Document:

EX-10.2

 

Exhibit 10.2

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 50.4626% 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:

	 	USD11.25
	 
	 	 
	Forward Cap Price:

	 	USD18.375
	 
	 	 
	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 Date.

3

 

	 	 	 
	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 10, 2008
	 
	 	 
	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).
	 
	 	 
	Forward Cash Settlement Amount:

	 	Clause (iii) of Section 8.5(e) of the
2002 Definitions is hereby replaced by
the following: “(iii) if the Settlement
Price is greater than the Forward Cap
Price, an amount equal to 61.2245% of
the difference of (A) the Settlement
Price, minus (B) the Forward Cap Price.”
	 
	 	 
	Number of Shares to be Delivered:

	 	Clause (iii) of Section 9.5(c) of the
2002 Definitions is hereby replaced by
the following: “(iii) if the Settlement
Price is greater than the Forward Cap
Price, a number of Shares equal to
61.2245% of the Number of Shares.”
	 
	 	 
	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

6

 

	 	 	 
	 

	 	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 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

7

 

	 	 	 
	 

	 	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.

	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.

8

 

	 	 	 
	Determining Party:

	 	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.
For all applicable Extraordinary Events, Credit Suisse

	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

9

 

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 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
7,774,800 (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

10

 

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 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

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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 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,

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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 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:

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     (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;

     (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.

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          (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.

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

15

 

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 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

16

 

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
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

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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.

          (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

18

 

	 	 	 	 	 
	 

	 	 	 	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.

19

 

	 	 	 	 	 
	 	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.
	 	396,000
	 	March 3, 2008
	2.
	 	396,000
	 	March 4, 2008
	3.
	 	396,000
	 	March 5, 2008
	4.
	 	396,000
	 	March 6, 2008
	5.
	 	396,000
	 	March 7, 2008
	6.
	 	396,000
	 	March 10, 2008
	7.
	 	396,000
	 	March 11, 2008
	8.
	 	396,000
	 	March 12, 2008
	9.
	 	396,000
	 	March 13, 2008
	10.
	 	396,000
	 	March 14, 2008
	11.
	 	396,000
	 	March 17, 2008
	12.
	 	396,000
	 	March 18, 2008
	13.
	 	396,000
	 	March 19, 2008
	14.
	 	396,000
	 	March 20, 2008
	15.
	 	396,000
	 	March 24, 2008
	16.
	 	396,000
	 	March 25, 2008
	17.
	 	396,000
	 	March 26, 2008
	18.
	 	396,000
	 	March 27, 2008
	19.
	 	396,000
	 	March 28, 2008
	20.
	 	396,000
	 	March 31, 2008EX-10.3

 

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

 

 

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

2

 

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

3

 

“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.

4

 

     “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

5

 

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

6

 

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,

7

 

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

8

 

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.

9

 

     (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

10

 

     (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

11

 

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,

12

 

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

13

 

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.

14

 

          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.

15

 

     (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

16

 

	 	 	 
	 

	 	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

17

 

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

18

 

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.

19

 

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

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