Document:

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                                                                   Exhibit 10.15

                             EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 18, 2000,
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is made and entered into by and between Scottish Annuity & Life Insurance
Company (Cayman), Ltd., a Cayman Islands company (the "Company"), and Thomas A.
                                                       -------
McAvity, Jr. (the "Executive").
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                                  WITNESSETH:

     WHEREAS, the Executive has agreed to serve as Senior Vice President and
Chief Investment Officer of the Company and is expected to make major
contributions to the short- and long-term profitability, growth and financial
strength of the Company; and

     WHEREAS, the Company wishes to employ the Executive, and the Executive is
willing to be employed by the Company, both on the terms and subject to the
conditions set forth in this Agreement.

     NOW, THEREFORE, the Company and the Executive agree as follows:

1.   Certain Defined Terms.  In addition to terms defined elsewhere herein, the
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     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.
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     (b)  "Base Pay" means the Executive's annual base salary rate as in effect
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           from time to time, as set forth in Section 5(a).

     (c)  "Beneficial Owner" means a "beneficial owner" as such term is used in
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          Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
          amended.

     (d)  "Board" means the Board of Directors of the Company or Parent.
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     (e)  "Cause" means that the Executive shall have committed any of the
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          following:

          (i)    an intentional act of fraud, embezzlement or theft in
                 connection with his duties or in the course of his employment
                 with the Company or any Subsidiary;

          (ii)   intentional wrongful damage to any material property of the
                 Company or any Subsidiary;

          (iii)  intentional wrongful disclosure of secret processes or
                 confidential information of the Company or any Subsidiary; or

          (iv)   conviction of a felony or other crime involving moral
                 turpitude;
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     and any such act shall have been materially harmful to the Company.  For
     purposes of this Agreement, no act or failure to act on the part of the
     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 the Executive not in good faith and without
     reasonable belief that his action or omission was in the best interest of
     the Company.  Notwithstanding the foregoing, the Executive shall not be
     deemed to have been terminated for "Cause" hereunder unless and until there
     shall have been delivered to the Executive a copy of a resolution duly
     adopted by the affirmative vote of not less than two-thirds of the Board
     then in office at a meeting of the Board 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, finding
     that, in the good faith opinion of the Board, the Executive had committed
     an act constituting "Cause" as herein defined and specifying the
     particulars thereof in detail.  Nothing herein will limit the right of the
     Executive or his beneficiaries to contest the validity or propriety of any
     such determination.

     (f)  "Change in Control" means the occurrence of any of the following
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          events:

          (i)    any Person or Group of Persons becomes, for the first time, the
                 Beneficial Owner, directly or indirectly, of more than fifty
                 percent (50%) of the total combined voting power of all classes
                 of capital stock of the Parent normally entitled to vote for
                 the election of directors of the Parent, other than as a result
                 of a transfer or series of related transfers of capital stock
                 from a Person or Group of Persons who immediately prior to such
                 transfer or transfers was the Beneficial Owner, and who after
                 giving effect to such transfer or transfers continues to be the
                 Beneficial Owner of more than fifty percent (50%) of the
                 Parent's capital stock;

          (ii)   the Company or Parent is merged or consolidated or reorganized
                 into or with another corporation or other legal person, and as
                 a result of such merger, consolidation or reorganization less
                 than a majority of the combined voting power of the then-
                 outstanding securities of such corporation or person
                 immediately after such transaction are held in the aggregate by
                 the holders of Ordinary Shares immediately prior to such
                 transaction;

          (iii)  the Company or Parent sells or otherwise transfers all or
                 substantially all of its assets to any other corporation or
                 other legal person, and less than a majority of the combined
                 voting power of the then outstanding securities of such
                 corporation or person immediately after such sale or transfer
                 is held in the aggregate by the holders of Ordinary Shares
                 immediately prior to such sale or transfer;

          (iv)   the Parent files a report or proxy statement with the
                 Securities and Exchange Commission pursuant to the Act
                 disclosing in response to Form 8-K or Schedule 14A (or any
                 successor schedule, form or report or item

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                 therein) that a change in control of the Parent has or may have
                 occurred or will or may occur in the future pursuant to any
                 then existing contract or transaction; or

          (v)    if during any period of two consecutive years, individuals who
                 at the beginning of any such period constitute the Directors
                 cease for any reason to constitute at least a majority thereof,
                 unless the election, or the nomination for election by the
                 Company's shareholders, or in the case of the Parent, the
                 Parent's shareholders, of each Director first elected during
                 such period was approved by a vote of at least two-thirds of
                 the Directors then still in office who were Directors at the
                 beginning of any such period.

     Notwithstanding the foregoing provisions of Paragraph (iv) above, a "Change
     in Control" shall not be deemed to have occurred for purposes of this
     Agreement:  (i) solely because (A) the Parent, (B) a Subsidiary or (C) any
     Parent-sponsored employee stock ownership plan or other employee benefit
     plan of the Parent either files or becomes obligated to file a report or
     proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
     8-K or Schedule 14A (or any successor schedule, form or report or item
     therein) under the Act, disclosing beneficial ownership by it of shares, or
     because the Parent reports that a change of control of the Parent has or
     may have occurred or will or may occur in the future by reason of such
     beneficial ownership; or (ii) solely because of a change in control of any
     Subsidiary other than Scottish Annuity & Life Insurance Company (Cayman)
     Ltd.

     (g)  "Competitive Activity" means the Executive's participation, without
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          the written consent of an officer of the Company, in the management of
          any business enterprise if such enterprise engages in substantial and
          direct competition with the Company. "Competitive Activity" will not
          include the mere ownership of securities in any such enterprise and
          the exercise of rights appurtenant thereto.

     (h)  "Director" means a member of the Board.
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     (i)  "Employee Benefits" means the perquisites, benefits and service credit
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          for benefits as provided under any and all employee retirement income
          and welfare benefit policies, plans, programs or arrangements in which
          senior officers of the Company are entitled to participate, including
          without limitation any stock option, performance share, performance
          unit, stock purchase, stock appreciation, savings, pension,
          supplemental executive retirement, or other retirement income or
          welfare benefit, deferred compensation, incentive compensation, group
          or other life, health, medical/hospital or other insurance (whether
          funded by actual insurance or self insured by the Company or a
          Subsidiary), disability, salary continuation, expense reimbursement
          and other employee benefit policies, plans, programs or arrangements
          that may now exist or may be adopted hereafter by the Company or a
          Subsidiary.

     (j)  "Group" means a "group" as such term is used in Section 13d-3 of the
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          Securities Exchange Act of 1934, as amended.

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     (k)  "Incentive Pay" means an annual bonus, incentive or other payment of
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          compensation, in addition to Base Pay, made or to be made in regard to
          services rendered in any year or other period pursuant to any bonus,
          incentive, profit-sharing, performance, discretionary pay or similar
          agreement, policy, plan, program or arrangement (whether or not
          funded) of the Company or a Subsidiary, or any successor thereto.

