Document:

Exhibit

Exhibit 4.7
DESCRIPTION OF SECURITIES 
REGISTERED UNDER SECTION 12 OF THE SECURITIES  EXCHANGE ACT OF 1934

The following summary descriptions do not purport to be complete and are qualified in their entirety by reference to (i) in the case of our common shares, the complete text of applicable laws and the pertinent sections of the amended and restated bye-laws of Arch Capital Group Ltd. (“Arch Capital”) and the memorandum of association, as amended, of Arch Capital, which we have previously filed with the Securities and Exchange Commission, or SEC, (ii) in the case of our preference shares, the pertinent sections of the amended and restated bye-laws of Arch Capital, and the applicable certificate of designations for such preference shares, which we have previously filed with the SEC, and (iii) in the case of our depositary shares, the pertinent sections of the amended and restated bye-laws of Arch Capital and the applicable certificate of designations, the terms and provisions of the applicable deposit agreement and the applicable form of depositary receipt, which we have previously filed with the SEC. As used herein, “we,” “us,” “our,” the “Company,” “Arch Capital” and “ACGL” mean Arch Capital Group Ltd. and do not include its subsidiaries.
The authorized share capital of Arch Capital consists of 1.8 billion common shares, U.S. $0.0011 par value per share, and 50 million preferred shares, U.S. $0.01 par value per share. As of December 31, 2019, the end of our most recent fiscal year, we had the following classes of securities registered under Section 12 of the Exchange Act:
		
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	common shares, $0.0011 par value per share;

		
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	depositary shares (the “Series E Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 5.25% Non-Cumulative Preferred Shares, Series E, have a $0.01 par value and $25,000 liquidation preference per share (equivalent to $25 liquidation preference per Series E Depositary Share) (the “Series E Preferred Shares”); and

		
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	depositary shares (the “Series F Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 5.45% Non-Cumulative Preferred Shares, Series F, have a $0.01 par value and $25,000 liquidation preference per share (equivalent to $25 liquidation preference per Series F Depositary Share) (the “Series F Preferred Shares”).

DESCRIPTION OF COMMON SHARES
General
Holders of the common shares have no preemptive, redemption, conversion or sinking fund rights. Subject to the voting restrictions described below, holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares and do not have any cumulative voting rights. In the event of a liquidation, dissolution, or winding up of Arch Capital, the holders of common shares are entitled to share equally and ratably in the assets of Arch Capital, if any, remaining after the payment of all debts and liabilities of Arch Capital and the liquidation preference of any outstanding preference shares. All outstanding common shares are fully paid and non-assessable. The Board of directors of Arch Capital, which we refer to as “the Board,” is permitted to authorize the issuance of additional common shares. Issuances of common shares are subject to the applicable rules of the Nasdaq Global Select Market or other organizations on whose systems Arch Capital’s common shares may then be quoted or listed.
Transfer Agent
American Stock Transfer & Trust Company is the transfer agent and registrar of Arch Capital’s common shares.

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Dividends
Holders of Arch Capital’s common shares are entitled to participate equally in dividends when the Board declares dividends on common shares out of funds legally available for dividends. The rights of holders of Arch Capital’s common shares to receive dividends are subject to the preferences of holders of Arch Capital’s preference shares, including Arch Capital’s issued and outstanding preference shares, which require that no dividends may be paid on or with respect to Arch Capital’s common shares prior to the declaration and payment of a dividend with respect to such preference shares.
Liquidation Rights
In the event of a liquidation, dissolution, or winding up of Arch Capital, the holders of common shares have a right to a ratable portion of assets remaining after the payment of all debts and liabilities of Arch Capital, if any, and the liquidation preference of any outstanding preference shares, plus any declared and unpaid dividends thereon, before any distribution is made on any common shares.
Voting at meetings
Unless a different number is otherwise expressly required by statute or the bye-laws, every act or decision (including any act or resolution regarding any amalgamation, scheme of arrangement, merger, consolidation or sale or transfer of assets that has been approved by the affirmative vote of at least two-thirds of the directors in office) done or made by a majority of the voting power held by the shareholders present in person or by proxy at a meeting duly held, at which a quorum is present, shall be regarded as the act or resolution of the shareholders; provided, that in any uncontested election of directors, the majority of the voting power represented by the votes cast at a meeting duly held, at which a quorum is present, shall be regarded as the act or resolution of the shareholders; provided, further, where the number of nominees exceeds the number of directors to be elected, nominees shall be elected by a plurality of the votes cast “for” such directors. 
Voting Limitation
Under Arch Capital’s bye-laws, if the votes conferred directly or indirectly or by attribution, by Arch Capital’s shares directly, indirectly or constructively owned (within the meaning of section 958 of the Internal Revenue Code of 1986, as amended (the “Code”)) by any U.S. person (as defined in section 7701(a)(30) of the Code) would otherwise represent more than 9.9% of the voting power of all shares entitled to vote generally at an election of directors, the votes conferred by such shares on such U.S. person will be reduced by whatever amount is necessary so that after any such reduction the votes conferred by such shares to such person will constitute 9.9% of the total voting power of all shares entitled to vote generally at an election of directors; provided that, with respect to certain institutional funds, votes shall be reduced in shares held directly by such funds only if and to the extent that reductions in the vote of other shares do not result in satisfaction of the 9.9% threshold and such reduction shall not be effective on or after the date on which such institutional fund reasonably objects in writing.
There may be circumstances in which the votes conferred on a U.S. person are reduced to less than 9.9% as a result of the operation of bye-law 45 because of shares that may be attributed to that person under the Code.
Notwithstanding the provisions of Arch Capital’s bye-laws described above, after having applied such provisions as best as they consider reasonably practicable, the Board may make such final adjustments to the aggregate number of votes conferred directly or indirectly or by attribution by the shares directly or indirectly or constructively owned by any U.S. person that they consider fair and reasonable in all the circumstances to ensure that such votes represent 9.9% of the aggregate voting power of the votes conferred by all Arch Capital’s shares entitled to vote generally at an election of directors.
In order to implement bye-law 45, we will assume that all shareholders are U.S. persons unless we receive assurances satisfactory to us that they are not U.S. persons.

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Shareholder Proposals

         Our bye-laws establish an advance notice procedure for shareholder proposals to be brought before an annual shareholders meeting of our shareholders and for nominations by shareholders of candidates for election as directors at an annual shareholders meeting or a special shareholders meeting at which directors are to be elected. Subject to any other applicable requirements, including rule 14a-8 under the U.S. Securities Exchange Act of 1934, only such business may be conducted at an annual meeting of shareholders as has been brought before the meeting by, or at the direction of, our Board of directors, or by a shareholder who has given to the secretary of the company timely written notice, in proper form, of the shareholder's intention to bring that business before the meeting. The presiding officer at such meeting has the authority to make such determinations. Only persons who are nominated by, or at the direction of, our Board of directors, or who are nominated by a shareholder who has given timely written notice, in proper form, to the secretary prior to a meeting at which directors are to be elected will be eligible for election as director of the company. Subject to Bermuda law as described below, shareholders will not be entitled to raise proposals at special shareholders meetings.

To be timely, notice of nominations or other business to be brought before an annual shareholders meeting must be received by the secretary of the company at our principal executive office no later than 50 days prior to the date of such annual shareholders meeting (or if less than 55 days' notice of the meeting is given, not later than the close of business on the seventh day following the day notice of the meeting is first given to shareholders). Similarly, notice of nominations to be brought before a special shareholders meeting at which directors are to be elected must be delivered to the secretary at our principal executive office no later than the close of business on the seventh day following the day on which notice of such meeting of shareholders is first given to shareholders.

The shareholder's notice to nominate a director must set forth the identity of the nominee, any arrangements or understandings the shareholder has the nominee and any other information as would be required under the proxy rules of the Securities and Exchange Commission if that person were in fact to appear as a nominee in our proxy statement.
    
Bermuda law provides that shareholders totaling at least 100 shareholders or holding at least 5% of the total voting rights can, at their own expense, require the company to, subject to the provisions of Bermuda law:

		
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	give notice of any resolution which those shareholders can properly propose and intend to propose at the next annual shareholders meeting of the company; or

		
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	circulate a statement prepared by those shareholders in respect of any matter referred to in a proposed resolution or any business to be dealt with at a shareholders meeting.

Board of Directors

Our bye-laws provide that the number of directors will not be less than three nor more than eighteen and will be determined from time to time by a vote of a majority of our Board of directors then in office. Our bye-laws provide that the Board will be divided into three classes. Each class will consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board. At each annual meeting of shareholders, directors will be elected to succeed those directors whose terms have expired, and each newly elected director will serve for a three-year term.

Our bye-laws provide that directors may be removed only for cause as determined by the affirmative vote of the holders of at least a majority of the shares then entitled to vote generally in an election of directors, which vote may only be taken at a special general meeting of shareholders called expressly for that purpose, and cause for removal shall be deemed to exist only if the director whose removal is proposed has been convicted of a felony or been found by a court to be liable for gross negligence or misconduct in the performance of his or her duties and 

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such adjudication is no longer subject to direct appeal. Our bye-laws also provide that our Board of directors have the right to fill vacancies, including vacancies created by expansion of the Board of directors.

Interested Shareholder Provisions

Our bye-laws prohibit interested shareholders from engaging in a business combination with Arch Capital for a period of three years from the time of becoming an interested shareholder. An interested shareholder is defined as a person that owns 15% or more of the voting power of the Company or any person that is an affiliate or associate of Arch Capital and was the owner of 15% or more of the voting power of the Company at any time within three years of the date that person's status as an interested shareholder is determined. Business combinations include:

		
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	mergers, amalgamations, consolidation or similar transactions,

		
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	the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets of the Company having an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the company determined on a consolidated basis or the aggregate market value of all outstanding shares of the Company;

		
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	any transaction that results in the issuance or transfer by the Company of any stock of the Company to the interested shareholder, except if the issuance is part of a proportionate distribution to all shareholders or due to the conversion of securities exercisable or exchangeable for shares in the Company;

		
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	any transaction involving the Company or one of our subsidiaries that results in the interested shareholder's percentage ownership in the company increasing; and

		
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	any receipt by the interested shareholder of the benefit of any loan, guarantee or other financial benefit provided by or through the Company.

The Company is not bound by the interested shareholder provisions that restrict the activities of it with respect to an interested shareholder if:

		
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	upon consummation of the transaction that resulted in the interested shareholder becoming an interested shareholder, that interested shareholder owned at least 85% of the voting power of the Company's shares outstanding at the time the transaction commenced;

		
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	the Board approved the transaction in which the interested shareholder became an interested shareholder before that transaction was completed; or

		
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	the business combination is approved by the Board and authorized at a meeting by the vote of 66 2/3% of the outstanding voting shares not owned by the interested shareholder.

         The restrictions of the interested shareholder provisions do not restrict the activities of an interested shareholder with respect to business combinations in the event that any of the following transactions:

		
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	a merger, amalgamation, consolidation or similar transaction of the Company;

		
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	a sale of the Company's assets having an aggregate market value equal to 50% or more of the aggregate value of all the Company's assets; or

		
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	a tender offer for 50% or more of the voting stock of the Company,

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is approved or not opposed by a majority of the Board of directors of the Company then in office (but not less than 1), so long as those directors were in office (or were nominated or elected by such directors by a majority of such Directors who were in office) prior to the time the interested shareholder became an interested shareholder during the previous 3 years, and a business combination before the Company consummates or abandons, and after the company either announces publicly, or gives notice (which it is required to do in the case of an asset sale or merger) to all interested shareholders of, one of the specified transactions.

         The provisions of the bye-laws restricting business combinations with interested shareholders can be repealed only with (1) the affirmative vote of 66-2/3% of the outstanding shares (excluding voting shares beneficially owned by any interested shareholder) and the approval of the Board or (2) the affirmative vote of a majority of the outstanding shares and the affirmative vote of 75% of the entire Board (and that 75% threshold must be met without the votes of directors who are affiliates of the interested shareholder).

Additional Voting Restrictions

         Our bye-laws provide that the affirmative vote of 80% of the voting power of the shares of the Company entitled to vote generally at an election of directors (including a majority of the voting power of such shares held by shareholders other than shareholders that are the beneficial owner of 10% or more of the then outstanding shares of voting stock of the company (“10% holders”)) shall be required (the “extraordinary vote”) for the following corporate actions:

		
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	adoption of any agreement for, or the approval of, any amalgamation, merger or consolidation of the Company or any subsidiary with or into a 10% holder or any affiliate thereof;

		
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	sale, lease, transfer or other disposition of any or all of the assets of the Company or any subsidiary to a 10% holder or any affiliate thereof;

		
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	the issuance or transfer by the Company or any subsidiary of voting securities of the Company or any subsidiary to a 10% holder or any affiliate thereof; or

		
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	amendment of these provisions.

         The extraordinary vote will not apply to any transaction approved by the Board, so long as a majority of the directors voting in favor of the transaction were duly elected and acting members of the Board prior to the time the 10% holder became a 10% holder.

Anti-Takeover Effects

         Certain of the provisions described above in our bye-laws could have the effect of discouraging unsolicited takeover bids from third parties or the removal of incumbent management. As a result, it may be less likely that you
will receive premium prices for your shares in an unsolicited takeover of our Company by another party. These provisions may encourage companies interested in acquiring the Company to negotiate in advance with our Board of directors, since the Board has the authority to overrule the operation of several of the limitations.

         Our bye-laws provide that certain provisions which may have anti-takeover effects may be repealed or altered only with prior Board approval and upon the affirmative vote of holders of shares representing at least 65% of the total voting power of the shares of the Company entitled generally to vote at an election of directors (80% in the case of the provisions described under "--Interested Shareholder Provisions -- Additional Voting Restrictions").

         Voting Limitation

         The provisions described above under "-- Voting Limitation" may deter any unsolicited or unnegotiated bids for the company since, subject to the exceptions described above, no shareholder or (without approval of 75% 

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of the directors then in office) group will be able to vote shares representing more than 9.9% of the voting power of the company's voting shares.

         Limitation on Shareholder Proposals and Calling of Special Shareholders meetings

        The provisions limiting shareholders' right to call special shareholders meetings and to raise proposals or nominate directors at shareholders meetings may have anti-takeover effects, although under Bermuda law, subject to specified conditions, any 10% shareholder can call a special shareholders meeting and any 5% shareholder can raise a proposal at a shareholders meeting.

         Action by Written Consent

        Under Bermuda law, shareholders may act by written consent only if such consent is unanimous among all shareholders entitled to vote. This limitation, together with the limitation on shareholder proposals and calling of special shareholders meetings, could make an unsolicited or unnegotiated bid more difficult.

        Classified Board of Directors

         The classified Board provision could increase the likelihood that, in the event of a takeover of the company, incumbent directors will retain their positions. In conjunction with the provision of the bye-laws authorizing our
Board of directors to fill vacant directorships, the classified Board provision could prevent shareholders from removing incumbent directors without cause (as defined in our bye-laws) and filling the resulting vacancies with their own nominees. We believe that the provision will help assure that the Board, if confronted with an unsolicited proposal from a third party that has acquired a block of our voting shares, will have sufficient time to review the proposal and appropriate alternatives and to seek the best available result for all shareholders. We also believe that a classified Board helps assure the continuity and stability of the Board and our business strategy and policies.

         Power to Issue Shares

         Authorized preference shares, as well as authorized but unissued common shares, will be available for issuance by the Board, without further action by our shareholders, unless shareholder action is required by applicable law or the rules of any stock exchange on which any series of the Company's capital stock may then be listed. The Company is authorized to have issued and outstanding 1.8 billion common shares and 50 million preference shares. We believe that the availability of preference shares and additional common shares could facilitate certain financings and acquisitions and provide a means for meeting other corporate needs which might arise. These provisions give our Board of directors the power to approve the issuance of preference shares or common shares that could, depending on its terms, either impede or facilitate the completion of a merger, tender offer or other takeover attempt. For example, the issuance of preference shares might impede a business combination if the terms of those shares include voting rights which would enable a holder to block business combinations.

         Interested Shareholder Provisions

         Any interested shareholder or 10% holder, each as defined above under "--Interested Shareholder Provisions," cannot effect certain transactions with the company unless it complies with the provisions described in that section or the Board of directors by requisite vote (or in the case of the Section 203 provisions, the shareholders by requisite vote) approve the transaction. These provisions may encourage potential acquirers to negotiate with the Board and deter any bids not approved by the Board.

Shareholder Approval of Business Combinations

        Bermuda law permits an amalgamation between two or more Bermuda companies, or between one or more Bermuda exempted companies and one or more foreign corporations, subject, unless the bye-laws otherwise provide, to obtaining a majority vote of three-fourths of the shareholders of each of the companies and each class of shares present and voting in person or by proxy at a meeting called for that purpose. Unless the bye-laws otherwise 

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provide, Bermuda law also requires that the quorum at the meeting be more than one-third of the issued shares of the company or the class. Each share carries the right to vote in respect of an amalgamation, whether or not it otherwise carries the right to vote.

         Except as set forth in the next paragraph, our bye-laws provide that any amalgamation approved by two-thirds of the Board of directors of the company shall require approval only by a majority of the voting power held by shareholders, if the holders of a majority of the shares issued and entitled to vote are present.

         Bermuda law also provides that where an offer is made for shares in a company by another company and, within four months of the offer, the holders of at least 90% in value of the shares which are the subject of the offer (other than shares already held by or on behalf of the offeror) accept, the offeror may by notice, given within two months after the expiration of the said four months, require any dissenting shareholders to transfer their shares on the terms of the offer. Dissenting shareholders may apply to a court within one month of notice objecting to the transfer and the court may make any order it thinks fit.

Interested Director Transactions

         Under Bermuda law, without the consent of the holders of shares carrying at least nine-tenths of the total voting rights or in other limited instances, a company may not make a loan to or enter into any guarantee or provide security in respect of any loan made to any person who is a director of that company or of its holding company. Exceptions to this provision are:

		
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	loans or guarantees by the company in the ordinary course of its business, if the business includes lending money or giving guarantees; or

		
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	loans for the purposes of the company or to enable its directors to perform their duties, given with prior approval at a shareholders meeting where the purposes of the loan are disclosed; or if not given at that meeting, the loan is repaid or discharged within six months from the conclusion of the next following annual shareholders meeting.

         This provision does not preclude the reimbursement of expenses or loans to directors who are or were employees of the company to enable them to acquire shares or stock options. 

Amendment of our bye-laws

         Our bye-laws provide that no bye-law shall be rescinded, altered or amended and no new bye-law shall be made until the same has been approved both by a resolution of the Board and by a resolution of the members. 

