Exhibit 10.3
SHARE ISSUANCE AGREEMENT
     Dated as of May 31, 2006
     Among
     MONTPELIER RE HOLDINGS LTD. (“Issuer”),
     and
     Credit Suisse International (“Dealer”)
     and
     Credit Suisse Securities (USA) LLC, in its capacity as Collateral Agent (as
hereinafter defined).
     This AGREEMENT sets forth the terms and conditions under which Issuer shall
issue Shares to Dealer.
     The parties hereto agree as follows:
          Section 1 . Certain Definitions. The following capitalized terms shall
have the following meanings:
     “Business Day” means a day on which regular trading occurs in the principal
trading market for the Shares.
     “Cash” means any coin or currency of the United States as at the time shall
be legal tender for payment of public and private debts.
     “Clearing Organization” means The Depository Trust Company, or, if agreed
to by Dealer and Issuer, such other Securities Intermediary at which Dealer and
Issuer maintain accounts.
     “Closing Price” on any day means, with respect to the Shares (i) if the
Shares are listed on a U.S. securities exchange registered under the Exchange
Act, are traded on the NASDAQ National Market or are included in the OTC
Bulletin Board Service (operated by the National Association of Securities
Dealers, Inc.), the last reported sale price, regular way, in the principal
trading session on such day on such market on which the Shares are then listed
or is admitted to trading (or, if the day of determination is not a Business
Day, the last preceding Business Day) and (ii) if the Shares are not so listed
or admitted to trading or if the last reported sale price is not obtainable
(even if the Shares are listed or admitted to trading on such market ), the
average of the bid prices for the Shares obtained

 

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from as many dealers in the Shares (which may include Dealer or its affiliates),
but not exceeding three, as shall furnish bid prices available to Issuer.
     “Collateral” means any Cash or Non-Cash Collateral, including any proceeds
thereof.
     “Collateral Account” means the securities account of the Collateral Agent
maintained on the books of Credit Suisse Securities (USA) LLC, as securities
intermediary, and designated “Credit Suisse Securities (USA) LLC, as Collateral
Agent of Montpelier Re Holdings Ltd., as pledgee of Credit Suisse International,
as Dealer.”
     “Collateral Agent” means Credit Suisse Securities (USA) LLC, in its
capacity as collateral agent for Issuer hereunder, or any successor thereto
under Section 18.
     “Collateral Requirement” means, at any time, the greater of (i) the
Outstanding Market Value minus the sum of (A) the Offset Amount and (B) the
Payment Amount and (ii) zero.
     “Confirmations” mean the two letter agreements each dated as of May 31,
2006 between Issuer and Dealer, each relating to a Share Forward Transaction for
which the initial, aggregate number of Shares underlying such Share Forward
Transaction is 7,774,800 and 7,920,000, respectively (including all provisions
incorporated therein) (and each such letter agreement, a “Confirmation”).
     “Cutoff Time” shall mean 10:00 a.m. in the jurisdiction of the Clearing
Organization, or such other time on a Business Day as shall be agreed by the
parties.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “FHLMC Certificates” means single-class mortgage participation certificates
in book-entry form backed by single-family residential mortgage loans, the full
and timely payment of interest at the applicable certificate rate and the
ultimate collection of principal of which are guaranteed by the Federal Home
Loan Mortgage Corporation (excluding Real Estate Mortgage Investment Conduit
(“REMIC”) or other multi-class pass-through certificates, pass-through
certificates backed by adjustable rate mortgages and securities paying interest
or principal only).
     “FNMA Certificates” means single-class mortgage pass-through certificates
in book-entry form backed by single-family residential mortgage loans, the full
and timely payment of interest at the applicable certificate rate and the
ultimate collection of principal of which are guaranteed by the Federal

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National Mortgage Association (excluding REMIC or other multi-class pass-through
certificates, pass-through certificates backed by adjustable rate mortgages and
securities paying interest or principal only).
     “GNMA Certificates” means single-class fully modified pass-through
certificates in book-entry form backed by single-family residential mortgage
loans, the full and timely payment of principal and interest of which is
guaranteed by the Government National Mortgage Association (excluding REMIC or
other multi-class pass-through certificates, pass-through certificates backed by
adjustable rate mortgages and securities paying interest or principal only).
     “Initial Issuance Date” means June 6, 2006.
     “Issued Shares” means the Shares issued to Dealer pursuant to and in
accordance with Subsections (a) and (d) of Section 2.
     “Issuance Date” means each date Shares are issued to Dealer pursuant to and
in accordance with Subsections (a) and (d) of Section 2.
     “Market Value” on any day means (i) with respect to the Shares, the most
recent Closing Price of the Shares prior to such day and (ii) with respect to
any Collateral that is (a) Cash, the face amount thereof, (b) a letter of
credit, the undrawn amount thereof and (c) any other security or property, the
market value thereof, as determined by the Collateral Agent, in accordance with
market practice for such securities or property, based on the price for such
security or property as of the most recent close of trading obtained from a
generally recognized source or the closing bid quotation at the most recent
close of trading obtained from such source, plus accrued interest to the extent
not included therein, unless market practice with respect to the valuation of
such securities or property in connection is to the contrary; provided that with
respect to Collateral consisting of (i) Treasuries and Mortgage-Backed
Securities with a maturity of at least one year but less than five years, such
Market Value shall be multiplied by 98%, (ii) Treasuries and Mortgage-Backed
Securities with a maturity of at least five years but less than ten years, such
Market Value shall be multiplied by 97%, and (iii) Treasuries and
Mortgage-Backed Securities with a maturity of at least five years, such Market
Value shall be multiplied by 95%.
     “Maximum Number of Outstanding Issued Shares” means 15,694,800; provided
that the Maximum Number of Outstanding Shares shall be increased by the sum of
(x) number of Option Hedge Shares (as such term is defined in the Underwriting
Agreement) purchased by the Underwriter (as such term is defined in the
Underwriting Agreement) pursuant to Section 2 of the Underwriting Agreement, and
(y) the number of additional Additional Shares (as such term is defined in the
Underwriting Agreement) corresponding to such number of Option Hedge Shares
(such number of Additional Shares calculated based on Dealer’s

