Execution Copy
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Employment Agreement
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of March 29,
2004, is made and entered into by and between Scottish Re Holdings Limited (the
"Company") and Deborah G. Percy (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to ensure that it retains the Executive's
management and executive services by directly engaging Executive as its
Executive Vice President Human Resources;
WHEREAS, in order to induce the Executive to continue to serve in such
position, the Company desires to provide the Executive with compensation and
other benefits on the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is willing to accept such employment and
perform services for the Company, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the agreements and covenants
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto covenant and agree as follows:
1. Certain Defined Terms.
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In addition to terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital
letters:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Change in Control" means the occurrence during the Term of any of the
following events:
(i) the acquisition by any individual, entity or group, within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act (a "Person"),
including as a result of a Business Combination (as defined in
Section 1(b)(iii)), of beneficial ownership, within the meaning
of Rule 13d-3 promulgated under the Act, of 25% or more of the
combined voting power of the then outstanding Voting Stock of
Holdings; provided, however, that for purposes of this Section
1(b)(i), the following acquisitions shall not constitute a Change
in Control: (A) any acquisition by Holdings of Voting Stock of
Holdings, or (B) any acquisition of Voting Stock of
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Holdings by any employee benefit plan (or related trust)
sponsored or maintained by Holdings or any Subsidiary; or
(ii) individuals who, as of the date hereof, constitute the Holdings
Board (the "Incumbent Board," (as modified by this Section
1(b)(ii))) cease for any reason to constitute at least a majority
of the Holdings Board; provided, however, that any individual
becoming a Director subsequent to the date hereof whose election,
or nomination for election by the shareholders of Holdings, was
approved by a vote of at least two-thirds of the Directors then
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of Holdings in which such person
is named as a nominee for director, without objection to such
nomination) shall be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest (within the meaning
of Rule 14a-11 of the Act) with respect to the election or
removal of Directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Holdings Board; or
(iii) consummation of a reorganization, merger or consolidation, a
sale or other disposition of all or substantially all of the
assets of Holdings, or other transaction (each, a "Business
Combination"), unless, in each case, immediately following such
Business Combination, either (A)(I) the individuals and entities
who were the beneficial owners of Voting Stock of Holdings
immediately prior to such Business Combination beneficially own
in the aggregate, directly or indirectly, more than 50% of the
combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of
such transaction owns Holdings or all or substantially all of the
assets of Holdings either directly or through one or more
subsidiaries), (II) no Person (other than Holdings, such entity
resulting from such Business Combination, or any employee benefit
plan (or related trust) sponsored or maintained by Holdings, any
Subsidiary or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or
more of the combined voting power of the then outstanding shares
of Voting Stock of the entity resulting from such Business
Combination, and (III) at least a majority of the members of the
board of directors of the entity
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resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement or of the action of the Holdings Board providing for
such Business Combination, or (B) the same as Section
1(b)(iii)(A), except in clause (I), substituting "one-third" for
"50%," and in clause (III), substituting "two-thirds" for "a
majority";
(iv) approval by the shareholders of Holdings of a complete
liquidation or dissolution of Holdings, except pursuant to a
Business Combination that complies with clause (A) or (B) of
Section 1(b)(iii); or
(v) a sale or other disposition of (A) shares of Voting Stock of the
Company representing at least 50% of the combined voting power of
the then outstanding shares of Voting Stock of the Company, or
(B) all or substantially all of the assets of the Company,
unless, in either case, the individuals and entities who were the
beneficial owners of Voting Stock of Holdings immediately prior
to such sale or disposition beneficially own in the aggregate,
directly or indirectly, more than 50% of the combined voting
power of the then outstanding shares of Voting Stock of the
entity acquiring such Voting Stock or assets of the Company.
(c) "Company Board" means the Board of directors of the Company.
(d) "Competitive Activity" means the Executive's participation, without
the written consent of the Company Board, in the management of any
business enterprise if such enterprise engages in substantial and
direct competition with the Company and such enterprise engages in
substantial and direct competition with the Company if such
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 10% of such enterprise's
net sales for its most recently completed fiscal year and if the
Company's net sales of said product or service amounted to 10% of the
Company's net sales for its most recently completed fiscal year.
"Competitive Activity" shall not include (i) the mere ownership of
securities in any such enterprise (which is a company whose shares are
quoted or dealt in on any recognized investment exchange (as defined
by Section 207(1) of the Financial Services Act 1986) and the exercise
of rights appurtenant thereto or (ii) participation in the management
of any such enterprise other than in connection with the competitive
operations of such enterprise.
(e) "Director" means a member of the Holdings Board.
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(f) "Holdings" means Scottish Re Group Limited, a Cayman Islands, British
West Indies company.
(g) "Holdings Board" means the Board of Directors of Holdings
("Holdings").
(h) "Incapacity" means sickness or injury rendering the Executive
incapable of performing services in accordance with the provisions of
this Agreement.
(i) "Ordinary Shares" means the ordinary shares, par value $0.01 per
share, of Holdings.
(j) "Subsidiary" means an entity in which Holdings directly or indirectly
beneficially owns 50% or more of the outstanding Voting Stock.
(k) "Total Cash Compensation" means the sum of the (i) highest annual Base
Salary in effect during the Term; and (ii) highest annual Incentive
Bonus (as set forth in Section 6(b)) earned during the prior three (3)
fiscal years.