Notwithstanding any other provision of the bye-laws, the affirmative vote of the holders of at least sixty-five percent (65%) of the voting power of the shares entitled to vote generally at an election of directors shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with the purpose or intent of, bye-laws 10(2) (Exercise of power to purchase shares of or discontinue the Company), 11 (Election of Directors), 15 (Vacancies on the Board; Removal of Directors, Etc.), 31 (Right to indemnification), 32 (Waiver of claims), 33 (Indemnification of employees), 39 (Notice of general meeting), 45 (Limitation on voting rights of Controlled Shares), 46(3) (Voting at meetings), 52 (Rights of shares), 53 (Power to issue shares), 79(1) and 79(2) (Alteration of Bye-laws, Etc.), and the affirmative vote of the holders of shares representing not less than 66-2/3% of the voting power of all the then outstanding voting shares voting together as a single class, excluding voting shares beneficially owned by any interested shareholder shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with the purpose or intent of, bye-law 78 (Business Combinations) unless such amendment, repeal or adoption is recommended by the affirmative vote of at least 75% of the Directors in office (not including Directors who are affiliates of any interested shareholder). The affirmative vote of the holders of at least 80% of the voting power of the shares of the Company entitled to vote generally at an election of Directors (including a majority of the outstanding shares held by shareholders other than 10% holders) shall be required for any amendment of Bye-law 79(3) or any transaction referenced in Bye-law 79(3) unless the transaction is approved by the Board.

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Listing of our common shares

         Our common shares are listed on the NASDAQ Stock Market (“NASDAQ”) under the symbol “ACGL.” 

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DESCRIPTION OF THE SERIES E PREFERRED SHARES 
General 
The Series E Preferred Shares constitute a series of our authorized preference shares. 
We will generally be able to pay dividends and distributions upon liquidation, dissolution or winding-up only out of lawfully available funds for such payment (i.e., after taking account of all indebtedness and other non-equity claims). The Series E Preferred Shares were fully paid and non-assessable when issued. Holders of the Series E Preferred Shares do not have preemptive or subscription rights to acquire more of our capital shares. 
Holders do not have the right to convert Series E Preferred Shares into, or exchange Series E Preferred Shares for, shares of any other class or series of shares or other securities of ours. The Series E Preferred Shares have no stated maturity and are not subject to any sinking fund, retirement fund or purchase fund or other obligation of ACGL to redeem or purchase the Series E Preferred Shares. 
Ranking 
The Series E Preferred Shares rank senior to our junior shares and equally with each other series of our preferred shares that we may issue with respect to the payment of dividends and distributions of assets upon liquidation, dissolution or winding-up. Junior shares include any class or series of shares that rank junior to the Series E Preferred Shares either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding-up. The Series E Preferred Shares are on parity with the Series F Preferred Shares with respect to the payment of dividends and distribution of assets upon a liquidation, dissolution or winding up of Arch Capital.
We may issue, without limitation, (1) additional Series E Depositary Shares representing additional Series E Preferred Shares that would form part of the same series of Series E Depositary Shares offered in this offering, and (2) additional series of securities that rank equally with or senior to the Series E Preferred Shares. Unless our shareholders otherwise provide, our Board of directors may from time to time create and issue preference shares of other series and fix their relative rights, preferences and limitations. 
Dividends 
Dividends on the Series E Preferred Shares are not mandatory. Holders of Series E Preferred Shares will be entitled to receive, only when, as and if declared by the Board of directors of ACGL or a duly authorized committee of the Board, out of lawfully available funds for the payment of dividends under Bermuda law, non-cumulative cash dividends from the original issue date, quarterly on the last day of March, June, September and December of each year. If so declared, dividends will accrue with respect to a particular dividend period, on the liquidation preference amount of $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share) at the annual rate of 5.25% per annum. In the event that we issue additional Series E Preferred Shares after the original issue date, dividends on such additional shares may accrue from the original issue date or any other date we specify at the time such additional shares are issued. 
Dividends, if so declared, will be payable to holders of record of the Series E Preferred Shares as they appear on our books on the applicable record date, which shall be March 15, June 15, September 15 and December 15, as applicable, immediately preceding the applicable dividend payment date or such other record date fixed by our Board of directors (or a duly authorized committee of the Board) that is not more than 60 nor less than 10 days prior to such dividend payment date (each, a “dividend record date”). These dividend record dates will apply regardless of whether a particular dividend record date is a business day. 
A dividend period is the period from and including a dividend payment date to but excluding the next dividend payment date. Dividends payable on the Series E Preferred Shares will be computed on the basis of a 360-

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day year consisting of twelve 30-day months. If any date on which dividends would otherwise be payable is not a business day, then the dividend payment date will be the next succeeding business day with the same force and effect as if made on the original dividend payment date, and no additional dividends shall accrue on the amount so payable from such date to such next succeeding business day. 
Dividends on the Series E Preferred Shares will not be cumulative. Accordingly, if the Board of directors of ACGL, or a duly authorized committee of the Board, does not declare a dividend on the Series E Preferred Shares payable in respect of any dividend period before the related dividend payment date, such dividend will not accrue and will not be payable and we will have no obligation to pay a dividend for that dividend period on the dividend payment date or at any future time, whether or not dividends are declared for any future dividend period on the Series E Preferred Shares or any other preferred shares we may issue in the future. 
So long as any Series E Preferred Shares remain issued and outstanding for any dividend period, unless the full dividends for the latest completed dividend period on all outstanding Series E Preferred Shares and parity shares have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside):
		
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	no dividend shall be paid or declared on our common shares, or any other junior shares (as defined below) (other than a dividend payable solely in junior shares); and 

		
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	no common shares or other junior shares shall be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly (other than (i) as a result of a reclassification of junior shares for or into other junior shares, or the exchange or conversion of one junior share for or into another junior share, or (ii) through the use of the proceeds of a substantially contemporaneous sale of junior shares, in each case as permitted by the bye-laws of ACGL in effect on the date of issuance of the Series E Preferred Shares). 

As used in this section, “junior shares” means any class or series of our capital shares that ranks junior to the Series E Preferred Shares either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or winding-up of ACGL. At present, junior shares consist of our common shares. 
When dividends are not paid (or duly provided for) in full on any dividend payment date (or, in the case of parity shares (as defined below) having dividend payment dates different from the dividend payment dates pertaining to the Series E Preferred Shares, on a dividend payment date falling within the related dividend period for the Series E Preferred Shares) upon the Series E Preferred Shares and any parity shares, all dividends declared by the Board of directors of ACGL or a duly authorized committee of the Board upon the Series E Preferred Shares and all such parity shares and payable on such dividend payment date (or, in the case of parity shares having dividend payment dates different from the dividend payment dates pertaining to the Series E Preferred Shares, on a dividend payment date falling within the related dividend period for the Series E Preferred Shares) shall be declared by the Board or such committee pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all declared but unpaid dividends per Series E Preferred Share and all parity shares payable on such dividend payment date (or, in the case of parity shares having dividend payment dates different from the dividend payment dates pertaining to the Series E Preferred Shares, on a dividend payment date falling within the related dividend period for the Series E Preferred Shares) bear to each other. 
As used in this section, “parity shares” means any class or series of our capital shares that ranks equally with the Series E Preferred Shares with respect to the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding-up of ACGL. 
Certain Restrictions on Payment of Dividends 
ACGL is a holding company whose assets primarily consist of the shares in our subsidiaries. Generally, ACGL depends on its available cash resources, liquid investments and dividends or other distributions from subsidiaries to make payments, including any payments of dividends, redemption amounts or liquidation amounts with respect to our preferred shares. 

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The ability of our regulated insurance and reinsurance subsidiaries to pay dividends or make distributions or other payments to us is dependent on their ability to meet applicable regulatory standards. Under Bermuda law, Arch Reinsurance Ltd. (“Arch Re Bermuda”), our Bermuda-based reinsurer and insurance, is subject to individual capital requirements, including, among other requirements, being required to maintain an enhanced capital requirement which must equal or exceed its minimum solvency margin (i.e., the amount by which the value of its general business assets must exceed its general business liabilities) equal to the greatest of (1) $100 million, (2) 50% of net premiums written (being gross premiums written less any premiums ceded by Arch Re Bermuda, but Arch Re Bermuda may not deduct more than 25% of gross premiums when computing net premiums written) and (3) 15% of net discounted aggregated losses and loss expense provisions and other insurance reserves. Arch Re Bermuda is prohibited from declaring or paying any dividends during any financial year if it is not in compliance with its enhanced capital requirement, minimum solvency margin or minimum liquidity ratio. In addition, Arch Re Bermuda is prohibited from declaring or paying in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its previous financial year's statutory balance sheet) unless it files, at least seven days before payment of such dividends, with the Bermuda Monetary Authority (“BMA”) an affidavit stating that it will continue to meet the required margins. In addition, Arch Re Bermuda is prohibited, without prior approval of the BMA, from reducing by 15% or more its total statutory capital, as set out in its previous year's statutory financial statements. Arch Re Bermuda is required to meet enhanced capital requirements as calculated using a risk based capital model called the Bermuda Solvency Capital Requirement model or an internal model approved by the BMA. 
Under Bermuda law, we may not lawfully declare or pay a dividend on the Series E Preferred Shares (even if such dividends have been previously declared) if we have reasonable grounds for believing that (i) we are or, after giving effect to the payment of dividends, would be, unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than our liabilities, or (iii) we are or, after such payment, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements or such other applicable rules, regulations or restrictions as may from time to time be issued or imposed by the BMA (or any successor agency or then-applicable regulatory authority) pursuant to the terms of the Insurance Act 1978 of Bermuda (the “Insurance Act”) or any successor legislation or then-applicable law. 
In addition to meeting applicable regulatory standards, the ability of our insurance and reinsurance subsidiaries to pay dividends is also constrained by our dependence on the financial strength ratings of our insurance and reinsurance subsidiaries from independent rating agencies. 
Payment of Additional Amounts 
We will make all payments on the Series E Preferred Shares free and clear of and without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which we are organized (a “taxing jurisdiction”) or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (x) the laws (or any regulations or rulings promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof). If a withholding or deduction at source is required, we will, subject to certain limitations and exceptions described below, pay to the holders of the Series E Preferred Shares such additional amounts as dividends as may be necessary so that every net payment made to such holders, after the withholding or deduction, will not be less than the amount provided for in the Certificate of Designations to be then due and payable. 
We will not be required to pay any additional amounts for or on account of: 
		
	(1)
	any tax, fee, duty, assessment or governmental charge of whatever nature that would not have been imposed but for the fact that such holder was a resident, citizen, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing 

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jurisdiction or any political subdivision thereof or otherwise had some connection with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Series E Preferred Shares or any Series E Preferred Shares presented for payment more than 30 days after the Relevant Date. The “Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the dividend disbursing agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to holders, notice to that effect shall have been duly given to the holders of the Series E Preferred Shares; 
		
	(2)
	any estate, inheritance, gift, sale, transfer, wealth, personal property or similar tax, assessment or other governmental charge or any tax, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment of the liquidation preference; 

		
	(3)
	any tax, fee, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment of the liquidation preference of or any dividends on the Series E Preferred Shares; 

		
	(4)
	any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the holder of such Series E Preferred Shares to comply with any reasonable request by us addressed to the holder within 90 days of such request (a) to provide information concerning the nationality, citizenship, residence or identity of the holder or (b) to make any declaration or other similar claim or satisfy any information or reporting requirement, which is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge; 

		
	(5)
	any tax, fee, duty, assessment or other governmental charge that is withheld by any paying agent from any payment on any Series E Preferred Shares, if such payment can be made without such withholding by at least one other paying agent; 

		
	(6)
	any tax, fee, duty, assessment or other governmental charge that is imposed or withheld pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code); or 

		
	(7)
	any combination of items (1), (2), (3), (4), (5) and (6). 

In addition, we will not pay additional amounts with respect to any payment on any such Series E Preferred Shares to any holder who is a fiduciary, partnership, limited liability company or other pass-thru entity other than the sole beneficial owner of such Series E Preferred Shares if such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership, limited liability company or other pass-thru entity or a beneficial owner to the extent such beneficiary, partner or settlor would not have been entitled to such additional amounts had it been the holder of the Series E Preferred Shares. 
If there is a substantial probability that we or any entity formed by a consolidation, merger or amalgamation involving us or the entity to which we convey, transfer or lease substantially all our properties and assets (a “successor company”) would become obligated to pay any additional amounts as a result of a change in tax law, we or the successor company will also have the option to redeem the Series E Preferred Shares. See “—Redemption—Tax Events.” 

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Liquidation Rights 
Upon any voluntary or involuntary liquidation, dissolution or winding-up of ACGL, holders of the Series E Preferred Shares and any parity shares are entitled to receive out of our assets available for distribution to shareholders, after satisfaction of liabilities to creditors, if any, but before any distribution of assets is made to holders of our common shares or any of our other shares ranking junior as to such a distribution to the Series E Preferred Shares, a liquidating distribution in the amount of $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share) plus any declared and unpaid dividends. Holders of the Series E Preferred Shares will not be entitled to any other amounts from us after they have received their full liquidation preference. 
In any such distribution, if our assets are not sufficient to pay the liquidation preferences in full to all holders of the Series E Preferred Shares and all holders of any parity shares, the amounts paid to the holders of Series E Preferred Shares and to the holders of any parity shares will be paid pro rata in accordance with the respective aggregate liquidation preferences of those holders, but only to the extent we have assets available after satisfaction of all liabilities to creditors. In any such distribution, the “liquidation preference” of any holder of preferred shares means the amount payable to such holder in such distribution, including any declared but unpaid dividends (and any unpaid, accrued cumulative dividends in the case of any holder of shares on which dividends accrue on a cumulative basis). If the liquidation preference has been paid in full to all holders of the Series E Preferred Shares and any holders of parity shares, the holders of our other shares shall be entitled to receive all of our remaining assets according to their respective rights and preferences. 
For purposes of this section, a consolidation, amalgamation, merger, arrangement, reincorporation, de-registration or reconstruction involving ACGL or the sale or transfer of all or substantially all of the shares or the property or business of ACGL will not be deemed to constitute a liquidation, dissolution or winding-up. 
Redemption 
Under Bermuda law, the source of funds that may be used by a company to pay amounts to shareholders on the redemption of their shares in respect of the nominal or par value of their shares is limited to (1) the capital paid up on the shares being redeemed, (2) funds of the company otherwise available for payment of dividends or distributions or (3) the proceeds of a new issuance of shares made for purposes of the redemption, and in respect of the premium over the nominal or par value of their shares is limited to (a) funds otherwise available for dividends or distributions or (b) out of the company's share premium account before the redemption date. 
Under Bermuda law, no redemption may be made by us if there are reasonable grounds for believing that (i) we are or, after giving effect to redemption of shares, would be unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than our liabilities, or (iii) we are or, after such redemption, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements or such other applicable rules, regulations or restrictions as may from time to time be issued or imposed by the BMA (or any successor agency or then-applicable regulatory authority) pursuant to the terms of the Insurance Act or any successor legislation or then-applicable law. In addition, if the redemption price is to be paid out of funds otherwise available for dividends or distributions, no redemption may be made if the realizable value of our assets would thereby be less than the aggregate of our liabilities. 
Our ability to effect a redemption of the Series E Preferred Shares is subject to regulatory approval. Our ability to effect a redemption of the Series E Preferred Shares may be subject to the performance of our subsidiaries. Distributions to us from our insurance subsidiaries will also be subject to applicable insurance laws and regulatory constraints. 
The Series E Preferred Shares are not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or other similar provisions. 
On or After Series E Par Call Date 

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Except as described below, the Series E Preferred Shares are not redeemable prior to September 29, 2021 (the “Series E Par Call Date”). On and after the Series E Par Call Date, the Series E Preferred Shares will be redeemable at our option, in whole or in part, upon not less than 30 days nor more than 60 days' notice, at a redemption price equal to $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share), plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends. Holders of the Series E Preferred Shares will have no right to require the redemption of the Series E Preferred Shares. 
Business Combination Proposal 
The Series E Preferred Shares are redeemable at our option at any time prior to the Series E Par Call Date, if we have submitted to the holders of our common shares a proposal for an amalgamation, consolidation, merger, arrangement, reconstruction, reincorporation, de-registration or any other similar transaction involving ACGL that requires, or we have submitted any proposal for any other matter that, as a result of any change in Bermuda law after September 22, 2016 (whether by enactment or official interpretation) that requires, in either case, a vote of the holders of the Series E Preferred Shares at the time outstanding, voting separately as a single class (alone or with one or more other classes or series of preferred shares). Our option to redeem the Series E Preferred Shares under such circumstances shall be for all of the outstanding Series E Preferred Shares upon not less than 30 nor more than 60 days prior written notice, and at a redemption price of $26,000 per Series E Preferred Share (equivalent to $26 per Series E Depositary Share), plus all declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends. 
Capital Disqualification Event 
We will have the option to redeem for cash the Series E Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days' nor more than 60 days' prior written notice in accordance with the procedures described under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends, at any time within 90 days following the occurrence of the date (a “capital redemption trigger date”) on which we have reasonably determined that a “capital disqualification event” (as defined below) has occurred as a result of (a) any amendment to, or change in, the laws or regulations of Bermuda that is enacted or becomes effective after the initial issuance of the Series E Preferred Shares; (b) any proposed amendment to, or change in, those laws or regulations that is announced or becomes effective after the initial issuance of the Series E Preferred Shares; or (c) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of the Series E Preferred Shares; provided that any such redemption in part may only be made if (x) we have reasonably determined that the portion of the Series E Preferred Shares to be redeemed is the subject of the capital disqualification event and (y) after giving effect to such redemption, we have reasonably determined that a capital disqualification event will not exist with respect to the then-outstanding Series E Preferred Shares and such redemption will not result in the suspension or removal of the Series E Depositary Shares from listing on NASDAQ. 
As used in this section, (i) a “capital disqualification event” means the Series E Preferred Shares do not qualify, in whole or in part (including as a result of any transitional or grandfathering provisions or otherwise), for purposes of determining the solvency margin, capital adequacy ratio or any other comparable ratio, regulatory capital resource or level, of ACGL or any subsidiary thereof, where capital is subdivided into tiers, as Tier 2 capital securities under then-applicable capital adequacy regulations imposed upon us by the BMA (or any successor agency or then-applicable regulatory authority) and, which includes, without limitation, our individual and group enhanced capital requirements, applicable to the Company under the BMA's capital adequacy regulations, except as a result of any applicable limitation on the amount of such capital; and (ii) ”capital adequacy regulations” means the solvency margins, capital adequacy regulations or any other regulatory capital rules applicable to us from time to time on an individual or group basis pursuant to Bermuda law and/or the laws of any other relevant jurisdiction and which set out the requirements to be satisfied by financial instruments to qualify as solvency margin or additional 

-14-

solvency margin or regulatory capital (or any equivalent terminology employed by the then-applicable capital adequacy regulations). 
Tax Events 
We will have the option to redeem for cash the Series E Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures described under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends, at any time following the occurrence of a tax event (as defined). A “tax event” means as a result of a “change in tax law” there is a substantial probability that we or any successor corporation would be required to pay any additional amounts with respect to the Series E Preferred Shares. 
Prior to any redemption upon a tax event, we will be required to deliver a certificate signed by two executive officers of the Company to the transfer agent for the Series E Preferred Shares confirming that a tax event has occurred and is continuing (as reasonably determined by us). 
A “change in tax law” means (a) a change in or amendment to laws, regulations or rulings of any jurisdiction, political subdivision or taxing authority described in the next sentence, (b) a change in the official application or interpretation of those laws, regulations or rulings, (c) any execution of or amendment to any treaty affecting taxation to which any jurisdiction, political subdivision or taxing authority described in the next sentence is party after September 22, 2016, or (d) a decision rendered by a court of competent jurisdiction in Bermuda or any taxing jurisdiction or any political subdivision, whether or not such decision was rendered with respect to us. The jurisdictions, political subdivisions and taxing authorities referred to in the previous sentence are (a) Bermuda or any political subdivision or governmental authority of or in Bermuda with the power to tax, (b) any jurisdiction from or through which we or our dividend disbursing agent are making payments on the Series E Preferred Shares or any political subdivision or governmental authority of or in that jurisdiction with the power to tax or (c) any other jurisdiction in which ACGL or a successor corporation is organized or generally subject to taxation or any political subdivision or governmental authority of or in that jurisdiction with the power to tax. 
In addition, we will have the option to redeem for cash any or all Series E Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures set forth under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series E Preferred Share (equivalent to $25 per Series E Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends, if the entity formed by a consolidation, merger or amalgamation involving us or the entity to which we convey, transfer or lease substantially all our properties and assets is required to pay additional amounts in respect of any tax, assessment or governmental charge imposed on any holder of Series E Preferred Shares as a result of a change in tax law that occurred after the date of the consolidation, merger, amalgamation, conveyance, transfer or lease. 
Procedures for Redemption 
The redemption price for any shares of Series E Preferred Shares shall be payable on the redemption date to the holders of such shares against book entry transfer or surrender of the certificate(s) evidencing such shares to us or our agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the dividend record date for a dividend period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such dividend record date relating to the dividend payment date provided in “—Dividends” above. 
Prior to delivering notice of redemption as provided below, we will file with our corporate records a certificate signed by one of our officers affirming our compliance with the redemption provisions under the Companies Act 1981 of Bermuda (the “Companies Act”) relating to the Series E Preferred Shares, and stating that there are reasonable grounds for believing that we are, and after the redemption will be, able to pay our liabilities as 

-15-

they become due and that the redemption will not cause us to breach any provision of applicable Bermuda law or regulation. We will mail a copy of this certificate with the notice of any redemption. 
If the Series E Preferred Shares are to be redeemed, the notice of redemption shall be given by first class mail to the holders of record of the Series E Preferred Shares to be redeemed, mailed not less than 30 days nor more than 60 days prior to the date fixed for redemption thereof (provided that, if the Series E Preferred Shares are held in book-entry form through The Depository Trust Company, or “DTC,” we may give such notice in any manner permitted by DTC). Each notice of redemption will include a statement setting forth:
		
	•
	the redemption date; 

		
	•
	the number of Series E Preferred Shares to be redeemed and, if less than all the Series E Preferred Shares held by such holder are to be redeemed, the number of such Series E Preferred Shares to be redeemed from such holder; 

		
	•
	the redemption price; and 

		
	•
	that the shares should be delivered via book entry transfer or the place or places where holders may surrender certificates evidencing the Series E Preferred Shares for payment of the redemption price. 

