Document:

Exhibit 4.2
	 

	 
		EXECUTION COPY
	 

	 
		“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. A COPY OF SUCH ARTICLES OF ASSOCIATION AND
		SHAREHOLDERS’ AGREEMENT 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.
	 

	 
		GREENLIGHT CAPITAL RE, LTD.
	 

	 
		SHARE PURCHASE OPTION
	 

	 
		 
	 

	 
			
				
				  Certificate No.: W-1
				

			 	
				
				  Date: August 11, 2004
				

			 

 

	 
		FOR VALUE RECEIVED, GREENLIGHT CAPITAL RE,
		LTD., a company organized under the laws of the Cayman Islands with limited
		liability (the “Company”),
		hereby grants to First International Capital Holdings, Ltd. (“FIC”)
		(the “Option Holder”) this option certificate (this
		“Option”) to purchase, in accordance with the terms set
		forth herein, FOUR HUNDRED THOUSAND (400,000) shares of the Company’s
		Class A Ordinary Shares, initially having a par value of US$0.10 per share (the
		“Class A Ordinary
		Shares”), at a price per share
		equal to US$10.00 as adjusted from time to time pursuant to Section 2 hereof
		(the “Exercise
		Price”) but at no time shall the
		Exercise Price be less than the then current par value of any share to be
		issued pursuant hereto.
	 

	 
		This Option is issued pursuant to that
		certain letter agreement, dated as of August 5, 2002 (the “Letter Agreement”), between Greenlight Capital, Inc., the sponsor
		of the Company (“Greenlight
		Capital”) and First International
		Securities, Ltd. (“FIS”).
		Greenlight Capital assigned all of its rights, title and interests under the
		first paragraph of the section of the letter entitled “FIS’ Incentive
		Compensation” to the Company as of the date hereof. FIS assigned all of
		its rights, title and interest
	 

	 
		 
	 

	 
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		under the Letter Agreement to FIC on June
		30, 2003. Each capitalized term used in this Option but not otherwise defined
		herein has the meaning given to such term in the Letter Agreement.
	 

	 
		This Option is subject to the following
		provisions:
	 

	 
		Section 1. Option Terms.
	 

	 
		(a) This Option is for
		the purchase of FOUR HUNDRED THOUSAND (400,000) Class A Ordinary Shares at the
		Exercise Price, as such price may be adjusted from time to time under the terms
		hereof.
	 

	 
		(b) This Option shall
		expire at 5:00 p.m. Cayman Islands time, on the tenth anniversary of the date
		that this Option is exercisable (the “Expiration
		Date”).
	 

	 
		Section 2. Anti-dilution Provisions. In order to prevent dilution of the purchase rights
		granted under Section 1 hereof, the Exercise Price shall be subject to
		adjustment from time to time pursuant to this Section 2. 
	 

	 
		(a) Effect on Exercise Price of Certain
		Events. For purposes of determining the
		adjusted Exercise Price, the following shall be applicable:
	 

	 
		(i) Subdivision or Combination of Ordinary
		Shares. If the Company, at any time
		while this Option is outstanding (a) shall pay a stock or bonus share
		dividend on its Class A Ordinary Shares or Class B Ordinary Shares, par value
		$0.10 per share (the “Class B
		Ordinary Shares” and, collectively
		with the Class A Ordinary Shares, the “Ordinary Shares”), (b) subdivide the class of Ordinary Shares into
		a larger number of shares or (c) combine the Ordinary Shares into a smaller
		number of shares then (i) the Exercise Price thereafter shall be determined by
		multiplying the Exercise Price by a fraction the numerator of which shall be
		the number of Ordinary Shares (excluding treasury shares, if any) issued and
		outstanding before such event and the denominator of which shall be the number
		of Ordinary Shares issued and outstanding after such event and (ii) the number
		of Ordinary Shares issuable upon exercise of the Option shall be
		multiplied by a fraction, the numerator of which shall be the number of
		Ordinary Shares (excluding treasury shares, if any) issued and outstanding
		after such event and the denominator of which shall be the number of Ordinary
		Shares (excluding treasury shares, if any) issued and outstanding before such
		event. Any adjustment made pursuant to this Section 2(a)(1) shall become
		effective immediately after the record date for the determination of
		shareholders entitled to receive such dividend or distribution and shall become
		effective immediately after the effective date in the case of a subdivision or
		combination.
	 

	 
		(ii) Amalgamation, Reorganization, Reclassification,
		Consolidation, Merger or Sale. Any
		amalgamation, recapitalization, reorganization, reclassification,
		consolidation, scheme, arrangement, merger of the Company or sale of all or
		substantially all of the Company’s assets or other transaction, in each
		case which is effected in such a manner that the holders of Ordinary Shares are
		entitled to receive (either directly or upon subsequent liquidation) shares,
		securities or assets with respect to or in exchange for Ordinary Shares is
		referred to herein as an “Organic
		Change.” Prior to the consummation
		of any Organic Change, the Company shall make appropriate provisions to insure
		that the Option Holder shall thereafter have the right to acquire and receive,
		in lieu of or in addition to (as the case may be) Class A Ordinary Shares
		immediately theretofore acquirable and receivable upon the exercise of this
		Option, such shares, securities or assets as such Option Holder would have
		received in connection with such Organic Change if such Option Holder had
		exercised this Option immediately prior to such Organic Change. In each such
		Organic Change, the Company shall also make appropriate provisions to insure
		that the provisions of this Section 2 shall thereafter be applicable to this
		Option (including, in the
	 

	 
		 
	 

	 
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		case of any such amalgamation,
		consolidation, merger or sale in which the successor entity or purchasing
		entity is other than the Company) and that there is an immediate adjustment of
		the Exercise Price to the value for the Class A Ordinary Shares reflected by
		the terms of such amalgamation, consolidation, merger or sale, and a
		corresponding immediate adjustment in the number of Class A Ordinary Shares
		acquirable and receivable upon exercise of this Option, if the value so
		reflected is less than the Exercise Price in effect immediately prior to such
		amalgamation, consolidation, merger or sale. Prior to the consummation of any
		such consolidation, merger or sale, the Company shall use its reasonable
		efforts to cause the successor entity (if other than the Company resulting from
		amalgamation, consolidation, merger or sale) or the entity purchasing such
		assets to assume, by written instrument, the obligation to deliver to each such
		Option Holder such shares, securities or assets as, in accordance with the
		foregoing provisions, the Option Holder may be entitled to acquire; provided,
		however that any such assumption shall not relieve the Company of its
		obligations hereunder.
	 

	 
		(b) Notices.
		Immediately upon any adjustment of the Exercise Price, the Company shall give,
		or cause to be given, written notice thereof to the Option Holder, setting
		forth in reasonable detail and certifying the calculation of such adjustment.
		The Company shall give, or cause to be given, written notice to the Option
		Holder at least five (5) business days prior to the date on which the Company
		closes its books or takes a record (i) with respect to any dividend or
		distribution upon Ordinary Shares, (ii) with respect to any pro rata
		subscription offer to holders of Ordinary Shares or (iii) for determining
		rights to vote with respect to any Organic Change, dissolution or liquidation.
		The Company shall also give, or cause to be given, written notice to the Option
		Holder at least five (5) business days prior to the date on which any Organic
		Change shall take place
	 

	 
		Section 3. Exercise of Option. 
	 