(l) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Employment.
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The Company hereby agrees to employ Executive, and Executive hereby agrees
to be employed with the Company for the Term, upon the terms and conditions
herein set forth.
3. Term.
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The term of employment under this Agreement (the "Initial Term") shall
commence on March 29, 2004 ("Commencement Date") and subject to earlier
termination pursuant to Section 7, expire on the third anniversary of the
Commencement Date; provided, however, that commencing on the third
anniversary of the Commencement Date, this Agreement will automatically be
renewed for successive one-year periods (the "Additional Term"), subject to
earlier termination pursuant to Section 7, unless either party provides
written notice of non-renewal to the other pursuant to Section 14 at least
ninety (90) days prior to the end of the Initial Term or any Additional
Term. The Initial Term and any Additional Term shall be referred to under
this Agreement as the "Term"; provided, however, that if a Change in
Control occurs during the Term (as determined without regard to this
clause), then the Term shall include the period ending on the second
anniversary of the first occurrence of a Change in Control.
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4. Positions and Duties; Hours of Work; Suspension.
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(a) During the Term, Executive will serve in the position of Executive
Vice President Human Resources of the Company, or such other positions
as may be agreed upon by the Company and the Executive, and will have
such duties, functions, responsibilities and authority as are (i)
reasonably assigned to her by the Holdings' Chief Executive Officer,
consistent with Executive's position as Executive Vice President Human
Resources or (ii) assigned to her office in the Company's Articles of
Association. Executive will report directly to the Chief Executive
Officer of Holdings.
(b) During the Term, Executive will be the Company's full-time employee
and, except as may otherwise be approved in advance in writing by the
Company Board, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other
disability, Executive will devote substantially all of her business
time and attention to the performance of her duties to the Company.
Notwithstanding the foregoing, Executive may (i) subject to the
approval of the Company Board, serve as a director of a company,
provided such service does not constitute a Competitive Activity, (ii)
serve as an officer, director or otherwise participate in purely
educational, welfare, social, religious and civic organizations, (iii)
serve as an officer, director or trustee of, or otherwise participate
in, any organizations and activities with respect to which Executive's
participation was disclosed to the Company in writing prior to the
date hereof and (iv) manage personal and family investments.
(c) The Executive shall carry out her duties between 09.00 and 17.00
Monday to Friday (inclusive) with a one hour break for lunch. The
Executive's normal working week shall be 35 hours. However, the
Executive will also be required to work (without any additional
remuneration) any additional hours as are reasonably necessary or
appropriate from time to time to carry out her duties properly and
effectively. The Executive agrees that any cap on the average working
time imposed by the Working Time Regulations 1998 will not apply to
her.
(d) Notwithstanding the foregoing or any other provision of this Agreement
the Company will not be under any obligation to provide the Executive
with any work and the Company may immediately upon commencing any
disciplinary investigation into the activities or conduct of the
Executive without notice suspend the Executive and/or exclude her from
all or any premises of the Company for any period not exceeding three
months provided that throughout such period the Executive's Base
Salary and other contractual benefits shall continue to be paid or
provided by the Company and provided further that at any time during
such period the
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Executive will at the request of the Board immediately resign without
claim for compensation from office as a director of the Company and
any Associated Company and from any other office held by her in the
Company or any Associated Company and in the event of her failure to
do so the Company hereby irrevocably authorised to appoint some person
in her name and on her behalf to sign and deliver such resignations to
the Board.
5. Place of Performance.
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In connection with her employment during the Term, unless otherwise agreed
by Executive, Executive will be based at the Company's principal executive
offices in Windsor, England; provided, however, that Executive agrees and
acknowledges that in view of the nature of Company's business operations,
Executive may be required in the performance of her duties to undertake
substantial travel on behalf of the Company and, if necessary, requested to
relocate to another executive office of the Company within the United
Kingdom.
6. Compensation and Related Matters.
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As compensation and consideration for the performance by Executive of her
obligations pursuant to this Agreement, Executive shall be entitled to the
following:
(a) Base Salary. During the Term, the Company shall pay Executive an
annual base salary ("Base Salary") of (pound) 125,000, payable at the
times and in the manner consistent with the Company's policies
regarding compensation of executive employees but not less frequently
than monthly. The Company agrees to review such compensation not less
frequently than annually during the Term. Once increased, the Base
Salary may not be decreased. The Base Salary as increased from time to
time shall be referred to herein as "Base Salary".
(b) Incentive Bonus. The Company may pay a cash bonus to Executive based
upon pre-established performance goals established by the Company (the
"Incentive Bonus"). Any Incentive Bonus shall be payable at the times
and in the manner consistent with the Company's policies regarding
compensation of executive employees.
(c) Executive Benefits. During the Term, the Company will make available
to Executive and her eligible dependents, participation in all
Company-sponsored employee benefit plans including all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which senior executives of the Company participate,
including any stock
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option, stock purchase, stock appreciation, savings, pension,
supplemental executive retirement or other retirement income or
welfare benefit, disability, salary continuation, and any other
deferred compensation, incentive compensation, group and/or executive
life, health, medical/hospital or other insurance, expense
reimbursement or other employee benefit policies, plans, programs or
arrangements, including without limitation financial counseling
services or any equivalent successor policies, plans, programs or
arrangements that may now exist or be adopted hereafter by the
Company. Details of such plans will be provided to the Executive when
available, and save as provided therein, the terms of such plans may
be amended at the Company's discretion.