If notice of redemption of any Series E Preferred Shares has been given and if the funds necessary for such redemption have been set aside by us for the benefit of the holders of any Series E Preferred Shares so called for redemption, then, from and after the redemption date, no further dividends will be declared on such Series E Preferred Shares, such Series E Preferred Shares shall no longer be deemed outstanding and all rights of the holders of such Series E Preferred Shares will terminate, except the right to receive the redemption price, without interest. 
In case of any redemption of only part of the Series E Preferred Shares at the time outstanding, the Series E Preferred Shares to be redeemed shall be selected either pro rata or in such other manner as we may determine to be fair and equitable. 
If the Series E Preferred Shares are redeemed, in whole or in part, a corresponding number of Series E Depositary Shares will be redeemed with the proceeds received by the depositary from the redemption of the Series E Preferred Shares held by the depositary. The redemption price per Series E Depositary Share will be equal to 1/1,000th of the redemption price per Series E Preferred Share. 
Our ability to redeem the Series E Preferred Shares will be limited by the terms of our agreements governing our indebtedness and by the provisions of other agreements that we may enter into. 
Under Bermuda law, we may not redeem our preference shares (including the Series E Preferred Shares) at any time if we have reasonable grounds for believing that we are, or after the redemption would be, unable to pay our liabilities as they become due. Preference shares (including the Series E Preferred Shares) may not be redeemed except out of the capital paid up thereon or out of our funds that would otherwise be available for dividends or distributions or out of the proceeds of a new issue of shares made for the purpose of the redemption. The premium, if any, payable on redemption must be provided for out of our funds that would otherwise be available for dividends or distributions or out of our share premium account before the preference shares are redeemed. Preference shares also may not be redeemed if as a result of the redemption, our issued share capital would be reduced below the minimum capital specified in the memorandum of association of ACGL. 
Variation or Exchange 
At any time following a tax event or a capital disqualification event, we may, without the consent of any holders of the Series E Preferred Shares, vary the terms of the Series E Preferred Shares or exchange the Series E Preferred Shares for new securities, which (i) in the case of a tax event, would eliminate the substantial probability 

-16-

that we or any successor corporation would be required to pay any additional amounts with respect to the Series E Preferred Shares as a result of a change in tax law or (ii) in the case of a capital disqualification event, would cause the Series E Preferred Shares to become securities that qualify as Tier 2 capital (where capital is subdivided into tiers) or its equivalent under then-applicable capital adequacy regulations imposed upon us by the BMA or any successor agency or then-applicable regulatory authority, including under the BMA's enhanced capital requirements, for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or levels of ACGL or any member thereof. In either case, the terms of the varied securities or new securities considered in the aggregate cannot be less favorable, including from a financial perspective, to holders than the terms of the Series E Preferred Shares prior to being varied or exchanged (as reasonably determined by the Company); provided that no such variation of terms or securities received in exchange shall change the specified denominations, or any payment of dividend on, the redemption dates (other than any extension of the period during which an optional redemption may not be exercised by the Company) or currency of, the Series E Preferred Shares, reduce the liquidation preference thereof or the dividend payable thereon, lower the ranking of the securities or change the foregoing list of items that may not be so amended as part of such variation or exchange. Further, no such variation of terms or securities received in exchange shall impair the right of a holder of the securities to institute suit for the payment of any amounts due (as provided under the certificate of designations), but unpaid with respect to such holder's securities. 
Prior to any variation or exchange, we will be required to receive an opinion of independent legal advisers of recognized standing to the effect that holders and beneficial owners (including holders and beneficial owners of Series E Depositary Shares) of the Series E Preferred Shares (including as holders and beneficial owners of the varied or exchanged securities) will not recognize income, gain or loss for United States federal income tax purposes as a result of such variation or exchange and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case had such variation or exchange not occurred. 
Any variation or exchange of the Series E Preferred Shares described above will be made after notice is given to the holders of the Series E Preferred Shares not less than 30 nor more than 60 days prior to the date fixed for variation or exchange, as applicable. 
Voting Rights 
Except as provided below, the holders of the Series E Preferred Shares will have no voting rights. 
Whenever dividends on any Series E Preferred Shares shall have not been declared and paid for the equivalent of six or more dividend periods, whether or not for consecutive dividend periods (a “nonpayment event”), the holders of the Series E Preferred Shares, voting together as a single class with holders of any and all other series of voting preferred shares (as defined below) then issued and outstanding, will be entitled to vote for the election of a total of two additional members of the Board of directors of ACGL (the “preferred shares directors”), provided that the election of any such directors shall not cause us to violate the corporate governance requirement of any exchange on which our securities may be listed or quoted that listed or quoted companies must have a majority of independent directors. 
In such case, we will use our best efforts to increase the number of directors constituting the Board of directors to the extent necessary to effectuate such right. Each preference share director will be added to an already existing class of directors. 
Whenever such special voting power of such holders of the Series E Preferred Shares has vested, such right may be exercised initially either at a special general meeting of the holders of Series E Preferred Shares called for the purpose of such election of directors, or at any annual general meeting of shareholders, and thereafter at the annual general meetings of shareholders. 
At any time when such special voting power has vested in the holders of any of the Series E Preferred Shares as described above, the chairman, president or chief executive officer of ACGL will, upon the written request 

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of the holders of record of at least 20% of the Series E Preferred Shares then issued and outstanding addressed to the secretary of ACGL, call a special general meeting of the holders of the Series E Preferred Shares for the purpose of electing directors. Such meeting will be held at the earliest practicable date in such place as may be designated pursuant to our bye-laws (or if there be no designation, at our principal office in Bermuda). If such meeting shall not be called by our chairman, president or chief executive officer within 20 days after ACGL's secretary has been personally served with such request, or within 60 days after mailing the same by registered or certified mail addressed to ACGL's secretary at our registered office, then the holders of record of at least 20% of the Series E Preferred Shares then issued and outstanding may designate in writing one such holder to call such meeting at ACGL's expense, and such meeting may be called by such holder so designated upon the notice required for annual general meetings of shareholders and will be held in Bermuda, unless ACGL otherwise designates. Any holder of the Series E Preferred Shares so designated will have access to our register of members for the purpose of causing meetings of shareholders to be called pursuant to these provisions. Notwithstanding the foregoing, no such special general meeting will be called during the period within 90 days immediately preceding the date fixed for the next annual general meeting of shareholders. 
There is no quorum requirement for a meeting to elect any director by the holders of voting preferred shares pursuant to these provisions. 
The directors so elected by the holders of the Series E Preferred Shares and any other series of voting preferred shares will continue in office (1) until their successors, if any, are elected by such holders at the next annual general meeting or (2) until they are removed by the holders of record of a majority of the aggregate voting power of Series E Preferred Shares and voting preferred shares then issued and outstanding (voting together as a single class), as further described below, or (3) unless required by applicable law to continue in office for a longer period, in each case, until termination of the right of such holders to vote as a class for preferred shares directors, if earlier. If and to the extent permitted by applicable law, immediately upon any termination of the right of the holders of the Series E Preferred Shares to vote as a class for preferred shares directors as provided herein, the terms of office of the directors then in office so elected by the holders of the Series E Preferred Shares and any other series of voting preferred shares will terminate. 
As used in this section, “voting preferred shares” means any other class or series of our preferred shares ranking equally with the Series E Preferred Shares as to dividends and the distribution of assets upon liquidation, dissolution or winding-up of ACGL and upon which like voting rights have been conferred and are exercisable. 
If and when dividends for at least four dividend periods, whether or not consecutive, following a nonpayment event have been paid in full (or declared and a sum sufficient for such payment shall have been set aside), the holders of the Series E Preferred Shares shall be divested of the foregoing voting rights (subject to revesting in the event of each subsequent nonpayment event) and, if such voting rights for all other holders of voting preferred shares have terminated, the term of office of each preferred shares director so elected shall terminate and the number of directors on the Board of directors of ACGL shall automatically decrease by two. In determining whether dividends have been paid for four dividend periods following a nonpayment event, we may take account of any dividend we elect to pay for such a dividend period after the regular dividend payment date for that period has passed. 
Any preferred shares director may be removed at any time without cause by the holders of record of a majority of the aggregate voting power, as determined under our bye-laws, of Series E Preferred Shares and any other shares of voting preferred shares then issued and outstanding (voting together as a single class) when they have the voting rights described above. So long as a nonpayment event shall continue, any vacancy in the office of a preferred shares director (other than prior to the initial election after a nonpayment event) may be filled by the written consent of the preferred shares director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the issued and outstanding Series E Preferred Shares and any other shares of voting preferred shares then issued and outstanding (voting together as a single class) when they have the voting rights described above. Any vote of shareholders to remove, or to fill a vacancy in the office of, a preferred shares director may be taken only at a special general meeting of such shareholders, called as provided above for an initial election of preferred shares director after a nonpayment event (unless such request is received less than 90 days 

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before the date fixed for the next annual or special meeting of the shareholders of ACGL, in which event such election shall be held at such next annual or special general meeting of shareholders). The preferred shares directors shall each be entitled to one vote per director on any matter. Each preferred shares director elected at any special general meeting of shareholders or by written consent of the other preferred shares director shall hold office until the next annual meeting of the shareholders of ACGL if such office shall not have previously terminated as above provided. 
The bye-laws of ACGL provide that all or any of the special rights attached to any class of shares (including the Series E Preferred Shares) issued may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of a majority of the voting power represented by the issued shares of that class or with the sanction of a resolution passed by a majority of the voting power represented by the votes cast at a separate general meeting of the holders of the shares of the class in accordance with the Companies Act. The bye-laws also provide that rights conferred upon the holders of the shares of any class (including the Series E Preferred Shares) issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith or senior thereto. The Companies Act provides that in certain circumstances, non-voting shares have the right to vote (for example without limitation, converting a limited liability company to unlimited liability company, discontinuance of a company from Bermuda, or conversion of preference shares into redeemable preference shares). 
Notwithstanding the foregoing, our bye-laws contain a provision limiting the voting rights of any U.S. person, as defined in the Code, who owns (directly, indirectly or constructively under the Code) shares with more than 9.9% of the total voting power of all shares entitled to vote generally at an election of directors to 9.9% of such voting power. 
Without the consent of the holders of the Series E Preferred Shares, so long as such action does not affect the special rights, preferences, privileges and voting powers of the Series E Preferred Shares, taken as a whole, we may amend, alter, supplement or repeal any terms of the Series E Preferred Shares:
		
	•
	to cure any ambiguity, or to cure, correct or supplement any provision contained in the Certificate of Designations for the Series E Preferred Shares that may be defective or inconsistent; or 

		
	•
	to make any provision with respect to matters or questions arising with respect to the Series E Preferred Shares that is not inconsistent with the provisions of the Certificate of Designations. 

The foregoing voting provisions will not apply with respect to the Series E Preferred Shares if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all issued and outstanding Series E Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been set aside by us for the benefit of the holders of Series E Preferred Shares to effect such redemption. 
On any item on which the holders of the Series E Preferred Shares are entitled to vote, such holders will be entitled to one vote for each Series E Preferred Share held. As described under “Description of the Series E Depositary Shares—Voting Rights,”, because each Series E Depositary Share represents a 1/1,000th interest in a Series E Preferred Share, holders of depositary receipts will be entitled to 1/1,000th of a vote per share of the Series E Preferred Shares under those limited circumstances in which holders of the Series E Preferred Shares are entitled to vote. Holders of the Series E Depositary Shares must act through the depositary to exercise any voting rights in respect of the Series E Preferred Shares. 
On any item on which the holders of the our Series C Non-Cumulative Preferred Shares are entitled to vote, such holders will be entitled to one vote for each preference share held. The holders of our Series C Non-Cumulative Preferred Shares have similar voting rights to those described above. Our Series C Non-Cumulative Preferred Shares are not represented by depositary shares. Therefore, on matters submitted to a vote of holders of preference shares, investors holding Series C Non-Cumulative Preferred Shares would be entitled to 1,000 times more voting power 

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compared to investors holding Series E Depositary Shares representing the same amount of liquidation preference of Series E Preferred Shares. 
Conversion 
Holders will not have the right to convert Series E Preferred Shares into, or exchange Series E Preferred Shares for, any other securities or property of ACGL. 
Listing of the Series E Preferred Shares 
The Series E Preferred Shares are not listed on any exchange. The Series E Depositary Shares are listed on NASDAQ under the symbol “ACGLP.” 

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DESCRIPTION OF THE SERIES E DEPOSITARY SHARES 
General 
Each Series E Depositary Share represents a 1/1,000th interest in a Series E Preferred Share and will be evidenced by a depositary receipt. We have deposited the underlying Series E Preferred Shares with the depositary pursuant to a deposit agreement among us, American Stock Transfer & Trust Company, acting as depositary, and the holders from time to time of the depositary receipts (the “Series E Deposit Agreement”). The address of the principal executive office of American Stock Transfer & Trust Company is at 6201 15th Avenue, Brooklyn, New York 11219.  
Subject to the terms of the Series E Deposit Agreement, each owner of a depositary receipt will be entitled, in proportion to the fractional interest of a share of Series E Preferred Shares evidenced by that depositary receipt, to all the rights and preferences of Series E Preferred Shares represented by those Series E Depositary Shares (including any dividend, liquidation, redemption and voting rights). If the Series E Preferred Shares are exchanged for new securities pursuant to the provisions described under “Description of the Series E Preferred Shares—Variation or Exchange,” each Series E Depositary Share will represent the same percentage interest in such new security, and will be evidenced by a depositary receipt. 
The Series E Depositary Shares will be evidenced by depositary receipts issued pursuant to the Series E Deposit Agreement. Immediately following the issuance and delivery of the Series E Preferred Shares by us to the depositary, we will cause the depositary to issue, on our behalf, the depositary receipts and related Series E Depositary Shares. Copies of the Series E Deposit Agreement and depositary receipt may be obtained from us upon request, and the statements made hereunder relating to the Series E Deposit Agreement and the depositary receipts to be issued thereunder are summaries of certain provisions thereof and do not purport to be complete and are subject to, and qualified in their entirety by reference to, all of the provisions of the Series E Deposit Agreement and related depositary receipts. 
Dividends and Other Distributions 
Any dividend or other distribution (including upon our voluntary or involuntary liquidation, dissolution or winding-up) paid in respect of a Series E Depositary Share will be in an amount equal to 1/1,000th of the dividend declared or distribution payable, as the case may be, on the underlying share of the Series E Preferred Shares. The depositary will distribute all cash dividends and other cash distributions received on the Series E Preferred Shares to the holders of record of the Series E Depositary Shares in proportion to the number of Series E Depositary Shares held by each holder on the relevant record date. In the event of a distribution other than in cash, the depositary will distribute property received by it to the holders of record of the Series E Depositary Shares in proportion to the number of Series E Depositary Shares held by each holder, unless the depositary determines that this distribution is not feasible, in which case the depositary may, with our approval, adopt a method of distribution that it deems practicable, including the sale of the property and distribution of the net proceeds of that sale to the holders of the Series E Depositary Shares. 
Record dates for the payment of dividends and other matters relating to the Series E Depositary Shares will be the same as the corresponding record dates for the Series E Preferred Shares. 
Subject to any obligation to pay additional amounts as described in “Description of the Series E Preferred Shares—Payment of Additional Amounts,” the amount paid as dividends or otherwise distributable by the depositary with respect to the Series E Depositary Shares or the underlying Series E Preferred Shares will be reduced by any amounts required to be withheld by us or the depositary on account of taxes or other governmental charges. The depositary may refuse to make any payment or distribution, or any transfer, exchange or withdrawal of any Series E Depositary Shares or the Series E Preferred Shares until such taxes or other governmental charges are paid. 
Withdrawal of Series E Preferred Shares 

