EX-10.1



 





Exhibit 10.1







CONFIRMATION




	 	 	 
	Date:

	 	May 31, 2006
	 
	 	 
	To:

	 	Montpelier Re Holdings Ltd.
	 

	 	Mintflower Place
	 

	 	8 Par-La-Ville Road
	 

	 	Hamilton HM 08
	 

	 	Bermuda
	Telefax No.:

	 	(441) 296-5551
	Attention:

	 	Kip Oberting
	 
	 	 
	From:

	 	Credit Suisse International
	 

	 	One Cabot Square
	 

	 	London E14 4QJ England
	 
	 	 
	 

	 	External ID:                      – Risk ID:





Dear Sir or Madam,



The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions
of the Transaction entered into between us on the Trade Date specified below (the “Transaction”).
This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.



In this Confirmation, “Credit Suisse” means Credit Suisse International and “Counterparty” means
Montpelier Re Holdings Ltd.





	1.	 	The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“2002 Definitions”), as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between
the 2002 Definitions and this Confirmation, this Confirmation will govern. The Transaction is
a Share Forward Transaction within the meaning set forth in the 2002 Definitions.
	 
	 	 	This Confirmation shall supplement, form a part of and be subject to an agreement (the
“Agreement”) in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) (the
“ISDA Form”), as published by the International Swaps and Derivatives Association, Inc., as
if Credit Suisse and Counterparty had executed the ISDA Form (without any Schedule thereto)
on the date hereof. All provisions contained in the Agreement are incorporated into and
shall govern this Confirmation except as expressly modified below. This Confirmation
evidences a complete and binding agreement between you and us as to the terms of the
Transaction and replaces any previous agreement between us with respect to the subject
matter hereof. This Confirmation shall be deemed to supplement, form part of and be subject
to the Agreement.
	 
	 	 	If there exists any ISDA Master Agreement between Credit Suisse and Counterparty or any
confirmation or other agreement between Credit Suisse and Counterparty pursuant to which an
ISDA Master Agreement is deemed to exist between Credit Suisse and Counterparty, then
notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or
agreement or any other agreement to which Credit Suisse and Counterparty are parties, the
Transaction shall not be considered a Transaction under, or otherwise governed by, such
existing or deemed ISDA Master Agreement.
	 
	2.	 	The terms of the particular Transaction to which this Confirmation relates are as follows:
	 
	 	 	General Terms:





	 	 	 
	Trade Date:

	 	May 31, 2006






 









 






	 	 	 
	Effective Date:

	 	June 6, 2006
	 
	 	 
	Seller:

	 	Counterparty
	 
	 	 
	Buyer:

	 	Credit Suisse
	 
	 	 
	Shares:

	 	The common shares, par value
1/6 cent per share, of
Counterparty (the “Issuer”) (Symbol: “MRH”).
	 
	 	 
	Components:

	 	The Transaction will be divided into
individual Components, each with the terms set
forth in this Confirmation, and, in
particular, with the Number of Shares and
Valuation Date set forth in this Confirmation.
The payments, issuances and tenders for
repurchase for cancellation to be made upon
settlement of the Transaction will be
determined separately for each Component as if
each Component were a separate Transaction
under the Agreement.
	 
	 	 
	Number of Shares:

	 	For each Component, as provided in Annex A to
this Confirmation; provided that the Number
of Shares for each Component shall be
increased by 49.5374% of (x) the sum of (1)
number of Option Hedge Shares (as such term is
defined in the Underwriting Agreement dated as
of the date hereof among Counterparty, Credit
Suisse and Credit Suisse Securities (USA) LLC
(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
(2) 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 Credit Suisse’s
“delta” hedge ratio as of the Trade Date),
divided by (y) twenty (such quotient subject
to rounding by the Calculation Agent to avoid
odd lots). For the avoidance of doubt, any
reference herein to “the Number of Shares”
without any reference to a particular
Component means the aggregate Number of Shares
for all Components.
	 
	 	 
	Forward Floor Price:

	 	USD11.75
	 
	 	 
	Forward Cap Price:

	 	USD18.465
	 
	 	 
	Prepayment:

	 	Applicable with respect to Funded Components
(as defined below); Not Applicable with
respect to Unfunded Components (as defined
below).
	 
	 	 
	 

	 	Seller may, at any time, upon no less than two
Scheduled Trading Days prior written notice to
Buyer, designate a Currency Business Day (the
“Prepayment Date”) occurring after the Trade
Date but prior to the Valuation Date for any
Component to receive from Buyer an amount
equal to the Prepayment Amount for such
Component. Such notice shall indicate the
Component(s) with respect to






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	 	which Seller is
designating a Prepayment Date.
	 
	 	 
	 

	 	For the avoidance of doubt, Seller may
designate a Prepayment Date for a Component
for which there has previously been both a
Prepayment Date and a Repayment Date.

	 
	 	 
	 

	 	With respect to a Funded Component for which
the Prepayment Date occurs prior to an
increase in the related Number of Shares
pursuant to the proviso in the definition
thereof, on the date, if any, that the
Underwriter (as such term is defined in the
Underwriting Agreement) exercises its option
to purchase Option Hedge Shares (as such term
is defined in the Underwriting Agreement)
pursuant Section 2 of the Underwriting
Agreement, Buyer shall be deemed to have
elected an additional Prepayment, calculated
with respect to a number of Shares equal to
the amount of such increase and with a
Prepayment Date being the date one Settlement
Cycle following the date on which the
Underwriter (as such term is defined in the
Underwriting Agreement) exercises such option.
	 
	 	 
	Prepayment Amount:

	 	For any Component, the product of (i) the
Number of Shares for such Component, and (ii)
the Present Value for such Component as of the
Prepayment Date of the Forward Floor Price.
	 
	 	 
	Present Value:

	 	With respect to any Component, the Present
Value of any amount as of any date shall be
the present value as of such date of a payment
of such amount on the scheduled Settlement
Date for such Component (assuming the
Valuation Date for such Component occurs on
the Scheduled Valuation Date for such
Component), calculated using a discount rate
equal to the Discount Rate as of the Scheduled
Trading Day immediately preceding such date,
assuming a tenor of the period of time from
and including such date to but excluding such
scheduled Settlement Date.
	 
	 	 
	Discount Rate:

	 	As of any date, an interpolated rate for the
relevant tenor specified in the definition of
“Present Value”, as determined by the
Calculation Agent by reference to the U.S.
dollar LIBOR swap curve as of such date as
displayed on Bloomberg page “USSW” (or, if
such page is not available or does not display
such swap curve, such other source as the
Calculation Agent determines). The Discount
Rate shall be applied on an actual/360 basis.
	 
	 	 
	Counterparty’s Right to Pay
Repayment Amounts:

	 	Seller may, at any time, upon no less than two
Scheduled Trading Days prior written notice to
Buyer, designate a Currency Business Day (the
“Repayment Date”) occurring after the
Prepayment Date for any Component but prior to
the Valuation Date for such Component to pay
to Buyer an amount equal to the Repayment
Amount for such Component. Such notice shall
indicate the Component(s) with respect to
which Seller is designating a Repayment






3









 






	 	 	 
	 

	 	Date.
	 
