Exhibit 10.7
	 

	 
		

	 

	 
		GREENLIGHT CAPITAL RE, LTD.
	 

	 
		AMENDED AND RESTATED
	 

	 
		2004 STOCK INCENTIVE PLAN
	 

	 
		

	 

	 
		FORM OF STOCK OPTION AGREEMENT
	 

	 
		

	 

	 
		This Stock Option Agreement (the “Agreement”) is
		made and entered into as of the date of grant set forth below (the
		“Date of Grant”) by and between Greenlight Capital Re,
		Ltd. (the “Company”), and the participant named below
		(“Participant”). Capitalized terms not defined herein
		shall have the meaning ascribed to them in the Company’s Amended and
		Restated 2004 Stock Incentive Plan (the “Plan”).
	 

	 	
			 
				Participant: 
			 

		  	

			 
				 
			 

		  
	
			 
				Address:
			 

		  	

			 
				 
			 

		  
	
			 
				 
			 

		  	

			 
				 
			 

		  
	
			 
				Total Option Shares:
			 

		  	

			 
				 
			 

		  
	
			 
				Exercise Price Per Share:
			 

		  	

			 
				 
			 

		  
	
			 
				Date of Grant:
			 

		  	

			 
				 
			 

		  
	
			 
				Expiration Date:
			 

		  	

			 
				 
			 

		  


	 
		

	 

	 
		1.
	 

	 
		Grant of
		Option.  The Company hereby grants to Participant an
		option (this “Option”) to purchase the total number of
		Shares set forth above as Total Option Shares (“Option
		Shares”) at the Exercise Price Per Share set forth above
		(the “Exercise Price”), subject to all of the terms and
		conditions of this Agreement and the Plan.
	 

	 
		2.
	 

	 
		Exercise Period.
	 

	 
		2.1
	 

	 
		Provided Participant continues to provide Continuous Service to the
		Company or any Affiliate, the Option will become vested and exercisable with
		respect to 33 1/3% of the Option Shares subject thereto on each of the
		next three anniversaries of the Date of Grant until the Option is 100% vested.
		 Except as provided in this Agreement, any unvested portion of the Option
		will not be exercisable on or after Participant’s termination of
		Continuous Service (“Termination Date”) and shall
		immediately terminate on such Termination Date.
	 

	 
		2.2
	 

	 
		The Option shall expire on the Expiration Date set forth above or earlier
		as provided in Section 2.1 or 3 of this Agreement or, if applicable, pursuant
		to Section 11 of the Plan.
	 

	 
		3.
	 

	 
		Termination.
	 

	 
		3.1
	 

	 
		If Participant’s Continuous Service is terminated for Cause, the
		Option, whether or not vested, shall terminate and cease to be exercisable.
	 

	 
		
 

	 

	 
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		3.2
	 

	 
		If Participant’s Continuous Service terminates due to his death or
		Disability, any unvested portion of the Option shall terminate and cease to be
		exercisable and any vested portion of the Option shall remain exercisable for
		one-year following such death or Disability, but not beyond the Expiration
		Date.
	 

	 
		3.3
	 

	 
		If Participant’s Continuous Service terminates for any reason other
		than those set forth in Sections 3.1 and 3.2 hereof, the unvested portion of
		the Option shall automatically terminate and cease to be exercisable and the
		vested portion of the Option shall remain exercisable by Participant for ninety
		(90) days after the Termination Date, but in any event no later than the
		Expiration Date.
	 

	 
		3.4
	 

	 
		Nothing in the Plan or this Agreement shall confer on Participant any
		right to continue in the employ of, or other relationship with, the Company or
		any Affiliate, or limit in any way the right of the Company or any Affiliate to
		terminate Participant’s Continuous Service, with or without Cause.
	 

	 
		4.
	 

	 
		Manner of Exercise.
	 