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Unless the related Series E Depositary Shares have been previously called for redemption, a holder of Series E Depositary Shares may surrender his or her depositary receipts at the corporate trust office of the depositary, pay any taxes, charges and fees provided for in the Series E Deposit Agreement and comply with any other requirements of the Series E Deposit Agreement for the number of whole shares of Series E Preferred Shares and any money or other property represented by such holder's depositary receipts. A holder of Series E Depositary Shares who exchanges shares of Series E Preferred Shares will be entitled to receive whole shares of Series E Preferred Shares on the basis set forth herein; partial shares of Series E Preferred Shares will not be issued. 
However, holders of whole shares of Series E Preferred Shares will not be entitled to deposit those shares under the Series E Deposit Agreement or to receive Series E Depositary Shares for those shares after the withdrawal. If the Series E Depositary Shares surrendered by the holder in connection with the withdrawal exceed the number of Series E Depositary Shares that represent the number of whole shares of Series E Preferred Shares to be withdrawn, the depositary will deliver to the holder at the same time new Series E Depositary Shares evidencing the excess number of Series E Depositary Shares. 
Redemption 
If the Series E Preferred Shares underlying the Series E Depositary Shares are redeemed, in whole or in part, a corresponding number of Series E Depositary Shares will be redeemed with the proceeds received by the depositary from the redemption of the Series E Preferred Shares held by the depositary. The redemption price per Series E Depositary Share will be equal to 1/1,000th of the redemption price per Series E Preferred Share. 
Whenever we redeem Series E Preferred Shares held by the depositary, the depositary will redeem, as of the same redemption date, the number of Series E Depositary Shares so redeemed. If fewer than all of the outstanding Series E Depositary Shares are redeemed, the depositary will select the Series E Depositary Shares to be redeemed pro rata or by lot or by any other equitable method as may be determined by the depositary or as may be required by the principal national stock exchange on which the Series E Depositary Shares are listed. The depositary will mail (or otherwise transmit by an authorized method) notice of redemption to holders of the depositary receipts not less than 30 and not more than 60 days prior to the date fixed for redemption of the Series E Preferred Shares and the related Series E Depositary Shares. 
Voting Rights 
Because each Series E Depositary Shares represents a 1/1,000th interest in a Series E Preferred Shares, holders of depositary receipts will be entitled to 1/1,000th of a vote per share of the Series E Preferred Shares under those limited circumstances in which holders of the Series E Preferred Shares are entitled to vote. Holders of the Series E Depositary Shares must act through the depositary to exercise any voting rights in respect of the Series E Preferred Shares. Although each Series E Depositary Shares is entitled to 1/1,000th of a vote, the depositary can vote only whole shares of Series E Preferred Shares. Holders of the Series E Depositary Shares will not have any voting rights, except for the limited voting rights described under “Description of the Series E Preferred Shares—Voting Rights.”  
When the depositary receives notice of any meeting at which the holders of the Series E Preferred Shares are entitled to vote, the depositary will mail (or otherwise transmit by an authorized method) the information contained in the notice to the record holders of the Series E Depositary Shares relating to the Series E Preferred Shares. Each record holder of the Series E Depositary Shares on the record date, which will be the same date as the record date for the Series E Preferred Shares, may instruct the depositary to vote the number of the Series E Preferred Shares votes represented by the holder's Series E Depositary Shares. To the extent possible, the depositary will vote the number of the Series E Preferred Shares votes represented by Series E Depositary Shares in accordance with the instructions it receives. 
We have agreed to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. The depositary will refrain from voting the Series E Preferred Shares to the extent it 

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does not receive specific instructions from the holders of any Series E Depositary Shares representing such Series E Preferred Shares. 
Conversion 
Holders of depositary receipts will not have the right to convert Series E Depositary Shares into, or exchange Series E Depositary Shares for, any other securities or property of the ACGL. 
Amendment and Termination of the Series E Deposit Agreement 
The form of depositary receipt evidencing the Series E Depositary Shares and any provision of the Series E Deposit Agreement may be amended by agreement between us and the depositary. However, any amendment that materially and adversely alters the rights of the existing holders of Series E Depositary Shares will not be effective unless the amendment has been approved by the record holders of at least the amount of the Series E Depositary Shares then outstanding necessary to approve any amendment that would materially and adversely affect the rights of the holders of the Series E Preferred Shares. Either we or the depositary may terminate the Series E Deposit Agreement if there has been a final distribution in respect of the Series E Preferred Shares in connection with our liquidation, dissolution or winding up. 
Charges of Depositary 
We will pay all transfer and other taxes, assessments, and governmental charges arising solely from the existence of the depositary arrangements. We will pay the fees of the depositary in connection with the initial deposit of the Series E Preferred Shares. Holders of depositary receipts will pay transfer and other taxes, assessments, and governmental charges and any other charges as are expressly provided in the Series E Deposit Agreement to be for their accounts. The depositary may refuse to effect any transfer of a depositary receipt or any withdrawals of Series E Preferred Shares evidenced by a depositary receipt until all taxes, assessments, and governmental charges with respect to the depositary receipt or Series E Preferred Shares are paid by their holders. 
Resignation and Removal of Depositary 
The depositary may resign at any time by delivering to us notice of its election to do so, and we may at any time remove the depositary, any resignation or removal to take effect upon the appointment of a successor depositary and its acceptance of the appointment. The successor depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000. 
Miscellaneous 
The depositary will forward to the holders of Series E Depositary Shares all of our reports and communications which are delivered to the depositary and which we are required to furnish to the holders of our Series E Preferred Shares. 
Neither we nor the depositary will be liable if we are prevented or delayed by law or any circumstance beyond our control in performing our obligations under the Series E Deposit Agreement. All of our obligations as well as the depositary's obligations under the Series E Deposit Agreement are limited to performance in good faith of our respective duties set forth in the Series E Deposit Agreement, and neither of us will be obligated to prosecute or defend any legal proceeding relating to any Series E Depositary Shares or Series E Preferred Shares unless provided with satisfactory indemnity. We, and the depository, may rely upon written advice of counsel or accountants, or information provided by persons presenting Series E Preferred Shares for deposit, holders of Series E Depositary Shares, or other persons believed to be competent and on documents believed to be genuine. 
Listing of the Series E Depositary Shares 

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The Series E Depositary Shares are listed on NASDAQ under the symbol “ACGLP.” 
Transfer Agent, Registrar, Dividend Disbursing Agent and Redemption Agent 
American Stock Transfer & Trust Company is the transfer agent, registrar, dividend disbursing agent and redemption agent for the Series E Depositary Shares. 
Book-Entry; Delivery and Form 
The Series E Depositary Shares are represented by one or more global securities that have been deposited with and registered in the name of DTC or its nominee. The global securities were issued to DTC, the depository for the Series E Depositary Shares, who keeps a computerized record of its participants whose clients have purchased the Series E Depositary Shares. Each participant keeps a record of its clients. Unless exchanged in whole or in part for a certificated security, a global security may not be transferred. However, DTC, its nominees, and their successors may transfer a global security as a whole to one another. Beneficial interests in the global securities are shown on, and transfers of the global securities will be made only through, records maintained by DTC and its participants. 
DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered under the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). DTC holds securities that its participants (direct participants) deposit with DTC. DTC also records the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through computerized records for direct participants' accounts. This eliminates the need to exchange certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Neither we nor the underwriters take any responsibility for these operations or procedures, and you are urged to contact DTC or its participants directly to discuss these matters. 
DTC's book-entry system is also used by other organizations such as securities brokers and dealers, banks and trust companies that work through a direct participant. The rules that apply to DTC and its participants are on file with the SEC. 
DTC is owned by a number of its direct participants and by the NYSE, the American Stock Exchange, Inc. and the Financial Industry Regulatory Authority, Inc. 
When you purchase Series E Depositary Shares through the DTC system, the purchases must be made by or through a direct participant, who will receive credit for the Series E Depositary Shares on DTC's records. You are the beneficial owner and your ownership interest will be recorded only in the direct (or indirect) participants' records. DTC has no knowledge of your individual ownership of the Series E Depositary Shares. DTC's records only show the identity of the direct participants and the amount of the Series E Depositary Shares held by or through them. You will not receive a written confirmation of your purchase or sale or any periodic account statement directly from DTC. You will receive these from your direct (or indirect) participant. Thus, the direct (or indirect) participants are responsible for keeping accurate account of the holdings of their customers like you. 
We will wire dividend payments to DTC's nominee and we will treat DTC's nominee as the owner of the global securities for all purposes. Accordingly, we will have no direct responsibility or liability to pay amounts due on the global securities to you or any other beneficial owners in the global securities. 
Any redemption notices will be sent by us directly to DTC, who will in turn inform the direct participants, who will then contact you as a beneficial holder. 
It is DTC's current practice, upon receipt of any payment of dividends or liquidation amount, to credit direct participants' accounts on the payment date based on their holdings of beneficial interests in the global 

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securities as shown on DTC's records. In addition, it is DTC's current practice to assign any consenting or voting rights to direct participants whose accounts are credited with preferred securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interests in the global securities, and voting by participants, will be based on the customary practices between the participants and owners of beneficial interests, as is the case with the Series E Preferred Shares held for the account of customers registered in “street name.” However, payments will be the responsibility of the participants and not of DTC or us. 
Series E Depositary Shares represented by global securities will be exchangeable for certificated securities with the same terms in authorized denominations only if:
		
	•
	DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under applicable law and a successor depositary is not appointed by us within 90 days; or 

		
	•
	we determine not to require all of the Series E Depositary Shares to be represented by global securities. 

If the book-entry-only system is discontinued, the transfer agent will keep the registration books for the Series E Depositary Shares at its corporate office. 

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DESCRIPTION OF THE SERIES F PREFERRED SHARES
General
The Series F Preferred Shares constitute a series of our authorized preference shares.
We will generally be able to pay dividends and distributions upon liquidation, dissolution or winding-up only out of lawfully available funds for such payment (i.e., after taking account of all indebtedness and other non-equity claims). The Series F Preferred Shares were fully paid and non-assessable when issued. Holders of the Series F Preferred Shares do not have preemptive or subscription rights to acquire more of our capital shares.
Holders do not have the right to convert Series F Preferred Shares into, or exchange Series F Preferred Shares for, shares of any other class or series of shares or other securities of ours. The Series F Preferred Shares have no stated maturity and are not be subject to any sinking fund, retirement fund or purchase fund or other obligation of Arch Capital to redeem or purchase the Series F Preferred Shares.
Ranking
The Series F Preferred Shares rank senior to our junior shares and equally with each other series of our preferred shares that we may issue with respect to the payment of dividends and distributions of assets upon liquidation, dissolution or winding-up. Junior shares include any class or series of shares that rank junior to the Series F Preferred Shares either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding-up. The Series E Preferred Shares are on parity with the Series F Preferred Shares with respect to the payment of dividends and distribution of assets upon a liquidation, dissolution or winding up of Arch Capital. 
We may issue, without limitation, (1) additional Series F Depositary Shares representing additional Series F Preferred Shares that would form part of the same series of Series F Depositary Shares, and (2) additional series of securities that rank equally with or senior to the Series F Preferred Shares. Unless our shareholders otherwise provide, our Board of directors may from time to time create and issue preference shares of other series and fix their relative rights, preferences and limitations.
Dividends
Dividends on the Series F Preferred Shares are not mandatory. Holders of Series F Preferred Shares are entitled to receive, only when, as and if declared by the Board of directors of Arch Capital or a duly authorized committee of the Board, out of lawfully available funds for the payment of dividends under Bermuda law, non-cumulative cash dividends from the original issue date, quarterly on the last day of March, June, September and December of each year. If so declared, dividends will accrue with respect to a particular dividend period, on the liquidation preference amount of $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share) at the annual rate of 5.45% per annum. In the event that we issue additional Series F Preferred Shares in the future, dividends on such additional shares may accrue from the original issue date or any other date we specify at the time such additional shares are issued.
Dividends, if so declared, will be payable to holders of record of the Series F Preferred Shares as they appear on our books on the applicable record date, which shall be March 15, June 15, September 15 and December 15, as applicable, immediately preceding the applicable dividend payment date or such other record date fixed by our Board of directors (or a duly authorized committee of the Board) that is not more than 60 nor less than 10 days prior to such dividend payment date (each, a “dividend record date”). These dividend record dates will apply regardless of whether a particular dividend record date is a business day.

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A dividend period is the period from and including a dividend payment date to but excluding the next dividend payment date. Dividends payable on the Series F Preferred Shares will be computed on the basis of a 360-day year consisting of twelve 30-day months. If any date on which dividends would otherwise be payable is not a business day, then the dividend payment date will be the next succeeding business day with the same force and effect as if made on the original dividend payment date, and no additional dividends shall accrue on the amount so payable from such date to such next succeeding business day.
Dividends on the Series F Preferred Shares are not cumulative. Accordingly, if the Board of directors of Arch Capital, or a duly authorized committee of the Board, does not declare a dividend on the Series F Preferred Shares payable in respect of any dividend period before the related dividend payment date, such dividend will not accrue and will not be payable and we will have no obligation to pay a dividend for that dividend period on the dividend payment date or at any future time, whether or not dividends are declared for any future dividend period on the Series F Preferred Shares or any other preferred shares we may issue in the future.
So long as any Series F Preferred Shares remain issued and outstanding for any dividend period, unless the full dividends for the latest completed dividend period on all issued and outstanding Series F Preferred Shares and parity shares have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside):
		
	•
	no dividend shall be paid or declared on our common shares, or any other junior shares (as defined below) (other than a dividend payable solely in junior shares); and

		
	•
	no common shares or other junior shares shall be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly (other than (i) as a result of a reclassification of junior shares for or into other junior shares, or the exchange or conversion of one junior share for or into another junior share, or (ii) through the use of the proceeds of a substantially contemporaneous sale of junior shares, in each case as permitted by the bye-laws of Arch Capital in effect on the date of issuance of the Series F Preferred Shares).

As used herein, “junior shares” means any class or series of our capital shares that ranks junior to the Series F Preferred Shares either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or winding-up of Arch Capital. At present, junior shares consist of our common shares.
When dividends are not paid (or duly provided for) in full on any dividend payment date (or, in the case of parity shares (as defined below) having dividend payment dates different from the dividend payment dates pertaining to the Series F Preferred Shares, on a dividend payment date falling within the related dividend period for the Series F Preferred Shares) upon the Series F Preferred Shares and any parity shares, all dividends declared by the Board of directors of Arch Capital or a duly authorized committee of the Board upon the Series F Preferred Shares and all such parity shares and payable on such dividend payment date (or, in the case of parity shares having dividend payment dates different from the dividend payment dates pertaining to the Series F Preferred Shares, on a dividend payment date falling within the related dividend period for the Series F Preferred Shares) shall be declared by the Board or such committee pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all declared but unpaid dividends per Series F Preferred Share and all parity shares payable on such dividend payment date (or, in the case of parity shares having dividend payment dates different from the dividend payment dates pertaining to the Series F Preferred Shares, on a dividend payment date falling within the related dividend period for the Series F Preferred Shares) bear to each other.
As used herein, “parity shares” means any class or series of our capital shares that ranks equally with the Series F Preferred Shares with respect to the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding-up of Arch Capital. As of December 31, 2019, our Series E Preferred Shares are our only issued and outstanding class or series of shares that are parity shares.
Certain Restrictions on Payment of Dividends

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Arch Capital is a holding company whose assets primarily consist of the shares in our subsidiaries. Generally, Arch Capital depends on its available cash resources, liquid investments and dividends or other distributions from subsidiaries to make payments, including any payments of dividends, redemption amounts or liquidation amounts with respect to our preferred shares.
The ability of our regulated insurance and reinsurance subsidiaries to pay dividends or make distributions or other payments to us is dependent on their ability to meet applicable regulatory standards. Under Bermuda law, Arch Re Bermuda is subject to individual capital requirements, including, among other requirements, being required to maintain an enhanced capital requirement which must equal or exceed its minimum solvency margin (i.e., the amount by which the value of its general business assets must exceed its general business liabilities) equal to the greatest of (1) $100 million, (2) 50% of net premiums written (being gross premiums written less any premiums ceded by Arch Re Bermuda, but Arch Re Bermuda may not deduct more than 25% of gross premiums when computing net premiums written) and (3) 15% of net discounted aggregated losses and loss expense provisions and other insurance reserves. Arch Re Bermuda is prohibited from declaring or paying any dividends during any financial year if it is not in compliance with its enhanced capital requirement, minimum solvency margin or minimum liquidity ratio. In addition, Arch Re Bermuda is prohibited from declaring or paying in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files, at least seven days before payment of such dividends, with BMA an affidavit stating that it will continue to meet the required margins. In addition, Arch Re Bermuda is prohibited, without prior approval of the BMA, from reducing by 15% or more its total statutory capital, as set out in its previous year’s statutory financial statements. Arch Re Bermuda is required to meet enhanced capital requirements as calculated using a risk based capital model called the Bermuda Solvency Capital Requirement model or an internal model approved by the BMA.
Under Bermuda law, we may not lawfully declare or pay a dividend on the Series F Preferred Shares (even if such dividends have been previously declared) if we have reasonable grounds for believing that (i) we are or, after giving effect to the payment of dividends, would be, unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than our liabilities, or (iii) we are or, after such payment, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements or such other applicable rules, regulations or restrictions as may from time to time be issued or imposed by the BMA (or any successor agency or then-applicable regulatory authority) pursuant to the terms of the Insurance Act  or any successor legislation or then-applicable law.
In addition to meeting applicable regulatory standards, the ability of our insurance and reinsurance subsidiaries to pay dividends is also constrained by our dependence on the financial strength ratings of our insurance and reinsurance subsidiaries from independent rating agencies. The ratings from these agencies depend to a large extent on the capitalization levels of our insurance and reinsurance subsidiaries. 
Payment of Additional Amounts
We will make all payments on the Series F Preferred Shares free and clear of and without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which we are organized (a “taxing jurisdiction”) or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (x) the laws (or any regulations or rulings promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof). If a withholding or deduction at source is required, we will, subject to certain limitations and exceptions described below, pay to the holders of the Series F Preferred Shares such additional amounts as dividends as may be necessary so that every net payment made to such holders, after the withholding or deduction, will not be less than the amount provided for in the Certificate of Designations to be then due and payable.

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We will not be required to pay any additional amounts for or on account of:
		
	(1)
	any tax, fee, duty, assessment or governmental charge of whatever nature that would not have been imposed but for the fact that such holder was a resident, citizen, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing jurisdiction or any political subdivision thereof or otherwise had some connection with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Series F Preferred Shares or any Series F Preferred Shares presented for payment more than 30 days after the Relevant Date. The “Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the dividend disbursing agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to holders, notice to that effect shall have been duly given to the holders of the Series F Preferred Shares;

		
	(2)
	any estate, inheritance, gift, sale, transfer, wealth, personal property or similar tax, assessment or other governmental charge or any tax, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment of the liquidation preference;

		
	(3)
	any tax, fee, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment of the liquidation preference of or any dividends on the Series F Preferred Shares;

		
	(4)
	any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the holder of such Series F Preferred Shares to comply with any reasonable request by us addressed to the holder within 90 days of such request (a) to provide information concerning the nationality, citizenship, residence or identity of the holder or (b) to make any declaration or other similar claim or satisfy any information or reporting requirement, which is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge;

		
	(5)
	any tax, fee, duty, assessment or other governmental charge that is withheld by any paying agent from any payment on any Series F Preferred Shares, if such payment can be made without such withholding by at least one other paying agent;

		
	(6)
	any tax, fee, duty, assessment or other governmental charge that is imposed or withheld pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code); or

		
	(7)
	any combination of items (1), (2), (3), (4), (5) and (6).