(d) Expenses. The Company will promptly reimburse Executive for all
reasonable business expenses Executive incurs in order to perform her
duties to the Company under this Agreement in a manner commensurate
with Executive's position and level of responsibility with the
Company, and in accordance with the Company's policy regarding
substantiation of expenses.
(e) Vacation and Holidays.
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(i) The Executive will (in addition to the usual public and bank
holidays) be entitled during the continuance of her employment to
28 working day's paid holiday in each period of 12 months
commencing on 1 January (the "Holiday Year").
(ii) Holiday shall be taken at such times as may be approved by the
Chairman of the Company.
(iii) The Executive may not, without the prior written consent of the
Chairman of the Company carry forward more than six days unused
holiday entitlement from one Holiday Year to another.
(iv) On the termination of her employment the Executive's entitlement
to accrued holiday pay will be calculated on a pro rata basis in
respect of each completed month of service in the Holiday Year in
which her employment terminates and the appropriate amount will
be paid to the Executive provided that if the Executive shall
have taken more days' holiday than her accrued entitlement the
Company is hereby authorised to make an appropriate deduction
from any amounts due from the Company to the Executive.
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(f) Indemnification. The Executive shall be offered an opportunity to
enter into Holdings' Indemnification Agreement substantially in
the form attached hereto as Exhibit A effective as of the
Commencement Date.
(g) Initial Equity Compensation Grant. The Company shall grant
Executive an option (the "Option") to purchase 50,000 Ordinary
Shares of Holdings. Additionally, the Company shall grant
Executive 20,000 restricted shares (the "Restricted Shares") of
Holdings (collectively the "Grants"). Any such issuance of
Options and/or Restricted Shares shall be subject to shareholder
approval of the 2004 Equity Incentive Compensation Plan (the
"2004 Plan"). Additionally, any grant to Executive under the 2004
Equity Incentive Compensation Plan shall be subject to the terms
and conditions of the 2004 Plan as well as the performance
requirements expressly adopted by the Holdings' Board and/or
Compensation Committee. A copy of the 2004 Equity Incentive
Compensation Plan is attached hereto as Exhibit B.
(h) Incapacity.
(i) The Executive shall, subject to complying with the Company's
rules governing notification and evidence of absence by
reason of Incapacity for the time being in force, be
entitled to payment of her salary (which shall include any
entitlement to statutory sick pay or social security
benefits to which he may be entitled) in respect of absence
by reason of Incapacity in respect of the first 180 days'
absence in any 12-month period PROVIDED THAT whilst the
Executive is entitled to be paid during Incapacity there
shall be deducted therefrom the aggregate of any amounts
receivable by the Executive by virtue of any sickness,
accident benefit or permanent health scheme operated by or
on behalf of the Company (except insofar as such amounts
represent reimbursement of medical or nursing fees or
expenses incurred by the Executive) and the amount of any
social security sickness or other benefit to which the
Executive may be entitled.
(ii) If the Executive shall have been absent from work due to
sickness injury or other incapacity for 180 days or more in
any 12-month period then he shall receive such benefits (if
any) as the Company may in its absolute discretion decide.
(iii) If any Incapacity is caused by any alleged action or wrong
of a third party and the Executive decides to claim damages
in respect thereof, then the Executive will use all
reasonable endeavours to recover damages for loss of
earnings over the period for which
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salary has been or will be paid to her by the Company under
Clause 6(i)(i), and will account to the Company for any such
damages recovered (net of the reasonable costs of recovery
and in an amount not exceeding the actual salary paid or
payable to her by the Company under Clause 6(i)(i) in
respect of the said period.) The Executive will keep the
Company informed of the commencement, progress and outcome
of any such claim.
(i) Disciplinary and Grievance Procedure.
(i) For statutory purposes there are no formal disciplinary or
grievance procedures in relation to the Executive's
employment. The Executive will be expected to maintain the
highest standards of integrity and behaviour.
(ii) If the Executive is not satisfied with any disciplinary
decision taken in relation to her she may appeal in writing
within 14 days of that decision to the Chairman of the
Company whose decision shall be final.
(iii) If the Executive has a grievance regarding her employment
it should in the first instance be taken up with the
Chairman of the Company.
(j) There are no collective agreements which apply to the Executive's
employment.
7. Termination.
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(a) Termination by the Company with Cause. The Company shall have the
right to terminate Executive's employment at any time with Cause by
providing a Notice of Termination to Executive in accordance with
Section 7(g) not more than sixty (60) days after the Company's actual
knowledge of the Cause event, and such termination shall not be deemed
to be a breach of this Agreement. For purposes of this Agreement,
"Cause" shall mean: (i) habitual drug or alcohol use which impairs
Executive's ability to perform her or her duties hereunder; (ii)
Executive's conviction during the Term by a court of competent
jurisdiction, or a pleading of "no contest" or guilty to an arrestable
criminal offense resulting in the imposition of a custodial sentence;
(iii) Executive's engaging in fraud, embezzlement or any other illegal
conduct with respect to the Company or Holdings, which acts are
materially harmful to, either financially, or to the business
reputation of the Company or Holdings; (iv) Executive's willful breach
of Section 9 hereof; (v) Executive's willful
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and continued failure or refusal to perform her duties hereunder
(other than such failure caused by Executive's Disability), after a
written demand for performance is delivered to Executive by the
Company that specifically identifies the manner in which the Company
believes that Executive has failed or refused to perform her duties;
or (vi) Executive otherwise breaches any material provision of this
Agreement which is not cured, if curable, within thirty (30) days
after written notice thereof. No act or failure to act on the part of
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional"
only if done or omitted to be done by Executive not in good faith and
without reasonable belief that her action or omission was in the best
interest of the Company and Holdings.