     (l)  "Ordinary Shares" means the ordinary shares, par value $1.00 per
           ---------------
          share, of the Company.

     (m)  "Parent" means Scottish Annuity & Life Holdings, Ltd.
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     (n)  "Person" means any individual, corporation, partnership, limited
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          liability company, joint venture, estate, trust, unincorporated
          association, or any other entity.

     (o)  "Retirement Plans" means the retirement income, supplemental executive
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          retirement, excess benefits and retiree medical, life and similar
          benefit plans providing retirement perquisites, benefits and service
          credit for benefits for senior officers of the Company now existing or
          hereafter adopted.

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

     (q)  "Term" means the period commencing as of the date of this Agreement
           ----
          and expiring on the second anniversary of this Agreement; provided,
          however, that commencing on the second anniversary of the date of this
          Agreement and each anniversary thereafter, the term of this Agreement
          will automatically be extended for an additional one year unless, not
          later than 90 days before any such anniversary date, the Company or
          the Executive shall have given written notice that it or the
          Executive, as the case may be, does not wish to have the Term
          extended.

     (r)  "Termination Date" means the date on which the Executive's employment
           ----------------
          is terminated (the effective date of which shall be the date of
          termination, or such other date that may be specified by the Executive
          if the termination is pursuant to Section 6(b)).

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

2.   Employment.  The Company hereby agrees to employ the Executive, and the
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     Executive hereby agrees to be employed with the Company for the Term, upon
     the terms and conditions herein set forth.

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3.   Positions and Duties.
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     (a)  During the Term, the Executive will serve in the positions of Senior
          Vice President and Chief Investment Officer of the Company, or such
          other position 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 Board, consistent with
          the Executive's positions as the Company's Senior Vice President and
          Chief Investment Officer or (ii) assigned to his office in the
          Company's articles of association. The Executive will report directly
          to the President of the Company.

     (b)  During the Term, the Executive will be the Company's full-time
          employee and, except as may otherwise be approved in advance in
          writing by the Board, and except during vacation periods and
          reasonable periods of absence due to sickness, personal injury or
          other disability, the Executive will devote substantially all of his
          business time and attention to the performance of his duties to the
          Company. Notwithstanding the foregoing, the Executive may (i) subject
          to the approval of the Board, serve as a director of a company,
          provided such service does not constitute a Competitive Activity, (ii)
          serve as an officer, director or otherwise participate in purely
          educational, welfare, social, religious and civic organizations, (iii)
          serve as an officer, director or trustee of, or otherwise participate
          in, any organizations and activities with respect to which the
          Executive's participation was disclosed to the Company in writing
          prior to the date hereof and (iv) manage personal and family
          investments.

4.   Place of Performance.  In connection with his employment during the Term,
     --------------------
     unless otherwise agreed by the Executive, the Executive will be based at
     the Company's principal executive offices in the Cayman Islands. The
     Executive will undertake normal business travel on behalf of the Company.

5.   Compensation and Related Matters.
     --------------------------------

     (a)  Annual Base Salary. During the Term, the Company will pay to the
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          Executive an annual base salary of not less than US $202,000, which
          annual base salary may be increased (but not decreased) from time to
          time by the Board (or a duly authorized committee thereof) in its sole
          discretion, payable at the times and in the manner consistent with the
          Company's general policies regarding compensation of executive
          employees. The Board may from time to time authorize such additional
          compensation to the Executive, in cash or in property, as the Board
          may determine in its sole discretion to be appropriate.

     (b)  Annual Housing Allowance. During the Term, the Company will pay to
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          Executive an annual housing allowance of not less than US $48,000,
          which annual housing allowance may be increased (but not decreased)
          from time to time by the Board (or a duly authorized committee
          thereof) in its sole direction, payable at the times and in the manner
          consistent with the Company's general policies regarding compensation
          of executive employees.

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     (c)  Signing Bonus. The Company hereby agrees to pay the Executive a US
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          $50,000 signing bonus upon execution of this Agreement.

     (d)  Relocation Expenses. The Company hereby agrees to pay for the
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          reasonable and necessary relocation expenses of the Executive,
          including, but not limited to, costs for moving of household goods to
          Grand Cayman, the costs of moving household goods and vehicles to
          Executive's children's residences, costs of moving household goods to
          storage, closing costs (to include brokerage commissions not to exceed
          $40,000), house search expenses, costs of temporary housing and
          automobile expenses and costs of storing household goods.

     (e)  Annual Incentive Compensation. If the Board (or a duly authorized
          -----------------------------
          committee thereof) authorizes any cash incentive compensation or
          approves any other management incentive program or arrangement, the
          Executive will be eligible to participate in such plan, program or
          arrangement under the general terms and conditions applicable to
          executive and management employees. The annual cash incentive
          compensation paid to the Executive will be paid in accordance with the
          Company's annual incentive compensation plan. Nothing in this Section
          5(e) will guarantee to the Executive any specific amount of incentive
          compensation, or prevent the Board (or a duly authorized committee
          thereof) from establishing performance goals and compensation targets
          applicable only to the Executive. Presently however, the Company
          expects the initial incentive annual bonus will range from 25% to 50%
          of the sum of Executive's Annual Base Pay and Annual Housing
          Allowance.

     (f)  Retirement Account. During the Term, the Company shall fund a
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          retirement account for the Executive in an amount not less than 10% of
          the sum of Executive's Base Pay and Annual Housing Allowance for each
          year during the Term. The Company shall provide for the Executive and
          his dependents medical and health care benefits standard for executive
          officers of the Company.

     (g)  Executive Benefits. In addition to the compensation described in
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          Sections 5(a) and 5(b), the Company will make available to the
          Executive and his eligible dependents, subject to the terms and
          conditions of the applicable plans, including without limitation the
          eligibility rules, 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 (whether funded by actual
          insurance or self-insured by the Company), 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.

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     (h)  Expenses. The Company will promptly reimburse the Executive for all
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          business expenses the Executive incurs in order to perform his duties
          to the Company under this Agreement in a manner commensurate with the
          Executive's position and level of responsibility with the Company, and
          in accordance with the Company's policy regarding substantiation of
          expenses.

     (i)  Options. The Company shall grant Executive, upon the execution of this
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          Agreement, an option ("Option") to purchase up to 75,000 Ordinary
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          Shares of Scottish Annuity & Life Holdings, Ltd. ("Option Agreement"),
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          such Option to be exercisable at a per share price equal to the Market
          Value Per Share (as defined in the Scottish Annuity & Life Holdings,
          Ltd.'s Second Amended and Restated 1998 Stock Option Plan) on the date
          of grant and to be governed by the option agreement, a form of which
          is attached hereto as Exhibit A.

