Document:

EXECUTION COPY

    ________________________________________________________________________

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                    SECURITY LIFE OF DENVER INSURANCE COMPANY

                  SECURITY LIFE OF DENVER INTERNATIONAL LIMITED

                                       AND

                            SCOTTISH RE GROUP LIMITED

                            SCOTTISH RE (U.S.), INC.

                            NEWCO, AS DEFINED HEREIN

                                October 17, 2004

    ________________________________________________________________________

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                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----

ARTICLE I Definitions........................................................2

     1.1   Definitions.......................................................2

ARTICLE II Transfer and Acquisition of Assets...............................19

     2.1   Place and Date of Closing........................................19
     2.2   Transfer and Acquisition.........................................19
     2.3   Deliveries on Closing............................................19
     2.4   Closing Payment..................................................21
     2.5   Closing Adjustment...............................................23

ARTICLE III Representations and Warranties of Sellers.......................27

     3.1   Organization and Good Standing...................................27
     3.2   Enforceability...................................................28
     3.3   Consents and Approvals...........................................29
     3.4   Financial Statements.............................................29
     3.5   Pro Forma Statements.............................................30
     3.6   Contingent Liabilities...........................................31
     3.7   Assets...........................................................31
     3.8   Actions Pending; Orders and Proceedings..........................31
     3.9   Real Property....................................................32
     3.10  Business Contracts...............................................32
     3.11  Assigned Contracts...............................................33
     3.12  Intellectual Property............................................33
     3.13  Computer Programs................................................35
     3.14  Compliance with Legal Requirements...............................37
     3.15  Permits..........................................................37
     3.16  Reinsurance Assumed..............................................38
     3.17  Reinsurance Retroceded...........................................39
     3.18  Investment Company...............................................41
     3.19  Employees........................................................41
     3.20  Employee Benefits................................................41
     3.21  Labor Relations..................................................41
     3.22  Brokers or Finders...............................................41
     3.23  Absence of Certain Changes and Events............................42
     3.24  Books and Records................................................42
     3.25  Taxes............................................................43

ARTICLE IV Representations and Warranties of Purchaser and Purchaser
           Subsidiaries.....................................................44

     4.1   Status of Purchaser Entities.....................................44
     4.2   Enforceability...................................................44
     4.3   Certain Proceedings..............................................44
     4.4   Financial Statements.............................................45

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     4.5   Ratings..........................................................45
     4.6   Brokers or Finders...............................................45
     4.7   Purchaser's Approvals............................................45
     4.8   Investment Company...............................................45
     4.9   Financing........................................................46
     4.10  Purchaser Licenses...............................................46

ARTICLE V Additional Agreements of Seller and Purchaser.....................46

     5.1   Conduct of Business..............................................46
     5.2   Expenses.........................................................48
     5.3   Access; Certain Communications...................................48
     5.4   Regulatory Matters; Third Party Consents; Assigned Contracts.....49
     5.5   Further Assurances...............................................50
     5.6   Notification of Certain Matters..................................50
     5.7   Maintenance and Transfer of Records..............................51
     5.8   Employee Matters.................................................52
     5.9   Intellectual Property; Computer Programs.........................54
     5.10  Real Property Leases.............................................57
     5.11  Quarterly Financial Information..................................57
     5.12  Letters of Credit; Guaranties....................................57
     5.13  Cooperation after Closing........................................58
     5.14  Regulatory Compliance............................................59
     5.15  Use of Names.....................................................59
     5.16  Trust Arrangements...............................................59
     5.17  Tax Treatment of Transaction.....................................60
     5.18  Enforcement of Rights............................................60
     5.19  Post-Closing Access..............................................61
     5.20  Termination of New Business......................................62
     5.21  Non-Compete......................................................62
     5.22  Non-Solicitation.................................................64
     5.23  Enforcement......................................................64
     5.24  Credit Support...................................................65
     5.25  SLD-SLDI Retrocession Agreements.................................67
     5.26  Newco; Keepwell Agreements.......................................67
     5.27  Industry Risks Retrocession Arrangement..........................68
     5.28  Recapture of Certain Business....................................69
     5.29  Term Sheets......................................................69
     5.30  Experience Refunds...............................................69
     5.31  Certain Unexecuted Reinsurance Contracts.........................69
     5.32  Investment Portfolio.............................................70

ARTICLE VI Conditions Precedent To The Obligation Of Purchaser To Close.....70

     6.1   Representations, Warranties and Covenants........................70
     6.2   Related Agreements...............................................70
     6.3   Secretary's Certificates.........................................71
     6.4   Approvals and Consents...........................................71

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     6.5   Injunction and Litigation........................................71
     6.6   Material Adverse Effect..........................................71
     6.7   Sundry Assets....................................................71
     6.8   New Business Under Assumed Reinsurance Contracts.................72

ARTICLE VII Conditions Precedent To The Obligation Of Sellers To Close......72

     7.1   Representations, Warranties and Covenants........................72
     7.2   Related Agreements...............................................72
     7.3   Secretary's Certificates.........................................72
     7.4   Approvals and Consents...........................................73
     7.5   Injunction and Litigation........................................73
     7.6   Purchaser Financial Condition....................................73
     7.7   Purchaser Financing..............................................73
     7.8   Newco............................................................73

ARTICLE VIII Termination....................................................73

     8.1   Termination of Agreement.........................................74
     8.2   Procedure on Termination.........................................74

ARTICLE IX Tax Matters......................................................74

     9.1   Tax Matters......................................................74

ARTICLE X Indemnification...................................................76

     10.1     Sellers' Indemnification......................................76
     10.2     Purchaser's Indemnification...................................77
     10.3     Indemnification Procedures....................................77
     10.4     Indemnification Limits........................................78
     10.5     Exclusive Remedy..............................................80
     10.6     Tax Losses....................................................80

ARTICLE XI Miscellaneous Provisions.........................................80

     11.1     Notices.......................................................80
     11.2     Sole Agreement................................................81
     11.3     Successors and Assigns........................................81
     11.4     Captions......................................................82
     11.5     Governing Law and Jurisdiction................................82
     11.6     No Third Party Beneficiaries..................................82
     11.7     Counterparts..................................................82
     11.8     Severability..................................................82
     11.9     Waiver of Jury Trial; Multiplied and Punitive Damages.........83
     11.10    Purchaser Guaranty............................................83
     11.11    ING Guaranty and Covenant.....................................83

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                                LIST OF EXHIBITS
                                ----------------

Exhibit A         Assignment and Assumption Agreement
Exhibit B         Bill of Sale and General Assignment
Exhibit C         SLD Administrative Services Agreement Term Sheet
Exhibit D         SLD Coinsurance Agreement
Exhibit E         SLD Funds Withheld Coinsurance Agreement Term Sheet
Exhibit F         SLD Modified Coinsurance Agreement Term Sheet
Exhibit G         SLD Coinsurance / Modified Coinsurance Agreement Term Sheet
Exhibit H         SLD Security Trust Agreement
Exhibit I         SLDI Administrative Services Agreement Term Sheet
Exhibit J         SLDI Coinsurance Agreement
Exhibit K         SLDI Funds Withheld Coinsurance Agreement Term Sheet
Exhibit L         SLDI Coinsurance / Modified Coinsurance Agreement Term Sheet
Exhibit M         SLDI Modified Coinsurance Agreement Term Sheet
Exhibit N         SLDI Reserve Trust Agreement
Exhibit O         Technology Transfer and License Agreement Term Sheet
Exhibit P         Trademark and Trade Name License Agreement Term Sheet
Exhibit Q         Transition Services Agreement Term Sheet
Exhibit R         Assignment of Confidentiality Agreements
Exhibit S         Denver Lease Term Sheet
Exhibit T-1       Sample SLD Closing Statements
Exhibit T-2       Sample SLDI Closing Statements
Exhibit U         Investment Guidelines
Exhibit V         SLD Reserve Trust Agreement
Exhibit W         SLDI Security Trust Agreement
Exhibit X-1       SLD Industry Risks Retrocession Agreements Term Sheet
Exhibit X-2       SLDI Industry Risks Retrocession Agreements Term Sheet
Exhibit Y         Newco Keepwell