	 	 
	Repayment Amount:

	 	For any Component, the product of (i) the
Number of Shares for such Component, and (ii)
the Present Value for such Component as of the
Repayment Date of the Forward Floor Price.
	 
	 	 
	Funded Component:

	 	Any Component with respect to which a
Prepayment Date has occurred and with respect
to which a Repayment Date has not subsequently
occurred.
	 
	 	 
	Unfunded Component:

	 	Any Component that is not a Funded Component.
	 
	 	 
	Variable Obligation:

	 	Applicable
	 
	 	 
	Exchange:

	 	New York Stock Exchange
	 
	 	 
	Related Exchanges:

	 	All Exchanges
	 
	 	 
	Calculation Agent:

	 	Credit Suisse, which shall make all
calculations, adjustments and determinations
in a commercially reasonable manner. Upon
request by Counterparty, the Calculation Agent
shall provide Counterparty and Credit Suisse
with a schedule of all calculations,
adjustments and determinations in reasonable
detail and in a timely manner, and will use
reasonable efforts to consult with
Counterparty and Credit Suisse prior to making
calculations, adjustments and determinations
where reasonably practicable.





Valuation:



In respect of any Component:




	 	 	 
	Valuation Date:

	 	The Scheduled Valuation Date provided in Annex A
to this Confirmation (or, if such date is not a
Scheduled Trading Day, the next following
Scheduled Trading Day that is not already a
Valuation Date for another Component); provided
that if that date is a Disrupted Day, the
Valuation Date for such Component shall be the
first succeeding Scheduled Trading Day that is
not a Disrupted Day and is not or is not deemed
to be a Valuation Date in respect of any other
Component of the Transaction hereunder; and
provided further that if such Valuation Date has
not occurred pursuant to the preceding proviso as
of the Final Disruption Date, the Final
Disruption Date shall be the Valuation Date for
such Component (irrespective of whether such date
is a Valuation Date in respect of any other
Component for the Transaction) and,
notwithstanding anything to the contrary in this
Confirmation or the 2002 Definitions, the
Settlement Price for such Valuation Date shall be
the prevailing market value per Share on the
Final Disruption Date determined by the
Calculation Agent in a commercially reasonable
manner. Notwithstanding the foregoing and
anything to the contrary in the 2002 Definitions,
if a Market Disruption






4









 






	 	 	 
	 

	 	Event occurs on any
Valuation Date, the Calculation Agent may
determine that such Valuation Date is a Disrupted
Day only in part, in which case the Calculation
Agent shall make adjustments to the Number of
Shares for the relevant Component for which such
day shall be the Valuation Date and shall
designate the Scheduled Trading Day determined in
the manner described in the immediately preceding
sentence as the Valuation Date for the remaining
Number of Shares for such Component. Section 6.6
of the 2002 Definitions shall not apply to any
Valuation Date hereunder.
	 
	 	 
	Final Disruption Date:

	 	April 12, 2007
	 
	 	 
	Market Disruption Event:

	 	The third and fourth lines of Section 6.3(a) of
the 2002 Definitions are hereby amended by
deleting the words “during the one hour period
that ends at the relevant Valuation Time” and
replacing them with “at any time prior to the
relevant Valuation Time”.





Settlement Terms:



In respect of any Component:




	 	 	 
	Settlement Currency:

	 	USD
	 
	 	 
	Settlement Method Election:

	 	Applicable; provided that Section 7.1 of
the 2002 Definitions is hereby amended by
adding the phrase “Net Share Settlement
(in the case of Unfunded Components)”
after “Cash Settlement” in the sixth line
thereof; and provided further that Seller
may elect that more than one Settlement
Method shall apply to all Components; and
provided further that the same Settlement
Method or Methods shall apply to all
Components (except that if Seller elects
for Net Share Settlement to apply to any
portion of all the Components, Seller
shall be deemed to have elected for
Physical Settlement to apply to that
portion of any such Components that are
Funded Components).
	 
	 	 
	

	 	If Seller elects for more than one
Settlement Method to apply to all
Components, in the Settlement Method
notice delivered pursuant to Section 7.1
of the 2002 Definitions, Seller shall
specify, as a number of the aggregate
Number of Shares, the portion of all
Components to be settled by each
Settlement Method.
	 
	 	 
	 

	 	If Seller elects for more than one
Settlement Method to apply to all
Components, then each Component shall be
treated, for purposes of these Settlement
Terms, as if it were more than one
Component, each with a Number of Shares
equal to the applicable portion of the
Number of Shares for such Component and
with the Settlement Method as specified
in the Settlement Method described in the
immediately preceding sentence. For the
avoidance of






5









 






	 	 	 
	 

	 	doubt, the proportion of
each Component to which each Settlement
Method shall apply shall be approximately
equal.
	 
	 	 
	Default Settlement Method:

	 	Physical Settlement
	 
	 	 
	Electing Party:

	 	Counterparty
	 
	 	 
	Settlement Method Election Date:

	 	For all Components, the date that is two
Scheduled Trading Days prior to the
Scheduled Valuation Date for the first
Component.
	 
	 	 
	Settlement Date:

	 	In the case of Physical Settlement or Net
Share Settlement, the date that is one
Settlement Cycle immediately following
the Valuation Date.
	 
	 	 
	Settlement Price:

	 	Notwithstanding Section 7.3 of the 2002
Definitions, the Settlement Price will be
equal to the Rule 10b-18 volume-weighted
average price per Share on the Valuation
Date as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “MRH.N
<equity> AQR SEC” (or any successor
thereto).
	 
	 	 
	Net Share Settlement:

	 	If Net Share Settlement is applicable,
then, on the Settlement Date, if the Net
Share Amount is positive, Seller shall
issue to Buyer a number of Shares equal
to the Net Share Amount and Buyer shall
pay to Seller an amount equal to the
aggregate par value of such Shares, and,
if the Net Share Amount is negative,
Buyer shall tender for repurchase for
cancellation to Seller a number of Shares
equal to the absolute value of the Net
Share Amount and Seller shall pay to
buyer USD0.01. Any such issuance (or
tender for repurchase for cancellation)
will be made through the relevant
Clearance System to the account of Buyer
or Seller, as the case may be, specified
in this Confirmation. The provisions of
Sections 9.8, 9.9, 9.10, 9.11 (subject to
the provisions opposite the caption
“Representation and Agreement” below) and
9.12 of the 2002 Definitions will be
applicable, except that all references in
such provisions to “Physically-Settled”
shall be read to refer also to “Net Share
Settled.”
	 
	 	 
	Net Share Amount:

	 	The sum of (a) the Forward Cash
Settlement Amount determined as if Cash
Settlement were applicable (and
Prepayment were Not Applicable with
respect to such Component), and (b) the
Adjustment Amount, divided by the
Settlement Price. The “Adjustment
Amount” shall be equal to, if such
Forward Cash Settlement Amount is
positive, the aggregate par value of the
Net Share Amount, or, if such Forward
Cash Settlement Amount is negative,
USD0.01, multiplied by -1.
	 
