Schedule 13D
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A-2
Under the Securities Exchange Act of 1934
(Amendment No. 2)
ARCH CAPITAL GROUP LTD.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
767711 10 4
(CUSIP Number)
Gregory F. Van Gundy, Esq.
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036-2774
Phone (212) 345-5000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 8, 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(e), 13d-1(f) or 13d-1(g), check the following box
[GRAPHIC OMITTED].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Marsh & McLennan Companies, Inc.
IRS Identification Number: 36-2668272
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- ---------------------------- ---------------------------------------------------
3 SEC USE ONLY
- ---------------------------- ---------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ---------------------------- ---------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ---------------------------- ---------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------- ---------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES None
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY None
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
----------- ---------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
None
- ---------------------------- ---------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
None
- ---------------------------- ---------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
- ---------------------------- ---------------------------------------------------
- ---------------------------- ---------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ---------------------------- ---------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC
- ---------------------------- ---------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ---------------------------- ---------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Marsh & McLennan Risk Capital Holdings, Ltd.
IRS Identification Number: 13-3689981
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- ---------------------------- ---------------------------------------------------
3 SEC USE ONLY
- ---------------------------- ---------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ---------------------------- ---------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ---------------------------- ---------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------- ---------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,536,005 See Item 5
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY None
----------- ---------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,536,005 See Item 5
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PERSON WITH 10 SHARED DISPOSITIVE POWER
None
- ---------------------------- ---------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
1,536,005 See Item 5
- ---------------------------- ---------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES*
See Item 5
- ---------------------------- ---------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.7%
- ---------------------------- ---------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ---------------------------- ---------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
ITEM 1. SECURITY AND ISSUER
-------------------
The class of equity securities to which this Schedule 13D/A
relates is the Common Stock, par value $.01 per share (the "Shares"), of Arch
Capital Group, Ltd. (f/k/a Risk Capital Holdings, Inc.), a Bermuda corporation
("Arch"). The principal executive offices of Arch are located at 20 Horseneck
Lane, Greenwich, Connecticut 06830.
ITEM 2. IDENTITY AND BACKGROUND
-----------------------
Item 2 is hereby amended to the extent set forth below:
Schedule I attached hereto and incorporated herein by reference sets
forth, with respect to each current executive officer and director of MMC and
MMRCH the following information: (a) name; (b) residence or business address;
and (c) present principal occupation or employment and the name, principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment is conducted. Each
person listed on Schedule I, unless otherwise indicated, is a United States
citizen.
None of MMC or MMRCH, nor (to the knowledge of MMC or MMRCH) any
executive officer, director or controlling person of MMC or MMRCH (a) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), during the last five years or (b) has been a party, during the
last five years, to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, 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 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
-------------------------------------------------
N/A
ITEM 4. PURPOSE OF THE TRANSACTION
--------------------------
Item 4 is hereby amended to add the following:
As disclosed in Arch's Form 8-K filed on November 9, 2001, pursuant
to a Letter Agreement dated November 8, 2001, MMRCH received 140,380 Shares as a
result of a cashless exercise of its 905,397 Class A Warrants, and 1,770,601
class B warrants held by MMRCH were canceled in exchange for a cash payment by
Arch to MMRCH of $7.50 per Class B warrant (approximately $13.3 million in the
aggregate). The Shares owned by MMRCH are being held for investment purposes.
Depending on market conditions, MMC or MMRCH may acquire additional Shares or
dispose of some or all of the Shares reported herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
------------------------------------
Item 5 is hereby amended to add the following:
As of April 12, 2002, MMC and MMRCH may be deemed to beneficially own
Shares as follows:
Number of % of
Shares of Class of
Name Common Stock Common Stock
MMC None 0.0%
MMRCH 1,536,005 9.7%
The aggregate number of Shares beneficially owned by MMRCH to which
this Schedule 13D/A relates is 1,536,005, representing in the aggregate 9.7% of
the 15,765,332 Shares outstanding and 3.0% of the Shares outstanding assuming
conversion of the 35,687,735 shares of Series A Convertible Preferred Stock of
Arch ("Series A Preferred"), in each case as reported in Arch's Form 10-K filed
on March 18, 2002. MMRCH has the sole power to vote and the sole power to
dispose of the outstanding Shares owned by it.