     (j)  Executive shall accrue paid vacation at the rate of four weeks per
          annum, in accordance with the Company's standard vacation policy.

6.   Termination Following the Date of this Agreement.
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     (a)  The Executive's employment may be terminated by the Company during the
          Term and the Executive shall be entitled to the severance compensation
          provided by Section 7 unless such termination is the result of the
          occurrence of one or more of the following events:

          (i)    The Executive's death;

          (ii)   If the Executive becomes permanently disabled within the
                 meaning of, and begins actually to receive disability benefits
                 pursuant to, the long-term disability plan in effect for, or
                 applicable to, the Executive; or

          (iii)  Cause.

If, during the Term, the Executive's employment is terminated by the Company or
any Subsidiary other than pursuant to Section 6(a)(i), 6(a)(ii) or 6(a)(iii),
the Executive will be entitled to the benefits provided by Section 7 hereof.

     (b)  The Executive may terminate employment with the Company during the
          Term with the right to severance compensation as provided in Section 7
          upon the occurrence of one or more of the following events (regardless
          of whether any other reason, other than Cause as hereinabove provided,
          for such termination exists or has occurred, including without
          limitation other employment):

          (i)  Failure to elect or reelect or otherwise to maintain the
               Executive in the office or the position, or a substantially
               equivalent office or position, of or with the Company (or any
               successor thereto by operation of law of or otherwise), which the
               Executive held pursuant to, and upon the date of, this Agreement;

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         (ii)  (A) A significant adverse change in the nature or scope of the
               authorities, powers, functions, responsibilities or duties
               attached to the position with the Company which the Executive
               held pursuant to, and upon the date of, this Agreement, (B) a
               reduction in the aggregate of the Executive's Base Pay and Annual
               Housing Allowance received from the Company and any Subsidiary or
               (C) the termination or denial of the Executive's rights to
               Employee Benefits or a reduction in the scope or value thereof,
               unless such reduction is applicable to all employees of the
               Company on a pro rata basis, any of which is not remedied by the
               Company within 30 calendar days after receipt by the Company of
               written notice from the Executive of such change, reduction or
               termination, as the case may be;

         (iii) A determination by the Executive (which determination will be
               conclusive and binding upon the parties hereto provided it has
               been made in good faith and in all events will be presumed to
               have been made in good faith unless otherwise shown by the
               Company by clear and convincing evidence) that a change in
               circumstances has occurred following this Agreement, including,
               without limitation, a change in the scope of the business or
               other activities for which the Executive was responsible
               immediately following the date of this Agreement, which has
               rendered the Executive substantially unable to carry out, has
               substantially hindered the Executive's performance of, or has
               caused the Executive to suffer a substantial reduction in, any of
               the authorities, powers, functions, responsibilities or duties
               attached to the position held by the Executive pursuant to, and
               upon the date of, this Agreement, which situation is not remedied
               within 30 calendar days after written notice to the Company from
               the Executive of such determination;

         (iv)  The liquidation, dissolution, merger, consolidation or
               reorganization of the Company or Parent or transfer of all or
               substantially all of its business and/or assets, unless the
               successor or successors (by liquidation, merger, consolidation,
               reorganization, transfer or otherwise) to which all or
               substantially all of its business and/or assets have been
               transferred (by operation of law or otherwise) assumed all duties
               and obligations of the Company or Parent under this Agreement
               pursuant to Section 13(a);

         (v)   A Change in Control has occurred and Executive, within one year
               thereafter, gives the notice of termination of his employment
               with the Company contemplated in this Section 6(b); or

         (vi)  Without limiting the generality or effect of the foregoing, any
               material breach of this Agreement by the Company or any successor
               thereto which is not remedied by the Company within 30 calendar
               days after receipt by the Company of written notice from the
               Executive of such breach.

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     (c)  If the Executive terminates this Agreement other than pursuant to
          Section 6(b), the Executive shall reimburse to the Company a pro rata
          share of the signing bonus and relocation expenses according to the
          following schedule:

          (i)    If the Executive terminates this Agreement prior to the
                 expiration of 6 months, the Executive shall reimburse 75% of
                 the signing bonus and relocation expenses to the Company;

          (ii)   If the Executive terminates this Agreement prior to the
                 expiration of 12 months, the Executive shall reimburse 50% of
                 the signing bonus and relocation expenses to the Company; and

          (iii)  If the Executive terminates this Agreement prior to the
                 expiration of 18 months, the Executive shall reimburse 25% of
                 the signing bonus and relocation expenses to the Company.

      (d) A termination by the Company pursuant to Section 6(a) or by the
          Executive pursuant to Section 6(b) will not affect any rights that the
          Executive may have pursuant to any agreement, policy, plan, program or
          arrangement of the Company or any Subsidiary providing Employee
          Benefits, which rights shall be governed by the terms thereof.

7.   Severance Compensation.
     ----------------------

     (a)  If the Company shall terminate the Executive's employment during the
          Term other than pursuant to Section 6(a)(i), 6(a)(ii) or 6(a)(iii), if
          the Executive shall terminate his employment pursuant to Section 6(b),
          or if the Company shall give Executive written notice not later than
          90 days prior to the second anniversary or any subsequent anniversary
          of this Agreement of nonrenewal of this Agreement, the Company shall
          pay to the Executive the amount specified herein upon the later of (i)
          five business days after the Termination Date or date of expiration of
          this Agreement, as the case may be, (ii) the effective date of a
          release executed by the Executive and the Company in the form attached
          hereto as Exhibit B or (iii), at the Executive's option, a date later
          than the dates specified in clauses (i) and (ii). In lieu of any
          further payments to the Executive for periods subsequent to the
          Termination Date or such expiration date, except in the event of a
          termination by the Executive of his employment pursuant to Section
          6(b)(v), the Company shall make a lump sum payment (the "Severance
                                                                   ---------
          Payment"), in an amount equal to 200% of the sum of (i) an amount
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          equal to the aggregate Base Pay and Annual Housing Allowance (at the
          highest rates in effect for any year prior to the Termination Date)
          and (ii) the aggregate Incentive Pay (based upon the greatest amount
          of Incentive Pay paid or payable to the Executive for any year prior
          to the Termination Date). If the Executive shall terminate his
          employment pursuant to Section 6(b)(v), his Severance Payment shall be
          an amount equal to 300% of the sum of the amounts described in clauses
          (i) and (ii) of the immediately preceding sentence of this Section
          7(a).

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     (b)  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.

     (c)  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 thereof
          at an annualized rate of interest equal to the then-applicable
          interest rate prescribed by the Pension Benefit Guarantee Corporation
          for benefit valuations in connection with non-multiemployer pension
          plan terminations assuming the immediate commencement of benefit
          payments.