	 
		4.1
	 

	 
		To exercise this Option, Participant (or in the case of exercise after
		Participant’s death or incapacity, Participant’s executor,
		administrator, heir or legatee, as the case may be) must deliver to the Company
		an executed stock option exercise agreement in the form as may be approved by
		the Committee from time to time (the “Exercise
		Agreement”), which shall set forth, inter alia, (i)
		Participant’s election to exercise the Option, (ii) the number of Option
		Shares being purchased, (iii) any restrictions imposed on the Option Shares,
		(iv) any representations, warranties and agreements regarding
		Participant’s investment intent and access to information as may be
		required by the Company to comply with applicable securities laws and (v)
		whether the Shares shall be certificated or held in book-form.  If someone
		other than Participant exercises the Option, then such person must submit
		documentation reasonably acceptable to the Company verifying that such person
		has the legal right to exercise the Option.  The Option may not be
		exercised unless all necessary regulatory approvals have been obtained and such
		exercise is in compliance with all applicable securities laws and all
		regulatory and other applicable laws of the Cayman Islands, as they are in
		effect on the date of exercise.  The Exercise Agreement shall be
		accompanied by full payment of the Exercise Price for the Option Shares being
		purchased in cash or by cashiers’ check, or where permitted by law:
	 

	 
		(a)
	 

	 
		provided that the shareholders of the Company have approved by ordinary
		resolution at a general meeting either the Plan which contemplates the manner
		of repurchase set out herein or the manner of repurchase of Shares contemplated
		hereby, and to the extent permitted by, and in compliance with, all applicable
		laws and the Company’s Memorandum and Articles of Association, by delivery
		to the Company of Shares having an aggregate Fair Market Value equal to the
		Exercise Price to be satisfied by their delivery which have been held by
		Participant for at least six (6) months;
	 

	 
		(b)
	 

	 
		provided that an Initial Public Offering has occurred, through a
		“same day sale” commitment from Participant and a broker-dealer that
		is a member of the National Association of Securities Dealers (an
		“NASD Dealer”) whereby
	 

	 
		
 

	 

	 
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		Participant irrevocably elects to exercise the Option and to sell a
		portion of the Option Shares so purchased sufficient to pay for the total
		Exercise Price and whereby the NASD Dealer irrevocably commits to forward the
		total Exercise Price directly to the Company; or
	 

	 
		(c)
	 

	 
		by any combination of the foregoing.
	 

	 
		4.2
	 

	 
		At the time of exercise, Participant shall pay to the Company such amount
		as the Company deems necessary to satisfy its obligation to withhold any
		applicable income or other taxes incurred by reason of the exercise of the
		Option granted hereunder.  Participant may satisfy any such tax
		withholding obligation relating to the exercise or acquisition of the Option
		Shares by any of the following means (in addition to the Company’s right
		to withhold or to direct the withholding from any compensation paid to
		Participant by the Company or by an Affiliate) or by a combination of such
		means:  (i) tendering a cash payment; (ii) authorizing the Company to
		withhold Shares from the Shares otherwise issuable to the Participant as a
		result of the exercise or acquisition of Option Shares hereunder (and payment
		therefor); provided, however, that no Shares are withheld with a
		value exceeding the minimum amount of tax required to be withheld by law; or
		(iii) provided that the shareholders of the Company have approved by ordinary
		resolution at a general meeting either the Plan which contemplates the manner
		of repurchase set out herein or the manner of repurchase of Shares contemplated
		hereby, and to the extent permitted by, and in compliance with, all applicable
		laws and the Company’s Memorandum and Articles of Association, delivering
		to the Company or to an Affiliate, owned and unencumbered Shares not acquired
		from the Company with a Fair Market Value equal to the amount of tax liability
		to be satisfied by their delivery.
	 

	 
		5.
	 

	 
		Issuance of
		Shares.  Except as otherwise provided in the Plan or
		this Agreement, as promptly as practicable after receipt of such written
		notification of exercise, full payment of the Exercise Price, receipt of all
		regulatory consents, as appropriate, and any required income tax withholding,
		the Company shall issue or transfer to Participant the number of Shares with
		respect to which Options have been so exercised (less Shares withheld in
		satisfaction of tax withholding obligations, if any), and shall deliver to
		Participant a certificate or certificates therefor, registered in
		Participant’s name (unless Participant elects to have the Company hold the
		Shares in book-form).
	 

	 
		6.
	 

