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
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Xxxxxxx 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, XXXXX & XXXX, 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
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understood that for purposes of the Xxxx 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 Xxxx 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 Xxxx 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 Xxxx
to Market Procedures as set forth in Schedule 4(A) hereto. Such adjustment is
hereby deemed to modify the Xxxx 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 Xxxx 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
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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., Xxxxx & McLennan Capital
Professionals Fund, L.P., and Xxxxx & XxXxxxxx 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
Xxxxxx Xxxxxxxx (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
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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.
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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, X.X.
XXXXXXX XXXXXX NETHERLANDS
INTERNATIONAL PARTNERS II, C.V.
By: Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxxx Xxx
-----------------------------------
Name: Xxxxxxx Xxx
Title: Partner
WARBURG PINCUS (BERMUDA) PRIVATE EQUITY VIII, L.P.
By: Warburg Pincus (Bermuda)
Private Equity Ltd.,
its General Partner,
By: /s/ Xxxxxxx Xxx
-----------------------------------
Name: Xxxxxxx Xxx
Title: Partner
WARBURG PINCUS (BERMUDA)
INTERNATIONAL PARTNERS, L.P.
By: Warburg Pincus (Bermuda)
International Ltd.,
its General Partner,
By: /s/ Xxxxxxx Xxx
-----------------------------------
Name: Xxxxxxx Xxx
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/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
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/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
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/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
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/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Notice Information for Farallon Capital
Partners, L.P.:
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx and
Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Notice Information for Farallon Capital
Institutional Partners II, L.P.:
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx and
Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Notice Information for Farallon Capital
Institutional Partners III, L.P.:
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx and
Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Notice Information for RR Capital
Partners, L.P.:
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx and
Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
TRIDENT II, L.P.
By: MMC Capital, Inc.,
as Manager
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Principal
Notice Information for Trident II, L.P.:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
and
c/x Xxxxx & McLennan Capital, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
XXXXX & MCLENNAN CAPITAL
PROFESSIONALS FUND, L.P.
By: MMC Capital, Inc.,
as Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Principal
Notice Information for Xxxxx & XxXxxxxx
Capital Professionals Fund, L.P.:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
and
c/x Xxxxx & XxXxxxxx Capital, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
XXXXX & MCLENNAN EMPLOYEES'
SECURITIES COMPANY, L.P.
By: MMC Capital, Inc.,
as Manager
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Principal
Notice Information for Xxxxx & XxXxxxxx
Employees' Securities Company, L.P.:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
and
c/x Xxxxx & XxXxxxxx Capital, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
INSURANCE PRIVATE EQUITY
INVESTORS, L.L.C.
By: GE Asset Management Incorporated,
its Manager,
By: /s/ Xxxxxxx XxXxxxx
------------------------------------
Name: Xxxxxxx XxXxxxx
Title: Vice President
Notice Information for Insurance Private
Equity Investors, L.L.C.:
c/o GE Asset Management Incorporated
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
ORBITAL HOLDINGS, LTD.
By: /s/ Xxxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Attorney-in-fact
Notice Information for Orbital
Holdings, Ltd.:
c/o GE Capital
000 Xxxxxxxxx Xx.
Xxxxxxxx, XX 00000
SOUNDVIEW PARTNERS LP
By: Xxxxxx Xxxxxxxx,
its General Partner
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: General Partner
OTTER CAPITAL LLC
By: Xxxx Xxxxxxxx,
its Managing Member
By: /s/ Xxxx Xxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Member
XXXXX X. XXXXX
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
XXXX X. XXXXXX
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
XXXXXX X. XXXXX
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
XXXX GRANDISSON
By: /s/ Marc Grandisson
-------------------------------
Name: Marc Grandisson
For purposes of Section A.8. only:
TARACAY INVESTORS
By: Xxxxxx Xxxxxxxx,
Managing Partner
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
For purposes of Section A.8. only:
THE TRIDENT PARTNERSHIP, L.P.
By: Trident Corp.,
its General Partner
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Assistant Secretary
S-2
Accepted and agreed to as of the date first above-written.
ARCH CAPITAL GROUP LTD.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
SCHEDULE 1
Warburg Pincus (Bermuda) Private
Equity VIII, X.X.
Xxxxxxx Xxxxxx (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.