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“delta” hedge ratio with respect to the Confirmations as of the Trade Date (as
such term is defined in the Confirmations)). If a Potential Adjustment Event or
Extraordinary Event (each as defined in the Confirmations) occurs, the Maximum
Number of Outstanding Issued Shares shall be adjusted in a manner consistent
with any adjustments thereto under the Confirmations.
     “Mortgage-Backed Securities” means FHLMC Certificates, FNMA Certificates or
GNMA Certificates, but excluding zero-coupon securities.
     “Non-Cash Collateral” means (i) any evidence of indebtedness issued, or
directly and fully guaranteed or insured, by the United States of America or any
agency or instrumentality thereof, including Treasuries and Mortgage-Backed
Securities; (ii) any deposits, certificates of deposit or acceptances of any
institution which is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500 million at the
time of deposit (and which may include the Collateral Agent or any affiliate of
the Collateral Agent so long as the Collateral Agent is other than Dealer or an
affiliate of Dealer); (iii) any marketable obligations of any Person that are
fully and unconditionally guaranteed by a bank referred to in clause (ii);
(iv) any repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or issued by any agency thereof and backed as to timely
payment by the full faith and credit of the United States of America;
(v) commercial paper of any corporation incorporated under the laws of the
United States or any State thereof that is rated “investment grade” A-1 by
Standard & Poor’s Rating Group, a division of McGraw Hill Inc., or any successor
thereto, or P-1 by Moody’s Investors Services, Inc., or any successor thereto;
(vi) any money market funds (including, but not limited to, money market funds
managed by the Collateral Agent or an affiliate of the Collateral Agent)
registered under the Investment Company Act of 1940, as amended; (vii) any
letter of credit issued by a bank referred to in clause (ii); and (viii) all
proceeds of the foregoing; provided that in no event shall Non-Cash Collateral
include “margin stock” as defined by Regulation U of the Board of Governors of
the Federal Reserve System.
     “Number of Outstanding Issued Shares” means, at any time, the number of
Issued Shares, less the number of Issued Shares (or other Shares), if any,
tendered by Dealer to Issuer for repurchase for cancellation for USD0.01
pursuant to this Agreement. Notwithstanding anything herein to the contrary, in
no event shall the Number of Outstanding Issued Shares at any time exceed the
Maximum Number of Outstanding Issued Shares at such time. If a Potential
Adjustment Event or Extraordinary Event (each as defined in the Confirmations)
occurs, the Number of Outstanding Issued Shares shall be adjusted in a manner
consistent with any adjustments thereto under the Confirmations.

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     “Offset Amount” means, at any time, the sum of (i) the aggregate amount of
the Prepayment Amounts that Issuer could then receive in respect of Components
of the Transactions for which no Prepayment Date has then yet occurred under the
Confirmations (or for which a Prepayment Date and subsequent Repayment Date has
occurred) and (ii) the excess over zero, if any, of the Forward Cash Settlement
Amount that would apply if the Valuation Date for all Components of the
Transactions occurred at such time (for the avoidance of doubt, determined
taking into account whether a Prepayment Date had occurred prior to such time)
(all capitalized terms used in this definition and not otherwise defined in this
Agreement having the meanings set forth in the Confirmations).
     “Outstanding Market Value” means, at any time, the aggregate Market Value
of a number of Shares equal to the Number of Outstanding Issued Shares.
     “Person” means an individual, a company, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
     “Shares” shall have the meaning set forth in the Confirmations.
     “Securities Intermediary” means a “securities intermediary” as defined by
Section 8-102(a)(14) of the UCC.
     “Treasuries” means negotiable debt obligations issued by the U.S. Treasury
Department.
     “UCC” means the Uniform Commercial Code as in effect in the State of New
York on the date hereof and as it may be amended from time to time.
     “Underwriting Agreement” means the Underwriting Agreement dated as of the
date hereof among Issuer, Dealer and Credit Suisse Securities (USA) LLC.
          Section 2 . Issuance Of Shares; Tender of Issued Shares For Repurchase
for Cancellation; Payment for Issued Shares
     (a) Subject to the terms and conditions of this Agreement, Issuer shall
issue to Dealer on the Initial Issuance Date 7,800,000 Shares. In addition,
Issuer may, in its discretion, upon request from Dealer, issue to Dealer such
number of additional Shares in accordance with subsection (d) hereof, on such
Issuance Date, as specified in such request, subject to the Maximum Number of
Outstanding Shares.
     (b) Notwithstanding anything to the contrary in this Agreement, Dealer
shall not be permitted to receive any Shares hereunder at any time to the extent
that Dealer determines that any receipt of such Shares shall cause Dealer’s
ultimate parent entity to become, directly or indirectly, a “beneficial owner”
(within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations

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promulgated thereunder) of more than 9% of all the Shares of Issuer outstanding
at such time. If any issuance owed to Dealer hereunder is not made, in whole or
in part, as a result of this provision, Issuer’s obligation to make such
issuance shall not be extinguished and Issuer shall make such issuance as
promptly as practicable after, but in no event later than one Business Day
after, Dealer gives notice to Issuer that such issuance would not result in
Dealer’s ultimate parent entity directly or indirectly so beneficially owning in
excess of 9% of all the Shares of Issuer outstanding at such time.
     (c) Issuer shall issue the Issued Shares to Dealer at or before the Cutoff
Time on any Issuance Date. Issuance of the Issued Shares to Dealer shall be made
in the manner set forth under Section 12 below.
     (d) Dealer shall pay to Issuer 1/6 cent per Issued Share (the “Payment
Amount”). The Payment Amount shall be paid by Dealer on or before the time of
issuance of the Issued Shares pursuant to Section 2(c) on a
delivery-versus-payment basis through the facilities of the Clearing
Organization.
          Section 3 . Collateral.
     (a) Unless otherwise agreed by Issuer and Dealer, Dealer shall, prior to
the issuance of the Issued Shares to Dealer, but in no case later than the close
of business on the applicable Issuance Date, transfer to the Collateral Agent,
for deposit to the Collateral Account, Collateral such that the aggregate Market
Value of all Collateral will be at least equal to the Collateral Requirement on
such Issuance Date.
     (b) Any Collateral transferred by Dealer to the Collateral Agent hereunder
shall be security for Dealer’s obligations hereunder. Dealer hereby pledges
with, assigns to, and grants the Collateral Agent for the benefit of Issuer a
continuing first priority security interest in, and a lien upon, the Collateral
so transferred, which shall attach upon the issuance of the Issued Shares by
Issuer to Dealer and which shall cease upon the transfer of any such Collateral
to Dealer in accordance with the terms of this Agreement. In addition to the
rights and remedies given to the Collateral Agent hereunder, the Collateral
Agent may exercise on behalf of Issuer all the rights and remedies of a secured
party under the UCC. Notwithstanding anything to the contrary herein, Issuer may
not use or invest the Collateral and the Collateral Agent shall take no
instruction from Issuer regarding the use or investment of Collateral.
     (c) Following the repurchase for cancellation by Issuer of the Issued
Shares (or other Shares) pursuant to Section 5, the Collateral Agent shall
release to Dealer an amount of Collateral selected by Dealer such that
immediately following such release of Collateral, the Market Value of the
Collateral will be at least equal to the Collateral Requirement. Such release of
Collateral shall be made no later

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than the Cutoff Time on the day the Issued Shares (or other Shares) are
repurchased for cancellation, or if such day is not a day on which a transfer of
such Collateral may be effected under Section 12, or if the repurchase for
cancellation of Issued Shares (or other Shares) from Dealer by Issuer occurs
after the Cutoff Time on such day, then in each case the next day on which such
a release or repurchase for cancellation (as applicable) may be effected.
     (d) If Dealer transfers Collateral to the Collateral Agent, as provided in
this Section 3, and pays the Payment Amount, and Issuer does not issue the
Issued Shares to Dealer on the Initial Issuance Date, Dealer shall have the
absolute right to the return of the Collateral and the Payment Amount.
     (e) Dealer may, upon notice to Issuer and the Collateral Agent, substitute
Collateral for Collateral securing the Issued Shares; provided that such
substituted Collateral shall have a Market Value such that the aggregate Market
Value of such substituted Collateral, together with all other Collateral, shall
equal or exceed the Collateral Requirement as of the date of such substitution.
     (f) Any Collateral deposited in the Collateral Account shall be segregated
from all other assets and property of the Collateral Agent, which such
segregation may be accomplished by appropriate identification on the books and
records of the Collateral Agent, as Securities Intermediary. If at any time the
Securities Intermediary for the Collateral Account is not the Collateral Agent,
such Securities Intermediary shall acknowledge that the Collateral Account is
maintained for the Collateral Agent and undertake to treat the Collateral Agent
as entitled to exercise the rights that comprise the Collateral credited to the
Collateral Account.
     (g) Each of the parties to this Agreement hereby agree that Cash and each
item within the definition of Non-Cash Collateral shall be treated as a
“financial asset” as defined by Section 8-102(a)(9) of the UCC.
          Section 4 . Mark To Market.
     (a) If at the close of trading on any Business Day the aggregate Market
Value of all Collateral shall be less than the Collateral Requirement (a
“Collateral Deficit”), Issuer may, by notice to Dealer and Collateral Agent,
demand that Dealer transfer to Collateral Agent, for deposit to the Collateral
Account, no later than the following Business Day, additional Collateral so that
the Market Value of such additional Collateral, when added to the Market Value
of all other Collateral, shall equal or exceed the Collateral Requirement on
such Business Day of determination.
     (b) If at the close of trading on any Business Day the aggregate Market
Value of all Collateral shall be greater than the Collateral Requirement (a
“Collateral Excess”), Dealer may, by notice to Issuer and Collateral Agent,