	 	 
	Representation and Agreement:

	 	Notwithstanding Section 9.11 of the 2002
Definitions, the parties acknowledge that
(i) any Shares tendered by Credit Suisse
for repurchase for cancellation for
USD0.01 by Counterparty (including in
connection with Net Share






6









 






	 	 	 
	 

	 	Settlement)
will be subject to compliance with
applicable law and restrictions and
limitations arising from Counterparty’s
status under applicable securities laws,
and (ii) any Shares issued to Credit
Suisse in return for payment of at least
the par value thereof (whether in
connection with Physical Settlement or
Net Share Settlement) will be subject to
restrictions and limitations under
applicable securities laws, as described
in Section 4(c)(ii) below.





Share Adjustments:



In respect of any Component:




	 	 	 
	Method of Adjustment:

	 	Calculation Agent Adjustment. Notwithstanding the
foregoing, any cash dividend or distribution on
the Shares, the declaration and payment of which
shall be subject to compliance with Bermuda law,
whether or not extraordinary, shall be governed by
the provisions opposite the caption “Dividend
Adjustment” below and shall not be a “Potential
Adjustment Event” for purposes of Section 11.2 of
the 2002 Definitions.
	 
	 	 
	Dividend Adjustment:

	 	If at any time during the period from, but
excluding, the Trade Date to, and including, the
Valuation Date, an ex-dividend date for a cash
dividend or distribution occurs with respect to
the Shares (an “Ex-Dividend Date”) and that
dividend or distribution is greater than or less
than the Regular Dividend on a per Share basis,
then the Calculation Agent will adjust either the
Forward Floor Price or the Forward Cap Price or
both to preserve the fair value of the Transaction
to the parties after taking into account such
dividend or distribution (or, if such adjustment
would not so preserve such fair value, the
Calculation Agent may also adjust the Number of
Shares to so preserve such fair value). If no
Ex-Dividend Date occurs within any calendar
quarter (including, without limitation, because of
an inability to declare or pay dividends under
Bermuda law), Counterparty shall be deemed to have
paid a cash dividend in an amount of zero with an
Ex-Dividend Date occurring on the last Exchange
Business Day of such calendar quarter.
	 
	 	 
	Regular Dividend:

	 	USD0.075 for the first dividend or distribution on
the Shares for which the Ex-Dividend Date falls
within a regular quarterly dividend period of
Counterparty, and zero for any subsequent dividend
or distribution on the Shares for which the
ex-dividend date falls within the same regular
quarterly dividend period. Counterparty’s ability
to declare and pay dividends will, at all times,
be subject to compliance with Bermuda law.
	 
	 	 
	Excess Dividend Amount:

	 	For the avoidance of doubt, all references to the
Excess Dividend Amount shall be deleted from
Section 8.4(b) and 9.2(a)(iii) of the 2002
Definitions.






7









 





Extraordinary Events:




	 	 	 
	New Shares:

	 	In the definition of New Shares in Section 12.1(i) of
the 2002 Definitions, the text in clause (i) shall be
deleted in its entirety and replaced with “publicly
quoted, traded or listed on any of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ
National Market or the London Stock Exchange (or
their respective successors)”.
	 
	 	 
	Consequences of Merger Events:
	 	 
	 
	 	 
	     (a) Share-for-Share:

	 	Alternative Obligation; provided that if the relevant
New Shares are quoted, traded or listed on the London
Stock Exchange, the Calculation Agent shall be
permitted to make changes to the exercise,
settlement, payment or other terms of the Transaction
to preserve the fair value of the Transaction to the
parties after taking into account changes in currency
relevant to the Shares and any changes in the tax
position of Credit Suisse as a result of such change
in listing.
	 
	 	 
	     (b) Share-for Other:

	 	Cancellation and Payment, subject to Section 6(b).
	 
	 	 
	     (c) Share-for-Combined:

	 	Component Adjustment
	 
	 	 
	Tender Offer:

	 	Not applicable
	 
	 	 
	Composition of Combined Consideration:

	 	Not Applicable
	 
	 	 
	Nationalization, Insolvency or Delisting:

	 	Cancellation and Payment, subject to Section 6(b);
and provided that Section 12.6(a)(iii) of the 2002
Definitions is hereby amended by adding the words “on
the London Stock Exchange or” after the word
“re-quoted” in the fourth line thereof.
	 
	 	 
	 

	 	In addition to the provisions of Section 12.6(a)(iii)
of the 2002 Definitions, it will also constitute a
Delisting if the Shares are not immediately
re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market or the London Stock Exchange
(or their respective successors); if the Shares are
immediately re-listed, re-traded or re-quoted on any
such exchange or quotation system, such exchange or
quotation system shall be deemed to be the Exchange.
Notwithstanding the foregoing, if Shares are
re-listed, re-traded and re-quoted on the London
Stock Exchange, the Calculation Agent shall be
permitted to make changes to the exercise,
settlement, payment or other terms of the Transaction
to preserve the fair value of the Transaction to the
parties after taking into account changes in currency
relevant to the Shares and any changes in the tax
position of Credit Suisse arising as a result of such
occurrence.
	 
	 	 
	Determining Party:

	 	For all applicable Extraordinary Events, Credit Suisse






8









 




Additional Disruption Events:




	 	 	 
	Change in Law:

	 	Applicable; provided that (x) Section
12.9(a)(ii) of the 2002 Definitions is
hereby amended by replacing the phrase
“the interpretation” in the third line
thereof with the phrase “or public
announcement of the formal or informal
interpretation,” and (y) clause (Y) of
Section 12.9(a)(ii) of the 2002
Definitions is hereby deleted.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Insolvency Filing:

	 	Applicable
	 
	 	 
	Hedging Disruption:

	 	Not Applicable
	 
	 	 
	Loss of Stock Borrow:

	 	Applicable; provided that the phrase “at a
rate equal to or less than the Maximum
Stock Loan Rate” at the end of the
definition of Loss of Stock Borrow shall
be deleted in its entirety; and provided
further that Section 12.9(b)(iv) of the
2002 Definitions is hereby amended by
deleting the phrase “at a rate equal to or
less than the Maximum Stock Loan Rate” in
each of the fifth and the seventh lines
thereof.
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Applicable
	 
	 	 
	Initial Stock Loan Rate:

	 	Zero basis points.
	 
	 	 
	Hedging Party:

	 	For all applicable Additional Disruption
Events, Credit Suisse
	 
	 	 
	Determining Party:

	 	For all applicable Additional Disruption
Events, Credit Suisse





Non-Reliance:




	 	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable






3. Optional Early Termination or Settlement




          (a) At any time on or prior to the Valuation Date for any Component, Seller may elect, by
delivery of three Scheduled Trading Days prior written notice to Buyer, to terminate such
Component, in which case an Additional Termination Event shall be deemed to have occurred in
respect of which (1) Seller shall be the sole Affected Party and (2) such Component shall be the
sole Affected Transaction.