As disclosed in Arch's Form 8-K filed on November 9, 2001, pursuant to
a Letter Agreement dated November 8, 2001, Arch issued 1,636,729 shares of
Series A Preferred and Class A Warrants to purchase 173,178 Shares to Trident
II, L.P. and certain related co-investment funds (collectively, "Trident II").
MMRCH is a limited partner in Trident II and one of the general partners of the
sole general partner of Trident II, L.P. MMC Capital, Inc. ("MMC Capital"), a
subsidiary of MMRCH, also serves as an investment advisor to Trident II. MMC and
MMRCH disclaim that they beneficially own any Shares beneficially owned by
Trident II.
As disclosed in the Schedule 13D/A filed on April 12, 2002 by The
Trident Partnership, L.P. ("Trident I"), Trident I received 391,761 Shares on
April 9, 2002, as a result of a cashless exercise of its 1,386,079 Class A
Warrants. The Warrants had an exercise price of $20.00 per share, and the
cashless exercise was based on the closing price of $27.88 for the Shares on
April 8, 2002, the day prior to the date on which notice Trident I provided its
notice of exercise. Trident I also reported that it sold 640,700 Shares in
market transactions on April 9, 2002, at an average net per Share price of
$27.05 (or approximately $17.3 million in the aggregate). Following these
transactions, Trident I reported that it continued to own 1,061 Shares. MMRCH is
a limited partner in Trident I and a minority shareholder in the general partner
of Trident I. MMC Capital also serves as an investment advisor to Trident I. MMC
and MMRCH disclaim that they beneficially own any Shares beneficially owned by
Trident I.
To the knowledge of MMC and MMRCH, none of their respective officers
and directors beneficially own any Shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
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Item 6 is hereby amended to add the following:
Pursuant to a Letter Agreement dated November 8, 2001, the right of
MMRCH to designate an observer to the Board of Directors of Arch was terminated.
ITEM 7. MATERIAL TO BE FILED AS EXHIBIT
-------------------------------
1. Letter Agreement dated November 8, 2001, among Arch, MMRCH and the
other parties thereto.
SIGNATURE
---------
After reasonable inquiry and to my best knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: April 12, 2002 MARSH & MCLENNAN COMPANIES, INC.
By:/s/Gregory F. Van Gundy
---------------------------------
Name: Gregory F. Van Gundy
Title: Secretary
For this and all future filings, reference is made to an Agreement
dated September 28, 1995 with respect to one filing of Schedule 13D of said
entities, pursuant to Rule 13d-1(f)(1).
Marsh & McLennan Companies, Inc.
Unless otherwise indicated, the business address of the directors and executive
officers of Marsh & McLennan Companies, Inc. is 1166 Avenue of the Americas, New
York, New York 10036-2774 and all directors and executive officers are citizens
of the United States of America. An asterisk indicates that a person is a
director of MMC.
Name and Business Address Principal Occupation or Employment
Lewis W. Bernard* Chairman of Classroom, Inc.
Classroom, Inc.
c/o Morgan Stanley
1221 Avenue of the Americas, 30th Floor
New York, NY 10020
Francis N. Bonsignore Senior Vice President, Executive
Resources and Development of
Marsh & McLennan Companies, Inc.
Mathis Cabiallavetta* Vice Chairman of Marsh & McLennan
(Citizen of Switzerland) Companies, Inc. Chairman of Marsh &
McLennan Global Development
Peter Coster* President & Chief Executive Officer
(Citizen of the United Kingdom) of Mercer Consulting Group, Inc., a
subsidiary of Marsh & McLennan
Companies, Inc.
Charles A. Davis* Vice Chairman of Marsh & McLennan
MMC Capital, Inc. Companies, Inc. President & Chief
20 Horseneck Lane Executive Officer of MMC Capital,
Greenwich, CT 06830 Inc.
Robert F. Erburu* Former Chairman of The Times Mirror
The Times Mirror Company Company
Los Angeles Times
202 West First Street, 6th Floor
Los Angeles, CA 90012
Oscar Fanjul* Chief Executive Officer of
(Citizen of Spain) Omega-Capital
Omega-Capital
P(degree)de la Castellana, 35-7(degree)
28046 Madrid
Spain
Jeffrey W. Greenberg* Chairman & Chief Executive Officer
of Marsh & McLennan Companies, Inc.