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demand that Collateral Agent transfer to Dealer such amount of the Collateral
selected by Dealer so that the Market Value of the Collateral, after deduction
of such amounts, shall thereupon be at least equal to the Collateral Requirement
on such Business Day of determination.
     (c) Notwithstanding the foregoing, the respective rights of Issuer and
Dealer under Section 4(a) and Section 4(b) may be exercised only where a
Collateral Excess or Collateral Deficit exceeds 2% of the Outstanding Market
Value of the Issued Shares.
          Section 5 . Repurchase for Cancellation of Issued Shares by Issuer.
     (a) Subject to compliance with applicable law, Issuer may repurchase for
cancellation from Dealer any or all of the Issued Shares (or a number of other
Shares equal to or less than the Number of Outstanding Issued Shares) on any
Business Day by giving three Business Days written notice to Dealer for USD0.01
payable in respect thereof by Issuer to Dealer. In addition, if on any day
Issuer is required to issue Shares to Dealer pursuant to any of the
Confirmations, then on the date of such issuance, Issuer shall, subject to
compliance with applicable law, repurchase for cancellation for USD0.01 from
Dealer, and Dealer shall tender for repurchase for cancellation to Issuer, a
number of Shares equal to the number of Shares so issued pursuant to such
Confirmation.
     (b) If Dealer is required to tender to Issuer for repurchase for
cancellation Issued Shares (or other Shares) upon the occurrence of a Default as
set forth in Section 10, the Issued Shares (or other Shares) shall, subject to
compliance with applicable law, be repurchased for cancellation by Issuer from
Dealer for USD0.01 payable in respect thereof by Issuer to Dealer, no later than
the third Business Day following the date of occurrence of the relevant event
described in Section 10.
     (c) Dealer shall tender the Issued Shares (or other Shares) before the
Cutoff Time on the day such repurchase for cancellation for USD0.01 is required,
subject to compliance with applicable law, to be made. Tender of Issued Shares
(or other Shares) to Issuer shall be made in the manner set forth under
Section 12 below.
     (d) Subject to compliance with applicable law, Dealer shall be entitled to
require Issuer to repurchase for cancellation for USD0.01 any or all of the
Issued Shares (or a number of Shares equal to or less than the Number of
Outstanding Shares) on any Business Day.
     (e) Notwithstanding the foregoing, if Dealer is unable, after using
commercially reasonable efforts, to borrow or purchase the Shares that Dealer is
required to tender for repurchase for cancellation to Issuer pursuant to clause
(a) above or upon the occurrence of a Default as set forth in Section 10 in
compliance

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with applicable legal and regulatory requirements, including, without
limitation, requirements under Rule 10b-18 under the Exchange Act, as if Dealer
were Issuer, Dealer and Issuer agree to negotiate in good faith to allow Dealer
to delay tender for repurchase for cancellation of some or all of the Shares
required to be tendered for repurchase for cancellation by Dealer so that Dealer
could effect purchases of such Shares in a manner that would be in compliance
with such requirements.
          Section 6 . Distributions.
     (a) If at any time Issuer pays a cash dividend or makes a cash distribution
in respect of the Shares (in liquidation or otherwise), Dealer shall pay to
Issuer, within one Business Day after the payment of such dividend or
distribution, an amount in cash equal to the product of (i) the amount per Share
of such dividend or distribution and (ii) the Number of Outstanding Issued
Shares.
     (b) If at any time Issuer makes a distribution in respect of the Shares (in
liquidation or otherwise) in property or securities, including any options,
warrants, rights or privileges in respect of securities (other than a
distribution of Shares, but including any options, warrants, rights or
privileges exercisable for, convertible into or exchangeable for Shares) (a
“Non-Cash Distribution”), Dealer shall deliver to Issuer (whether or not Dealer
is a holder of any or all of the Issued Shares) in kind, within one Business Day
after the date of such Non-Cash Distribution, the property or securities
distributed in an amount equal to the product of (i) the amount per Share of
such Non-Cash Distribution and (ii) the Number of Outstanding Issued Shares.
     (c) Any interest, cash distribution or cash dividend made on or in respect
of any Collateral hereunder, shall, subject to Section 6(e), be delivered by the
Collateral Agent to Dealer, on the date such interest, cash distribution or cash
dividend is received by the Collateral Agent.
     (d) Any non-cash distributions or dividend made on or in respect of any
Collateral hereunder shall, subject to Section 6(e) below, be delivered by the
Collateral Agent to Dealer on the date such non-cash distribution or dividend is
received by the Collateral Agent.
     (e) Notwithstanding the provisions of paragraph (c) or (d) of this
Section 6 if a transfer of such cash or other property to Dealer by the
Collateral Agent as contemplated by either of those paragraphs would give rise
to a Collateral Deficit, the Collateral Agent shall (only to the extent needed
to avoid any such Collateral Deficit) not make such transfer of cash or other
property in accordance with this Section 6, but shall in lieu of such transfer
immediately credit the amounts that would have been transferable under this
Section 6 to the Collateral Account.

