Exhibit 10.20

                                                                  Execution Copy

                              Employment Agreement


     This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of July 1, 2002, is
made and entered into by and between Scottish Annuity & Life Insurance Company
(Cayman) Ltd., a Cayman Islands, British West Indies company (the "Company") and
Thomas A. McAvity, Jr. (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 and Chief Investment Officer;

     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.

     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)  "Board" means the Board of Directors of Scottish Annuity & Life
          Holdings, Ltd., a Cayman Islands, British West Indies company
          ("Holdings").

     (c)  "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(c)(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(c)(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 Holdings by any employee benefit


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                plan (or related trust) sponsored or maintained by Holdings or
                any Subsidiary; or

          (ii)  individuals who, as of the date hereof, constitute the Board
                (the "Incumbent Board," (as modified by this Section
                1(c)(ii))) cease for any reason to constitute at least a
                majority of the 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
                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 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 Board providing
                for such Business Combination, or (B) the same as Section
                1(c)(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(c)(iii); or


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<PAGE>

          (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.

     (d)  "Code" means the Internal Revenue Code of 1986, as amended.

     (e)  "Competitive Activity" means the Executive's participation, without
          the written consent of the Board of the Company, 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 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.

     (f)  "Director" means a member of the Board.

     (g)  "Ordinary Shares" means the ordinary shares, par value $0.01 per
          share, of Holdings.

     (h)  "Subsidiary" means an entity in which Holdings directly or indirectly
          beneficially owns 50% or more of the outstanding Voting Stock.

     (i)  "Total Cash Compensation" means the sum of the (i) highest annual Base
          Salary in effect during the Term; (ii) highest annual Housing
          Allowance in effect during the Term; and (iii) highest annual
          Incentive Bonus (as set forth in Section 6(b)) earned during the prior
          three (3) fiscal years.

     (j)  "Voting Stock" means securities entitled to vote generally in the
          election of directors.

2.   Employment.

     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.


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<PAGE>

3.   Term.

     The term of employment under this Agreement (the "Initial Term") shall
commence on July 1, 2002 ("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 15 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.

4.   Positions and Duties.

     (a)  During the Term, Executive will serve in the position of Executive
          Vice President and Chief Investment Officer 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 him by the Chief Executive
          Officer of the Company, consistent with Executive's positions as the
          Company's Executive Vice President and Chief Investment Officer or
          (ii) assigned to his office in the Company's Articles of Association.
          Executive will report directly to the Chief Executive Officer of the
          Company.

     (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
          Board of the Company, and except during vacation periods and
          reasonable periods of absence due to sickness, personal injury or
          other disability, Executive will devote substantially all of his
          business time and attention to the performance of his duties to the
          Company. Notwithstanding the foregoing, Executive may (i) subject to
          the approval of the Board of the Company, 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.

5.   Place of Performance.

     In connection with his employment during the Term, unless otherwise agreed
by Executive, Executive will be based at the Company's principal executive
offices in Bermuda; 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 his duties to undertake substantial travel on
behalf of the Company and, if necessary, requested to relocate to another
executive office of the Company.


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<PAGE>

6.   Compensation and Related Matters.

     As compensation and consideration for the performance by Executive of his
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 US $262,500, payable at the
          times and in the manner consistent with the Company's policies
          regarding compensation of executive employees. 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. For each calendar year that begins during the Term,
          the Company shall 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)  Housing Allowance. The Company hereby agrees to pay the Executive US
          $5,650 per month cash allowance for use by Executive in his sole
          discretion.

     (d)  Club Dues and Expenses. The Company hereby agrees to reimburse
          Executive for club dues and expenses up to US $5,000 per calendar year
          in accordance with the Company's policy regarding substantiation of
          expenses.

     (e)  Executive Benefits. During the Term, the Company will make available
          to Executive and his 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 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.

     (f)  Expenses. The Company will promptly reimburse Executive for all
          reasonable business expenses Executive incurs in order to perform his
          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.


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<PAGE>

     (g)  Vacation and Holidays. Executive shall be entitled to four (4) weeks
          of paid vacation per annum, in accordance with the Company's vacation
          policy.

     (h)  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.

7.   Termination.

     (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 his 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 10 hereof; (v) Executive's willful and continued failure or
          refusal to perform his 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 his 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 his action or omission was in the best interest of the
          Company and Holdings.

     (b)  Death. In the event Executive dies during the Term, his employment
          shall automatically terminate effective on the date of his 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 him from performing his
          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


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<PAGE>

          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 his
          duties hereunder within thirty (30) days following receipt of such
          notice.

     (d)  Good Reason.

