Exhibit 10.3
	 

	 
		PROMISSORY NOTE
	 

	 
		 
	 

	 
			
				
				  US$24,500,000.00
				

			 	
				
				  August 11, 2004
				

			 

 

	 
		ARTICLE I
	 

	 
		PAYMENT OBLIGATION
	 

	 
		FOR VALUE RECEIVED, the undersigned,
		Greenlight Capital Investors, LLC, a Delaware limited liability company
		(“Maker”), unconditionally promises to pay to the order of
		Greenlight Capital Re, Ltd., a Cayman Islands exempted company with limited
		liability, or its registered assigns (“Payee”), the sum of Twenty Four Million Five Hundred
		Thousand Dollars (US $24,500,000.00), together with interest on the unpaid
		principal balance from time to time outstanding at a rate per annum equal to
		LIBOR (as defined herein) plus 3.0%, which interest shall accrue daily,
		commencing on the date hereof (and, thereafter, from the most recent date that
		interest was paid) and shall be payable in cash annually on August 11 of each
		year (or the immediately succeeding Business Day (as defined herein), if such
		day is not a Business Day) (such date, the “Anniversary Date”), commencing on the Anniversary Date in 2005,
		until the principal amount hereof shall have been paid in full. The principal
		of, and accrued and unpaid interest on, this Promissory Note (this
		“Note”) shall be due and payable in lawful money of the
		United States on the earlier of (a) the Anniversary Date in 2009 or (b) the
		making of demand therefor by Payee following the occurrence and during the
		continuance of an Event of Default (as defined in Article III hereof) or as
		otherwise provided in Article III hereof. Interest hereunder shall be
		calculated on the basis of a year of 360 days and the actual number of days
		elapsed.
	 

	 
		This Note has been executed and delivered
		pursuant to that certain securities purchase agreement by and between Maker and
		Greenlight Capital Re, Ltd., dated as of the date hereof, pursuant to which
		Maker purchased 5,050,000 newly issued Class B ordinary shares, par value $0.10
		per share, of Greenlight Capital Re, Ltd. (the “Class B Ordinary Shares”).
	 

	 
		For the purposes of this Note: (1)
		“LIBOR”
		means the one-year British Bankers Association London Interbank Offered Rate
		Fixing of U.S. Dollar, as published in the Wall Street Journal on the first
		Business Day immediately following the Anniversary Date of each year during the
		term of this Note; provided, that LIBOR for the period from the date hereof
		through the Anniversary Date in 2005 shall be 2.34125% and (2)
		“Business
		Day” means every day other
		than a Saturday, Sunday, or legal holiday in New York, New York or in the
		Cayman Islands.
	 

	 
		Maker shall have the right to prepay the
		principal of this Note in full or in part at any time and from time to time
		without premium or penalty, provided, however, that accrued interest on the
		portion of principal being prepaid shall be due and payable contemporaneously
		with such prepayment of principal.
	 

	 
		ARTICLE II
	 

	 
		AFFIRMATIVE AND NEGATIVE
		COVENANTS
	 

	 
		So long as any of the principal of and
		accrued interest on this Note is outstanding, Maker will comply with each of
		the following covenants:
	 

	 
		 
	 

	 
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		1. Transfer of Class B Ordinary Shares. In the event that Maker proposes to sell, assign,
		exchange or otherwise transfer or dispose of, directly or indirectly (each, a
		“Transfer”) any Class B Ordinary Shares (including any Class
		A ordinary shares of Payee issuable upon conversion of Class B Ordinary Shares)
		Maker shall (i) provide Payee with notice of such Transfer at least five (5)
		Business Days prior to the closing of such Transfer and (ii) contemporaneously
		with the closing of such Transfer, remit to Payee the proceeds (the
		“Proceeds”) received by Maker in connection therewith,
		provided that the amount of such Proceeds remitted to Payee shall not exceed
		the outstanding principal of, and accrued interest on, this Note as of the date
		of application of such Proceeds. The Proceeds shall first be applied to the
		accrued interest on this Note and, if there is any excess, to the outstanding
		principal of this Note as of the date of application of such Proceeds.
		Notwithstanding the foregoing, Maker shall not be permitted to Transfer any
		Class B Ordinary Shares unless (a) such Transfer is made pursuant to a bona
		fide transaction with a third party, which transaction shall have been
		negotiated in good faith on an arm’s-length basis and (b) the
		consideration to be paid to Maker in connection with such Transfer shall be
		paid in cash at the closing of such Transfer. In furtherance of the foregoing
		Maker hereby acknowledges the lien on the Class B Ordinary Shares granted to
		Payee pursuant to Article 68 of Greenlight Capital Re, Ltd.’s Memorandum
		and Articles of Association, as the same shall exist on the date hereof (the
		“Memorandum and
		Articles”).
	 

	 
		2. Limitation on Indebtedness. Maker will not, without the prior written consent of
		Payee, incur any indebtedness for borrowed money senior or pari passu in right
		of payment to this Note.
	 