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     (f) Issuer represents to Dealer that, subject to notice otherwise as set
forth in the next sentence, any distributions paid on the Shares, to the extent
such distributions constitute dividends for U.S. federal income tax purposes,
will qualify as foreign source dividends for U.S. federal income tax purposes
within the meaning of Section 862 of the Internal Revenue Code. If, at any time
during a period in which this Agreement is in effect, such dividends would not
qualify as foreign source dividends, Issuer shall notify Dealer of such change
in facts as soon as practicable.
     (g) Issuer acknowledges that Dealer intends to rely upon the representation
in clause (f) in determining the extent, if any, to which Dealer is obligated to
make any deduction or withholding of present or future taxes, levies, imposts,
duties, charges, assessments or fees of any nature (including interest,
penalties and additions thereto) that are imposed by any government or other
taxing authority (“Taxes”) with respect to any payment by Dealer under this
Agreement. On the basis of such reliance and assuming no notice is made pursuant
to the second sentence of clause (f), Dealer will make each payment described in
clauses (a) or (b) without withholding or deduction for or on account of any
Taxes. The previous sentence shall not apply if, at any time during a period in
which this Agreement is in effect, Dealer concludes in its reasonable judgment
that such withholding or deduction is necessary or appropriate to protect Dealer
from potential withholding tax liability. In that case, Dealer shall notify
Issuer of its intent to make such withholding or deduction as soon as
practicable. Dealer shall have no obligation to pay any additional amounts in
respect of such withholding or deduction to Issuer.
          Section 7 . Rights in Respect of Issued Shares.
     (a) Subject to the terms of this Agreement, Dealer shall have all of the
incidents of ownership in respect of all Issued Shares, including the right to
transfer the Issued Shares to others.
          Section 8 . Representations and Warranties.
     (a) Each of Dealer and Issuer represents and warrants to the other that:
     (i) it has full power to execute and deliver this Agreement, to enter into
the transactions contemplated hereby and to perform its obligations hereunder;
     (ii) it has taken all necessary action to authorize such execution,
delivery and performance;
     (iii) this Agreement constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms; and

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     (iv) the execution, delivery and performance of this Agreement does not and
will not violate, contravene, or constitute a default under, (A) its certificate
of incorporation, bylaws or other governing documents, (B) any laws, rules or
regulations of any governmental authority to which it is subject, (C) any
contracts, agreements or instrument to which it is a party or (D) any judgment,
injunction, order or decree by which it is bound.
     (b) Issuer represents and warrants to Dealer, as of the date hereof and as
of each Issuance Date, that the Issued Shares have been duly authorized and,
upon the issuance of the Issued Shares and delivery of a certificate therefor
(or a certified copy of the Share register showing the relevant Share entry) to
Dealer or to the order of Dealer in accordance with the terms and conditions
hereof, and subject to the contemporaneous or prior receipt of the Payment
Amount by Issuer, will be validly issued, fully paid and nonassessable (which
term means that no further sums are required to be paid by the holders thereof
in connection with the issue of such Shares); and the shareholders of Issuer
have no preemptive rights with respect to the Issued Shares.
     (c) Issuer represents and warrants to Dealer, as of the date hereof and as
of each Issuance Date, that the Shares are listed on the New York Stock Exchange
(the “Stock Exchange”). Issuer represents and warrants to Dealer, as of each
Issuance Date, that the Issued Shares have been approved for listing on the
Stock Exchange, subject to official notice of issuance.
     (d) Dealer represents to Issuer that it has, or at the time of transfer to
the Collateral Agent shall have, the right to grant to the Collateral Agent, for
the benefit of Issuer, and that the Collateral Agent, for the benefit of Issuer,
shall acquire, a continuing first priority security interest in the Collateral.
     (e) The representations and warranties of Dealer and Issuer under this
Section 8 shall remain in full force and effect at all times during the term of
this Agreement and shall survive the termination for any reason of this
Agreement.
     (f) Issuer represents and warrants to Dealer, as of the date hereof and as
of each Issuance Date, that it is solvent and able to pay its debts as they come
due, with assets having a fair value greater than liabilities and with capital
sufficient to carry on the business in which it engages through its wholly-owned
operating subsidiary, Montpelier Reinsurance Ltd.
     (g) The Collateral Agent represents and warrants to Issuer that:
     (i) The Collateral Agent is a limited liability company, duly organized,
validly existing and in good standing under the laws of Delaware, and has full
power to execute and deliver this Agreement, to

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enter into the transactions contemplated hereby and to perform its obligations
hereunder.
     (ii) The Calculation Agent has taken all necessary action to authorize such
execution, delivery and performance.
     (iii) This Agreement constitutes a legal, valid and binding obligation of
the Collateral Agent enforceable against the Collateral Agent in accordance with
its terms.
     (iv) The Collateral Agent has not and will not enter into any agreement
pursuant to which any Person other than Issuer or the Collateral Agent has or
will have “control” (within the meaning of Section 8-106 of the UCC) with
respect to the Collateral.
     (v) The Collateral Agent hereby agrees that all liens, pledges and other
security interests of any kind or nature held by it (other than liens, pledges
and security interests arising hereunder) in any of the Collateral securing any
obligation to the Collateral Agent (either in such capacity or in any other
capacity) (collectively, “Other Liens”) shall be subordinate and junior to the
liens, pledges and security interests in the Collateral arising hereunder and
that the Collateral Agent will take no action to enforce any Other Liens so long
as any obligation under the Confirmations or hereunder (whether or not then due)
should remain unsatisfied.
          Section 9 . Covenants. Dealer covenants and agrees with Issuer that
all Issued Shares will be used solely for the purpose of settling sales of Hedge
Shares or Additional Shares (each as defined in the Underwriting Agreement)
pursuant to the terms of the Underwriting Agreement or closing out open Share
borrowings created in the course of Dealer’s hedging activities related to its
exposure under the Confirmations.
          Section 10 . Events of Default.
     (a) If either of the following events occur (each, a “Default”), then,
subject to compliance with applicable law, Dealer shall be required to tender
all of the Issued Shares (or a number of other Shares equal to the Number of
Outstanding Issued Shares) to Issuer for repurchase for cancellation, subject to
compliance with applicable law, for USD0.01, as provided in Section 5(b),
without any requirement that Issuer give any notice or take any other action.
     (i) the filing by or on behalf of Dealer of a voluntary petition or an
answer seeking reorganization, arrangement, readjustment of its debts or for any
other relief under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution,