	 
		Compliance with Securities
		Law.  Participant understands and acknowledges that
		the Option Shares have not been registered with the U.S. Securities and
		Exchange Commission (the “SEC”) under the Securities
		Act of 1933, as amended (the “Securities Act”) and
		that, notwithstanding any other provision of the Agreement to the contrary, the
		vesting and holding of the Option Shares is expressly conditioned upon
		compliance with the Securities Act and any other applicable securities laws.
		 Participant agrees to cooperate with the Company to ensure compliance
		with such laws.  In addition, Participant has been advised that SEC Rule
		144 promulgated under the Securities Act, which permits certain limited sales
		of unregistered securities, is not presently available with respect to the
		Option Shares and, in any event, requires that the Option Shares be held for a
		minimum of one (1) year, and in certain cases two (2) years, after they have
		been purchased and paid for (within the meaning of Rule 144).
		 Participant understands that Rule 144 may indefinitely restrict transfer
		of the Option Shares so long as the Participant remains an
		“affiliate” of the Company or if “current public
		information” about the
	 

	 
		
 

	 

	 
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		Company (as defined in Rule 144) is not publicly available.  If the
		Option Shares are issued pursuant to SEC Rule 701 promulgated under the
		Securities Act, the Option Shares may become freely tradable by non-affiliates
		(under limited conditions regarding the method of sale) ninety (90) days after
		the first sale of Option Shares to the general public pursuant to a
		registration statement filed with and declared effective by the SEC.
		 Affiliates must comply with the provisions (in addition to the holding
		period requirements) of Rule 144.  Participant represents that he is an
		“Accredited Investor” within the meaning of Rule 501(a) of Regulation
		D, as promulgated under Section 5 of the Securities Act.
	 

	 
		7.
	 

	 
		Restrictive Legends and Stop-Transfer Orders.

	 

	 
		7.1
	 

	 
		Participant understands and agrees that the Company will place the
		legends set forth below or similar legends on any stock certificate(s)
		evidencing the Option Shares, together with any other legends that may be
		required by any applicable securities laws, the Company’s Certificate of
		Incorporation or Memorandum and Articles of Association, any other agreement
		between Participant and the Company or any agreement between Participant and
		any third party:
	 

	 
		THE SECURITIES EVIDENCED BY THIS
		CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
		1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
		UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
		SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
		SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES AN
		OPINION OF COUNSEL OF THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
		THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
		EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
		AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE PRIOR APPROVAL OF THE CAYMAN
		ISLANDS MONETARY AUTHORITY.
	 

	 
		IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
		SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S ARTICLES OF
		ASSOCIATION AND PURSUANT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF AUGUST
		11, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS.
		 THE SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS, INCLUDING A
		REPURCHASE RIGHT FOR THE BENEFIT OF GREENLIGHT CAPITAL RE, LTD., IN THE
		
	 

	 
		
 

	 

	 
		4
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		GREENLIGHT CAPITAL RE, LTD.
		AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN.  A COPY OF SUCH ARTICLES
		OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT AND STOCK INCENTIVE PLAN WILL
		BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
		REQUEST.
	 

	 
		OWNERSHIP OF OPTIONS BY UNITED STATES PERSONS (AS DEFINED IN
		SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED) MAY
		SUBJECT SUCH PERSONS TO SIGNIFICANT ADVERSE UNITED STATES FEDERAL INCOME TAX
		CONSEQUENCES, INCLUDING ADVERSE CONSEQUENCES ARISING UNDER THE UNITED STATES
		PASSIVE FOREIGN INVESTMENT COMPANY RULES.  UNITED STATES PERSONS THAT OWN
		OPTIONS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE UNITED
		STATES FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH OWNERSHIP OF THE
		OPTIONS.
	 

	 
		7.2
	 

	 
		Participant agrees that, to ensure compliance with the restrictions
		imposed by this Agreement, the Company may issue appropriate
		“stop-transfer” instructions to its transfer agent, if any, and if
		the Company transfers its own securities, it may make appropriate notations to
		the same effect in its own records.
	 