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                                LIST OF SCHEDULES
                                -----------------

Schedule 1.1(a)       List of Assigned Contracts
Schedule 1.1(b)       Methodologies for Determining Estimated Market Value and
                      Market Value
Schedule 1.1(c)       Excluded Business
Schedule 1.1(d)       Initial Portfolio
Schedule 1.1(e)       Sellers' Knowledge People
Schedule 1.1(f)       Purchaser's Knowledge People
Schedule 1.1(g)       Sellers' Severance Plan
Schedule 1.1(h)-1     Certain Transferred Assets
Schedule 1.1(h)-2     Business Employee Related Assets
Schedule 1.1(i)       Certain Insurance Contracts Included
Schedule 2.4(a)       SLD Accounting Policies
Schedule 2.4(b)       SLDI Accounting Policies
Schedule 2.5(h)       2004 Production Adjustment
Schedule 3.3          Sellers' Consents and Approvals
Schedule 3.4          Exceptions to Financial Statements
Schedule 3.5          Exceptions to Pro Forma Statements
Schedule 3.6          Contingent Liabilities
Schedule 3.7(a)       Encumbrances Exceptions to Assets
Schedule 3.7(b)       Exceptions to Transferred Assets
Schedule 3.8          Actions Pending
Schedule 3.9          Real Estate Leases
Schedule 3.10(a)      Business Contracts
Schedule 3.10(b)      Exceptions to Business Contracts
Schedule 3.11         Exceptions to Assigned Contracts
Schedule 3.12(a)      Patent
Schedule 3.12(b)      List of Other Intellectual Property
Schedule 3.12(c)      Infringement of Intellectual Property
Schedule 3.12(d)      Encumbrances to Intellectual Property
Schedule 3.12(e)      Licensed Intellectual Property
Schedule 3.12(f)      Exceptions to Owned Intellectual Property
Schedule 3.12(h)      Data Base Infringement
Schedule 3.13(a)      Owned Principally-Used Computer Programs
Schedule 3.13(b)      Owned Generally-Used Computer Programs
Schedule 3.13(c)      Licensed Computer Programs
Schedule 3.13(d)      Retained Computer Programs
Schedule 3.13(e)      Infringement of Computer Programs
Schedule 3.13(g)      Exceptions to Computer Programs
Schedule 3.13(h)      License Agreements
Schedule 3.14         Compliance with Legal Requirements
Schedule 3.15         Permits
Schedule 3.16(a)      Material Assumed Reinsurance Contracts
Schedule 3.16(b)      Exceptions to Material Assumed Reinsurance Contracts
Schedule 3.16(c)      Exceptions to Assumed Reinsurance Contracts

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Schedule 3.16(d)      Unexecuted Assumed Reinsurance Contracts
Schedule 3.17(a)      Material Retroceded Reinsurance Contracts
Schedule 3.17(b)      Exceptions to Material Retroceded Reinsurance Contracts
Schedule 3.17(c)      Exceptions to Retroceded Reinsurance Contracts
Schedule 3.17(d)      Retroceded Reinsurance Reserve Credit
Schedule 3.17(e)      Retrocession Pools
Schedule 3.17(f)      Unexecuted Retroceded Reinsurance Contracts
Schedule 3.19         Business Employees
Schedule 3.23         Absence of Certain Changes and Events
Schedule 3.25(a)      Taxes
Schedule 4.7          Purchaser's Consents and Approvals
Schedule 5.1          Exceptions to Conduct of Business
Schedule 5.15(a)      Restricted Names
Schedule 5.24(a)      SLD-SLDI Retrocession Agreements
Schedule 5.24(c)      Current Permanent Facilities of Purchaser

Schedule 5.28         Reinsurance Contracts Eligible for Recapture

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<PAGE>

                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT, dated as of October 17, 2004 (this
"Agreement"), has been made and entered into by and among Security Life of
Denver Insurance Company, a Colorado insurance company ("SLD"); Security Life of
Denver International Limited, a Bermuda insurance company ("SLDI" and, together
with SLD, "Sellers" and each a "Seller"); solely for purposes of Section 11.11,
ING (as defined below); Scottish Re Group Limited, a holding company organized
under the laws of the Cayman Islands ("Purchaser"); Scottish Re (U.S.), Inc., a
Delaware insurance company ("SRUS"); solely for purposes of Section 5.26,
Scottish Annuity & Life Insurance Company (Cayman) Ltd., a company organized
under the laws of the Cayman Islands ("Scottish Annuity & Life"); for purposes
of Section 5.24, Scottish Re Life Corporation, a Missouri insurance company
("Scottish Re Life"); and effective on the date its duly authorized officer
signs this Agreement, Newco (as defined below).

                                   WITNESSETH:

     WHEREAS, Sellers wish to sell and transfer to Purchaser, and Purchaser
wishes to purchase and assume, Sellers' individual life reinsurance business and
the Assumed Liabilities (as defined below);

     WHEREAS, pursuant to the terms set forth in this Agreement and certain
reinsurance, administrative and other agreements and arrangements to be entered
into in connection herewith, SLD wishes to cede or retrocede to a Purchaser
Subsidiary on an indemnity basis the Insurance Contracts (as defined below) of
SLD;

     WHEREAS, pursuant to the terms set forth in this Agreement and certain
reinsurance, administrative and other agreements and arrangements to be entered
into in connection herewith, SLDI wishes to cede or retrocede to a Purchaser
Subsidiary on an indemnity basis the Insurance Contracts (as defined below) of
SLDI; and

     WHEREAS, Sellers also wish to sell, and Purchaser wishes to purchase,
certain assets primarily used in connection with Sellers' individual life
reinsurance business, upon the terms and subject to the conditions set forth
herein.

     NOW, THEREFORE, in consideration of the promises and the covenants and
conditions contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:

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                                    ARTICLE I

                                   Definitions
                                   -----------

     1.1 Definitions.
         -----------

     The following terms shall have the respective meanings set forth below
throughout this Agreement:

180-Day Treasury Rate means the annual yield rate, on the date to which the
180-Day Treasury Rate relates, of actively traded U.S. Treasury securities
having a remaining duration to maturity of six (6) months, as such rate is
published under "Treasury Constant Maturities" in Federal Reserve Statistical
Release H.15(519).

Affiliate means, with respect to any Person, at the time in question, any other
Person controlling, controlled by or under common control with such Person.

Applicable Law means any Legal Requirement applicable to a Person or any such
Person's subsidiaries, properties, or assets, or to such Person's
Representatives.

Assigned Contracts means, subject to Section 5.4(c), (i) the contracts of
Sellers and their Affiliates that are utilized in the Business and listed on
Schedule 1.1(a) and (ii) any other similar contracts of Sellers and their
Affiliates that are principally used in the Business and that are entered into
by Sellers or their Affiliates between the date hereof and the Closing Date in
compliance with Section 5.1(e) and which will be added to Schedule 1.1(a) prior
to the Closing Date.

Assignment and Assumption Agreement means the assignment and assumption
agreement by and among SLD, SLDI, Purchaser and one or more Purchaser
Subsidiaries substantially in the form of Exhibit A.

Assignment of Confidentiality Agreements means the assignment agreement
substantially in the form of Exhibit R pursuant to which ING will assign to
Purchaser the confidentiality agreements entered into with other potential
purchasers of the Business.