	 
		(a) Exercise Procedure: The Option Holder may exercise any portion of this
		Option at any time and from time to time, commencing after the date hereof
		until 5:00 p.m. Cayman Islands time, on the Expiration Date by surrendering at
		the registered office of the Company this Option and a completed Exercise
		Agreement (substantially in the form of Exhibit A
		attached hereto) and by paying the Exercise Price in one of the following
		manners:
	 

	 
		(i) Cash Exercise.
		The Option Holder shall deliver immediately available funds or a cashiers check
		payable to the Company; or
	 

	 
		(ii) Cashless Exercise. After the date of issuance of this Option, if all of
		the Class A Ordinary Shares underlying this Option (the “Option Shares”) are registered pursuant to an effective
		registration statement and the provisions of the Companies Law (2003 Revision)
		as from time to time amended or replaced (the “Companies Law”) may be satisfied by the Company, the Option
		Holder shall have the right to surrender this Option to the Company together
		with a notice of cashless exercise, in which event the Company shall issue to
		the Option Holder the number of Option Shares determined as follows:
	 

	 
		X = Y (A-B)/A
	 

	 
		Where:
	 

	 
		X = the number of Option Shares to be issued
		to the Option Holder
	 

	 
		Y = the number of Option Shares with respect
		to which this Option is being exercised
	 

	 
		 
	 

	 
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		A = the average of the per share Market
		Price of the Ordinary Shares for the five (5) trading days immediately prior to
		(but not including) the date of exercise (but not less than the then par value
		of the Ordinary Shares)
	 

	 
		B = the Exercise Price
	 

	 
		For purposes of Rule 144 promulgated under
		the United States Securities Act of 1933, as amended, it is intended,
		understood and acknowledged that the Option Shares issued in a cashless
		exercise transaction shall be deemed to have been acquired and paid the full
		purchase price therefor by the Option Holder, and the holding period for the
		Option Shares shall be deemed to have been commenced on the issue date to the
		extent permitted by Rule 144. The consideration to the Company for the issue of
		the Option Shares shall be the surrender of the Option and the rights of the
		Option Holder hereunder.
	 

	 
		For purposes hereof, “Market
		Price” means on any particular date (i) the closing bid price per Class A
		Ordinary Share on such date on the national securities exchange or automated
		quotation system on which the Class A Ordinary Shares are then listed or if
		there is no such price on such date, then the closing bid price on such
		exchange or quotation system on the date nearest preceding such date, or (ii)
		if the Class A Ordinary Shares are not listed then on a national securities
		exchange or automated quotation system, the closing bid price for each Ordinary
		Share in the over-the-counter market, as reported by the National Quotation
		Bureau Incorporated (or similar organization or agency succeeding to its
		functions of reporting prices) at the close of business on such date.
	 

	 
		(b) Certificates for the Class A Ordinary
		Shares acquired through exercise of this Option shall be delivered by the
		Company to the Option Holder within five (5) business days after (i) notice of
		request for such certificates by the Option Holder, (ii) receipt by the Company
		of the items required by Section 3(a) for the respective method or methods of
		exercise, and (iii) where applicable, compliance with any required approval
		under the Companies Law (and the Company shall use reasonable efforts to assist
		in obtaining any required approval of the Cayman Islands Monetary Authority as
		promptly as practicable). Upon a partial exercise of this Option, unless this
		Option has expired or all of the purchase rights represented hereby have been
		exercised, the Company shall prepare a new Option, substantially identical
		hereto, representing the rights formerly represented by this Option which have
		not expired or been exercised and shall, within such five-day period, deliver
		such new Option to such Option Holder.
	 

	 
		(c) The Class A Ordinary Shares issuable
		upon exercise of this Option shall be deemed to have been issued to the Option
		Holder on the date by which the Company receives the completed Exercise
		Agreement and payment of the Exercise Price, if any, and the register of
		members of the Company has recorded such issue of shares and, where applicable,
		has received any required approval under the Companies Law and the Option
		Holder shall be deemed for all purposes to have become the record holder of
		such Class A Ordinary Shares on such date.
	 

	 
		(d) The issuance of certificates for the
		Class A Ordinary Shares issuable upon exercise of this Option shall be made
		without charge to the Option Holder for any issuance tax in respect thereof or
		other cost incurred by the Company in connection with such exercise and the
		related issuance of the Class A Ordinary Shares.
	 

	 
		(e) The Company shall at all times reserve
		and keep available authorized but unissued Class A Ordinary Shares, solely for
		the purpose of issuance upon exercise of this Option, such number of Class A
		Ordinary Shares as are issuable upon exercise of this Option. All Class A
		Ordinary
	 

	 
		 
	 

	 
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		Shares shall, when issued, be duly and
		validly issued, fully paid and nonassessable (meaning that no further sums are
		required to be paid by the holders thereof in connection with the issue
		thereof) and free from all taxes, liens and charges. The Company shall take
		such actions as may be necessary to assure that the Class A Ordinary Shares may
		be so issued without violation of any applicable law or governmental regulation
		or any requirements of any domestic securities exchange upon which their shares
		may be listed (except for official notice of issuance which shall be
		-immediately delivered by the Company upon each such issuance).
	 

	 
		Section 4. Option Not Transferable.
	 

	 
		(a) Except as permitted by Section 4(b),
		this Option is not transferable by the Option Holder.
	 

	 
		(b) The restrictions set forth in 4(a) above
		shall not apply to any transfer by the holder of this Option to any Person
		approved by the Board of Directors of the Company in its sole and reasonable
		discretion; provided that prior to such transfer, each proposed transferee (i)
		delivers a written notice to the Company, which notice shall disclose in
		reasonable detail the identity of such transferee, (ii) delivers an opinion of
		counsel which (to the Company’s reasonable satisfaction) is knowledgeable
		in securities and tax matters and that such transfer would not likely cause
		adverse tax, regulatory or legal consequences to the Company, any of its
		subsidiaries or any of its shareholders and (iii) executes that certain
		Shareholders’ Agreement dated as of August 11, 2004 by and among the
		Company and each of the other signatories to the Shareholders’ Agreement.
		“Person” means an individual, a partnership, a company, a
		corporation, a limited liability company, an association, a joint stock
		company, a trust, a joint venture, an unincorporated organization or a
		governmental or quasi-governmental entity or any department, agency or
		political subdivision thereof.
	 

	 
		Section 5. Option Exchangeable for Different
		Denominations. This Option is
		exchangeable, upon the surrender hereof by the Option Holder at the registered
		office of the Company, for new options in different denominations,
		substantially identical hereto, representing in the aggregate the rights
		formerly represented by this Option, and each of such new options shall
		represent such portion of such rights as is designated by the Option Holder at
		the time of such surrender. The date the Company initially issues this Option
		shall be the date of issuance of such new options regardless of the number of
		times new certificates representing the unexpired and unexercised rights
		formerly represented by this Option shall be issued.
	 

	 
		Section 6. Replacement; Taxes. Upon receipt of evidence reasonably satisfactory to
		the Company (an affidavit of the Option Holder shall be satisfactory) of the
		ownership and the loss, theft, destruction or mutilation of any certificate
		evidencing this Option, and in the case of any such loss, theft or destruction,
		upon receipt of indemnity reasonably satisfactory to the Company (provided that
		if such Option Holder is a financial institution or other institutional
		investor its own agreement shall be satisfactory), or, in the case of any such
		mutilation upon surrender of such certificate, the Company shall (at its
		expense) execute and deliver in lieu of such certificate a new certificate,
		substantially identical hereto, representing the rights represented by such
		lost, stolen, destroyed or mutilated certificate and dated the date of such
		lost, stolen, destroyed or mutilated certificate. The Company shall pay all
		taxes (other than securities transfer taxes) and all other expenses and charges
		payable in connection with the preparation, execution, and delivery of options
		pursuant to Sections 4, 5 and 6.
	 

	 
		Section 7. Successors and Assigns. This instrument is intended to bind and inure to the
		benefit of and be enforceable by the Option Holder and its respective heirs,
		executors, administrators and successors.
	 

	 
		 
	 

	 
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		Section 8. Amendment and Waiver. Except as otherwise provided herein, the provisions of
		this Option may be amended only if the Company has obtained the written consent
		of the Option Holder, which consent shall not be unreasonably withheld.
	 

	 
		Section 9. Descriptive Headings. The descriptive headings of this Option are inserted
		for convenience only and do not constitute a part of this Option.
	 