(b) Death. In the event Executive dies during the Term, her employment
shall automatically terminate effective on the date of her death, such
termination shall not be deemed to be a breach of this Agreement, and
the Company shall pay or provide to the Executive's beneficiaries or
estate, as appropriate, as soon as practicable after the Executive's
death, the amounts and benefits provided for in Section 8(d).
(c) Disability. In the event Executive shall suffer from a mental or
physical disability which shall have prevented her from performing her
material duties hereunder for a period of at least one-hundred eighty
(180) non-consecutive days within any 365 day period, the Company
shall have the right to terminate Executive's employment for
"Disability," such termination to be effective upon the giving of
notice thereof to the Executive in accordance with Section 7(g)
hereof, such termination shall not be deemed to be a breach of this
Agreement, and the Company shall provide to the Executive the amounts
and benefits provided for in Section 8(d). Executive's employment
hereunder shall terminate effective on the 30th day after receipt of
such notice by Executive (the "Disability Effective Date"); provided
that Executive shall not have returned to full-time performance of her
duties hereunder within thirty (30) days following receipt of such
notice.
Providing always that the Company warrants that Executive's employment
will not be terminated by the Company if Executive is receiving
benefits under the Company PHI scheme or is awaiting a decision from
the PHI scheme insurers in respect of benefits under the PHI scheme,
where continuing employment is a prerequisite to the Executive's
receipt of benefits under such scheme.
(d) Good Reason.
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(i) Executive may terminate her employment with the Company for "Good
Reason" and such termination shall not be deemed to be a breach
of this Agreement. Executive shall have Good Reason if Executive
has knowledge that one of the events described in Section
7(d)(ii) has occurred without Executive's written consent and (A)
if the event is not curable, Executive gives a Notice of
Termination to the Company pursuant to Section 7(g) within sixty
(60) days after having knowledge of the event, or (B) if the
event is curable, (I) Executive gives written notice to the
Company thereof in accordance with Section 14 within sixty (60)
days after having knowledge of the event, (II) such event has not
been cured within thirty (30) days after the Executive gives
notice of the event to the Company, and (III) Executive gives a
Notice of Termination to the Company in accordance with Section
7(g) within thirty (30) days after the expiration of the
Company's 30-day cure period.
(ii) For purposes of this Agreement, "Good Reason" shall mean (A)
prior to a Change in Control, (I) a failure by the Company to
comply with any material provision of this Agreement; (II) the
liquidation, dissolution, merger, consolidation or reorganization
of the Company or all of its business and/or assets, unless the
successor(s) assume all duties and obligations of the Company
pursuant to Section 13(a); or (III) upon the provision of notice
by the Company under Section 3 of non-renewal of the Agreement,
and (B) on or after a Change in Control, (I) any of the events
set forth in Section 7(d)(ii)(A); (II) any material and adverse
change to Executive's duties or authority which are inconsistent
with her title and position set forth herein; (III) a diminution
of Executive's title or position; (IV) the relocation of
Executive's office; (V) a reduction in Executive's Base Salary;
or (VI) a material reduction of Executive's benefits provided
pursuant to Section 6 other than a reduction permitted under
terms and conditions of the applicable Company policy or benefit
plan.
(e) Without Good Reason. Executive may voluntarily terminate her
employment with the Company without Good Reason by giving written
notice to the Company as provided in Section 7(g). Such notice must be
provided to the Company at least thirty (30) days prior to such
termination. Such termination shall not be deemed to be a breach of
this Agreement.
(f) Without Cause. This Company shall have the right to terminate
Executive's employment hereunder without Cause by providing written
notice to Executive as provided in Section 7(g), and such termination
shall
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not be deemed to be a breach of this Agreement. "Without Cause" shall
mean for any reason other than Cause, death or Disability, as provided
in Sections 7(a), 7(b) and 7(c).
(g) Notice of Termination; Garden Leave.
-----------------------------------
(i) Any termination of Executive's employment by the Company pursuant
to Section 7(a), 7(c) or 7(f), or by Executive pursuant to
Section 7(d) or 7(e), shall be communicated by a Notice of
Termination to the other party hereto in accordance with this
Section 7(g) and Section 14. For purposes of this Agreement, a
"Notice of Termination" means a written notice that (A) indicates
the specific termination provision in this Agreement relied upon,
(B) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated and (C) if the Date of Termination (as defined in
Section 7(h)) is other than the date of receipt of such notice,
specifies the Date of Termination. The failure by the Executive
or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in
enforcing the Executive's or Company's rights hereunder.
(ii) Any Notice of Termination by the Company for Cause shall be
ratified by a resolution duly adopted by the affirmative vote of
not less than two-thirds of the Company Board then in office
(excluding, for this purpose, the Executive, if the Executive is
then a member of the Company Board) at a meeting of the Company
Board called and held for such purpose, after reasonable notice
to the Executive and an opportunity for the Executive, together
with her counsel (if the Executive chooses to have counsel
present at such meeting), to be heard before the Company Board,
finding that, in the good faith opinion of the Company Board, the
Executive had committed an act constituting "Cause" as defined in
Section 7(a) and specifying the particulars thereof in detail.