          (i)  Executive may terminate his 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 15 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 14(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 his 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 his
          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.


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     (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 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.

          (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 15. 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 Board of the Company then
                in office (excluding, for this purpose, the Executive, if the
                Executive is then a member of the Board) at a meeting of the
                Board of the Company called and held for such purpose, after
                reasonable notice to the Executive and an opportunity for the
                Executive, together with his counsel (if the Executive chooses
                to have counsel present at such meeting), to be heard before
                the Board of the Company, finding that, in the good faith
                opinion of the Board of the Company, the Executive had
                committed an act constituting "Cause" as defined in Section
                7(a) and specifying the particulars thereof in detail.

     (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


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          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.

     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
in a lump sum in cash upon the later of (i) five (5) business days after the
Date of Termination or date of expiration of this Agreement, as the case may be,
(ii) the effective date of a release (if a release is required by this Section
8) or (iii) at the Executive's option, a date later than the dates specified in
clauses (i) and (ii).

     (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 his 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 B, 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 (i) as severance
          pay, an amount equal to the sum of the Total Cash Compensation that
          Executive would have received during the remaining Term of the
          Agreement, 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, the Company shall pay the
          Executive under Section 8(b)(i) an amount equal to the


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          sum of one (1) full year's Total Cash Compensation, (y) upon
          termination by the Executive for Good Reason due to Section
          7(d)(ii)(A)(III) (Company's notice of non-renewal of the Agreement),
          the Company shall pay the Executive under Section 8(b)(i) an amount
          not less than one (1) full year's Total Cash Compensation, and (z) 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 10.

     (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.


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     (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 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, his 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 his
          dependents or beneficiaries, as the case may be, of all taxes so
          imposed, the recipient retains an amount equal to such taxes.
          Notwithstanding the foregoing, or any other provision of the
          Agreement, for purposes of determining the period of continuation
          coverage to which the Executive or any of his dependents is entitled
          pursuant to Section 4980B of the Code under the Company's medical,
          dental and other group health plans, or successor plans, the
          Executive's "qualifying event" will be the termination of the
          Continuation Period and the Executive will be considered to have
          remained actively employed on a full-time basis through that date.

     (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 the Executive as soon as the


                                 Page 11 of 23
<PAGE>

          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.

     (j)  Relocation expenses. If the Executive becomes entitled to the benefits
          provided by Section 8(b), 8(c) or 8(d), the Company shall reimburse
          the Executive for his reasonable relocation costs from Bermuda to the
          United States in accordance with the Company's Relocation Policy.

9.   Certain Additional Payments by the Company.

     (a)  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
          9) or distribution by the Company, Holdings or any of their affiliates
          to or for the benefit of the Executive, 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 Code
          by reason of being considered "contingent on a change in ownership or
          control" of the Company or Holdings, within the meaning of Section
          280G of the Code or to 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 Executive
          shall be entitled to receive an additional payment or payments
          (collectively, a "Gross-Up Payment"); provided; however, that no
          Gross-up Payment shall be made with respect to the Excise Tax, if any,
          attributable to (i) any incentive stock option, as defined by Section
          422 of the Code ("ISO") granted prior to the execution of this
          Agreement, or (ii) any stock appreciation or similar right, whether or
          not limited, granted in tandem with any ISO described in clause (i).
          The Gross-Up Payment shall be in an amount such that, after payment by
          the Executive of all taxes (including any interest or penalties
          imposed with respect to such taxes), including any Excise Tax imposed
          upon the Gross-Up Payment, the Executive retains an amount of the
          Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For
          purposes of determining the amount of the Gross-Up Payment, the
          Executive will be considered to pay (x) federal income taxes at the
          highest rate in effect in the year in which the Gross-Up Payment will
          be made and (y) state and local income taxes at the highest rate in
          effect in the state or locality in which the Gross-Up Payment


                                 Page 12 of 23
<PAGE>

          would be subject to state or local tax, net of the maximum reduction
          in federal income tax that could be obtained from deduction of such
          state and local taxes.