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winding-up or liquidation or similar act or law, of any state, federal or other
applicable foreign jurisdictions, now or hereafter existing (“Bankruptcy Law”),
or any action by Dealer for, or consent or acquiescence to, the appointment of a
receiver trustee or other custodian of Dealer, or of all or a substantial part
of its property; or the making by Dealer of a general assignment for the benefit
of creditors; or the admission by Dealer in writing of its inability to pay its
debts as they become due; or
     (ii) the filing of any involuntary petition against Dealer in bankruptcy or
seeking reorganization, arrangement, readjustment of its debts or for any other
relief under any Bankruptcy Law and an order for relief by a court having
jurisdiction in the premises shall have been issued or entered therein; or any
other similar relief shall be granted under any applicable federal or state law
or law of any other applicable foreign jurisdictions; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee or other officer having similar powers over
Dealer or over all or a part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
Dealer or of all or a substantial part of its property; or the issuance of a
warrant of attachment, execution or similar process against any substantial part
of the property of Dealer; and continuance of any such event for 15 consecutive
calendar days unless dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged.
          Section 11 . Issuer’s Remedies.
     (a) Notwithstanding anything to the contrary herein, if Dealer is required
to tender Issued Shares (or other Shares) to Issuer for repurchase, subject to
compliance with applicable law, for cancellation for USD0.01 pursuant to Section
5(a) or Section 10 and, at the time such requirement arises, the purchase of
Shares in an amount equal to the number of Issued Shares (or other Shares) so
required to be tendered shall (i) be prohibited by any law, rules or regulation
of any governmental authority to which it is or would be subject, (ii) violate,
or would upon such purchase likely violate, any order or prohibition of any
court, tribunal or other governmental authority or (iii) require the prior
consent of any court, tribunal or governmental authority prior to any such
repurchase (each of (i), (ii) and (iii), a (“Legal Obstacle”), then, in each
case, Dealer shall immediately notify Issuer of the Legal Obstacle and the basis
therefor, whereupon Dealer’s obligations under Section 5(a) or Section 10 shall
be suspended until such time as no Legal Obstacle with respect to such
obligations shall exist (a “Repurchase Suspension”). Upon notification of a
Repurchase Suspension and for so long as the Repurchase Suspension shall
continue, Issuer shall have the right, exercisable in its sole discretion, to
direct the Collateral Agent to, and the Collateral Agent

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upon receipt of the written request of Issuer (with a copy to Dealer) shall,
release to Issuer an amount of Collateral with a Market Value equal to the
Market Value of all (or such fewer number as Issuer may specify) of the Issued
Shares (or other Shares) that are the subject of the Repurchase Suspension,
whereupon Dealer’s obligation to tender the specified number of Issued Shares
(or other Shares) to Issuer shall be automatically extinguished. If any
Repurchase Suspension continues for more than five Business Days, then on the
fifth such Business Day Issuer shall have the right, exercisable in its sole
discretion, to require Dealer to pay to Issuer, no later than one Business Day
following notice from Issuer, an amount in Cash equal to the aggregate Market
Value as of the date of such notice and the number of Shares otherwise required
to be tendered, whereupon Dealer’s obligation to tender the specified number of
Shares to Issuer for repurchase for cancellation shall be automatically
extinguished.
     (b) If Dealer shall fail to tender Issued Shares (or other Shares) to
Issuer pursuant to Section 5 or Section 10 when due, then, in addition to any
other remedies available to Issuer under this Agreement or under applicable law,
Issuer shall have the right (without further notice to Dealer) to (i) subject to
compliance with applicable law, repurchase for cancellation for USD0.01 a number
of Shares equal to the number of Shares otherwise required to be tendered
(“Replacement Shares”) in the principal market for such securities in a
commercially reasonable manner, (ii) sell any Collateral in the principal market
for such Collateral in a commercially reasonable manner and (iii) apply and set
off the Collateral and any proceeds thereof against the payment of the purchase
price for such Replacement Shares and any amounts due to Issuer under this
Agreement. To the extent Issuer shall exercise such right, Dealer’s obligation
to tender a like amount of Issued Shares (or other Shares) to Issuer for
repurchase for cancellation for USD0.01 shall terminate and Dealer shall be
liable to Issuer for the repurchase price of Replacement Shares (plus all other
amounts, if any, due to Issuer hereunder). In the event that the repurchase
price of Replacement Shares (plus all other amounts, if any, due to Issuer
hereunder) exceeds the amount of the Collateral, Dealer shall be liable to
Issuer for the amount of such excess. The repurchase price of Replacement Shares
purchased under this Section 11 shall include, and the proceeds of any sale of
Collateral shall be determined after deduction of, broker’s fees and commissions
and all other reasonable costs, fees and expenses related to such repurchase and
cancellation. In the event Issuer exercises its rights under this Section 11(b),
Issuer may elect in its sole discretion, in lieu of repurchasing all or a
portion of the Replacement Shares or selling all or a portion of the Collateral,
to be deemed to have made, such repurchase of Replacement Shares or such sale of
Collateral, as the case may be, for an amount equal to the Closing Price of the
Shares on the date Issuer elects to exercise this remedy. Upon the satisfaction
of all Dealer’s obligations hereunder, any remaining Collateral shall be
returned to Dealer.