(iii) After notice of termination has been given by the Executive, or
if the Executive seeks to resign without notice or by giving
shorter notice than that required under this Agreement then
provided the Company continues to pay the Executive's contractual
benefits in accordance with the terms of this Agreement, the
Company has at
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its discretion the right for the notice period or balance of the
notice period then outstanding until the date of termination to:
(A) exclude the Executive from the Company's premises and
require the Executive not to attend at the Company's
premises; and/or
(B) require the Executive to carry out no duties; and/or
(C) require the Executive not to communicate or deal with
employees, agents, consultants, clients or other
representatives of the Company.
(h) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause or
by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein (but
not more than thirty (30) days thereafter), as the case may be
(although such Date of Termination shall retroactively cease to
apply if the circumstances providing the basis of termination for
Cause or Good Reason are cured in accordance with Section 7(a) or
7(d) of this Agreement, as the case may be), (ii) if Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date set forth
in the Notice of Termination (iii) if Executive's employment is
terminated by Executive without Good Reason, the Date of
Termination shall be the date set forth in the Notice of
Termination, but no sooner than thirty (30) days after such
Notice of Termination is received by the Company and (iv) if
Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of the
Executive's death or the Disability Effective Date, as the case
may be.
8. Compensation upon Termination.
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If the Company or Executive terminates the Executive's employment during
the Term, the Company shall pay to the Executive the amount(s) set forth
below. The Compensation Payments described in Section 8(a) shall be paid,
subject to all required deductions, in a lump sum to the Executive's bank
account five (5) business days after the Date of Termination or date of
expiration of this Agreement, as the case may be. Severance Pay and the
Termination Bonus under Section 8(b) shall be paid, subject to all
applicable deductions, into the Executive's bank account in six (6) equal
monthly installments, the first installment to be paid five (5) business
days after the effective date of the release described in Section 8(b):
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(a) Compensation upon Termination for Cause or Without Good Reason. In the
event of termination of Executive's employment by the Company for
Cause or by the Executive without Good Reason, or by reason of
expiration of the Term (if applicable), the Company shall pay the
Executive her accrued, but unpaid Base Salary, accrued vacation pay
and unpaid business expenses through the Date of Termination (the
"Compensation Payments"), and the Executive shall be entitled to no
other compensation, except as otherwise due to the Executive under
applicable law. The Executive shall not be entitled to the payment of
any bonus or other incentive compensation for any portion of the
fiscal year in which such termination occurs.
(b) Compensation upon Termination by the Company Without Cause or upon
Termination by the Executive for Good Reason. Subject to Section 8(c),
in the event of the termination of the Executive's employment by the
Company without Cause or upon termination of the Executive's
employment by the Executive for Good Reason, the Company shall pay the
Executive the Compensation Payments. In addition, conditioned upon
receipt of the Executive's release of claims substantially in the form
attached hereto as Exhibit C, subject to such changes as may be
required to preserve the intent thereof for changes in applicable law,
the Company shall pay or provide to the Executive, in lieu of notice
and any statutory entitlement in respect of the termination of her
employment, (i) as "Severance Pay", an amount equal to the sum of the
Total Cash Compensation that Executive would have received during the
Initial Term, such amount to be calculated from the date the
Executive's employment was terminated to the date that is the third
anniversary of the Commencement Date (the "Severance Calculation
Period"), (ii) earned, but unpaid Incentive Bonus for the year of
termination, as determined in the good faith opinion of the Company
based upon the relative achievement of performance targets through the
Date of Termination (the "Termination Bonus"), and (iii) the welfare
benefits set forth in Section 8(f). Notwithstanding the foregoing
provisions of this Section 8(b), (x) where the Severance Calculation
Period is for twelve (12) calendar months or less or where termination
takes place during the Additional Term, the sum payable under Section
8(b)(i) shall be an amount equal to the sum of one (1) full year's
Total Cash Compensation and (y) any right of the Executive to receive
termination payments and benefits under Section 8(b) shall be
forfeited to the extent of any amounts payable or benefits to be
provided after a material breach of any covenant set forth in Section
9.
Page 14 of 25
(c) Compensation upon Termination in Connection with a Change in Control
of the Company. If, within the period of time commencing on the date
of the first occurrence of a Change in Control and continuing until
the second anniversary of such occurrence of a Change in Control or,
if earlier, until the Executive's death, the Executive's employment is
terminated by the Company without Cause or by the Executive for Good
Reason, then the provisions of Section 8(b) shall be applicable,
except that an amount equal to 300% of the Executive's Total Cash
Compensation shall be substituted in lieu of the amount set forth in
Section 8(b)(i), and the Severance Calculation Period shall be
inapplicable. For purposes of the preceding sentence, if a Change in
Control occurs and not more than one-hundred twenty (120) days prior
to the date on which the Change in Control occurs, the Executive's
employment is terminated by the Company without Cause, such
termination of employment shall be deemed a termination of employment
after a Change in Control if the Executive has reasonably demonstrated
that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in
Control, or (ii) otherwise arose in connection with or in anticipation
of a Change in Control.