	 
		Section 10. Governing Law.
		This Option shall be governed by and construed and enforced in accordance with
		the laws of the Cayman Islands. Each party, for the benefit of the other,
		hereby irrevocably submits to the nonexclusive jurisdiction of the courts of
		the Cayman Islands for the adjudication of any dispute hereunder or in
		connection herewith or with any transaction contemplated hereby or discussed
		herein, 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. Each party 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 such party at the address for such notices to it
		under this Option 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.
	 

	 
		Section 11. Complete Agreement; Severability. Except as otherwise expressly set forth herein, this
		Option and any other agreement or instrument executed by the parties and
		contemplated by the Letter Agreement embody the complete agreement and
		understanding among the parties hereto with respect to the subject matter
		hereof and supersede and preempt any prior understandings, agreements or
		representations by or among the parties, written or oral, which may have
		related to the subject matter hereof in any way. In case any provision of this
		Option shall be invalid, illegal or unenforceable, such invalidity, illegality,
		or unenforceability shall not in any way affect or impair any other provision
		of this Option.
	 

	 
		Section 12. Notices. All
		notices and other communications provided for herein shall be in writing and
		shall be deemed to have been duly given if delivered personally or sent by
		registered or certified mail, return receipt requested, postage prepaid:

	 

	 
		 
	 

	 
			
				
				  If to the Company:
				

			 	
				
				   
				

			 	
				
				  Greenlight Capital Re,
				  Ltd.
 HSBC Financial Services (Cayman)
				  Limited
 2nd Floor, Strathvale House, 90
				  North Church Street
 P.O. Box
				  1109GT
 Grand Cayman, Cayman
				  Islands
 Attn: Tom Clark
				

			 
	
				
				  In each case with a copy to:
				

			 	
				
				   
				

			 	
				
				  Akin Gump Strauss Hauer & Feld
				  LLP
 590 Madison Avenue

				  New York, New York 10022

				  Attention: Kerry E. Berchem, Esq.
				

			 
	
				
				  If to the Purchaser:
				

			 	
				
				   
				

			 	
				
				  First International Capital
				  Holdings, Ltd.
 c/o Caribbean Corporate
				  Services Ltd.
 Omar Hodge
				  Building
 Road Town

				  Tortola, British Virgin Islands

				  Attention: Joseph Taussig
				

			 

 

	 
		 
	 

	 
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		All such notices and communications shall be
		deemed to have been duly given when delivered by hand, if personally delivered;
		five business days after the date of deposit in the Cayman Islands or United
		States of America mail, if mailed by first-class certified air mail; when
		receipt is acknowledged by the recipient facsimile machine, if sent by
		facsimile; and one business day after being delivered via a next-day air
		courier.
	 

	 
		 
	 

	 
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		IN WITNESS
		WHEREOF, the Company has caused this Option to be executed on a deed the date
		first written above.
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  GREENLIGHT CAPITAL RE, LTD.
				

			 
	
				
				   
				

			 	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /s/ David Einhorn
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  Name: David Einhorn
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  Title: Director
				

			 

 

	 
		 
	 

	 
			
				
				  Accepted and Agreed to:

				  As of August 27, 2004
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  FIRST INTERNATIONAL CAPITAL
				  HOLDINGS, LTD.
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				  
 /s/ Joseph F. Taussig
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				

			 
	
				
				   
				

			 	
				
				  Name: Joseph F. Taussig
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				  Title: President
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		8
	 

	 
		 
	 

	 
 

	 
		EXHIBIT A
	 

	 
		EXERCISE AGREEMENT
	 

	 
			
				
				  To:
				

			 	
				
				  GREENLIGHT CAPITAL RE,
				  LTD.
				

			 

 

	 
		1.  The undersigned hereby: (1) irrevocably elects to
		subscribe for and offers to purchase Class A Ordinary Shares of Greenlight
		Capital Re, Ltd., pursuant to Option No. W-1 heretofore issued to
		______________ on __________, 2004; (2) encloses a payment of $ _________ for
		these shares at a price of $ ______ per share (as adjusted pursuant to the
		provisions of the Option); and (3) requests that a certificate for the shares
		be issued in the name of the undersigned and delivered to the undersigned at
		the address specified below.
	 

	 
		2.  The undersigned hereby: (1) irrevocably elects to
		exchange Option(s) to purchase _______ Class A Ordinary Shares of Greenlight
		Capital Re, Ltd., pursuant to Option No. W-1 heretofore issued to ____________
		on ________, 2004; (2) encloses Option(s) as a payment of $___________ for
		these shares at a price of $____ per share (as adjusted pursuant to the
		provisions of the Option); and (3) requests that a certificate for the shares
		be issued in the name of the undersigned and delivered to the undersigned at
		the address specified below.
	 

	 
		 
	 

	 
			
				
				  
 Dated:
				

			 	
				
				   
				

			 	
				
				  Signature 
				

			 	
				
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  Address
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		9Exhibit 10.1
	 

	 
		October 12, 2005
	 

	 
		Greenlight Reinsurance, Ltd.
	 

	 
		Strathvale House
	 

	 
		90 North Church Street
	 

	 
		P.O. Box 1109 GT
	 

	 
		Georgetown, Grand Cayman, Cayman
		Islands
	 

	 
		Re: US$200,000,000 Letter of Credit Facility 

	 

	 
		Gentlemen:
	 

	 
		We are pleased to confirm that we have
		established for the account of Greenlight Reinsurance, Ltd.
		(“Greenlight”) a letter of credit facility (the “Facility”)
		in a maximum amount of US$200,000,000, available for use by Greenlight until
		October 11, 2006, as such date may be extended in accordance with the following
		sentence (the “Facility Termination Date”). The Facility Termination
		Date shall be extended by 364 days beyond the then effective Facility
		Termination Date unless we or Greenlight delivers a written notice of
		cancellation to the other party at least 120 days before the then effective
		Facility Termination Date. Availments under the Facility shall be in the form
		of letters of credit (“Letters of Credit”).
	 

	 
		The issuance of each Letter of Credit will
		be governed by our standard form of Application and Agreement for Standby
		Letter of Credit, a form of which is annexed hereto as Exhibit A (each as
		amended, supplemented or otherwise modified, a “Letter of Credit
		Agreement”). Greenlight will be required to pay us (i) with respect to any
		issuance or amendment of each Letter of Credit during any calendar month, $250
		per each such issuance or amendment payable on the 10th day of the
		next following calendar month and (ii) a commission equal to 1.15% per annum of
		the outstanding amount of each Letter of Credit, payable quarterly in advance.
		Each Letter of Credit shall be issued solely to support Greenlight’s
		reinsurance or insurance obligations incurred in its ordinary course of
		business and shall be for the duration set forth in the applicable Letter of
		Credit Agreement, but in no event shall the expiration date of any Letter of
		Credit be more than three years after the date on which it was issued, subject
		to extensions (not to exceed three years so long as the remaining tenor of such
		Letter of Credit does not exceed three years at any time) at any time prior to
		the Facility Termination Date, provided that no Event of Default (as defined in
		the Hypothecation Agreement referred to below) has occurred and is continuing.
		Letters of Credit may be cancelled at any time, without penalty, upon request
		by Greenlight and with the applicable beneficiary’s prior written consent.
		Upon any such termination of a Letter of Credit, we shall refund to Greenlight
		the unearned portion of the commission received by us with respect thereto. We
		agree that, within two Business Days (as defined in a Letter of Credit
		Agreement) of our receipt of a Letter of Credit Agreement, duly completed with
		respect to the Credit (as defined in such Letter of Credit Agreement) and
		executed by Greenlight, we will issue the Credit so long as no Event of Default
		has occurred and is continuing. Letters of Credit may be denominated in U.S.
		Dollars, Canadian Dollars, Cayman Dollars, Bermuda Dollars, Pounds Sterling,
		Swiss Francs, Euros, Japanese Yen or such other currency requested by
		Greenlight as is reasonably acceptable to us.
	 