Assumed Liabilities means (a) the liabilities and obligations arising under the
Assigned Contracts, (b) any other liabilities and obligations expressly assumed
by Purchaser or any Purchaser Subsidiary under this Agreement and the Related
Agreements, including without limitation the Reinsured Liabilities, and (c) the
Purchaser Assumed Employee Liabilities. Without limiting the generality of the
preceding sentence and for the avoidance of doubt, Assumed Liabilities will not
include (x) any liability or obligation of either Seller or any ERISA Affiliate
arising under or relating to any Employee Benefit Plan established, maintained,
sponsored or contributed to by either Seller or any ERISA Affiliate, any
liability or obligation of either Seller or any ERISA Affiliate relating to any
current or former employee, director, shareholder, agent or independent
contractor of either Seller or any ERISA Affiliate or any liability or
obligation arising under or relating

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to occurrences before or after the Closing Date out of any employee grievance,
claim or complaint relating to the conduct of the Business whether or not the
employee is hired by Purchaser, other than the Purchaser Assumed Employee
Liabilities, or (y) any liability or obligation of either Seller or any
Affiliate of either Seller that is (A) not otherwise attributable to the
Business, (B) based upon any pro-rating or other cost chargeback methodology or
(C) of the kind described in clause (a) of the preceding sentence arising prior
to the Closing Date, except for any such liability or obligation described in
clause (a) of the preceding sentence to the extent that such liability or
obligation is reflected on the Final Closing Statements.

Assumed Reinsurance Contracts shall have the meaning given in Section 3.16(a).

Bill of Sale and General Assignment means the bill of sale and general
assignment substantially in the form of Exhibit B.

Book Value means with respect to Transferred Statutory Assets, the carrying
value thereof on the books of SLD or SLDI, as the case may be, for statutory
statement blank purposes determined as of the Effective Time by SLD or SLDI, as
the case may be, in accordance with SAP.

Books and Records means all records and all Data, Databases and other data and
information (in whatever form maintained) in the possession or control of either
Seller or any Affiliate of Sellers and relating primarily to the Business as
currently conducted, including administrative records, internal reports relating
to internal controls designed to comply with Section 404 of the Sarbanes-Oxley
Act of 2002, claim records, policy files, sales records, files and records
relating to regulatory matters, reinsurance records, underwriting records and
accounting records, but excluding any Tax Returns and Tax records and all other
data and information with respect to Tax and any files, records, data and
information with respect to the Business Employees and any records, data and
information with respect to any Seller Plan; provided, that if any such records
or data contain information which does not relate to the Business or relates
solely to the Excluded Business or Sellers' and their Affiliates' risk retention
management other than that relating exclusively to the Business, such
information shall not constitute "Books and Records".

Business means the individual life reinsurance business of Sellers represented
by the Assigned Contracts and the Insurance Contracts, which business is
represented as of December 31, 2003 and June 30, 2004 by the Pro Forma
Statements; provided, that the Business does not include the Excluded Business.

Business Day means any day other than a Saturday, Sunday or a day on which
commercial banks in New York City, Denver, Colorado or Hamilton, Bermuda are
required or authorized by Applicable Law to be closed.

Business Employees shall have the meaning set forth in Section 3.19.

Business Leases shall have the meaning given in Section 3.9.

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Cause shall mean, with respect to a Transferred Employee, (a) failing to abide
by the policies of the Purchaser or any Affiliate of Purchaser employing such
Transferred Employee, (b) being convicted of, or pleading nolo contendere to, a
felony, any other crime or illegal activity, (c) willful neglect of duties, or
(d) persistent failure to perform duties consistent with a commercially
reasonable standard of care.

Change of Control means, with respect to any Person (other than to or with an
Affiliate of such Person) (i) a merger, consolidation, liquidation, dissolution,
reorganization or share exchange to which such Person is a party and is not the
surviving entity; (ii) a sale, transfer or other disposition of all or
substantially all of the assets of such Person; or (iii) a sale, transfer or
other disposition or other change of ownership, directly or indirectly, of more
than fifty percent (50%) of the capital stock of such Person.

Claim shall have the meaning given in Section 10.3(a).

Claims Notice shall have the meaning given in Section 10.3(a).

Closing shall have the meaning given in Section 2.1.

Closing Date shall have the meaning given in Section 2.1.

Closing Statement Date means the last day of the month preceding the month in
which the Closing occurs.

COBRA means Section 601 et seq. of ERISA and Section 4980B of the Code.

Code means the Internal Revenue Code of 1986, as amended.

Competing Business shall have the meaning given in Section 5.21(a).

Computer Programs means current versions of all existing (i) computer programs,
including all object code, all executables, copy books and modules, if any,
required to compile programs, all available source code, and, with respect to
the Owned Principally-Used Computer Programs, Owned Generally-Used Computer
Programs and Licensed Computer Programs, any program to program and user
interfaces related to such Computer Programs; (ii) descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing; and (iii) documentation, including operator and user manuals and
training materials, relating to any of the foregoing.

Confidentiality Agreement means the Confidentiality Agreement between ING and
Purchaser dated as of May 4, 2004.

Covered Amount shall have the meaning given in Section 5.24(d).

Data means (i) all information created in the conduct of the Business that is
stored in or accessible using any computer, network, operating system, software
or any combination thereof owned or controlled by Sellers or any Affiliate of
Sellers and (ii) statistical data, compilations and analyses used or created by
Sellers in the Business to support business

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processes such as underwriting decisions, risk management, pricing and
transaction processing, that is stored in or accessible using any computer,
network, operating system, software or any combination thereof owned or
controlled by Sellers of any Affiliate of Sellers; provided, however, that
"Data" shall not include any Excluded Data. For the avoidance of doubt, "Data"
shall not be construed to include any portion of any Computer Program.

Database means any electronic compilation of Data (including any documentation
needed to run, modify or interpret the same) that is (i) used in, or generated
by, the operation of the Owned Principally-Used Computer Programs, Owned
Generally-Used Computer Programs or Licensed Computer Programs, (ii) operating
on any of the Retained Computer Programs, provided that nothing in this
Agreement shall obligate Sellers or any Affiliate of Sellers to transfer such
Retained Computer Programs or any portion thereof, or (iii) necessary to the
operation of the Business, but shall exclude any portion of any such Database to
the extent it contains any Excluded Data or any other information that is not
Data.

Delivered Unexecuted Assumed Reinsurance Contracts shall have the meaning given
in Section 3.16(d).

Delivered Unexecuted Retroceded Reinsurance Contracts shall have the meaning
given in Section 3.17(f).

Denver Lease means the lease agreement, substantially on the terms set forth in
Exhibit S, pursuant to which SLD will lease to Purchaser or a Purchaser
Subsidiary a portion of the premises located at 1290 Broadway, Denver, Colorado
as of the Closing Date.

Direct Insurance Contracts shall have the meaning given in Section 3.25(d).

Effective Time means 11:59 p.m. Eastern Time on the last calendar day of the
month in which the Closing Date falls.

Embedded Computer Programs means Computer Programs included in the Owned
Principally-Used Computer Programs and the Owned Generally-Used Computer
Programs that (i) are owned by third parties, and (ii) either have been produced
or substantially modified through custom development provided specifically to
meet Sellers' requirements, or are integrated inseparably with the Owned
Principally-Used Computer Programs or the Owned Generally-Used Computer
Programs, but excluding Computer Programs that are readily available for
commercial licensing or purchase from third-party owners.