8.   Certain Additional Payments by the Company.
     ------------------------------------------

     (a)  Anything in this Agreement to the contrary notwithstanding, in the
          event that this Agreement shall become operative and it shall be
          determined (as hereafter provided) that any payment (other than the
          Gross-Up payments provided for in this Section 8) or distribution by
          the Company or any of its 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 Internal Revenue Code
          of 1986, as amended (the "Code") (or any successor provision thereto)
                                    ----
          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 successor provision thereto) 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
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          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.

     (b)  Subject to the provisions of Section 8(f), all determinations required
          to be made under this Section 8, 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

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          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 30 calendar days after the
          Termination Date, 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 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, 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 (or any
          successor provision thereto) 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
          8(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 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 8(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 Accounting Firm with respect to the Excise Tax
          payable by the Executive. The Executive shall make proper payment of
          the amount of any Excise Payment, 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

                                      11
<PAGE>

          relevant, the Accounting Firm determines that the amount of the Gross-
          Up Payment should be reduced, the Executive shall within five 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 8(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
          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 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;

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 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 8(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 8(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in

                                      12
<PAGE>

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 8(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 8(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 8(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 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 8.

                                      13
<PAGE>

9.   No Mitigation Obligation.  The Company hereby acknowledges that it will be
     ------------------------
     difficult and may be impossible for the Executive to find reasonably
     comparable employment following the Termination Date and that the
     noncompetition covenant in Section 10 will further limit the employment
     opportunities for the Executive. In addition, the Company acknowledges that
     its severance pay plans applicable in general to its salaried employees do
     not provide for mitigation, offset or reduction of any severance payment
     received thereunder. Accordingly, the payment of the severance compensation
     by the Company to the Executive in accordance with the terms of this
     Agreement is hereby acknowledged by the Company to be reasonable, and the
     Executive will not be required to mitigate the amount of any payment
     provided for in this Agreement by seeking other employment or otherwise,
     nor will any profits, income, earnings or other benefits from any source
     whatsoever create any mitigation, offset, reduction or any other obligation
     on the part of the Executive hereunder or otherwise.

10.  Competitive Activity; Confidentiality; Nonsolicitation.
     ------------------------------------------------------
     (a)  The Executive acknowledges that during the course of his employment
          with the Company the Executive will learn business information
          valuable to the Company and will form substantial business
          relationships with the Company's clients. To protect the Company's
          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, 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 7, engage in any Competitive
          Activity for a period ending on the first anniversary of the
          Termination Date or date of expiration of this Agreement, as the case
          may be.

     (b)  During the Term, the Company agrees that it will disclose 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 business interest in protecting its
          confidential and 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 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. Confidential or proprietary information will include, without
          limitation, the Company's 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. For purposes of the preceding two sentences,

                                      14
<PAGE>

          the term "Company" will also include any Subsidiary (collectively, the
          "Restricted Group"). The foregoing obligations imposed by this Section
           ----------------
          10(b) will not apply (i) during the Term, in the course of the
          business of and for the benefit of the Company, (ii) if such
          confidential or proprietary information will have become, through no
          fault of the Executive, generally known to the public or (iii) 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 year thereafter 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 Restricted Group to give up employment or a business
          relationship with the Restricted Group.

     (d)  The Executive agrees that on or before the Termination Date 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 Termination Date, the Company's
          policies and procedures for worldwide business conduct.

11.  Legal Fees and Expenses.  It is the intent of the Company that the
     -----------------------
     Executive not be required to incur legal fees and the related expenses
     associated with the interpretation, enforcement or defense of Executive's
     rights under this Agreement by litigation or otherwise because the cost and
     expense thereof would substantially detract from the benefits intended to
     be extended to the Executive hereunder. Accordingly, if it should appear to
     the 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, the Executive
     the benefits provided or intended to be provided to the Executive
     hereunder, the Company irrevocably authorizes the 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 the 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 the Executive's entering into an attorney-client relationship
     with such counsel, and in that connection the Company and the Executive
     agree that a confidential relationship shall exist between the Executive
     and such counsel. Without respect to whether the 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 the Executive in connection with any
     of the foregoing.

                                      15
<PAGE>

12.  Withholding of Taxes.  The Company may withhold from any amounts payable
     --------------------
     under this Agreement all federal, state, city or other taxes as the Company
     is required to withhold pursuant to any applicable law, regulation or
     ruling.

13.  Successors and Binding Agreement.
     --------------------------------

     (a)  The Company will require any successor (whether direct or indirect, by
          purchase, merger, consolidation, reorganization or otherwise) to all
          or substantially all of the business or assets of the Company, by
          agreement in form and substance reasonably satisfactory to the
          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 the
          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 13(a) and 13(b). Without limiting the
          generality or effect of the foregoing, the Executive's right to
          receive payments hereunder will not be assignable, transferable or
          delegable, whether by pledge, creation of a security interest, or
          otherwise, other than by a transfer by Executive's will or by the laws
          of descent and distribution and, in the event of any attempted
          assignment or transfer contrary to this Section 13(c), the Company
          shall have no liability to pay any amount so attempted to be assigned,
          transferred or delegated.

14.  Notices.  For all purposes of this Agreement, all communications, including
     -------
     without limitation notices, consents, requests or approvals, required or
     permitted to be given hereunder will be in writing and will be deemed to
     have been duly given when hand delivered or dispatched by electronic
     facsimile transmission (with receipt thereof orally confirmed), or five
     business days after having been mailed by, or three business days after
     having been sent by an internationally recognized overnight courier service
     such as FedEx or UPS, addressed to the Company (to the attention of the
     Chief Executive Officer of the Company) at its principal executive office
     and to the 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
<PAGE>

15.  Governing Law.  The validity, interpretation, construction and performance
     -------------
     of this Agreement will be governed by and construed in accordance with the
     substantive laws of the Cayman Islands, British West Indies, without giving
     effect to the principles of conflict of laws.

16.  Validity.  If any provision of this Agreement or the application of any
     --------
     provision hereof to any person or circumstances is held invalid,
     unenforceable or otherwise illegal, the remainder of this Agreement and the
     application of such provision to any other person or circumstances will not
     be affected, and the provision so held to be invalid, unenforceable or
     otherwise illegal will be reformed to the extent (and only to the extent)
     necessary to make it enforceable, valid or legal.

17.  Miscellaneous.  No provision of this Agreement may be modified, waived or
     -------------
     discharged unless such waiver, modification or discharge is agreed to in
     writing signed by the Executive and the Company. No waiver by either party
     hereto at any time of any breach by the other party hereto or compliance
     with any condition or provision of this Agreement to be performed by such
     other party will be deemed a waiver of similar or dissimilar provisions or
     conditions at the same or at any prior or subsequent time. No agreements or
     representations, oral or otherwise, expressed or implied with respect to
     the subject matter hereof have been made by either party which are not set
     forth expressly in this Agreement. References to Sections are references to
     Sections of this Agreement.