	 
		Availability under the Facility will be
		subject to the advance rates and value ascribed to the securities and other
		financial assets pledged by Greenlight as security under the Hypothecation
		Agreement referred to below. At all times after the Facility Termination Date,
		we shall have the option to require Greenlight to pledge, under the
		Hypothecation Agreement, cash 
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		Greenlight Reinsurance, Ltd.
	 

	 
		October 12, 2005
	 

	 
		Page 2
	 

	 
		collateral in an amount not less than 100%
		of the outstanding amount of each Letter of Credit having an expiration date
		longer than one year following the first anniversary of the date of issuance of
		such Letter of Credit.
	 

	 
		As a condition to the effectiveness of the
		Facility, Greenlight shall furnish us with each of the following, each dated as
		of the date hereof or as of another date satisfactory to us:
	 

	 
		(a) a hypothecation agreement (the
		“Hypothecation Agreement”), a form of which is annexed hereto as
		Exhibit B, duly executed by Greenlight, pledging to us Greenlight’s
		Collateral Account number 522-96812 (the “Account”) maintained by
		Citigroup Global Markets Inc. (“CGMI”) as security for, among other
		things, Greenlight’s reimbursement obligations under the Letter of Credit
		Agreements;
	 

	 
		(b) a control agreement (the “Control
		Agreement”), a form of which is annexed hereto as Exhibit C, duly executed
		by Greenlight and CGMI;
	 

	 
		(c) an agreement with Corporation Service
		Company providing for it to serve as agent for the service of process under the
		Letter of Credit Agreements, the Hypothecation Agreement and the Control
		Agreement;
	 

	 
		(d) a certificate of the Secretary or an
		Assistant Secretary of Greenlight certifying:
	 

	 
		(i)
	 

	 
		that attached thereto are true and complete
		copies of:
	 

	 
		(A) 
	 

	 
		the Amended and Restated Articles of
		Association of Greenlight;
	 

	 
		(B) 
	 

	 
		the Amended and Restated Memorandum of
		Association of Greenlight; and
	 

	 
		(C)
	 

	 
		resolutions of the board of directors of
		Greenlight approving the Facility and authorizing the execution, delivery and
		performance by Greenlight of this letter agreement, the Letter of Credit
		Agreements, the Hypothecation Agreement and the Control Agreement and the
		transactions contemplated hereby and thereby; and
	 

	 
		(ii) 
	 

	 
		 the incumbency of the officers of
		Greenlight authorized to execute and deliver this letter agreement, the Letter
		of Credit Agreements, the Hypothecation Agreement, the Control Agreement and
		the documents delivered in connection herewith and therewith;
	 

	 
		(e) a Certificate of Good Standing for each
		of Greenlight and Greenlight Capital Re, Ltd. issued by the Registrar
		of
Companies; and
	 

	 
		(f) opinions of New York and Cayman Islands
		counsel to Greenlight, in form and substance reasonably satisfactory to
		us.
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		Greenlight Reinsurance, Ltd.
	 

	 
		October 12, 2005
	 

	 
		Page 3
	 

	 
		You shall also pay or reimburse us for the
		costs and reasonable out-of-pocket expenses (including, without limitation,
		attorneys’ fees and expenses) of the preparation, negotiation, execution
		and delivery of this letter agreement, the Letter of Credit Agreements, the
		Hypothecation Agreement, the Control Agreement and the agreements and other
		documents executed and delivered in connection herewith and therewith.
	 

	 
		Each of the parties hereto agrees that if
		CGMI materially breaches its duties under the Prime Broker Agreement, dated
		August 12, 2005, between Greenlight and CGMI, Greenlight may transfer the
		Account and all of the collateral therein into a cash securities account with
		The Goldman Sachs Group, Inc., Bank of America, N.A. or any of their respective
		affiliates, or any other financial institution reasonably satisfactory to us,
		subject to such financial institution entering into a control agreement, in
		substantially the form of Exhibit A hereto, with Greenlight and us before or
		concurrently with such transfer.
	 

	 
		This letter agreement shall be governed by
		and construed in accordance with the laws of the State of New York (without
		giving effect to the conflicts of law principles thereof).
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		Greenlight Reinsurance, Ltd.
	 

	 
		October 12, 2005
	 

	 
		Page 4
	 

	 
		Please acknowledge your acceptance of the
		terms and conditions hereof by signing this letter agreement in the signature
		block below.
	 

	 
		 
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  Sincerely,
 
 

				  CITIBANK, N.A.
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /s/ Michael Lonie
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  Michael Lonie

				  Vice President
				

			 

 

	 
		 
	 

	 
		 
	 

	 
			
				
				  Attachments
 

				  ACKNOWLEDGED AND ACCEPTED

				  AS OF THE DATE FIRST SET FORTH ABOVE:

				  
 GREENLIGHT REINSURANCE, LTD.
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				  
 /s/ Leonard Goldberg
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				

			 
	
				
				   
				

			 	
				
				  Leonard Goldberg 

				  Chief Executive Officer
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		EXHIBIT A 
	 

	 
		CITIBANK, N.A.
	 

	 
		NEW YORK 
	 

	 
		APPLICATION FOR STANDBY LETTER OF
		CREDIT
	 

	 
		 
	 

	 
			
				
				  Citibank, N.A., New York, NY
				  10043
				

				
				  Attn: Standby Letter of Credit
				  Dept., FLA-1, 2/A
				

			 	
				
				   
				

			 	
				
				  Letter of Credit Reference
				  No.
				

			 
	
				
				  Advising Bank (Name and
				  Address)
				

			 	
				
				   
				

			 	
				
				  Applicant:

				  Greenlight Reinsurance, Ltd.

				  Strathvale House

				  90 North Church Street

				  P.O. Box 1109 GT

				  Georgetown, Grand Cayman, Cayman Islands
				

			 
	
				
				  Beneficiary (Name and
				  Address)
				

			 	
				
				   
				

			 	
				
				  Amount (In specific
				  currency):
				

			 
	
				
				   
				

			 	
				
				  Expiry Date and Place:
				

			 

 

	 
		This Application is for the issuance of a
		standby letter of credit under and subject to the terms and conditions of
		(select one):
	 

	 
			
				
				  
				

			 	
				
				  The Agreement for Standby Letter of
				  Credit attached hereto:
				

			 

 

	 
			
				
				  
				

			 	
				
				  The Continuing Agreement for
				  Commercial and/or Standby Letters of Credit dated ____*
				

			 

 

	 
			
				
				  
				

			 	
				
				  Other (describe): ____
				

			 

 

	 
		 
	 

	 
			
				
				   
				

			 

 

	 
		Subject to the following terms and
		conditions, please issue your irrevocable Letter of Credit (hereinafter called
		the “Credit”) to be available by the beneficiary’s
		draft(s):
	 

	 
		Drawn at sight on:
	 

	 
			
				
				  
				

			 	
				
				  Citibank, N.A., New York, NY.

				

			 

 

	 
			
				
				  
				

			 	
				
				  ________
				

			 
	 	(Name and Address of Paying Bank, if any)

 

	  

	 
		______________
	 

	 
		* If a Continuing Agreement is already in
		place, submit only this Application, with customer’s signature and
		relationship manager’s approvals reflected on page 2 of this form.
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
	 

	 
		Accompanied by Beneficiary’s written
		statement that the amount of any draft(s) drawn hereunder represent funds due
		__________ and payable because of the following reasons (select one): 
	 

	 
			
				
				  
				

			 	
				
				  Applicant of the Credit has failed
				  to comply with terms or conditions of a contract described as:
				  __________
				

			 

 

	 
			
				
				  
				

			 	
				
				  Applicant of the Credit has been
				  awarded a contract under an offer to bid and has failed to become a party to
				  the contract related thereto (describe): __________
				

			 

 

	 
			
				
				  
				

			 	
				
				  It has become necessary for the
				  Beneficiary bank or other financial entity to make payment under its
				  undertaking issued on behalf of Applicant of this Credit, with an expiration
				  date of __________, at its counters, in favor of __________, in relation
				  to
				

			 

 

	 
			
				
				  
				

			 	
				
				  Description of transaction if other
				  than described above: __________
				

			 

 

	 
			
				
				  
				

			 	
				
				  Automatic extension available with
				  __________ day notification of non-renewal, and with a final expiration date of
				  __________
				

			 

 

	 
			
				
				  
				

			 	
				
				  Credit to be issued in transferable
				  form.
				