Employee Benefit Plan means any employee benefit plan, program, policy,
practice, agreement or other arrangement under which any current or former
employee, director, shareholder, agent or independent contractor of either
Seller or any ERISA Affiliate, or any beneficiary or dependent thereof, has any
present or future rights in benefits and which is sponsored or maintained by
either Seller or any ERISA Affiliate or to which either Seller or any ERISA
Affiliate contributes or is obligated to contribute, including without
limitation any ERISA Plan, and any bonus, incentive, deferred compensation,

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<PAGE>

vacation, stock purchase, stock option, severance, employment, change in
control, collective bargaining, employee loan or fringe benefit plan, program,
policy, practice, agreement or other arrangement, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not.

Employee Information shall have the meaning given in Section 5.8(a).

Encumbrance means any pledge, security interest, mortgage, community property
interest, right, lien (including but not limited to liens for unpaid Taxes),
attachment, automatic or other stay in a bankruptcy or insolvency proceeding,
trust agreement, constructive or resulting trust, voting trust or agreement,
restricted stock agreement, right of first refusal, or option, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership, except such restrictions as may be contained in
the respective articles of incorporation, bylaws or comparable organizational
documents of the Sellers and restrictions on subsequent transfer contained in
U.S. federal and state securities and insurance laws and Bermuda securities and
insurance laws.

End Date shall have the meaning given in Section 8.1(c).

Enforceability Exceptions shall have the meaning given in Section 3.2(a).

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate means any entity that would be deemed a "single employer" with
either Seller under Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA.

ERISA Plan means an employee benefit plan as defined in Section 3(3) of ERISA.

Estimated Book Value means with respect to Transferred Statutory Assets, the
carrying value thereof on the books of SLD and SLDI, as the case may be, for
statutory statement blank purposes in accordance with SAP to be estimated in
good faith as of the last calendar day of the month preceding the month in which
the Closing shall occur.

Estimated Market Value means, as to any Investment Asset, the market value
thereof estimated in good faith by SLD and SLDI, as the case may be, as of the
last calendar day of the month preceding the month in which the Closing shall
occur in accordance with the methodologies set forth on Schedule 1.1(b).

Excess Reserves Amount shall have the meaning given in Section 5.24(a).

Excess Retention Risk shall have the meaning given in Section 5.27.

Excluded Business means those businesses, contracts and policies identified on
Schedule 1.1(c).

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<PAGE>

Excluded Data means any data, information, statistical data, compilations or
analyses relating solely to (i) the Excluded Business, (ii) Sellers' and their
Affiliates' risk retention management, other than that related exclusively to
the Business, or (iii) the Shared Services. For the avoidance of doubt, the
Excluded Data shall not include any data that is included in the Transferred
Assets.

Excluded Extra Contractual Obligations means any liability for fines, penalties,
forfeitures, punitive, special, exemplary or other form of extra-contractual
damages, which liabilities or obligations arise from any actual or alleged act,
error or omission, whether or not intentional, negligent, or in bad faith by
Sellers or any of their Affiliates prior to the Closing Date in connection with
the issuance, delivery, cancellation or administration of any of the Insurance
Contracts.

Excluded Tax Liability means the following Losses: (i) all liabilities for Taxes
and related Losses now or hereafter owed by Sellers (or any Affiliate thereof),
including (but not limited to) any liability for Taxes owed by Sellers as a
result of the transfers described in Sections 2.2, 2.4 and 2.5 of this
Agreement, except for any liabilities for Taxes relating to the Transferred
Assets with respect to any Tax period or portion thereof beginning after the
Closing Date; (ii) all liabilities for Taxes and related Losses relating or
attributable to the Business or the ownership, use or operation of the
Transferred Assets for any Tax period or portion thereof ending on or before the
Closing Date; or (iii) all liabilities for Transfer Taxes allocated to Sellers
(or any Affiliate thereof) pursuant to Section 9.1(c), provided, however, that
no liability for Taxes or related Losses shall constitute an Excluded Tax
Liability to the extent it is shown on the Final Closing Statements.

Excluded Undelivered Contracts shall have the meaning given in Section 5.31.

Facility Fee shall have the meaning given in Section 5.24(d).

Final and Binding shall have the meaning given in Section 2.5(c).

Final Closing Statements shall have the meaning given in Section 2.5(c).

Final Retrocessionaire Accruals Calculation shall have the meaning given in
Section 2.5(i).

FIRPTA Affidavit means an affidavit dated as of the Closing Date, sworn under
penalty of perjury, stating that each Seller is not a "foreign person" within
the meaning of Treasury Regulations section 1.1445-2(b).

GAAP means United States generally accepted accounting principles.

Governmental Authority means any government or political subdivision, board,
commission, court, administrative agency or other instrumentality thereof,
whether federal, state, local or foreign and including any regulatory authority
which may be partly or wholly autonomous.

                                       7
<PAGE>

Indemnified Party shall have the meaning given in Section 10.3(a).

Indemnifying Party shall have the meaning given in Section 10.3(a).

Independent Accountant shall have the meaning given in Section 2.5(c).

Industry Risks Retrocession Agreements means collectively the retrocession
agreements between one or more Purchaser Subsidiaries and SLD substantially on
the terms set forth in Exhibit X under which each Purchaser Subsidiary will
retrocede certain risks to SLD.

Initial Portfolio means the portfolio of investment assets listed on Schedule
1.1(d) hereto.

ING means ING America Insurance Holdings, Inc., a Delaware corporation.

ING Facility shall have the meaning given in Section 5.24(a).

ING Statements shall have the meaning given in Section 3.4(d).

Insurance Contracts means collectively, (a) all individual life reinsurance
contracts (ceded, retroceded or assumed), those reinsurance contracts identified
on Schedule 1.1(i) and other similar arrangements (including all Unexecuted
Assumed Reinsurance Contracts and Unexecuted Retroceded Reinsurance Contracts)
identified or described on the internal systems, books, records or other data of
Sellers as constituting part of the "Individual Re" business of SLD and SLDI,
either specifically, generally or by product code, which were entered into by
SLD or SLDI prior to the Effective Time, and (b) any "Post-Closing Insurance
Contracts" as defined in the Reinsurance Agreements, provided that in no event
shall Insurance Contracts include any Excluded Business. "Insurance Contracts"
shall include (i) any reinsurance treaties, facultative certificates, cover
notes and endorsements issued as or in connection with the contracts identified
in clause (a) of the preceding sentence, (ii) placement slips and binders issued
as or in connection with such contracts, and (iii) any reinsurance contract
identified in clause (a) that has expired or been terminated but under which
either Seller may still have liability. "Insurance Contracts" shall exclude any
reinsurance treaty (other than an Unexecuted Assumed Reinsurance Contract or an
Unexecuted Retroceded Reinsurance Contract) that is entered into after the date
of this Agreement without Purchaser's consent.

Intellectual Property means, in connection with each Seller, intellectual
property rights owned, licensed or otherwise used by such Seller in the Business
as currently conducted, including but not limited to all Trademarks, designs,
logos, slogans and general intangibles of like nature, registrations and
applications relating to the foregoing; patents, copyrights (including
registrations and applications for any of the foregoing); databases and
compilations (excluding any Databases), including any and all data, collections
of data and documentation (excluding any Data) related to any of the foregoing;
confidential information, technology, know-how, inventions, processes, formulae,
algorithms, models and methodologies, and any licenses to use any of the
foregoing (but excluding Computer Programs) together with the goodwill of each
of the respective businesses associated therewith, and together with any and all
(i) renewals thereof; and (ii) rights to sue for past, present and future
infringement or misappropriation thereof.

                                       8
<PAGE>

Investment Assets means the assets included in the Initial Portfolio, with such
additions thereto and deletions therefrom as may be agreed upon by Purchaser and
Sellers and such other deletions as (i) may be identified by Purchaser in a
notice provided to Sellers not later than November 15, 2004 or (ii) may result
from maturation or redemption or other similar events outside the control of
Sellers.