18.  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.

19.  Entire Agreement.  This Agreement sets forth the entire understanding
     ----------------
     between the Company and the Executive, and all oral or written agreements
     or representations, express or implied, with respect to the subject matter
     of this Agreement are set forth in this Agreement. All prior employment
     agreements, understandings and obligations (whether written, oral, express
     or implied) between the Company and the Executive are, without further
     action, terminated as of the date of this Agreement and are superseded by
     this Agreement.

                                      17
<PAGE>

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

                                 /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

                                      18<PAGE>

                                                                   Exhibit 10.16

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 18,
                                      ---------
2000, is made and entered into by and between Scottish Reassurance, Inc., a
Delaware corporation (the "Company"), and Oscar R. Scofield (the "Executive").
                           -------                                ---------

                                  WITNESSETH:

     WHEREAS, the Executive has agreed to serve as President and Chief Operating
Officer of the Company and is expected to make major contributions to the short-
and long-term profitability, growth and financial strength of the Company; and

     WHEREAS, the Company wishes to employ the Executive, and the Executive is
willing to be employed by the Company, both on the terms and subject to the
conditions set forth in this Agreement.

     NOW, THEREFORE, the Company and the Executive 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)  "Base Pay" means the Executive's annual base salary rate as in effect
           --------
          from time to time, as set forth in Section 5(a).

     (c)  "Board" means the Board of Directors of the Company.
           -----

     (d)  "Cause" means that the Executive shall have committed any of the
           -----
          following:

          (i)   an intentional act of fraud, embezzlement or theft in connection
                with his duties or in the course of his employment with the
                Company or any Subsidiary;

          (ii)   intentional wrongful damage to any material property of the
                 Company or any Subsidiary;

          (iii)  intentional wrongful disclosure of secret processes or
                 confidential information of the Company or any Subsidiary; or

          (iv)   conviction of a felony or other crime involving moral
                 turpitude;

     and any such act shall have been materially harmful to the Company. For
     purposes of this Agreement, no act or failure to act on the part of the
     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 the Executive not in good faith and without
     reasonable belief that his action or omission was in the best interest of
<PAGE>

     the Company. Notwithstanding the foregoing, the Executive shall not be
     deemed to have been terminated for "Cause" hereunder unless and until there
     shall have been delivered to the Executive a copy of a resolution duly
     adopted by the affirmative vote of not less than two-thirds of the Board
     then in office at a meeting of the Board 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, finding
     that, in the good faith opinion of the Board, the Executive had committed
     an act constituting "Cause" as herein defined and specifying the
     particulars thereof in detail. Nothing herein will limit the right of the
     Executive or his beneficiaries to contest the validity or propriety of any
     such determination.

     (e)  "Change in Control" means the occurrence of any of the following
           -----------------
          events:

          (i)    the Company or Parent is merged or consolidated or reorganized
                 into or with another corporation or other legal person, and as
                 a result of such merger, consolidation or reorganization less
                 than a majority of the combined voting power of the then-
                 outstanding securities of such corporation or person
                 immediately after such transaction are held in the aggregate by
                 the holders of Ordinary Shares immediately prior to such
                 transaction;

          (ii)   the Company or Parent sells or otherwise transfers all or
                 substantially all of its assets to any other corporation or
                 other legal person, and less than a majority of the combined
                 voting power of the then outstanding securities of such
                 corporation or person immediately after such sale or transfer
                 is held in the aggregate by the holders of Ordinary Shares
                 immediately prior to such sale or transfer;

          (iii)  the Parent files a report or proxy statement with the
                 Securities and Exchange Commission pursuant to the Act
                 disclosing in response to Form 8-K or Schedule 14A (or any
                 successor schedule, form or report or item therein) that a
                 change in control of the Parent has or may have occurred or
                 will or may occur in the future pursuant to any then existing
                 contract or transaction; or

          (iv)   if during any period of two consecutive years, individuals who
                 at the beginning of any such period constitute the Directors
                 cease for any reason to constitute at least a majority thereof,
                 unless the election, or the nomination for election by the
                 Company's shareholders, or in the case of the Parent, the
                 Parent's shareholders, of each Director first elected during
                 such period was approved by a vote of at least two-thirds of
                 the Directors then still in office who were Directors at the
                 beginning of any such period.

     Notwithstanding the foregoing provisions of Paragraph (iii) above, a
     "Change in Control" shall not be deemed to have occurred for purposes of
     this Agreement: (i) solely because (A) the Parent, (B) a Subsidiary or (C)
     any Parent-sponsored employee stock ownership

                                       2
<PAGE>

     plan or other employee benefit plan of the Parent either files or becomes
     obligated to file a report or proxy statement under or in response to
     Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
     schedule, form or report or item therein) under the Act, disclosing
     beneficial ownership by it of shares, or because the Parent reports that a
     change of control of the Parent has or may have occurred or will or may
     occur in the future by reason of such beneficial ownership; or (ii) solely
     because of a change in control of any Subsidiary other than Scottish
     Reassurance, Inc.

     (f)  "Competitive Activity" means the Executive's participation, without
           --------------------
          the written consent of an officer of the Company, in the management of
          any business enterprise if such enterprise engages in substantial and
          direct competition with the Company. "Competitive Activity" will not
          include the mere ownership of securities in any such enterprise and
          the exercise of rights appurtenant thereto.

     (g)  "Director" means a member of the Board.
           --------

     (h)  "Employee Benefits" means the perquisites, benefits and service credit
           -----------------
          for benefits as provided under any and all employee retirement income
          and welfare benefit policies, plans, programs or arrangements in which
          senior officers of the Company are entitled to participate, including
          without limitation any stock option, performance share, performance
          unit, stock purchase, stock appreciation, savings, pension,
          supplemental executive retirement, or other retirement income or
          welfare benefit, deferred compensation, incentive compensation, group
          or other life, health, medical/hospital or other insurance (whether
          funded by actual insurance or self insured by the Company or a
          Subsidiary), disability, salary continuation, expense reimbursement
          and other employee benefit policies, plans, programs or arrangements
          that may now exist or may be adopted hereafter by the Company or a
          Subsidiary.

     (i)  "Incentive Pay" means an annual bonus, incentive or other payment of
           -------------
          compensation, in addition to Base Pay, made or to be made in regard to
          services rendered in any year or other period pursuant to any bonus,
          incentive, profit-sharing, performance, discretionary pay or similar
          agreement, policy, plan, program or arrangement (whether or not
          funded) of the Company or a Subsidiary, or any successor thereto.

     (j)  "Ordinary Shares" means the ordinary shares, par value $.01 per share,
           ---------------
          of the Company.