(d) Compensation upon Death or Disability. In the event of the Executive's
death or the termination of employment due to Disability, the Company
shall pay to the Executive (or beneficiaries, or estate, as the case
may be) an amount equal to the sum of (i) the Compensation Payments
and (ii) the Termination Bonus. Executive shall be entitled to any
other rights, compensation and/or benefits as may be due to Executive
in accordance with the terms and provision of any agreements, plans or
programs of the Company.
(e) Set-Off, Counterclaim or Late Payment. There shall be no right of
set-off or counterclaim in respect of any claim, debt or obligation
against any payment to or benefit for the Executive provided for in
this Agreement. Without limiting the rights of the Executive at law or
in equity, if the Company fails to make any payment required to be
made hereunder on a timely basis, the Company shall pay interest on
the amount or value thereof at an annualized rate of interest equal to
the "prime rate" as set forth from time to time during the relevant
period in The Wall Street Journal "Money Rates" column, plus four
(4)%. Such interest shall be payable as it accrues on demand. Any
change in such prime rate shall be effective on and as of the date of
such change.
(f) Welfare Benefits. If the Executive becomes entitled to the benefits
provided by Section 8(b) or 8(c), then in addition to such benefits,
for a period following the Date of Termination equal to the greater of
the
Page 15 of 25
remaining Term or twelve (12) months (the "Continuation Period"), the
Company shall arrange to provide the Executive with health insurance,
life insurance, and other medical benefits substantially similar to
those that the Executive was receiving or entitled to receive
immediately prior to the Date of Termination (or, if greater,
immediately prior to the reduction, termination, or denial described
in Section 7(d)(ii)(B)(VI), if applicable). If and to the extent that
any benefit described in this Section 8(f) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company, then the Company will itself pay or provide for the payment
to the Executive, her dependents and beneficiaries, of such benefits
along with, in the case of any benefit described in this Section 8(f)
that is subject to tax because it is not or cannot be paid or provided
under any such policy, plan, program or arrangement of the Company, an
additional amount such that after payment by the Executive, or her
dependents or beneficiaries, as the case may be, of all taxes so
imposed, the recipient retains an amount equal to such taxes.
(g) Scope and Nonduplication. The provision or payment of termination
benefits under this Section 8 shall not affect any rights the
Executive may have pursuant to any agreement, plan, policy, program or
arrangement of the Company providing employee benefits, which rights
shall be governed by the terms thereof or by the release described in
Section 8; provided, however, that to the extent, and only to the
extent, a payment or benefit that is paid or provided under this
Section 8 would also be paid or provided under the terms of any
applicable plan, program, or arrangement, including, without
limitation, any severance program, such applicable plan, program,
agreement or arrangement shall be deemed to have been satisfied by the
payment made or benefit provided under this Agreement.
(h) Mitigation. In the event of the termination of the Executive by the
Company without Cause, or by the Executive with Good Reason, the
Executive shall not be required to mitigate damages by seeking other
employment or otherwise as a condition to receiving termination
payments or benefits under this Agreement. No amounts earned by the
Executive after the Executive's termination by the Company without
Cause or by the Executive with Good Reason, whether from
self-employment, as a common law employee, or otherwise, shall reduce
the amount of any payment or benefit under any provision of this
Agreement. Notwithstanding the foregoing, the Executive's coverage
under the Company's group medical insurance as provided in Section
8(f) shall be reduced to the extent comparable welfare benefits are
actually received by
Page 16 of 25
the Executive as soon as the Executive becomes covered under any group
medical plan made available by another employer. The Executive shall
report to the Company any such coverage actually received by the
Executive.
(i) Resignations. Except to the extent requested by the Company, upon any
termination of the Executive's employment with the Company, the
Executive shall immediately resign all positions and directorships
with the Company, Holdings and each of their subsidiaries and
affiliates.
9. Competitive Activity; Confidentiality; Non-solicitation.
-------------------------------------------------------
(a) Executive acknowledges that during the course of her employment with
the Company the Executive will learn business information valuable to
the Company and Holdings and will form substantial business
relationships with the Company's and Holdings' clients. To protect the
Company's and Holdings' legitimate business interests in preserving
its valuable confidential business information and client
relationships, the Executive shall not without the prior written
consent of the Company or Holdings, which consent shall not be
unreasonably withheld, engage in any Competitive Activity during the
Term or for a period of six (6) months following the termination of
the Executive's employment.
(b) During the Term, and in consideration for the Executive's agreement to
enter into this Agreement, the Company agrees that it will disclose or
cause to be disclosed to Executive its Confidential or Proprietary
Information (as defined in this Section 9(b)) to the extent necessary
for Executive to carry out her obligations to the Company. The
Executive hereby acknowledges the Company has a legitimate business
interest in protecting its Confidential or Proprietary Information and
hereby covenants and agrees that he will not without the prior written
consent of the Company, during the Term or thereafter (i) disclose to
any person not employed by the Company, or use in connection with
engaging in competition with the Company, any Confidential or
Proprietary Information of the Company or (ii) remove, copy or retain
in her possession any Company files or records. For purposes of this
Agreement, the term "Confidential or Proprietary Information" will
include all information of any nature and in any form that is owned by
the Company or by Holdings and that is not publicly available (other
than by Executive's breach of this Section 9(b)) or generally known to
persons engaged in businesses similar or related to those of the
Company or Holdings. Confidential or Proprietary Information will
include, without limitation, the Company's and Holdings' financial
matters, customers, employees, industry contacts, strategic business
plans, product
Page 17 of 25
development (or other proprietary product data), marketing plans, and
all other secrets and all other information of a confidential or
proprietary nature. Confidential or Proprietary Information shall not
be deemed to have become public for purposes of this Agreement where
it has been disclosed or made public by or through anyone acting in
violation of a contractual, ethical, or legal responsibility to
maintain its confidentiality. The foregoing obligations imposed by
this Section 9(b) shall not apply (x) during the Term, in the course
of the business of and for the benefit of the Company or Holdings, (y)
if such Confidential or Proprietary Information will have become,
through no fault of the Executive, generally known to the public or
(z) if the Executive is required by law to make disclosure (after
giving the Company notice and an opportunity to contest such
requirement).