Knowledge shall mean, (i) with respect to Sellers, the actual knowledge, after
reasonable internal investigation in connection with the transactions
contemplated by this Agreement and the Related Agreements, of those individuals
listed on Schedule 1.1(e), and (ii) with respect to Purchaser, the actual
knowledge, after reasonable internal investigation in connection with the
transactions contemplated by this Agreement and the Related Agreements, of those
individuals listed on Schedule 1.1(f).

Legal Requirement means any constitution, code, statute, law, applicable court
decision, ordinance, regulation, writ, injunction, rule, established principle
of common law, decree or administrative ruling of any Governmental Authority.

Licensed Computer Programs shall have the meaning set forth in Section 3.13(c).

Licensed Computer Program Licenses shall have the meaning set forth in Section
3.13(c).

Licensed Intellectual Property shall have the meaning given in Section 3.12(e).

Loss means all losses, costs, obligations, liabilities, settlement payments,
awards, judgments, fines, penalties, damages, and expenses (including but not
limited to reasonable and necessary fees of counsel, investigators, expert
witnesses, consultants and other professionals, court filing fees, court costs,
arbitration fees or costs, witness fees and other similar expenses).

Market Value means, as to any Investment Asset, the market value thereof
determined in good faith as of the Effective Time in accordance with the
methodologies set forth on Schedule 1.1(b).

Material Adverse Effect means a material adverse effect on either (A) the
ability of Sellers or any of their Affiliates to consummate the transactions
contemplated by this Agreement and the Related Agreements or (B) the financial
condition or results of operations of the Business, taken as a whole; provided,
however, that with respect to the foregoing clause (B) only, the following shall
be excluded from the definition of "Material Adverse Effect" and from any
determination as to whether a Material Adverse Effect has occurred or may occur:
(i) any adverse change or effect that is caused by or that arises out of
conditions affecting the economy or financial, banking, currency or capital
markets in general; (ii) any adverse change or effect that is caused by or that
arises out of conditions that (A) affect the life reinsurance industry, or the
insurance or financial services industries generally, including without
limitation changes in Applicable Law, and (B) do not have a disproportionate
effect on the Business; and (iii) any adverse change or effect resulting from
the announcement or the pendency of the transactions

                                       9

<PAGE>

contemplated by this Agreement (including, but not limited to, changes in
relations with employees and declines in sales volumes).

Material Assumed Reinsurance Contracts shall have the meaning given in Section
3.16(a).

Material Retroceded Reinsurance Contracts shall have the meaning given in
Section 3.17(a).

NAIC Annual Statement Blank means the form of annual report promulgated by the
National Association of Insurance Commissioners (2003 format).

Newco means a wholly-owned subsidiary of Purchaser to be formed under the laws
of Bermuda and the regulations set forth in Section 953(d) of the Code, or
alternatively, the Substitute Newco, an existing Affiliate of Purchaser, in
either case as contemplated by Section 5.26.

Newco Keepwell shall have the meaning given in Section 5.26(a).

Non-Compete means Sellers' obligations under Section 5.21.

Non-Compete Term shall have the meaning given in Section 5.21(a).

Non-Insurance Liabilities shall have the meaning given in Section 5.17(a).

Nonmaterial Contracts shall have the meaning given in Section 5.4(c).

Owned Generally-Used Computer Programs shall have the meaning given in Section
3.13(b).

Owned Intellectual Property shall have the meaning given in Section 3.12(d).

Owned Principally-Used Computer Programs shall have the meaning given in Section
3.13(a).

Permanent Facility shall have the meaning given in Section 5.24(c).

Permit means any license, permit, order, approval, registration, membership,
authorization or qualification under any Applicable Law or with any Governmental
Authority or under any industry or non-governmental self-regulatory
organization.

Permitted Encumbrances, means (i) as to any asset, Encumbrances for Taxes,
assessments and governmental charges or levies (A) not yet due and payable or
(B) which are being contested in good faith and which have been properly
reserved for on the Final Closing Statements, (ii) as to any asset, such
Encumbrances, minor imperfections of title or easements on leasehold estate or
personalty subject thereto that do not in the aggregate impair the value of or
interfere with or prohibit the current use or operation of such asset in the
Business; and (iii) as to any asset other than any Investment Asset,
Encumbrances

                                       10
<PAGE>

imposed by Applicable Law, including, without limitation, materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business, that do not in the aggregate impair
the value of or interfere with or prohibit the current use or operation of such
asset in the Business.

Person means any natural person, corporation, partnership, limited liability
company, trust, joint venture or other entity.

Pro Forma Statements shall have the meaning given in Section 3.5(a).

Purchaser shall have the meaning given in the preamble.

Purchaser Assumed Employee Liabilities means (i) any claims by any Business
Employee arising out of or relating to any act or omission by Purchaser or an
Affiliate of Purchaser or any Representative of Purchaser or any Affiliate of
Purchaser, including but not limited to, any act or omission in connection with
the recruitment, solicitation, interviewing, hiring, failure to hire, selection,
or failure to select a Business Employee, or other activities in violation of
any Applicable Law governing the hiring, interviewing, or selection of employees
or potential employees, including but not limited to Applicable Law prohibiting
discrimination in hiring on the basis of race, age, national origin, sex,
religion, pregnancy, military status, sexual orientation or actual or perceived
disability, except to the extent that the act(s) or omission(s) on which such
claims, liabilities or obligations in this clause (i) are based were expressly
authorized by either Seller or any of their Affiliates in writing, and (ii) any
liability or obligation arising out of or relating to any act or omission of
either Seller or any of their Affiliates taken at the request of Purchaser or
any Affiliate of Purchaser upon, before or after the Closing Date in connection
with the recruitment, solicitation, interviewing, hiring, failure to hire,
selection or failure to select a Business Employee.

Purchaser Extra Contractual Obligations means any liability for fines,
penalties, forfeitures, punitive, special, exemplary or other form of
extra-contractual damages, which liabilities or obligations arise from any
actual or alleged act, error or omission, whether or not intentional, negligent,
or in bad faith by Purchaser or any of its Affiliates after the Closing Date in
connection with the issuance, delivery, cancellation or administration of any of
the Insurance Contracts.

Purchaser Facility shall have the meaning given in Section 5.24(b).

Purchaser Financial Statements shall have the meaning given in Section 4.4.

Purchaser Indemnified Parties shall have the meaning given in Section 10.1.

Purchaser Subsidiary means SRUS, Newco or any other Affiliate of Purchaser that
enters into any Reinsurance Agreement in accordance with the terms of this
Agreement.

Quarterly Statutory Statements shall have the meaning given in Section 5.11(a).

Recaptured Business shall have the meaning given in Section 5.24(b).

                                       11
<PAGE>

Reinsurance Agreements means collectively the SLD Coinsurance Agreement, the SLD
Modified Coinsurance Agreement, the SLD Funds Withheld Coinsurance Agreement,
the SLD Coinsurance / Modified Coinsurance Agreement, the SLDI Coinsurance
Agreement, the SLDI Modified Coinsurance Agreement, the SLDI Funds Withheld
Coinsurance Agreement and the SLDI Coinsurance / Modified Coinsurance Agreement.