			 

 

	 
			
				
				  
				

			 	
				
				  Any transfer(s) of this Credit to be
				  effective by __________
				

			 

 

	 
		(Indicate an appropriate transferring bank
		name and location)
	 

	 
			
				
				  
				

			 	
				
				  Attachments hereto impose additional
				  terms and conditions on Applicant and/or Citibank and are incorporated into
				  this Application and Agreement as if fully set forth herein.
				

			 

 

	 
			
				
				  
				

			 	
				
				  All banking, charges, other than
				  Citibank, N.A. charges, are for account of:       Beneficiary
				        Applicant
				

			 

 

	 
		Transmit the Credit by:
	 

	 
			
				
				   Cable/SWIFT  
				

			 	
				
				   Airmail  
				

			 	
				
				   Courier Service
				

			 

 

	 
		All drafts and documents called for under
		the Credit are to be delivered by the negotiating or paying bank to Citibank,
		N.A. New York by airmail in a single mailing.
	 

	 
		 
	 

	 
			
				
				   
				

			 

 

	 
		GREENLIGHT REINSURANCE, LTD.
	 

	 
		 
	 

	 
			
				
				  By: 
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	

				
				   
				

			 
	 	 	 	 	 	 	 	 
	
				
				  Name:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  Date
				

			 	
				
				   
				

			 	
				
				  Account Manager’s
				  Signature
				

			 	
				
				   
				

			 	
				
				  Date
				

			 
	
				
				  Title:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				  and Stamp
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
 

	 
		CITIBANK, N.A
	 

	 
		NEW YORK
	 

	 
		AGREEMENT FOR
		STANDBY LETTER OF CREDIT
	 

	 
		In consideration of your issuance of an
		irrevocable letter of credit (the “Credit”) substantially in
		accordance with the terms and conditions provided by the undersigned (the
		“Applicant”) on the Application attached hereto or as otherwise
		requested by Applicant in writing, Applicant unconditionally agrees with you
		(“Citibank”) as follows:
	 

	 
		1. Reimbursement. Applicant will pay
		Citibank the amount of each draft or other request for payment (each, a
		“Draft”) drawn under the Credit, whether drawn before, on or, if in
		accordance with applicable law, after the expiry date stated in the Credit.
		Each such payment shall be made within five Business Days (a day of the year on
		which banks in New York, New York are not required or permitted to close) after
		the date of payment by Citibank of a Draft together with interest accrued on
		such amount at a daily fluctuating interest rate per annum equal to the rate of
		interest announced publicly from time to time by Citibank in New York, New York
		as Citibank’s Base Rate. The Credit may be denominated in U.S. Dollars,
		Canadian Dollars, Cayman Dollars, Bermuda Dollars, Pounds Sterling, Swiss
		Francs, Euros, Japanese Yen or such other currency requested by Applicant as is
		reasonably acceptable to Citibank.
	 

	 
		2. Commissions, Fees, Charges and Expenses.
		Applicant will pay Citibank (a) commissions, fees and other charges on the
		Credit (for so long as Citibank shall be obligated under the Credit in
		accordance with applicable law) at such rates and times as specified in the
		letter agreement dated October 12, 2005 (as amended, supplemented or otherwise
		modified from time to time, the “Facility Agreement”) between
		Applicant and Citibank and (b) on demand, and without limitation of paragraph 6
		hereof, all expenses which Citibank may reasonably pay or incur in connection
		with the Credit.
	 

	 
		3. Payments. Interest on Past Due Amounts;
		Computations. All amounts due from Applicant shall be paid to Citibank at 399
		Park Avenue, New York, New York 10043 (or such other address notified to
		Applicant in writing), without defense, set-off, cross-claim, or counterclaim
		of any kind, in United States Dollars and in same day funds, provided, however,
		that if the Credit is denominated in a currency other than United States
		Dollars, Applicant will pay the equivalent of such amount in United States
		Dollars computed at Citibank’s selling rate for cable transfers to the
		place where and in the currency in which such amount is payable, or in the
		currency in which the Credit is denominated, or at or in such other place, form
		or manner as is acceptable to Citibank in its sole discretion. Any amount not
		paid when due shall bear interest until paid in full at a daily fluctuating
		interest rate per annum equal to two percent per annum above the rate of
		interest announced publicly from time to time by Citibank in New York as
		Citibank’s Base Rate, but in no event in excess of the maximum rate
		permitted by applicable law. Applicant authorizes Citibank to charge the demand
		deposit account of Applicant with Citibank for any amount when due. Unless
		otherwise agreed in writing as to the Credit, all computations of commissions,
		fees and interest shall be based on a 360-day year and actual days elapsed;
		provided, however, that if such computation shall cause the amount of interest
		payable hereunder to exceed the maximum rate of interest permitted by
		applicable law, all computations of interest shall be made upon the basis of a
		year of 365 or 366 days.
	 

	 
		4. Additional Costs. If Citibank determines
		that the introduction or effectiveness of, or any change in, any law or
		regulation or compliance with any guideline or request from any central bank or
		other governmental or quasi-governmental authority (whether or not having the
		force of law) after the date hereof affects or would affect the amount of
		capital or reserves required or expected to be maintained by Citibank or any
		corporation controlling Citibank and Citibank determines that the amount of
		such capital or reserve is increased by or based upon the existence of the
		Credit, then Applicant shall pay Citibank on demand from time to time
		additional amounts sufficient in Citibank’s reasonable, Good Faith (as
		defined below) judgment to compensate for the increase. Citibank’s
		certificate as to amounts due shall be conclusive, in the absence of manifest
		error.
	 

	 
		5. Taxes. All payments made to Citibank
		shall be made free and clear of and without deduction for any present or future
		taxes, levies, imposts, deductions, charges, or withholdings, and all related
		liabilities, excluding income and franchise taxes imposed by the jurisdiction
		of Citibank’s head office issuing the Credit or any of its political
		subdivisions (all non-excluded taxes, levies, imposts, deductions, charges,
		withholdings and liabilities are called “Taxes”). If any Taxes shall
		be required by law to be deducted from or in respect of any sum payable under
		this Agreement, (a) the sum payable under this Agreement shall be increased as
		may be necessary so that after making all required deductions Citibank receives
		an amount equal to the sum Citibank would have received had no such deductions
		been required, (b) Applicant shall be responsible for payment of the amount to
		the relevant taxing authority, (c) Applicant shall indemnify Citibank on demand
		for any Taxes paid by Citibank and any liability (including penalties, interest
		and expenses) arising from its payment or in respect of such Taxes, whether or
		not such Taxes were correctly or legally asserted, and (d) Applicant shall
		provide Citibank with the original or a certified copy of the receipt
		evidencing each payment of Taxes within 30 days of the tax payment date.