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          Section 12 . Issuance of Shares; Transfer of Cash and Securities
     (a) All issuances of Issued Shares to Dealer or repurchases for
cancellation of Issued Shares by Issuer from Dealer hereunder shall be made by
the crediting by a Clearing Organization of such financial assets to the
transferee’s “securities account” (within the meaning of Section 8-501 of the
UCC) maintained with such Clearing Organization (or a participant therein). All
transfers of Collateral to Collateral Agent by Dealer shall be made by crediting
the Collateral Account. All transfers of Collateral to Issuer by Collateral
Agent shall be made in the manner directed by Issuer. In every transfer of
“financial assets” (within the meaning of Section 8-102 of the UCC) hereunder,
the transferor shall take all steps necessary (a) to effect a delivery to the
transferee under Section 8-301 of the UCC, or to cause the creation of a
security entitlement in favor of the transferee under Section 8-501 of the UCC,
(b) to enable the transferee to obtain “control” (within the meaning of
Section 8-106 of the UCC), and (c) to provide the transferee with comparable
rights under any applicable foreign law or regulation.
     (b) All transfers of cash hereunder to Dealer or Issuer shall be by wire
transfer in immediately available, freely transferable funds.
     (c) A transfer of securities or cash may be effected under this Section 12
on any day except (1) a day on which the transferee is closed for business at
its address set forth in Section 15 or (2) a day on which a Clearing
Organization or wire transfer system is closed, if the facilities of such
Clearing Organization or wire transfer system are required to effect such
transfer.
          Section 13 . Indemnities.
     (a) Issuer hereby agrees to indemnify and hold harmless Dealer and its
affiliates and its former, present and future directors, officers, employees and
other agents and representatives from and against any and all liabilities,
judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties,
obligations and expenses incurred or suffered by any such person or entity
directly or indirectly arising from, by reason of, or in connection with,
(i) any breach by Issuer of any of its representations or warranties contained
in Section 8 or Section 6(f) or (ii) any breach by Issuer of any of its
covenants or agreements in this Agreement.
     (b) Dealer hereby agrees to indemnify and hold harmless Issuer and its
affiliates and its former, present and future directors, officers, employees and
other agents and representatives from and against any and all liabilities,
judgments, claims, settlements, losses, damages, fees, liens, taxes, penalties,
obligations and expenses incurred or suffered by any such person or entity
directly or indirectly arising from, by reason of, or in connection with (i) any
breach by Dealer of any of its representations or warranties contained in
Section 8 or (ii) any breach by Dealer of any of its covenants or agreements in
this Agreement.

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     (c) In case any claim or litigation which might give rise to any obligation
of a party under this Section 13 (each an “Indemnifying Party”) shall come to
the attention of the party seeking indemnification hereunder (the “Indemnified
Party”), the Indemnified Party shall promptly notify the Indemnifying Party in
writing of the existence and amount thereof; provided that the failure of the
Indemnified Party to give such notice shall not adversely affect the right of
the Indemnified Party to indemnification under this Agreement, except to the
extent the Indemnifying Party is materially prejudiced thereby. The Indemnifying
Party shall promptly notify the Indemnified Party in writing if it accepts such
claim or litigation as being within its indemnification obligations under this
Section 13. Such response shall be delivered no later than 30 days after the
initial notification from the Indemnified Party; provided that if the
Indemnifying Party reasonably cannot respond to such notice within 30 days, the
Indemnifying Party shall respond to the Indemnified Party as soon thereafter as
reasonably possible.
     (d) An Indemnifying Party shall be entitled to participate in, and, if
(i) in the judgment of the Indemnified Party such claim can properly be resolved
by money damages alone and the Indemnifying Party has the financial resources to
pay such damages and (ii) the Indemnifying Party admits in writing that this
indemnity fully covers the claim or litigation, the Indemnifying Party shall be
entitled to direct, the defense of any claim at its expense, but such defense
shall be conducted by legal counsel reasonably satisfactory to the Indemnified
Party. An Indemnified Party shall not make any settlement of any claim or
litigation described in clauses (i) and (ii) of the preceding sentence without
the written consent of the Indemnifying Party.
          Section 14 . Termination Of Agreement.
     (a) Unless otherwise agreed by Dealer and Issuer, the provisions of
Section 13 shall survive the termination of this Agreement.
          Section 15 . Notices.
     (a) All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when received.
     (b) All such notices and other communications shall be directed to the
following address:

     
(i)
  If to Dealer:
 
   
 
  One Cabot Square,
 
  London E14 4QJ England
 
  Attn: Kevin Studd, Managing Director—Legal Department
 
  Telephone: 44 20 7888 1605

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  Facsimile No.: 44 20 7888 4603
 
   
(ii)
  If to the Collateral Agent:
 
   
 
  Credit Suisse Securities (USA) LLC
 
  Eleven Madison Avenue, 9th Floor
 
  New York, NY 10010
 
  Attn: Senior Legal Officer
 
  Tel: (212) 538-2616
 
  Fax: (212) 325-8282
 
   
(iii)
  If to Issuer:
 
   
 
  Montpelier Re Holdings Ltd.
 