(c) The Executive hereby covenants and agrees that during the Term and for
six (6) months after the Date of Termination Executive will not,
without the prior written consent of the Company, which consent shall
not unreasonably be withheld, on behalf of Executive or on behalf of
any person, firm or company, directly or indirectly, attempt to
influence, persuade or induce, or assist any other person in so
persuading or inducing, any senior employee of the Company or Holdings
with whom the Executive has had direct contact during the course of
her employment to give up employment or a business relationship with
the Company or Holdings, and the Executive shall not directly or
indirectly solicit or hire such employees of the Company or Holdings
for employment with any other employer.
(d) The Executive agrees that on or before the Date of Termination the
Executive shall return all Company property, including without
limitation all credit, identification and similar cards, keys and
documents, books, records and office equipment. The Executive agrees
that he shall abide by, through the Date of Termination, the Company's
and Holdings' policies and procedures for worldwide business conduct.
(e) Executive and the Company agree that the covenants contained in this
Section 9 are reasonable under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction any such
covenant is not reasonable in any respect, such court will have the
right, power and authority to excise or modify any provision or
provisions of such covenants as to the court will appear not
reasonable and to enforce the remainder of the covenants as so
amended. Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of her obligations under
this Section 9 would be inadequate and that damages flowing from such
a breach may not readily be susceptible to
Page 18 of 25
being measured in monetary terms. Accordingly, Executive acknowledges,
consents and agrees that, in addition to any other rights or remedies
that the Company may have at law, in equity or under this Agreement,
upon adequate proof of her violation of any such provision of this
Agreement, the Company will be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further
breach, without the necessity of proof of actual damage.
(f) Representations of the Executive. The Executive represents and
warrants to the Company that:
(i) (A) There are no restrictions, agreements or understandings
whatsoever to which the Executive is a party that would prevent
or make unlawful the Executive's execution of this Agreement or
the Executive's employment under this Agreement, or that is or
would be inconsistent, or in conflict with this Agreement or the
Executive's employment under this Agreement, or would prevent,
limit or impair in any way the performance by the Executive of
the obligations under this Agreement; and (B) the Executive has
disclosed to the Company all restraints, confidentiality
commitments or other employment restrictions that the Executive
has with any other employer, person or entity.
(ii) Upon and after the Executive's termination or cessation of
employment with the Company, and until such time as no
obligations of the Executive to the Company hereunder exist, the
Executive: (A) shall provide a complete copy of this Agreement to
any prospective employer or other person, entity or association
in a competing business with whom or which the Executive proposes
to be employed, affiliated, engaged, associated or to establish
any business or remunerative relationship prior to the
commencement thereof, provided that Executive shall first cause
the compensation amounts hereunder to be deleted or not
disclosed; and (B) shall notify the Company of the name and
address of any such person, entity or association prior to the
Executive's employment, affiliation, engagement, association or
the establishment of any business or remunerative relationship.
10. Intellectual Property.
---------------------
(a) Subject to the relevant provisions of the Patents Act 1977, the
Registered Designs Act 1949 and the Copyright Designs and Patents Act
1988 if at any time in the course of her employment the Executive
makes or discovers or participates in the making or discovery of any
Intellectual
Page 19 of 25
Property relating to or capable of being used in the business of the
Company or Holdings he will immediately disclose full details of such
to the Company Board and at the request and expense of the Company he
will do all things which may be necessary or desirable for obtaining
appropriate forms of protection for the Intellectual Property in such
parts of the world as may be specified by the Company and for vesting
all rights in the same in the Company or its nominee.
(b) The Executive hereby irrevocably appoints the Company to be her
attorney in her name and on her behalf to sign, execute or do any
instrument or thing and generally to use her name for the purpose of
giving to the Company or its nominee the full benefit of the
provisions of Clause 10(a) and in favour of any third party a
certificate in writing signed by any director or the secretary of the
Company that any instrument or act falls within the authority
conferred by Clause 10(a) shall be conclusive evidence that such is
the case.
(c) The Executive hereby waives all of her moral rights (as defined in the
Copyright Designs and Patents Act 1988) in respect of any acts of the
Company or any acts of third parties done with the Company's authority
in relation to any Intellectual Property which is the property of the
Company by virtue of Clause 10(a).
(d) All rights and obligations under this Clause in respect of
Intellectual Property made or discovered by the Executive during her
employment will continue in full force and effect after the
termination of her employment and will be binding upon the Executive's
personal representatives.
