HFCP IV (BERMUDA), L.P.
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.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇
Bermuda
February 28, 2003
To the Sellers listed on Schedule A,
c/o MMC Capital, Inc., as Manager
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Purchase and Sale of Shares
Ladies and Gentlemen:
In consideration of the agreements and obligations contained in this
letter agreement (this "Agreement"), HFCP IV (Bermuda), L.P., 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. ("Buyers," and each a "Buyer") and the
sellers listed on Schedule A ("Sellers," and each, a "Seller") agree as follows:
1. PURCHASE AND SALE. At the Closing, each Seller shall sell to the
Buyers, and the Buyers shall purchase from such Seller, those Common Shares, par
value $0.01 (the "Common Shares"), and those Series A Convertible Preference
Shares, par value $0.01 (the "Preference Shares," and together with the Common
Shares, the "Shares"), of Arch Capital Group Ltd., a Bermuda corporation (the
"Company"), set forth opposite the name of such Seller on Schedule A, for an
aggregate purchase price of $50,220,000 (the "Transaction," and such amount, the
"Purchase Price"). The closing of the Transaction (the "Closing") shall take
place at the offices of MMC Capital, Inc., at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ at 10:00 a.m. on March 20, 2003. At the Closing, (a) each Seller shall
deliver to the Buyers a certificate or certificates representing the Shares set
forth opposite the name of such Seller on Schedule A, together with stock powers
duly executed in blank or duly executed instruments of transfer, and (b) the
Buyers shall deliver to the Sellers, via wire transfer of immediately available
funds to such account or accounts as the Sellers shall designate in writing
prior to the Closing, an amount equal to the Purchase Price.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS. (a) Each Seller
represents and warrants to the Buyers that such Seller is the sole record and
beneficial owner of the Shares set
February 28, 2003
Page 2
forth opposite the name of such Seller on Schedule A, and at Closing, such
Seller will deliver to the Buyers such Shares, free and clear of any lien or
security interest of any kind whatsoever.
(b) Each Seller has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement, and to
consummate the Transaction. The execution, delivery and performance of this
Agreement by each Seller and the consummation by each Seller of the Transaction
have been duly authorized by all necessary limited partnership action and no
other proceedings on the part of such Seller are necessary to authorize this
Agreement or to consummate the Transaction. This Agreement has been duly
executed and delivered by each Seller and (assuming the due authorization,
execution and delivery by each Buyer), constitutes the legal, valid and binding
obligation of such Seller enforceable against such Seller in accordance with its
terms.
(c) The execution, delivery and performance by each Seller of this
Agreement and the consummation of the Transaction require no action by or in
respect of, or filing with, any governmental body, agency or official.
(d) Each Seller acknowledges that: (i) the Buyers may be in
possession of material, nonpublic information regarding the Company, its
financial condition, results of operations, business, properties, assets,
liabilities, management, projections, reserves, appraisals and plans, proposals
and prospects; (ii) such information may be materially adverse to such Seller's
interests; and (iii) if such Seller were in possession of some or all of such
information such Seller might not be willing to sell any or all of the Shares
pursuant to the Transaction or would have a materially different view of the
benefits of the Transaction. Each Seller also acknowledges and agrees that
the Buyers shall have no obligation to disclose to such Seller any of the
information referred to in the preceding sentence. Each Seller further
acknowledges that such Seller has conducted its own investigation, to the
extent that such Seller has determined necessary or desirable, regarding the
information described in the first sentence of this paragraph. Each Seller
hereby, on its own behalf and on behalf of its affiliates and its and their
respective successors and assigns, irrevocably waives and renounces any and
all claims of any nature whatsoever it may have or acquire against Buyer, its
directors, officers, employees, representatives, or any of their respective
affiliates and their respective heirs, successors and assigns, based on
non-disclosure, deceptive trade practices, other laws or otherwise, and
acknowledges that neither the Buyers nor any of their respective directors,
officers, employees, representatives or any of their respective affiliates
have made any representation or warranty, whether express or implied, of any
kind or character in respect of or in connection with the Transaction, except
as set forth in this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYERS. (a) Each Buyer has all
requisite power and authority to execute and deliver this Agreement, to perform
its obligations under this Agreement, and to consummate the Transaction. The
execution, delivery and performance of this Agreement by each Buyer and the
consummation by each Buyer of the Transaction have been duly authorized by all
necessary limited partnership action and no other proceedings on the part of
such Buyer are necessary to authorize this Agreement or to consummate the
Transaction. This Agreement has been duly executed and delivered by each Buyer
and (assuming the due authorization, execution and delivery by each Buyer),
constitutes the legal, valid and binding obligation of such Buyer enforceable
against such Buyer in accordance with its terms.