Reinsured Liabilities means all gross liabilities and obligations arising out of
or relating to the Insurance Contracts (excluding Excluded Extra Contractual
Obligations) whether incurred before or after the Effective Time, including,
without limitation: (a) the Reserves; (b) all liabilities for incurred but not
reported claims, benefits, interest on death claims or unearned premiums arising
under or relating to the Insurance Contracts, whether or not included within the
Reserves; (c) all liabilities arising out of any changes to the terms and
conditions of the Insurance Contracts mandated by Applicable Law; (d) (i) Taxes
due in respect of premiums (without giving effect to any credits due to Sellers
(or any Affiliate thereof) for any guaranty fund assessments paid by Sellers (or
any Affiliate thereof) prior to Closing) to the extent such Taxes (A) relate to
premiums received by or accrued by Purchaser (and any Affiliate thereof)
beginning after the Closing Date or (B) are reflected on the Final Closing
Statements, and (ii) all other Tax liabilities arising out of or relating to the
Insurance Contracts to the extent such Taxes (A) relate to a Tax period (or
portion thereof) beginning after the Closing Date or (B) are reflected on the
Final Closing Statements (except for, in each case, Excluded Tax Liabilities);
(e) assessments and similar charges in connection with participation by either
Sellers (or any Affiliate thereof) or Purchaser (or any Affiliate thereof)
whether voluntary or involuntary, in any guaranty association established or
governed by any state or other jurisdiction; (f) commissions payable with
respect to the Insurance Contracts to or for the benefit of the producers or
intermediaries who marketed or produced the Insurance Contracts; (g) all
liabilities for amounts payable for returns or refunds of premiums; (h) all
expense allowances payable under the Insurance Contracts, (i) all unclaimed
property liabilities arising under or relating to the Insurance Contracts; (j)
all amounts payable under the Retroceded Reinsurance Contracts; and (k) all
Purchaser Extra Contractual Obligations.

Related Agreements means each of the agreements the forms or terms of which are
Exhibits A through S and Exhibits U through Y hereto.

Representatives means, with respect to any Person, such Person's officers,
directors, employees, managing directors, agents, advisors and other
representatives.

Reserves means the aggregate amount of reserves and other liabilities with
respect to the Insurance Contracts issued or reinsured by SLD or SLDI that would
be appropriately includable in line items 1, 2, 3, 4.1, 4.2, 5, 6.1, 6.2, 6.3,
7, 8, 9.1, 9.2, 9.3, 10, 11, 12, 13, 14 (excluding any Excluded Tax Liability),
17, 18, 19, 24.2, 24.3, 24.6, 24.7, 25.02 and 25.03 except OPEB of the
Liabilities, Surplus and Other Funds page of the NAIC Annual Statement Blank.

Restricted Area shall have the meaning given in Section 5.21(b).

                                       12

<PAGE>

Retained Computer Programs shall have the meaning set forth in Section 3.13(d).

Retained IP Rights means (i) the Excluded Data (ii) any Intellectual Property
used in the Business and related primarily to either (A) the Excluded Business
or (B) the Shared Services, (iii) the Trademarks, trade names, service marks,
corporate names or acronyms of Sellers or any of their Affiliates, including the
Trademarks, service marks, names and acronyms set forth in Schedule 5.15(a), and
any Intellectual Property, domain name or URL (or any application or
registration therefor) related to those listed in Schedule 5.15(a), owned by,
licensed to or used by Sellers or any of their Affiliates, and any other name,
mark, acronym or domain name that is confusingly similar to such marks,
corporate names or acronyms of Sellers, and (iv) the names, Trademarks and any
other intellectual property licensed to Purchaser and Purchaser Subsidiaries
pursuant to the Trademark and Trade Name License Agreement, to the extent not
included in clause (iii) above; provided, however, that "Retained IP Rights"
shall not include any of the Owned Intellectual Property identified as part of
the Transferred Assets on Schedule 1.1(h)-1.

Retained Liabilities means any liabilities of either Seller that are not Assumed
Liabilities, including, without limitation, Excluded Extra Contractual
Obligations or any Reinsured Liabilities recaptured by either Seller in
accordance with the terms of the Reinsurance Agreements.

Retained Licenses means the licenses, sublicenses and other rights retained by
Sellers and any Affiliate of Sellers pursuant to the Technology Transfer and
License Agreement.

Retroceded Business shall have the meaning given in Section 5.24(a).

Retroceded Reinsurance Contracts shall have the meaning given in Section
3.17(a).

Retrocessionaire Accruals Calculation shall have the meaning given in Section
2.5(i).

Sage System shall have the meaning given in Section 2.5(i).

SAP means, as to either Seller, any Purchaser Subsidiary or Scottish Annuity &
Life, the statutory accounting practices prescribed or permitted by the
insurance regulatory authorities of the jurisdiction in which such Seller or
Purchaser Subsidiary is domiciled.

Scottish Annuity & Life shall have the meaning given in the preamble.

Scottish Re Life shall have the meaning given in the preamble.

Seller(s) shall have the meaning given in the preamble.

Seller Plan(s) shall have the meaning given in Section 3.20.

Sellers' Severance Plan means payments or benefits extended under the ING
Americas Severance Pay Plan or any other applicable and effective written
policy, program or arrangement of any Business Employee's employer providing for
payments or benefits

                                       13
<PAGE>

upon termination of employment (other than qualified or non-qualified retirement
plans) (including, but not limited to, outplacement services), as listed on
Schedule 1.1(g).

Shared Services means those functions and services shared by either Seller with
one or more of Sellers' Affiliates, which may include Sellers' back-office
administrative, accounting and human resources functions, investment asset
management functions and financial processes, or general IT support such as
network operations, telecommunications, database management, training and
development, security, and platforms.

Shared Services Computer Programs means those Computer Programs (other than the
Owned Principally-Used Computer Programs, the Owned Generally-Used Computer
Programs or the Licensed Computer Programs) utilized in the performance of the
Shared Services.

SLD shall have the meaning given in the preamble.

SLD Administrative Services Agreement means the administrative services
agreement by and between SLD and SRUS, substantially in the form of Exhibit C.

SLD Closing Date Liabilities means, as of a given date, the liabilities of SLD
relating to the Business that would be appropriately includable in line items 1
(minus the amount of modified coinsurance reserves), 2, 3, 4.1, 4.2, 5, 6.1,
6.2, 6.3, 7, 8, 9.1, 9.2, 9.3, 10, 11, 12, 13, 14 (excluding any Excluded Tax
Liability), 16, 17, 18, 19, 20, 21, 24.2, 24.6, 24.8 (to the extent related to
the Investment Assets to be transferred hereunder), 25.02 and 25.03 except OPEB
of the Liabilities, Surplus and Other Funds page of the NAIC Annual Statement
Blank; provided, that the SLD Closing Date Liabilities will not include the
amount of any liability to be retained or paid by SLD or any Affiliate of SLD
pursuant to the terms of this Agreement or any Related Agreement. The SLD
Closing Date Liabilities shall be (a) estimated and reflected in the SLD Closing
Statements as of the last day of the month preceding the month in which the
Closing Date shall occur; and (b) subsequently adjusted and reflected in the SLD
Revised Closing Statements and the Final Closing Statements as of the Effective
Time.

SLD Closing Statements shall have the meaning given in Section 2.4(a)

SLD Coinsurance Agreement means the coinsurance agreement by and between SLD and
SRUS, substantially in the form of Exhibit D.

SLD Coinsurance / Modified Coinsurance Agreement means the coinsurance /
modified coinsurance agreement by and between SLD and SRUS substantially on the
terms set forth in Exhibit G.

SLD Funds Withheld Coinsurance Agreement means the funds withheld coinsurance
agreement by and between SLD and SRUS substantially on the terms set forth in
Exhibit E.

                                       14
<PAGE>

SLD Modified Coinsurance Agreement means the modified coinsurance agreement by
and between SLD and SRUS substantially on the terms set forth in Exhibit F.

SLD Pro Forma Statements shall have the meaning given in Section 3.5(a).

SLD Reserve Trust Account means the trust account established pursuant to the
SLD Reserve Trust Agreement.

SLD Reserve Trust Agreement means the trust agreement by and among SLD, the
Trustee and SRUS substantially in the form of Exhibit V.

SLD Revised Closing Statements shall have the meaning given in Section 2.5(a).

SLD Security Trust Account means the trust account established pursuant to the
SLD Security Trust Agreement.