          (b) In addition, and without limiting paragraph (a) above, at any time on or prior to the
Valuation Date for any Component, Seller may elect, by delivery of three Scheduled Trading Days
prior written notice to Buyer, to accelerate the Valuation Date for such Component, in which case
the Calculation Agent shall adjust the applicable payment or issuance (or tender for repurchase for
cancellation) amount such that the net value


9









 







to the parties of the resulting settlement equals the net value that the parties would have
owed or been entitled to, as the case may be, had Seller elected to terminate such Component
pursuant to paragraph (a) above.




          (c) Seller may, prior to electing to terminate any Component pursuant to paragraph (a) above
or accelerate the Valuation Date for any Component pursuant to paragraph (b) above, request a
quotation from the Calculation Agent or Buyer, as applicable, as to the applicable terms of such
termination or the settlement resulting from such acceleration, as the case may be, and the
Calculation Agent and Buyer shall be bound by the terms of such quotation if Seller then makes such
election within one full Exchange Business Day; provided, however, that if any event of the type
described in the first paragraph of Section 9 of the Underwriting Agreement occurs during such full
Exchange Business Day, neither the Calculation Agent nor Buyer shall be bound by the terms of such
quotation. For the avoidance of doubt, such quotation may be expressed as a function of the value
of the Shares as determined by the Calculation Agent.




4. Matters relating to the Purchase of Shares and Related Matters:




          (a) Conditions to Effectiveness. The effectiveness of this Confirmation on the
Effective Date shall be subject to the following conditions:





     (i) all of the conditions set forth in Section 5 of the Underwriting Agreement shall
have been satisfied;




     (ii) the representations and warranties of Counterparty contained in the Underwriting
Agreement and any certificate delivered pursuant thereto by Counterparty shall be true and
correct on the Effective Date as if made as of the Effective Date;




     (iii) Counterparty shall have performed all of the obligations required to be performed
by it under the Underwriting Agreement on or prior to the Effective Date;




     (iv) all of the representations and warranties of Counterparty hereunder and under the
Agreement shall be true and correct on the Effective Date; and




     (v) Counterparty shall have performed all of the obligations required to be performed
by it hereunder and under the Agreement on or prior to the Effective Date.


If issuance of, and payment of the par value for, the Hedge Shares (as such term is defined in the
Underwriting Agreement) shall not have occurred by the Closing Date (as such term is defined in the
Underwriting Agreement), the parties shall have no further obligations in connection with the
Transaction, other than in respect of breaches of representations or covenants on or prior to such
date. If, for any reason, the prospectus contemplated by the Underwriting Agreement ceases to
satisfy the requirements of the Underwriting Agreement prior to the completion by Credit Suisse,
its affiliates or the other underwriters of the sale of a number of Shares equal to the Number of
Shares, plus the “Number of Shares” as such term is defined in the Confirmation, dated as of the
date hereof, between Credit Suisse and Counterparty relating to a Share Forward Transaction for
which the initial, aggregate number of Shares underlying such Share Forward Transaction is
7,920,000 (the “Second Confirmation”), Credit Suisse may reduce the Number of Shares hereunder such
that the Number of Shares, plus the “Number of Shares” as such term is defined in the Second
Confirmation is equal to the number of Shares sold pursuant to the Underwriting Agreement prior to
such time, and in such event, the Calculation Agent shall make any other commercially reasonable
adjustments to the terms of the Transaction as appropriate to preserve the fair value of the
Transaction to the parties. If one or more Suspension Days (as such term is defined in the
Underwriting Agreement) occur under the Underwriting Agreement, the Calculation Agent shall from
time to time propose to Counterparty an adjustment to the terms of the Transaction that is
appropriate to reflect any gain realized or loss suffered by Credit Suisse in connection with its
hedging activities in relation to the Transaction as a result of such Suspension Days (it being
understood and agreed by the parties hereto and the Calculation Agent that, without limiting the
generality of Section 1.40 of the 2002 Definitions, such adjustment (1) shall be commercially
reasonable and (2) shall reflect only such gain or loss resulting solely from its inability to
hedge its position in relation to the Transaction as a result of such Suspension Day), in which
event Counterparty shall have the right to elect, in its sole discretion, to (x) accept such
adjustment, (y) so long as no Component hereunder is a Funded Component, amend this Confirmation
such that the Transaction


10









 






will be, thereafter, a Share Forward Transaction with a non-variable number of Shares equal to
Credit Suisse’s net “delta” short position with respect to the Transaction at such time, a forward
price accretion rate equal to LIBOR, a forward price determined by the Calculation Agent to
preserve the fair value of the Transaction to the parties, an assumed regular quarterly cash
dividend of USD0.075 and unless otherwise agreed by the parties, that is consistent with the
Interpretive Letter (as defined below) (in which case the parties hereto shall negotiate in good
faith to so amend this Confirmation) or (z) reduce the Number of Shares hereunder such that the
Number of Shares, plus the “Number of Shares” as such term is defined in the Second Confirmation,
is equal to the number of Shares sold pursuant to the Underwriting Agreement prior to such time,
and, if Counterparty makes the election set forth in clause (z), the Calculation Agent shall make
any other commercially reasonable adjustments to the terms of the Transaction as appropriate to
preserve the fair value of the Transaction to the parties. Credit Suisse shall use commercially
reasonable efforts to complete the sale of a number of Shares equal to the Number of Shares plus
the “Number of Shares” as such term is defined in the Second Confirmation pursuant the Underwriting
Agreement prior to September 6, 2006. If Credit Suisse has not completed such sales prior to such
date, Counterparty shall have the right to elect, in its sole discretion, at any time thereafter to
reduce the Number of Shares hereunder such that the Number of Shares, plus the “Number of Shares”
as such term is defined in the Second Confirmation, is equal to the number of Shares sold pursuant
to the Underwriting Agreement prior to such time, and, if Counterparty makes such election, the
Calculation Agent shall make any other commercially reasonable adjustments to the terms of the
Transaction as appropriate to preserve the fair value of the Transaction to the parties.




          (b) Interpretive Letter. The parties intend for this Confirmation to constitute a
“Contract” as described in the letter dated October 6, 2003 submitted by Robert W. Reeder and
Leslie N. Silverman to Paula Dubberly of the staff of the Securities and Exchange Commission (the
“Staff”) to which the Staff responded in an interpretive letter dated October 9, 2003 (the
“Interpretive Letter”).




          (c) Agreements and Acknowledgments Regarding Shares.





     (i) Counterparty hereby represents and warrants to, and agrees with, Credit Suisse that
the Shares have been duly authorised and any Shares, when issued in return for payment of at
least the par value thereof in accordance with the terms of the Transaction and upon
delivery of a certificate therefor (or a certified copy of the share register showing the
relevant share entry to Credit Suisse or to the order of Credit Suisse), 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
issuance thereof will not be subject to any preemptive or similar rights.




