, Pincus & Co., its General Partner By: /s/ Kewsong Lee --------------------------------- Name: Kewsong Lee Title: Partner -10- SCHEDULE 1 Amount Warburg Purchaser Assigned Warburg Pincus Private Equity VIII, L.P. $25,000,000 Warburg Pincus International Partners, L.P. $24,000,000 Warburg Pincus Netherlands International Partners I, C.V. $600,000 Warburg Pincus Netherlands International Partners II, C.V. $400,000 ================= Total $50,000,000 EX-99.III 5 dex99iii.txt LETTER AGREEMENT AMONG ORBITAL, WARBURG EXHIBIT III EXECUTION COPY ARCH CAPITAL GROUP LTD. 20 Horseneck Lane Greenwich, CT 06830 November 20, 2001 Orbital Holdings, Ltd. Warburg Pincus Private Equity VIII, L.P. (the "GE Orbital Holdings Purchaser") Warburg Pincus International Partners, L.P. Warburg Pincus Netherlands International c/o GE Capital Partners I, C.V. 120 Longridge Rd. Warburg Pincus Netherlands International Stamford, CT 06927 Partners II, C.V. (collectively, "Warburg") 466 Lexington Avenue New York, NY 10017 HFCP IV (Bermuda), L.P. ("H&F") c/o Hellman & Friedman LLC One Maritime Plaza Suite 1200 San Francisco, CA 94111
Ladies and Gentlemen: This letter agreement (this "Agreement") confirms the agreement reached today among each of the parties signatories hereto regarding the participation of the GE Orbital Holdings Purchaser in the purchase of a portion of the Securities, as contemplated by, and on the terms set forth in, this Agreement and the Subscription Agreement dated as of October 24, 2001, as amended (the "Subscription Agreement") by and among Arch Capital Group Ltd. ("Arch"), Warburg and H&F (the "Original Signatories"), and certain other matters in connection therewith. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Subscription Agreement. 1. Investment by GE Orbital Holdings Purchaser. Warburg hereby assigns, without recourse or warranty by it, to the GE Orbital Holdings Purchaser (as set forth in Schedule 1 hereto) the right, and obligation, to purchase an aggregate of $10,000,000 of the Securities on the terms and conditions set forth in the Subscription Agreement (except as explicitly modified hereby), as a Purchaser (as defined in the Subscription Agreement). The GE Orbital Holdings Purchaser acknowledges that its investment will be required to be made -2- on the Closing Date, simultaneously with the investments being made by the Original Signatories. The GE Orbital Holdings Purchaser shall become a "Purchaser" under the Subscription Agreement and an "Investor" under the Shareholders Agreement (solely for purposes of Sections 3.4, 5.1, 5.2 and 5.3 and Articles II, IV and VIII thereof, and the provisions implementing the provisions described in paragraph 2 below); provided that: (a) Warburg and H&F shall jointly have the sole right (on behalf of themselves and all other Purchasers) to make any and all determinations with respect to, or to take any and all actions necessary to effectuate the provisions of, Section B of the Subscription Agreement (including the right to approve any amendment or acceleration of, or to waive compliance by Arch with, any of the terms thereof), provided that the consequences of such determinations and actions by Warburg and H&F do not apply differently to the GE Orbital Holdings Purchaser than to Warburg and H&F (or, if they apply differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Orbital Holdings Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (b) Warburg and H&F shall have the sole right to determine whether each condition for the Purchasers contained in Section C of the Subscription Agreement is satisfied; (c) the failure of the conditions set forth in Section C.2 of the Subscription Agreement due to any breach by the GE Orbital Holdings Purchaser of any representation, warranty or covenant shall not affect the obligation of the Company to sell the Securities on the Closing Date to either Warburg or H&F (d) the GE Orbital Holdings Purchaser shall be subject to Section D.1 and D.2 of the Subscription Agreement, including the covenants thereunder; (e) the GE Orbital Holdings Purchaser shall have no rights (including no right to consent to any action proposed to be taken by Arch under, or any right to waive compliance by Arch with, any covenant or agreement) as a "Purchaser" under Section D.4 of the Subscription Agreement, it being acknowledged that each GE Orbital Holdings Purchaser shall, however, have the obligations of a "Purchaser" under Sections D.4(d), (g) and (i) thereof; provided that any information provided to the Company pursuant to Section D.4(g) shall be held confidentially and not used for any purpose other than as set forth in Section D.4(g); (f) the GE Orbital Holdings Purchaser shall not be considered an "original signatory" to the Subscription Agreement for purposes of Section E.6 thereof, provided that no amendment, modification or waiver of Section E of the -3- Subscription Agreement shall affect the GE Orbital Holdings Purchaser differently than Warburg and H&F (or, if they affect them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Orbital Holdings Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (g) no consent of the GE Orbital Holdings Purchaser shall be required to effect any modification or amendment to the Subscription Agreement (including, without limitation, Schedules A and B, and Exhibits I, II and III thereto), unless such amendment or modification affects the GE Orbital Holdings Purchaser differently than Warburg and H&F (or, if they affect them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Orbital Holdings Purchaser or more favorable to Warburg and H&F as a result of such determination or action); (h) the GE Orbital Holdings Purchaser shall have no rights under Section F.2 (except the right to be reimbursed by the Company, together with the other GE Orbital Holdings Purchaser, for up to an aggregate of up to $50,000 in counsel fees), and no right to assign under Section F.4, of the Subscription Agreement (except that the GE Orbital Holdings Purchaser may assign its rights and obligations under the Subscription Agreement in connection with a transfer of Securities to (i) any person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by or under common control with, such GE Orbital Holdings Purchaser, (ii) an entity over which such GE Orbital Holdings Purchaser has management rights, or (iii) if such GE Orbital Holdings Purchaser is affiliated with a trustee of a pension trust, to a successor trustee or trust, in each case so long as such transferee becomes a party to, and bound by, this Agreement, Amendment No. 1 to the Subscription Agreement and the Shareholders Agreement (a "Permitted Transferee"); (i) Amendment No. 1 to the Subscription Agreement will contain a covenant by the Company to conduct its business in compliance with law including, without limitation, the Foreign Corrupt Practices Act; (j) so long as the GE Orbital Holdings Purchaser owns any equity interest in the Company, the Company agrees to furnish to the GE Orbital Holdings Purchaser a copy of its annual and quarterly reports filed under the Securities and Exchange Act of 1934; and (k) for the avoidance of doubt, the GE Orbital Holdings Purchaser shall become parties to the Shareholders Agreement as an "Investor" solely for purposes of Sections 3.4, 5.1, 5.2 and 5.3 and Articles II, IV and VIII thereof and the provisions thereof implementing the provisions of paragraph 2 below; it being further understood that Warburg and H&F can -4- consent on behalf of all other Investors to (A) any amendment or modification whatsoever of the Sections of the Shareholders Agreement that do not apply to the GE Orbital Holdings Purchaser and (B) any amendment or modification of the Sections of the Shareholders Agreement that do apply to the GE Orbital Holdings Purchaser, so long as in the case of clause (B), such amendment or modification does not affect the GE Orbital Holdings Purchaser differently than Warburg and H&F (or, if it affects them differently, it is because of differences in the treatment of Warburg and H&F as opposed to other Purchasers existing in the Subscription Agreement or the Shareholders Agreement (as modified by this Agreement) and such differences are not made more adverse to the GE Orbital Holdings Purchaser or more favorable to Warburg and H&F as a result of such determination or action). 2. Registration; Tag-Along. Arch, the Original Signatories and the GE Orbital Holdings Purchaser agree that the Shareholders Agreement will be amended and restated to provide that: (a) if the GE Orbital Holdings Purchaser exercises its right under Section 4.3 thereof, any cutback pursuant to Section 4.4 thereof will treat the GE Orbital Holdings Purchaser at least as favorably as Warburg and H&F (i.e., the GE Orbital Holdings Purchaser will have priority under clause (b), and not under clause (c), thereof); (b) Warburg and H&F agree that in the case of a Warburg Demand or an H&F Demand involving an underwritten public offering, when selecting an underwriter, the consent of the General Electric Pension Trust will be required for the selection of any underwriter in which the General Electric Company has a direct or indirect interest of 5% or more if the GE Orbital Holdings Purchaser will be a participating seller in the offering; (c) the GE Orbital Holdings Purchasers will have the obligations of a Selling Investor (considered together for the purpose of determining whether the Selling Investor has met the $50 million threshold), and the rights of a Tag-Along Investor, under Section 5.1 thereof; provided that (1) each Investor participating in a transaction under Section 5.1 shall only be responsible for its pro rata portion of any indemnification (except in respect of representations specifically relating to such Investor) and (2) in the event that H&F is a Selling Investor, the GE Orbital Holdings Purchasers shall only be permitted to elect to participate as a Tag-Along Investor if Warburg so elects; (c) the GE Orbital Holdings Purchaser shall be subject to the restrictions of Section 5.2 of the Shareholders Agreement with respect to the Securities acquired by it under the Subscription Agreement and any securities acquired in respect thereof, to the same extent that Warburg and H&F are restricted with respect to the Securities acquired by them under the Subscription Agreement and any securities -5- acquired in respect thereof, provided that the GE Orbital Holdings Purchaser will be permitted to transfer Securities to a Permitted Transferee. "Tag-Along Investor," "Third Party Sale" and "Selling Investor" have the meanings given to them in the Shareholders Agreement and to the extent necessary the term "Tag-Along Investor" shall be deemed to include more than one party. 3. Further Assurances. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary or desirable under applicable legal requirements, to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement, the parties hereto shall use their reasonable best efforts to take or cause to be taken all such necessary or desirable action and execute, and deliver and file, or cause to be executed, delivered and filed, all necessary or desirable documentation. The GE Orbital Holdings Purchaser agrees (to the full extent of their current or future ownership of securities of Arch) to vote in favor of all matters to be submitted to shareholders of Arch in connection with the foregoing or the transactions contemplated by the Subscription Agreement (and the grants of any shares or options contemplated thereby or in connection therewith). Each of the parties will consult with each other with respect to the issuance of any press release or public announcement with respect to the foregoing. 4. Notices. All notices or other communications given or made hereunder shall be validly given or made if in writing and delivered by facsimile transmission or in person at, or mailed by registered or certified mail, return receipt requested, postage prepaid, to, the addresses (and shall be deemed effective at the time of receipt thereof): (a) If to Arch: Arch Capital Group Ltd. 20 Horseneck Lane Greenwich, CT 06830 Attention: Peter Appel, President and Chief Executive Officer Facsimile: (203) 861-7240 (b) If to the GE Orbital Holdings Purchaser: c/o GE Capital 120 Longridge Rd. Stamford, CT 06927 -6- or to such other address as the party to whom notice is to be given may have previously furnished notice in writing to the other in the manner set forth above. A notice hereunder shall not be deemed given until copies thereof are given as contemplated above. Notices to all other parties hereto shall be given in accordance with the Subscription Agreement. 5. Entire Agreement; Amendment. This Agreement, together with the Subscription Agreement, Amendment No. 1 to the Subscription Agreement (including the exhibits thereto) the Shareholders Agreement contains all of the terms agreed upon by the parties with respect to the subject matter hereof. This Agreement may be amended or the provisions thereof waived only by a written instrument signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. 6. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not constitute a part hereof. 7. Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party without the prior written consent of the other party; provided that this Agreement may be assigned by a Purchaser consistent with an assignment in accordance with Section F.4 of the Subscription Agreement and Section 1(h) of this Agreement, so long as the assignee executes an agreement in the form of this Agreement. 8. Severability. In the event that any provision or any part of this Agreement is held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall not effect the validity or enforceability of any other provision or part thereof. 9. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the substantive laws of the State of New York, without giving effect to principles of conflicts of laws. 10. Counterparts. This Agreement and any instrument delivered in connection herewith may be executed in any number of counterparts with the same effect as if the signatures on all counterparts are upon the same instrument. [Signature pages follow] -7- Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the duplicate enclosed copy of this Agreement. Very truly yours, ARCH CAPITAL GROUP LTD. By: /s/ Louis Petrillo --------------------------- Name: Louis Petrillo Title: Secretary Agreed to and Accepted As of the Date First Above Written: ORBITAL HOLDINGS, LTD. By: /s/ Lorraine Hliboki ----------------------------------- Name: Lorraine Hliboki Title: Attorney-in-fact Notice Information for Orbital Holdings, Ltd.: c/o GE Capital 120 Longridge Rd. Stamford, CT 06927 -8- HFCP IV (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner By: H&F Corporate Investors IV (Bermuda) Ltd. its General Partner By: /s/ David R. Tunnell ----------------------------------- Name: David R. Tunnell Title: Authorized Signatory WARBURG PINCUS PRIVATE EQUITY VIII, L.P. WARBURG PINCUS INTERNATIONAL PARTNERS, L.P. WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V. WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS II, C.V. By: Warburg, Pincus & Co., its General Partner By: /s/ Kewsong Lee ----------------------------------- Name: Kewsong Lee Title: Partner -9- SCHEDULE 1 Amount Warburg Purchaser Assigned ----------------- -------- Warburg Pincus Private Equity VIII, L.P. $5,000,000 Warburg Pincus International Partners, L.P. $4,800,000 Warburg Pincus Netherlands International Partners I, C.V. $120,000 Warburg Pincus Netherlands International Partners II, C.V. $80,000 ================ Total $10,000,000 EX-99.IV 6 dex99iv.txt CERTIFICATE OF DESIGNATIONS OF SERIES A EXHIBIT IV Final Schedule to the Bye-laws of Arch Capital Group Ltd. CERTIFICATE OF DESIGNATIONS OF SERIES A CONVERTIBLE PREFERENCE SHARES The terms of the authorized Preference Shares (as defined below) of Arch Capital Group Ltd., a company incorporated under the laws of Bermuda (the "Company"), shall be as set forth below in this Schedule to the Bye-laws of the Company (this "Schedule"). (a) Designation. (1) There is hereby created from the authorized and unissued preference shares of the Company a series of convertible preference shares designated as the Company's "Series A Convertible Preference Shares" (the "Preference Shares") as designated by the Board of Directors. Each Preference Share will have a liquidation preference of $21.00 (the "Liquidation Preference"). (2) All Preference Shares purchased, exchanged, converted or otherwise acquired by the Company shall be repurchased and canceled and, upon the taking of any action required by applicable law, shall be restored to the status of authorized but unissued preference shares of the Company, without designation as to series, and may thereafter be reissued. (b) Currency. All Preference Shares shall be denominated in United States currency, and all payments and distributions thereon or with respect thereto shall be made in United States currency. All references herein to "$" or "dollars" refer to United States currency. (c) Ranking. The Preference Shares shall, with respect to dividend rights and rights upon liquidation, winding up or dissolution, rank (1) prior to each other class or series of shares of the Company except Parity Shares and (2) on a parity with Parity Shares. For purposes hereof, (A) "Junior Shares" shall mean the Common Shares of the Company, par value $0.01 per share (the "Common Shares") and the shares of any other class or series of equity securities of the Company which, by the terms of the Bye-laws of the Company or of the instrument by which the Board of Directors shall fix the rights, preferences and limitations thereof, shall not be designated as ranking on a parity with the Preference Shares in respect of dividend rights and rights upon liquidation, winding up or dissolution and (B) "Parity Shares" shall mean the shares of any other class or series of equity securities of the Company which, by the terms of the Bye-laws of the Company or of the instrument by which the Board of Directors shall fix the rights, preferences and limitations thereof, shall, in the event that the dividends thereon are not paid in full, be entitled to share ratably with the Preference Shares, or shall, in the event that the amounts payable thereon on liquidation are -2- not paid in full, be entitled to share ratably with the Preference Shares in any distribution of assets other than by way of dividends in accordance with the sums which would be payable in such distribution if all sums payable were discharged in full. (d) Dividends. The holders of Preference Shares shall be entitled to receive, from funds legally available therefor, dividends payable when, as and if dividends (including, without limitation, any dividend consisting of stock or other securities or property or rights or warrants to subscribe for securities of the Company or any of its subsidiaries by way of dividend or spin-off) are declared by the Board of Directors with respect to the Common Shares. Dividends shall be payable on each outstanding Preference Share in an amount per Preference Share equal to the amount of such dividends as would be payable with respect to the number of Common Share(s) into which such Preference Share is convertible pursuant to paragraphs (g)(1) and (h). No dividends may be paid or declared on or with respect to the Common Shares prior to the declaration and payment of a dividend on or with respect to the Preference Shares. Dividends shall be non-cumulative. (e) Liquidation Preference. (1) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company or a reduction or decrease in the Company's shares resulting in a distribution of assets to the holders of any class or series of the Company's shares, each holder of Preference Shares shall be entitled to payment out of the assets of the Company available for distribution of an amount equal to the then effective Liquidation Preference per Preference Share held by such holder, plus all accumulated and