SLD Security Trust Agreement means the trust agreement by and among SLD, the
Trustee and SRUS substantially in the form of Exhibit H.

SLD-SLDI Retrocession Agreements shall have the meaning given in Section
5.24(a).

SLD Trust Accounts means the trust accounts established pursuant to the SLD
Reserve Trust Agreement and the SLD Security Trust Agreement.

SLDI shall have the meaning given in the preamble.

SLDI Administrative Services Agreement means the administrative services
agreement by and between SLDI and Newco, substantially on the terms set forth in
Exhibit I.

SLDI Closing Date Liabilities means, as of a given date, the liabilities of SLDI
relating to the Business that would be appropriately includable in line items 1
(minus the amount of modified coinsurance reserves), 2, 3, 4.1, 4.2, 5, 6.1,
6.2, 6.3, 7, 8, 9.1, 9.2, 9.3, 10, 11, 12, 13, 14 (excluding any Excluded Tax
Liability), 16, 17, 18, 19, 20, 21, 24.2, 24.6, 24.8 (to the extent related to
the Investment Assets to be transferred hereunder), 25.02 and 25.03 except OPEB
of the Liabilities, Surplus and Other Funds page of the NAIC Annual Statement
Blank; provided, that the SLDI Closing Date Liabilities will not include the
amount of any liability to be retained or paid by SLDI or any Affiliate of SLDI
pursuant to the terms of this Agreement or any Related Agreement. The SLDI
Closing Date Liabilities shall be (a) estimated and reflected in the SLDI
Closing Statements as of the last calendar day of the month preceding the month
in which the Closing Date shall occur; and (b) subsequently adjusted and
reflected in the SLDI Revised Closing Statements and the Final Closing
Statements as of the Effective Time.

SLDI Closing Statements shall have the meaning given in Section 2.4(b).

SLDI Coinsurance Agreement means the coinsurance agreement by and between SLDI
and Newco, substantially in the form of Exhibit J.

                                       15

<PAGE>

SLDI Coinsurance / Modified Coinsurance Agreement means the coinsurance /
modified coinsurance agreement by and between SLDI and Newco substantially on
the terms set forth in Exhibit L.

SLDI Funds Withheld Coinsurance Agreement means the funds withheld coinsurance
agreement by and between SLDI and Newco substantially on the terms set forth in
Exhibit K.

SLDI Modified Coinsurance Agreement means the modified coinsurance agreement by
and between SLDI and Newco substantially on the terms set forth in Exhibit M.

SLDI Pro Forma Statements shall have the meaning given in Section 3.5(a).

SLDI Reserve Trust Account means the trust account established pursuant to the
SLDI Reserve Trust Agreement.

SLDI Reserve Trust Agreement means the trust agreement by and among SLDI, the
Trustee and Newco substantially in the form of Exhibit N.

SLDI Revised Closing Statements shall have the meaning given in Section 2.5(b).

SLDI Security Trust Agreement means the trust agreement by and among SLDI, the
Trustee and Newco substantially in the form of Exhibit W.

SLDI Security Trust Account means the trust account established pursuant to the
SLDI Security Trust Agreement.

SLDI Trust Accounts means the trust accounts established pursuant to the SLDI
Reserve Trust Agreement and the SLDI Security Trust Agreement.

SRUS shall have the meaning given in the preamble.

Standby Commitment shall have the meaning given in Section 5.12(c).

Statutory Statements shall have the meaning given in Section 3.4(a).

Substitute Newco shall have the meaning given in Section 5.26(b).

Tax Authority means, with respect to any Tax, any governmental entity or
political subdivision thereof that imposes such Tax, and any agency charged with
the collection of such Tax for such entity or subdivision.

Taxes or Tax means (i) any and all taxes (including any amounts (including
ancillary amounts) paid pursuant to a closing agreement entered into pursuant to
Section 7121 of the Code or any similar provision of Applicable Law), fees,
Transfer Taxes, levies, duties, tariffs, imposts and other similar charges
(together with any and all interest, penalties, or additions to tax with respect
thereto) imposed by a governmental or Tax Authority, including without
limitation: taxes or other similar charges imposed with

                                       16

<PAGE>

respect to income, gross receipts, franchise, earned surplus, windfall, profits,
severance, real or personal property, intangible property, sales, use,
occupation, service, service use, payroll, capital, premiums or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, employment,
social security, stamp, transfer, value added, license or gains taxes; and
escheat liabilities, customs duties, tariffs, and similar charges and (ii) any
liability in respect of any items described above payable by reason of contract,
assumption, transferee liability, operation of law, Treasury Regulation Section
1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar
provision under state, local or foreign law) or otherwise (including without
limitation any amounts due under any Tax Sharing Agreements).

Tax Claim shall have the meaning given in Section 3.25(b).

Tax Return means any return, report, claim, certificate, form, statement,
disclosure, declaration, election, information return, estimate or other
document (including any related or supporting information attached and any
amended materials provided with respect to any of the foregoing) supplied to, or
filed with, a Tax Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax, including where permitted or
required any Tax return filed on a consolidated, combined, unitary or other
similar basis.

Tax Sharing Agreement means any Tax allocation, indemnity, sharing or similar
contract or arrangement.

Technology Transfer and License Agreement means the technology transfer and
license agreement by and between SLD or an Affiliate of SLD and Purchaser or a
Purchaser Subsidiary, substantially on the terms set forth in Exhibit O,
pursuant to which SLD or an Affiliate of SLD will transfer the Owned
Principally-Used Computer Programs to Purchaser or a Purchaser Subsidiary and
grant a license to Purchaser or a Purchaser Subsidiary to use certain Computer
Programs owned by either Seller or any of its Affiliates and used in the
Business.

Trademark and Trade Name License Agreement means the trademark and trade name
license agreement, substantially on the terms set forth in Exhibit P, pursuant
to which Sellers will license to Purchaser or a Purchaser Subsidiary certain
intellectual property used in the conduct of the Business.

Trademarks means all United States and foreign trademarks (including service
marks and trade names, whether registered or at common law), registrations and
applications therefor, registered copyrights, registrations and applications
therefor, domain names, logos and designs owned by a Seller and used in
connection with the Business as currently conducted, together with the goodwill
of each of the respective businesses associated therewith, together with any and
all (i) renewals thereof; and (ii) rights to sue for past, present and future
infringement or misappropriation thereof.

                                       17

<PAGE>

Transfer Taxes means any sales, use, stamp, documentary, filing, recording,
transfer, real estate, stock transfer, intangible property transfer, personal
property transfer, gross receipts, registration, duty, securities transactions
or similar fees or Taxes or governmental charges (together with any interest or
penalty, addition to Tax or additional amount imposed) as levied by any Tax
Authority in connection with the transactions contemplated by this Agreement.

Transferred Assets means, collectively (i) the Books and Records, (ii) the
Assigned Contracts, (iii) the Transferred Statutory Assets, (iv) the Owned
Principally-Used Computer Programs, (v) the Investment Assets to be transferred
to the Purchaser Subsidiaries by Sellers or Affiliates of Sellers on the Closing
Date pursuant to the terms of this Agreement, (vi) the Owned Intellectual
Property as identified on Schedule1.1(h)-1, (vii) all of the fixed assets
identified on Schedule 1.1(h)-1 and those assets identified on Schedule 1.1(h)-2
that are used primarily by the Transferred Employees, and (viii) the going
concern, goodwill, and other similar intangible assets of the Business, but
excluding any rights under the Retained Computer Programs and under any contract
or agreement other than an Assigned Contract.