     (b)  Subject to the provisions of Section 9(f), all determinations required
          to be made under this Section 9, including whether an Excise Tax is
          payable by the Executive and the amount of such Excise Tax and whether
          a Gross-Up Payment is required to be paid by the Company to the
          Executive and the amount of such Gross-Up Payment, if any, shall be
          made by a nationally recognized accounting firm (the "Accounting
          Firm") selected by the Executive in his sole discretion. The Executive
          shall direct the Accounting Firm to submit its determination and
          detailed supporting calculations to both the Company and the Executive
          within thirty (30) calendar days after the Date of Termination, if
          applicable, and any such other time or times as may be requested by
          the Company or the Executive. If the Accounting Firm determines that
          any Excise Tax is payable by the Executive, the Company shall pay the
          required Gross-Up Payment to the Executive within five (5) business
          days after receipt of such determination and calculations with respect
          to any Payment to the Executive. If the Accounting Firm determines
          that no Excise Tax is payable by the Executive with respect to any
          material benefit or amount (or portion thereof), it shall, at the same
          time as it makes such determination, furnish the Company and the
          Executive an opinion that the Executive has substantial authority not
          to report any Excise Tax on his federal, state or local income or
          other tax return. As a result of the uncertainty in the application of
          Section 4999 of the Code and the possibility of similar uncertainty
          regarding applicable state or local tax law at the time of any
          determination by the Accounting Firm hereunder, it is possible that
          Gross-Up Payments which will not have been made by the Company should
          have been made (an "Underpayment"), consistent with the calculations
          required to be made hereunder. In the event that the Company exhausts
          or fails to pursue its remedies pursuant to Section 9(f) and the
          Executive thereafter is required to make a payment of any Excise Tax,
          the Executive shall direct the Accounting Firm to determine the amount
          of the Underpayment that has occurred and to submit its determination
          and detailed supporting calculations to both the Company and the
          Executive as promptly as possible. Any such Underpayment shall be
          promptly paid by the Company to, or for the benefit of, the Executive
          within five (5) business days after receipt of such determination and
          calculations.

     (c)  The Company and the Executive shall each provide the Accounting Firm
          access to and copies of any books, record and documents in the
          possession of the Company or the Executive, as the case may be,
          reasonably requested by the Accounting Firm, and-otherwise cooperate
          with the Accounting Firm in connection with the preparation and
          issuance of the determinations and calculations contemplated by
          Section 9(b). Any determination by the Accounting Firm as to the
          amount of the Gross-Up Payment shall be binding upon the Company and
          the Executive.

     (d)  The federal, state and local income or other tax returns filed by the
          Executive shall be prepared and filed on a consistent basis with the
          determination of the


                                 Page 13 of 23
<PAGE>

          Accounting Firm with respect to the Excise Tax payable by the
          Executive. The Executive shall report and make proper payment of the
          amount of any Excise Tax, and at the request of the Company, provide
          to the Company true and correct copies (with any amendments) of his
          federal income tax return as filed with the Internal Revenue Service
          and corresponding state and local tax returns, if relevant, as filed
          with the applicable taxing authority, and such other documents
          reasonably requested by the Company, evidencing such payment. If prior
          to the filing of the Executive's federal income tax return, or
          corresponding state or local tax return, if relevant, the Accounting
          Firm determines that the amount of the Gross-Up Payment should be
          reduced, the Executive shall within five (5) business days pay to the
          Company the amount of such reduction.

     (e)  The fees and expenses of Accounting Firm for its services in
          connection with the determinations and calculations contemplated by
          Section 9(b) shall be borne by the Company. If such fees and expenses
          are initially paid by the Executive, the Company shall reimburse the
          Executive the full amount of such fees and expenses within five (5)
          business days after receipt from the Executive of a statement therefor
          and reasonable evidence of his payment thereof.

     (f)  The Executive shall notify the Company in writing of any claim by the
          Internal Revenue Service or any other taxing authority that, if
          successful, would require the payment by the Company of a Gross-Up
          Payment. Such notification shall be given as promptly as practicable
          but no later than thirty (30) business days after the Executive
          actually receives notice of such claim and the Executive shall further
          apprise the Company of the nature of such claim and the date on which
          such claim is requested to be paid (in each case, to the extent known
          by the Executive). The Executive shall not pay such claim prior to the
          earlier of (i) the expiration of the 30-calendar-day period following
          the date on which he gives such notice to the Company and (ii) the
          date that any payment of amount with respect to such claim is due. If
          the Company notified the Executive in writing prior to the expiration
          of such period that it desires to contest such claim, the Executive
          shall:

          (i)   provide the Company with any written records or documents in
                his possession relating to such claim reasonably requested by
                the Company;

          (ii)  take such action in connection with contesting such claim as
                the Company shall reasonably request in writing from time to
                time, including without limitation accepting legal
                representation with respect to such claim by an attorney
                competent in respect of the subject matter and reasonably
                selected by the Company;

          (iii) cooperate with the Company in good faith in order effectively
                to contest such claim; and

          (iv)  permit the Company to participate in any proceedings relating
                to such claim;