	 
		ARTICLE III
	 

	 
		EVENTS OF DEFAULT
	 

	 
		Each of the following shall constitute an
		Event of Default (each, an “Event of Default” and, collectively, the “Events of Default”): 
	 

	 
			
				
				   
				

			 	
				
				  1.
				

			 	
				
				  default in making due and punctual
				  payment of the principal of this Note, or any interest accrued hereon, or any
				  other amount payable hereunder, when and as such payment shall become due and
				  payable, whether at maturity or by acceleration or otherwise, and such payment
				  is not made within five (5) days of written notice received by Maker specifying
				  such default; or
				

			 

 

	 
			
				
				   
				

			 	
				
				  2.
				

			 	
				
				  the failure by Maker to comply with
				  any of the covenants set forth in (i) Article II of this Note or (ii) the
				  Memorandum and Articles with respect to the Transfer of Class B Ordinary
				  Shares; or
				

			 

 

	 
			
				
				   
				

			 	
				
				  3.
				

			 	
				
				  the Transfer by Maker, whether in
				  one or in a series of transactions, of all or substantially all of its assets
				  including, without limitation, the Transfer of all or substantially all of the
				  Class B Ordinary Shares (including any Class A Ordinary Shares of the Company
				  issuable upon conversion of the Class B Ordinary Shares); or
				

			 

 

	 
		 
	 

	 
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				  4.
				

			 	
				
				  Maker shall admit in writing its
				  inability to, or be generally unable to, pay its debts as such debts become
				  due; or
				

			 

 

	 
			
				
				   
				

			 	
				
				  5.
				

			 	
				
				  Maker shall (i) apply for or consent
				  in writing to the appointment of, or taking possession by, a receiver,
				  custodian, trustee or liquidator of itself or of all or a substantial part of
				  its property, (ii) make a general assignment for the benefit of its creditors,
				  (iii) file a petition seeking to take advantage of any law relating to
				  bankruptcy, insolvency, reorganization, winding-up, or composition or
				  adjustment of debts or (iv) take any action for the purpose of effecting any of
				  the foregoing; or
				

			 

 

	 
			
				
				   
				

			 	
				
				  6.
				

			 	
				
				  a proceeding or case shall be
				  commenced, without the application or consent of the Maker, in any court of
				  competent jurisdiction, seeking (i) Maker’s liquidation, reorganization,
				  dissolution, or winding-up, or the composition or adjustment of its debts, (ii)
				  the appointment of a trustee, receiver, custodian, liquidator or the like of
				  Maker or all or any substantial part of its assets, or (iii) similar relief in
				  respect of Maker under any law relating to bankruptcy, insolvency,
				  reorganization, winding-up or composition or adjustment of debts, and such
				  proceeding or case shall continue undismissed, or an order, judgment or decree
				  approving or ordering any of the foregoing shall be entered and continued
				  unstayed and in effect, for a period of sixty (60) days; or an order for relief
				  against Maker shall be entered in an involuntary case under any law relating to
				  bankruptcy, insolvency, reorganization, winding-up, or composition or
				  adjustment of debts; or
				

			 

 

	 
			
				
				   
				

			 	
				
				  7.
				

			 	
				
				  the security interest of Payee in
				  the Class B Ordinary Shares pursuant to Article 68 of the Memorandum and
				  Articles shall at any time fail to constitute a first and paramount lien and
				  charge in such Class B Ordinary Shares, or Maker shall so assert in writing;
				  or
				

			 

 

	 
			
				
				   
				

			 	
				
				  8.
				

			 	
				
				  either this Note or Article 68 of
				  the Memorandum and Articles shall at any time be declared to be invalid or
				  unenforceable in any material respect, or Maker shall so assert in
				  writing.
				

			 

 

	 
		If an Event of Default occurs under
		paragraphs 1, 2, 3, 7 or 8 above, then and in any such case Payee may declare
		the outstanding principal amount of this Note to be due and payable
		immediately, upon written notice to Maker and, upon any such declaration, the
		outstanding principal amount of this Note, and the interest--accrued thereon,
		together with all costs of collection, including reasonable attorneys’
		fees if collected by law or through an attorney at law (as further set forth in
		Section IV(4) hereof), shall be and become immediately due and payable. If an
		Event of Default occurs under paragraphs 4, 5 or 6 above, then the outstanding
		principal of and all accrued and unpaid interest on this Note shall
		automatically be and become immediately due and payable, without presentment,
		demand, protest, notice of dishonor or other formalities or notice of any kind,
		all of which are hereby expressly waived by Maker.
	 

