|
Execution Copy
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of July 25, 2007
between
Scottish Holdings, Inc. (the "Company") and Michael Baumstein
(the "Employee")
(together, the "Parties").
WHEREAS, the Employee and the Company are parties to an
employment
agreement dated March 15, 2004 (the "2004 Employment
Agreement");
WHEREAS, the Parties wish to establish the terms of
Employee's
continued employment with the Company upon the terms and
conditions set forth
herein which supersede the terms of the 2004 Employment
Agreement, and all other
agreements with respect to the subject matter hereof;
Accordingly, the Parties agree as follows:
1. Employment and Acceptance. The Company shall employ the
Employee, and Employee shall accept employment, subject to the
terms of this
Agreement, effective as of May 7, 2007 (the "Effective
Date").
2. Term. Subject to earlier termination pursuant to Section
5
of this Agreement, this Agreement and the employment
relationship hereunder
shall continue from the Effective Date until the second
anniversary of the
Effective Date (the "Initial Term") and shall renew for one (1)
year intervals
thereafter (each, a "Renewal Term") unless either party shall
have given at
least sixty (60) days advanced written notice to the other that
it does not wish
to extend the Term. As used in this Agreement, the "Term" shall
refer to the
Initial Term and any Renewal Term and shall, in all cases,
terminate on the date
the Employee's employment terminates in accordance with this
Section 2 or
Section 5. In the event of the Employee's termination of
employment during the
Term, the Company's obligation to continue to pay all base
salary, as adjusted,
bonus and other benefits then accrued shall terminate except as
may be provided
for in Section 5 of this Agreement.
3. Duties and Title.
3.1 Title. The Company shall employ the Employee to render
exclusive and full-time services to the Company and its
subsidiaries. The
Employee shall serve in the capacity of Executive Vice
President, Head of
Capital Markets and Group Treasurer, and shall report to the
Chief Financial
Officer of Scottish Re Group Limited. The Employee shall also
serve during the
Term in executive positions for one or more of the Company's
subsidiaries and
affiliates for no additional consideration.
3.2 Duties. The Employee will have such authority and
responsibilities and will perform such executive duties as are
customarily
performed by an Executive Vice President, Head of Capital
Markets and Group
Treasurer of a company in similar lines of business as the
Company and its
subsidiaries or as may be assigned to Employee by the Chief
Financial Officer of
Scottish Re Group Limited. The Employee will devote all his full
working-time
and attention to the performance of such duties and to the
promotion of the
business and interests of the Company and its subsidiaries.
<PAGE>
3.3 Location. The Employee shall perform his full-time
services
to the Company and its subsidiaries in the Company's Charlotte,
NC office (the
"Location"); provided that the Employee shall be required to
travel as necessary
to perform his duties hereunder.
4. Compensation and Benefits by the Company. As compensation
for all services rendered pursuant to this Agreement, the
Company shall provide
the Employee the following during the Term:
4.1 Base Salary. During the Term, the Company will pay to
the
Employee an annual base salary of $400,000, payable in
accordance with the
customary payroll practices of the Company. The Employee's
annual base salary
may be increased by the Company at its discretion and the
Company agrees to
review such compensation not less frequently than annually
during the Term. The
Base Salary as increased from time to time shall be referred to
herein as "Base
Salary".
4.2 Bonuses. During the Term, the Employee shall be eligible
to
receive an annual bonus ("Bonus") under a plan established by
the Company in the
amount determined by the Board of Directors of the Company (the
"Board") based
upon achievement of performance measures established by the
Company and approved
by the Board. The employee's target bonus shall be 75% of Base
Salary.
Notwithstanding the foregoing, for the calendar years ending on
December 31,
2007 and December 31, 2008, the Employee shall receive a Bonus
of not less than
fifty percent (50%) of the Base Salary. The Employee's Bonus
shall be payable at
such times and in the manner consistent with the Company's
policies regarding
compensation of executive employees. In addition, the Company
may pay such
additional bonuses as it may establish within its direction.
4.3 Signing Bonus. As soon as practicable following the date
hereof, the Company will pay to the Employee a one-time,
lump-sum payment in the
amount of $70,000 (the "Signing Bonus").
4.4 Participation in Employee Benefit Plans. The Employee
shall
be entitled during the Term, if and to the extent eligible, to
participate in
all of the applicable benefit plans of the Company, which may be
available to
other senior executives of the Company. The Company may at any
time or from time
to time amend, modify, suspend or terminate any employee benefit
plan, program
or arrangement for any reason without the Employee's consent if
such amendment,
modification, suspension or termination is consistent with the
amendment,
modification, suspension or termination for other executives of
the Company.
Notwithstanding the foregoing, the Employee will continue to
participate in
and/or receive benefits under (x) the Company's Exec-U-Care plan
(the
"Exec-U-Care Plan") and (y) the Scottish Holdings, Inc. Deferred
Compensation
Plan (the "Deferred Compensation Plan") (or other comparable
benefit plans
sponsored by the Company or an affiliate of the Company) to the
same extent that
the Employee participated in or received benefits under such
plans prior to the
Effective Date through the Term, subject to the terms of such
plans and
applicable law. In the event the Company modifies, amends or
terminates the
Deferred Compensation Plan or the Exec-U-Care Plan prior to the
expiration of
the Term in a way that adversely affects the Employee's benefits
under either
plan, the Company will pay the Employee compensation or provide
the Employee
with benefits (as determined in the Company's discretion)
through the
- 2 -
<PAGE>
expiration of the Term comparable to the Employee's benefits and
compensation
under such plans as of the Effective Date.
4.5 Equity Compensation. The Company will grant Employee
stock
options to purchase 225,000 ordinary shares of an affiliate of
the Company
pursuant to the 2007 Scottish Re Group Limited Stock Option
Plan, an equity
incentive compensation plan established by an affiliate of the
Company (the
"Equity Incentive Plan"), pursuant to the terms of the Equity
Incentive Plan and
any applicable agreements thereunder as determined from time to
time by the
Board.
4.6 Expense Reimbursement. During the Term, the Employee
shall
be entitled to receive reimbursement for all appropriate
business expenses
incurred by him in connection with his duties under this
Agreement in accordance
with the policies of the Company as in effect from time to
time.
4.7 Club Dues and Expenses. During the Term, the Company
hereby
agrees to reimburse Employee for club dues and expenses not to
exceed $5,000 per
calendar year in accordance with the Company's policy regarding
substantiation
of expenses.
4.8 Vacation and Holidays. Employee shall be entitled to
four
(4) weeks of paid vacation per annum, in accordance with the
Company's vacation
policy.
4.9 Legal Fees.
(a) The Company shall pay or reimburse the Employee for all
reasonable attorneys' fees and costs (not to exceed $10,000)
incurred by the
Employee in connection with advice pertaining to and negotiation
of this
Agreement upon presentation to the Company of bills for such
services and such
other supporting information as the Company may reasonably
require.
(b) If it should appear to Employee 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,
Employee the benefits
provided or intended to be provided to Employee hereunder, the
Company
irrevocably authorizes Employee from time to time to retain
counsel of
Employee's choice at the expense of the Company as hereafter
provided, to advise
and represent Employee 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 Company and such counsel, the Company
irrevocably
consents to Employee's entering into an attorney-client
relationship with such
counsel, and in that connection the Company and Employee agree
that a
confidential relationship shall exist between Employee and such
counsel. Without
respect to whether Employee 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 Employee in
connection with any of the foregoing; provided that, in regard
to such matters,
the Employee has not acted in bad faith or with no colorable
claim of success.
Such payments shall be made within five (5) business days
after
- 3 -
<PAGE>
delivery of Employee'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 4.9(b),
the obligations
of the Company under this Section 4.9(b) shall not exceed, in
the aggregate,
$50,000.
4.10 Indemnification. The Holdings' Indemnification
Agreement
(the "Indemnification Agreement") attached as Exhibit A to the
2004 Employment
Agreement will continue in full force and effect in accordance
with the terms of
the Indemnification Agreement.
5. Termination of Employment.
5.1 By the Company for Cause or by the Employee Without Good
Reason or Due to Death or Disability. If: (i) the Employee's
employment
terminates due to his death; (ii) the Company terminates the
Employee's
employment with the Company for Cause (as defined below); (iii)
the Company
terminates the Employee's employment with the Company due to the
Employee's
Disability (as defined below); or (iv) Employee terminates his
employment
without Good Reason (as defined below), provided that the
Employee shall be
required to give the Company at least thirty (30) days prior
written notice of
such termination, the Employee or the Employee's legal
representatives (as
appropriate), shall be entitled to receive the following (the
"Accrued
Benefits"):
(a) the Employee's accrued but unpaid Base Salary and
benefits set forth in Section 4.4, if any, to the date of
termination;
(b) the unpaid portion of the Bonus, if any, relating to
the calendar year prior to the calendar year of the Employee's
death,
Disability, termination by the Company for Cause or by the
Employee without Good
Reason, payable in accordance with Section 4.2;
(c) expenses reimbursable under Section 4.6 incurred but
not yet reimbursed to the Employee to the date of termination;
and
(d) in accordance with the Company's policies, any accrued
but unused vacation time or paid time off.
For the purposes of this Agreement, "Disability" means a
determination
by the Company in accordance with applicable law that as a
result of a physical
or mental injury or illness, the Employee is unable to perform
the essential
functions of his job with or without reasonable accommodation
for a period of
(i) ninety (90) consecutive days; or (ii) one hundred eighty
(180) days in any
one (1) year period.
For the purposes of this Agreement, "Cause" means, as determined
by
the Board (or its designee), with respect to conduct during the
Employee's
employment with the Company, whether or not committed during the
Term, (i)
commission of a felony by Employee; (ii) acts of dishonesty by
Employee
resulting or intending to result in personal gain or enrichment
at the expense
of the Company or its subsidiaries; (iii) Employee's material
breach of his
obligations under this Agreement; (iv) conduct by Employee in
connection with
his duties hereunder that is fraudulent, unlawful or grossly
negligent; (v)
engaging in personal conduct by
- 4 -
<PAGE>
Employee (including but not limited to employee harassment or
discrimination,
the use or possession at work of any illegal controlled
substance) which
seriously discredits or damages the Company or its subsidiaries;
(vi)
contravention of specific reasonable lawful material direction
from the person
or entity to whom the Employee reports or continuing inattention
to or
continuing failure to adequately perform the material duties to
be performed by
Employee under the terms of Section 3.2 of this Agreement or
(vii) breach of the
Employee's covenants set forth in Section 7 below before
termination of
employment; provided, that, the Employee shall have fifteen (15)
days after
notice from the Company to cure the deficiency leading to the
Cause
determination (except with respect to (i) above), if curable. A
termination for
"Cause" shall be effective immediately (or on such other date
set forth by the
Company).
For the purposes of this Agreement, "Good Reason" means, without
the
Employee's consent, (i) a material adverse reduction in
Employee's
responsibilities or duties; (ii) a reduction in the Employee's
Base Salary or
bonus opportunity; provided that, the Company may at any time or
from time to
time amend, modify, suspend or terminate any bonus, incentive
compensation or
other benefit plan or program provided to the Employee for any
reason and
without the Employee's consent if such modification, suspension
or termination
(x) is a result of the underperformance of the Employee or the
Company under its
business plan, or (y) is consistent with an "across the board"
reduction for all
similar level executive employees of the Company, and, in each
case, is
undertaken in the Board's reasonable business judgment acting in
good faith and
engaging in fair dealing with the Employee; (iii) without the
Employee's prior
written consent, relocation of the Employee's Location of work
to any location
that is in excess of 50 miles from the Location thereof on the
Effective Date;
or (iv) the Company's material breach of the Agreement; provided
that a
suspension of the Employee and the requirement that the Employee
not report to
work shall not constitute "Good Reason" if the Employee
continues to receive the
compensation and benefits required by this Agreement. The
Employee shall provide
the Company written notice specifying such event or deficiency
constituting Good
Reason within sixty (60) days following the Employee's knowledge
of the
occurrence of such event and the Company shall have thirty (30)
days after
receipt of such notice to cure the event or deficiency that
would result in Good
Reason.
