EXHIBIT 4.17


 


PREFERRED STOCK GUARANTEE


 


From


 


ARCH CAPITAL GROUP LTD.


 


To


 


Holders of


 


ARCH CAPITAL GROUP (U.S.) INC.


 


[·]%
Preferred Stock, Series [·],
par value $[·]
per share


 


Dated as of [·]


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS AND RULES OF INTERPRETATION

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Interpretation

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTEE

  	
   

  
	
  Section 2.01

  	
  Guarantee

  	
  3

  
	
  Section 2.02

  	
  Waiver of Notice and Demand

  	
  3

  
	
  Section 2.03

  	
  Absolute and Unconditional

  	
  3

  
	
  Section 2.04

  	
  Enforcement of Guarantee

  	
  4

  
	
  Section 2.05

  	
  Guarantee of Payment

  	
  4

  
	
  Section 2.06

  	
  Subrogation

  	
  4

  
	
  Section 2.07

  	
  Reinstatement of Obligations

  	
  4

  
	
  Section 2.08

  	
  Certain Rights, Remedies and Powers of
  Guaranteed Persons

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SUBORDINATION

  	
   

  
	
  Section 3.01

  	
  Subordination

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TERMINATION

  	
   

  
	
  Section 4.01

  	
  Termination

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
  Section 5.01

  	
  Amendments

  	
  5

  
	
  Section 5.02

  	
  Successors and Assigns

  	
  6

  
	
  Section 5.03

  	
  Notices

  	
  6

  
	
  Section 5.04

  	
  Benefit

  	
  6

  
	
  Section 5.05

  	
  Governing Law

  	
  6

  
	
  Section 5.06

  	
  Separability

  	
  7

  



 


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PREFERRED
STOCK GUARANTEE


 


This PREFERRED STOCK GUARANTEE,
dated as of [·]
(this “Guarantee”), is executed and delivered
by Arch Capital Group Ltd., a Bermuda public limited liability company (the “Guarantor”), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Stock (as defined herein) of Arch
Capital Group (U.S.) Inc., a Delaware corporation (the “Issuer”).


 


WHEREAS, the
Guarantor is the owner, directly or indirectly, of 100% of the issued and
outstanding shares of common stock of the Issuer;


 


WHEREAS, the board
of directors of the Issuer (or a duly authorized committee thereof) authorized
the creation of the series of [·]%
Preferred Stock, Series [·],
par value $[·]
per share (the “Preferred Stock”) having the
designation, rights, privileges and other terms set forth in a certificate (the
“Certificate of Designations”) filed by
the Issuer with the Delaware Secretary of State on [·];


 


WHEREAS, the rules and
regulations of the United States Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “Securities Act”),
and the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
permit the Issuer to substantially reduce its financial reporting obligations
if the Issuer’s payment obligations with respect to the Preferred Stock are
fully and unconditionally guaranteed by the Guarantor; and


 


WHEREAS, the
Guarantor will receive, directly or indirectly, substantial benefits from the
Issuer’s ability to reduce its reporting obligations under the Securities Act
and Exchange Act, and desires fully and unconditionally to agree, to the extent
set forth herein, to guarantee to the Holders of the Preferred Stock the
payment of the Guaranteed Payments (as defined herein) on the terms and
conditions set forth herein;


 


NOW, THEREFORE, in
consideration of the premises, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Guarantor
executes and delivers this Guarantee for the benefit of the Holders from time
to time.


 


ARTICLE 1


 


DEFINITIONS AND RULES OF INTERPRETATION


 


Section 1.01                                Definitions.


 


As used in this Guarantee, the terms set
forth below shall, unless the context otherwise requires, have the following
meanings.


 


“Affiliate” of
any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control” when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to
the foregoing.


 

















 


“Dividends”
means all dividends payable to Holders of Preferred Stock in accordance with
the terms of the Preferred Stock set forth in the Certificate of Designations.


 


“Dividend Payments”
means any accrued [and accumulated] and unpaid Dividends that have been
properly declared by the board of directors of the Issuer on the Preferred
Stock out of funds legally available therefor.


 


“Guaranteed Payments”
shall mean the following payments or distributions, without duplication, with
respect to the Preferred Stock then outstanding, to the extent provided for in
the Certificate of Designations and to the extent not paid when payable by the
Issuer:  (i) any Dividend Payments, (ii) the
Redemption Price and (iii) the Liquidation Distribution.


 


“Holder” shall
mean any holder, as registered on the books and records of the Issuer, of any
outstanding Preferred Stock; provided, however, that in determining whether the Holders of the requisite
percentage of Preferred Stock have given any request, notice, consent or waiver
hereunder, “Holder” shall not include the Guarantor or any entity that is an Affiliate
of the Guarantor.


 


“Liquidation Distribution”
means the aggregate of the liquidation amount payable by the Issuer upon the
Preferred Stock in accordance with the terms set forth in the Certificate of
Designations upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Issuer.


 


“Majority of the Preferred
Stock” means Holder(s) of outstanding Preferred Stock, voting
together as a single class, whose number of shares of Preferred Stock
represents at least a majority of the number of all shares of outstanding
Preferred Stock.


 


 “Person” means any individual, corporation, limited liability
company, partnership, joint venture, trust, estate, joint stock company,
unincorporated organization or government, or any agency or political
subdivision thereof, or any other entity of whatever nature.


 


“Redemption Price”
means the amount payable by the Issuer on redemption of the Preferred Stock in
accordance with the terms set forth in the Certificate of Designations upon
shares of Preferred Stock being duly called for redemption.


 


Section 1.02                                Interpretation.


 


In this Guarantee, unless the context
otherwise requires:


 


(a)                                  a
term defined anywhere in this Guarantee has the same meaning throughout;


 


(b)                                 all
references to “this Guarantee” are to this Guarantee as modified, supplemented
or amended from time to time;


 


(c)                                  all
references in this Guarantee to Articles and Sections are to Articles and Sections
of this Guarantee unless otherwise specified;


 


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(d)                                 a
reference to the singular includes the plural and vice versa; and


 


(e)                                  the
masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.


 


ARTICLE 2


 


GUARANTEE


 


Section 2.01                                Guarantee.


 


The Guarantor hereby fully and
unconditionally guarantees to each Holder the due and punctual payment of the
Guaranteed Payments, as and to the extent applicable (without duplication of
amounts theretofore paid by the Issuer) when and as the same shall become due
and payable, according to the terms of the Preferred Stock as set forth in the
Certificate of Designations, regardless of any defense, right of setoff or
counterclaim that the Issuer may have or assert.  In case of the failure of the Issuer or any
successor thereto punctually to pay any such Guaranteed Payments, as and to the
extent applicable, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, as if such
payment were made by the Issuer.  The
Guarantor’s obligation to make a Guaranteed Payment may be satisfied by direct
payment of the required amounts by the Guarantor to or for the benefit of the
Holders or by payment by the Issuer of such amounts to or for the benefit of
the Holders.


 


Section 2.02                                Waiver
of Notice and Demand.


 


The Guarantor hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.


 


Section 2.03                                Absolute
and Unconditional.


 


The Guarantor hereby agrees that its
obligations under this Guarantee shall be as if it were a principal obligor and
not merely a surety and shall be absolute and unconditional, irrespective of
the validity, regularity or enforceability of the Preferred Stock, the absence
of any action to enforce the same, any waiver or consent by the Holder of any
shares of Preferred Stock with respect to any terms thereof, the recovery of
any judgment against the Issuer or any action to enforce the same, or any
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor.  The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Stock and that the Guarantor shall
be liable as a principal obligor hereunder to make Guaranteed Payments pursuant
to the terms of this Guarantee notwithstanding the occurrence of any event
referred to in this Section 2.03.


 


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Section 2.04                                Enforcement
of Guarantee.


 


Any Holder of Preferred Stock may institute a
legal proceeding directly against the Guarantor to enforce its rights under
this Guarantee, without first instituting a legal proceeding against the Issuer
or any other Person.


 


Section 2.05                                Guarantee
of Payment.


 


This Guarantee creates a guarantee of payment
and not merely of collection.  This
Guarantee will not be discharged except (i) by payment of the Dividend
Payments, the Redemption Price or the Liquidation Distribution, if and as
applicable, in full by the Issuer, (ii) by payment of the Guaranteed
Payments in full (without duplication of amounts theretofore paid by the
Issuer) by the Guarantor or (iii) upon termination of this Guarantee
pursuant to Section 4.01 hereof.


 


Section 2.06                                Subrogation.


 


The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee. 
If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
applicable Holders and to pay over such amount to or for the applicable
Holders.


 


Section 2.07                                Reinstatement
of Obligations.


 


If any Holder of Preferred Stock is required
by any court or otherwise to return to the Issuer or the Guarantor, or any
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official acting in relation to the Issuer or the Guarantor, any amount paid to
such Holder in respect of Guaranteed Payments, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.


 


Section 2.08                                Certain
Rights, Remedies and Powers of Guaranteed Persons.


 


The Holders of Preferred Stock shall have all
of the rights and remedies available under applicable law and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof.  Each and every remedy
of each such Person shall, to the extent permitted by law, be cumulative and
shall be in addition to any other remedy now or hereafter existing at law or in
equity.  At the option of any such
Person, the Guarantor may be joined in any action or proceeding commenced by
such Person against the Issuer in respect of any obligations guaranteed
pursuant to this Guarantee, and recovery may be had against the Guarantor in
such action or proceeding or in any independent action or proceeding against
the Guarantor, without any requirement that any remedy or claim against the Issuer
be first asserted, prosecuted or exhausted.


 


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ARTICLE 3


 


SUBORDINATION


 


Section 3.01                                Subordination.


 


This Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in
right of payment, and subject, to all liabilities of the Guarantor, except
those made pari passu or subordinate by their
terms, (ii) pari passu with the most senior
preferred stock or preference shares now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in
respect of any of the most senior preferred stock or preference stock of any
Affiliate of the Guarantor, and (iii) senior to all common stock now or
hereafter issued by the Guarantor.  The
Guarantor’s obligations under this Guarantee will rank pari passu
with respect to obligations under other guarantee agreements that it may enter
into from time to time to the extent that such agreements shall be entered into
in substantially the form hereof and provide for comparable guarantees by the
Guarantor of payment on preferred stock issued by the Issuer or any of its
Affiliates.


 


ARTICLE 4


 


TERMINATION


 


Section 4.01                                Termination.


 


This Guarantee shall terminate and be of no
further force and effect upon:  (i) full
payment of the Redemption Price of all Preferred Stock, (ii) full payment
of the amounts payable to or for the Holders in accordance with the Certificate
of Designations upon liquidation, dissolution or winding up of the Issuer, or (iii) such
date when no shares of Preferred Stock are outstanding.  Notwithstanding the foregoing, this Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any Holder must restore to the Guarantor any Guaranteed Payments or to
the Issuer payment of any sums paid by the Issuer and guaranteed by this
Guarantee.


 


ARTICLE 5


 


MISCELLANEOUS


 


Section 5.01                                Amendments.


 


Except with respect to any changes that would
not materially and adversely affect any power, preference or special right of
the shares of Preferred Stock or of the Holders thereof (in which case no
consent of Holders will be required), this Guarantee may only be amended with
the prior approval of the Holders of not less than a Majority of the Preferred
Stock.  Any such approval shall be deemed
to be on behalf of the Holders of all of the Preferred Stock.  The provisions of the Certificate of
Designations concerning meetings or consents of Holders shall apply to the
giving of such approval.  No amendment
may impair the right of any Holder to receive payment of any Guaranteed
Payments in accordance with this Guarantee as in effect on the 


 


5

















 


date hereof or
to institute suit for the enforcement of any such payment without, in each
case, the consent of each such Holder.


 


Section 5.02                                Successors
and Assigns.


 


All guarantees and agreements contained in
this Guarantee shall bind the successors, assignees, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of shares of the Preferred Stock then outstanding.  Except in connection with a consolidation,
merger, conveyance or other transfer or business combination involving the
Guarantor in which the resulting or acquiring entity (if other than the
Guarantor) agrees in writing to be legally responsible for this Guarantee, the
Guarantor shall not assign its obligations hereunder.


 


Section 5.03                                Notices.


 


Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, facsimiled or mailed by first
class mail as follows:


 


(a)                                  if
given to the Guarantor, to the address set forth below or such other address as
the Guarantor may give notice of to the Holders:


 


Arch Capital Group Ltd.


Wessex House, 3rd Floor


45 Reid Street


Hamilton HM 12, Bermuda

Phone:  (441) 278-9250

Fax Number:  (441) 278-9255

Attention:  Secretary


 


(b)                                 if
given to any Holder of Preferred Stock, at the address set forth on the books
and records of the Issuer.


 


All notices hereunder shall be deemed to have
been given when received in person, facsimiled with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address
of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.


 


Section 5.04                                Benefit.


 


This Guarantee is solely for the benefit of
the Holders and is not separately transferable from the Preferred Stock.


 


Section 5.05                                Governing
Law.


 


THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD 


 


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TO CONFLICT OF
LAWS PRINCIPLES THEREUNDER, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER
JURISDICTION ARE MANDATORILY APPLICABLE.


 


Section 5.06                                Separability.


 


Wherever possible, each provision of this Guarantee
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guarantee shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guarantee.


 


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THIS GUARANTEE is
effective as of the day and year first above written.


 


 


	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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