     (ii) Counterparty agrees and acknowledges that Credit Suisse will hedge its exposure to
the Transaction by selling, pursuant to a registration statement in the manner contemplated
by the Underwriting Agreement, Shares borrowed from third parties, or Shares issued to
Credit Suisse by Counterparty pursuant to the Share Issuance Agreement dated as of the date
hereof among Counterparty, Credit Suisse and Credit Suisse Securities (USA) LLC, in its
capacity as Collateral Agent (as defined therein) (the “Share Issuance Agreement”), and each
of Credit Suisse and Counterparty currently believes that the Shares (up to the Number of
Shares) issued by Counterparty to Credit Suisse pursuant to the Share Issuance Agreement or
the Transaction may be used by Credit Suisse to settle such sales or close out open Share
borrowings created in the course of Credit Suisse’s hedging activities related to its
exposure under the Transaction without further registration under the Securities Act of
1933, as amended (the “Securities Act”), it being understood that if any such issued Shares
are tendered by Credit Suisse to Counterparty for repurchase for cancellation, subject to
compliance with applicable law, for USD0.01, then it is the current belief of the parties
that Shares subsequently issued by Counterparty to Credit Suisse may not be so used.
Accordingly, Counterparty agrees that, subject to Section 4(d), the Shares that it first
issues to Credit Suisse on or prior to the Settlement Date or Cash Settlement Payment Date
(whether in connection with settlement of the Transaction or pursuant to a related Share
issuance transaction) will not bear a restrictive legend and that such Shares will be
deposited in, and the issuance thereof, and payment of at least the par value thereof, shall
be effected through the facilities of, the Clearance System. If Credit Suisse tenders to
Counterparty any Shares for repurchase for cancellation, subject to compliance with
applicable law, for USD0.01 pursuant to the Share Issuance Agreement, other than pursuant to
Section 5(a) of the Share Issuance Agreement, then Credit Suisse acknowledges and agrees
that any Shares issued by Counterparty to Credit Suisse pursuant to the Transaction, plus
any Shares issued by Counterparty to Credit Suisse pursuant to the Transaction (as such term
is defined in the Second Confirmation) (in each



11









 







case, after giving effect to the netting provision in Section 19 of the Share Issuance
Agreement) that, when aggregated with the number of Shares issued to Credit Suisse, in
return for payment of at least the par value thereof, pursuant to the Share Issuance
Agreement (without deduction for any Shares tendered by Credit Suisse to Counterparty for
repurchase for cancellation, subject to compliance with applicable law, for USD0.01 pursuant
to the Share Issuance Agreement), exceed the Number of Shares, plus the Number of Shares (as
such term is defined in the Second Confirmation) will be subject to compliance with
applicable law and to restrictions on transfer under applicable securities laws, and may
only be sold, otherwise disposed of or hedged pursuant to an effective registration
statement or an exemption from the registration requirements of the Securities Act, and,
notwithstanding Section 9.11 of the 2002 Definitions, this fact shall not constitute a
breach of the representations and warranties contained in such Section 9.11. For the
avoidance of doubt, in such event (i) Counterparty shall not be limited in its right to
elect a Settlement Method that results in such an issuance of restricted shares, (ii)
Counterparty be under no obligation to provide a registration statement or take any other
action not specifically set forth in this Confirmation or required by law or its constituent
documents in respect of any such restricted Shares, and (iii) no liquidity or other discount
shall be applied in connection with such issuance.




     (iii) Counterparty agrees not to take any action to reduce or decrease the number of
authorized and unissued Shares below the sum of the aggregate Number of Shares, plus the
total number of Shares issuable upon settlement (whether by net share settlement or
otherwise) of any other transaction or agreement to which it is a party.




     (iv) In connection with this Confirmation and the Transaction, Credit Suisse or its
affiliate shall (A) hedge its exposure to the Transaction by selling a number of Shares
equal to the Number of Shares pursuant to the registration statement as contemplated by the
Underwriting Agreement and (B) use any Shares issued by Counterparty to Credit Suisse, in
return for payment of at least the par value thereof, in connection with the Transaction
only to settle such sales or close out open Share borrowings created in the course of Credit
Suisse’s hedging activities related to its exposure under the Transaction.



          (d) Securities Laws Matters. If the belief of either Credit Suisse or Counterparty
stated in the first sentence of sub-paragraph (ii) of “Agreements and Acknowledgments Regarding
Shares” above changes because of a change in law or a change in interpretation or the policy of the
Securities and Exchange Commission or its staff, or either Credit Suisse or Counterparty otherwise
determines that in its reasonable opinion any Shares to be issued to Credit Suisse by Counterparty
in return for payment of at least the par value thereof may not be used as described under such
sub-paragraph (ii) for any reason (other than as a result Credit Suisse tendering to Counterparty
any Shares for repurchase for cancellation for USD0.01 pursuant to the Share Issuance Agreement
other than pursuant to Section 5(a) of the Share Issuance Agreement), then Counterparty may elect
that any Shares issued in return for payment of at least the par value thereof hereunder either be
(x) registered pursuant to an effective registration statement covering public resale of such
Shares (“Registered Shares”) or (y) deemed to have been issued pursuant to the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof (“Restricted
Shares”).





     (i) If Counterparty has elected to issue Registered Shares, Counterparty shall have
afforded Credit Suisse and its counsel and other advisers a reasonable opportunity to
conduct a due diligence investigation of Counterparty customary in scope for underwritten
equity offerings, and Counterparty and Credit Suisse shall have executed an agreement
containing such terms, covenants, conditions, representations, warranties and indemnities
substantially similar to such provisions that are customary for underwriting agreements in
underwritten equity offerings.




     (ii) Issuance of Restricted Shares by Counterparty to Credit Suisse in return for
payment of at least the par value thereof (a “Private Placement Settlement”) shall be
effected in accordance with customary private placement procedures with respect to such
Restricted Shares reasonably acceptable to Credit Suisse. On the date of such issuance,
Counterparty shall not have taken, or caused to be taken, any action that would make
unavailable either (x) the exemption pursuant to Section 4(2) of the Securities Act for the
sale or deemed sale by Counterparty to Credit Suisse (or any affiliate designated by Credit
Suisse) of the Restricted Shares or (y) the exemption pursuant to Section 4(1) or Section
4(3) of the Securities Act for resales of the Restricted Shares by Credit Suisse (or any
such affiliate of Credit Suisse). Counterparty and Credit Suisse shall execute an agreement
containing customary representations, covenants, blue sky and other governmental filings
and/or



12









 







registrations, indemnities to Credit Suisse, due diligence rights (for Credit Suisse or
any designated buyer of the Restricted Shares by Credit Suisse), opinions and certificates,
and such other documentation as is customary for private placement agreements, all
reasonably acceptable to Credit Suisse. In the case of an issuance of Restricted Shares in
return for payment of at least the par value thereof, the Calculation Agent may adjust the
number of Restricted Shares to be issued to Credit Suisse hereunder in a commercially
reasonable manner to reflect the fact that such Restricted Shares may not be freely returned
to securities lenders by Credit Suisse and may only be saleable by Credit Suisse at a
discount to reflect the lack of liquidity in Restricted Shares. Notwithstanding the
Agreement or this Confirmation, the date of issuance of such Restricted Shares shall be the
Clearance System Business Day following notice by Credit Suisse to Counterparty of the
number of Restricted Shares to be issued in return for payment of at least the par value
thereof pursuant to this clause (ii). For the avoidance of doubt, issuance of Restricted
Shares in return for payment of at least the par value thereof shall be due as set forth in
the previous sentence and not be due on the date that would otherwise be applicable.