unpaid dividends thereon, before any distribution is made on any Junior Shares, including, without limitation, Common Shares. If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company or a reduction or decrease in the Company's capital Shares, the amounts payable with respect to Preference Shares and all other Parity Shares are not paid in full, the holders of Preference Shares and the holders of the Parity Shares shall share equally and ratably in any distribution of assets of the Company in proportion to the full liquidation preference and all accumulated and unpaid dividends to which each such holder is entitled. (2) Neither the voluntary sale, conveyance, exchange or transfer (for cash, shares, securities or other consideration) of all or substantially all of the property or assets of the Company nor the consolidation, merger or amalgamation of the Company with or into any person or the consolidation, merger or amalgamation of any person with or into the Company shall alone be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Company, or a reduction or decrease in the capital of the Company, without the adoption of a formal plan of liquidation by the Company. (f) Voting Rights. Except as required by applicable Bermuda law, the Bye-laws of the Company and as may otherwise be provided herein or in any amendment -3- hereto, the holders of Preference Shares shall not be entitled to any voting rights as shareholders of the Company except as follows: (1) The affirmative vote of the holders of at least a majority of the outstanding Preference Shares, voting with holders of shares of all other series of preference shares affected in the same way as a single class, in person or by proxy, at a special or annual meeting called for the purpose, or by written consent in lieu of a meeting, shall be required to amend, repeal or change any provisions of this Schedule in any manner which would adversely affect, alter or change the powers, preferences or special rights of the Preference Shares and any such securities affected in the same way; provided, however, that the creation, authorization or issuance of any other class or series of capital shares or the increase or decrease in the amount of authorized shares of any such class or series or of the Preference Shares, or any increase, decrease or change in the par value of any class or series of shares (including the Preference Shares), shall not require the consent of the holders of the Preference Shares and shall not be deemed to affect adversely, alter or change the powers, preferences and special rights of the Preference Shares. With respect to any matter on which the holders are entitled to vote as a separate class, each Preference Share shall be entitled to one vote. (2) Holders of Preference Shares shall be entitled to notice of any shareholders' meeting. The holders of Preference Shares shall be entitled to vote upon all matters upon which holders of the Common Shares have the right to vote, and shall be entitled to the number of votes equal to the largest whole number of Common Shares into which such Preference Shares could be converted pursuant to the provisions of paragraphs (g)(1) and (h) hereof, at the record date for the determination of the shareholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, such votes to be counted together with all other shares having general voting powers and not separately as a class. (3) Notwithstanding the provisions of paragraph (f)(2), the vote of the Preference Shares shall be limited as set forth herein. (A) Prior to receipt of the Requisite Shareholder Approval, if the votes conferred by the Controlled Shares (as defined in bye-law 45) of any person, including the Preference Shares held by that person, would otherwise represent more than 9.9% of the voting power of all shares entitled to vote generally at an election of Directors, the vote of each Preference Share held by such person shall be reduced by whatever amount is necessary so that after any such reduction, the votes conferred by the Controlled Shares of such person, including such Preference Shares, shall -4- constitute 9.9% of the total voting power of all shares of the Company entitled to vote generally at any election of Directors. (B) Prior to the receipt of the Requisite Shareholder Approval, if the aggregate votes conferred by the Preference Shares then outstanding, together with any Common Shares issued upon conversion of any Preference Shares, or issued upon exercise of any Class A Warrants issued under the Subscription Agreement or the Management Subscription Agreement (including by operation of the anti-dilution adjustments in the Class A Warrants), or issued in cancellation of the Class A Warrants of the Company in connection with the transactions under the Subscription Agreement (together, the "Aggregate Potential Votes") would exceed 19.9% of the total votes entitled to be cast by the Common Shares issued and outstanding on November 19, 2001 (the "Total Base Votes"), then the vote of each Preference Share shall be reduced proportionately (in relation to the total number of Preference Shares then outstanding) so that, after giving effect to such reduction, the Aggregate Potential Votes do not exceed 19.9% of the Total Base Votes (it being understood that if both clause (A) and this clause (B) apply, clause (B) shall be applied first, then clause (A)). (C) Prior to the receipt of the Requisite Regulatory Approval, if the votes conferred by Common Shares and Preference Shares beneficially owned by a given person would otherwise represent more than 9.9% of the voting power of all shares entitle to vote generally at an election of Directors, the vote of each Preference Share held by such person shall be reduced by whatever amount is necessary so that after any such reduction, the votes conferred by the Common Shares and Preference Shares beneficially owned by such person, shall constitute 9.9% of the total voting power of all shares of the Company entitled to vote generally at any election of Directors. (D) Until such time as any waiting period with respect to the acquisition of Preference Shares by Orbital Holdings, Ltd. And Insurance Private Equity Investors, L.P. required to expire under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, including any extensions thereof, shall have expired or been terminated, the Preference Shares held by such -5- GE Purchasers shall not have any votes with respect to the election of directors. (g) Conversion. (1) Optional Conversion. Each Preference Share shall be convertible at any time and from time to time at the option of the holder thereof into fully paid and nonassessable Common Shares. The number of Common Shares deliverable upon conversion of a Preference Share as of the Issuance Date, subject to adjustment as hereinafter provided, shall be one. (2) Mandatory Conversion. Following the later of (a) receipt of the Requisite Shareholder Approval and the Requisite Regulatory Approval, and (b) 90 days following the consummation of the Final Adjustment contemplated by Section B.3 of the Subscription Agreement, the Preference Shares shall automatically convert into Common Shares. The number of Common Shares deliverable upon conversion of a Preference Share shall be as set forth in paragraphs (g)(1) and (h). (3) Fractional Shares. In connection with the conversion of any Preference Shares, no fractions of Common Shares shall be issued, but in lieu thereof, the Company shall pay a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Current Market Price of the Common Shares as of the date of conversion. If more than one Preference Share shall be surrendered for conversion by the same holder at the same time, the number of full Common Shares issuable on conversion thereof shall be computed on the basis of the total number of Preference Shares so surrendered. (4) Mechanics of Conversion. (a) Before any holder of Preference Shares shall be entitled to convert the same into Common Shares, he shall surrender the certificate or certificates therefor, duly endorsed, or deliver an appropriate indemnity agreement, at the office of the Company or its transfer agent for the Preference Shares and shall give written notice to the Company of the election to convert the same and shall state therein the name or names in which the certificate or certificates for Common Shares are to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preference Shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of Common Shares to which such holder shall be entitled as aforesaid. A certificate or certificates will be issued for the remaining Preference Shares in any case in which fewer than all of the Preference Shares represented by a certificate are converted. (b) In connection with the mandatory conversion, the Company shall deliver written notice to each such holder that the conversion date has occurred and the place where certificates are to be surrendered for conversion. -6- (5) Issue Taxes. The Company shall pay all issue taxes, if any, incurred in respect of the issue of Common Shares on conversion. If a holder of shares surrendered for conversion specifies that the Common Shares to be issued on conversion are to be issued in a name or names other than the name or names in which such surrendered shares stand, the Company shall not be required to pay any transfer or other taxes incurred by reason of the issuance of such Common Shares to the name of another. (6) Reservation of Shares. The Company shall at all times reserve and keep available, free from preemptive rights, for issuance upon the conversion of Preference Shares, such number of its authorized but unissued Common Shares as will from time to time be sufficient to permit the conversion of all outstanding Preference Shares. Prior to the delivery of any securities which the Company shall be obligated to deliver upon conversion of the Preference Shares, the Company shall comply with all applicable laws and regulations which require action to be taken by the Company. All Common Shares delivered upon conversion of the Preference Shares will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (h) Conversion Price Adjustments. The number of Common Shares into which each Preference Share is convertible shall be subject to adjustment from time to time as follows: (1) Share Splits and Combinations. In case the Company shall at any time or from time to time after the Issuance Date (A) subdivide or split the outstanding Common Shares, (B) combine or reclassify the outstanding Common Shares into a different number of shares or (C) issue by reclassification of the Common Shares any shares of the Company, then, and in each such case, the number of Common Shares into which each Preference Share is convertible shall be adjusted so that the holder of any Preference Shares thereafter surrendered for conversion shall be entitled to receive the number of Common Shares or other securities of the Company which such holder would have owned or have been entitled to receive after the occurrence of any of the events described above, had such Preference Shares been surrendered for conversion immediately prior to the occurrence of such event or the record date therefor, whichever is earlier. An adjustment made pursuant to this subparagraph (1) shall become effective at the close of business on the day upon which such corporate action becomes effective. Such adjustment shall be made successively whenever any event listed above shall occur. (2) Share Dividends in Common Shares. In case the Company at any time or from time to time after the Issuance Date pays a dividend or makes a distribution in Common Shares on any class of shares of the Company (other than a dividend or distribution of Common Shares or other securities which is made directly to the holders of Preference Shares pursuant to paragraph (d), or with respect to which -7- adjustments are provided in paragraph (h)(1) above) the number of Common Shares into which each Preference Share is convertible shall be adjusted so that the holder of any Preference Shares thereafter surrendered for conversion shall be entitled to receive the number of Common Shares which such holder would have owned or have been entitled to receive after such dividend, had such Preference Shares been surrendered for conversion immediately prior to the record date for the determination of holders entitled to receive such dividend. (3) Distribution of Indebtedness, Securities or Assets. In case the Company distributes to all holders of Common Shares (whether by dividend or other distribution, or in a merger, amalgamation or consolidation or otherwise) evidences of indebtedness, shares of any class or series, other securities, including rights or warrants to subscribe for securities, cash or assets, in each case, of the Company or any of its subsidiaries (other than a dividend or distribution which is made directly to the holders of Preference Shares pursuant to paragraph (d) above), the Company shall distribute to the holders of Preference Shares the same in an amount per Preference Share equal to the amount as would be payable with respect to the number of Common Share(s) into which such Preference Share is convertible pursuant to paragraphs (g)(1) and (h). (4) Transactions in Which Common Shares are Exchanged. In case at any time the Company shall be a party to any transaction (including, without limitation, a merger, amalgamation, consolidation, sale of all or substantially all of the Company's assets, liquidation or recapitalization of the Common Shares and excluding any transaction to which clauses (1), (2) or (3) of this paragraph (h) apply) in which the previously outstanding Common Shares shall be changed into or exchanged for different securities of the Company or common stock or other securities of another corporation or entity (including cash) or any combination of any of the foregoing (each such transaction being a "Transaction"), the Company shall make all necessary provisions such that each Preference Share shall thereafter be convertible into, in lieu of Common Shares, the amount of securities or other property to which such holder would actually have been entitled as a holder of Common Shares upon the consummation of the Transaction if such holder had converted such Preference Shares immediately prior to such Transaction (subject to adjustments from and after consummation of the Transaction as nearly equivalent as possible to the adjustments provided for in this paragraph (h)). (5) Below Market Offerings of Common Shares. In case the Company shall at any time, or from time to time, issue Common Shares (or securities convertible into, or exercisable for, Common Shares) at a price per share (or having a conversion or exercise price per share) less than the Current Market Price (or, in the case of an issuance or sale in connection with an underwritten public offering, less than 99% of -8- the Current Market Price, as determined by the underwriters, less underwriting discounts and commissions) as of the date of issuance of such shares or of such other securities, then, and in each such case, the number of Common Shares into which each Preference Share is convertible shall be adjusted so that the holder of each share thereof shall be entitled to receive, upon the conversion thereof, the number of Common Shares determined by multiplying (A) the number of Common Shares into which such share was convertible on the day immediately prior to such date by (B) a fraction, the numerator of which shall be the sum of (i) the number of Common Shares outstanding on such date and (ii) the number of additional Common Shares issued (or into which the other securities may convert or be exercised), and the denominator of which shall be the sum of (aa) the number of Common Shares outstanding on such date and (bb) the number of Common Shares which the aggregate consideration receivable by the Company for the total number of Common Shares so issued (or into which the other securities may convert or be exercised) would purchase at such Current Market Price on such date. An adjustment made pursuant to this subparagraph (5) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively immediately after the close of business on such date. For purposes of this subparagraph (5), the aggregate consideration receivable by the Company in connection with the issuance of Common Shares, or of other securities convertible into or exercisable for Common Shares, shall be deemed to be equal to the sum of the aggregate offering price (before deduction of reasonable underwriting discounts or commissions and expenses) of all such securities plus the minimum aggregate amount, if any, payable upon conversion or exercise of any such other securities into Common Shares. The provisions of this clause (h) shall not apply to the issuance of any Common Shares (i) pursuant to any restricted share, share option, share purchase or similar plan or arrangement for the benefit of employees or directors of the Company or any of its subsidiaries approved by the Board of Directors or a duly organized committee thereof, (ii) pursuant to options, warrants and conversion rights outstanding on November 20, 2001, or (iii) issued upon conversion of Preference Shares or exercise of Class A Warrants issued under the Subscription Agreement or the Management Subscription Agreement, including pursuant to the purchase price adjustments therein. (i) Certain Definitions. As used in this Schedule, the following terms shall have the following meanings, unless the context otherwise requires: "Board of Directors" means the Board of Directors of the Company. "Business Day" means any day other than a Saturday, Sunday or a United States federal or Bermuda holiday. -9- "Conversion Price" per Preference Share at any time means the price equal to $21.00 divided by the number of Common Shares into which such share is then convertible. "Current Market Price" means the average of the closing bid and asked prices of the Common Shares as reported by the National Association of Securities Dealers Automated Quotation System, or if the Common Shares are not there listed, on the principal United States national exchange on which such shares are listed or admitted. "Issuance Date" means the first date of issuance of any Preference Shares. "Management Subscription Agreement" means the Management Subscription Agreement, dated as of October 24, 2001, by and between the Company and certain of its officers and directors parties thereto. "Requisite Regulatory Approval" means approval by the insurance authorities in the States of Florida, Missouri, Nebraska and Wisconsin of the acquisition of greater than 9.9% of the total voting power of all shares of the Company entitled to vote generally in the election of directors by the persons who are original signatories to the Subscription Agreement as "Purchasers". "Requisite Shareholder Approval" means the approval by the holders of Common Shares and Preference Shares of (a) an amendment to bye-laws 45 and 75 in the form of Exhibit III to the Subscription Agreement, and (b) the issuance of Common Shares issuable upon conversion of all Preference Shares issued under the Subscription Agreement and the Management Subscription Agreement and the issuance of Common Shares issuable upon exercise of all Class A Warrants issued under the Subscription Agreement and the Management Subscription Agreement (including by operation of the anti-dilution adjustments in the Class A Warrants), to the extent that the number of all such Common Shares and Common Shares issued in cancellation of the Class A Warrants of the Company in connection with the transactions under the Subscription Agreement would exceed 19.9% of the total number of Common Shares issued and outstanding on November 19, 2001. "Subscription Agreement" means the Subscription Agreement, dated as of October 24, 2001, by and between Arch Capital Group Ltd., a company organized under the laws of Bermuda, and each of the Purchasers named therein, as amended as of November 20, 2001. (j) Headings. The headings of the paragraphs of this Schedule are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. (k) Bye-laws. This Schedule shall be attached to the Bye-laws of the Company and shall become incorporated in such Bye-laws. EX-99.V 7 dex99v.txt FORM OF ISSUER'S CLASS A WARRANTS EXHIBIT V Final Schedule to the Bye-laws of Arch Capital Group Ltd. [ ] CLASS A WARRANTS, EACH WARRANT ENTITLING THE HOLDER TO PURCHASE ONE COMMON SHARE OF ARCH CAPITAL GROUP LTD. ARCH CAPITAL GROUP LTD. THIS WARRANT (THE "WARRANT") AND THE UNDERLYING COMMON SHARES MAY NOT BE TRANSFERRED EXCEPT (I) IN COMPLIANCE WITH THE PROVISIONS OF THE AGREEMENTS PURSUANT TO WHICH THE CLASS A WARRANTS WERE ORIGINALLY ISSUED AND ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS AND (II) (A) PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), (B) IN COMPLIANCE WITH RULE 144 UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN AND IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE ACT OR (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR", AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) UNDER THE ACT IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. ARCH CAPITAL GROUP LTD., a Bermuda exempted limited company (the "Company"), hereby certifies that, for value received, [ ] (the "Holder"), or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company, at any time and from time to time in whole or in part, an aggregate of [ ] fully paid and nonassessable common shares, par value $.01 per share ("Common Shares"), of the Company during the period beginning on the date of issuance hereof (the "Closing Date") and ending on September 19, 2002 (the "Exercise Period"). 