	 

	 
		6. Indemnification. Applicant will indemnify
		and hold Citibank and its officers, directors, affiliates, employees, attorneys
		and agents (each, an “Indemnified Party”) harmless from and against
		any and all claims, liabilities, losses, damages, costs and expenses including
		without limitation, reasonable attorneys’ fees and disbursements, other
		dispute resolution expenses (including fees and expenses in preparation for a
		defense of any investigation, litigation or proceeding) and costs of collection
		that arise out of or in connection with or by reason of: (a) the issuance of
		the Credit, (b) any payment or action taken or omitted to be taken (including,
		without limitation, any failure to make payment on the Credit) in connection
		with the Credit including any action or proceeding seeking (i) to restrain any
		drawing under the Credit, (ii) to compel or restrain the payment of any amount
		or the taking of any other action under the Credit, (iii) to compel or restrain
		the taking of any action under this Agreement, or (iv) to obtain similar relief
		(including by way of interpleader, declaratory judgment, attachment, or
		otherwise, regardless of who the prevailing party is in any such action or
		proceeding), (c) the enforcement of this Agreement, (d) any change in the value
		of a foreign currency covered by the Credit or (e) any act or omission, whether
		rightful or wrongful, of any present or future de jure or de facto government
		or governmental authority relating to the Credit, except, in each case, to the
		extent such claim, liability, loss, damage, cost or expense is found in a
		final, non-appealable judgment by a court of competent jurisdiction to have
		resulted from such Indemnified Party’s gross negligence or willful
		misconduct. Applicant will pay on demand from time to time all amounts owing
		under this section.
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		7. Obligations Absolute: Limitations of
		Liability. (a) Applicant’s obligations under this Agreement (the
		“Obligations”) shall be unqualified, irrevocable and payable in the
		manner and method provided for under this Agreement irrespective of any one or
		more of the following circumstances: (i) any lack of validity or enforceability
		of this Agreement, the Credit, or any other agreement, application, amendment,
		guaranty, document, or instrument relating thereto, (ii) any change in the
		time, manner or place of payment of or in any other term of all or any of the
		Obligations of Applicant or the obligations of any person or entity that
		guarantees the Obligations, (iii) the existence of any claim, set-off, defense
		or other right that Applicant may have at any time against any beneficiary or
		any transferee of the Credit (or any person or entity for whom any such
		beneficiary or transferee may be acting), Citibank or any other person or
		entity, whether in connection with any transaction contemplated by this
		Agreement or any unrelated transaction, or any claim by Citibank or Applicant
		against the beneficiary of the Credit for breach of warranty, (iv) any
		exchange, release or non-perfection of any security interest in any Property
		(as hereafter defined) or other collateral, or release or amendment or waiver
		of or consent to departure from the terms of any guaranty or security
		agreement, for all or any of the Obligations, (v) any Draft, or other document
		presented under the Credit being forged, fraudulent, invalid, or insufficient
		or any statement therein being untrue or inaccurate, (vi) any failure by
		Citibank to issue the Credit (or any amendment thereof) in the specific form
		requested by Applicant, unless Citibank receives written notice from Applicant
		of such failure within five Business Days after Applicant shall have received a
		copy of the Credit (or such amendment) as actually issued by Citibank and such
		failure is material and consequential, it being understood that Citibank shall
		have no obligation to issue any Credit in violation of any applicable law or
		regulation, (vii) any previous Obligation, whether or not paid, arising from
		Citibank’s payment against any Draft, certificate or other document which
		appeared on its face to be signed or presented by the proper party but was in
		fact signed or presented by a party posing as the proper party, (viii) payment
		by Citibank under the Credit against presentation of a Draft or other document
		that in Citibank’s Good Faith judgment appeared to comply with the terms
		and conditions of the Credit but in fact did not comply with the terms and
		conditions of the Credit unless Citibank receives written notice from Applicant
		of such discrepancy within three Business Days following Applicant’s
		receipt of such Draft or other document, and (ix) any action or inaction taken
		or suffered by Citibank or any of its correspondents in connection with the
		Credit or any relevant Draft, certificate, other document or Property, if taken
		in good faith (i.e. honesty in fact in the conduct or transaction concerned,
		“Good Faith”) and in conformity with applicable U.S. or foreign law
		or letter of credit practices and all of the documents covering the Credit. (b)
		Without limiting any other provision of this Agreement, Citibank and any of its
		correspondents: (i) may rely upon any telephonic, telegraphic, facsimile,
		electronic, written or other communication believed in Good Faith to have been
		authorized by Applicant, whether or not given or signed by an authorized
		person, (ii) shall not be responsible for errors, omissions, interruptions or
		delays in transmission or delivery of any message, advice or document in
		connection with the Credit, whether transmitted by courier, mail, telex, any
		other telecommunication, or otherwise (whether or not they be in cipher), or
		for errors in interpretation of technical terms or in translation (and Citibank
		and its correspondents may transmit Credit terms without translating them),
		(iii) shall not be responsible for the identity or authority of any signer or
		the form, accuracy, genuineness, falsification or legal effect of any Draft,
		certificate or other document presented under the Credit if such Draft,
		certificate or other document on its face appears to be in accordance with the
		terms and conditions of the Credit, (iv) shall not be responsible for any acts
		or omissions by or the solvency of the beneficiary of the Credit or any other
		person or entity having any role in any transaction underlying the Credit, (v)
		may accept or pay as complying with the terms and conditions of the Credit any
		Draft, certificate or other document appearing on its face as determined by
		Citibank in Good Faith (A) substantially to comply with the terms and
		conditions of the Credit, (B) to be signed or presented by or issued to any
		successor of the beneficiary or any other person in whose name the Credit
		requires or authorizes that any Draft, certificate or other document be signed,
		presented or issued, including any administrator, executor, personal
		representative, trustee in bankruptcy, debtor in possession, liquidator,
		receiver, or successor by merger or consolidation, or any other person or
		entity purporting to act as the representative of or in place of any of the
		foregoing, or (C) to have been signed, presented or issued after a change of
		name of the beneficiary, (vi) may disregard (A) any requirement stated in the
		Credit that any Draft, certificate or other document be presented to it at a
		particular hour or place and (B) any discrepancies that do not reduce the value
		of the beneficiary’s performance to Applicant in any transaction
		underlying the Credit, (vii) may accept as a Draft any written or electronic
		demand or other request for payment under the Credit, even if such demand or
		other request is not in the form of a negotiable draft, (viii) shall not be
		responsible for the effectiveness or suitability of the Credit for
		Applicant’s purpose, or be regarded as the drafter of the Credit
		regardless of any assistance that Citibank may, in its discretion, provide to
		Applicant in preparing the text of the Credit or amendments thereto, (ix) shall
		not be liable to Applicant for any consequential or special damages, or for any
		damages resulting from any change in the value of any foreign currency,
		services or goods or other property covered by the Credit, (x) may assert or
		waive application of UCP (as defined below) Articles 17 (force majeure) and 45
		(hours of presentation) and all other UCP articles primarily benefiting bank
		issuers, (xi) may honor a previously dishonored presentation under the Credit,
		whether pursuant to court order, to settle or compromise any claim that it
		wrongfully dishonored, or otherwise, and shall be entitled to reimbursement to
		the same extent as if it had initially honored plus reimbursement of any
		interest paid by it, (xii) may honor, upon receipt, any drawing that is payable
		upon presentation of a statement advising negotiation or payment (even if such
		statement indicates that a Draft, certificate or other document is being
		separately delivered) and shall not be liable for any failure of any Draft,
		certificate or document to arrive or to conform in any way with the Draft,
		certificate or other document referred to in the statement or any underlying
		contract, and (xiii) may pay any paying or negotiating bank (designated or
		permitted by the terms of the Credit) claiming that it rightfully honored under
		the laws or practices of the place where it is located. None of the
		circumstances described in this section shall place Citibank or any of its
		correspondents under any resulting liability to Applicant.
	 

	 
		8. Independence. Applicant acknowledges that
		the rights and obligations of Citibank under the Credit are independent of the
		existence, performance or nonperformance of any contract or arrangement
		underlying the Credit, including contracts or arrangements between Citibank and
		Applicant and between Applicant and the beneficiary of the Credit. Citibank
		shall have no duty to notify Applicant of its receipt of a Draft, certificate
		or other document presented under the Credit or of its decision to honor the
		Credit. Citibank may, without incurring any liability to Applicant or impairing
		its entitlement to reimbursement under this Agreement, honor the Credit despite
		notice from Applicant of, and without any duty to inquire into, any defense to
		payment or any adverse claims or other rights against the beneficiary of the
		Credit or any other person. Citibank shall have no duly to request or require
		the presentation of any document, including any default certificate, not
		required to be presented under the terms and conditions of the Credit. Citibank
		shall have no duty to seek any waiver of discrepancies from Applicant, nor any
		duty to grant any waiver of discrepancies which Applicant approves or requests
		. Each Credit may be extended at any time before the Facility Termination Date
		(as defined in the Facility Agreement) in
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		accordance with the terms and conditions of
		the Facility Agreement.
	 