     (iii) If Counterparty issues any Restricted Shares in return for payment of at least
the par value thereof in respect of the Transaction or any restricted Shares in accordance
with the terms of Section 3(c)(ii) hereof, Counterparty agrees that (A) such Shares may be
transferred freely among Credit Suisse and the wholly owned direct and indirect subsidiaries
of Credit Suisse’s ultimate parent entity and (B) after the minimum “holding period” within
the meaning of Rule 144(d) under the Securities Act has elapsed, Counterparty shall promptly
remove, or cause the transfer agent for the Shares to remove, any legends referring to any
transfer restrictions from such Shares upon delivery by Credit Suisse (or such affiliate of
Credit Suisse) to Counterparty or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Credit Suisse or its affiliates in
connection with resales of restricted securities pursuant to Rule 144 under the Securities
Act, each without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Credit Suisse (or such affiliate of
Credit Suisse).



5. Representations, Warranties and Covenants:





     (a) Each party to this Confirmation represents and warrants to the other party that:




     (i) it is an “accredited investor” as defined in Section 2(a)(15)(ii) of the Securities
Act; and




     (ii) it is an “eligible contract participant” as defined in Section 1a(12) of the
Commodity Exchange Act, as amended (the “CEA”), and this Confirmation and the Transaction
hereunder are subject to individual negotiation by the parties and have not been executed or
traded on a “trading facility” as defined in Section 1a(33) of the CEA.



          (b) Counterparty represents and warrants to, and agrees with, Credit Suisse as of the date
hereof (and, solely with respect to the representation and warranty set forth in clause (b)(i)
below, as of (x) the date of any election by Seller pursuant to Section 3(a) or Section 3(b) above
and (y) any date that Counterparty notifies Credit Suisse that Net Share Settlement or Cash
Settlement applies with respect to all or a portion of all Components) that:





     (i) each of its filings under the Securities Act, the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) or other applicable securities laws that are required to be
filed have been filed and that, as of the respective dates thereof and as of the date of
this representation, there is no misstatement of material fact contained therein or omission
of a material fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not misleading;




     (ii) it has reserved and will keep available, free from preemptive rights, out of its
authorized but unissued Shares, solely for the purpose of issuance, in return for payment of
at least the par value thereof, upon settlement of the Transaction as herein provided, the
maximum number of Shares as shall then be issuable upon settlement of the Transaction;



13









 






     (iii) it is not entering into this Confirmation to create actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for Shares) or to
raise or depress or otherwise manipulate the price of the Shares (or any security
convertible into or exchangeable for Shares);




     (iv) it is entering into this Confirmation and the Transaction in good faith, not as
part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and
it has not entered into or altered any hedging transaction relating to the Shares
corresponding to or offsetting the Transaction;




     (v) it is not and, after giving effect to the transactions contemplated hereby, will
not be required to register as an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended; and




     (vi) it is eligible to conduct a primary offering of Shares on Form S-3, the offering
contemplated by the Underwriting Agreement complies with Rule 415 under the Securities Act,
and the Shares are “actively traded” as defined in Rule 101(c)(1) of Regulation M
(“Regulation M”) promulgated under the Exchange Act.




     (c) In connection with this Confirmation and the Transaction, Counterparty agrees that:




     (i) it shall not enter into or alter any hedging transaction relating to the Shares
corresponding to or offsetting the Transaction; and




     (ii) it shall use its best efforts, upon obtaining knowledge of the occurrence of any
event that would, with the giving of notice, the passage of time or the
satisfaction of any condition, constitute an Event of Default, a Potential Event of Default,
a Termination Event in respect of which it is an Affected Party, a Potential
Adjustment Event, an Extraordinary Event or an Additional Disruption Event, to
notify Credit Suisse within one Scheduled Trading Day of the occurrence of obtaining
such knowledge; provided that (x) Counterparty shall have no duty or obligation to
investigate, or inquire about, the occurrence of any such event; (y) any failure to so
notify Credit Suisse shall not result in any increased liability on the part of Counterparty
nor shall it be, or deemed to be, a waiver by Counterparty of any of its rights hereunder;
and (z) any failure to so notify Credit Suisse shall not constitute an Event of Default.




     (iii) if Counterparty elects Cash Settlement or Net Share Settlement pursuant to the
provisions under the heading “Settlement Terms,” in Section 2 above, it shall not engage in
any “distribution” (as defined in Regulation M) during the period starting on the Initial
Averaging Date and ending on the Valuation Date.



          (d) Counterparty represents and warrants to Credit Suisse as of the date hereof, and as of any
date on which Counterparty makes payment to Credit Suisse in connection with any Cash Settlement
hereunder, 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.




          (e) Credit Suisse represents and warrants to Counterparty that (a) it is an unlimited
liability company organized under U.K. law, (b) its sole direct shareholders are Credit Suisse, a
Swiss banking company, International Holding AG, a Swiss Aktiengesellschaft, and Credit Suisse
Group, a Swiss Aktiengesellschaft, (c) none of Credit Suisse’s direct or indirect shareholders in
the Credit Suisse group is a “U.S. person” as that term is defined in section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended, and (d) Credit Suisse and its affiliates have not
granted any “U.S. person” (as so defined) an option to buy 10 percent or more of the stock of
Credit Suisse or its direct and indirect shareholders in the Credit Suisse group.




14









 








6. Miscellaneous:




          (a) Early Termination. The parties agree that, notwithstanding the definition of
Settlement Amount in the Agreement, for purposes of Section 6(e) of the Agreement, Second Method
and Loss will apply to the Transaction. For purposes of this Confirmation, “Termination Currency”
means United States Dollars.




          (b) Payment on Early Termination and on Certain Extraordinary Events.




          If, subject to Section 6(c) below, one party owes the other party any amount in connection
with the Transaction pursuant to Section 12.7 or 12.9 of the 2002 Definitions (except in the case
of an Extraordinary Event in which the consideration or proceeds to be paid to holders of Shares as
a result of such event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (a
“Payment Obligation”), then, in lieu of either party fulfilling such Payment Obligation, Issuer
shall have the right, in its sole discretion, to satisfy any such Payment Obligation, or to require
Credit Suisse satisfy any such Payment Obligation, as the case may be, by issuing for payment of at
least the par value thereof, or requiring Credit Suisse to tender for repurchase for cancellation
for USD0.01, as the case may be, a number of Termination Delivery Units (as defined below) having a
cash value equal to the amount of such Payment Obligation (such number of Termination Delivery
Units to be issued (or tendered for repurchase for cancellation) to be determined by the
Calculation Agent as the number of whole Termination Delivery Units that could be sold or
purchased, as the case may be, over a commercially reasonable period of time to generate proceeds
equal to the cash equivalent of such Payment Obligation or with the cash equivalent of such Payment
Obligation, as the case may be). Such issuance (or tender for repurchase for cancellation) and
payment shall be made on the third Scheduled Trading Day (or, if such day is not both a Clearance
System Business Day and a Currency Business Day, the next following Scheduled Trading Day that is
both such days) immediately following the date on which such Payment Obligation would have been
due. Notwithstanding anything to the contrary in the Agreement, for purpose of determining the
Payment Obligation, the Transaction shall be deemed to be the only Transaction under the Agreement.