1. PURCHASE PRICE. Such Common Shares shall be purchased at a purchase price per share, subject to the provisions of Paragraph 3 hereof, equal to $20.00 (as adjusted in accordance with the terms hereof, the "Purchase Price"). The number and character of such Common Shares are subject to adjustment as provided below, and the term "Common Shares" shall mean, unless the context otherwise requires, the Common Shares or other securities or property at the time deliverable upon the exercise of this Warrant. 2. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant shall be exercised by the Holder surrendering this Warrant, with the form of -2- subscription at the end hereof duly executed by such Holder (the "Exercise Notice"), to the Company at its offices, 20 Horseneck Lane, Greenwich, Connecticut 06830, accompanied by payment as specified below of the aggregate Purchase Price determined as of the Determination Date (as defined below) of the Common Shares being purchased pursuant to such exercise. Payment of the aggregate Purchase Price may be made, at the option of the Holder, (i) in cash, (ii) by certified check or bank cashier's check payable to the order of the Company in the amount of such Purchase Price, (iii) by delivering Common Shares with an aggregate Market Price (as hereinafter defined) as of the day prior to the Company's receipt of the Exercise Notice (the "Determination Date") equal to the product of the Purchase Price and the number of Common Shares being purchased, (iv) by the Company reducing, at the request of the Holder, the number of Common Shares for which this Warrant is exercisable by a number of Common Shares (the "Surrendered Stock") such that the product of (a) the Market Price per Common Share as of the Determination Date less the Purchase Price in effect on the Determination Date multiplied by (b) the Surrendered Stock equals or exceeds the product of (x) the Purchase Price in effect on the Determination Date and (y) the number of Common Shares being purchased, or any combination of the methods of payment described in clauses (i) through (iv) above. 2.1. Partial Exercise. This Warrant may be exercised for less than the full number of Common Shares at the times called for hereby, in which case the number of Common Shares receivable upon the exercise of this Warrant as a whole, the sum payable upon the exercise of this Warrant as a whole, shall be proportionately reduced. Upon any such partial exercise, the Company at its expense will forthwith issue to the Holder hereof a new Warrant or Warrants of like tenor for the number of Common Shares as to which rights have not been exercised, such Warrant or Warrants to be issued in the name of the Holder hereof or his nominee (upon payment by such Holder of any applicable transfer taxes). 2.2. Delivery of Certificates for Common Shares on Conversion. As soon as practicable after the exercise of this Warrant and payment of the Purchase Price, and in any event within ten (10) days thereafter, the Company, at its expense, will cause to be issued in the name of and delivered to the Holder hereof a certificate or certificates for the number of fully paid and nonassessable Common Shares or other securities or property to which such Holder shall be entitled upon such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash in an amount determined in accordance with Paragraph 3.9 hereof. The Company agrees that the Common Shares so received shall be deemed to be issued to the Holder as the record owner of such Common Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment for such Common Shares made as aforesaid. 3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order to prevent dilution of the right granted hereunder, the Purchase Price shall be subject to adjustment from time to time in accordance with this Paragraph 3. Upon each adjustment -3- of the Purchase Price pursuant to this Paragraph 3, the registered holder hereof shall thereafter be entitled to acquire upon exercise of this Warrant, at the Purchase Price resulting from such adjustment, the number of shares of the Company's Common Shares obtainable by multiplying the Purchase Price in effect immediately prior to such adjustment by the number of shares of the Company's Common Shares acquirable upon conversion thereof immediately prior to such adjustment and dividing the product thereof by the Purchase Price resulting from such adjustment. 3.1. Adjustment for Issue or Sale of Common Shares. Except as provided in Paragraph 3.5 below, if and whenever on or after the date of issuance hereof the Company shall issue or sell, or shall in accordance with subparagraphs (1) to (8) of this Paragraph 3.1 inclusive, be deemed to have issued or sold any Common Shares to any person for a consideration per share less than the Market Price (or, in the case of an issuance or sale in connection with an underwritten public offering, 99% of the Market Price less underwriting discounts and commissions) in effect immediately prior to the time of such issue or sale, then forthwith upon such issue or sale (each, a "Triggering Transaction"), the Purchase Price shall, subject to subparagraphs (1) to (8) of this Paragraph 3.1, be reduced to the Purchase Price (calculated to the nearest tenth of a cent) determined by multiplying the Purchase Price in effect immediately prior to the time of such Triggering Transaction by a fraction, the numerator of which shall be the sum of (x) the product of the Number of Common Shares Deemed Outstanding (as defined below) immediately prior to such Triggering Transaction multiplied by the Market Price immediately prior to such Triggering Transaction plus (y) the total amount, if any, received or receivable at any time by the Company as consideration for the issuance or sale of such Common Shares, and the denominator of which shall be the product of (x) the Number of Common Shares Deemed Outstanding immediately after such Triggering Transaction, multiplied by (y) the Market Price immediately prior to such Triggering Transaction; provided that in the case of a sale of Common Shares pursuant to a purchase, underwriting or similar agreement, the Market Price shall mean the Market Price in effect upon the date such agreement is executed by the Company. For purposes of this Paragraph 3, the term "Number of Common Shares Deemed Outstanding" at any given time shall mean the sum of (i) the number of Common Shares outstanding at such time, and (ii) the number of Common Shares deemed to be outstanding under subparagraphs (1) to (8) of this Paragraph 3, inclusive, at such time. For purposes of this Paragraph 3, inclusive, at such time. For purposes of this Paragraph 3, the term "Market Price" shall mean, as of any date, (a) for any period during which a security shall be listed for trading on a national securities exchange or on the Nasdaq Stock Market ("Nasdaq"), or (in the case of non-United States securities) similar securities exchange, the closing price per share of such security as of such day, or, in case no reported sale occurs on such trading day, the mean of the reported closing bid and asked prices per share for the prior five trading days ending on such day, (b) for any period during which such security shall not be so listed, but when prices for such security shall be reported by Nasdaq or similar system -4- in the case of non-U.S. securities, the mean of the most recent average bid and asked prices per share as quoted by Nasdaq or such other system or (c) the market price per share of such security as determined by the Board of Directors of the Company (the "Board of Directors") as of the next preceding day, in the event neither (a) nor (b) above shall be applicable, or in the event the Board of Directors shall be in good faith determine that application of (a) or (b) would not result in a fair determination of the Market Price. For purposes of determining the adjusted Purchase Price under this Paragraph 3.1, the following subparagraphs (1) to (8), inclusive, shall be applicable: (1) In case the Company at any time shall in any manner issue or sell (whether directly or by assumption in a merger or otherwise) any rights to subscribe for or to purchase, or any options for the purchase of, Common Shares or any other securities convertible into or exchangeable or exercisable for Common Shares (such rights or options being herein called "Options" and such convertible, exchangeable or exercisable shares or securities being herein called "Convertible Securities"), whether or not such Options or the right to convert, exercise or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Shares are issuable upon exercise, conversion or exchange (determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issuing of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, by (y) the total maximum number of Common Shares issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities) shall be less than the Market Price (or, in the case of an issuance or sale in connection with an underwritten public offering, less than 99% of the Market Price less underwriting discounts and commissions), determined as of the date of such issuance or sale (or, in the case of an issuance or sale pursuant to a purchase, underwriting or similar agreement, the Market Price determined as of the date such agreement is executed by the Company), then the total maximum number of Common Shares issuable upon exercise of such Options or conversion or exchange of all such Convertible Securities shall (as of the date of the grant of such Option) be deemed to be outstanding and to have been issued and sold by the Company for such price per share. No adjustment of the Purchase Price shall be made upon exercise of such Options or conversion or exchange of such Convertible Securities, except as otherwise provided in subparagraph (3) below. (2) In case the Company at any time shall in any manner issue or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the rights to exchange, exercise or convert thereunder are immediately exercisable, and the price per share for which Common Shares are issuable upon such conversion, exercise or exchange (determined by dividing (x) the -5- total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (y) the total maximum number of Common Shares issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Market Price (or, in the case of an issuance or sale in connection with an underwritten public offering, less than 99% of the Market Price less underwriting discounts and commissions), determined as of the date of such issuance or sale (or, in the case of an issuance or sale pursuant to a purchase, underwriting or similar agreement, the Market Price determined as of the date such agreement is executed by the Company), then the total maximum number of Common Shares issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issue and sold by the Company for such price per share. No adjustment of the Purchase Price shall be made upon the actual issue of such Common Shares upon exercise of the rights to exchange or convert under such Convertible Securities, except as otherwise provided in subparagraph (3) below. (3) If the exercise price provided for in any Options referred to in subparagraph (1), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subparagraph (1) or (2), or the rate at which any Convertible Securities referred to in subparagraph (1) or (2) are convertible into or exchangeable for Common Shares, shall change at any time (other than under or by reason of provisions designed to protect against dilution of the type set forth in Paragraph 3.1 or 3.3), the Purchase Price in effect at the time of such change shall forthwith be readjusted to the Purchase Price which would have been in effect at the time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion or exchange rate, as the case may be, at the time initially granted, issued or sold. If the exercise price provided for in any Option referred to in subparagraph (1), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subparagraph (1) or (2), or the rate at which any Convertible Securities referred to in subparagraph (1) or (2) are convertible into or exchangeable for Common Shares, shall be reduced at any time under or by reason of provisions with respect thereto designed to protect against dilution, then the Purchase Price then in effect hereunder shall forthwith be adjusted to such respective amount as would have been obtained had such Option or Convertible Security never been issued as to such Common Shares and had adjustments been made upon the issuance of Common Shares delivered as aforesaid, but only if as a result of such adjustment the Purchase Price then in effect hereunder is hereby reduced and provided that there shall be no duplication of any adjustments otherwise made in accordance with the terms hereof. -6- (4) On the expiration of any Option or the termination of any right to convert or exchange any Convertible Securities, the Purchase Price then in effect hereunder shall forthwith be increased to the Purchase Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued. (5) In case any Options shall be issued in connection with the issue or sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued without consideration. (6) In case any Common Shares, Options or Convertible Securities shall be issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor. In case any Common Shares, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration as determined in good faith by the Board of Directors. (7) The number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company, but the disposition of any shares so owned or held shall be considered an issue or sale of Common Shares for the purpose of this Paragraph 3.1. (8) In case the Company shall declare a dividend or make any other distribution upon the stock of the Company payable in Common Shares, Options or Convertible Securities, then in such case any Common Shares, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. 3.2. Determination of Date of Issuance or Sale of Common Shares. For purposes of Paragraph 3.1, in case the Company shall take a record of the holders of its Common Shares for the purpose of determining holders entitled (x) to receive a dividend or other distribution payable in Common Shares, Options or Convertible Securities, or (y) to subscribe for or purchase Common Shares, Options or Convertible Securities, then such record date shall be deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right or subscription or purchase, as the case may be. 3.3. Subdivisions and Combinations. In case the Company shall at any time subdivide (other than by means of a dividend payable in Common Shares covered by -7- subparagraph 3.1(8)) its outstanding Common Shares into a greater number of shares, the Purchase Price in effect immediately prior to such subdivision shall be appropriately reduced, and, conversely, in case the outstanding Common Shares of the Company shall be combined into a smaller number of shares, the Purchase Price in effect immediately prior to such combination shall be proportionately increased. 3.4. Reorganization, Reclassification, Consolidation, Merger or Sale of Assets. If any capital reorganization or reclassification of the shares of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Shares shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Shares, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the Holder of this Warrant shall have the right to acquire and receive upon exercise hereof such common stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding Common Shares of the Company as would have been received upon exercise of this Warrant at the Purchase Price then in effect. The Company will not effect any such consolidation, merger or sale unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument, mailed or delivered to the Holder of this Warrant at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such holder such common stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. In the event that pursuant to the terms of this Paragraph 3.4, this Warrant becomes exercisable for securities other than Common Shares, then the provisions of Section 3 shall apply to such securities as though such securities were Common Shares. If a purchase, tender or exchange offer is made to and accepted by the holders of more than 50% of the outstanding Common Shares of the Company, the Company shall not effect any consolidation, merger or sale with the person having made such offer or with any Affiliate of such person unless prior to the consummation of such consolidation, merger or sale the holder of this Warrant shall have been given a reasonable opportunity to then elect to receive upon the exercise of this Warrant either the common shares, securities or assets then issuable with respect to the Common Shares of the Company or the common shares, securities or assets, or the equivalent, issued to previous holders of the Common Shares in accordance with such offer. For purposes hereof the term "Affiliate" with respect to any given person shall mean any person controlling, controlled by or under common control with the given person. 3.5. No Adjustment for Exercise of Certain Options, Warrants, Etc. The provisions of this Section 3 shall not apply to any Common Shares issued, issuable or deemed outstanding under subparagraphs (1) to (8) of paragraph 3.1, inclusive: (i) to any person -8- pursuant to any stock option, stock purchase or similar plan or arrangement for the benefit of employees or directors of the Company or its subsidiaries; provided that any Common Shares issued pursuant to any such plan or arrangement (in excess of 1,700,000 shares) shall be approved by the Board of Directors or a duly organized committee thereof, it being further provided that, with respect to Class A Warrants exercised by the Initial Investors or their Affiliates (as defined in the Registration Statement filed by the Company in connection with the Company's public offering of its Common Shares), this Section 3 shall apply with respect to any Common Shares issued pursuant to any such plan or arrangement in excess of 1,700,000 shares (ii) pursuant to options, warrants and conversion rights in existence on the date of issuance hereof or (iii) pursuant to the exercise of any Class A Warrants or Class B Warrants described in the Company's prospectus relating to the initial public offering of its Common Shares. 3.6. Notices of Record Date, Etc. In the event that: (1) the Company shall declare any cash dividend upon its Common Shares, or (2) the Company shall declare any dividend upon its Common Shares payable in common shares or make any special dividend or other distribution to the holders of its Common Shares, or (3) the Company shall offer for subscription pro rata to the holders of its Common Shares any additional common shares of any class or other rights, or (4) there shall be any capital reorganization or reclassification of the shares of the Company, including any subdivision or combination of its outstanding Common Shares, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation, or (5) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with such event, the Company shall give to the Holder of this Warrant: (i) at least ten (10) days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up; and -9- (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, at least ten (10) days prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Shares shall be entitled thereto, and such notice in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Common Shares shall be entitled to exchange their Common Shares for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Each such written notice shall be given by first class mail, postage prepaid, addressed to the Holder of this Warrant at the address of such Holder as shown on the books of the Company. 3.7. Adjustments for Other Distributions. If at any time or from time to time on or after the date of issuance hereof, the Company shall distribute, grant or issue to all holders of its Common Shares any of its assets or debt securities or any rights or warrants to purchase assets or securities of the Company (including securities or cash, but excluding (x) distributions covered by Section 3.1 or (y) cash dividends or other cash distributions that are paid out of consolidation current net earnings or earnings retained in the business as shown on the books of the Company unless such cash distributions in any twelve month period exceed 3.00% of the average Market Price of the Common Shares for the fifteen (15) trading days ending on the first day of such twelve month period) (collectively, the "Purchase Rights"), then the Holder of this Warrant shall be entitled to, at its option: (i) have the Purchase Price reduced to the Purchase Price (calculated to the nearest tenth of a cent) determined by multiplying the Purchase Price in effect immediately prior to the time of distribution of such Purchase Rights by a fraction, the numerator of which shall be the difference between (x) the Market Price immediately prior to such distribution and (y) the fair market value of the assets, securities, rights or warrants applicable to one Common Share (which fair market value shall be determined by the Company in accordance with generally accepted accounting principals) and the denominator of which shall be the Market Price immediately prior to such distribution; provided that in the case of a distribution, grant or issuance pursuant to a purchase, underwriting or similar agreement, the Market Price shall mean the Market Price in effect upon the date such agreement is executed by the Company; or -10- (ii) acquire (within thirty (30) days after the later to occur of the initial exercise date of such Purchase Rights or receipt by such Holder of the notice concerning Purchase Rights to which such Holder shall be entitled under Paragraph 3.6) and upon the terms applicable to such Purchase Rights either: (x) the aggregate Purchase Rights which such Holder could have acquired if it had held the number of Common Shares acquirable upon exercise of this Warrant immediately before the grant, issuance or sale of such Purchase Rights; provided that if any Purchase Rights were distributed to holders of Common Shares without the payment of additional consideration by such holders, corresponding Purchase Rights shall be distributed to the exercising holder of this Warrant as soon as possible after such exercise and it shall not be necessary for the exercising holder of this Warrant specifically to request delivery of such rights; or (y) in the event that any such Purchase Rights shall have expired or shall expire prior to the end of said thirty (30) day period, the number of Common Shares or the amount of property which such Holder could have acquired upon such exercise at the same time or times at which the Company granted, issued or sold such expired Purchase Rights. 3.8. Adjustment by Board of Directors. If any event occurs as to which the provisions of this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the rights of the Holder of this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Purchase Price as otherwise determined pursuant to any of the provisions of this Section 3 except in the case of a combination of shares of a type contemplated in Paragraph 3.3 and then in no event to an amount larger than the Purchase Price as adjusted pursuant to Paragraph 3.3. 3.9. Fractional Shares. The company shall not issue fractions of Common Shares upon exercise of this Warrant or scrip in lieu thereof. If any fraction of a Common Share would, except for the provisions of this Paragraph 3.9, be issuable upon exercise of this Warrant, the company shall in lieu thereof pay to the person entitled thereto an amount in cash equal to the product of such fraction, calculated to the nearest one-hundredth (1/100), and the Market Price of a Common Share as of such date of exercise. 3.10. Officers' Statement as to Adjustments. Whenever the Purchase Price shall be adjusted as provided in this Section 3, the Company shall forthwith file at the office -11- designated for the exercise of this Warrant a statement, signed by the chairman of the Board, the President, any Vice President or the Treasurer of the Company, showing in reasonable detail the facts requiring such adjustment and the Purchase Price that will be effective after such adjustment. The Company shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to the record holder of this warrant at his or its address appearing on the Warrant register of the Company. If such notice relates to an adjustment resulting from an event referred to in Paragraph 3.6, such notice shall be included as part of the notice required to be mailed and published under the provisions of Paragraph 3.6. 4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its charter or through reorganization, reclassification, consolidation, amalgamation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder hereof against dilution or other impairment. Without limiting the generality of the foregoing, the Company will not increase the par value of any Common Share receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise, and at all times will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Shares upon the exercise of this Warrant. 5. RESERVATION OF COMMON SHARES, ETC., ISSUABLE UPON EXERCISE OF WARRANTS. The Company shall at all times reserve and keep available out of its authorized but unissued Common Shares, solely for issuance and delivery upon the exercise of this Warrant and other similar warrants, such number of its duly authorized Common Shares as from time to time shall be issuable upon the exercise of this Warrant and all other similar warrants at the time outstanding. 6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to it, or (in the case of mutilation) upon surrender and cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of like tenor. 7. REMEDIES. The Company stipulates that the remedies at law of the Holder of this Warrant in the event of any default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that the same may be specifically enforced. -12- 8. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all of which each taker or owner hereof consents and agrees: (a) Nether this Warrant, the Common Shares underlying this Warrant (the "Underlying Stock") nor the rights of the Holder hereunder may be transferred except in compliance with the provisions of a certain Subscription Agreement executed in connection with the issuance of this Warrant, copies of which are on file at the principal office of the Company. The provisions of this Section 8 shall be binding upon any transferee of this Warrant and upon each holder of Underlying Stock. (b) Subject to the limitation described in this Section 8, title to this Warrant may be transferred by endorsement (by the Holder hereof executing the form of assignment at the end hereof including guaranty of signature) and delivery in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery. (c) Any person in possession of this Warrant properly endorsed and, if not the original holder hereof, to whom possession was transferred in accordance with the provisions was transferred in accordance with the provisions of clauses (a) and (b) of this Section 8 is authorized to represent himself as absolute owner hereof and is granted power to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value; each prior taker or owner waives and renounces all of his equities or rights in this Warrant in favor of every such bona fide purchaser, and every such bona fide purchaser shall acquire title hereto and to all rights represented hereby. (d) Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder of this Warrant as the absolute owner hereof for all purposes without being affected by any notice to the contrary. (e) The Company shall not be required to pay any U.S. federal or state transfer tax or charge that may be payable in respect of any transfer involved in the transfer or delivery of this Warrant or the issuance or conversion or delivery of certificates for Common Shares in a name other than that of the registered Holder of this warrant or to issue or deliver any certificates for Common Shares upon the exercise of this Warrant until any and all such taxes and charges shall have been paid -13- by the Holder of this Warrant or until it has been established to the Company's satisfaction that no such tax or charge is due. 9. NO RIGHTS TO VOTE OR RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS. Prior to the exercise of this Warrant, the Holder hereof shall not be entitled to any rights of a shareholder of the Company with respect to Common Shares for which this Warrant shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 10. MAILING OF NOTICES, ETC. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first-class certified mail, postage prepaid, to the address furnished to the Company in writing by the last Holder of this Warrant who shall have furnished an address to the Company in writing. 11. CHANGE, WAIVER, ETC. The terms of this Warrant may not be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the Holder of this Warrant against which enforcement of the change, waiver, discharge or termination is sought. S-1 ARCH CAPITAL GROUP LTD. By: ---------------------------- Name: Title: Dated: Attest: - -------------------------- [To be signed only upon exercise of Warrant] To Arch Capital Group Ltd. The undersigned, the Holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ________________ Common Shares of Arch Capital Group Ltd. and herewith makes payment of $_________ therefor and/or requests that the number of Common Shares for which the within Warrant is exercisable to reduced by __________ Common Shares (in addition to the Common Shares being purchased) and/or delivers _________ Common Shares, the aggregate of such payment being equal to the aggregate purchase price for the Common Shares being purchased, and requests that the certificates for the Common Shares being purchased be issued in the name of, and be delivered to, _____________, whose address is ____________________. Dated: ____________________ __________________________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant) __________________________________________ Address [To be signed only upon transfer of Warrant] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________ the within Warrant and appoints _______________ attorney to transfer said right on the books of Arch Capital Group Ltd. with full power of substitution in the premises. Dated: ____________________ __________________________________________ (Signature must conform in all respects to name of Holder as specified on the face of the Warrant) __________________________________________ Address In the presence of ____________________________ EX-99.VI 8 dex99vi.txt SHAREHOLDERS AGREEMENT EXHIBIT VI EXECUTION COPY SHAREHOLDERS AGREEMENT BY AND AMONG THE SHAREHOLDERS SIGNATORY HERETO and arch CAPITAL GROUP ltd. DATED AS OF NOVEMBER 20, 2001 TABLE OF CONTENTS Page ---- ARTICLE I CERTAIN DEFINITIONS Section 1.1. Certain Definitions ......................... 2 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the Company 7 Section 2.2. Representations and Warranties of Warburg ... 8 Section 2.3. Representations and Warranties of H&F ....... 8 Section 2.4. Representations and Warranties of GE ........ 8 Section 2.5. Representations and Warranties of Trident ... 9 Section 2.6. Representations and Warranties of Farallon .. 9 ARTICLE III VOTING; BOARD REPRESENTATION Section 3.1. Board of Directors .......................... 9 Section 3.2. Committees of the Board ..................... 11 Section 3.3. Investor Protection Matters ................. 11 Section 3.4. Voting ...................................... 13 Section 3.5. Chairman of the Company ..................... 13 Section 3.6. Certain Transactions ........................ 13 ARTICLE IV REGISTRATION RIGHTS Section 4.1. Demand Registrations ........................ 14 Section 4.2. Shelf Registration .......................... 16 Section 4.3. Piggy-Back Registration ..................... 16 Section 4.4. Allocation of Shares to be Registered ....... 16 Section 4.5. Registration Procedures ..................... 17 Section 4.6. Registration Expenses ....................... 20 Section 4.7. Indemnification; Contribution ............... 20 ARTICLE V TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; RESTRICTIONS ON TRANSFER AND CONVERSION Section 5.1. Tag-Along Rights; Drag-Along Rights ......... 22 Section 5.2. Restrictions on Transfer .................... 23 -i- Page ---- Section 5.3. Restrictions on Conversion. ................. 24 ARTICLE VI RESTRICTIONS ON DIVIDENDS AND SHARE REPURCHASES ARTICLE VII EFFECTIVENESS AND TERMINATION Section 7.1. Effectiveness .............................. 25 Section 7.2. Termination ................................ 25 ARTICLE VIII MISCELLANEOUS Section 8.1. Injunctive Relief .......................... 25 Section 8.2. Successors and Assigns ..................... 26 Section 8.3. Amendments; Waiver ......................... 26 Section 8.4. Notices .................................... 26 Section 8.5. Applicable Law ............................. 28 Section 8.6. Headings ................................... 28 Section 8.7. Integration ................................ 28 Section 8.8. Severability ............................... 28 Section 8.9. Consent to Jurisdiction .................... 29 Section 8.10. Counterparts ............................... 29 -ii- SHAREHOLDERS AGREEMENT, dated as of November 20, 2001 (this "Agreement"), by and among ARCH Capital Group Ltd., a company registered under the laws of Bermuda (the "Company"), WARBURG PINCUS (BERMUDA) PRIVATE EQUITY VIII, L.P., a limited partnership organized under the laws of Bermuda, WARBURG PINCUS (BERMUDA) INTERNATIONAL PARTNERS, L.P., a limited partnership organized under the laws of Bermuda, WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V., an entity organized under the laws of the Netherlands, WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS II, C.V., an entity organized under the laws of the Netherlands (each, a "Warburg Purchaser," and collectively, "Warburg"), HFCP IV (BERMUDA), L.P., a limited partnership organized under the laws of Bermuda, H&F INTERNATIONAL PARTNERS IV-A (BERMUDA), L.P., a limited partnership organized under the laws of Bermuda, H&F INTERNATIONL PARTNERS IV-B (BERMUDA), L.P., a limited partnership organized under the laws of Bermuda, and H&F EXECUTIVE FUND IV (BERMUDA), L.P., a limited partnership organized under the laws of Bermuda (each, a "H&F Purchaser," and collectively, "H&F," and together with Warburg and such other Persons that are, or may hereafter become, parties hereto (in either case for purposes of such provisions hereof as may be indicated immediately above the signature of such other Persons) pursuant to the terms of Section 8.2 hereof, the "Investors"). W I T N E S S E T H: WHEREAS, the Company and certain of the Investors have entered into a Subscription Agreement, dated as of October 24, 2001, as amended November 20, 2001 (the "Subscription Agreement"), pursuant to the terms of which, among other things, the Company shall issue and sell to the Investors, and Investors shall acquire from the Company, (1) Series A Convertible Preference Shares, par value U.S. $0.01 per share, of the Company (the "Preference Shares"), and (2) Class A Warrants to purchase common shares, par value U.S. $0.01 per share, of the Company (the "Common Shares") (the "Class A Warrants," and together with the Preference Shares, the "Purchased Securities") (such sale and purchase and the other transactions contemplated by the Subscription Agreement or described in the following recitals, the "Transactions"); WHEREAS, the Company and the purchasers named therein (the "Management Purchasers") have entered into a Management Subscription Agreement, dated as of October 24, 2001 (the "Management Subscription Agreement"), pursuant to the terms of which, among other things, the Company shall issue and sell to the Management Purchasers, and the Management Purchasers shall acquire from the Company, Purchased Securities; WHEREAS, the Company, Warburg, H&F and Trident have entered into a letter agreement, dated as of November 8, 2001, pursuant to the terms of which, among other -1- things, Warburg assigned to Trident its right, and Trident assumed from Warburg its obligation, under the Subscription Agreement to purchase certain Purchased Securities; WHEREAS, the Company, Warburg, H&F and GE have entered into a letter agreement, dated as of November 20, 2001, pursuant to the terms of which, among other things, Warburg assigned to GE its right, and GE assumed from Warburg its obligation, under the Subscription Agreement to purchase certain Purchased Securities; WHEREAS, the Company, Warburg, H&F and Farallon have entered into a letter agreement, dated as of November 20, 2001, pursuant to the terms of which, among other things, H&F assigned to Farallon its right, and Farallon assumed from H&F its obligation, under the Subscription Agreement to purchase certain Purchased Securities; WHEREAS, the execution of this Agreement is a condition to the obligation of the parties to consummate the Transactions; and WHEREAS, the Company and Investors desire to establish in this Agreement certain terms and conditions concerning the acquisition of Purchased Securities and related provisions concerning the Investors' relationship with and investment in the Company following the consummation of the Transactions; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I CERTAIN DEFINITIONS Section 1.1 Certain Definitions. In addition to other terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the meanings ascribed to them below: "Affiliate" shall mean, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person (including with respect to individuals, any trusts, foundations, family limited partnerships or similar entities); provided, however, that no portfolio investment of either Warburg or H&F, or any of their respective Affiliates, shall be deemed to be an Affiliate of Warburg or H&F, as the case may be; provided, further, that none of the Farallon Purchasers or Farallon, or any of their respective Affiliates, shall be deemed to be an Affiliate of H&F. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or -2- policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Agreement" shall have the meaning assigned to such term in the preamble hereto. "Approval Date" shall mean the later of the dates on which the Requisite Shareholder Approval and the Requisite Regulatory Approval occur. "Beneficially Own" shall mean, with respect to any securities, having "beneficial ownership" of such securities for purposes of Rule 13d-3 or 13d-5 under the Exchange Act as in effect on the date hereof, and "Beneficial Ownership" shall have the corresponding meaning. "Blackout Period" shall have the meaning assigned in Section 4.1(c). "Board" shall mean the duly elected Board of Directors of the Company in office at the applicable time. "Business Day" shall mean any day that is not a Saturday, Sunday or other day on which the commercial banks in New York City are authorized or required by law to remain closed. "Bye-laws" shall mean the bye-laws of the Company. "Claims" shall have the meaning assigned in Section 4.7(a). "Class A Warrants" shall have the meaning assigned in the recitals hereto. "Closing" shall mean the consummation of the Transactions pursuant to the terms of the Subscription Agreement. "Common Shares" shall have the meaning assigned in the recitals hereto. "Company" shall have the meaning assigned in the preamble hereto. "Demand Registration" shall mean any registration effected pursuant to a Warburg Demand Request or a H&F Demand Request. "Director" shall mean any member of the Board. "Effective Period" shall have the meaning assigned in Section 4.5(a)(3). -3- "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations that may from time to time be promulgated thereunder. "Existing Registration Rights" shall have the meaning assigned in Section 4.1(a) hereof. "Farallon" shall mean Farallon Capital Partners, L.P., Farallon Capital Institutional Partners II, L.P., Farallon Capital Institutional Partners III, L.P. and RR Capital Partners, L.P., collectively, with each individually being a "Farallon Purchaser". "Farallon Permitted Transferee" shall mean, with respect to any Farallon Purchaser, any Person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control with such Farallon Purchaser or an entity over which such Farallon Purchaser has management rights. "GE" shall mean Insurance Private Equity Investors, L.L.C. and Orbital Holdings, Ltd., collectively, with each individually being a "GE Purchaser". "GE Permitted Transferee" shall mean, with respect to any GE Purchaser, any Person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control with such GE Purchaser or an entity over which such GE Purchaser has management rights, or any successor trustees or trust (if applicable). "H&F" shall have the meaning assigned in the preamble hereto. "H&F Demand Request" shall have the meaning assigned in Section 4.1(b) hereof. "H&F Demand Shares" shall have the meaning assigned in Section 4.1(b) hereof. "H&F Directors" shall have the meaning assigned in Section 3.1(c) hereof. "H&F Purchaser" shall have the meaning assigned the preamble hereto. "H&F Registrable Shares" shall have the meaning assigned in Section 4.1(b) hereof. "Independent Director" means a Director who is not an Affiliate of either Warburg or H&F. "Initial H&F Director" shall have the meaning assign in Section 3.1(b). -4- "Initial Investment" shall mean, with respect to any Investor, the total number of Common Shares issuable (a) upon conversion of the Preference Shares acquired by such Investor at the Closing, (b) upon conversion of any additional Preference Shares acquired by such Investor with respect to the Preference Shares referred to in clause (a) pursuant to the terms of the Subscription Agreement (or the Management Subscription Agreement), (c) upon exercise for cash of the Class A Warrants acquired by such Investor at Closing, (d) upon exercise for cash of any additional Class A Warrants acquired by such Investor pursuant to the terms of the Subscription Agreement (or the Management Subscription Agreement) and (e) any other securities issued in respect of the securities described in clauses (a) though (d) of this definition or into which such securities shall be converted in connection with stock splits, reverse stock splits, stock dividends or distributions, or combinations or similar recapitalizations. "Initial Shares" shall mean, with respect to any Investor, (a) the Preference Shares acquired by such Investor at the Closing, (b) any additional Preference Shares acquired by such Investor with respect to the Preference Shares referred to in clause (a) pursuant to the terms of the Subscription Agreement (or the Management Subscription Agreement), (c) the Class A Warrants acquired by such Investor at Closing, (d) any additional Class A Warrants acquired by such Investor pursuant to the terms of the Subscription Agreement (or the Management Subscription Agreement) and (e) any other securities issued in respect of the securities described in clauses (a) though (d) of this definition or into which such securities shall be converted in connection with stock splits, reverse stock splits, stock dividends or distributions, or combinations or similar recapitalizations. References to the "the number of Initial Shares" shall mean the number of Common Shares comprising the Initial Shares (based, in the case of Preference Shares and Class A Warrants, upon the number of Common Shares issuable upon conversion or exercise for cash thereof). "Initial Warburg Director" shall have the meaning assigned in Section 3.1(b) hereof. "Interested Party Transaction" shall mean any transaction between the Company or any of its Subsidiaries and any officer or Director, or Affiliate of any officer or Director, of the Company. "Investors" shall have the meaning assigned in the preamble hereto. "Investor Shares" shall mean, at any time, any Common Shares issuable in respect of Initial Shares acquired by an Investor and any Common Shares acquired by an Investor after the Closing (and any Common Shares or other securities issued in respect thereof or into which such Common Shares shall be converted in connection with stock splits, reverse stock splits, stock dividends or distributions, or combinations or similar recapitalizations). -5- "Management Purchasers" shall have the meaning set forth in the recitals hereto. "Management Subscription Agreement" shall have the meaning set forth in the recitals hereto. "Mandatory Conversion Date" shall have the meaning set forth in Section 3.3 hereof. "Market Value" shall mean, as of any date, the average of the daily high and low sales prices per Common Share on the Nasdaq for each of the twenty full trading days immediately preceding (but not including) such date. "Material Transaction" shall have the meaning assigned in Section 4.1(c). "Maximum Number" shall have the meaning assigned in Section 4.4. "Nasdaq" shall mean The Nasdaq Stock Market, Inc. "Nasdaq Independent Director" shall have the meaning specified in Rule 4200(a)(14) of the Rules of the National Association of Securities Dealers, Inc. "Participating Investor" shall have the meaning assigned in Section 4.5(a)(2) hereof. "Per Share Price" shall have the meaning assigned in the Subscription Agreement. "Person" shall mean any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Piggy-Back Registration" shall have the meaning assigned in Section 4.3. "Piggy-Back Request" shall have the meaning assigned in Section 4.3. "Preference Shares" shall have the meaning assigned in the recitals hereto. "Purchased Securities" shall have the meaning assigned in the recitals hereto. "Registrable Shares" shall have the meaning assigned in Section 4.1(b) hereof. "Requisite Regulatory Approval" shall have the meaning assigned in the Certificate of Designations for the Preference Shares. -6- "Requisite Shareholder Approval" shall have the meaning assigned in the Certificate of Designations for the Preference Shares. "Retained Investment" shall mean, with respect to any Investor, at any time, the amount of the Initial Investment Beneficially Owned by such Investor at such time. "Retained Percentage" shall mean, with respect to any Investor, at any time, the quotient, expressed as a percentage, of (a) such Investor's Retained Investment, over (b) such Investor's Initial Investment. "SEC" shall mean the United States Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations that may from time to time be promulgated thereunder. "Selling Investor" shall have the meaning assigned in Section 5.1(a) hereof. "Shelf Registration Statement" shall have the meaning assigned in Section 4.2 hereof. "Subscription Agreement" shall have the meaning assigned in the recitals hereto. "Subsidiary" shall mean, with respect to any Person, any other entity of which securities or other ownership interests having ordinary power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person. "Tag-Along Investor" shall have the meaning assigned in Section 5.1(a) hereof. "Third Party Sale" shall have the meaning assigned in Section 5.1(a) hereof. "Third Party Sale Notice" shall have the meaning assigned in Section 5.1(a) hereof. "Transactions" shall have the meaning assigned in the recitals hereto. "Trident" shall mean Trident II, L.P., Marsh & McLennan Capital Professionals Fund, L.P. and Marsh & McLennan Employee's Securities Company, L.P., collectively, with each individually a "Trident Purchaser." "Votes" shall mean votes entitled to be cast generally in the election of Directors. -7- "Voting Power" shall mean, calculated at a particular point in time, the ratio, expressed as a percentage, of (a) the Votes represented by the Voting Securities with respect to which the Voting Power is being determined, to (b) the aggregate Votes represented by all then outstanding Voting Securities. For this purpose, the votes attributable to the Preference Shares shall be on an as-converted basis, without regard to the limitations imposed under the Certificate of Designations. "Voting Securities" shall mean (a) the Common Shares, (b) the Preference Shares and (c) shares of any other class of securities of the Company then entitled to vote generally in the election of Directors. "Warburg" shall have the meaning assigned in the preamble hereto. "Warburg Demand Request" shall have the meaning assigned in Section 4.1(a) hereof. "Warburg Demand Shares" shall have the meaning assigned in Section 4.1(a) hereof. "Warburg Directors" shall have the meaning assigned in Section 3.1(c) hereof. "Warburg Purchaser" shall have the meaning assigned in the preamble hereto. "Warburg Registrable Shares" shall have the meaning assigned in Section 4.1(a) hereof. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the Company. The Company represents and warrants to each Investor as follows: (a) The Company has been duly formed and is validly existing as a company in good standing under the laws of Bermuda and has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by the Company and the Company has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by the Company and, assuming due authorization and valid execution and delivery by each other party -8- hereto, is a valid and binding obligation of the Company, enforceable against it in accordance with its terms. Section 2.2 Representations and Warranties of Warburg. Each Warburg Purchaser represents and warrants to each other party hereto as follows: (a) Such Warburg Purchaser has been duly formed and is validly existing and in good standing, to the extent applicable, under the laws of its respective jurisdiction of formation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by such Warburg Purchaser and such Warburg Purchaser has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by such Warburg Purchaser and, assuming due authorization and valid execution and delivery by the Company, is a valid and binding obligation of such Warburg Purchaser, enforceable against it in accordance with its terms. Section 2.3 Representations and Warranties of H&F. Each H&F Purchaser represents and warrants to each other party hereto as follows: (a) Such H&F Purchaser has been duly formed and is validly existing under the laws of its respective jurisdiction of formation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by such H&F Purchaser and such H&F Purchaser has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by such H&F Purchaser and, assuming due authorization and valid execution and delivery by the Company, is a valid and binding obligation of such H&F Purchaser, enforceable against it in accordance with its terms. Section 2.4 Representations and Warranties of GE. Each GE Purchaser represents and warrants to each other party hereto as follows: (a) Such GE Purchaser has been duly formed and is validly existing under the laws of its respective jurisdiction of formation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. -9- (b) This Agreement has been duly and validly authorized by such GE Purchaser and such GE Purchaser has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by such GE Purchaser and, assuming due authorization and valid execution and delivery by the Company, is a valid and binding obligation of such GE Purchaser, enforceable against it in accordance with its terms. Section 2.5 Representations and Warranties of Trident. Each Trident Purchaser represents and warrants to each other party hereto as follows: (a) Such Trident Purchaser has been duly formed and is validly existing under the laws of its respective jurisdiction of formation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by such Trident Purchaser and such Trident Purchaser has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by such Trident Purchaser and, assuming due authorization and valid execution and delivery by the Company, is a valid and binding obligation of such Trident Purchaser, enforceable against it in accordance with its terms. Section 2.6 Representations and Warranties of Farallon. Each Farallon Purchaser represents and warrants to each other party hereto as follows: (a) Such Farallon Purchaser has been duly formed and is validly existing under the laws of its respective jurisdiction of formation and has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. (b) This Agreement has been duly and validly authorized by such Farallon Purchaser and such Farallon Purchaser has taken all necessary and appropriate action to execute and deliver this Agreement and to perform its obligations hereunder. (c) This Agreement has been duly executed and delivered by such Farallon Purchaser and, assuming due authorization and valid execution and delivery by the Company, is a valid and binding obligation of such Farallon Purchaser, enforceable against it in accordance with its terms. -10- ARTICLE III VOTING; BOARD REPRESENTATION Section 3.1 Board of Directors. (a) The Company shall be managed by its duly elected officers subject to the overall direction and supervision of the Board. Each of Warburg and H&F shall, and shall cause its controlled Affiliates to, vote all Voting Securities that such Investor and its controlled Affiliates Beneficially Own and take any and all actions as may be reasonably necessary to cause the provisions of this Section 3.1, including the election of the Warburg Directors and H&F Directors, to be effectuated. (b) Prior to the Closing, and as a condition to the Closing, the Company shall use its best efforts to secure the resignation of a number of Directors such that there remain seven Directors immediately following the Closing (the "Pre-Closing Directors"), of whom at least two shall qualify as Nasdaq Independent Directors. Immediately following the Closing, the size of the Board shall be decreased such that the Board shall consist of nine Directors, and one Director designated by Warburg, (the "Initial Warburg Director") and one Director designated by H&F (the "Initial H&F Director") shall each be appointed by the Board as a director to serve in such classes of Directors as may be necessary to assure that each class in Directors is as near in equal in number as possible and that the Initial Warburg Director and the Initial H&F Director are distributed among different classes. (c) Effective as of 12:00 a.m. on the date immediately following the Approval Date, the size of the Board shall be increased such that the Board shall then and thereafter consist of 15 Directors (such number not to be increased without the consent of Warburg and H&F) and (i) four individuals designated by Warburg (together with the Initial Warburg Director, and any other replacements or substitutions therefor, the "Warburg Directors"), and (ii) two individual designated by H&F (together with the Initial H&F Director, and any other replacements or substitutions therefor, the "H&F Directors") shall each be appointed by the Board as a Director to serve in such classes of Directors as may be necessary to assure that each class in Directors is as near in equal in number as possible and that the Warburg Directors and the H&F Directors, respectively, are distributed among different classes. (d) For so long as Warburg's Retained Percentage is equal to or exceeds 75%, the Initial Warburg Director and, following the Approval Date each Warburg Director, shall be included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders at which such Warburg Director's term is scheduled to expire. For so long as Warburg's Retained Percentage is less than 75% but exceeds or is equal to 55%, there shall be a number of individuals designated by Warburg included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate -11- number of Warburg Directors shall be not less than four. For so long as Warburg's Retained Percentage is less than 55% but exceeds or is equal to 40%, there shall be a number of individuals designated by Warburg included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate number of Warburg Directors shall be not less than three. For so long as Warburg's Retained Percentage is less than 40% but exceeds or is equal to 25%, there shall be a number of individuals designated by Warburg included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate number of Warburg Directors shall be not less than two. For so long as Warburg's Retained Percentage is less than 25% but is equal to or exceeds 10%, there shall be a number of individuals designated by Warburg included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate number of Warburg Directors shall be not less than one. For so long as Warburg has the power to have at least two Directors included in the slate of nominees recommended by the Board, power with respect to one such Director shall be exercised by Warburg Pincus (Bermuda) Private Equity VIII, L.P and power with respect to one such Director shall be exercised by Warburg Pincus (Bermuda) International Partners, L.P. (e) For so long as H&F's Retained Percentage is equal to or exceeds 60%, each H&F Director shall be included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders at which such H&F Director's term is scheduled to expire. For so long as H&F's Retained Percentage is less than 60% but exceeds or is equal to 35%, there shall be a number of individuals designated by H&F included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate number of H&F Directors shall be not less than two. For so long as H&F's Retained Percentage is less than 35% but is equal to or exceeds 20%, there shall be a number of individuals designated by H&F included in the slate of nominees recommended by the Board to shareholders for election as directors at each annual general meeting of shareholders such that the aggregate number of H&F Directors shall be not less than one. For so long as H&F has the power to have at least one Director included in the slate of nominees recommended by the Board, such power shall be exercised by HFCP IV (Bermuda), L.P. (f) Each of Warburg and H&F shall provide to the Company in a timely manner all information required by Regulation 14A