	 
		9. Non-Documentary Conditions. Citibank is
		authorized (but shall not be required) to disregard any non-documentary
		conditions stated in the Credit.
	 

	 
		10. Transfers. If, at Applicant’s
		request, the Credit is issued in transferable form, Citibank shall have no duty
		to determine the proper identity of anyone appearing in any transfer request,
		Draft, or other document as transferee, nor shall Citibank be responsible for
		the validity or correctness of any transfer.
	 

	 
		11. Extensions and Modifications of the
		Credit. This Agreement shall be binding upon Applicant with respect to any
		extension or modification of the Credit made at Applicant’s written
		request or with Applicant’s written consent. Applicant’s Obligations
		shall not be reduced or impaired in any way by any agreement by Citibank and
		the beneficiary of the Credit extending Citibank’s time to honor or to
		give notice of discrepancies and any such agreement shall be binding upon
		Applicant.
	 

	 
		12. Additional Bond. If at any time
		Applicant shall seek to restrain or preclude payment of or drawing under the
		Credit or any court shall extend the term of the Credit or take any other
		action which has a similar effect, then, in each case, Applicant shall provide
		Citibank with a bond or other collateral of a type and value, not exceeding the
		outstanding amount of the Credit, satisfactory to Citibank as security for the
		Obligations.
	 

	 
		13. Set-off. If any Event of Default (as
		defined in the Hypothecation Agreement dated October 12, 2005, as amended,
		supplemented or otherwise modified from time to time, by Applicant In favor of
		Citibank) shall occur and be continuing, Citibank may set off and apply any and
		all deposits (general or special, time or demand, provisional or final) at any
		time held and other indebtedness at any time owing by Citibank or Citigroup
		Global Markets Inc. to or for the credit or the account of Applicant
		(“Deposits”) against any and all of the Obligations, irrespective of
		whether or not Citibank shall have made any demand under this Agreement and
		although such Deposits or Obligations may be unmatured or contingent.
		Citibank’s rights under this section are in addition to other rights and
		remedies (including other rights of set-off) which Citibank may have under this
		Agreement or applicable law.
	 

	 
		14. Waiver of Immunity. Applicant
		acknowledges that this Agreement Is, and the Credit will be, entered into for
		commercial purposes and, to the extent that Applicant now or later acquires any
		immunity from jurisdiction of any court or from any legal process with respect
		to itself or its property, Applicant now irrevocably waives its immunity with
		respect to the Obligations.
	 

	 
		15. Notices; Interpretation; Severability.
		Notices and other communications hereunder shall be in writing and sent by
		overnight courier mall, by telecopier, or by hand-delivery to the address of
		Citibank, at Citibank, N.A., 388 Greenwich Street, New York, New York 10013,
		telecopier no. (212) 816-3133, Attention: Product Manager, Standby Letters of
		Credit, and, if to Applicant, to the address specified for it below. All such
		notices shall be deemed given (i) if sent by overnight courier mail or by
		hand-delivery, when received at such address or when delivery is refused or
		(ii) if sent by telecopied transmission, when transmission is confirmed.
		Headings are included only for convenience are not interpretative. The term
		“including” means “including without limitation.” If any
		provision of this Agreement is held illegal or unenforceable, the validity of
		the remaining provisions shall not be affected.
	 

	 
		16. Successors and Assigns. This Agreement
		shall be binding upon Applicant and its successors and permitted assigns, and
		shall inure to the benefit of and be enforceable by Citibank, its successors
		and permitted assigns. Applicant shall not voluntarily transfer or otherwise
		assign any of its obligations under this Agreement. Citibank may, with the
		consent of Applicant, which shall not be unreasonably withheld or delayed,
		assign or otherwise transfer all or any of its rights under this Agreement (it
		being understood that Citibank may not, without Applicant’s prior written
		consent, assign any of its obligations (including, without limitation, its
		obligation to issue the Credit) under this Agreement, all without prejudice to
		the retention by Citibank of all rights not so transferred, except that the
		consent of Applicant shall not be required hereunder in the case of an
		assignment, (i) at any time that an Event of Default has occurred and is
		continuing, (ii) to an affiliate of Citibank, or (iii) which constitutes a
		pledge to a Federal Reserve Bank in accordance with applicable law. Citibank
		may, in connection with any such assignment, transfer or delivery, disclose to
		the assignee or transferee or proposed assignee or proposed transferee any
		information relating to Applicant furnished to Citibank by or on behalf of
		Applicant, provided that, prior to any such disclosure, the assignee or
		transferee or proposed assignee or proposed transferee shall agree to be
		subject to the confidentiality obligations applicable to Citibank under
		paragraph 24 hereof with respect to any confidential information related to
		Applicant and shall enter into a confidentiality agreement to such effect with
		Citibank under which Applicant is designated a third party beneficiary with the
		right to enforce the terms of such confidentiality agreement. Citibank shall be
		forever relieved from any liability with respect to the portion of
		Citibank’s rights transferred or assigned in accordance herewith. This
		Agreement shall not be construed to confer any right or benefit upon any person
		or entity other than Applicant and Citibank and their respective successors and
		permitted assigns.
	 

	 
		17. Modification; No Waiver. None of the
		terms of this Agreement may be waived or amended except in a writing signed by
		the party against whose interest the term is waived or amended. Forbearance,
		failure or delay by Citibank in the exercise of a remedy shall not constitute a
		waiver, nor shall any exercise or partial exercise of any remedy preclude any
		further exercise of that or any other remedy. Any waiver or consent by Citibank
		shall be effective only in the specific instance and for the specific purpose
		for which it is given and shall not be deemed, regardless of frequency given,
		to be a further or continuing waiver or consent.
	 

	 
		18. Multiple Role Disclosure. Citibank and
		its affiliates offer a wide range of financial services, including back-office
		letter of credit processing services on behalf of financial institutions and
		letter of credit beneficiaries. Our services are provided internationally to a
		wide range of customers, some of whom may be Applicant’s counter-parties
		or competitors. Applicant acknowledges and accepts that Citibank and its
		affiliates may perform more than one role in relation to a particular
		Credit.
	 

	 
		19. Other Agreements; Remedies Cumulative;
		Delivery by Facsimile. This Agreement (and any controlling agreement described
		in the preceding sentence) constitutes the entire agreement between the parties
		concerning Citibank’s issuance of a letter or letters of credit for
		Applicant’s account and supersedes all prior simultaneous agreements,
		written or oral. All rights and remedies of Citibank under this Agreement and
		other documents delivered in connection with this Agreement are cumulative and
		in addition to any other right or remedy under this Agreement, the Credit or
		applicable law. Delivery of a signed signature page to this Agreement by
		facsimile transmission shall be effective as, and shall constitute physical
		delivery of, a signed original counterpart of this Agreement.
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		20. Termination; Surviving Provisions. This
		Agreement shall be terminated only upon the extinguishment of Citibank’s
		liability under the Credit and payment in full to Citibank of all Obligations
		hereunder. Indemnity, tax, immunity, and jurisdiction provisions shall survive
		termination of this Agreement. If the Credit is issued in favor of any bank or
		other financial or commercial entity in support of an undertaking issued by
		such bank or entity on behalf of Applicant or Citibank, Applicant shall remain
		liable under this Agreement (even after expiry of the Credit) for amounts paid
		and expenses incurred by Citibank with respect to the Credit or the undertaking
		until Citibank is released by such other bank or entity.
	 