	 
		7.3
	 

	 
		The Company will not be required (i) to approve nor record the transfer
		on its books of any Option Shares that have been sold or otherwise transferred
		in violation of any of the provisions of this Agreement or (ii) to treat
		as owner of such Option Shares, or to accord the right to vote or pay dividends
		to, any purchaser or other transferee to whom such Shares have been purportedly
		transferred.
	 

	 
		8.
	 

	 
		Company; Participant.
		 
	 

	 
		8.1
	 

	 
		The term “Company” as used in this Agreement with
		reference to Continuous Service shall include the Company and its Affiliates,
		if any, as appropriate.
	 

	 
		8.2
	 

	 
		Whenever the word “Participant” is used in any
		provision of this Agreement under circumstances where the provision should
		logically be construed to apply to the beneficiaries, the executors, the
		administrators, or the person or persons to whom the Option may be transferred
		by will or by the laws of descent and distribution, the word
		“Participant” shall be deemed to include such person or persons.
	 

	 
		9.
	 

	 
		Non-Transferability.  The
		Option is not transferable by Participant otherwise than to a designated
		beneficiary upon death or by will or the laws of descent and distribution, and
		is exercisable during Participant’s lifetime only by him.  No
		assignment or transfer of the Option,
	 

	 
		
 

	 

	 
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		or of the rights represented thereby, whether voluntary or involuntary,
		by operation of law or otherwise (except to a designated beneficiary, upon
		death, by will or the laws of descent and distribution), shall vest in the
		assignee or transferee any interest or right herein whatsoever, but immediately
		upon such assignment or transfer the Option shall terminate and become of no
		further effect.
	 

	 
		10.
	 

	 
		Rights as
		Shareholder.  Participant or a transferee of the
		Option shall have no rights as shareholder with respect to any Option Shares
		until he shall have become the holder of record of such shares, and no
		adjustment shall be made for dividends or distributions or other rights in
		respect of Option Shares for which the record date is prior to the date upon
		which he shall become the holder of record thereof.  
	 

	 
		11..
	 

	 
		Adjustments.  The Option
		may be adjusted or terminated in any manner as contemplated by the Plan.
	 

	 
		12.
	 

	 
		General
		Compliance.  Notwithstanding any of the provisions
		hereof, Participant hereby agrees that he will not exercise the Option, and
		that the Company will not be obligated to issue or transfer any Shares to
		Participant hereunder, if the exercise hereof or the issuance or transfer of
		such Option Shares shall constitute a violation by Participant or the Company
		of any provisions of any law or regulation of any governmental authority or a
		violation of the terms and conditions of the Company’s Memorandum and
		Articles of Association or Shareholders’ Agreement (as defined below).
		 Any determination in this connection by the Committee shall be final,
		binding and conclusive.  The Company shall in no event be obliged to
		register any securities pursuant to the Securities Act (as now in effect or as
		hereafter amended) or to take any other affirmative action in order to cause
		the exercise of the Option or the issuance or transfer of Shares pursuant
		thereto to comply with any law or regulation of any governmental authority.
	 

	 
		13.
	 

	 
		Notice.  Every notice or
		other communication relating to this Agreement shall be in writing, and shall
		be mailed to or delivered to the party for whom it is intended at such address
		as may from time to time be designated by it in a notice mailed or delivered to
		the other party as herein provided; provided, that, unless and until some other
		address be so designated, all notices or communications by Participant to the
		Company shall be mailed or delivered to the Company at its principal executive
		office, and all notices or communications by the Company to Participant may be
		given to Participant personally or may be mailed to him at his address as
		recorded in the records of the Company.
	 

	 
		14.
	 

	 
		Binding
		Effect.  Subject to Section 9 hereof, this Agreement
		shall be binding upon the heirs, executors, administrators and successors of
		the parties hereto.
	 

	 
		15.
	 

	 
		Governing
		Law.  This Agreement shall be governed by and
		construed in accordance with the laws of the Cayman Islands.
	 

	 
		16.
	 

	 
		Plan.  The terms
		and provisions of the Plan including, without limitation, Section 14 thereof,
		are incorporated herein by reference, and Participant hereby acknowledges
		receiving a copy of the Plan.  In the event of a conflict or inconsistency
		between the discretionary terms and provisions of the Plan and the provisions
		of this Agreement, the Plan shall govern and control.
	 