Ray J. Groves* President & Chief Operating Officer
of Marsh Inc., a subsidiary of
Marsh & McLennan Companies, Inc.
Stephen R. Hardis* Chairman of Axcelis Technologies,
Eaton Center Inc.
1111 Superior Ave., N.E., 26th Floor
Cleveland, Ohio 44114
Gwendolyn S. King* President of Podium Prose
Podium Prose
1025 Connecticut Avenue, N.W.
Suite 1012
Washington, DC 20036
The Rt. Hon. Lord Lang of Monkton, DL* Former British Secretary of State
(Citizen of the United Kingdom) for Trade & Industry
Kersland
Monkton
Ayshire KA9 2QU
United Kingdom
Lawrence J. Lasser* President & Chief Executive Officer
Putnam Investments, LLC of Putnam Investments, LLC, a
One Post Office Square subsidiary of Marsh & McLennan
Boston, MA 02109 Companies, Inc.
David A. Olsen* Former Chairman of Johnson &
Higgins
William L. Rosoff Senior Vice President and General
Counsel of Marsh & McLennan
Companies, Inc.
Adele Simmons* Vice Chair of Chicago Metropolis
Chicago Metropolis 2020 2020
30 West Monroe Street, 18th Floor
Chicago, IL 60603
John T. Sinnott* Chairman & Chief Executive Officer
of Marsh Inc., a subsidiary of
Marsh & McLennan Companies, Inc.
A.J.C. Smith* Former Chairman of Marsh & McLennan
Companies, Inc.
Sandra S. Wijnberg Senior Vice President and Chief
Financial Officer of Marsh &
McLennan Companies, Inc.
Marsh & McLennan Risk Capital Holdings, Ltd.
Unless otherwise indicated, the business address of the directors and executive
officers of Marsh & McLennan Risk Capital Holdings, Ltd. is 1166 Avenue of the
Americas, New York, New York 10036-2774 and all directors and executive officers
are citizens of the United States of America. An asterisk indicates that a
person is a director of MMRCH.
Name and Business Address Principal Occupation or Employment
Charles A. Davis* Vice Chairman of Marsh & McLennan
MMC Capital, Inc. Companies, Inc. President & Chief
20 Horseneck Lane Executive Officer of MMC Capital,
Greenwich, CT 06830 Inc.
Jeffrey W. Greenberg* Chairman & Chief Executive Officer
of Marsh & McLennan Companies, Inc.
William L. Rosoff* Senior Vice President and General
Counsel of Marsh & McLennan
Companies, Inc.
A.J.C. Smith* Former Chairman of Marsh & McLennan
Companies, Inc.
Sandra S. Wijnberg* Senior Vice President and Chief
Financial Officer of Marsh &
McLennan Companies, Inc.
ARCH CAPITAL GROUP LTD.
20 Horseneck Lane
Greenwich, CT 06830
November 8, 2001
The Trident Partnership, L.P. Warburg Pincus Private Equity VIII, L.P.
("Trident I") Warburg Pincus International Partners, L.P.
Craig Appin House Warburg Pincus Netherlands International
8 Wesley Street Partners I, C.V.
Hamilton HM 11 Bermuda Warburg Pincus Netherlands International
Partners II, C.V.
