<Page>
EXHIBIT 4.5
CONFORMED COPY
SHAREHOLDERS AGREEMENT
BY AND AMONG
THE SHAREHOLDERS SIGNATORY HERETO
AND
ARCH CAPITAL GROUP LTD.
DATED AS OF NOVEMBER 20, 2001
CONFORMED TO REFLECT
AMENDMENTS DATED JANUARY 3, 2002 AND MARCH 15, 2002
<Page>
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...............9
Section 2.2. Representations and Warranties of Warburg...................9
Section 2.3. Representations and Warranties of H&F......................10
Section 2.4. Representations and Warranties of GE.......................10
Section 2.5. Representations and Warranties of Trident..................10
Section 2.6. Representations and Warranties of Farallon.................11
ARTICLE III
VOTING; BOARD REPRESENTATION
Section 3.1. Board of Directors.........................................11
Section 3.2. Committees of the Board....................................13
Section 3.3. Investor Protection Matters................................14
Section 3.4. Voting.....................................................16
Section 3.5. Chairman of the Company....................................17
Section 3.6. Certain Transactions.......................................17
ARTICLE IV
REGISTRATION RIGHTS
Section 4.1. Demand Registrations.......................................17
Section 4.2. Shelf Registration.........................................20
Section 4.3. Piggy-Back Registration....................................20
Section 4.4. Allocation of Shares to be Registered......................20
Section 4.5. Registration Procedures....................................21
Section 4.6. Registration Expenses......................................25
Section 4.7. Indemnification; Contribution..............................25
<Page>
ARTICLE V
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS;
RESTRICTIONS ON TRANSFER AND CONVERSION
Section 5.1. Tag-Along Rights; Drag-Along Rights........................27
Section 5.2. Restrictions on Transfer...................................28
Section 5.3. Restrictions on Conversion.................................29
ARTICLE VI
RESTRICTIONS ON DIVIDENDS AND SHARE REPURCHASES
ARTICLE VII
EFFECTIVENESS AND TERMINATION
Section 7.1. Effectiveness..............................................30
Section 7.2. Termination................................................30
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Injunctive Relief..........................................31
Section 8.2. Successors and Assigns.....................................31
Section 8.3. Amendments; Waiver.........................................31
Section 8.4. Notices....................................................32
Section 8.5. Applicable Law.............................................33
Section 8.6. Headings...................................................33
Section 8.7. Integration................................................34
Section 8.8. Severability...............................................34
Section 8.9. Consent to Jurisdiction....................................34
Section 8.10. Counterparts...............................................34
-ii-
<Page>
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 INTERNATIONAL 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;
<Page>
-2-
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 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
<Page>
-3-
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 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.
<Page>
-4-
"DIRECTOR" shall mean any member of the Board.
"EFFECTIVE PERIOD" shall have the meaning assigned in Section
4.5(a)(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.
<Page>
-5-
"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).
"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.
<Page>
-6-
"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).
"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.
<Page>
-7-
"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 NASDAQ APPROVAL" shall have the meaning assigned in the
Certificate of Designations for the Preference Shares.
"REQUISITE REGULATORY APPROVAL" shall have the meaning assigned in
the Certificate of Designations for the Preference Shares.
"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" means the Subscription Agreement, dated as
of October 24, 2001, by and between the Company and each of the Purchasers named
therein, as amended from time to time in accordance with its terms.
"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
<Page>
-8-
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.
"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.
<Page>
-9-
"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 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.
<Page>
-10-
(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.
(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:
<Page>
-11-
(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.
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.