	 
		
 

	 

	 
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		17.
	 

	 
		Tax Consequences.
		 Set forth below is a brief summary as of the Date of Grant of some of the
		U.S. Federal tax consequences of the grant, vesting and exercise of the Option
		and disposition of the Option Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
		AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD
		CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
		 This Agreement is not given in the form of a covered opinion, within the
		meaning of Circular 230 issued by the U.S. Secretary of the Treasury.
		 Thus, we are required to inform you that you cannot rely upon any tax
		advice contained in this Agreement for the purpose of avoiding U.S. Federal tax
		penalties.  In addition, any tax advice contained in this Agreement may
		not be used to promote, market or recommend a transaction to another party.
	 

	 
		17.1
	 

	 
		The grant and vesting of the Option should not result in any U.S. Federal
		income tax liability.
	 

	 
		17.2
	 

	 
		There may be a regular U.S. Federal income tax liability upon the
		exercise of the Option. Participant may be treated as having received
		compensation income (taxable at ordinary income tax rates) equal to the excess,
		if any, of the Fair Market Value of the Option Shares on the date of exercise
		over the Exercise Price. If Participant is a current or former employee of the
		Company, the Company may be required to withhold from Participant’s
		compensation or collect from Participant and pay to the applicable taxing
		authorities an amount equal to a percentage of this compensation income at the
		time of exercise.
	 

	 
		17.3
	 

	 
		If the Shares delivered upon exercise of the Option are held for more
		than twelve (12) months, any gain realized on disposition of the Share should
		be treated as long term capital gain.
	 

	 
		18.
	 

	 
		Nonqualified
		Stock Option.  The Option granted hereunder is not
		intended to be an incentive stock option within the meaning of Section 422 of
		the Code.
	 

	 
		19.
	 

	 
		Successors and
		Assigns.  The Company may assign any of its rights
		under this Agreement.  This Agreement shall be binding upon and inure to
		the benefit of the successors and assigns of the Company. Subject to the
		restrictions on transfer set forth herein, this Agreement shall be binding upon
		Participant and Participant’s heirs, executors, administrators, legal
		representatives, successors and assigns.
	 

	 
		20.
	 

	 
		Market Standoff
		Agreement.  In the case of an Initial Public Offering,
		if the underwriters require that any officers and directors of the Company
		agree not to effect any disposition of any equity security of the Company or of
		any security convertible into or exchangeable or exercisable for any equity
		security of the Company (in each case, other than as part of such underwritten
		public offering), Participant agrees to the same during the 180-day period (or
		such longer period as may be reasonably requested by the underwriter of such
		offering) beginning on the effective date of such registration statement
		(except as a part of such registration).
	 

	 
		21.
	 

	 
		Shareholders
		Agreement.  Upon the exercise of the Option, the
		Company shall only be required to issue the Option Shares if Participant signs
		an instrument of accession pursuant to which Participant will become bound by
		the terms and conditions of the Company’s
	 

	 
		
 

	 

	 
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		Shareholders Agreement, dated as of August 11, 2004, as it may be amended
		from time to time (the “Shareholders’ Agreement”).

	 

	 
		[signature page next]
	 

	 
		
 

	 

	 
		8
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
		by  its duly authorized representative and Participant has executed this
		Agreement, effective as of the Date of Grant.
	 

	 		
	
			 
				 
			 

		  	
			 
				 
			 

		  
	 	 
	
			 
				GREENLIGHT CAPITAL RE, LTD.
			 

		  	
			 
				PARTICIPANT
			 

		  
	
			 
				By:  ______________________________
			 

		  	
			 
				____________________________________
			 

			 
				(Signature)
			 

		  
	
			 
				 
			 

		  	
			 
				 
			 

		  
	 	 
	
			 
				____________________________________
			 

			 
				(Please print name)
			 

		  	
			 
				____________________________________
			 

			 
				(Please print name)
			 

		  
	
			 
				 
			 

		  	
			 
				 
			 

		  
	 	 
	
			 
				____________________________________
			 

			 
				(Please print title)
			 

		  	
			 
				 
			 

		  


	 
		

	 

	 
		

	 

	 
		
 

	 

	 
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