Trident II, L.P. ("Trident II") (collectively, "Warburg")
Craig Appin House 466 Lexington Avenue
8 Wesley Street New York, NY 10017
Hamilton HM 11 Bermuda
Marsh & McLennan Capital
Professionals Fund, L.P. HFCP IV (Bermuda), L.P. ("H&F")
Marsh & McLennan Employees' c/o Hellman & Friedman LLC
Securities Company, L.P. One Maritime Plaza
(together, the Suite 1200
"Co-Investment Funds") San Francisco, CA 94111
c/o Maples and Calder Ugland House
South Church Street
George Town Grand Cayman
Cayman Islands, British West Indies
Marsh & McLennan Risk Capital Holdings,
Ltd. ("Marsh")
1166 Avenue of the Americas
New York, NY 10036
Ladies and Gentlemen:
This letter agreement (this "Agreement") confirms the agreement
reached today among each of the parties signatories hereto regarding the
participation of Trident II and the Co-Investment Funds 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 (the
"Subscription Agreement") by and among Arch Capital Group Ltd. ("Arch"), Warburg
and H&F (the "Purchasers"), 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 Trident II. Warburg hereby assigns, without
recourse or warranty by it, to Trident II and the Co-Investment Funds
(collectively, the "Assignees") the right, and obligation, to purchase an
aggregate of $35,000,000 of the Securities on the terms and conditions set forth
in the Subscription Agreement (except as explicitly modified hereby), as
Purchasers under the Subscription Agreement. The Assignees acknowledge that
their investment will be required to be made on the Closing Date, simultaneously
with the investments being made by the Investors. The Assignees shall become
"Purchasers" under the Subscription Agreement and "Investors" under the
Shareholders Agreement (solely for purposes of Sections 3.4 and 5.3 and Article
IV thereof and the provisions implementing the provisions described in paragraph
6(b) below); provided that:
(i) 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 any Assignee 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 any Assignee or more favorable
to Warburg and H&F as a result of such determination or action);
(ii) 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;
(iii) the failure of the conditions set forth in Section C.2 of
the Subscription Agreement due to any breach by any Assignee 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;
(iv) the Assignees shall be subject to Section D.1 and D.2 of the
Subscription Agreement, including the covenants thereunder;
(v) Assignees 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 Assignee 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);
(vi) no Assignee shall 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
Subscription Agreement shall affect any Assignee differently than
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 any
Assignee or more favorable to Warburg and H&F as a result of such
determination or action);
(vii) no consent of any Assignee 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 an Assignee
differently than 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 any Assignee or more favorable to Warburg and H&F as a
result of such determination or action);
(viii) the Assignees shall have no rights under Section F.2, and
no right to assign under Section F.4, of the Subscription Agreement; and
(ix) for the avoidance of doubt, the Assignees shall become
parties to the Shareholders Agreement as "Investors" solely for purposes
of Sections 3.4 and 5.3 and Article IV thereof and the provisions
thereof implementing the provisions of paragraph 6(b) 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 any Assignee
and (B) any amendment or modification of the Sections of the
Shareholders Agreement that do apply to any Assignee, so long as in the
case of clause (B) such amendment or modification does not affect any
Assignee differently than 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 or the Shareholders Agreement (as modified by this Agreement)
and such differences are not made more adverse to any Assignee or more
favorable to Warburg and H&F as a result of such determination or
action).
2. Termination of Marsh Board Observer Rights. The parties
acknowledge that the rights of Marsh & McLennan Risk Capital Holdings, Ltd.
("Marsh") under Section 5(g) of the Amended and Restated Subscription Agreement
dated as of June 28, 1995 (the "1995 Marsh Subscription Agreement") by and
between Arch and Marsh, as amended by paragraph 2 of the Amendment to Amended
and Restated Subscription Agreement dated as of October 31, 2000 by and between
Arch and Marsh, have been terminated.
3. Designation of Trident Director; Reports. The parties
acknowledge that all rights of The Trident Partnership, L.P. ("Trident I") under
Section 5(b) of the Amended and Restated Subscription Agreement dated as of
June 28, 1995 (the "1995 Trident Subscription Agreement") between Arch and
Trident I have been terminated. For so long as Trident I owns any equity
interest in Arch, Arch agrees furnish to Trident I a copy of its annual and
quarterly reports filed under the Securities Exchange Act of 1934.
4. Capital Commitment to Trident II. Arch is hereby released
from any obligation (pursuant to the Trident II partnership agreement or
otherwise) to make any additional capital contributions to Trident II; in
respect of (i) any investment made by Trident II on or after the date hereof or
(ii) the expenses relating to any such investment; provided that Arch shall
remain committed to fund its portion (equal to $4,662,388.79) of the outstanding
capital call with respect to AXIS Specialty Limited. This release shall be
without any penalty, forfeiture of rights or other adverse consequence to Arch
or Arch's investment in Trident II, which shall continue with respect to Arch's
interest in all investments of Trident II existing as of the date hereof and the
AXIS investment. For the avoidance of doubt, Arch shall be entitled to its share
of profits, losses and distributions, and be obligated for its share of
management fees and partnership expenses, with respect to Arch's interest in all
investments of Trident II existing as of the date hereof and the Axis
investment. Subject to the foregoing, Arch shall continue to be a Trident II
limited partner and be subject to the rights and obligations of limited
partners, including the indemnification provisions. Upon the Closing Date, Arch
and Trident II shall enter into an appropriate amendment to the Trident II
partnership agreement to reflect the foregoing.