                                 Page 14 of 23
<PAGE>

          provided, however, that the Company shall bear and pay directly all
          costs and expenses (including interest and penalties) incurred in
          connection with such contest and shall indemnify and hold harmless the
          Executive, on an after-tax basis, for and against any Excise Tax or
          income or other tax, including interest and penalties with respect
          thereto, imposed as a result of such representation and payment of
          costs and expenses. Without limiting the foregoing provisions of this
          Section 9(f), the Company shall control all proceedings taken in
          connection with the contest of any claim contemplated by this Section
          9(f) and, at its sole option, may pursue or forego any and all
          administrative appeals, proceedings, hearings and conferences with the
          taxing authority in respect of such claim (provided, however, that the
          Executive may participate therein at his own cost and expense) and
          may, at its option, either direct the Executive to pay the tax claimed
          and sue for a refund or contest the claim in any permissible manner,
          and the Executive agrees to prosecute such contest to a determination
          before any administrative tribunal, in a court of initial jurisdiction
          and in one or more appellate courts, as the Company shall determine;
          provided, however, that if the Company directs the Executive to pay
          the tax claimed and sue for a refund, the Company shall advance the
          amount of such payment to the Executive on an interest-free basis and
          shall indemnify and hold the Executive harmless, on an after-tax
          basis, from any Excise Tax or income or other tax, including interest
          or penalties with respect thereto, imposed with respect to such
          advance; and provided further, however, that any extension of the
          statute of limitations relating to payment of taxes for the taxable
          year of the Executive with respect to which the contested amount is
          claimed to be due is limited solely to such contested amount.
          Furthermore, the Company's control of any such contested claim shall
          be limited to issues with respect to which a Gross-Up Payment would be
          payable hereunder and the Executive shall be entitled to settle or
          contest as the case may be, any other issue raised by the Internal
          Revenue Service or any other taxing authority.

     (g)  If, after the receipt by the Executive of an amount advanced by the
          Company pursuant to Section 9(f), the Executive receives any refund
          with respect to such claim, the Executive shall (subject to the
          Company's complying with the requirements of Section 9(f)) promptly
          pay to the Company the amount of such refund (together with any
          interest paid or credited thereon after any taxes applicable thereto).
          If, after the receipt by the Executive of an amount advanced by the
          Company pursuant to Section 9(f), a determination is made that the
          Executive shall not be entitled to any refund with respect to such
          claim and the Company does not notify the Executive in writing of its
          intent to contest such denial or refund prior to the expiration of
          thirty (30) calendar days after such determination, then such advance
          shall be forgiven and shall not be required to be repaid and the
          amount of any such advance shall offset, to the extent thereof, the
          amount of Gross-Up Payment required to be paid by the Company to the
          Executive pursuant to this Section 9.

     (h)  Notwithstanding any provision of this Agreement to the contrary, but
          giving effect to any redetermination of the amount of Gross-Up
          payments otherwise required by this Section 9, if (i) but for this
          sentence, the Company would be


                                 Page 15 of 23
<PAGE>

          obligated to make a Gross-Up Payment to the Executive and (ii) the
          aggregate "present value" of the "parachute payments" to be paid or
          provided to the Executive under this Agreement or otherwise does not
          exceed three times the Executive's "base amount" by more than $50,000,
          then the payments and benefits to be paid or provided under this
          Agreement will be reduced (or repaid to the Company, if previously
          paid or provided) to the minimum extent necessary so that no portion
          of any payment or benefit to the Executive, as so reduced or repaid,
          constitutes an "excess parachute payment." For purposes of this
          Section 9(h), the terms "excess parachute payment," "present value,"
          "parachute payment," and "base amount" will have the meanings assigned
          to them by Section 280G of the Code. The determination of whether any
          reduction in or repayment of such payments or benefits to be provided
          under this Agreement is required pursuant to this Section 9(h) will be
          made at the expense of the Company, if requested by the Executive or
          the Company, by the Accounting Firm. Appropriate adjustments shall be
          made to amounts previously paid to Executive, or to amounts not paid
          pursuant to this Section 9(h), as the case may be, to reflect properly
          a subsequent determination that the Executive owes more or less Excise
          Tax than the amount previously determined to be due. In the event that
          any payment or benefit intended to be provided under this Agreement or
          otherwise is required to be reduced or repaid pursuant to this Section
          9(h), the Executive shall be entitled to designate the payments and/or
          benefits to be so reduced or repaid in order to give effect to this
          Section 9(h). The Company shall provide the Executive with all
          information reasonably requested by the Executive to permit the
          Executive to make such designation. In the event that the Executive
          fails to make such designation within 10 business days prior to the
          Date of Termination or other due date, the Company may effect such
          reduction or repayment in any manner it deems appropriate.