In addition, we will not pay additional amounts with respect to any payment on any such Series F Preferred Shares to any holder who is a fiduciary, partnership, limited liability company or other pass-thru entity other than the sole beneficial owner of such Series F Preferred Shares if such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership, limited liability company or other pass-thru entity or a beneficial owner to the extent such beneficiary, partner or settlor would not have been entitled to such additional amounts had it been the holder of the Series F Preferred Shares.
If there is a substantial probability that we or any entity formed by a consolidation, merger or amalgamation involving us or the entity to which we convey, transfer or lease substantially all our properties and assets (a 

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“successor company”) would become obligated to pay any additional amounts as a result of a change in tax law, we or the successor company will also have the option to redeem the Series F Preferred Shares. See “—Redemption—Tax Events.”
Liquidation Rights
Upon any voluntary or involuntary liquidation, dissolution or winding-up of Arch Capital, holders of the Series F Preferred Shares and any parity shares are entitled to receive out of our assets available for distribution to shareholders, after satisfaction of liabilities to creditors, if any, but before any distribution of assets is made to holders of our common shares or any of our other shares ranking junior as to such a distribution to the Series F Preferred Shares, a liquidating distribution in the amount of $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share) plus any declared and unpaid dividends. Holders of the Series F Preferred Shares will not be entitled to any other amounts from us after they have received their full liquidation preference.
In any such distribution, if our assets are not sufficient to pay the liquidation preferences in full to all holders of the Series F Preferred Shares and all holders of any parity shares, the amounts paid to the holders of Series F Preferred Shares and to the holders of any parity shares will be paid pro rata in accordance with the respective aggregate liquidation preferences of those holders, but only to the extent we have assets available after satisfaction of all liabilities to creditors. In any such distribution, the “liquidation preference” of any holder of preferred shares means the amount payable to such holder in such distribution, including any declared but unpaid dividends (and any unpaid, accrued cumulative dividends in the case of any holder of shares on which dividends accrue on a cumulative basis). If the liquidation preference has been paid in full to all holders of the Series F Preferred Shares and any holders of parity shares, the holders of our other shares shall be entitled to receive all of our remaining assets according to their respective rights and preferences.
For purposes of this section, a consolidation, amalgamation, merger, arrangement, reincorporation, de-registration or reconstruction involving Arch Capital or the sale or transfer of all or substantially all of the shares or the property or business of Arch Capital will not be deemed to constitute a liquidation, dissolution or winding-up.
Redemption
Under Bermuda law, the source of funds that may be used by a company to pay amounts to shareholders on the redemption of their shares in respect of the nominal or par value of their shares is limited to (1) the capital paid up on the shares being redeemed, (2) funds of the company otherwise available for payment of dividends or distributions or (3) the proceeds of a new issuance of shares made for purposes of the redemption, and in respect of the premium over the nominal or par value of their shares is limited to (a) funds otherwise available for dividends or distributions or (b) out of the company’s share premium account before the redemption date.
Under Bermuda law, no redemption may be made by us if there are reasonable grounds for believing that (i) we are or, after giving effect to redemption of shares, would be unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than our liabilities, or (iii) we are or, after such redemption, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements or such other applicable rules, regulations or restrictions as may from time to time be issued or imposed by the BMA (or any successor agency or then-applicable regulatory authority) pursuant to the terms of the Insurance Act 1978 or any successor legislation or then-applicable law. In addition, if the redemption price is to be paid out of funds otherwise available for dividends or distributions, no redemption may be made if the realizable value of our assets would thereby be less than the aggregate of our liabilities.
Our ability to effect a redemption of the Series F Preferred Shares is subject to regulatory approval. Our ability to effect a redemption of the Series F Preferred Shares may be subject to the performance of our subsidiaries. Distributions to us from our insurance subsidiaries will also be subject to applicable insurance laws and regulatory constraints.

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The Series F Preferred Shares are not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or other similar provisions.
On or After Series F Par Call Date
Except as described below, the Series F Preferred Shares are not redeemable prior to August 17, 2022 (the “Series F Par Call Date”). On and after the Series F Par Call Date, the Series F Preferred Shares will be redeemable at our option, in whole or in part, upon not less than 30 days nor more than 60 days’ notice, at a redemption price equal to $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share), plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends. Holders of the Series F Preferred Shares will have no right to require the redemption of the Series F Preferred Shares.
Business Combination Proposal
The Series F Preferred Shares are redeemable at our option at any time prior to the Series F Par Call Date, if we have submitted to the holders of our common shares a proposal for an amalgamation, consolidation, merger, arrangement, reconstruction, reincorporation, de-registration or any other similar transaction involving Arch Capital that requires, or we have submitted any proposal for any other matter that, as a result of any change in Bermuda law after November 29, 2017 (whether by enactment or official interpretation) that requires, in either case, a vote of the holders of the Series F Preferred Shares at the time issued and outstanding, voting separately as a single class (alone or with one or more other classes or series of preferred shares); provided, in each case, that no redemption may occur prior to the Series F Par Call Date unless we have sufficient funds in order to meet the BMA’s enhanced capital requirement (“ECR”) and the BMA (or its successor, if any) approves of the redemption or we replace the capital represented by the Series F Preferred Shares with capital having equal or better capital treatment as the Series F Preferred Shares under the ECR. Our option to redeem the Series F Preferred Shares under such circumstances shall be for all of the issued and outstanding Series F Preferred Shares upon not less than 30 nor more than 60 days prior written notice, and at a redemption price of $26,000 per Series F Preferred Share (equivalent to $26 per Series F Depositary Share), plus all declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends.
Capital Disqualification Event
We will have the option to redeem for cash the Series F Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days’ nor more than 60 days’ prior written notice in accordance with the procedures described under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share) plus declared and unpaid dividends, if any, up to, but excluding, the date of redemption, without accumulation of any undeclared dividends, at any time within 90 days following the occurrence of the date (a “capital redemption trigger date”) on which we have reasonably determined that a “capital disqualification event” (as defined below) has occurred as a result of (a) any amendment to, or change in, the laws or regulations of Bermuda that is enacted or becomes effective after the initial issuance of the Series F Preferred Shares; (b) any proposed amendment to, or change in, those laws or regulations that is announced or becomes effective after the initial issuance of the Series F Preferred Shares; or (c) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of the Series F Preferred Shares; provided that any such redemption in part may only be made if (x) we have reasonably determined that the portion of the Series F Preferred Shares to be redeemed is the subject of the capital disqualification event and (y) after giving effect to such redemption, we have reasonably determined that a capital disqualification event will not exist with respect to the then-issued and outstanding Series F Preferred Shares and such redemption will not result in the suspension or removal of the Depositary Shares from listing on NASDAQ. Further, no redemption may occur prior to the Series F Par Call Date unless we have sufficient funds in order to meet the BMA’s ECR and the BMA (or its successor, if any) approves of the redemption or we replace the capital represented by the Series F Preferred Shares with capital having equal or better capital treatment as the Series F Preferred Shares under the ECR.

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As used in this section, (i) a “capital disqualification event” means the Series F Preferred Shares do not qualify, in whole or in part (including as a result of any transitional or grandfathering provisions or otherwise), for purposes of determining the solvency margin, capital adequacy ratio or any other comparable ratio, regulatory capital resource or level, of Arch Capital or any subsidiary thereof, where capital is subdivided into tiers, as Tier 2 capital securities under then-applicable capital adequacy regulations imposed upon us by the BMA (or any successor agency or then-applicable regulatory authority) and, which includes, without limitation, our individual and group enhanced capital requirements, applicable to the Company under the BMA’s capital adequacy regulations, except as a result of any applicable limitation on the amount of such capital; and (ii) ”capital adequacy regulations” means the solvency margins, capital adequacy regulations or any other regulatory capital rules applicable to us from time to time on an individual or group basis pursuant to Bermuda law and/or the laws of any other relevant jurisdiction and which set out the requirements to be satisfied by financial instruments to qualify as solvency margin or additional solvency margin or regulatory capital (or any equivalent terminology employed by the then-applicable capital adequacy regulations).
Tax Events
We will have the option to redeem for cash the Series F Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures described under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends, at any time following the occurrence of a tax event (as defined). A “tax event” means as a result of a “change in tax law” there is a substantial probability that we or any successor corporation would be required to pay any additional amounts with respect to the Series F Preferred Shares.
Prior to any redemption upon a tax event, we will be required to deliver a certificate signed by two executive officers of the Company to the transfer agent for the Series F Preferred Shares confirming that a tax event has occurred and is continuing (as reasonably determined by us).
A “change in tax law” means (a) a change in or amendment to laws, regulations or rulings of any jurisdiction, political subdivision or taxing authority described in the next sentence, (b) a change in the official application or interpretation of those laws, regulations or rulings, (c) any execution of or amendment to any treaty affecting taxation to which any jurisdiction, political subdivision or taxing authority described in the next sentence is party after August 14, 2017, or (d) a decision rendered by a court of competent jurisdiction in Bermuda or any taxing jurisdiction or any political subdivision, whether or not such decision was rendered with respect to us. The jurisdictions, political subdivisions and taxing authorities referred to in the previous sentence are (a) Bermuda or any political subdivision or governmental authority of or in Bermuda with the power to tax, (b) any jurisdiction from or through which we or our dividend disbursing agent are making payments on the Series F Preferred Shares or any political subdivision or governmental authority of or in that jurisdiction with the power to tax or (c) any other jurisdiction in which Arch Capital or a successor corporation is organized or generally subject to taxation or any political subdivision or governmental authority of or in that jurisdiction with the power to tax.
In addition, we will have the option to redeem for cash any or all Series F Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures set forth under “—Procedures for Redemption” below, at a redemption price of $25,000 per Series F Preferred Share (equivalent to $25 per Series F Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any undeclared dividends, if the entity formed by a consolidation, merger or amalgamation involving us or the entity to which we convey, transfer or lease substantially all our properties and assets is required to pay additional amounts in respect of any tax, assessment or governmental charge imposed on any holder of Series F Preferred Shares as a result of a change in tax law that occurred after the date of the consolidation, merger, amalgamation, conveyance, transfer or lease.
Procedures for Redemption

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The redemption price for any shares of Series F Preferred Shares shall be payable on the redemption date to the holders of such shares against book entry transfer or surrender of the certificate(s) evidencing such shares to us or our agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the dividend record date for a dividend period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such dividend record date relating to the dividend payment date provided in “—Dividends” above.
Prior to delivering notice of redemption as provided below, we will file with our corporate records a certificate signed by one of our officers affirming our compliance with the redemption provisions under the Companies Act 1981 of Bermuda (the “Companies Act”) relating to the Series F Preferred Shares, and stating that there are reasonable grounds for believing that we are, and after the redemption will be, able to pay our liabilities as they become due and that the redemption will not cause us to breach any provision of applicable Bermuda law or regulation. We will mail a copy of this certificate with the notice of any redemption.
If the Series F Preferred Shares are to be redeemed, the notice of redemption shall be given by first class mail to the holders of record of the Series F Preferred Shares to be redeemed, mailed not less than 30 days nor more than 60 days prior to the date fixed for redemption thereof (provided that, if the Series F Preferred Shares are held in book-entry form through the DTC, we may give such notice in any manner permitted by DTC). Each notice of redemption will include a statement setting forth:
		
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	the redemption date;

		
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	the number of Series F Preferred Shares to be redeemed and, if less than all the Series F Preferred Shares held by such holder are to be redeemed, the number of such Series F Preferred Shares to be redeemed from such holder;

		
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	the redemption price; and

		
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	that the shares should be delivered via book entry transfer or the place or places where holders may surrender certificates evidencing the Series F Preferred Shares for payment of the redemption price.

If notice of redemption of any Series F Preferred Shares has been given and if the funds necessary for such redemption have been set aside by us for the benefit of the holders of any Series F Preferred Shares so called for redemption, then, from and after the redemption date, no further dividends will be declared on such Series F Preferred Shares, such Series F Preferred Shares shall no longer be deemed outstanding and all rights of the holders of such Series F Preferred Shares will terminate, except the right to receive the redemption price, without interest.
In case of any redemption of only part of the Series F Preferred Shares at the time issued and outstanding, the Series F Preferred Shares to be redeemed shall be selected either pro rata or in such other manner as we may determine to be fair and equitable.
If the Series F Preferred Shares are redeemed, in whole or in part, a corresponding number of Series F Depositary Shares will be redeemed with the proceeds received by the depositary from the redemption of the Series F Preferred Shares held by the depositary. The redemption price per Series F Depositary Share will be equal to 1/1,000th of the redemption price per Series F Preferred Share.
Our ability to redeem the Series F Preferred Shares will be limited by the terms of our agreements governing our indebtedness and by the provisions of other agreements that we may enter into.
Under Bermuda law, we may not redeem our preference shares (including the Series F Preferred Shares) at any time if we have reasonable grounds for believing that we are, or after the redemption would be, unable to pay our liabilities as they become due. Preference shares (including the Series F Preferred Shares) may not be redeemed except out of the capital paid up thereon or out of our funds that would otherwise be available for dividends or 

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distributions or out of the proceeds of a new issue of shares made for the purpose of the redemption. The premium, if any, payable on redemption must be provided for out of our funds that would otherwise be available for dividends or distributions or out of our share premium account before the preference shares are redeemed. Preference shares also may not be redeemed if as a result of the redemption, our issued share capital would be reduced below the minimum capital specified in the memorandum of association of Arch Capital.
Variation or Exchange
At any time following a tax event or a capital disqualification event, we may, without the consent of any holders of the Series F Preferred Shares, vary the terms of the Series F Preferred Shares or exchange the Series F Preferred Shares for new securities, which (i) in the case of a tax event, would eliminate the substantial probability that we or any successor corporation would be required to pay any additional amounts with respect to the Series F Preferred Shares as a result of a change in tax law or (ii) in the case of a capital disqualification event, would cause the Series F Preferred Shares to become securities that qualify as Tier 2 capital (where capital is subdivided into tiers) or its equivalent under then-applicable capital adequacy regulations imposed upon us by the BMA or any successor agency or then-applicable regulatory authority, including under the BMA’s enhanced capital requirements, for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or levels of Arch Capital or any member thereof. In either case, the terms of the varied securities or new securities considered in the aggregate cannot be less favorable, including from a financial perspective, to holders than the terms of the Series F Preferred Shares prior to being varied or exchanged (as reasonably determined by the Company); provided that no such variation of terms or securities received in exchange shall change the specified denominations, or any payment of dividend on, the redemption dates (other than any extension of the period during which an optional redemption may not be exercised by the Company) or currency of, the Series F Preferred Shares, reduce the liquidation preference thereof or the dividend payable thereon, lower the ranking of the securities or change the foregoing list of items that may not be so amended as part of such variation or exchange. Further, no such variation of terms or securities received in exchange shall impair the right of a holder of the securities to institute suit for the payment of any amounts due (as provided under the certificate of designations), but unpaid with respect to such holder’s securities.
Prior to any variation or exchange, we will be required to receive an opinion of independent legal advisers of recognized standing to the effect that holders and beneficial owners (including holders and beneficial owners of Series F Depositary Shares) of the Series F Preferred Shares (including as holders and beneficial owners of the varied or exchanged securities) will not recognize income, gain or loss for United States federal income tax purposes as a result of such variation or exchange and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case had such variation or exchange not occurred.
Any variation or exchange of the Series F Preferred Shares described above will be made after notice is given to the holders of the Series F Preferred Shares not less than 30 nor more than 60 days prior to the date fixed for variation or exchange, as applicable.
Voting Rights
Except as provided below, the holders of the Series F Preferred Shares will have no voting rights.
Whenever dividends on any Series F Preferred Shares shall have not been declared and paid for the equivalent of six or more dividend periods, whether or not for consecutive dividend periods (a “nonpayment event”), the holders of the Series F Preferred Shares, voting together as a single class with holders of any and all other series of voting preferred shares (as defined below) then issued and outstanding, will be entitled to vote for the election of a total of two additional members of the Board of directors of Arch Capital (the “preferred shares directors”), provided that the election of any such directors shall not cause us to violate the corporate governance requirement of any exchange on which our securities may be listed or quoted that listed or quoted companies must have a majority of independent directors.

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In such case, we will use our best efforts to increase the number of directors constituting the Board of directors to the extent necessary to effectuate such right. Each preference share director will be added to an already existing class of directors.
Whenever such special voting power of such holders of the Series F Preferred Shares has vested, such right may be exercised initially either at a special general meeting of the holders of Series F Preferred Shares called for the purpose of such election of directors, or at any annual general meeting of shareholders, and thereafter at the annual general meetings of shareholders.
At any time when such special voting power has vested in the holders of any of the Series F Preferred Shares as described above, the chairman, president or chief executive officer of Arch Capital will, upon the written request of the holders of record of at least 20% of the Series F Preferred Shares then issued and outstanding addressed to the secretary of Arch Capital, call a special general meeting of the holders of the Series F Preferred Shares for the purpose of electing directors. Such meeting will be held at the earliest practicable date in such place as may be designated pursuant to our bye-laws (or if there be no designation, at our principal office in Bermuda). If such meeting shall not be called by our chairman, president or chief executive officer within 20 days after Arch Capital’s secretary has been personally served with such request, or within 60 days after mailing the same by registered or certified mail addressed to Arch Capital’s secretary at our registered office, then the holders of record of at least 20% of the Series F Preferred Shares then issued and outstanding may designate in writing one such holder to call such meeting at Arch Capital’s expense, and such meeting may be called by such holder so designated upon the notice required for annual general meetings of shareholders and will be held in Bermuda, unless Arch Capital otherwise designates. Any holder of the Series F Preferred Shares so designated will have access to our register of members for the purpose of causing meetings of shareholders to be called pursuant to these provisions. Notwithstanding the foregoing, no such special general meeting will be called during the period within 90 days immediately preceding the date fixed for the next annual general meeting of shareholders.
There is no quorum requirement for a meeting to elect any director by the holders of voting preferred shares pursuant to these provisions.
The directors so elected by the holders of the Series F Preferred Shares and any other series of voting preferred shares will continue in office (1) until their successors, if any, are elected by such holders at the next annual general meeting or (2) until they are removed by the holders of record of a majority of the aggregate voting power of Series F Preferred Shares and voting preferred shares then issued and outstanding (voting together as a single class), as further described below, or (3) unless required by applicable law to continue in office for a longer period, in each case, until termination of the right of such holders to vote as a class for preferred shares directors, if earlier. If and to the extent permitted by applicable law, immediately upon any termination of the right of the holders of the Series F Preferred Shares to vote as a class for preferred shares directors as provided herein, the terms of office of the directors then in office so elected by the holders of the Series F Preferred Shares and any other series of voting preferred shares will terminate.
As used in this section, “voting preferred shares” means any other class or series of our preferred shares ranking equally with the Series F Preferred Shares as to dividends and the distribution of assets upon liquidation, dissolution or winding-up of Arch Capital and upon which like voting rights have been conferred and are exercisable.
If and when dividends for at least four dividend periods, whether or not consecutive, following a nonpayment event have been paid in full (or declared and a sum sufficient for such payment shall have been set aside), the holders of the Series F Preferred Shares shall be divested of the foregoing voting rights (subject to revesting in the event of each subsequent nonpayment event) and, if such voting rights for all other holders of voting preferred shares have terminated, the term of office of each preferred shares director so elected shall terminate and the number of directors on the Board of directors of Arch Capital shall automatically decrease by two. In determining whether dividends have been paid for four dividend periods following a nonpayment event, we may take account of any dividend we elect to pay for such a dividend period after the regular dividend payment date for that period has passed.