5. Exchange/Cancellation of Marsh's Warrants. Effective upon the
Closing Date, all of Marsh's 905,397 Class A Warrants of the Company shall be
canceled in exchange for the issuance by Arch of 140,380 Common Shares.
Effective upon the Closing Date, all of Marsh's 1,770,601 Class B Warrants of
the Company shall be canceled in exchange for the payment by Arch of cash equal
to $7.50 per Class B Warrant (such price aggregating $13,279,507.50). On the
Closing Date, Marsh agrees to deliver to the Company all certificates
representing such Class A Warrants and Class B Warrants (or a certificate of
loss and related appropriate document), and the Company shall deliver the
certificate(s), registered in the name of Marsh, representing the Common Shares
issued to Marsh in exchange for its Class A Warrants. For the avoidance of
doubt, any cancellation or exchange of Class B Warrants made pursuant to the
terms of this Section 5 shall have no effect on any amount that may become
payable to the Purchasers under Section B.2 of the Subscription Agreement.
6. Registration; Tag-Along; Take-Along. (a) For the avoidance of
doubt, the parties acknowledge that this Agreement does not affect the rights of
Marsh under Section 6 (Registration Rights) of the 1995 Marsh Subscription
Agreement or of Trident I under Section 6 (Registration Rights) of the 1995
Trident Subscription Agreement.
(b) Arch, the Purchasers and the Assignees also agree that the
Shareholders Agreement will provide that:
(i) if any Assignee exercises its right under Section 4.3
thereof, any cutback pursuant to Section 4.4 thereof will treat the
Assignees at least as favorably as Warburg and H&F (i.e., the Assignees
will have priority under clause (b), and not under clause (c), thereof);
(ii) each Assignee will have the rights of a Tag-Along Investor
under Section 5.1 thereof to participate ratably on the basis of
securities owned in a Third Party Sale (excluding any sale or
distribution described in the last sentence of Section 5.1 of the
Shareholders Agreement) on the same terms as the Selling Investor (but,
for the avoidance of doubt, not have the obligations of a Selling
Investor under Section 5.1 thereof); provided that such Assignee shall
only be responsible for its pro rata portion of any indemnification
(except in respect of representations specifically relating to such
Assignee);
(iii) in the event of a Third Party Sale (excluding any sale or
distribution described in the last sentence of Section 5.1 of the
Shareholders Agreement), the Selling Investor will have the right to
require each Assignee to participate ratably on the basis of securities
owned in such Third Party Sale on the same terms as the Selling
Investor; provided that such Assignee shall only be responsible for its
pro rata portion of any indemnification (except in respect of
representations specifically relating to such Assignee).
(iv) each Assignee 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 acquired in respect thereof.
"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.
7. 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. Each of
Trident I, Trident II, Marsh and the Co-Investment Funds agree (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.
8. 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):
(i) 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
(ii) If to Trident I, Trident II, Marsh or the Employee
Co-Investment Funds, to it at:
1166 Avenue of the Americas
New York, New York 10036
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
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.
9. Entire Agreement; Amendment. This 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.
10. Headings. The headings of the sections of this Agreement
are inserted for convenience only and shall not constitute a part hereof.
11. 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.
12. 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.
13. 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.
14. 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]
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:
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Name:
Title:
Agreed to and Accepted
As of the Date First Above Written:
THE TRIDENT PARTNERSHIP, L.P.
By:
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Name:
Title:
TRIDENT II, L.P.
By:
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Name:
Title:
MARSH & MCLENNAN RISK
CAPITAL HOLDINGS, LTD.
By:
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Name:
Title:
MARSH & MCLENNAN CAPITAL
PROFESSIONALS FUND, L.P.
By:
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Name:
Title:
MARSH & MCLENNAN EMPLOYEES'
SECURITIES COMPANY, L.P.
By:
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Name:
Title:
HFCP IV (BERMUDA), L.P.
By: H&F Investors IV, LLC,
its General Partner
By: H&F Investors III, Inc.
its Manager
By:
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Name:
Title:
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:
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Name:
Title: