THE CYPRESS GROUP L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
October 17, 2004
Scottish Re Group Limited
Xxxxx Xxxxx, 0xx Xxxxx
0 Xxx-xx-Xxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX 00
Ladies and Gentlemen:
Reference is made to the Securities Purchase Agreement, dated the date
hereof (the "Purchase Agreement"), among Scottish Re Group Limited ("Scottish
Re"), Cypress Merchant B Partners II (Cayman) L.P. ("CMB II"), Cypress Merchant
Banking II-A C.V. ("CMB II-A"), Cypress Side-by-Side (Cayman) L.P. ("CSS") and
55th Street Partners II (Cayman) L.P. ("00xx Xxxxxx Partners" and, together with
CMB II, CMB II-A and CSS, the "Cypress Entities"). Terms not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
CMB II hereby agrees that as promptly as practicable (but in no event
more than five business days) after the date of this letter agreement it will
mail the form attached hereto as Exhibit A to the five largest investors in CMB
II (each an "Investor" and collectively, the "Investors") and will request each
Investor to respond to such request for information within 15 days after the
date of such mailing. At the end of such 15 day period (the "Response
Deadline"), CMB II will forward to you all of the information (the "Investor
Information") it has received from the Investors in response to such request for
information. CMB II also agrees that it will complete and return to Scottish Re
a Cypress questionnaire (the "Cypress Questionnaire") in the form attached
hereto as Exhibit B by the Response Deadline with respect to the persons listed
in Annexes A and B hereto and any subsidiaries of, or investment funds managed
or advised by, such persons that Scottish Re identifies to CMB II in writing,
not later than 10 days after the date hereof, as being actual shareholders of
Scottish Re (the "Supplement"). If the Investor Information and the completed
Cypress Questionnaire indicate that, after giving effect to the purchase of the
Purchased Securities, the total Controlled Shares of the Cypress Entities would
be equal to 10% or more of the outstanding Ordinary Shares, then the Cypress
Entities and Scottish Re agree to decrease the number of Ordinary Shares to be
purchased pursuant to the terms of the Purchase Agreement to such number of
Ordinary Shares which would result in the total Controlled Shares of the Cypress
Entities upon consummation of the Closing being less than 10% of the outstanding
Ordinary Shares. In exchange for the decrease in the number of Ordinary Shares
to be purchased by the Cypress Entities at Closing, the Cypress Entities and
Scottish Re will increase the number of Class C Warrants to be purchased by a
corresponding amount. Notwithstanding the foregoing, if such decrease in the
number of Ordinary Shares to be purchased would result in the Cypress Entities
purchasing Ordinary Shares representing less than 8% of the outstanding Ordinary
Shares (after giving effect to such issuance), the Cypress Entities may elect,
by written notice given to Scottish Re not later than November 15, 2005, to
terminate
the Purchase Agreement. If the Investor Information and the completed Cypress
Questionnaire indicate that, after giving effect to the purchase of the
Purchased Securities, the total Controlled Shares of the Cypress Entities would
be equal to less than 10% of the outstanding Ordinary Shares, then the Cypress
Entities and Scottish Re agree that such determination shall be binding and
conclusive for purposes of determining whether the issuance of the Purchased
Securities at the Closing is permitted by the Articles of Association of
Scottish Re, unless the Cypress Entities have actual knowledge of a change in
the ownership structure of the Cypress Entities.
The parties expressly agree that except as required by law or legal
process, the terms and existence of this agreement, and the information provided
pursuant to the terms hereof, shall be kept confidential by the parties unless
required to be disclosed pursuant to the U.S. securities laws and shall not,
without the prior written consent of the Cypress Entities, be relied upon by any
person other than Scottish Re. Notwithstanding anything herein to the contrary,
any party to this agreement (and any employee, representative, or other agent of
any party to this agreement) may disclose to any and all persons, without
limitation of any kind, the U.S. federal income tax treatment and tax structure
of the transactions contemplated by this agreement (the "Transactions") and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure; provided,
however, that neither party (nor any employee, representative or other agent
thereof) shall disclose any information (a) that is not relevant to an
understanding of the U.S. federal income tax treatment or tax structure of the
Transactions, including the identity of any party to this agreement (or its
employees, representatives, or other agents) or other information that could
lead any person to determine such identity, (b) to the extent such disclosure
could result in a violation of any federal or state securities laws or (c) until
the earlier of (i) the date of the public announcement of discussions relating
to the Transactions, (ii) the date of the public announcement of the
Transactions and (iii) the date of the execution of an agreement to enter into
the Transactions.
This letter shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
2
CYPRESS MERCHANT B PARTNERS II (CAYMAN) L.P.
By: Cypress Associates II (Cayman) L.P., its general partner
By: CMBP II (Cayman) Ltd., its general partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
CYPRESS MERCHANT BANKING II-A C.V.
By: Cypress Associates II (Cayman) L.P., its managing
general partner
By: CMBP II (Cayman) Ltd., its general partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
CYPRESS SIDE-BY-SIDE (CAYMAN) L.P.
By: Cypress Associates II (Cayman) L.P., its general partner
By: CMBP II (Cayman) Ltd., its general partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
55TH STREET PARTNERS II (CAYMAN) L.P.
By: Cypress Associates II (Cayman) L.P., its general partner
By: CMBP II (Cayman) Ltd., its general partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
Title:
3
ACCEPTED AND AGREED:
SCOTTISH RE GROUP LIMITED
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President
and General Counsel