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Any preferred shares director may be removed at any time without cause by the holders of record of a majority of the aggregate voting power, as determined under our bye-laws, of Series F Preferred Shares and any other shares of voting preferred shares then issued and outstanding (voting together as a single class) when they have the voting rights described above. So long as a nonpayment event shall continue, any vacancy in the office of a preferred shares director (other than prior to the initial election after a nonpayment event) may be filled by the written consent of the preferred shares director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the issued and outstanding Series F Preferred Shares and any other shares of voting preferred shares then issued and outstanding (voting together as a single class) when they have the voting rights described above. Any vote of shareholders to remove, or to fill a vacancy in the office of, a preferred shares director may be taken only at a special general meeting of such shareholders, called as provided above for an initial election of preferred shares director after a nonpayment event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders of Arch Capital, in which event such election shall be held at such next annual or special general meeting of shareholders). The preferred shares directors shall each be entitled to one vote per director on any matter. Each preferred shares director elected at any special general meeting of shareholders or by written consent of the other preferred shares director shall hold office until the next annual meeting of the shareholders of Arch Capital if such office shall not have previously terminated as above provided.
The bye-laws of Arch Capital provide that all or any of the special rights attached to any class of shares (including the Series F Preferred Shares) issued may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of a majority of the voting power represented by the issued shares of that class or with the sanction of a resolution passed by a majority of the voting power represented by the votes cast at a separate general meeting of the holders of the shares of the class in accordance with the Companies Act. The bye-laws also provide that rights conferred upon the holders of the shares of any class (including the Series F Preferred Shares) issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith or senior thereto. The Companies Act provides that in certain circumstances, non-voting shares have the right to vote (for example without limitation, converting a limited liability company to unlimited liability company, discontinuance of a company from Bermuda, or conversion of preference shares into redeemable preference shares).
Notwithstanding the foregoing, our bye-laws contain a provision limiting the voting rights of any U.S. person, as defined in the Code, who owns (directly, indirectly or constructively under the Code) shares with more than 9.9% of the total voting power of all shares entitled to vote generally at an election of directors to 9.9% of such voting power. 
Without the consent of the holders of the Series F Preferred Shares, so long as such action does not affect the special rights, preferences, privileges and voting powers of the Series F Preferred Shares, taken as a whole, we may amend, alter, supplement or repeal any terms of the Series F Preferred Shares:
		
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	to cure any ambiguity, or to cure, correct or supplement any provision contained in the Certificate of Designations for the Series F Preferred Shares that may be defective or inconsistent; or

		
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	to make any provision with respect to matters or questions arising with respect to the Series F Preferred Shares that is not inconsistent with the provisions of the Certificate of Designations.

The foregoing voting provisions will not apply with respect to the Series F Preferred Shares if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all issued and outstanding Series F Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been set aside by us for the benefit of the holders of Series F Preferred Shares to effect such redemption.
On any item on which the holders of the Series F Preferred Shares are entitled to vote, such holders will be entitled to one vote for each Series F Preferred Share held. As described under “Description of the Series F 

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Depositary Shares —Voting Rights,” because each Series F Depositary Share represents a 1/1,000th interest in a Series F Preferred Share, holders of depositary receipts will be entitled to 1/1,000th of a vote per share of the Series F Preferred Shares under those limited circumstances in which holders of the Series F Preferred Shares are entitled to vote. Holders of the Series F Depositary Shares must act through the depositary to exercise any voting rights in respect of the Series F Preferred Shares.
Conversion
Holders will not have the right to convert Series F Preferred Shares into, or exchange Series F Preferred Shares for, any other securities or property of Arch Capital.
Listing of the Series F Preferred Shares
The Series F Preferred Shares are not listed on any exchange. The Series F Depositary Shares are listed on NASDAQ under the symbol “ACGLO.”

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DESCRIPTION OF THE SERIES F DEPOSITARY SHARES 
General
Each Series F Depositary Share represents a 1/1,000th interest in a Series F Preferred Share and will be evidenced by a depositary receipt. We have deposited the underlying Series F Preferred Shares with the depositary pursuant to a deposit agreement among us, American Stock Transfer & Trust Company, acting as depositary, and the holders from time to time of the depositary receipts (the “Series F Deposit Agreement”). The address of the principal executive office of American Stock Transfer & Trust Company is at 6201 15th Avenue, Brooklyn, New York 11219.  
Subject to the terms of the Series F Deposit Agreement, each owner of a depositary receipt will be entitled, in proportion to the fractional interest of a share of Series F Preferred Shares evidenced by that depositary receipt, to all the rights and preferences of Series F Preferred Shares represented by those Series F Depositary Shares (including any dividend, liquidation, redemption and voting rights). If the Series F Preferred Shares are exchanged for new securities pursuant to the provisions described under “Description of the Series F Preferred Shares—Variation or Exchange,” each Series F Depositary Share will represent the same percentage interest in such new security, and will be evidenced by a depositary receipt.
The Series F Depositary Shares are evidenced by depositary receipts issued pursuant to the Series F Deposit Agreement. Copies of the Series F Deposit Agreement and depositary receipt may be obtained from us upon request, and the statements made hereunder relating to the Series F Deposit Agreement and the depositary receipts to be issued thereunder are summaries of certain provisions thereof and do not purport to be complete and are subject to, and qualified in their entirety by reference to, all of the provisions of the Series F Deposit Agreement and related depositary receipts.
Dividends and Other Distributions
Any dividend or other distribution (including upon our voluntary or involuntary liquidation, dissolution or winding-up) paid in respect of a Series F Depositary Share will be in an amount equal to 1/1,000th of the dividend declared or distribution payable, as the case may be, on the underlying share of the Series F Preferred Shares. The depositary will distribute all cash dividends and other cash distributions received on the Series F Preferred Shares to the holders of record of the Series F Depositary Shares in proportion to the number of Series F Depositary Shares held by each holder on the relevant record date. In the event of a distribution other than in cash, the depositary will distribute property received by it to the holders of record of the Series F Depositary Shares in proportion to the number of Series F Depositary Shares held by each holder, unless the depositary determines that this distribution is not feasible, in which case the depositary may, with our approval, adopt a method of distribution that it deems practicable, including the sale of the property and distribution of the net proceeds of that sale to the holders of the Series F Depositary Shares.
Record dates for the payment of dividends and other matters relating to the Series F Depositary Shares will be the same as the corresponding record dates for the Series F Preferred Shares.
Subject to any obligation to pay additional amounts as described in “Description of the Series F Preferred Shares—Payment of Additional Amounts” above, the amount paid as dividends or otherwise distributable by the depositary with respect to the Series F Depositary Shares or the underlying Series F Preferred Shares will be reduced by any amounts required to be withheld by us or the depositary on account of taxes or other governmental charges. The depositary may refuse to make any payment or distribution, or any transfer, exchange or withdrawal of any Series F Depositary Shares or the Series F Preferred Shares until such taxes or other governmental charges are paid.
Withdrawal of Series F Preferred Shares
Unless the related Series F Depositary Shares have been previously called for redemption, a holder of Series F Depositary Shares may surrender his or her depositary receipts at the corporate trust office of the depositary, pay any taxes, charges and fees provided for in the Series F Deposit Agreement and comply with any 

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other requirements of the Series F Deposit Agreement for the number of whole shares of Series F Preferred Shares and any money or other property represented by such holder’s depositary receipts. A holder of Series F Depositary Shares who exchanges shares of Series F Preferred Shares will be entitled to receive whole shares of Series F Preferred Shares on the basis set forth in the prospectus supplement; partial shares of Series F Preferred Shares will not be issued.
However, holders of whole shares of Series F Preferred Shares will not be entitled to deposit those shares under the Series F Deposit Agreement or to receive Series F Depositary Shares for those shares after the withdrawal. If the Series F Depositary Shares surrendered by the holder in connection with the withdrawal exceed the number of Series F Depositary Shares that represent the number of whole shares of Series F Preferred Shares to be withdrawn, the depositary will deliver to the holder at the same time new Series F Depositary Shares evidencing the excess number of Series F Depositary Shares.
Redemption
If the Series F Preferred Shares underlying the Series F Depositary Shares are redeemed, in whole or in part, a corresponding number of Series F Depositary Shares will be redeemed with the proceeds received by the depositary from the redemption of the Series F Preferred Shares held by the depositary. The redemption price per Series F Depositary Share will be equal to 1/1,000th of the redemption price per Series F Preferred Share.
Whenever we redeem Series F Preferred Shares held by the depositary, the depositary will redeem, as of the same redemption date, the number of Series F Depositary Shares so redeemed. If fewer than all of the issued and outstanding Series F Depositary Shares are redeemed, the depositary will select the Series F Depositary Shares to be redeemed pro rata or by lot or by any other equitable method as may be determined by the depositary or as may be required by the principal national stock exchange on which the Series F Depositary Shares are listed. The depositary will mail (or otherwise transmit by an authorized method) notice of redemption to holders of the depositary receipts not less than 30 and not more than 60 days prior to the date fixed for redemption of the Series F Preferred Shares and the related Series F Depositary Shares.
Voting Rights
Because each Series F Depositary Share represents a 1/1,000th interest in a Series F Preferred Share, holders of depositary receipts will be entitled to 1/1,000th of a vote per share of the Series F Preferred Shares under those limited circumstances in which holders of the Series F Preferred Shares are entitled to vote. Holders of the Series F Depositary Shares must act through the depositary to exercise any voting rights in respect of the Series F Preferred Shares. Although each Series F Depositary Share is entitled to 1/1,000th of a vote, the depositary can vote only whole shares of Series F Preferred Shares. Holders of the Series F Depositary Shares will not have any voting rights, except for the limited voting rights described under “Description of the Series F Preferred Shares—Voting Rights.”
When the depositary receives notice of any meeting at which the holders of the Series F Preferred Shares are entitled to vote, the depositary will mail (or otherwise transmit by an authorized method) the information contained in the notice to the record holders of the Series F Depositary Shares relating to the Series F Preferred Shares. Each record holder of the Series F Depositary Shares on the record date, which will be the same date as the record date for the Series F Preferred Shares, may instruct the depositary to vote the number of the Series F Preferred Shares votes represented by the holder’s Series F Depositary Shares. To the extent possible, the depositary will vote the number of the Series F Preferred Shares votes represented by Series F Depositary Shares in accordance with the instructions it receives.
We have agreed to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. The depositary will refrain from voting the Series F Preferred Shares to the extent it does not receive specific instructions from the holders of any Series F Depositary Shares representing such Series F Preferred Shares. 
Conversion

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Holders of depositary receipts will not have the right to convert Series F Depositary Shares into, or exchange Series F Depositary Shares for, any other securities or property of Arch Capital.
Amendment and Termination of the Series F Deposit Agreement
The form of depositary receipt evidencing the Series F Depositary Shares and any provision of the Series F Deposit Agreement may be amended by agreement between us and the depositary. However, any amendment that materially and adversely alters the rights of the existing holders of Series F Depositary Shares will not be effective unless the amendment has been approved by the record holders of at least the amount of the Series F Depositary Shares then issued and outstanding necessary to approve any amendment that would materially and adversely affect the rights of the holders of the Series F Preferred Shares. Either we or the depositary may terminate the Series F Deposit Agreement if there has been a final distribution in respect of the Series F Preferred Shares in connection with our liquidation, dissolution or winding up.
Charges of Depositary
We will pay all transfer and other taxes, assessments, and governmental charges arising solely from the existence of the depositary arrangements. We will pay the fees of the depositary in connection with the initial deposit of the Series F Preferred Shares. Holders of depositary receipts will pay transfer and other taxes, assessments, and governmental charges and any other charges as are expressly provided in the Series F Deposit Agreement to be for their accounts. The depositary may refuse to effect any transfer of a depositary receipt or any withdrawals of Series F Preferred Shares evidenced by a depositary receipt until all taxes, assessments, and governmental charges with respect to the depositary receipt or Series F Preferred Shares are paid by their holders.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its election to do so, and we may at any time remove the depositary, any resignation or removal to take effect upon the appointment of a successor depositary and its acceptance of the appointment. The successor depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The depositary will forward to the holders of Series F Depositary Shares all of our reports and communications which are delivered to the depositary and which we are required to furnish to the holders of our Series F Preferred Shares.
Neither we nor the depositary will be liable if we are prevented or delayed by law or any circumstance beyond our control in performing our obligations under the Series F Deposit Agreement. All of our obligations as well as the depositary’s obligations under the Series F Deposit Agreement are limited to performance in good faith of our respective duties set forth in the Series F Deposit Agreement, and neither of us will be obligated to prosecute or defend any legal proceeding relating to any Series F Depositary Shares or Series F Preferred Shares unless provided with satisfactory indemnity. We, and the depositary, may rely upon written advice of counsel or accountants, or information provided by persons presenting Series F Preferred Shares for deposit, holders of Series F Depositary Shares, or other persons believed to be competent and on documents believed to be genuine.
Listing of the Series F Depositary Shares
The Series F Depositary Shares are listed on NASDAQ under the symbol “ACGLO.” 
Transfer Agent, Registrar, Dividend Disbursing Agent and Redemption Agent

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American Stock Transfer & Trust Company is the transfer agent, registrar, dividend disbursing agent and redemption agent for the Series F Depositary Shares. 
Book-Entry; Delivery and Form
The Series F Depositary Shares will be represented by one or more global securities that will be deposited with and registered in the name of DTC or its nominee. This means that we will not issue certificates to you for the Series F Depositary Shares except in limited circumstances. The global securities will be issued to DTC, the depository for the Series F Depositary Shares, who will keep a computerized record of its participants (for example, your broker) whose clients have purchased the Series F Depositary Shares. Each participant will then keep a record of its clients. Unless exchanged in whole or in part for a certificated security, a global security may not be transferred. However, DTC, its nominees, and their successors may transfer a global security as a whole to one another. Beneficial interests in the global securities will be shown on, and transfers of the global securities will be made only through, records maintained by DTC and its participants.
DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered under the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). DTC holds securities that its participants (direct participants) deposit with DTC. DTC also records the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through computerized records for direct participants’ accounts. This eliminates the need to exchange certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Neither we nor the underwriters take any responsibility for these operations or procedures, and you are urged to contact DTC or its participants directly to discuss these matters.
DTC’s book-entry system is also used by other organizations such as securities brokers and dealers, banks and trust companies that work through a direct participant. The rules that apply to DTC and its participants are on file with the SEC.
DTC is owned by a number of its direct participants and by the NYSE, the American Stock Exchange, Inc. and the Financial Industry Regulatory Authority, Inc.
When you purchase Series F Depositary Shares through the DTC system, the purchases must be made by or through a direct participant, who will receive credit for the Series F Depositary Shares on DTC’s records. You are the beneficial owner and your ownership interest will be recorded only in the direct (or indirect) participants’ records. DTC has no knowledge of your individual ownership of the Series F Depositary Shares. DTC’s records only show the identity of the direct participants and the amount of the Series F Depositary Shares held by or through them. You will not receive a written confirmation of your purchase or sale or any periodic account statement directly from DTC. You will receive these from your direct (or indirect) participant. Thus, the direct (or indirect) participants are responsible for keeping accurate account of the holdings of their customers like you.
We will wire dividend payments to DTC’s nominee and we will treat DTC’s nominee as the owner of the global securities for all purposes. Accordingly, we will have no direct responsibility or liability to pay amounts due on the global securities to you or any other beneficial owners in the global securities.
Any redemption notices will be sent by us directly to DTC, who will in turn inform the direct participants, who will then contact you as a beneficial holder.
It is DTC’s current practice, upon receipt of any payment of dividends or liquidation amount, to credit direct participants’ accounts on the payment date based on their holdings of beneficial interests in the global securities as shown on DTC’s records. In addition, it is DTC’s current practice to assign any consenting or voting rights to direct participants whose accounts are credited with preferred securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interests in the global securities, and voting by 

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participants, will be based on the customary practices between the participants and owners of beneficial interests, as is the case with the Series F Preferred Shares held for the account of customers registered in “street name.” However, payments will be the responsibility of the participants and not of DTC or us. 
Series F Depositary Shares represented by global securities will be exchangeable for certificated securities with the same terms in authorized denominations only if:
		
	•
	DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under applicable law and a successor depositary is not appointed by us within 90 days; or

		
	•
	we determine not to require all of the Series F Depositary Shares to be represented by global securities.

If the book-entry-only system is discontinued, the transfer agent will keep the registration books for the Series F Depositary Shares at its corporate office.

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Exhibit 10.16
EMPLOYMENT AGREEMENT 

EMPLOYMENT AGREEMENT (“Agreement”), dated as of March 1, 2019, between Arch U.S. MI Services Inc., a Delaware corporation (the “Company”), and David Gansberg (the “Executive”). 

WHEREAS, the Executive has been promoted to the positions described in Section 3.01 below;

WHEREAS, in connection with the promotion and in exchange for and contingent on the Executive’s execution of this Agreement, the Executive’s base salary will be increased to the amount set forth in Section 4.01 below, he will receive the equity grant from the Company described in Section 4.06 below and he will be entitled to the severance benefits on the terms set forth in Article 5 below; 

WHEREAS, the Executive’s positions with the Company and its Affiliates will give him access to Confidential Information (as defined herein) of the Company and its Affiliates (as defined herein);

WHEREAS, the Executive’s positions with the Company and its Affiliates will give the Executive certain opportunities , on behalf of the Company, to work with and develop relationships with employees, customers, investors, clients, insured, reinsureds, brokers, agents, and licensees of the Company and its Affiliates; and

WHEREAS, the parties agree that this Agreement is necessary for the protection and preservation of the proprietary and confidential information of the Company and its Affiliates, the protection and preservation of the goodwill of the Company and its Affiliates, and the protection and preservation of the relationships that the Company has with its employees, customers, investors, clients, insureds, reinsureds, brokers, agents, licensees, and others with which the Company has a business relationship; and

NOW, THEREFORE, in consideration of the Executive’s continued employment as provided herein, the Executive’s increased base salary, his receipt of an equity grant from the Company, his severance benefits payable as set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 

ARTICLE 1 

DEFINITIONS 

SECTION 1.01. Definitions. For purposes of this Agreement, the following terms have the meanings set forth below: 

“Accounting Firm” has the meaning set forth in Section 12.10(b). 

“Affiliate” means any Person, directly or indirectly, through one or more intermediaries, 
Controlling, Controlled by, or under common Control with the Company. For purposes hereof, (a) “Control” means the ownership, directly or indirectly, of (i) in the case of a corporation, Voting Securities (as defined below) representing 50% or more of the total voting power or value of all the then outstanding Voting Securities of such corporation or (ii) in the case of a partnership, limited liability company, association or other business entity (“Business Entity”), 50% or more of the partnership or other similar ownership interest of such Business Entity; and (b) “Voting Security” means any security of a corporation which carries the right to vote generally in the election of directors. For purposes of the definition of “Control,” (x) a Person will be deemed to have a 50% or more ownership interest in a Business Entity if such Person is allocated 50% or more of Business Entity gains or losses or controls the managing director or member or general partner of such Business Entity; and (y) “Controlling” and “Controlled” have meanings correlative thereto.

                    

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“Base Salary” has the meaning set forth in Section 4.01. 