     (k)  "Parent" means Scottish Annuity & Life Holdings, Ltd.
           ------

     (l)  "Retirement Plans" means the retirement income, supplemental executive
           ----------------
          retirement, excess benefits and retiree medical, life and similar
          benefit plans providing retirement perquisites, benefits and service
          credit for benefits for senior officers of the Company now existing or
          hereafter adopted.

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

                                       3
<PAGE>

     (n)  "Term" means the period commencing as of the date of this Agreement
           ----
          and expiring on the second anniversary of this Agreement; provided,
          however, that commencing on the second anniversary of the date of this
          Agreement and each anniversary thereafter, the term of this Agreement
          will automatically be extended for an additional one year unless, not
          later than 90 days before any such anniversary date, the Company or
          the Executive shall have given written notice that it or the
          Executive, as the case may be, does not wish to have the Term
          extended.

     (o)  "Termination Date" means the date on which the Executive's employment
           ----------------
          is terminated (the effective date of which shall be the date of
          termination, or such other date that may be specified by the Executive
          if the termination is pursuant to Section 6(b)).

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

2.   Employment.  The Company hereby agrees to employ the Executive, and the
     ----------
     Executive hereby agrees to be employed with the Company for the Term, upon
     the terms and conditions herein set forth.

3.   Positions and Duties.
     --------------------

     (a)  During the Term, the Executive will serve in the positions of
          President and Chief Operating Officer of the Company, or such other
          position 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 Board, consistent with the
          Executive's positions as the Company's President and Chief Operating
          Officer or (ii) assigned to his office in the Company's articles of
          association. The Executive will report directly to the Board.

     (b)  During the Term, the Executive will be the Company's full-time
          employee and, except as may otherwise be approved in advance in
          writing by the Board, and except during vacation periods and
          reasonable periods of absence due to sickness, personal injury or
          other disability, the Executive will devote substantially all of his
          business time and attention to the performance of his duties to the
          Company. Notwithstanding the foregoing, the Executive may (i) subject
          to the approval of the Board, serve as a director of a company,
          provided such service does not constitute a Competitive Activity, (ii)
          serve as an officer, director or otherwise participate in purely
          educational, welfare, social, religious and civic organizations, (iii)
          serve as an officer, director or trustee of, or otherwise participate
          in, any organizations and activities with respect to which the
          Executive's participation was disclosed to the Company in writing
          prior to the date hereof and (iv) manage personal and family
          investments.

4.   Place of Performance.  In connection with his employment during the Term,
     --------------------
     unless otherwise agreed by the Executive, the Executive will be based at
     the Company's

                                       4
<PAGE>

     principal executive offices in Charlotte, North Carolina. The Executive
     will undertake normal business travel on behalf of the Company.

5.   Compensation and Related Matters.
     --------------------------------

     (a)  Annual Base Salary. During the Term, the Company will pay to the
          ------------------
          Executive an annual base salary of not less than US $250,000, which
          annual base salary may be increased (but not decreased) from time to
          time by the Board (or a duly authorized committee thereof) in its sole
          discretion, payable at the times and in the manner consistent with the
          Company's general policies regarding compensation of executive
          employees. The Board may from time to time authorize such additional
          compensation to the Executive, in cash or in property, as the Board
          may determine in its sole discretion to be appropriate.

     (b)  Signing Bonus. The Company hereby agrees to pay the Executive a US
          -------------
          $50,000 signing bonus upon execution of this Agreement.

     (c)  Relocation Expenses. The Company hereby agrees to pay for the
          -------------------
          reasonable and necessary relocation expenses of the Executive,
          including, but not limited to, costs for moving of household goods.

     (d)  Annual Incentive Compensation. If the Board (or a duly authorized
          -----------------------------
          committee thereof) authorizes any cash incentive compensation or
          approves any other management incentive program or arrangement, the
          Executive will be eligible to participate in such plan, program or
          arrangement under the general terms and conditions applicable to
          executive and management employees. The annual cash incentive
          compensation paid to the Executive will be paid in accordance with the
          Company's annual incentive compensation plan. Nothing in this Section
          5(e) will guarantee to the Executive any specific amount of incentive
          compensation, or prevent the Board (or a duly authorized committee
          thereof) from establishing performance goals and compensation targets
          applicable only to the Executive. Presently however, the Company
          expects the initial incentive annual bonus will range from 25% to 50%
          of the Executive's Base Pay.

     (e)  Retirement Account. During the Term, the Company shall fund a
          ------------------
          retirement account for the Executive in an amount not less than 10% of
          Executive's Base Pay for each year during the Term. The Company shall
          provide for the Executive and his dependents medical and health care
          benefits standard for executive officers of the Company.

     (f)  Executive Benefits. In addition to the compensation described in
          ------------------
          Sections 5(a) and 5(b), the Company will make available to the
          Executive and his eligible dependents, subject to the terms and
          conditions of the applicable plans, including without limitation the
          eligibility rules, 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

                                       5
<PAGE>

          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 (whether funded by actual insurance or self-insured by
          the Company), 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.

     (g)  Expenses. The Company will promptly reimburse the Executive for all
          --------
          business expenses the Executive incurs in order to perform his duties
          to the Company under this Agreement in a manner commensurate with the
          Executive's position and level of responsibility with the Company, and
          in accordance with the Company's policy regarding substantiation of
          expenses.

     (h)  Options.  The Company shall grant Executive, upon the execution of
          -------
          this Agreement, an option ("Option") to purchase up to 75,000 Ordinary
                                      ------
          Shares of Scottish Annuity & Life Holdings, Ltd. ("Option Agreement"),
                                                             ----------------
          such Option to be exercisable at a per share price equal to the Market
          Value Per Share (as defined in the Scottish Annuity & Life Holdings,
          Ltd.'s Second Amended and Restated 1998 Stock Option Plan) on the date
          of grant and to be governed by the option agreement, a form of which
          is attached hereto as Exhibit A.

     (i)  Executive shall accrue paid vacation at the rate of four weeks per
          annum, in accordance with the Company's standard vacation policy.

6.   Termination Following the Date of this Agreement.
     ------------------------------------------------

     (a)  The Executive's employment may be terminated by the Company during the
          Term and the Executive shall be entitled to the severance compensation
          provided by Section 7 unless such termination is the result of the
          occurrence of one or more of the following events:

          (i)    The Executive's death;

          (ii)   If the Executive becomes permanently disabled within the
                 meaning of, and begins actually to receive disability benefits
                 pursuant to, the long-term disability plan in effect for, or
                 applicable to, the Executive; or

          (iii)  Cause.

If, during the Term, the Executive's employment is terminated by the Company or
any Subsidiary other than pursuant to Section 6(a)(i), 6(a)(ii) or 6(a)(iii),
the Executive will be entitled to the benefits provided by Section 7 hereof.