and Schedule 14A under the Exchange Act with respect to each Warburg Director and each H&F Director, respectively. Section 3.2 Committees of the Board. The Company and the Investors agree that (1) for so long as there is at least one Warburg Director on the Board, each committee of the Board shall include at least one Warburg Director, and (2) for so long as there is at least one H&F Director on the Board, each committee of the Board shall include at least one H&F -12- Director. The foregoing is subject to any restrictions on service on the audit committee as may be applicable under the rules of the National Association of Securities Dealers, Inc. or the SEC. Section 3.3 Investor Protection Matters. Except as specifically set forth herein, in accordance with the Company's Bye-laws, the Board shall act by the vote of a majority of the Directors present at a meeting, and the required quorum for a meeting of the Board shall be a majority of the whole Board. Notwithstanding the foregoing, and except as specifically set forth in the Subscription Agreement, (a) prior to the Approval Date, unless also approved by the Initial Warburg Director and the Initial H&F Director, and (b) following the Approval Date, unless also approved by (i) at least one Warburg Director, if at such time Warburg's Retained Percentage equals or exceeds 25%, and (ii) at least one H&F Director, if at such time H&F's Retained Percentage equals or exceeds 50%, the Company shall not (and shall not permit any of its Subsidiaries to): (1) amend, or propose to amend, its certificate of incorporation, memorandum of association, bye-laws, or other organizational documents, or amend, terminate or waive any provision under, the Subscription Agreement or any other Agreement entered into in connection therewith; (2) split, consolidate, combine, subdivide, redeem or reclassify its share capital or other equity interests, or amend any term of the outstanding securities of the Company or its Subsidiaries; (3) declare, set aside, make or pay any dividend or other distribution in respect of its share capital or other equity interests, or purchase or redeem, directly or indirectly, any share capital or other equity interests (other than (A) dividends by a Subsidiary of the Company to the Company or a Subsidiary of the Company, and (B) dividends or other distributions by any entity in which the Company or any Subsidiary owns a minority interest, made in the normal course of business, consistent with past practice); (4) other than (A) in respect of grants or exercises under the 1999 Long Term Incentive and Share Award Plan, the 1995 Long Term Incentive and Share Award Plan and the Long Term Incentive Plan for New Employees, (B) issuances of securities pursuant to the Subscription Agreement and the Management Subscription Agreement, and (C) issuances of securities upon conversion or exercise of securities issued pursuant to clause (B) or of securities outstanding on the date hereof, issue, deliver or sell, or authorize the issuance, delivery or sale of, any share capital of any class, any equity interest, or any options, warrants, conversion or other rights to purchase any such shares or equity interests, or any securities convertible into or exchangeable for such shares or equity interests, or issue or authorize the issuance of any other security in respect of or in lieu of or in substitution for shares of capital or -13- (4) equity interests, or enter into any agreements restricting the transfer of, or affecting the rights of holders of, Common Shares, grant any preemptive or anti-dilutive rights to any holder of any class of securities of the Company, or grant registration rights with respect to any of the Company's securities; (5) amend or waive any rights under any grants made under the Long Term Incentive Plan for New Employees; (6) incur any indebtedness for borrowed money, guarantee any such indebtedness or issue or sell any debt securities, in excess of $5,000,000 in the aggregate, or prepay or refinance any indebtedness for borrowed money; (7) engage in any Interested Party Transaction; (8) acquire any assets or properties for cash or otherwise for an amount in excess of $5,000,000 in the aggregate; (9) acquire, whether by means of merger, stock or asset purchase, joint venture or other similar transaction, any equity interest in, or all or substantially all of the assets of any Person, or any business or division of any Person; (10) replace the independent auditors of the Company or make any material change in any method of financial accounting or accounting practice, except for any such change required by reason of a concurrent change in U.S. generally accepted accounting principles; (11) sell or otherwise dispose of assets material to the Company and its Subsidiaries taken as a whole, except as specifically contemplated by the Subscription Agreement; (12) increase by 5% or more the annual base compensation of any officer or key employee of the Company, or enter into or make any material change in any severance contract or arrangement with any such officer or key employee; (13) consummate a complete liquidation or dissolution of the Company, a merger or consolidation (A) in which the Company or any Subsidiary is a constituent corporation or (B) with respect to which the Common Shares would have the right to vote under applicable law, a sale of all or substantially all of the Company's assets, or any similar business combination; (14) enter into any transaction involving in excess of $1,000,000, or, if such transaction is in the ordinary course of business consistent with past practice, $5,000,000; -14- (15) approve the annual plan, annual capital expenditure budget or the five-year plan of the Company and its Subsidiaries, taken as a whole; (16) remove the Chief Executive Officer or Chairman of the Company, or appoint a new Chief Executive Officer or Chairman of the Company; or (17) enter into any agreement with respect to the foregoing. Nothing in this Section 3.3 shall grant either H&F or Warburg any right or consent to the extent that such right would result in such party being deemed to "control" an insurance subsidiary of the Company that is domiciled in any state in the United States, where the exercise of such control would otherwise require the prior approval of such state. In addition, the rights of Warburg and H&F set forth in this Section 3.3 shall, in any event, terminate upon the mandatory conversion of the Preference Shares under paragraph (g)(2) of the Certificate of Designations for the Preference Shares (the "Mandatory Conversion Date") or the earlier conversion of all Preference Shares in accordance with their terms. Section 3.4 Voting. Each Investor agrees to vote all Voting Securities Beneficially Owned by such Investor or by any controlled Affiliate of such Investor in favor of (a) the proposals to be submitted for approval of the shareholders of the Company at the special general meeting of the Company's shareholders to be held in connection with the Transactions and (b) the proposals to approve the grant to Robert Clements of 1,689,629 restricted shares and the grant to John M. Pasquesi of options to purchase 1,126,419 Common Shares at $20.00 per share, which grants were made in connection with the Transactions, which such proposals will be submitted for approval of the shareholders of the Company at the 2002 annual general meeting of the Company's shareholders. Section 3.5 Chairman of the Company. For so long as he is willing and able to serve as the Chairman of the Company, Warburg and H&F agree to take such actions as may be necessary to cause Robert Clements to be duly elected as Chairman of the Company. Section 3.6 Certain Transactions. For a period of two years after the Closing, except for transactions specifically contemplated by this Agreement, the Related Agreements (as defined in the Subscription Agreement) or the Purchased Securities, neither Warburg nor H&F nor any of their respective Affiliates will, directly or indirectly, without the prior approval of a majority of the Independent Directors: (a) acquire securities or assets from the Company or any of its Subsidiaries, (b) engage in any "Rule 13e-3 transaction" (as such term is defined in Rule 13e-3(a)(3) under the Securities Exchange Act of 1934, as amended) involving the Company, or (c) engage in any other transaction that would result in the compulsory acquisition of Common Shares. The Company shall not agree to amend this Section 3.6, without the prior approval of a majority of the Independent Directors. The Company, Warburg and H&F shall endeavor to include at all times two Independent Directors on the Board. -15- ARTICLE IV REGISTRATION RIGHTS Section 4.1 Demand Registrations. (a) Warburg may at any time following the date hereof and on not more than five separate occasions in the aggregate and not more frequently than once during any 180 day period, require the Company to file a registration statement under the Securities Act in respect of all or a portion of the Investor Shares then Beneficially Owned by Warburg or by any other person that Beneficially Owns Investor Shares and who acquired such Investor Shares in connection with such person's status as a partner in any partnership in which Warburg or any of its Affiliates is the general partner (all such Investor Shares, the "Warburg Registrable Shares") (provided that such request covers Warburg Registrable Shares with a Market Value on the date of the Demand Request of at least $25 million), by delivering to the Company a written notice stating that such right is being exercised, specifying the number of Common Shares to be included in such registration (the shares subject to such request, the "Warburg Demand Shares") and describing the intended method of distribution thereof (a "Warburg Demand Request"). Upon receiving a Warburg Demand Request, the Company shall (1) provide written notice of the Warburg Demand Request, pursuant to Section 4.3 hereof, to H&F and each other Investor, (2) use reasonable efforts to file as promptly as reasonably practicable a registration statement on such form as the Company may reasonably deem appropriate providing for the registration of the sale of such Warburg Demand Shares and any other Investor Shares to be included pursuant to Sections 4.3 and 4.4 hereof pursuant to the intended method of distribution and (3) after the filing of an initial version of the registration statement, use reasonable efforts to cause such registration statement to be declared effective under the Securities Act as promptly as practicable after the date of filing of such registration statement. Any Demand Registration filed pursuant to the request of Warburg may, subject to the provisions of Section 4.4 below, include other Common Shares that the Company is required to include in such registration statement by virtue of existing agreements between the holders of such Common Shares and the Company (the "Existing Registration Rights"). (b) H&F may at any time following the date hereof and on not more than five separate occasions in the aggregate and not more frequently than once during any 180 day period, require the Company to file a registration statement under the Securities Act in respect of all or a portion of the Investor Shares then Beneficially Owned by H&F or by any other person that Beneficially Owns Investor Shares and who acquired such Investor Shares in connection with such person's status as a partner in any partnership in which H&F or any of its Affiliates is the general partner (all such Common Shares, the "H&F Registrable Shares," and together with the Warburg Registrable Shares, the "Registrable Shares") (provided that such request covers H&F Registrable Shares with a Market Value on the date of the Demand Request of at least $25 million), by delivering to the Company a written notice stating that such right is being exercised, specifying the number of Common Shares to be included in -16- such registration (the shares subject to such request, the "H&F Demand Shares") and describing the intended method of distribution thereof (a "H&F Demand Request"). Upon receiving a H&F Demand Request, the Company shall (1) provide written notice of the H&F Demand Request, pursuant to Section 4.3 hereof, to Warburg and each other Investor, (2) use reasonable efforts to file as promptly as reasonably practicable a registration statement on such form as the Company may reasonably deem appropriate providing for the registration of the sale of such H&F Demand Shares and any other Investor Shares to be included therein pursuant to Section 4.3 and 4.4 hereof pursuant to the intended method of distribution, and (3) after the filing of an initial version of the registration statement, use reasonable efforts to cause such registration statement to be declared effective under the Securities Act as promptly as practicable after the date of filing of such registration statement. Any Demand Registration filed pursuant to the request of H&F may, subject to the provisions of Section 4.4 below, include other Common Shares that the Company is required to include in such registration statement by virtue of the Existing Registration Rights. (c) Notwithstanding anything in this Agreement to the contrary, the Company shall be entitled to postpone and delay, for reasonable periods of time not to exceed 60 consecutive days and in no event to exceed more than an aggregate of 90 days during any 360-day period (a "Blackout Period"), the filing or effectiveness of any Demand Registration if the Board shall determine that any such filing or the offering of any Registrable Shares would (1) in the good faith judgment of the Board, impede, delay or otherwise interfere with any pending or contemplated acquisition, corporate reorganization or other similar material transaction involving the Company (each, a "Material Transaction"), (2) based upon advice from the Company's investment banker or financial advisor, adversely affect any pending or contemplated financing, offering or sale of any class of securities by the Company, or (3) in the good faith judgment of the Board, require disclosure of material non-public information (other than information relating to an event described in clauses (1) or (2) above) which, if disclosed at such time, would be harmful to the best interests of the Company and its shareholders. Upon notice by the Company to each Investor of any such determination, such Investor shall keep the fact of any such notice strictly confidential, and during any Blackout Period promptly halt any offer, sale, trading or transfer by it or any of its Subsidiaries of any Common Shares for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and promptly halt any use, publication, dissemination or distribution of the Demand Registration, each prospectus included therein, and any amendment or supplement thereto by it for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and, if so directed by the Company, will deliver to the Company any copies then in its possession of the prospectus covering such Registrable Shares. (d) In case a Demand Registration has been filed, if a Material Transaction has occurred, the Company may cause such Demand Registration to be withdrawn and its -17- effectiveness terminated or may postpone amending or supplementing such Demand Registration for a reasonable period of time; provided, however, that in no event shall a Demand Registration so withdrawn by the Company count for the purposes of determining the number of Demand Registrations to which either Warburg or H&F is entitled under Section 4.1(a) or (b). (e) In connection with any underwritten offering under this Section 4.1, the managing underwriter for such Demand Registration shall be jointly selected by Warburg and H&F, provided that such managing underwriter shall be a nationally recognized investment banking firm. (f) Nothing in this Article IV shall affect or supersede any of the transfer restrictions set forth in Article V hereof or any of the other provisions of this Agreement. Section 4.2 Shelf Registration. At the request of either Warburg or H&F, the Company shall use reasonable best efforts to file a registration statement on Form S-3, or any successor form thereto, covering the offering of Investor Shares by all Investors (subject to the provisions of Section 5.2 hereof) on a delayed or continuous basis (the "Shelf Registration Statement") to be effective as soon as reasonably practicable following the Closing Date. Upon effectiveness of the Shelf Registration Statement, the Company will use its reasonable best efforts to keep the Shelf Registration Statement effective with the SEC until such time the Investor Shares held by all Investors are freely tradable under Rule 144(k) under the Securities Act. Notwithstanding the foregoing, the Company may suspend the effectiveness of the Shelf Registration Statement during any Blackout Period. Section 4.3 Piggy-Back Registration. If, at any time following the date hereof, the Company proposes to register any Common Shares under the Securities Act on its behalf or on behalf of any of its shareholders (including pursuant to a Demand Registration), on a form and in a manner that would permit registration of Common Shares (other than in connection with dividend reinvestment plans, rights offerings or a registration statement on Form S-4 or S-8 or any similar successor form), the Company shall give reasonably prompt written notice to each Investor of its intention to do so. Upon the written election of any Investor (a "Piggy-Back Request"), given within ten Business Days following the receipt by such Investor of any such written notice (which election shall specify the number of the Investor Shares intended to be disposed of by such Investor), the Company shall include in such registration statement (a "Piggy-Back Registration"), subject to the provisions of Section 4.4 hereof, such number of the Investor Shares as shall be set forth in such Piggy-Back Request. Section 4.4 Allocation of Shares to be Registered. In the event that the Company proposes to register Common Shares in connection with an underwritten offering and a nationally recognized investment banking firm selected by the Company, or in the case of a Demand Registration selected by Warburg and H&F, to act as managing underwriter -18- thereof reasonably and in good faith shall have advised the Company and each Investor in writing that, in its opinion, the inclusion in the registration statement of some or all of the Investor Shares sought to be registered in a Piggy-Back Request would adversely affect the price or success of the offering, the Company shall include in such registration statement such number of Common Shares as the Company is advised can be sold in such offering without such an effect (the "Maximum Number") as follows and in the following order of priority: (a) first, if such registration is not in connection with a Demand Registration, such number of Common Shares, if any, as the Company intended to be registered by the Company for its own account, or to be registered pursuant to Existing Registration Rights, to the extent such Existing Registration Rights so require; (b) second, if and to the extent that the number of Common Shares to be registered under clause (a) is less than the Maximum Number (or because the registration is a Demand Registration, in which case the Company is not permitted to offer Common Shares), such number of Investor Shares as Warburg, H&F, Trident, Farallon and GE (and, to the extent required by any Existing Registration Rights, any other holder of Common Shares having such rights) shall have intended to register which, when added to the number of Common Shares to be registered under clause (a), is less than or equal to the Maximum Number, it being understood that the number of shares included by Warburg, H&F, Trident, Farallon and GE (and such other holders under Existing Registration Rights) shall be cut back, if necessary, in proportion to their relative ownership at the time; and (c) third, if and to the extent that the number of Common Shares to be registered under clause (b) is less than the Maximum Number, such number of Investor Shares as the Participating Investors (other than Warburg, H&F, Trident, Farallon and GE (and such other holders under Existing Registration Rights)) shall have intended to register which, when added to the number of Common Shares to be registered under clauses (a) and (b), is less than or equal to the Maximum Number, it being understood that the number of shares included by the Participating Investors (other than Warburg, H&F, Trident, Farallon and GE (and such other holders under Existing Registration Rights)) shall be cut back, if necessary, in proportion to their relative ownership. Section 4.5 Registration Procedures. (a) In connection with each registration statement prepared pursuant to this Article IV, and in accordance with the intended method or methods of distribution of the Investor Shares as described in such registration statement, the Company shall, as soon as reasonably practicable and to the extent practicable: (1) prepare and file with the SEC a registration statement on an appropriate registration form and use reasonable efforts to cause such registration statement to become and remain effective as promptly as reasonably practicable; provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to counsel to H&F and Warburg, if disposing of Registrable Shares under such registration statement, draft copies of all such documents proposed to be filed at least five days prior to such filing, which documents -19- will be subject to the reasonable review of each of H&F and Warburg, as appropriate, and its agents and representatives; (2) furnish without charge to each Investor seeking to dispose of Investor Shares thereunder (each, a "Participating Investor"), and the managing underwriter or underwriters, if any, at least one conformed copy of the registration statement and each post-effective amendment or supplement thereto (but excluding schedules, all documents incorporated or deemed incorporated therein by reference and all exhibits, unless requested in writing by such Participating Investor or such underwriter) and such number of copies of the summary, preliminary, final, amended or supplemented prospectuses included in such registration statement as such Participating Investor or such underwriter may reasonably request; (3) except with respect to a Shelf Registration Statement, the obligations of the Company with respect to the effectiveness thereof to be governed by Section 4.2, use reasonable best efforts to keep such registration statement effective for the earlier of (A) 180 days and (B) such time as all of the securities covered by the registration statement have been disposed (the "Effective Period"); prepare and file with the SEC such amendments, post-effective amendments and supplements to the registration statement and the prospectus as may be necessary to maintain the effectiveness of the registration for the Effective Period and to cause the prospectus (and any amendments or supplements thereto) to be filed; (4) use reasonable efforts to register or qualify the Investor Shares covered by such registration statement under such other securities or "blue sky" laws of such jurisdictions in the United States as are reasonably necessary, keep such registrations or qualifications in effect for so long as the registration statement remains in effect, and do any and all other acts and things which may be reasonably necessary to enable each Participating Investor or any underwriter to consummate the disposition of the Investor Shares in such jurisdictions; (5) use reasonable efforts to cause the Investor Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable each Participating Investor to consummate the disposition of the Investor Shares; (6) use reasonable efforts to cause all Investor Shares covered by such registration statement to be listed on the Nasdaq or on the principal securities exchange on which the Common Shares are then listed; (7) promptly notify each Participating Investor and the managing underwriter or underwriters, if any, after becoming aware thereof, (A) when the registration statement or any related prospectus or any amendment or supplement -20- thereto has been filed, and, with respect to the registration statement or any post-effective amendment, when the same has become effective, (B) of any request by the SEC for amendments or supplements to the registration statement or the related prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Investor Shares to be registered for sale in any jurisdiction or the initiation of any proceeding for such purpose or (E) within the Effective Period of the happening of any event or the existence of any fact that makes any statement in the registration statement or any post-effective amendment thereto, prospectus or any amendment or supplement thereto, or any document incorporated therein by reference untrue in any material respect or which requires the making of any changes in the registration statement or post-effective amendment thereto or any prospectus or amendment or supplement thereto so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (8) during the Effective Period, use its reasonable efforts to obtain the withdrawal of any order enjoining or suspending the use or effectiveness of the registration statement or any post-effective amendment thereto; (9) deliver promptly to each of Warburg and H&F, if disposing of Investor Shares under such registration statement, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and permit each of Warburg and H&F, if disposing of Investor Shares under such registration statement, to do such investigation, with respect to information contained in or omitted from the registration statement, as it reasonably deems necessary; (10) in the case of an underwritten offering, use best efforts to enter into an underwriting agreement customary in form and scope for underwritten secondary offerings of the nature contemplated by the applicable registration statement; (11) provide a transfer agent and registrar for all such Investor Shares covered by such registration statement not later than the effective date of such registration statement, subject to any applicable laws or regulations; and (12) cooperate with each Participating Investor and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing such Investor Shares to be sold under the registration statement; and, in the case of an underwritten offering, enable such Investor Shares to -21- be in such denominations and registered in such names as the managing underwriter or underwriters, if any, may request in writing at least two Business Days prior to any sale of the Investor Shares to the underwriters. (b) In the event that the Company would be required, pursuant to Section 4.5(a)(7)(E) above, to notify each Participating Investor or the managing underwriter or underwriters, if any, of the happening of any event specified therein, the Company shall, subject to the provisions of Section 4.1(c) hereof, as promptly as practicable, prepare and furnish to each Participating Investor and to each such underwriter a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Investor Shares that have been registered pursuant to this Agreement, such prospectus shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each Participating Investor agrees that, upon receipt of any notice from the Company pursuant to Section 4.5(a)(7)(E) hereof, it shall, and shall use its reasonable best efforts to cause any sales or placement agent or agents for the Investor Shares and the underwriters, if any, to, forthwith discontinue disposition of the Investor Shares until such Person shall have received copies of such amended or supplemented prospectus and, if so directed by the Company, to destroy or to deliver to the Company all copies, other than permanent file copies, then in its possession of the prospectus (prior to such amendment or supplement) covering such Investor Shares as soon as practicable after such Participating Investor's receipt of such notice. (c) Each Participating Investor shall furnish to the Company in writing its intended method of distribution of the Investor Shares it proposes to dispose of and such other information as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order for the Company to comply with its obligations under all applicable securities and other laws and to ensure that the prospectus relating to such Investor Shares conforms to the applicable requirements of the Securities Act. Each Participating Investor shall notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Participating Investor to the Company or of the occurrence of any event, in either case as a result of which any prospectus relating to the Investor Shares contains or would contain an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. -22- (d) In the case of any registration under Section 4.1 hereof pursuant to an underwritten offering, or in the case of a registration under Section 4.3 hereof if the Company has determined to enter into an underwriting agreement in connection therewith, all Investor Shares to be included in such registration shall be subject to the applicable underwriting agreement and no Person may participate in such registration unless such Person agrees to sell such Person's securities on the basis provided therein and completes and executes all questionnaires, indemnities, underwriting agreements and other documents (other than powers of attorney) which must be executed in connection therewith, and provides such other information to the Company or the underwriter as may be reasonably requested to register such Person's Investor Shares. Section 4.6 Registration Expenses. The Company shall bear all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, fees and expenses in connection with the review of underwriting arrangements by the NASD Regulation, Inc. (including the fees of any "qualified independent underwriter"), agent fees and commissions, printing costs and fees and disbursements of its counsel, and of one counsel as may be reasonably selected by Warburg and H&F on behalf of the Participating Investors, and accountants, in each case, in connection with any registration and listing of any Investor Shares pursuant to Section 4.1, 4.2 or 4.3, other than underwriting discounts or commissions in connection with the Investor Shares disposed of by any Participating Investor, which shall be borne by such Participating Investor. Section 4.7 Indemnification; Contribution. (a) The Company shall, and it hereby agrees to, indemnify and hold harmless each Participating Investor and its partners, members, officers, directors, employees and controlling Persons, if any, and each underwriter, its partners, officers, directors, employees and controlling Persons, if any, in any offering or sale of Common Shares, against any losses, claims, damages or liabilities to which each such indemnified party may become subject, insofar as such losses, claims, damages or liabilities, or actions or proceedings in respect thereof, including any amounts paid in settlement as provided herein (collectively, "Claims"), arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and the Company shall, and it hereby agrees to, reimburse each Participating Investor or any such underwriter for any legal or other out-of-pocket expenses reasonably incurred by it in connection with investigating or defending any such Claims; provided, however, that the Company shall not be liable to any such Person in any such case to the extent that any such Claims arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary or final prospectus, or amendment or supplement thereto, in reliance upon and -23- in conformity with information furnished in writing to the Company by such Participating Investor or any underwriter expressly for use therein. (b) Each Participating Investor shall, and hereby agrees to (1) indemnify and hold harmless the Company, its directors, officers, employees and controlling Persons, if any, and each underwriter, its partners, officers, directors, employees and controlling Persons, if any, in any offering or sale of Common Shares, against any Claims to which each such indemnified party may become subject, insofar as such Claims arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Participating Investor expressly for use therein, and (2) reimburse the Company for any legal or other out-of-pocket expenses reasonably incurred by the Company in connection with investigating or defending any such Claim. (c) Promptly after receipt by an indemnified party under Section 4.7(a) or Section 4.7(b) of written notice of the commencement of any action or proceeding for which indemnification under Section 4.7(a) or Section 4.7(b) may be requested, such indemnified party shall notify the indemnifying party in writing of the commencement of such action or proceeding, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party in respect of such action or proceeding hereunder unless the indemnifying party was materially prejudiced by such failure of the indemnified party to give such notice, and in no event shall such omission relieve the indemnifying party from any other liability it may have to such indemnified party. In case any such action or proceeding shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall determine, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal or any other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for each indemnified party with respect to such claim. The indemnifying party will not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld or delayed. No indemnifying party shall, without the prior written consent of the indemnified party, compromise or consent to entry of any -24- judgment or enter into any settlement agreement with respect to any action or proceeding in respect of which indemnification is sought under Section 4.7(a) or Section 4.7(b) (whether or not the indemnified party is an actual or potential party thereto), unless such compromise, consent or settlement includes an unconditional release of the indemnified party from all liability in respect of such claim or litigation and does not subject the indemnified party to any material injunctive relief or other material equitable remedy. (d) Each Participating Investor and the Company agree that if, for any reason, the indemnification provisions contemplated by Sections 4.7(a) or 4.7(b) hereof are unavailable to or are insufficient to hold harmless an indemnified party in respect of any Claims referred to therein (other than as a result of the provisos thereto), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such Claims in such proportion as is appropriate to reflect the relative fault of and benefits derived by the indemnifying party, on the one hand, and the indemnified party, on the other hand, as well as other equitable considerations. The amount paid or payable by an indemnified party as a result of the Claims referred to above shall be deemed to include (subject to the limitations set forth in Section 4.7(c) hereof) any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. ARTICLE V TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; RESTRICTIONS ON TRANSFER AND CONVERSION Section 5.1 Tag-Along Rights; Drag-Along Rights. (a) In the event that Warburg, H&F or GE proposes to sell, convey, dispose or otherwise transfer Initial Shares (such party proposing to sell, the "Selling Investor") in a bona fide transaction to an un-Affiliated third party, or in a series of related bona fide transactions to multiple un-Affiliated third parties, and the net proceeds of such sale are reasonably expected to exceed $50 million (such a transaction, or series of related transactions, a "Third Party Sale"), such Selling Investor shall notify the other Investors having rights under this Section 5.1 (each such other Investor, a "Tag-Along Investor") in writing of such Third Party Sale, which notice shall set forth the material terms of such Third Party Sale, including, without limitation, the number of Initial Shares proposed to be sold and the per share price thereof (the "Third Party Sale Notice"). Such Tag-Along Investor shall have the right, but not the obligation, to participate in such Third Party Sale with respect to Initial Shares upon providing the Selling Investor written notice of intent to exercise such right within ten Business Days of the receipt of Third Party Sale Notice; provided, however, that (i) GE shall have such rights only (A) if Warburg is the Selling Investor, or (B) if H&F is the Selling Investor and Warburg shall have exercised -25- its rights to become at Tag-Along Investor under this Section 5.1, and (ii) Farallon shall have such rights only (A) if H&F is the Selling Investor, or (B) if Warburg is the Selling Investor and H&F shall have exercised its rights to become a Tag-Along Investor under this Section 5.1. Such notice shall set forth the number of Initial Shares that such Tag-Along Investor desires to sell in such Third Party Sale, which such number shall not exceed that number of Initial Shares equal to the product of (i) the number of Initial Shares set forth in the Third Party Sale Notice, and (ii) the quotient of (A) the Retained Investment of such Tag-Along Investor, over (B) the sum of (I) the Retained Investment of the Selling Investor, and (II) the Retained Investment of all Tag-Along Investors. Notwithstanding the foregoing, this Section 5.1 shall not be applicable to any sale effected in the public markets (including by means of a "block trade" effected through any registered broker-dealer), or to any distribution to partners of any partnership in which either Warburg or H&F, or any of their respective Affiliates, is the general partner. (b) In the event that Warburg or H&F proposes to become a Selling Investor under Section 5.1(a), Trident shall have the rights of a Tag-Along Investor under Section 5.1(a). (c) In the event that Warburg and/or H&F proposes to sell, convey, dispose or otherwise transfer Initial Shares representing either 51% of the votes then entitled to be cast in the election of directors, or 51% of the then outstanding Common Shares (taking into account Common Shares issuable upon conversion of the Preference Shares) in a transaction, or in a series of related transactions, to a single Person or group, Warburg and H&F shall have the right to require that Trident, and Trident shall have the obligation to, participate in such transaction, up to a number of Initial Shares then Beneficially Owned by Trident that shall not exceed that number of Initial Shares equal to the product of (i) the number of Initial Shares proposed to be transferred, and (ii) the quotient of (A) the Retained Investment of Trident, over (B) the sum of (I) the Retained Investment of Warburg and H&F, and (II) the Retained Investment of Trident and all other Investors participating in such sale. (d) No Tag-Along Investor under this Sections 5.1 shall be required to assume any responsibility for any indemnification obligations arising under such Third Party Sale in excess of the proportion of the number of Initial Shares sold by such party to the total number of Initial Shares sold in such Third Party Sale; provided, however, that the limitation provided in this Section 5.1(d) shall not be applicable to any indemnification obligations resulting from representations or warranties specifically relating to, and made by or on behalf of, such party. Section 5.2 Restrictions on Transfer. Until the earliest to occur of (a) the first anniversary of the Closing, (b) the occurrence of any event that would cause Company's outstanding Class B Warrants to vest and/or become exercisable, or (c) the completion by the Company of a registered public offering of Common Shares the net proceeds to the Company -26- of which exceed $25 million, each of Warburg, H&F, Farallon, GE and Trident, and each Management Purchaser, agrees that it or he will not