	 
		ARTICLE IV
	 

	 
		GENERAL
	 

	 
		 
	 

	 
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		1. Notices.
		All notices, demands and other communications provided for or permitted
		hereunder shall be made in writing and shall be by registered or certified
		first-class mail, return receipt requested, telecopier (with receipt
		confirmed), courier service or personal delivery as follows: (a) if to the
		Maker, at 140 East 45th Street, Floor 24, New York, NY 10017, facsimile
		1-212-973-9219 attention: Daniel Roitman, or at such other address or number as
		the Maker shall have furnished to the Payee in writing, or (b) if to the Payee,
		at Greenlight Capital Re, Ltd., c/o HSBC Financial Services (Cayman) Limited,
		P.O. Box 1109GT, Strathvale House, 90 North Church Street, Grand Cayman, Cayman
		Islands, facsimile 1-345-949-7634, attention: Tom Clark, or at such other
		address or number as the Payee shall have furnished to the Maker in writing.
		All such notices and communications shall be deemed to have been duly given
		when: delivered by hand, if personally delivered; when delivered by courier, if
		delivered by commercial overnight courier service; if mailed, five Business
		Days after being deposited in the mail, postage prepaid; or if telecopied to
		the telecopy number set forth above, when receipt is acknowledged by the
		recipient’s telecopier machine.
	 

	 
		2. Renunciation. Maker hereby waives presentment, demand, protest and
		notice of dishonor or refusal, protest or notice of protest and delay of
		grace.
	 

	 
		3. Waiver. No failure on the
		part of Payee to exercise and no delay in exercising, and no course of dealing
		with respect to, any right, power, privilege or remedy under this Note shall
		operate as a waiver thereof, nor shall any single or partial exercise of any
		right, power, privilege or remedy under this Note preclude any other or further
		exercise thereof or the exercise of any other right, power, privilege or
		remedy. The remedies provided herein are cumulative and not exclusive of any
		remedies provided by law.
	 

	 
		4. Expenses. Maker agrees to
		pay or reimburse Payee for (a) all reasonable out-of-pocket costs and expenses
		of Payee (including, without limitation, the reasonable fees and expenses of
		counsel to Payee), in connection with any amendment, supplement, modification
		or waiver of any of the terms of this Note and (b) all reasonable costs and
		expenses of Payee (including the reasonable fees and expenses of counsel) in
		connection with any default hereunder or Event of Default and any enforcement
		or collection proceedings resulting therefrom. The obligations of Maker under
		this Section (IV)(4) shall survive the repayment of the principal amount of
		this Note.
	 

	 
		5. Amendments. This Note may be
		amended or modified only by an instrument in writing duly executed by Maker and
		Payee. Any amendment or modification effected in accordance with this Section
		IV(5) shall be binding upon Maker and Payee.
	 

	 
		6. Successors and Assigns. This Note shall be
		binding upon; and inure to the benefit of, Maker and Payee and their respective
		successors and assigns. Maker may not assign its rights or obligations under
		this Note without the prior written consent of the Payee. Payee may assign or
		transfer this Note or any rights or obligations hereunder without the prior
		written consent of Maker.
	 

	 
		7. Headings. The section
		headings appearing herein are included solely for convenience of reference and
		are not intended to affect the interpretation of any provision of this
		Note.
	 

	 
		 
	 

	 
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		8. Severability. If one or more
		provisions of this Note are held to be unenforceable under applicable law, such
		provision(s) shall be excluded from this Note and the balance of this Note
		shall be interpreted as if such provision(s) were so excluded and shall
		otherwise be enforceable in accordance with its terms.
	 

	 
		9. Usury.
		Maker covenants (to the extent that it may lawfully do so) that it will not at
		any time insist upon, plead, or in any manner whatsoever claim or take the
		benefit or advantage of, any stay or extension law or any usury law or other
		law that would prohibit or forgive Maker from paying all or any portion of the
		principal of or interest on this Note, wherever enacted, now or at any time
		hereafter in force, or which may affect the covenants or the performance of
		this Note.
	 

	 
		10. Governing Law; Consent to
		jurisdiction. This Agreement
		shall be governed by and construed and enforced in accordance with the laws of
		the Cayman Islands. Maker hereby irrevocably submits to the exclusive
		jurisdiction of the courts of the Cayman Islands for the adjudication of any
		dispute hereunder or in connection herewith, and hereby irrevocably waives, and
		agrees not to assert in any suit, action or proceeding, any claim that it is
		not personally subject to the jurisdiction of any such court, that such suit,
		action or proceeding is improper. Maker hereby irrevocably waives personal
		service of process and consents to process being served in any such suit,
		action or proceeding by mailing a copy thereof to Maker at the address set
		forth in paragraph 1 of this Article IV and agrees that such service shall
		constitute good and sufficient service of process and notice thereof. Nothing
		contained herein shall be deemed to limit in any way any right to serve process
		in any manner permitted by law.
	 

	 
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		IN WITNESS WHEREOF, the undersigned have
		executed this Note as of the date first above written.
	 

	 
		 
	 

	 
			
				
				  GREENLIGHT CAPITAL INVESTORS,
				  LLC
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				  
 /s/ David Einhorn
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Name: 
				

			 	
				
				  David Einhorn
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  Title: 
				

			 	
				
				  Manager
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
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