“Termination Delivery Unit” means (A) in the case of a Termination Event, an Event
of Default or an Extraordinary Event (other than an Insolvency, Nationalization or Merger
Event), one Share or (B) in the case of an Insolvency, Nationalization or Merger Event, a
unit consisting of the number or amount of each type of property received by a holder of one
Share (without consideration of any requirement to pay cash or other consideration in lieu
of fractional amounts of any securities) in such Insolvency, Nationalization or Merger
Event. If a Termination Delivery Unit consists of property other than cash or New Shares
and Counterparty provides irrevocable written notice to the Calculation Agent on or prior to
the Closing Date that it elects to deliver cash, New Shares or a combination thereof (in
such proportion as Counterparty designates) in lieu of such other property, the Calculation
Agent will replace such property with cash, New Shares or a combination thereof as
components of a Termination Delivery Unit in such amounts, as determined by the Calculation
Agent, as shall have a value equal to the value of the property so replaced. If such
Insolvency, Nationalization or Merger Event involves a choice of consideration to be
received by holders, such holder shall be deemed to have elected to receive the maximum
possible amount of cash.



          (c) Set-Off and Netting. Credit Suisse agrees not to set-off or net amounts due from
Counterparty with respect to the Transaction against amounts due from Credit Suisse to Counterparty
under obligations other than Equity Contracts. Notwithstanding the foregoing, Credit Suisse and
Counterparty shall be entitled to set off and net any obligation of Credit Suisse to tender Shares
to Counterparty for repurchase for cancellation for USD0.01 under the Share Issuance Agreement,
against any obligation of Counterparty to issue Shares to Credit Suisse hereunder in return for
payment of at least the par value thereof. Section 2(c) of the Agreement as it applies to payments
due with respect to the Transaction shall remain in effect and is not subject to the first sentence
of this provision. In addition, upon the occurrence of an Event of Default of the type described
in paragraph (vii) of Section 5(a) of the Agreement with respect to either party as the Defaulting
Party (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to
X or any other person to set-off or apply any obligation of X (if X is Counterparty, under an
Equity Contract) owed to Y (whether or not matured or contingent and whether or not arising under
this Confirmation, and regardless of the currency, place of payment or booking office of the
obligation) against any obligation of Y (if X is Counterparty, under an Equity Contract) owed to X
(whether or not matured or contingent and whether or not arising under this Confirmation, and
regardless of the currency, place of payment or booking office of the obligation). Y will give
notice to the other party of any set-off

15









 








or application effected under this provision. “Equity Contract” shall mean for purposes of
this provision any transaction relating to Shares between X and Y that qualifies as ‘equity’ under
applicable accounting rules. Amounts (or the relevant portion of such amounts) subject to set-off
may be converted by Y into the Termination Currency at the rate of exchange at which such party
would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of
such currency. If any obligation is unascertained, Y may in good faith estimate that obligation
and set-off in respect of the estimate, subject to the relevant party accounting to the other when
the obligation is ascertained. Nothing in this provision shall be effective to create a charge or
other security interest. This provision shall be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other right to which any party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).




          (d) Maximum Share Delivery. Notwithstanding any other provision of this Confirmation,
in no event will Counterparty be required to issue hereunder, in return for payment of at least the
par value thereof, whether pursuant to Physical Settlement, Net Share Settlement, Private Placement
Settlement or otherwise, more than two times the Number of Shares to Credit Suisse in the
aggregate.




          (e) Status of Claims in Bankruptcy. Credit Suisse acknowledges and agrees that this
Confirmation is not intended to convey to Credit Suisse rights with respect to the transactions
contemplated hereby that are senior to the claims of common shareholders in a winding up of
Counterparty; provided, however, that nothing herein shall limit or shall be deemed to limit Credit
Suisse’s right to pursue remedies in the event of a breach by Counterparty of its obligations and
agreements with respect to this Confirmation and the Agreement.




          (f) No Collateral. Notwithstanding any provision of this Confirmation or the
Agreement, or any other agreement between the parties, to the contrary, the obligations of
Counterparty under the Transaction is not secured by any collateral. Without limiting the
generality of the foregoing, if the Agreement or any other agreement between the parties includes
an ISDA Credit Support Annex or other agreement pursuant to which Counterparty collateralizes
obligations to Credit Suisse, then the obligations of Counterparty hereunder will not be considered
to be obligations under such Credit Support Annex or other agreement pursuant to which Counterparty
collateralizes obligations to Credit Suisse, and the Transaction shall be disregarded for purposes
of calculating any Exposure or similar term thereunder.




          (g) Additional Share Issuance. If at any time Counterparty shall be required to pay
any amount in cash to Credit Suisse pursuant to any provision hereunder or under the Agreement
(other than pursuant to Section 12.7 or 12.9 of the 2002 Definitions or Section 6(d)(ii) of the
Agreement), Counterparty may, upon prior written notice to Credit Suisse, in lieu of making such
cash payment to Credit Suisse, issue a number of Shares (“Additional Shares”) with an aggregate
value, as determined by the Calculation Agent based on the closing price of the Shares on the
Exchange on the immediately preceding Exchange Business Day, equal to the amount of such cash
payment plus the aggregate par value of the Additional Shares, in return for a payment of such
aggregate par value. The parties acknowledge that any Additional Shares so issued will not be
registered for resale under applicable securities laws, and as a result the value thereof so
determined by the Calculation Agent will reflect a commercially reasonable illiquidity discount.
If, after using commercially reasonable efforts, Credit Suisse cannot sell the Additional Shares so
received from Counterparty so as to generate proceeds to Credit Suisse in an amount equal to the
amount of the cash payment otherwise owed by Counterparty, Counterparty shall, upon request, issue
Additional Shares to Credit Suisse from time to time, in return for a payment of the aggregate par
value of such Shares, until such time as the aggregate proceeds from sales effected by Credit
Suisse in a commercially reasonable manner of all Additional Shares equals the amount of such cash
payment, plus such aggregate par value. Credit Suisse agrees that upon so generating an aggregate
amount in proceeds from sales of Additional Shares equal to the amount of such cash payment, plus
such aggregate par value, Credit Suisse shall promptly pay to Counterparty any amount of such
proceeds in excess of such amount, and tender for repurchase for cancellation to Counterparty any
unsold Additional Shares in return for a payment of USD0.01.