10.  Competitive Activity; Confidentiality; Non-solicitation.

     (a)  Executive acknowledges that during the course of his 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, (i) engage in any Competitive Activity during
          the Term and (ii) if the Executive shall have received or shall be
          receiving benefits under Section 8(b) or 8(c), engage in any
          Competitive Activity for a period ending on the first anniversary of
          the earlier of the Date of Termination or the date of expiration of
          this Agreement.

     (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 10(b)) to the extent necessary
          for Executive to carry out his obligations to the Company. The
          Executive hereby acknowledges the Company has a legitimate


                                 Page 16 of 23
<PAGE>

          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 his 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
          10(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 contracts, strategic business plans, product 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
          10(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
          one (1) year 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 employee of the Company or Holdings to give up
          employment or a business relationship with the Company or Holdings,
          and the Executive shall not directly or indirectly solicit or hire
          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 10 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


                                 Page 17 of 23
<PAGE>

          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 his obligations under
          this Section 10 would be inadequate and that damages flowing from such
          a breach may not readily be susceptible to 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 his
          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.

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


                                 Page 18 of 23
<PAGE>

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 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, $50,000.00.

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.  Dispute Resolution.

     Any dispute between the parties under this Agreement shall be resolved
(except as provided below) through informal arbitration by an arbitrator
selected under the rules of the American Arbitration Association for arbitration
of employment disputes (located in New York, New York) and the arbitration shall
be conducted in that location under the rules of said Association. Each party
shall be entitled to present evidence and argument to the arbitrator. The
arbitrator shall have the right only to interpret and apply the provisions of
this Agreement and may not change any of its provisions, except as expressly
provided in Section 17 and only in the event the Company has not brought an
action in a court of competent jurisdiction to enforce the covenants in Section
10. The arbitrator shall permit reasonable pre-hearing discovery of facts, to
the extent necessary to establish a claim or a defense to a claim, subject to
supervision by the arbitrator. The determination of the arbitrator shall be
conclusive and binding upon the parties and judgment upon the same may be
entered in any court having jurisdiction thereof. The arbitrator shall give
written notice to the parties stating the arbitrator's determination, and shall
furnish to each party a signed copy of such determination. The expenses of
arbitration shall be borne equally by the Company and the Executive or as the
arbitrator equitably determines consistent with the application of state or
federal law; provided, however, that the Executive's share of such expenses
shall not exceed the maximum permitted by law. Any arbitration or action
pursuant to this Section 13 shall be governed by and construed in accordance
with the


                                 Page 19 of 23
<PAGE>

substantive laws of the State of New York and, where applicable,
federal law, without giving effect to the principles of conflict of laws of such
State.

     Notwithstanding the foregoing, the Company shall not be required to seek or
participate in arbitration regarding any actual or threatened breach of the
Executive's covenants in Section 10, but may pursue its remedies, including
injunctive relief, for such breach in a court of competent jurisdiction in New
York, or in the sole discretion of the Company, in a court of competent
jurisdiction where the Executive has committed or is threatening to commit a
breach of the Executive's covenants, and no arbitrator may make any ruling
inconsistent with the findings or rulings of such court.

14.  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 Agreement or any rights or obligations hereunder except as
          expressly provided in Sections 14(a) and 14(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 14(c), the Company shall have no
          liability to pay any amount so attempted to be assigned, transferred
          or delegated.

15.  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


                                 Page 20 of 23
<PAGE>

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
his 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.

16.  Governing Law.

     The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the substantive
laws of the State of New York and federal law, 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 10(e) to bring an
action to enforce the covenants contained in Section 10 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.

17.  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 10 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.

18.  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


                                 Page 21 of 23
<PAGE>

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.

19.  Survival.

     Notwithstanding any provision of this Agreement to the contrary, the
parties' respective rights and obligations under Sections 8, 9, 10, 11, 12, 13
and 14(b) will survive any termination or expiration of this Agreement or the
termination of the Executive's employment for any reason whatsoever.

20.  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 15. In the event of the Executive's
death or a 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.

21.  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.

22.  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 22 of 23
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first written above.



                                         /s/ Thomas A. McAvity, Jr.
                                         ---------------------------------------
                                         Thomas A. McAvity, Jr.




                                         SCOTTISH ANNUITY & LIFE INSURANCE
                                         COMPANY (CAYMAN) LTD.



                                         By: /s/ Scott E. Willkomm
                                             -----------------------------------
                                         Name:   Scott E. Willkomm
                                         Title:  President


                                 Page 23 of 23