5.2 By the Company Without Cause or By the Employee for Good
Reason. If during the Term the Company terminates Employee's
employment without
Cause (which may be done at any time without prior notice) or
Employee
terminates his employment for Good Reason, upon at least thirty
(30) days prior
written notice, upon execution without revocation of a valid
release agreement
in a form reasonably acceptable to the Company and the Employee
and not in
violation of any applicable laws (the "Release"), the Employee
shall be entitled
to receive:
(a) the Accrued Benefits;
(b) the pro-rata portion of the Bonus up to the date of
termination relating to the calendar year of the Employee's
termination, payable
in accordance with Section 4.2;
(c) (i) if prior to the expiration of the Initial Term, an
amount equal to two (2) times the sum of (x) the highest Base
Salary received by
the Employee with respect to any calendar year during the
previous two (2)
calendar years of the Term, and (y) the highest Bonus amount
received by the
Employee with respect to any calendar year during the
- 5 -
<PAGE>
previous two (2) calendar years of the Term and (ii) if during
any Renewal Term,
an amount equal to the sum of (x) the highest Base Salary
received by the
Employee with respect to any calendar year during the previous
two (2) calendar
years of the Term, and (y) the highest Bonus amount received by
the Employee
with respect to any calendar year during the previous two (2)
calendar years of
the Term, in each case payable in twelve (12) equal monthly
installments, less
standard income and payroll tax withholding and other authorized
deductions; and
(d) if the Employee elects continuing group coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1985, as
amended ("COBRA"), reimbursement of the cost of such
continuation coverage for
the earlier of (x) nine (9) months or (y) such earlier date that
the Employee is
covered under another group health plan, subject to the terms of
the plans and
applicable law.
The Company shall have no obligation to provide the benefits set
forth
above in the event that Employee breaches the provisions of
Section 6. For
purposes of clarity, the Company's failure to renew the Term
pursuant to Section
2 hereof, shall not constitute a termination of the Employee's
employment
without Cause.
5.3 Following the Company's Determination Not to Renew the
Term.
Should the Employee's employment with the Company terminate
following the
Company's determination not to renew the Term pursuant to
Section 2, upon
execution without revocation of the Release, the Employee shall
be entitled to
receive:
(a) Accrued Benefits; and
(b) an amount equal to the sum of (x) the Employee's Base
Salary, and (y) the highest Bonus amount received by the
Employee with respect
to any calendar year during the previous two (2) calendar years
of the Term,
payable in a lump sum within thirty (30) days following the
effective date of
the Release, less standard income and payroll tax withholding
and other
authorized deductions.
The Company shall have no obligation to provide the benefits set
forth
above in the event that Employee breaches the provisions of
Section 6.
5.4 No Mitigation; No Offset. The Employee shall be under no
obligation to seek other employment after his termination of
employment with the
Company and the obligations of the Company to the Employee which
arise upon the
termination of his employment pursuant to this Section 5 shall
not be subject to
mitigation or offset.
5.5 Removal from any Boards and Position. If the Employee's
employment is terminated for any reason under this Agreement, he
shall be deemed
to resign (i) if a member, from the Board or board of directors
of any
subsidiary of the Company or any other board to which he has
been appointed or
nominated by or on behalf of the Company and (ii) from any
position with the
Company or any subsidiary of the Company, including, but not
limited to, as an
officer of the Company and any of its subsidiaries.
5.6 Continued Employment Beyond the Expiration of the Term.
Unless the parties otherwise agree in writing, continuation of
the Employee's
employment with the Company beyond the expiration of the Term or
following
non-renewal of this Agreement by
- 6 -
<PAGE>
either party shall be deemed an employment at-will and shall not
be deemed to
extend any of the provisions of this Agreement, and the
Employee's employment
may thereafter be terminated at will by either the Employee or
the Company;
provided that the provisions of Sections 5.3, 6, 7, 8.5 and 8.10
of this
Agreement shall survive any termination of this Agreement or the
termination of
the Employee's employment hereunder.
6. Certain Additional Payments by the Company.
6.1 Anything in this Agreement to the contrary
notwithstanding,
in the event that it shall be determined (as hereafter provided)
that any
payment (other than the Gross-Up payments provided for in this
Section 6) or
distribution by the Company or its affiliates to or for the
benefit of the
Employee, whether paid or payable or distributed or
distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by
reason of any other
agreement, policy, plan, program or arrangement, including
without limitation
any stock option, performance share, performance unit, stock
appreciation right
or similar right, or the lapse or termination of any restriction
on or the
vesting or exercisability of any of the foregoing (a "Payment"),
would be
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code
of 1986, as amended, and the regulations thereunder (the "Code")
by reason of
being considered "contingent on a change in ownership or
control" of the Company
within the meaning of Section 280G of the Code, or any similar
tax imposed by
state or local law, or any interest or penalties with respect to
such tax (such
tax or taxes, together with any such interest and penalties,
being hereafter
collectively referred to as the "Excise Tax"), then the Employee
shall be
entitled to recei
| 