11. Legal Fees and Expenses.
-----------------------
If it should appear to Executive that the Company has failed to comply with
any of its obligations under this Agreement or in the event that the
Company or any other person takes or threatens to take any action to
declare this Agreement void or unenforceable, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive the benefits provided or intended to be provided to Executive
hereunder, the Company irrevocably authorizes Executive from time to time
to retain counsel of Executive's choice at the expense of the Company as
hereafter provided, to advise and represent Executive in connection with
any such interpretation, enforcement or defense, including without
limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer,
stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the
Page 20 of 25
Company and such counsel, the Company irrevocably consents to Executive's
entering into an attorney-client relationship with such counsel, and in
that connection the Company and Executive agree that a confidential
relationship shall exist between Executive and such counsel. Without
respect to whether Executive prevails, in whole or in part, in connection
with any of the foregoing, the Company will pay and be solely financially
responsible for any and all attorneys, and related fees and expenses
incurred by Executive in connection with any of the foregoing; provided
that, in regard to such matters, the Executive has not acted in bad faith
or with no colorable claim of success. Such payments shall be made within
five (5) business days after delivery of Executive's written requests for
payment, accompanied by such evidence of fees and expenses incurred as the
Company may reasonably require. Notwithstanding the foregoing provisions of
this Section 11, the obligations of the Company under this Section 11 shall
not exceed, in the aggregate, (pound)15,000.00.
12. Withholding of Taxes.
--------------------
The Company may withhold from any amounts payable under this Agreement all
applicable taxes that the Company is required to withhold pursuant to any
applicable law, regulation or ruling.
13. Successors and Binding Agreement.
--------------------------------
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all
or substantially all of the business or assets of the Company, by
agreement in form and substance reasonably satisfactory to Executive,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform
if no such succession had taken place. This Agreement will be binding
upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly
or indirectly all or substantially all of the business or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise
be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, transfer or delegate
this
Page 21 of 25
Agreement or any rights or obligations hereunder except as expressly
provided in Sections 13(a) and 13(b). Without limiting the generality
or effect of the foregoing, Executive's right to receive payments
hereunder will not be assignable, transferable or delegable, whether
by pledge, creation of a security interest, or otherwise, other than
by a transfer by Executive's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Section 13(c), the Company shall have no liability to
pay any amount so attempted to be assigned, transferred or delegated.
14. Notices.
-------
For all purposes of this Agreement, all communications, including without
limitation notices, consents, requests or approvals, required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five (5) business
days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three (3) business days
after having been sent by an internationally recognized overnight courier
service, addressed to the Company (to the attention of the Chief Executive
Officer of the Company) at its principal executive office and to Executive
at her principal residence, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
15. Governing Law.
-------------
The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the
substantive laws of England, without giving effect to the principles of
conflict of laws, except as expressly provided herein. In the event the
Company exercises its discretion under Section 9(e) to bring an action to
enforce the covenants contained in Section 9 in a court of competent
jurisdiction where the Executive has breached or threatened to breach such
covenants, and in no other event, the parties agree that the court may
apply the law of the jurisdiction in which such action is pending in order
to enforce the covenants to the fullest extent permissible. Notwithstanding
the foregoing, to the extent that Bermuda law restricts the ability of the
Company to fully comply with the express terms of this Agreement, the
Company may modify this Agreement to the extent necessary to comply with
such law and such modification shall not be deemed to be a breach of this
Agreement by the Company.
Page 22 of 25
16. Validity.
--------
Any provision of this Agreement that is deemed invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective, to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provisions of
this Agreement invalid, illegal or unenforceable in any other jurisdiction.
If any covenant in Section 9 should be deemed invalid, illegal or
unenforceable because its time, geographical area, or restricted activity,
is considered excessive, such covenant shall be modified to the minimum
extent necessary to render the modified covenant valid, legal and
enforceable.
17. Miscellaneous.
-------------
No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time
of any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party will be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject matter
hereof have been made by either party that are not set forth expressly in
this Agreement. The headings used in this Agreement are intended for
convenience or reference only and shall not in any manner amplify, limit,
modify or otherwise be used in the construction or interpretation of any
provision of this Agreement. References to Sections are references to
Sections of this Agreement. Any reference in this Agreement to a provision
of a statute, rule or regulation shall also include any successor thereto.
18. Survival.
--------
Notwithstanding any provision of this Agreement to the contrary, the
parties' respective rights and obligations under Sections 8, 9, 10, 11, 12
and 13(b) will survive any termination or expiration of this Agreement or
the termination of the Executive's employment for any reason whatsoever.
19. Beneficiaries.
-------------
The Executive shall be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the
Executive's death, and may change such election, in either case by giving
the Company written notice thereof in accordance with Section 14. In the
event of the Executive's death or a
Page 23 of 25
judicial determination of the Executive's incompetence, reference in this
Agreement to the "Executive" shall be deemed, where appropriate, to the
Executive's beneficiary, estate or other legal representative.
20. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute
one and the same agreement.
21. Entire Agreement.
----------------
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the Executive's employment by
the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement
shall constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceedings to vary the terms of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page 24 of 25
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first written above.
/s/ Deborah G. Percy
--------------------------------
Deborah G. Percy
SCOTTISH RE GROUP LIMITED
By: /s/ Scott Willkomm
--------------------------
Name: Scott Willkomm
Title: Director
Page 25 of 25