	 
		21. Governing Law; Governing Guidelines. (a)
		This Agreement and the rights and obligations of Applicant and Citibank
		hereunder shall be governed by and subject to the laws of the State of New York
		and applicable U.S. Federal laws. (b) Applicant agrees that Citibank may issue
		any Credit subject to the Uniform Customs and Practice for Documentary Credits,
		1993 Revision, International Chamber of Commerce Publication No. 500 (the
		“UCP”) or the International Standby Practices, International Chamber
		of Commerce No. 590 (the “ISP”) or, at Citibank’s option, such
		later revision thereof in effect at the time of issuance of the Credit. The UCP
		or the ISP, as applicable, shall serve, in the absence of proof to the
		contrary, as evidence of general banking usage with respect to the subject
		matter thereof. (c) Applicant agrees that (i) each Credit shall be interpreted
		in accordance with the laws of the State of New York and (ii) for matters not
		addressed by the UCP or the ISP, each Credit shall be subject to and governed
		by the laws of the State of New York and applicable U.S. Federal laws if, at
		Applicant’s request, a Credit expressly chooses a state or country law
		other than New York, U.S.A., or is silent with respect to UCP, ISP or governing
		law, Citibank shall not be liable for any payment, cost, expense or loss
		resulting from any action or inaction taken by Citibank if such action or
		inaction is justified under UCP, ISP, New York law or the law governing the
		Credit.
	 

	 
		22. Jurisdiction; Service of Process.
		Applicant now irrevocably submits to the non-exclusive jurisdiction of any
		state or federal court sitting in New York, New York, for itself, and in
		respect of any of its property and, if a taw other than New York, U.S.A. has
		been chosen to govern the Credit, Applicant also now irrevocably submits to the
		non-exclusive jurisdiction of any state or federal court sitting in such
		jurisdiction. Applicant agrees not to bring any action or proceeding against
		Citibank in any jurisdiction not described in the immediately preceding
		sentence. Applicant irrevocably waives any objection to venue or any claim of
		inconvenience. Applicant agrees that any service of process or other notice of
		legal process may be served upon it by mail or hand delivery if sent to it
		at:
	 

	 
		Corporation Services Company 
	 

	 
		1133 Avenue of the Americas 
	 

	 
		New York, New York 10036
	 

	 
		which Applicant now designates its
		authorized agent for the service of process in the courts in the State of New
		York. (If no authorized agent is designated in the space provided above,
		Applicant agrees that process shall be deemed served if sent to its address
		given for notices under this Agreement.) Applicant agrees that nothing in this
		Agreement shall affect Citibank’s right to serve process in any other
		manner permitted by law or to commence legal proceedings or otherwise proceed
		against Applicant in any other jurisdiction. Applicant agrees that final
		judgment against it in any action or proceeding shall be enforceable in any
		other jurisdiction within or outside the United States of America by suit on
		the judgment, a certified copy of which shall be conclusive evidence of the
		judgment.
	 

	 
		23. JURY TRIAL WAIVER. APPLICANT AND
		CITIBANK (BY ITS RECEIPT HEREOF) EACH IRREVOCABLY WAIVES ITS RIGHT TO A JURY
		TRIAL OF ANY CLAIM, COUNTERCLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
		OF THIS AGREEMENT, THE CREDIT OR ANY DEALINGS WITH ONE ANOTHER RELATING TO THE
		SUBJECT MATTER OF THIS AGREEMENT.
	 

	 
		24. Confidentiality. Citibank agrees to take
		and to cause its affiliates to take normal and reasonable precautions and
		exercise due care to maintain the confidentiality of all information provided
		by Applicant or any of its affiliates under this Agreement or any other
		agreement or document relating to the Credit (“Information”), and
		neither it nor any of its affiliates shall use any Information other than in
		connection with or in enforcement of this Agreement and the other agreements
		and documents relating to the Credit, except to the extent Information (a) was
		or becomes generally available to the public other than as a result of
		disclosure by Citibank or its affiliates, or (b) was or becomes available on a
		non-confidential basis from a source other than Applicant or its affiliates,
		provided that such source is not bound by a confidentiality agreement with
		Applicant known to Citibank; provided, however, that Citibank may disclose
		Information (i) at the request or pursuant to any requirement of any
		governmental authority to which Citibank is subject, in each case upon prior
		notice to Applicant unless prohibited by law or the rules governing the process
		requiring such disclosure; (ii) pursuant to subpoena or other court process,
		upon prior notice to Applicant unless prohibited by law or the rules governing
		the process requiring such disclosure; (iii) when required to do so in
		accordance with the provisions of any applicable requirement of law, upon prior
		notice to Applicant unless prohibited by law or the rules governing the process
		requiring such disclosure; (iv) to the extent reasonably required in connection
		with the exercise of any remedy hereunder or under any other agreement or
		document relating to the Credit; and (v) to Citibank’s independent
		auditors and other professional advisors who agree or are directed to maintain
		the confidentiality of the Information.
	 

	 
		 
	 

	 
		 
	 

	 
 

	 
		 
	 

	 
			
				
				  Very truly yours,
 

				  GREENLIGHT REINSURANCE, LTD.
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				  Leonard Goldberg 

				  Chief Executive Officer
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
			
				
				  Address:
				

			 	
				
				  Strathvale House
				

			 

 

	 
		90 North Church Street
	 

	 
		P.O. Box 1109 GT
	 

	 
		Georgetown, Grand Cayman, Cayman Islands
		
	 

	 
		Telecopier No.: (345) 949-7634 
	 

	 
		Telephone No.: (345) 914-7500
	 

	 
		Attention: Leonard Goldberg
	 

	 
		 
	 

	 
			
				
				  ACKNOWLEDGED AND AGREED AS OF
				  
 OCTOBER 12, 2005
 

				  CITIBANK, N.A.
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				  Vice President
   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				       (For
				  Citibank Use Only)
				

			 	 	 	 

 

	 
		 
	 

	 
		Item #305524 (REV 02/99)
	 

	 
		 
	 

	 
			

				
				  Approvals to Issue

				   
				

			 
	

				
				  Relationship Manager (Signature
				  & Stamp)
  
				

			 
	

				
				  (Other required Signature &
				  Stamp)
  
				

			 

 

	 
		 
	 

	 
		 
	 

	 
	 
		

	 

	 
		[Citigroup Logo]
	 

	 
		

	 

	 
		Citibank N.A.
	 

	 
		388 Greenwich Street
	 

	 
		New York, NY 10013
	 

	 
		

	 

	 
		

	 

	 
		September 19, 2006
	 

	 
		

	 

	 
		Greenlight Reinsurance, Ltd
	 

	 
		Strathvale House
	 

	 
		90 North Church Street
	 

	 
		P.O. Box 1109 GT
	 

	 
		Georgetown, Grand Cayman, Cayman Islands
	 

	 
		

	 

	 
		Re: US$200,000,000 Letter of Credit Facility dated October 12, 2005
		for the account of Greenlight Reinsurance, Ltd.
	 

	 
		

	 

	 
		

	 

	 
		Gentlemen:
	 

	 
		

	 

	 
		We are pleased to advise that we have amended the Letter of Credit
		Facility currently available for use until October 11, 2007 such that the
		commission of 1.15% per annum is reduced to a new rate of .90% per annum
		effective October 1, 2006.
	 

	 
		

	 

	 
		All other conditions remain unchanged.
	 

	 
		

	 

	 
		

	 

	 
		Sincerely,
	 

	 
		

	 

	 
		CITIBANK, N.A.
	 

	 
		

	 

	 
		

	 

	 
		By
	 

	 
		/s/   John Ahearn
	 

	 
		     -----------------------------------------
	 

	 
		           Vice-President

	 

	 
		                                                                                          September
		22, 2006
	 

	 
		                                                                                          Acknowledged
		& Agreed
	 

	 
		                                                                                          Greenlight
		Reinsurance, Ltd.
	 

	 
		                                                                                        

	 

	 
		                                                                                           /s/
		Tim Courtis
	 

	 
		                                                                                           --------------------------------------

	 

	 
		                                                                                           Chief
		Financial Officer

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