sell, dispose, convey or otherwise transfer any of such Investor's Initial Shares if, following the consummation of such sale, the Retained Percentage of such Investor would be less that 66%; provided, however, that GE and Farallon shall have the right to sell, dispose, convey or otherwise transfer Initial Shares to any GE Permitted Transferee or any Farallon Permitted Transferee, respectively; provided, further, that such GE Permitted Transferee or such Farallon Permitted Transferee, as the case may be, shall become a party hereto and agree to be bound by the terms hereof. Following the earliest to occur of clauses (a), (b) or (c) in the preceding sentence, there shall be no restrictions on transfer of any Initial Shares, except as may be imposed by applicable law, including by the Securities Act. Nothing in this Section 5.2 shall be deemed to affect any disposition of Initial Shares pursuant to the terms of any merger, consolidation or other business combination transaction, or to the tender of any Initial Shares into any tender or exchange offer, provided, that such merger, consolidation or other business combination has been approved by, or such tender or exchange offer has been recommended to, the shareholders of the Company by, the Board. Section 5.3 Restrictions on Conversion. Prior to the receipt of the Requisite Shareholder Approval, no Investor shall convert any Preference Share or exercise any Class A Warrant, if the number of Common Shares to be issued to such Investor upon such conversion or exercise, together with all Common Shares issued upon prior conversions or exercise by such holder, would exceed such Investor's Permissible Conversion Amount. An Investor's "Permissible Conversion Amount" shall be a number of Common Shares equal to the product of (a) the total number of Common Shares issuable to such Investor upon conversion or exercise of all such Investor's Initial Shares, and (b) a fraction the numerator of which is (i) .199 times the total number of Common Shares issued and outstanding on November 19, 2001 and the denominator of which is (ii) the total number of Common Shares issuable upon conversion or exercise of all Initial Shares plus the number of Common Shares issued on November 20, 2001. Prior to the Receipt of the Requisite Shareholder Approval, each holder of Preference Shares and Class A Warrants issued under the Subscription Agreement or the Management Subscription Agreement shall require any transferee of Preference Shares or Class A Warrants to agree to this restriction, such that it applies to such transferee as if such transferee had acquired such securities at Closing, and attributing to such transferee a pro rata portion of any conversion or exercise by the transferor, prior to such transfer. Prior to receipt of the Requisite Regulatory Approval, no Investor shall convert any Preference Shares into Common Shares or exercise any Class A Warrants unless all necessary approvals for such ownership of Common Shares have been obtained, it being understood that, subject to Section 5.2 hereof, this restriction on conversion and exercise shall not restrict an Investor from converting or exercising and selling, or otherwise disposing of, the shares received on conversion or exercise in such a manner as would not result in violation of any applicable regulation. GE shall not convert any Preference Shares, or exercise any Class A Warrant, until such time as any required waiting period, including extensions thereof, under the Hart -27- - - Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired or been terminated. ARTICLE VI RESTRICTIONS ON DIVIDENDS AND SHARE REPURCHASES The Company shall not declare any dividend or make any other distribution on, or in respect of, any Common Shares, and shall not repurchase any Common Shares, until such time as the Company has repurchased from Warburg and H&F, in proportion to their respective Retained Investments at the time of such repurchase, Initial Shares having an aggregate value of $250 million, at a per share price acceptable to Warburg and H&F. ARTICLE VII EFFECTIVENESS AND TERMINATION Section 7.1 Effectiveness. This Agreement shall take effect immediately upon the Closing and shall remain in effect until it is terminated pursuant to Section 7.2 hereof. Section 7.2 Termination. Other than with respect to Article IV hereof and with respect to the termination provisions specifically elsewhere set forth in this Agreement as may be applicable to any particular Section of this Agreement, this Agreement shall terminate upon the earliest to occur of the following: (a) the tenth anniversary of the Closing; or (b) mutual written agreement of the Company, Warburg and H&F at any time to terminate this Agreement. ARTICLE VIII MISCELLANEOUS Section 8.1 Injunctive Relief. Each party hereto acknowledges that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of this Agreement and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and, accordingly, agrees that each other party shall, in addition to any other rights or remedies which it may have, be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to compel specific performance of, or restrain any party from violating, any of such provisions. In connection with any action or proceeding for injunctive relief, each -28- party hereto hereby waives the claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each provision of this Agreement specifically enforced against it, without the necessity of posting bond or other security against it, and consents to the entry of injunctive relief against it enjoining or restraining any breach or threatened breach of such provisions of this Agreement. Section 8.2 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by the Company, Warburg and H&F, and for the purposes of such provisions hereof as may be indicated immediately above the signatures of Farallon, GE, Trident and each Management Purchaser, and their respective successors and permitted assigns, and no such term or provision is for the benefit of, or intended to create any obligations to, any other Person, except as otherwise specifically provided in this Agreement. Neither this Agreement nor any rights or obligations hereunder shall be assignable without the consent of each other party; provided, however, that in connection with any sale or transfer by Warburg or H&F of any Investor Shares, the transferee of such Investor Shares may become a party hereto solely for purposes of Article IV and Sections 3.4, 5.2 and 5.3 hereof and have the rights of, and be subject to the obligations of, an "Investor" upon due execution and delivery of a counterpart signature page hereto. Notwithstanding the foregoing, GE or Farallon may assign its rights hereunder to any GE Permitted Transferee or any Farallon Permitted Transferee, respectively, provided such GE Permitted Transferee or Farallon Permitted Transferee, as the case may be, becomes a party hereto and agrees to be bound by the terms hereof. Section 8.3 Amendments; Waiver. This Agreement may be amended only by an agreement in writing executed by the parties hereto. Any party may waive in whole or in part any benefit or right provided to it under this Agreement, such waiver being effective only if contained in a writing executed by the waiving party. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement or condition, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Section 8.4 Notices. Except as otherwise provided in this Agreement, all notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, when delivered personally or by facsimile transmission if promptly electronically confirmed, as follows, or as set forth on the signature page executed by the any Investor: -29- If to Company: Arch Capital Group, Ltd. 20 Horseneck Lane Greenwich, Connecticut 06830 Attention: General Counsel Telephone: (203) 862-4300 Fax: (203) 861-7240 with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Attention: Immanuel Kohn, Esq. Telephone: (212) 701-3000 Fax: (212) 269-5420 If to Warburg: c/o Warburg, Pincus Equity Partners, L.P. 466 Lexington Avenue New York, New York 10017 Attention: Scott A. Arenare, Esq. Telephone: (212) 878-0600 Fax: (212) 878-9200 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: Andrew R. Brownstein, Esq. Telephone: (212) 403-1000 Fax: (212) 403-2000 -30- If to H&F: c/o Hellman & Friedman LLC One Maritime Plaza Suite 1200 San Francisco, CA 94111 Attention: Richard M. Levine, Esq. Telephone: (415) 788-5111 Fax: (415) 788-0176 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: Patricia A. Vlahakis, Esq. Telephone: (212) 403-1000 Fax: (212) 403-2000 or to such other address, facsimile number or telephone as either party may, from time to time, designate in a written notice given in a like manner. Section 8.5 Applicable Law. Except to the extent of the applicability of the Companies Law of Bermuda to this Agreement, this Agreement shall be governed by and construed in accordance with the laws of the State of New York with regard to contracts formed and to be entirely performed within such state without giving effect to principles of conflicts of law. Section 8.6 Headings. The descriptive headings of the several sections in this Agreement are for convenience only and do not constitute a part of this Agreement and shall not be deemed to limit or affect in any way the meaning or interpretation of this Agreement. References to "Sections" and "Articles" herein shall be to the Sections or Articles of this Agreement, unless the context requires otherwise. Section 8.7 Integration. This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. Section 8.8 Severability. If any term or provision of this Agreement or any application thereof shall be declared or held invalid, illegal or unenforceable, in whole or in part, whether generally or in any particular jurisdiction, such provision shall be deemed amended to the extent, but only to the extent, necessary to cure such invalidity, illegality or unenforceability, and the validity, legality and enforceability of the remaining provisions, -31- both generally and in every other jurisdiction, shall not in any way be affected or impaired thereby. Section 8.9 Consent to Jurisdiction. In connection with any suit, claim, action or proceeding arising out of this Agreement, the parties each hereby consent to the in personam jurisdiction of the United States federal courts and state courts located in the Borough of Manhattan, City of New York, State of New York; the Company, Warburg and H&F each agree that service in the manner set forth in Section 8.4 hereof shall be valid and sufficient for all purposes; and the parties each agree to, and irrevocably waive any objection based on forum non conveniens or venue, appear in any United States federal court or state court located in the Borough of Manhattan, City of New York, State of New York. Section 8.10 Counterparts. This Agreement may be executed by the parties hereto in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -32- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the date set forth at the head of this Agreement. ARCH CAPITAL GROUP, LTD. By: /s/ Louis Petrillo ----------------------------------------- Name: Louis Petrillo Title: Secretary HFCP IV (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ----------------------------------------- Name: David R. Tunnell Title: Authorized Signatory H&F INTERNATIONAL PARTNERS IV-A (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ----------------------------------------- Name: David R. Tunnell Title: Authorized Signatory -33- H&F INTERNATIONAL PARTNERS IV-B (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ----------------------------------------- Name: David R. Tunnell Title: Authorized Signatory H&F EXECUTIVE FUND IV (BERMUDA), L.P. By: H&F Investors IV (Bermuda), L.P., its General Partner, By: H&F Corporate Investors IV (Bermuda) Ltd., its General Partner By: /s/ David R. Tunnell ----------------------------------------- Name: David R. Tunnell Title: Authorized Signatory -34- WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS I, C.V. By: Warburg, Pincus & Co., its General Partner, By: /s/ Kewsong Lee ----------------------------------------- Name: Kewsong Lee Title: Partner WARBURG PINCUS NETHERLANDS INTERNATIONAL PARTNERS II, C.V. By: Warburg, Pincus & Co., its General Partner, By: /s/ Kewsong Lee ----------------------------------------- Name: Kewsong Lee Title: Partner WARBURG PINCUS (BERMUDA) INTERNATIONAL PARTNERS, L.P. By: Warburg Pincus (Bermuda) International Ltd., its General Partner, By: /s/ Kewsong Lee ----------------------------------------- Name: Kewsong Lee Title: Partner -35- WARBURG PINCUS (BERMUDA) PRIVATE EQUITY VIII, L.P. By: Warburg Pincus (Bermuda) Private Equity Ltd., its General Partner, By: /s/ Kewsong Lee ------------------------------------------ Name: Kewsong Lee Title: Partner -36- For purposes of Articles II, IV and V and Section 3.4 hereof: TRIDENT II, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth ------------------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Trident II, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 -37- For purposes of Articles II, IV and V and Section 3.4 hereof: MARSH & MCLENNAN CAPITAL PROFESSIONALS FUND, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth ---------------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Marsh & McLennan Capital Professionals Fund, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 -38- For purposes of Articles II, IV and V and Section 3.4 hereof: MARSH & MCLENNAN EMPLOYEES' SECURITIES COMPANY, L.P. By: MMC Capital, Inc., as Manager By: /s/ David J. Wermuth ----------------------------------------- Name: David J. Wermuth Title: Principal Notice Information for Marsh & McLennan Employees' Securities Company, L.P.: 1166 Avenue of the Americas New York, New York Attention: Mark Dallara Facsimile: (212) 345-5627 and c/o Marsh & McLennan Capital, Inc. 20 Horseneck Lane Greenwich, CT 06830 Attention: David Wermuth Facsimile: (203) 862-2925 -39- For purposes of Articles II, IV and V and Section 3.4 hereof: FARALLON CAPITAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ---------------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Partners, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 -40- For purposes of Articles II, IV and V and Section 3.4 hereof: FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ----------------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Institutional Partners II, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 -41- For purposes of Articles II, IV and V and Section 3.4 hereof: FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ---------------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for Farallon Capital Institutional Partners III, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 -42- For purposes of Articles II, IV and V and Section 3.4 hereof: RR CAPITAL PARTNERS, L.P. By: Farallon Partners, L.L.C., its General Partner By: /s/ Monica R. Landry ---------------------------------------- Name: Monica R. Landry Title: Managing Member Notice Information for RR Capital Partners, L.P.: c/o Farallon Capital Management, L.L.C. One Maritime Plaza Suite 1325 San Francisco, CA 94111 Attention: Mark Wehrly and Sarah Aitcheson Telephone: (415) 421-2132 Facsimile: (415) 421-2133 -43- For purposes of Articles II, IV and V and Section 3.4 hereof: INSURANCE PRIVATE EQUITY INVESTORS, L.L.C. By: GE Asset Management Incorporated, its Manager, By: /s/ Patrick McNeela --------------------------------------- Name: Patrick McNeela Title: Vice President Notice Information for Insurance Private Equity Investors, L.L.C.: c/o GE Asset Management Incorporated 3003 Summer Street Stamford, CT 06905 Attention: Michael M. Pastore, Esq. For purposes of Articles II, IV and V and Section 3.4 hereof: ORBITAL HOLDINGS, LTD. By: /s/ Lorraine Hliboki --------------------------------------- Name: Lorraine Hliboki Title: Attorney-in-fact Notice Information for Orbital Holdings, Ltd.: c/o GE Capital 120 Longridge Rd. Stamford, CT 06927 -44- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: SOUND VIEW PARTNERS LP By: Robert Clements, its General Partner By: /s/ Robert Clements --------------------------------------- Name: Robert Clements Title: General Partner Notice Information for Sound View Partners, LP: -45- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: OTTER CAPITAL LLC By: John Pasquesi, its Managing Member By: /s/ John Pasquesi --------------------------------------- Name: John Pasquesi Title: Managing Member Notice Information for Otter Capital LLC: -46- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: PETER A. APPEL By: /s/ Peter A. Appel --------------------------------------- Name: Peter A. Appel Notice Information for Peter A. Appel: -47- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: PAUL B. INGREY By: /s/ Paul B. Ingrey --------------------------------------- Name: Paul B. Ingrey Notice Information for Paul B. Ingrey: -48- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: DWIGHT R. EVANS By: /s/ Dwight R. Evans --------------------------------------- Name: Dwight R. Evans Notice Information for Dwight R. Evans: -49- For purposes of Articles IV and Sections 3.4, 5.2 and 5.3 hereof: MARC GRANDISSON By: /s/ Marc Grandisson --------------------------------------- Name: Marc Grandisson Notice Information Marc Grandisson: -50- EX-99.VII 9 dex99vii.txt POWER OF ATTORNEY EXHIBIT VII POWER OF ATTORNEY The undersigned, General Electric Capital Services, Inc., a Delaware corporation (hereinafter referred to as the "Corporation") does hereby make, constitute and appoint the persons listed below as the Corporation's true and lawful agent and attorney-in-fact (hereinafter referred to as the "Attorney") to act either together or alone in the name and on behalf of the Corporation for and with respect to the matters hereinafter described. Name of Attorney: Michael A: Gaudino Robert O. O'Reilly, Sr. Murry K. Stegelmann James Ungari J. Gordon Smith Preston Abbott Leon E. Roday J. Gordon Smith Michael E. Pralle Iain MacKay Jonathan K. Sprole Barbara J. Gould Robert L. Lewis Wendy E. Ormond Mark F. Mylon Each Attorney shall have the power and authority to do the following: To execute and deliver any Schedule 13D, Schedule 13G or Forms 3, 4 and 5 or any amendments thereto required to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934 on behalf of the Corporation with regard to any securities owned by the Corporation, General Electric Capital Corporation or any of their subsidiaries. And, in connection with the foregoing, to execute and deliver ail documents, acknowledgments, consents and other agreements and to take such further action as may be necessary or convenient for the Corporation in order to more effectively carry out the intent and purpose of the foregoing. Agreements, commitments, documents, instruments, and other writings executed by the Attorney in accordance with the terms hereof shall be binding upon the Corporation without attestation and without affixation of the seal of the Corporation. The Power of Attorney conferred hereby shall not be delegable by any Attorney. The Attorney shall serve without compensation for acting in the capacity of agent and attorney-in-fact hereunder. Unless revoked by the Corporation, this Power of Attorney shall be governed under the laws of the State of New York and the authority of the Attorney hereunder shall terminate on March 31, 2002. -1- IN WITNESS WHEREOF, the Corporation has caused this Power of Attorney to be executed, attested and its corporate seal to be affixed pursuant to authority granted by the Corporation's board of directors, as of the 22nd day of February, 2000. General Electric Capital Services, Inc. (Corporate Seal) By: /s/ Nancy E. Barton ----------------------------------------- Nancy E. Barton, Senior Vice President Attest: /s/ Brian T. McAnaney - ------------------------------------------------- Brian T. McAnaney, Assistant Secretary -2- -----END PRIVACY-ENHANCED MESSAGE-----