          (h) Assignment. The rights and duties under this Confirmation may not be assigned or
transferred by any party hereto without the prior written consent of the other parties hereto, such
consent not to be unreasonably withheld; provided that Credit Suisse may assign or transfer any of
its rights or duties hereunder to Credit Suisse’s ultimate parent entity or any directly or
indirectly wholly-owned subsidiary of Credit Suisse’s ultimate parent entity (a “Permitted
Transferee”) without the prior written consent of Counterparty, so long as the senior unsecured
debt rating (“Credit Rating”) of such Permitted Transferee (or any guarantor of its obligations





16









 







under the Transaction) is equal to or greater than the Credit Rating of Credit Suisse, 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
Credit Suisse group that is a U.S. person (as so defined), or (c) an entity, if Credit Suisse 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 Credit Suisse group of such
entity. In connection with any assignment or transfer pursuant to the first proviso to the
immediately preceding sentence, the guarantee of any guarantor of the relevant transferee’s
obligations under the Transaction shall constitute a Credit Support Document under Agreement. In
addition, 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
Credit Suisse, such Permitted Transferee shall further assign and transfer its rights and duties
under this Confirmation to another Permitted Transferee with a Credit Rating (or whose obligations
under the Transaction are guaranteed by a guarantor with a Credit Rating) equal to or greater than
the Credit Rating of Credit Suisse within 30 calendar days.




          (i) Designation by Credit Suisse. Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Credit Suisse to purchase, sell, receive, tender
for repurchase for cancellation or deliver any Shares or other securities to or from Counterparty,
Credit Suisse may designate any of its affiliates to purchase, sell, receive or tender for
repurchase for cancellation such Shares or other securities and otherwise to perform Credit
Suisse’s obligations in respect of the Transaction and any such designee may assume such
obligations. Credit Suisse shall be discharged of its obligations to Counterparty to the extent of
any such performance.




          (j) Severability; Illegality. If compliance by either party with any provision of the
Transaction would be unenforceable or illegal, (i) the parties shall negotiate in good faith to
resolve such unenforceability or illegality in a manner that preserves the economic benefits of the
transactions contemplated hereby and (ii) the other provisions of the Transaction shall not be
invalidated, but shall remain in full force and effect.




          (k) Waiver of Trial by Jury. Each party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any suit, action or
proceeding relating to this Confirmation. Each party (a) 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 (b)
acknowledges that it and the other party have been induced to enter into this Confirmation by,
among other things, the mutual waivers and certifications in this Section.




          (l) Governing Law; Submission to Jurisdiction. THE AGREEMENT AND THIS CONFIRMATION
AND ALL DISPUTES ARISING THEREFROM AND RELATED THERETO WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE.
EACH PARTY HEREBY 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 THE AGREEMENT AND THIS CONFIRMATION.




          (m) Third Party Rights. This Confirmation is not intended and shall not be construed
to create any rights in any person other than Counterparty, Credit Suisse and their respective
successors and assigns and no other person shall assert any rights as third-party beneficiary
hereunder. Whenever any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of Counterparty and Credit Suisse shall bind, and inure to the benefit
of, their respective successors and assigns whether so expressed or not.




          (n) Waiver of Rights. Any provision of this Confirmation may be waived if, and only
if, such waiver is in writing and signed by the party against whom the waiver is to be effective.




17









 








          (o) 10b5-1. The parties intend for any settlement hereof to comply with the
requirements of Rule 10b5-1(c)(1)(i)(A) under the Exchange Act and this Confirmation to constitute
a binding contract or instruction satisfying the requirements of 10b5-1(c) and to be interpreted to
comply with the requirements of Rule 10b5-1(c).




          (p) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement
or this Confirmation, in no event shall Credit Suisse be entitled to receive, or shall be deemed to
receive, any Shares if, upon such receipt of such Shares by Credit Suisse, the “beneficial
ownership” (within the meaning of Section 16 of the Exchange Act and the rules promulgated
thereunder) of Credit Suisse’s ultimate parent entity would be equal to or greater than 9% or more
of the issued and outstanding Shares. If any issuance owed to Credit Suisse hereunder is not made,
in whole or in part, as a result of this provision, Counterparty’s obligation to effect such
issuance shall not be extinguished and Counterparty shall effect such issuance as promptly as
practicable after, but in no event later than one Exchange Business Day after, Credit Suisse gives
notice to Counterparty that such issuance would not result in Credit Suisse directly or indirectly
so beneficially owning in excess of 9% of the issued and outstanding Shares.




7. Addresses for Notice:




	 	 	 	 	 
	 

	 	If to Credit Suisse:
	 	One Cabot Square
	 

	 	 	 	London E14 4QJ England
	 

	 	 	 	Attn: Kevin Studd, Managing Director—Legal Department
	 

	 	 	 	Telephone: 44 20 7888 1605
	 

	 	 	 	Facsimile No.: 44 20 7888 4603
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Credit Suisse International
	 

	 	 	 	c/o 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
	 
	 	 	 	 
	 

	 	If to Counterparty:
	 	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






8. Accounts for Payment:




	 	 	 	 	 
	 

	 	To Credit Suisse:
	 	CS To Advise.
	 
	 	 	 	 
	 

	 	To Counterparty:
	 	MRH To Advise.






9. Issuance Instructions:




	 	 	 	 	 
	 	 	Unless otherwise directed in writing, any Share to be issued hereunder shall be issued as follows:
	 
	 	 	 	 
	 

	 	To Credit Suisse:
	 	To be advised.
	 
	 	 	 	 
	 

	 	To Counterparty:
	 	To be advised.






18









 





	 	 	 	 	 
	 	Yours sincerely,





CREDIT SUISSE INTERNATIONAL

 	 
	 	By:  	/s/ Edmond Curtin
 	 
	 	 	Name:  	Edmond Curtin 	 
	 	 	Title:  	Managing Director 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                     /s/ David Bonham
 	 
	 	 	Name:  	David Bonham 	 
	 	 	Title:  	Director 	 
	 



Confirmed as of the
date first above written:




MONTPELIER RE HOLDINGS LTD.




	 	 	 	 	 
	By:

	 	/s/ Kernan V. Oberting
 

Name: Kernan V. Oberting
	 	 
	 

	 	Title: Chief Financial Officer	 	 






Our Reference Number: External ID:                     / Risk ID:





 









 









ANNEX A



For each Component of the Transaction, the Number of Shares and Valuation Date is set forth below.




	 	 	 	 	 
	Component Number	 	Number of Shares	 	Scheduled Valuation Date
	1.
	 	388,740
	 	March 5, 2007
	2.
	 	388,740
	 	March 6, 2007
	3.
	 	388,740
	 	March 7, 2007
	4.
	 	388,740
	 	March 8, 2007
	5.
	 	388,740
	 	March 9, 2007
	6.
	 	388,740
	 	March 12, 2007
	7.
	 	388,740
	 	March 13, 2007
	8.
	 	388,740
	 	March 14, 2007
	9.
	 	388,740
	 	March 15, 2007
	10.
	 	388,740
	 	March 16, 2007
	11.
	 	388,740
	 	March 19, 2007
	12.
	 	388,740
	 	March 20, 2007
	13.
	 	388,740
	 	March 21, 2007
	14.
	 	388,740
	 	March 22, 2007
	15.
	 	388,740
	 	March 23, 2007
	16.
	 	388,740
	 	March 26, 2007
	17.
	 	388,740
	 	March 27, 2007
	18.
	 	388,740
	 	March 28, 2007
	19.
	 	388,740
	 	March 29, 2007
	20.
	 	388,740
	 	March 30, 2007






A-1