<Page>
-12-
(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 17 Directors (such number not to be
increased without the consent of Warburg and H&F) and (i) five individuals
designated by Warburg (together with the Initial Warburg Director, and any other
replacements or substitutions therefor, the "WARBURG DIRECTORS"), and (ii) two
individuals 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) Following the Approval Date, for so long as Warburg's Retained
Percentage is "x" as set forth in the table below, the slate of nominees
recommended by the Board to shareholders for election as directors of the
Company at each annual meeting of shareholders shall include such number of
individuals designated by Warburg, which together with the number of Warburg
Directors whose term is not scheduled to expire, is equal to the number set
forth opposite such Warburg's Retained Percentage in the table below:
<Table>
<Caption>
Warburg's Retained Number of
Percentage Nominees
-------------------- -------------
x > 75% 6
-
60% < x < 75% 5
-
45% < x < 60% 4
-
30% < x < 45% 3
-
20% < x < 30% 2
-
10% < x < 20% 1;
-
</Table>
PROVIDED that, if the Approval Date has not occurred, for so long as Warburg's
Retained Percentage is equal to or exceeds 10%, at least one Warburg Director
shall be included in the slate of nominees recommended by the Board to
shareholders for election as directors of the
<Page>
-13-
Company at each annual general meeting of shareholders at which a Warburg
Director's term is scheduled to expire. 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) Following the Approval Date, for so long as H&F's Retained
Percentage is "x" as set forth in the table below, the slate of nominees
recommended by the Board to shareholders for election as directors of the
Company at each annual meeting of shareholders shall include such number of
individuals designated by H&F, which together with the number of H&F Directors
whose term is not scheduled to expire, is equal to the number set forth opposite
such H&F's Retained Percentage in the table below:
<Table>
<Caption>
H&F's Retained Number of
Percentage Nominees
-------------- ---------
x > 60% 3
-
35% < x < 60% 2
-
20% < x < 35% 1;
-
</Table>
PROVIDED that, if the Approval Date has not occurred, for so long as H&F's
Retained Percentage is equal to or exceeds 20%, at least one H&F Director shall
be included in the slate of nominees recommended by the Board to shareholders
for election as directors of the Company at each annual general meeting of
shareholders at which an H&F Director's term is scheduled to expire. 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.
(g) The Company shall use its best efforts (i) to cause a special
meeting of the Board to be called upon the request of at least three Directors
and (ii) to cause to be submitted, at the 2002 annual general meeting of the
Company's shareholders, a proposal to amend Bye-Law 20 of the Company to replace
"by a majority of the total number of Directors" with "by three Directors or a
majority of the total number of Directors (whichever is fewer)".
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 com-
<Page>
-14-
mittee 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 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 pur-
<Page>
-15-
chase 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 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; PROVIDED, HOWEVER, that the foregoing shall not ap-
<Page>
-16-
ply to any merger or consolidation solely between or among wholly owned
Subsidiaries of the Company, other than any such transaction between
Subsidiaries which are considered "Core Insurance Operations" under
Section E, and Subsidiaries which are not considered "Core Insurance
Operations";
(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;
(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;
PROVIDED, HOWEVER, transactions solely between or among the Company and/or
one or more of its wholly owned Subsidiaries shall be excluded from
clauses (6), (8), (9), (11) and (14) (and from clause (17) to the extent
relating to an agreement with respect to a transaction excluded by this
proviso), other than any such transaction between Subsidiaries which are
considered "Core Insurance Operations" under Section E, and Subsidiaries
which are not considered "Core Insurance Operations."
In addition, prior to the Approval Date, and after the Approval Date for so long
as the Warburg Directors and the H&F Directors together constitute a majority of
the Board, (i) the notice for each meeting of the Board called by the Chairman
of the Board, the President of the Company, the Warburg Directors or the H&F
Directors shall include a list of topics to be discussed at the meeting (the
"AGENDA") and (ii) the Board shall not act on any matter that is not within the
Agenda without the consent of at least one Warburg Director and at least one H&F
Director. 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
<Page>
-17-
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.
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 in-
<Page>
-18-
tended 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 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 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 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.
<Page>
-19-
(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 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.
<Page>
-20-
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. Notwithstanding anything herein to the contrary, no Investor shall be
entitled to written notice of any such registration or be entitled to make a
Piggy-Back Request or Piggy-Back Registration with respect to the first such
registration and offering of Common Shares following the date hereof; provided
that such offering shall close on or prior to June 30, 2002.
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 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
<Page>
-21-
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 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
<Page>
-22-
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 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 Pe-
<Page>
-23-
riod 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 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
<Page>
-24-
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.
(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 informa-
<Page>
-25-
tion 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 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 in-
<Page>
-26-
demnified 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 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.