  Mintflower Place
 
  8 Par-La-Ville Road
 
  Hamilton HM 08
 
  Bermuda
 
  Attn: Kip Oberting
 
  Tel: (441) 278-5018
 
  Fax: (441) 296-5551

     (c) In the case of any party, at such other address as may be designated by
written notice to the other parties.
          Section 16 . Governing Law; Submission To Jurisdiction; Severability;
Assignment.
     (a) This Agreement and all disputes arising therefrom and related thereto
shall be governed by and construed in accordance with the laws of the State of
New York without reference to choice of law doctrine and each party hereto
submits to the exclusive jurisdiction of U.S. Federal and New York state courts
sitting in the Borough of Manhattan, New York City in connection with all
proceedings arising out of or relating to this Agreement.
     (b) To the extent permitted by law, the unenforceability or invalidity of
any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
     (c) The parties to this Agreement hereby irrevocably and unconditionally
waive any and all right to trial by jury in any legal proceeding arising out of
or related to this Agreement or the transactions contemplated hereby. Each party
(iv) certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party would not, in the
event of such a suit, action or proceeding, seek to enforce the foregoing waiver
and (v) acknowledges

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that it and the other party have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section.
     (d) This constitutes the entire agreement and understanding among the
parties with respect to the subject matter hereof and supersedes all oral
communications and prior writings with respect thereto.
     (e) The rights and duties of Dealer under this Agreement may not be
assigned or transferred by Dealer without the prior written consent of Issuer,
such consent not to be unreasonably withheld; provided that Dealer may assign or
transfer any of its rights or duties hereunder to Dealer’s ultimate parent
entity or any directly or indirectly wholly-owned subsidiary of Dealer’s
ultimate parent entity (a “Permitted Transferee”) without the prior written
consent of Issuer, so long as the senior unsecured debt rating (“Credit Rating”)
of such Permitted Transferee is equal to or greater than the Credit Rating of
Dealer, as specified by each of Standard and Poor’s Rating Services and Moody’s
Investor Service, Inc., at the time of such assignment or transfer; provided
further that a Permitted Transferee does not include (a) an entity that is a
“U.S. person” within the meaning of section 7701(a)(3) of the Internal Revenue
Code of 1986, as amended, (b) an entity that has any direct or indirect
shareholder in the Dealer group that is a U.S. person (as so defined), or (c) an
entity, if Dealer or its affiliates have granted any U.S. person (as so defined)
an option to buy 10 percent or more of the stock of such entity or any direct or
indirect shareholder in the Dealer group of such entity. If, subsequent to any
assignment or transfer pursuant to the first proviso to the immediately
preceding sentence, the Credit Rating of such Permitted Transferee falls below
that of Dealer, such Permitted Transferee shall further assign and transfer its
rights and duties under this Agreement to another Permitted Transferee with a
Credit Rating equal to or greater than the Credit Rating of Dealer within 30
calendar days.
     Section 17 . Counterparts. This Agreement may be executed in any number of
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same agreement.
          Section 18 . Collateral Agent.
     (a) Issuer hereby irrevocably appoints and authorizes the Collateral Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Collateral Agent by the terms hereof,
together with all such powers as are reasonably incidental thereto, and the
Collateral Agent accepts such appointment as provided herein.
     (b) If at any time while this Agreement is in effect (i) Credit Suisse
Securities (USA) LLC ceases to be a Securities Intermediary or (ii) Issuer shall
determine, in its sole discretion, that any of the relationships by or among the

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parties hereto are reasonably likely to prevent Issuer from acquiring, or
jeopardize the continuation of, Issuer’s continuing first priority security
interest in the Collateral as contemplated under Section 3(b), Issuer shall be
entitled to designate a bank or trust company reasonably satisfactory to Dealer
as a successor Collateral Agent. In the event of a designation of a successor
Collateral Agent, each of the parties to this Agreement agrees to take all such
actions as are reasonably necessary to effect the transfer of rights and
obligations of Credit Suisse Securities (USA) LLC as Collateral Agent hereunder
to such successor Collateral Agent, including the execution and delivery of
amendments to this Agreement as shall be necessary to effect such designation
and transfer.
          Section 19 . Set-off and Netting.
     (a) Issuer and Dealer shall be entitled to set off and net any obligation
of Issuer to issue Shares to Dealer under the Confirmations against any
obligation of Dealer to tender Shares to Issuer for repurchase for cancellation
for USD0.01 hereunder.
          Section 20 . Equity Rights.
     (a) Dealer acknowledges and agrees that this Agreement is not intended to
convey to Dealer rights with respect to the transaction contemplated hereby that
are senior to the claims of common shareholders in a winding up of Issuer;
provided, however, that nothing herein shall limit or shall be deemed to limit
Dealer’s right to pursue remedies in the event of a breach by Issuer of its
obligations and agreements with respect to this Agreement or the return of any
Collateral in accordance with the terms of this Agreement.

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

          MONTPELIER RE HOLDINGS LTD.    
 
       
By:
     /s/ Kernan V. Oberting                 Name: Kernan V. Oberting
  Title: Chief Financial Officer    
 
        CREDIT SUISSE INTERNATIONAL    
 
       
By:
    /s/ Edmond Curtin                 Name: Edmond Curtin       Title: Managing
Director    
 
       
By:
    /s/ David Bonham                 Name: David Bonham       Title: Director  
 
 
        CREDIT SUISSE SECURITIES (USA) LLC,
as Collateral Agent    
 
       
By:
    /s/ Marilyn Hirsch                 Name: Marilyn Hirsch       Title:
Managing Director