     (b)  The Executive may terminate employment with the Company during the
          Term with the right to severance compensation as provided in Section 7
          upon the occurrence of one or more of the following events (regardless
          of whether any

                                       6
<PAGE>

          other reason, other than Cause as hereinabove provided, for such
          termination exists or has occurred, including without limitation other
          employment):

          (i)    Failure to elect or reelect or otherwise to maintain the
                 Executive in the office or the position, or a substantially
                 equivalent office or position, of or with the Company (or any
                 successor thereto by operation of law of or otherwise), which
                 the Executive held pursuant to, and upon the date of, this
                 Agreement;

          (ii)   (A) A significant adverse change in the nature or scope of the
                 authorities, powers, functions, responsibilities or duties
                 attached to the position with the Company which the Executive
                 held pursuant to, and upon the date of, this Agreement, (B) a
                 reduction in the aggregate of the Executive's Base Pay received
                 from the Company and any Subsidiary or (C) the termination or
                 denial of the Executive's rights to Employee Benefits or a
                 reduction in the scope or value thereof, unless such reduction
                 is applicable to all employees of the Company on a pro rata
                 basis, any of which is not remedied by the Company within 30
                 calendar days after receipt by the Company of written notice
                 from the Executive of such change, reduction or termination, as
                 the case may be;

          (iii)  A determination by the Executive (which determination will be
                 conclusive and binding upon the parties hereto provided it has
                 been made in good faith and in all events will be presumed to
                 have been made in good faith unless otherwise shown by the
                 Company by clear and convincing evidence) that a change in
                 circumstances has occurred following this Agreement, including,
                 without limitation, a change in the scope of the business or
                 other activities for which the Executive was responsible
                 immediately prior to the date of this Agreement, which has
                 rendered the Executive substantially unable to carry out, has
                 substantially hindered the Executive's performance of, or has
                 caused the Executive to suffer a substantial reduction in, any
                 of the authorities, powers, functions, responsibilities or
                 duties attached to the position held by the Executive pursuant
                 to, and upon the date of, this Agreement, which situation is
                 not remedied within 30 calendar days after written notice to
                 the Company from the Executive of such determination;

          (iv)   The liquidation, dissolution, merger, consolidation or
                 reorganization of the Company or transfer of all or
                 substantially all of its business and/or assets, unless the
                 successor or successors (by liquidation, merger, consolidation,
                 reorganization, transfer or otherwise) to which all or
                 substantially all of its business and/or assets have been
                 transferred (by operation of law or otherwise) assumed all
                 duties and obligations of the Company under this Agreement
                 pursuant to Section 13(a);

                                       7
<PAGE>

          (v)    A Change in Control has occurred and Executive, within one year
                 thereafter, gives the notice of termination of his employment
                 with the Company contemplated in this Section 6(b); or

          (vi)   Without limiting the generality or effect of the foregoing, any
                 material breach of this Agreement by the Company or any
                 successor thereto which is not remedied by the Company within
                 30 calendar days after receipt by the Company of written notice
                 from the Executive of such breach.

     (c)  If the Executive terminates this Agreement other than pursuant to
          Section 6(b), the Executive shall reimburse to the Company a pro rata
          share of the signing bonus and relocation expenses according to the
          following schedule:

          (i)    If the Executive terminates this Agreement prior to the
                 expiration of 6 months, the Executive shall reimburse 75% of
                 the signing bonus and relocation expenses to the Company;

          (ii)   If the Executive terminates this Agreement prior to the
                 expiration of 12 months, the Executive shall reimburse 50% of
                 the signing bonus and relocation expenses to the Company; and

          (iii)  If the Executive terminates this Agreement prior to the
                 expiration of 18 months, the Executive shall reimburse 25% of
                 the signing bonus and relocation expenses to the Company.

     (d)  A termination by the Company pursuant to Section 6(a) or by the
          Executive pursuant to Section 6(b) will not affect any rights that the
          Executive may have pursuant to any agreement, policy, plan, program or
          arrangement of the Company or any Subsidiary providing Employee
          Benefits, which rights shall be governed by the terms thereof.

7.   Severance Compensation.
     ----------------------

     (a)  If the Company shall terminate the Executive's employment during the
          Term other than pursuant to Section 6(a)(i), 6(a)(ii) or 6(a)(iii), if
          the Executive shall terminate his employment pursuant to Section 6(b),
          or if the Company shall give Executive written notice not later than
          90 days prior to the second anniversary or any subsequent anniversary
          of this Agreement of nonrenewal of this Agreement, the Company shall
          pay to the Executive the amount specified herein upon the later of (i)
          five business days after the Termination Date or date of expiration of
          this Agreement, as the case may be, (ii) the effective date of a
          release executed by the Executive and the Company in the form attached
          hereto as Exhibit B or (iii), at the Executive's option, a date later
          than the dates specified in clauses (i) and (ii). In lieu of any
          further payments to the Executive for periods subsequent to the
          Termination Date or such expiration date, except in the event of a
          termination by the Executive of his employment pursuant to Section
          6(b)(v), the Company shall make a lump sum payment (the "Severance
                                                                   ---------
          Payment"), in an amount equal to 200% of the sum of (i) an amount
          --------
          equal to the aggregate annual

                                       8
<PAGE>

          Base Pay (at the highest rate in effect for any year prior to the
          Termination Date) and (ii) the aggregate Incentive Pay (based upon the
          greatest amount of Incentive Pay paid or payable to the Executive for
          any year prior to the Termination Date). If the Executive shall
          terminate his employment pursuant to Section 6(b)(v), his Severance
          Payment shall be an amount equal to 300% of the sum of the amounts
          described in clauses (i) and (ii) of the immediately preceding
          sentence of this Section 7(a).

     (b)  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.

     (c)  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 thereof
          at an annualized rate of interest equal to the then-applicable
          interest rate prescribed by the Pension Benefit Guarantee Corporation
          for benefit valuations in connection with non-multiemployer pension
          plan terminations assuming the immediate commencement of benefit
          payments.

8.   Certain Additional Payments by the Company.
     ------------------------------------------

     (a)  Anything in this Agreement to the contrary notwithstanding, in the
          event that this Agreement shall become operative and it shall be
          determined (as hereafter provided) that any payment (other than the
          Gross-Up payments provided for in this Section 8) or distribution by
          the Company or any of its 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 Internal
          Revenue Code of 1986, as amended (the "Code") (or any successor
                                                 ----
          provision thereto) 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 successor provision thereto) 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

                                       9
<PAGE>

          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.

     (b)  Subject to the provisions of Section 8(f), all determinations required
          to be made under this Section 8, 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 30 calendar days after the Termination Date, 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 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, 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 (or
          any successor provision thereto) 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
          8(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 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 8(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

                                      10
<PAGE>

          Accounting Firm with respect to the Excise Tax payable by the
          Executive. The Executive shall make proper payment of the amount of
          any Excise Payment, 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 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 8(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
          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 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;

                                      11
<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 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 8(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 8(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 8(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 8(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 8(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 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 8.

9.   No Mitigation Obligation.  The Company hereby acknowledges that it will be
     ------------------------
     difficult and may be impossible for the Executive to find reasonably
     comparable employment following the Termination Date and that the
     noncompetition covenant in Section 10 will further limit the employment
     opportunities for the Executive. In addition, the Company acknowledges that
     its severance pay plans applicable in general to its salaried employees do
     not provide for mitigation, offset or reduction of any severance payment
     received thereunder. Accordingly, the payment of the severance compensation
     by the Company to

                                      12
<PAGE>

     the Executive in accordance with the terms of this Agreement is hereby
     acknowledged by the Company to be reasonable, and the Executive will not be
     required to mitigate the amount of any payment provided for in this
     Agreement by seeking other employment or otherwise, nor will any profits,
     income, earnings or other benefits from any source whatsoever create any
     mitigation, offset, reduction or any other obligation on the part of the
     Executive hereunder or otherwise.

10.  Competitive Activity; Confidentiality; Nonsolicitation.
     ------------------------------------------------------
     (a)  The Executive acknowledges that during the course of his employment
          with the Company the Executive will learn business information
          valuable to the Company and will form substantial business
          relationships with the Company's clients. To protect the Company's
          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, 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 7, engage in any Competitive
          Activity for a period ending on the first anniversary of the
          Termination Date or date of expiration of this Agreement, as the case
          may be.

     (b)  During the Term, the Company agrees that it will disclose 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 business interest in protecting its
          confidential and 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 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. Confidential or proprietary information will include, without
          limitation, the Company's 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. For purposes of the preceding two sentences, the term
          "Company" will also include any Subsidiary (collectively, the
          "Restricted Group"). The foregoing obligations imposed by this Section
           ----------------
          10(b) will not apply (i) during the Term, in the course of the
          business of and for the benefit of the Company, (ii) if such
          confidential or proprietary information will have become, through no
          fault of the Executive, generally known to the public or (iii) if the
          Executive is required by law to make disclosure (after giving the
          Company notice and an opportunity to contest such requirement).

                                      13
<PAGE>

     (c)  The Executive hereby covenants and agrees that during the Term and for
          one year thereafter 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 Restricted Group to give up employment or a business
          relationship with the Restricted Group.

     (d)  The Executive agrees that on or before the Termination Date 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 Termination Date, the Company's
          policies and procedures for worldwide business conduct.

11.  Legal Fees and Expenses.  It is the intent of the Company that the
     -----------------------
     Executive not be required to incur legal fees and the related expenses
     associated with the interpretation, enforcement or defense of Executive's
     rights under this Agreement by litigation or otherwise because the cost and
     expense thereof would substantially detract from the benefits intended to
     be extended to the Executive hereunder. Accordingly, if it should appear to
     the 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, the Executive
     the benefits provided or intended to be provided to the Executive
     hereunder, the Company irrevocably authorizes the 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 the 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 the Executive's entering into an attorney-client relationship
     with such counsel, and in that connection the Company and the Executive
     agree that a confidential relationship shall exist between the Executive
     and such counsel. Without respect to whether the 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 the Executive in connection with any
     of the foregoing.

12.  Withholding of Taxes.  The Company may withhold from any amounts payable
     --------------------
     under this Agreement all federal, state, city or other taxes as the Company
     is required to withhold pursuant to any applicable law, regulation or
     ruling.

13.  Successors and Binding Agreement.
     --------------------------------

     (a)  The Company will require any successor (whether direct or indirect, by
          purchase, merger, consolidation, reorganization or otherwise) to all
          or substantially all of

                                      14
<PAGE>

          the business or assets of the Company, by agreement in form and
          substance reasonably satisfactory to the 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 the
          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 13(a) and 13(b). Without limiting the
          generality or effect of the foregoing, the Executive's right to
          receive payments hereunder will not be assignable, transferable or
          delegable, whether by pledge, creation of a security interest, or
          otherwise, other than by a transfer by Executive's will or by the laws
          of descent and distribution and, in the event of any attempted
          assignment or transfer contrary to this Section 13(c), the Company
          shall have no liability to pay any amount so attempted to be assigned,
          transferred or delegated.

14.  Notices.  For all purposes of this Agreement, all communications, including
     -------
     without limitation notices, consents, requests or approvals, required or
     permitted to be given hereunder will be in writing and will be deemed to
     have been duly given when hand delivered or dispatched by electronic
     facsimile transmission (with receipt thereof orally confirmed), or five
     business days after having been mailed by, or three business days after
     having been sent by an internationally recognized overnight courier service
     such as FedEx or UPS, addressed to the Company (to the attention of the
     Chief Executive Officer of the Company) at its principal executive office
     and to the 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.

15.  Governing Law.  The validity, interpretation, construction and performance
     -------------
     of this Agreement will be governed by and construed in accordance with the
     substantive laws of the state of North Carolina, without giving effect to
     the principles of conflict of laws.

16.  Validity.  If any provision of this Agreement or the application of any
     --------
     provision hereof to any person or circumstances is held invalid,
     unenforceable or otherwise illegal, the remainder of this Agreement and the
     application of such provision to any other person or circumstances will not
     be affected, and the provision so held to be invalid, unenforceable

                                      15
<PAGE>

     or otherwise illegal will be reformed to the extent (and only to the
     extent) necessary to make it enforceable, valid or legal.

17.  Miscellaneous.  No provision of this Agreement may be modified, waived or
     -------------
     discharged unless such waiver, modification or discharge is agreed to in
     writing signed by the Executive and the Company. No waiver by either party
     hereto at any time of any breach by the other party hereto or compliance
     with any condition or provision of this Agreement to be performed by such
     other party will be deemed a waiver of similar or dissimilar provisions or
     conditions at the same or at any prior or subsequent time. No agreements or
     representations, oral or otherwise, expressed or implied with respect to
     the subject matter hereof have been made by either party which are not set
     forth expressly in this Agreement. References to Sections are references to
     Sections of this Agreement.

18.  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.

19.  Entire Agreement.  This Agreement sets forth the entire understanding
     ----------------
     between the Company and the Executive, and all oral or written agreements
     or representations, express or implied, with respect to the subject matter
     of this Agreement are set forth in this Agreement. All prior employment
     agreements, understandings and obligations (whether written, oral, express
     or implied) between the Company and the Executive are, without further
     action, terminated as of the date of this Agreement and are superseded by
     this Agreement.

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

                                 /s/ Oscar R. Scofield
                                 ----------------------------------------------
                                 Oscar R. Scofield

                                 SCOTTISH REASSURANCE, INC.

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

                                    Title:   Director

                                      16

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