“Bonus Amount” means for termination of the Executive’s employment occurring during a calendar year, the greater of (i) the Executive’s target annual bonus for the year of such termination of employment, or (ii) the average of the Executive’s actual annual bonus for the three immediately preceding years (or such lesser number of years in which the Executive was employed by the Company or its Affiliate).

“Cause” means (a) theft or embezzlement by the Executive with respect to the Company or its Affiliates; (b) intentional malfeasance or gross negligence in the performance of the Executive’s duties; (c) the conviction of the Executive of any felony or any crime involving moral turpitude; (d) willful or prolonged absence from work by the Executive (other than by reason of disability due to physical or mental illness) or failure, neglect or refusal by the Executive to perform his duties and responsibilities without the same being corrected within ten (10) days after being given written notice thereof; (e) continued and habitual use of alcohol by the Executive to an extent which materially impairs the Executive’s performance of his duties; (f) the Executive’s use of illegal drugs; or (g) the material breach by the Executive of any of the covenants contained in this Agreement. 

“Code” has the meaning set forth in Section 12.09.

“Confidential Information” means information that is not generally known to the public and that was or is used, developed or obtained by the Company or its Affiliates in connection with their business. It shall not include information (a) required to be disclosed by court or administrative order (subject to the Executive’s compliance with the notice requirements set forth in Section 6.01 below); (b) lawfully obtainable from other sources or which is in the public domain through no fault of the Executive; or (c) the disclosure of which is consented to by the Company. 

“Date of Termination” has the meaning set forth in Section 5.06 and Section 5.02. 

“Employment Period” has the meaning set forth in Section 2.01 and Section 5.02. 

“Good Reason” means, without the Executive’s written consent and subject to the timely notice requirement and the Company’s opportunity to cure set forth in Section 5.05 below, (a) the material diminution of any material duties or responsibilities of the Executive; (b) a material reduction in the Executive’s Base Salary; (c) any material breach by the Company of the provisions contained in this Agreement; or (d) a requirement that Executive relocate his principal office to a location that is not within 50 miles of either Raleigh or Greensboro, North Carolina. 

“Intellectual Property” has the meaning set forth in Section 7.01. 

“Notice of Termination” has the meaning set forth in Section 5.05. 

“Noncompetition Period” has the meaning set forth in Section 9.01. 

“Nonsolicitation Period” has the meaning set forth in Section 9.02. 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. 

“Permanent Disability” means those circumstances where the Executive is unable to continue to perform the usual customary duties of his assigned job or as otherwise assigned in accordance with the provisions of this Agreement for a period of six (6) consecutive months in any twelve (12) month period because of physical, mental or emotional incapacity resulting from injury, sickness or disease. Any questions as to the existence of a Permanent Disability shall be determined by a qualified, independent physician selected by the Company and approved by the 

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Executive (which approval shall not be unreasonably withheld). The determination of any such physician shall be final and conclusive for all purposes of this Agreement. 

“Reimbursable Expenses” has the meaning set forth in Section 4.04. 

“Start Date” has the meaning set forth in Section 2.01.

ARTICLE 2 

EMPLOYMENT 

SECTION 2.01. Employment. The Company shall employ the Executive as provided herein, and the Executive shall accept such employment, for the period beginning as of March 1, 2019 (the “Start Date”) and ending as provided in Section 5.01 (the “Employment Period”). If the Executive fails to satisfy the condition set forth in the preceding sentence, he shall forfeit all rights hereunder.

ARTICLE 3 

POSITION AND DUTIES 

SECTION 3.01. Position and Duties. During the Employment Period, the Executive shall serve as Executive Chairman of the Company and shall have such responsibilities, powers and duties as may from time to time be prescribed by the Board of Directors of the Company; provided that such responsibilities, powers and duties are substantially consistent with those customarily assigned to individuals serving in such position at comparable companies or as may be reasonably required by the conduct of the business of the Company. During the Employment Period, the Executive shall also serve as the Chief Executive of the Global Mortgage Group and shall have such responsibilities, powers and duties as may from time to time be prescribed by the President and Chief Executive Officer of Arch Capital Group Ltd.; provided that such responsibilities, powers and duties are substantially consistent with those customarily assigned to individuals serving in such position at comparable companies or as may be reasonably required by the conduct of the business of the Company and its Affiliates.

The Executive understands and agrees that in these positions, he will have access to and become familiar with confidential and trade secret information belonging to the Company and its Affiliates, the Company’s manner of doing business, the manner in which Affiliates do business, future plans of the Company and its Affiliates, and confidential information relating to customers, employees, and business relations of the Company and its Affiliates. The Executive acknowledges that such information has been and will be established at great expense to the Company and its Affiliates and that the Company has a legitimate business interest in protecting such information from disclosure to competitors or otherwise.

During the Employment Period, the Executive shall devote substantially all of his working time and efforts to the business and affairs of the Company and its Affiliates. The Executive shall not directly or indirectly render any services of a business, commercial or professional nature to any other person or for-profit organization not related to the business of the Company or its Affiliates, whether for compensation or otherwise, without prior written consent of the Company. During the Employment Period, the Executive will comply with the Company’s Code of Business Conduct, as in effect for time to time.

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ARTICLE 4 

BASE SALARY AND BENEFITS 

SECTION 4.01. Base Salary. During the Employment Period, the Executive’s base salary will be $650,000 per annum (the “Base Salary”). The Base Salary will be payable by the Company bi-monthly on the 15th and last working day of each month. Annually during the Employment Period, the Company shall review with the Executive his job performance and compensation, and if deemed appropriate by the Company, in its discretion, the Executive’s Base Salary may be increased. 

SECTION 4.02. Bonuses. In addition to the Base Salary, the Executive shall be eligible to participate in an annual bonus plan on terms set forth from time to time by the Board of Directors of the Company. The Executive’s target annual bonus during the Employment Period will be 135% of his Base Salary. 

SECTION 4.03. Benefits. In addition to the Base Salary, and any bonuses payable to the Executive pursuant to this Agreement, the Executive shall be entitled to the following benefits during the Employment Period: 

(a)     such major medical, life insurance and disability insurance coverage as is, or may during the Employment Period be, provided generally for other senior executive officers of the Company as set forth from time to time in the applicable plan documents; 

(b)     in accordance with applicable policies, 27 paid vacation days and 10 sick days annually (vacation days will be pro-rated for partial years, sick days will be front loaded annually) during the Employment Period; and

(c)     benefits under any plan or arrangement available generally for the senior executive officers of the Company, including the Executive Supplemental Non-Qualified Savings and Retirement Plan, subject to and consistent with the terms and conditions and overall administration of such plans as set forth from time to time in the applicable plan documents. 

SECTION 4.04. Expenses. The Company shall reimburse the Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses (“Reimbursable Expenses”), subject to the Company’s requirements with respect to reporting and documentation of expenses. 

SECTION 4.05. Share-Based Awards. The Executive shall be eligible to participate in the Company’s Long Term Incentive and Share Award Plans (and any similar plan adopted by the Company) under which share-based awards may be granted, as determined by the Board of Directors of the Company in its discretion. 

SECTION 4.06 Equity Award. Subject to approval by the Board of Directors of Arch Capital Group Ltd. (“Parent”), on the date this Agreement has been fully-executed by the parties (“Grant Date”), the Executive will receive a signing bonus consisting of the share-based awards of Parent valued at $376,250 in the aggregate, consisting of (a) 80.12% performance shares of Parent (“Performance Shares”) and (b) 19.88% non-qualified options to purchase common shares of Parent (“Stock Options”) (with the percentages relating to the value of each award component). The Performance Shares will vest on March 10, 2022 (based on achievement of performance goals), and the Stock Options will vest in three equal annual installments on the first anniversary of the Grant Date, February 28, 2021 and February 28, 2022, provided that, in each case, on each such date the Executive is still an employee of the Company as set forth in the award agreements. 

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For these purposes, the (a) the number of Performance Shares will be determined by dividing the performance award target award value by the closing price of Parent’s common shares on the Grant Date and (b) the number of Stock Options will be determined by Parent based on a Black-Scholes valuation consistent with the manner in which Parent reflects options in its consolidated financial statements. The Stock Options will have an exercise price per share equal to the closing market price of Parent’s common shares on the Grant Date. The terms and conditions of the Performance Shares and the Stock Options will be as set forth in the award agreements. 

 ARTICLE 5 

TERM AND TERMINATION 

SECTION 5.01. Term. The Employment Period will terminate on the third anniversary of the Start Date; provided that (a) the Employment Period shall terminate prior to such date upon the Executive’s death or Permanent Disability, (b) the Employment Period may be terminated by the Company for any reason prior to such date, and (c) the Employment Period may be terminated by the Executive prior to such date, if such termination shall be for Good Reason. In addition, this Agreement will be automatically extended on the same terms and conditions for successive one year periods following the original term until either the Company or the Executive, at least ninety (90) days prior to the expiration of the original term or any extended term, shall give written notice of their intention not to renew the Agreement. Upon termination of the Executive’s employment with the Company for any reason, the Executive shall resign from all positions and in all capacities with the Company and its Affiliates or from any other company or other Person with which the Executive is serving at the Company’s request.

SECTION 5.02. Unjustified Termination. Except as otherwise provided in Section 12.09, if the Employment Period shall be terminated (i) at the end of the Employment Period due to the Company giving written notice of non-extension pursuant to Section 5.01 above, or (ii) prior to the expiration of the original term (or the Employment Period as extended pursuant to Section 5.01) by the Executive for Good Reason or by the Company not for Cause (such terminations under clauses (i) and (ii) of this Section 5.02 are collectively referred to as “Unjustified Terminations”), the Executive shall be paid solely (except as additionally provided in Section 5.04 below or the Company’s Incentive Compensation Plan or successor plan) his Base Salary and accrued but unused vacation days in accordance with the Company’s policies earned through the date of termination of employment and an amount equal to the sum of (A) his annual Base Salary, (B) his target annual bonus, (C) a pro-rated portion of the Executive’s target annual bonus based on the number of days elapsed in the calendar year through the Date of Termination, (D) payments under the Company’s Incentive Compensation Plan for underwriting years during which the Executive was a participant in the Plan in accordance with the terms of such plan, (E) unvested stock options, stock appreciation rights, restricted stock or restricted stock units, and any other unvested equity awards (other than performance-based awards) that have been (i) granted on or after the date hereof and (ii) held by the Executive for at least one year since the applicable grant date will vest upon the Date of Termination, and such stock options and stock appreciation rights will be exercisable for a period of 90 days from such Date of Termination (except that the vesting and exercisability of such awards shall instead be governed by the applicable award agreements in the event such termination of employment occurs within two years after a Change in Control (as defined in the applicable award agreement) or after the attainment of Retirement Age (as defined in the applicable award agreement)), and (F) unvested performance shares and performance share units that have been (i) granted on or after the date hereof and (ii) held by the Executive for at least one year since the applicable grant date will vest upon the Date of Termination based upon the lesser of:  (x) target performance, or (y) the actual level of achievement of all relevant performance goals (measured as of the latest date immediately preceding the Date of Termination for which performance can, as a practical matter, be determined) (except that the vesting of such awards shall instead be governed by the applicable award agreements in the event such termination of employment occurs within two years after a Change in Control or after the attainment of Retirement Age).

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The Executive shall be entitled to such payments and accelerated vesting, settlement and exercisability set forth in clauses (A), (B), (C), (D), (E) and (F) of this Section only if the Executive has fully complied with and continues to fully comply with the provisions of Sections 6.01, 7.01, 8.01, 9.01 or 9.02 hereof and the Executive has entered into a general release of claims reasonably satisfactory to the Company on or before the date that is fifty (50) days following the Date of Termination and does not revoke such release prior to the end of the statutory seven (7) day revocation period (it being understood that such general release will not require the Executive to release his rights under Sections 5.02 and 5.04 of this Agreement and will not contain any employment restrictions or non-solicitation obligations other than those set forth in this Agreement). 

Subject to Section 12.09 below, such amounts set forth in clauses (A), (B) and (C) will be paid in twelve (12) equal installments, the first two (2) of which shall be paid on the date that is two (2) months following the Date of Termination and the next ten (10) of which will be paid in ten (10) equal monthly installments commencing on the date that is three (3) months following the Date of Termination and continuing on each of the next nine (9) monthly anniversaries of the Date of Termination. In addition, promptly following an Unjustified Termination, the Executive shall also be reimbursed for all Reimbursable Expenses incurred by the Executive prior to such Unjustified Termination. Notwithstanding any provision hereof to the contrary, in order for the Executive to terminate the Employment Period for Good Reason, such termination of employment must occur no later than sixty (60) days after the date the Executive gives written notice in accordance with Section 5.05 below to the Company of the occurrence of the event or condition that constitutes Good Reason. 

The amount otherwise payable under clause (A) of this Section 5.02 will be increased as follows in the event a termination of the Executive’s employment described in this Section 5.02 occurs within the following periods (and not within two years after a Change in Control): (I) if such termination occurs prior to June 1, 2020, the amount will be increased by 150% of the Base Salary as in effect on the date hereof; (II) if such termination of employment occurs on or after June, 1, 2020 and prior to June 1, 2021, the amount will be increased by 100% of the Base Salary as in effect on the date hereof; (III) if such termination of employment occurs on or after June 1, 2021 and prior to June,1 2022, the amount will be increased by 50% of the Base Salary as in effect on the date hereof; and (IV) if such termination of employment occurs on or after June 1, 2022, the amount will not be increased.   

SECTION 5.03. Justified Termination. If the Employment Period shall be terminated (i) prior to the expiration of the original term (or the Employment Period as extended pursuant to Section 5.01) (a) by the Company for Cause, (b) as a result of the Executive’s resignation or leaving of his employment, other than for Good Reason or (c) as a result of the death or Permanent Disability of the Executive, or (ii) at the end of the Employment Period as a result of the Executive’s provision of written notice not to extend the Employment Period under Section 5.01 (such terminations under clauses (i) and (ii) of this Section 5.03 are collectively referred to as “Justified Terminations”), the Executive shall be entitled to receive solely (except as additionally provided in Section 5.04 below or the Company’s Incentive Compensation Plan or successor plan) his Base Salary earned through the date of termination of employment, accrued but unused vacation days in accordance with the Company’s policies, and reimbursement of all Reimbursable Expenses incurred by the Executive prior to such Justified Termination. 

SECTION 5.04. Benefits. Except as otherwise required by mandatory provisions of law, all of the Executive’s rights to fringe and other benefits under this Agreement or otherwise, if any, accruing after the termination of the Employment Period will cease upon such termination. Notwithstanding the foregoing, if such termination is a result of a Permanent Disability or if the Employment Period is terminated as a result of an Unjustified Termination, the Executive and dependents shall continue to receive his major medical insurance coverage benefits from the Company’s plan in effect from time to time (provided the Executive continues to pay the portion of the premiums for such coverage that are charged to similarly situated active employees) for a period equal to the lesser of (i) twelve (12) months after the Date of Termination, and (ii) until the Executive is provided by another employer with benefits substantially comparable (with no pre-existing condition limitations) to the benefits provided by such plan. The continuation of such benefits under this Section shall only be available if the Executive has fully complied with and continues to fully comply with the provisions of Sections 6.01, 7.01, 8.01, 9.01 or 9.02 of this Agreement.

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SECTION 5.05. Notice of Termination and Opportunity to Cure. Any termination by the Company for Permanent Disability or Cause or without Cause or by the Executive for Good Reason shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the date the termination is to take effect (consistent with the terms of this Agreement), the specific termination provision in this Agreement relied upon and, for a termination for Permanent Disability or for Cause or for a resignation for Good Reason, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision indicated. It shall be a condition precedent to the Executive’s right to terminate employment for Good Reason that (i) the Executive shall first have given the Company written notice that an event or condition constituting Good Reason has occurred within ninety (90) days after such occurrence, and any failure to give such written notice within such period will result in a waiver by the Executive of his right to terminate for Good Reason as a result of such event or condition, and (ii) a period of thirty (30) days from and after the giving of such written notice shall have elapsed without the Company having effectively cured or remedied such occurrence during such 30-day period, unless such occurrence cannot be cured or remedied within thirty (30) days, in which case the period for remedy or cure shall be extended for a reasonable time (not to exceed an additional fifteen (15) days) provided that the Company has made and continues to make a diligent effort to effect such remedy or cure.

SECTION 5.06. Date of Termination. “Date of Termination” shall mean (a) if the Employment Period is terminated as a result of a Permanent Disability, five (5) days after a Notice of Termination is given, (b) if the Employment Period is terminated by the Executive for Good Reason, the date specified in the Notice of Termination consistent with the terms hereof, (c) if the Employment Period terminates due to expiration of the term of this Agreement, the date the term expires, and (d) if the Employment Period is terminated for any other reason (including for Cause), the date designated by the Company in the Notice of Termination.

ARTICLE 6 

CONFIDENTIAL INFORMATION 

SECTION 6.01. Nondisclosure and Nonuse of Confidential Information. The Executive will not disclose or use at any time during or after the Employment Period any Confidential Information of which the Executive is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by the Executive’s performance of duties assigned to the Executive pursuant to this Agreement. Under all circumstances and at all times, the Executive will take all reasonably appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. If the Executive is compelled by court or administrative order to disclose information that would otherwise be considered Confidential Information, the Executive will first give the Company prompt written notice of any such requirement, disclose no more information than is so required in the opinion of competent legal counsel, and cooperate fully with any efforts by the Company to obtain a protective order or similar confidentiality treatment for such information. Nothing in this Agreement, however, or any other agreement or arrangement with the Company or any of its Affiliates shall require the Executive to give notice to the Company prior to the Executive making any disclosure of information or documents to any governmental agency or legislative body, any self-regulatory organization, the Legal Department of the Company, and/or pursuant to the whistleblower provisions of the Dodd-Frank Act or Sarbanes-Oxley Act.
SECTION 6.02. Defend Trade Secrets Act. Pursuant to 18 U.S.C. § 1833(b), the Executive understands that the Executive will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Company that (i) is made (x) in confidence to a Federal, State, or local government official, either directly or indirectly, or to the Executive’s attorney and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Executive understands that if the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the trade secret to the Executive’s attorney and use the trade secret information in the court proceeding if the Executive (I) files any 

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document containing the trade secret under seal, and (II) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section. Further, nothing in this Agreement or any other agreement or arrangement with the Company or any of its Affiliates shall prohibit or restrict the Executive from making any disclosure of information or documents to any governmental agency or legislative body, any self-regulatory organization, the Legal Department of the Company, and/or pursuant to the whistleblower provisions of the Dodd-Frank Act or Sarbanes-Oxley Act.
ARTICLE 7

INTELLECTUAL PROPERTY 

SECTION 7.01. Ownership of Intellectual Property. In the event that the Executive as part of his activities on behalf of the Company or its Affiliates generates, authors or contributes to any invention, design, new development, device, product, method of process (whether or not patentable or reduced to practice or comprising Confidential Information), any copyrightable work (whether or not comprising Confidential Information) or any other form of Confidential Information relating directly or indirectly to the business of the Company or its Affiliates as now or hereinafter conducted (collectively, “Intellectual Property”), the Executive acknowledges that such Intellectual Property is the sole and exclusive property of the Company and its Affiliates and hereby assigns all right title and interest in and to such Intellectual Property to the Company and its Affiliates. Any copyrightable work prepared in whole or in part by the Executive during employment with the Company will be deemed “a work made for hire” under Section 201(b) of the United States Copyright Act of 1976, as amended, and the Company and its Affiliates will own all of the rights comprised in the copyright therein. The Executive will promptly and fully disclose all Intellectual Property and will cooperate with the Company and its Affiliates to protect the interests of the Company and its Affiliates in and rights to such Intellectual Property (including providing reasonable assistance in securing patent protection and copyright registrations and executing all documents as reasonably requested by the Company or its Affiliates, whether such requests occur prior to or after termination of the Executive’s employment hereunder). 