(b) The execution, delivery and performance by each Buyer of this
Agreement and the consummation of the Transaction require no action by or in
respect of, or filing with, any governmental body, agency or official other than
filings with and approvals of applicable United States state insurance
regulatory bodies.
(c) The Buyers represent and warrant to Sellers that the Buyers have
and will have at Closing immediately available cash in the amount of the
Purchase Price.
(d) The Buyers acknowledge that Sellers are not transferring any
rights Sellers may have under the terms of the Subscription Agreement, dated as
of October 24, 2001, as amended, November 20, 2001 and January 3, 2002, pursuant
to this Agreement.
4. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
for principles of conflicts of laws. This Agreement shall inure solely to the
benefit of and be binding upon the parties and their respective successors and
assigns.
(b) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
February 28, 2003
Page 3
(c) This Agreement contains the entire agreement between the parties
concerning the subject matter of this Agreement and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.
* * *
February 28, 2003
Page 4
Please acknowledge your approval and acceptance of the matters
contained in this letter by executing and dating this copy of the letter and
returning it to our attention at the above address. An additional copy of this
letter has been included for your records.
Very truly yours,
HFCP IV (BERMUDA), L.P.,
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.,
By: H&F Investors IV (Bermuda), L.P.,
its General Partner,
By: H&F Corporate Investors IV
(Bermuda) Ltd., its General
Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Vice President and
Treasurer
February 28, 2003
Page 5
Accepted and agreed as of the date first written above:
TRIDENT II, L.P.,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ CAPITAL
PROFESSIONALS FUND, L.P.,
▇▇▇▇▇ & MCLENNAN EMPLOYEES'
SECURITIES COMPANY, L.P.,
By: MMC Capital, Inc., in each case, as Manager,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Principal
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ RISK CAPITAL
HOLDINGS, LTD.,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
SCHEDULE A
Stock Certificate/Account Preference Shares Common Shares Price ($31 per
------------------------- ----------------- ------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
Trident II, L.P. ACP0061 903,277 $28,001,587
▇/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ ACP0021 38,029 1,178,899
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ACP0096 122,942 3,811,202
------------------
▇▇▇▇▇▇ Town, Grand Cayman, Cayman $32,991,688
Islands
------------------
Copy to:
MMC Capital, Inc., as Manager
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ & McLennan Employees' ACP0058 28,969 $ 898,039
Securities Company, L.P.
▇/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ ACP0022 1,071 33,201
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ACP0097 3,461 107,291
------------------
▇▇▇▇▇▇ Town, Grand Cayman, Cayman $1,038,531
Islands
------------------
Copy to:
MMC Capital, Inc., as Manager
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ & McLennan Capital ACP0062 28,809 $893,079
Professionals Fund, L.P.
▇/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 521 16,151
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 1,065 33,015
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ACP0098 3,442 106,702
------------------
▇▇▇▇▇▇ Town, Grand Cayman, Cayman $1,048,947
Islands
------------------
Copy to:
MMC Capital, Inc., as Manager
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
------------------
▇▇▇▇▇ & McLennan Risk Capital ▇▇▇▇▇▇▇ ▇▇▇▇▇ 488,414 $15,140,834
Holdings, Ltd. Account
------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Total $50,220,000
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