<Page>
-27-
(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 its rights to
become a 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 In-
<Page>
-28-
vestor 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 Section 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 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 Re-
<Page>
-29-
tained Percentage of such Investor would be less than 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. The foregoing shall not
prohibit any transfer by a Management Purchaser of his Initial Shares (i) as a
bona fide gift to members of his immediate family, (ii) made to any trust for
the benefit of such Management Purchaser or members of his immediate family or
(iii) to a corporation, limited liability company, limited partnership or
general partnership all of the equity interests are owned by such Management
Purchaser, members of his immediate family and/or one or more trusts described
in clause (ii); provided that the transferee thereof agrees, subject to the next
sentence, not to sell, dispose, convey or otherwise transfer any of the Initial
Shares as to which such Management Purchaser is relying on the exception
provided by this sentence (it being understood that, with respect to Sound View
Partners, L.P. and Otter Capital LLC, references to "Management Purchaser" in
this sentence shall include Robert Clements and John M. Pasquesi, respectively).
Following the earliest to occur of clauses (a), (b) or (c) in this Section 5.2,
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 Nasdaq 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) (A) the lesser of (x) the product of .199 times the total number of Common
Shares issued and outstanding on November 19, 2001 and (y) the product of .199
times the total voting power of the Common Shares issued and outstanding on
November 19, 2001, minus (B) the 140,380 Common Shares issued on November 20,
2001, and the denominator of which is (ii) the total number of Common Shares
issuable upon conversion or exercise of all Initial Shares. 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 trans-
<Page>
-30-
feree 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-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
<Page>
-31-
(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 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
<Page>
-32-
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 any Investor:
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
<Page>
-33-
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
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.
<Page>
-34-
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, 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.
<Page>
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 T. Petrillo
-------------------------------
Name: Louis T. Petrillo
Title: Senior Vice President and
General Counsel
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
<Page>
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
<Page>
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
<Page>
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
<Page>
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.:
c/o Maples and Calder Ugland House
South Church Street
George Town Grand Cayman
Cayman Islands, British West Indies
Attention: Charles Jennings
Facsimile: (345) 949-8080
and
c/o MMC Capital, Inc.
20 Horseneck Lane
Greenwich, CT 06830
Attention: David Wermuth
Facsimile: (203) 862-2925
<Page>
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 Trident II, L.P.:
c/o Maples and Calder Ugland House
South Church Street
George Town Grand Cayman
Cayman Islands, British West Indies
Attention: Charles Jennings
Facsimile: (345) 949-8080
and
c/o MMC Capital, Inc.
20 Horseneck Lane
Greenwich, CT 06830
Attention: David Wermuth
Facsimile: (203) 862-2925
<Page>
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 Trident II, L.P.:
c/o Maples and Calder Ugland House
South Church Street
George Town Grand Cayman
Cayman Islands, British West Indies
Attention: Charles Jennings
Facsimile: (345) 949-8080
and
c/o MMC Capital, Inc.
20 Horseneck Lane
Greenwich, CT 06830
Attention: David Wermuth
Facsimile: (203) 862-2925
<Page>
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
<Page>
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
<Page>
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
<Page>
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
<Page>
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
<Page>
FOR PURPOSES OF ARTICLE 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:
c/o Arch Capital Group Ltd.
20 Horseneck Lane
Greenwich, CT 06830
Attention: Robert Clements
Facsimile: (203) 625-8366
<Page>
FOR PURPOSES OF ARTICLE 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:
One Maritime Plaza, 12th Floor
San Francisco, CA 94111
Attention: John Pasquesi
Facsimile: (415) 788-0176
<Page>
FOR PURPOSES OF ARTICLE 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:
c/o Arch Capital Group Ltd.
20 Horseneck Lane
Greenwich, CT 06830
Attention: Robert Clements
Facsimile: (203) 625-8366
<Page>
FOR PURPOSES OF ARTICLE 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:
c/o Arch Reinsurance Ltd.
Wessex House
45 Reid Street
Hamilton HM 12
Bermuda
Attention: Paul B. Ingrey
Facsimile: (441) 296-8241
<Page>
FOR PURPOSES OF ARTICLE 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:
8 Kent Place
Westfield, NJ 07090
Attention: Dwight R. Evans
<Page>
FOR PURPOSES OF ARTICLE IV AND SECTIONS 3.4,
5.2 AND 5.3 HEREOF:
MARC GRANDISSON
By: /s/ Marc Grandisson
-------------------------------
Name: Marc Grandisson
Notice Information Marc Grandisson:
c/o Arch Reinsurance Ltd.
Wessex House
45 Reid Street
Hamilton HM 12
Bermuda
Attention: Marc Grandisson
Facsimile: (441) 296-8241