ARTICLE 8

DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT 

SECTION 8.01. Delivery of Materials upon Termination of Employment. As requested by the Company from time to time and upon the termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all property of the Company and its Affiliates in the Executive’s possession or within his control, including, without limitation, all copies and embodiments, in whatever form or medium, of all Confidential Information or Intellectual Property (including written records, notes, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information or Intellectual Property), irrespective of the location or form of such property and, if requested by the Company, will provide the Company with written confirmation that all such property have been delivered to the Company. 

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ARTICLE 9

NONCOMPETITION AND NONSOLICITATION 

SECTION 9.01. Noncompetition. The Executive acknowledges that during his employment with the Company, he will become familiar with trade secrets and other Confidential Information concerning the Company and its Affiliates and their respective predecessors, and that his services will be of special, unique and extraordinary value to the Company. In addition, the Executive hereby agrees that during the Noncompetition Period, he will not directly or indirectly own, manage, control, participate in, be employed by, consult with, render services for, provide work for, become associated with, or in any manner engage in any Restricted Business in the Restricted Area. With respect to the twelve (12) month period after the Executive’s employment ends, the restriction on work only applies to the Executive providing executive level services, whether as an employee or independent contractor, or otherwise providing work or services in an executive level position.
For purposes of this Agreement, the “Noncompetition Period” shall mean the Employment Period, together with any period following the Employment Period during which the Executive remains an employee of the Company or its Affiliate, and the period of twelve (12) months following termination of the Executive’s employment for any reason; 
provided, however, that if the Executive’s termination of employment occurs as a result of the Executive’s resignation or leaving of his employment other than for Good Reason or at the end of the Employment Period as a result of the Executive’s provision of written notice not to extend the Employment Period under Section 5.01, except as provided in clause (Y) below, the Noncompetition Period shall continue beyond such termination of employment only if (i) the Company pays the Executive, for each day during which the Noncompetition Period so continues, an amount equal to 1/365th of the sum of (I) the Executive’s annual Base Salary, plus (II) his Bonus Amount for the calendar year of such termination of employment, and (III) a pro-rated portion of the Executive’s Bonus Amount based on the number of days elapsed in the calendar year through the Date of Termination, such amount to be paid in accordance with the regular payroll practices of the Company (except that any amount otherwise payable prior to the sixtieth (60th) day following the termination date shall instead be paid on such sixtieth (60th) day); and (ii) the Executive shall continue to receive his major medical insurance coverage benefits from the Company’s plan in effect from time to time (provided the Executive continues to pay the portion of the premiums for such coverage that are charged to similarly situated active employees) for a period equal to the lesser of (x) the end of the Noncompetition Period, and (y) until the Executive is provided by another employer with benefits substantially comparable (with no pre-existing condition limitations) to the benefits provided by such plan; and provided further, however, that: 
(X) the Company may elect, in its sole discretion, by written notice to the Executive given not more than ten (10) business days after the date the Executive’s employment terminates, to reduce the Noncompetition Period under such circumstances so that it ends on the date set forth in such written notice (which shall not be later than twelve (12) months after the termination date), in which case the Company’s obligation to make payments and provide benefits under this Section 9.01 shall end at the end of the Noncompetition Period, and 

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(Y) the Company’s requirement to make payments under this Section 9.01 as a condition to continuation of the Noncompetition Period shall apply only if the Executive has entered into a general release of claims reasonably satisfactory to the Company on or before the date that is fifty (50) days following the Date of Termination and does not revoke such release prior to the end of the statutory seven (7) day revocation period (it being understood that such general release will not require the Executive to release his rights under this Section 9.01 and will not contain any employment restrictions or non-solicitation obligations other than those set forth in this Agreement) and the Executive has fully complied with and continues to fully comply with the provisions of Sections 6.01, 7.01, 8.01, 9.01, 9.02 or 10.01 hereof. 
For the avoidance of doubt, amounts shall not be payable under both this Section 9.01 and Section 5.02. The Executive understands and agrees that should the Executive fail to fully comply with any of the obligations specified in Sections 6.01, 7.01, 8.01, 9.01, or 9.02 hereof, it will result in a forfeiture of any compensation and benefits to which the Executive may otherwise be entitled pursuant to clauses (A), (B), (C), (D), (E) and (F) of Section 5.02 of this Agreement or Section 9.01 of this Agreement. 
“Restricted Business” means (i) providing services or products relating to mortgage insurance or reinsurance, (ii) any business competing with the business(es) of the Company or its Affiliates as such business(es) exist as of the date of the Executive’s termination (for any reason), (iii) any business competing with the business(es) that were conducted by the Company or its Affiliates at any time during the twelve (12) months prior to the Executive’s termination (for any reason); or (iv) any business competing with the business(es) that were being actively developed by the Company or its Affiliates and with which the Executive was involved to a material extent during the twelve (12) months prior to termination of the Executive’s employment (for any reason). This restriction only applies to businesses of the Company or its Affiliates with which the Executive was materially involved or for which the Executive had access to confidential information. 
“Restricted Area” consists of the areas specified in Appendix A attached hereto.
The parties acknowledge that the Company engages in and actively seeks business throughout the United States and that the Company’s Affiliates engage in and actively seek business throughout the world. The parties further acknowledge that the Executive will have access to confidential information relating to all of the Company’s Affiliates and regularly participate in strategic business discussions and decisions relating to the Company’s Affiliates. Thus, a worldwide restriction is necessary to protect the legitimate business interests of the Company and its Affiliates. 
The Executive hereby acknowledges that the period of time, scope, and territory relating to this noncompetition provision are reasonable and necessary for the protection of the Company in the operation of business and do not unduly restrict the Executive’s ability to provide for himself and/or his family during the Noncompetition Period or to pursue adequate employment opportunities.  
It shall not be considered a violation of this Section 9.01 for the Executive to be a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as the Executive has no active participation in the business of such corporation.

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SECTION 9.02. Nonsolicitation. The Executive acknowledges that during his employment with the Company, he will become familiar with trade secrets and other Confidential Information concerning the Company, its Affiliates and their respective predecessors, and that his services will be of special, unique and extraordinary value to the Company. The Executive hereby agrees that during the Employment Period, together with any period following the Employment Period during which the Executive remains an employee of the Company or its Affiliate, and for a period of one (1) year after the date of termination of employment for any reason (the “Nonsolicitation Period”), the Executive will not, directly or indirectly:

(i)    solicit, induce, or attempt to solicit or induce any Relevant Employee of the Company to leave the employ of the Company, for any reason whatsoever; 

(ii)    solicit, induce, or attempt to solicit or induce any Relevant Employee of one of the Company’s Affiliates to leave the employ of that Affiliate, for any reason whatsoever;

(iii)    in any way disrupt or interfere with the relationship, contractual or otherwise between the Company and any Relevant Employee thereof;

(iv)    in any way disrupt or interfere with the relationship, contractual or otherwise between one of the Company’s Affiliates and any Relevant Employee thereof; or

(v)    hire, employ, or receive the work or services of any Relevant Employee which are the same or similar to the work or services that Relevant Employee provided to the Company or its Affiliates. 

For purposes of this Agreement, a “Relevant Employee” shall mean any individual who was employed with the Company or any Affiliate of the Company as a director, officer, executive, underwriter or manager at any time during the twelve (12) month period prior to the termination of the Executive’s employment (for any reason) and with whom the Executive had contact during the Executive’s employment with the Company or became aware of as a result of the Executive’s employment with the Company. 

The Executive further agrees that during the Nonsolicitation Period, the Executive will not, directly or indirectly:

     (i)    solicit, induce, or attempt to solicit or induce any Restricted Customer to cease doing business with the Company; or 

(ii)    solicit, induce, or attempt to solicit or induce any Restricted Customer to cease doing business with any Affiliate of the Company. 

For purposes of this Agreement, a “Restricted Customer” shall mean any firm, company, or Person who was a customer, investor, supplier, client, insured, reinsured, reinsurer, broker, agent, licensee or other business relation of the Company or any of its Affiliates at any time during the twelve (12) month period prior to the termination of the Executive’s employment (for any reason) and with whom the Executive had contact during the Executive’s employment with the Company or became aware of as a result of the Executive’s employment with the Company. 

SECTION 9.03. Enforcement. If, at the enforcement of Section 9.01 or 9.02, a court holds that the duration, territory, or scope stated therein are unreasonable under circumstances then existing, the parties agree that the maximum duration, territory, and scope reasonable under such circumstances will be substituted for the stated duration or scope and it is the parties’ intention that the court will revise the restrictions contained in this Article 9 to cover the maximum duration and scope permitted by law. 

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ARTICLE 10

EQUITABLE RELIEF

SECTION 10.01. Injunctive or Other Equitable Relief. The Executive acknowledges that (a) the covenants contained herein are reasonable, (b) the Executive’s services are unique, and (c) a breach or threatened breach by him of any of his covenants and agreements with the Company and its Affiliates contained in Sections 6.01, 7.01, 8.01, 9.01 or 9.02 could cause irreparable harm to the Company or its Affiliates for which they would have no adequate remedy at law. Accordingly, and in addition to any remedies which the Company and its Affiliates may have at law, in the event of an actual or threatened breach by the Executive of his covenants and agreements contained in Sections 6.01, 7.01, 8.01, 9.01 or 9.02, the Company and its Affiliates shall have the absolute right, without the need to post a bond or any other type of security, to commence a lawsuit or other proceeding in any court of competent jurisdiction (the “Selected Court”) seeking injunctive or other equitable relief (an “Injunction Proceeding”). In furtherance thereof, the Executive expressly and irrevocably agrees that the Selected Court may exercise personal jurisdiction over him in connection with any Injunction Proceeding and further agrees not to assert that any court other than the Selected Court is a more suitable forum for an Injunction Proceeding.

ARTICLE 11 

EXECUTIVE REPRESENTATIONS 

SECTION 11.01. Executive Representations. The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound, (b) the Executive is not a party to or bound by any employment agreement, noncompetition agreement or confidentiality agreement with any other Person that affects his right or ability to perform the duties contemplated by this Agreement, and (c) upon the execution and delivery of this Agreement by the Company, this Agreement will be the valid and binding obligation of the Executive, enforceable in accordance with its terms. 

ARTICLE 12 

MISCELLANEOUS 

SECTION 12.01. Remedies. The Company will have all rights and remedies set forth in this Agreement, all rights and remedies which the Company has been granted at any time under any other agreement or contract and all of the rights which the Company has under any law. The Company will be entitled to enforce such rights specifically, without posting a bond or other security, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. There are currently no disciplinary or grievance procedures in place, there is no collective agreement in place, and there is no probationary period. 

SECTION 12.02. Consent to Amendments. The provisions of this Agreement may be amended or waived only by a written agreement executed and delivered by the Company and the Executive. No other course of dealing between the parties to this Agreement or any delay in exercising any rights hereunder will operate as a waiver of any rights of any such parties. 

SECTION 12.03. Successors and Assigns. All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not, provided that the Executive may not assign his rights or delegate his obligations under this Agreement without the written consent of the Company. 

SECTION 12.04. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be 

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prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 

SECTION 12.05. Counterparts. This Agreement may be executed simultaneously in two counterparts, any one of which need not contain the signatures of more than one party, but all of which counterparts taken together will constitute one and the same agreement. 

SECTION 12.06. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 

SECTION 12.07. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and shall be delivered personally by hand, by electronic transmission (with a copy following by hand or by overnight courier), by registered or certified mail, postage prepaid, return receipt requested, or by overnight courier service (charges prepaid). Communications delivered personally by hand shall be deemed received on the date when delivered personally to the recipient; communications sent by electronic means shall be deemed received one (1) business day after the sending thereof; communications sent by registered or certified mail shall be deemed received four (4) business days after the sending thereof; and communications delivered by overnight courier shall be deemed received one (1) business day after the date when sent to the recipient. Such notices, demands and other communications will be sent to the Executive and to the Company at the addresses set forth below. 

		
	If to the Executive:
	To the last address delivered to the Company by the Executive in the manner set forth herein.

    
		
	If to the Company:
	Arch U.S. MI Services Inc. 
230 N. Elm St

Greensboro NC 27401
Attn: General Counsel

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. 

SECTION 12.08. Withholding. The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 

SECTION 12.09. Sections 409A. It is intended that this Agreement will comply with Sections 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and any regulations and guidelines issued thereunder), to the extent the Agreement is subject thereto, and the Agreement shall be interpreted on a basis consistent with such intent. If an amendment of the Agreement is necessary in order for it to comply with Section 409A, the parties hereto will negotiate in good faith to amend the Agreement in a manner that preserves the original intent of the parties to the extent reasonably possible. No action or failure to act, pursuant to this Section 12.09 shall subject the Company to any claim, liability, or expense, and the Company shall not have any obligation to indemnify or otherwise protect the Executive from the obligation to pay any taxes, interest or penalties pursuant to Section 409A of the Code. 

Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on the date of his “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account the applicable provisions of Treasury Regulation Section 1.409A-1(b)(9)(iii)), the portion, if any, of such payment so required to be delayed shall not be made prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of his “separation from service” or (ii) the date of his death (the “Delay Period”). Upon 

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the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments due under this Agreement shall be paid in accordance with the normal payment dates specified for them herein. Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A of the Code. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered deferred compensation under Section 409A, references to the Executive’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to the Executive’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company. In no case will compliance with this Section by the Company constitute a breach of the Company’s obligations under this Agreement. 
    
With respect to any reimbursement or in-kind benefit arrangements of the Company and its subsidiaries that constitute deferred compensation for purposes of Section 409A, except as otherwise permitted by Section 409A, the following conditions shall be applicable: (i) the amount eligible for reimbursement, or in-kind benefits provided, under any such arrangement in one calendar year may not affect the amount eligible for reimbursement, or in-kind benefits to be provided, under such arrangement in any other calendar year (except that the health and dental plans may impose a limit on the amount that may be reimbursed or paid), (ii) any reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

SECTION 12.10. Excess Parachute Payments.

(a)    Notwithstanding any other provision of this Agreement, in the event that the amount of payments or other benefits payable to the Executive under this Agreement (including, without limitation, the acceleration of any payment or the accelerated vesting of any payment or other benefit), together with any payments, awards or benefits payable under any other plan, program, arrangement or agreement maintained by the Company or one of its Affiliates, would constitute an “excess parachute payment” (within the meaning of Section 280G of the Code), the payments under Section 5.02 of this Agreement shall be reduced (by the minimum possible amounts) until no amount payable to the Executive under this Agreement constitutes an “excess parachute payment” (within the meaning of Section 280G of the Code); provided, however, that no such reduction shall be made if the net after-tax payment (after taking into account federal, state, local or other income, employment and excise taxes) to which the Executive would otherwise be entitled without such reduction would be greater than the net after-tax payment (after taking into account federal, state, local or other income, employment and excise taxes) to the Executive resulting from the receipt of such payments with such reduction.

(b)    All determinations required to be made under this Section 12.10, including whether a payment would result in an “excess parachute payment” and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting or consulting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive as requested by the Company or the Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company and shall be paid by the Company. Absent manifest error, all determinations made by the Accounting Firm under this Section 12.10 shall be final and binding upon the Company and the Executive.

SECTION 12.11. No Third Party Beneficiary. This Agreement will not confer any rights or remedies upon any person other than the Company and its Affiliates, the Executive and their respective heirs, executors, successors and assigns. 

SECTION 12.12. Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, written or oral, that may have related in any way to the subject matter 

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hereof, including, without limitation, the Employment Agreement dated as of April 7, 2017, between the Company and the Executive. 

SECTION 12.13. Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The use of the word “including” in this Agreement means including without limitation and is intended by the parties to be by way of example rather than limitation. 

SECTION 12.16. Survival. Sections 5.02, 5.04, 6.01, 6.02, 7.01, 8.01 and Articles 9, 10, 11 and 12 will survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 

SECTION 12.17. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW OF NORTH CAROLINA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 

SECTION 12.18. Arbitration. Except when the Company or its Affiliates exercise their right to seek injunctive or other equitable relief pursuant to Section 10.01 above, all disputes between the parties arising out of, in connection with or concerning this Agreement or any share-based award agreements between the Company and the Executive (collectively, the “Disputes”) shall be adjudicated in a confidential private arbitration to be conducted in accordance with the comprehensive rules and procedures of JAMS (the “JAMS Rules”), including, but not limited to, the internal appeal process provided for in JAMS Rule 34 (the “Arbitration”). The Arbitration shall be conducted before a panel of three arbitrators (the “Panel”), one appointed by the Company, another appointed by the Executive and the third appointed by the other two arbitrators (or, if the two arbitrators cannot agree, the third arbitrator shall be appointed by JAMS). Subject to the JAMS Rules, in-person hearings in the arbitration shall be held in Wake County, State of North Carolina, and shall be conducted in English. The parties shall each pay fifty percent (50%) of the Panel’s fees and other costs billed to the parties by JAMS for the Arbitration. Notwithstanding the immediately preceding sentence, each of the parties shall pay its own attorneys’ fees and costs incurred in connection with the Arbitration. The Panel shall have no authority to render an award that requires either of the parties to pay the attorneys’ fees or costs incurred by the other party in connection with the Arbitration or otherwise. A Judgment upon a final award rendered by the Panel, after giving effect to the JAMS internal appeal process, may be sought and entered in any court having jurisdiction thereof (an “Enforcement Proceeding”). If JAMS is not in business or is no longer providing arbitration services, then the American Arbitration Association shall be substituted for JAMS for the purposes of this Section 12.18. Each party shall maintain the confidentiality of the Arbitration (including any award rendered therein), except as necessary in connection with an Enforcement Proceeding or as otherwise required by law.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. 

ARCH U.S. MI SERVICES INC.
By: /s/ R. Michael Schmeiser    
Name:  R. Michael Schmeiser    
Title: President & CEO            
Date: October 1, 2019    
    
/s/ David Gansberg    
David Gansberg 
                        Date:  September 27, 2019___        

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APPENDIX A

The term “Restricted Area” as used in this Agreement, consists of:
(i)    the area throughout the world; and
(ii)    the following countries:
(a)    United States;
(b)    Bermuda
(c)    the countries in Europe;
(d)    United Kingdom;
(e)    Ireland;
(f)    France;
(g)    Switzerland;
(h)    Germany;
(i)    Sweden;
(j)    Finland;
(k)    Italy;
(l)    Australia;
(m)    Canada; 
(n)    Mexico;
(o)    Peru;
(p)    South Korea; 
(q)    Hong Kong;
(r)    any other country in which the Company is engaged in a Restricted Business; and
(s)    any other country in which an Affiliate of the Company is engaged in a Restricted Business.

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