Transferred Statutory Assets means those assets of SLD and SLDI included within
the Business that would be appropriately includable in line items 12.1, 12.2,
12.3, 13.1, 13.2, 13.3, 16 and 17 of the Assets page of the NAIC Annual
Statement Blank plus, in the case of SLDI, the deferred acquisition cost asset
permitted by the Bermuda Monetary Authority as a sundry asset as described in
Schedule 2.4(b).

Transferred Employees shall have the meaning given in Section 5.8(a).

Transition Services Agreement means the transition service agreement,
substantially on the terms set forth in Exhibit Q, pursuant to which Sellers, or
one or more Affiliates of Sellers, will provide Purchaser and the Purchaser
Subsidiaries certain services relating to the Business on an interim basis
following Closing.

Treasury Regulations means the Treasury Regulations (including temporary and
proposed Treasury Regulations) promulgated by the United States Department of
Treasury with respect to the Code or other federal Tax statutes.

Trustee means the trustee named in the SLD Reserve Trust Agreement, the SLD
Security Trust Agreement, the SLDI Reserve Trust Agreement and the SLDI Security
Trust Agreement and any successor trustee appointed as such pursuant to the
terms of such trust agreements.

2004 Production Adjustment shall have the meaning given in Section 2.5(h).

Undelivered Contracts shall have the meaning given in Section 5.31.

Unexecuted Assumed Reinsurance Contracts shall have the meaning given in Section
3.16(d).

                                       18
<PAGE>

Unexecuted Retroceded Reinsurance Contracts shall have the meaning given in
Section 3.17(f).

Warn Act shall have the meaning given in Section 5.8(i).

                                   ARTICLE II

                       Transfer and Acquisition of Assets
                       ----------------------------------

     2.1 Place and Date of Closing.
         -------------------------

     Unless otherwise agreed to by the parties hereto, the closing (the
"Closing") of the transactions contemplated hereby will take place in the
offices of Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, N.W.,
Washington, D.C., at 10:00 a.m., Eastern time, on (a) the last Business Day of
the calendar month in which all of the conditions set forth in Articles VI and
VII are satisfied or waived by the party or parties entitled to waive the same;
provided, that if such conditions are satisfied or waived less than five (5)
Business Days before the end of such month, the Closing shall take place on the
last Business Day of the immediately following month, or (b) such other date as
Sellers and Purchaser shall mutually agree. The day on which the Closing takes
place is referred to herein as the "Closing Date." The Closing shall be deemed
for all purposes to have occurred at 11:59 p.m., Eastern time, on the Closing
Date.

     2.2 Transfer and Acquisition.
         ------------------------

     Upon the terms and subject to the conditions set forth in this Agreement,
at the Closing:

     (a) SLD and SLDI will cede or retrocede to a Purchaser Subsidiary the
Insurance Contracts and such Purchaser Subsidiary shall reinsure the Insurance
Contracts pursuant to the Reinsurance Agreements, including, without limitation,
the right to premiums received by either Seller pursuant to any Insurance
Contract as provided in the Reinsurance Agreements;

     (b) Sellers and their Affiliates shall transfer and sell to Purchaser or a
Purchaser Subsidiary, and Purchaser or a Purchaser Subsidiary shall purchase,
the Transferred Assets; and

     (c) Purchaser or a Purchaser Subsidiary shall assume the Assumed
Liabilities; provided that Purchaser or a Purchaser Subsidiary is not assuming,
or in any way becoming liable or responsible for, any Retained Liability.

     2.3 Deliveries on Closing.
         ---------------------

     Upon the terms and subject to the conditions set forth in this Agreement,
Sellers, as applicable, or an Affiliate of Sellers shall enter into and deliver,
and Purchaser or a

                                       19
<PAGE>

Purchaser Subsidiary, as applicable, shall enter into and deliver on or prior to
the Closing Date:

     (a) the SLD Coinsurance Agreement;

     (b) the SLD Modified Coinsurance Agreement;

     (c) the SLD Funds Withheld Coinsurance Agreement;

     (d) the SLD Coinsurance / Modified Coinsurance Agreement;

     (e) the SLD Administrative Services Agreement;

     (f) the SLDI Coinsurance Agreement;

     (g) the SLDI Funds Withheld Coinsurance Agreement;

     (h) the SLDI Modified Coinsurance Agreement;

     (i) the SLDI Coinsurance / Modified Coinsurance Agreement;

     (j) the SLDI Administrative Services Agreement;

     (k) the Assignment and Assumption Agreement;

     (l) the Transition Services Agreement;

     (m) the SLD Reserve Trust Agreement;

     (n) the SLD Security Trust Agreement;

     (o) the SLDI Reserve Trust Agreement;

     (p) the SLDI Security Trust Agreement;

     (q) the Industry Risks Retrocession Agreements;

     (r) the Trademark and Trade Name License Agreement;

     (s) the Technology Transfer and License Agreement;

     (t) the Assignment of Confidentiality Agreements;

     (u) the Denver Lease;

     (v) the Asset Management Agreement;

     (w) the Newco Keepwell;

     (x) the FIRPTA Affidavit;

                                       20
<PAGE>

     (y)  the Bill of Sale and General Assignment and any other necessary asset
          purchase and sale documents, bills of sale and assignments and other
          appropriate evidence of transfer in respect of the Transferred Assets
          and the Assigned Contracts; and

     (z)  there shall be executed and delivered such other agreements,
          instruments and documents as are required under this Agreement to be
          executed and delivered by Sellers, Purchaser and any Affiliates of
          Sellers and Purchaser.

     2.4  Closing Payment.
          ---------------

     (a) Not later than the third Business Day prior to the Closing Date, SLD
will deliver to Purchaser pro forma financial statements (consisting of a
balance sheet and a statement of income) of SLD in the same format as the SLD
Pro Forma Statements with respect to the Business as of and for the period ended
on the last calendar day of the month preceding the month in which the Closing
shall occur (the "SLD Closing Statements"), together with a certification of
SLD's Chief Financial Officer that the SLD Closing Date Liabilities and all
other items appearing on the SLD Closing Statements were:

          (i) estimated in good faith;

          (ii) based upon the books and records of SLD; and

          (iii) calculated in a manner consistent with SAP, the accounting
     policies generally described in Schedule 2.4(a) and the methodologies
     utilized in preparing SLD's Pro Forma Statements and SLD's 2003 Statutory
     Statements, except that:

               (A) the SLD Closing Statements will reflect any change in SAP
     since December 31, 2003, which shall be specifically described in the SLD
     Closing Statements;

               (B) the SLD Closing Statements will not reflect the recapture
     transaction contemplated by Section 5.28;

               (C) the SLD Closing Statements will not reflect any change in
     assumptions with respect to mortality, persistency, expenses, letter of
     credit costs, interest, investment earnings or other actuarial assumptions
     from those assumptions utilized in preparing the December 31, 2003 balance
     sheet included in SLD's Statutory Statements; and

               (D) Investment Assets will be valued at Estimated Market Value
     and Transferred Statutory Assets will be valued at their Estimated Book
     Value.

For illustrative purposes, an example of the SLD Closing Statements, prepared as
at June 30, 2004, are attached as Exhibit T-1.

                                       21
<PAGE>

     (b) Not later than the third Business Day prior to the Closing Date, SLDI
will deliver to Purchaser pro forma financial statements (consisting of a
balance sheet and a statement of income) of SLDI in the same format as the SLDI
Pro Forma Statements with respect to the Business as of and for the period ended
on the last calendar day of the month preceding the month in which the Closing
shall occur (the "SLDI Closing Statements"), together with a certification of
SLDI's Chief Financial Officer that the SLDI Closing Date Liabilities and all
other items appearing on the SLDI Closing Statements were:

          (i) estimated in good faith;

          (ii) based upon the books and records of SLDI; and

          (iii) calculated in a manner consistent with SAP, the accounting
     policies generally described in Schedule 2.4(b) and except as specifically
     described in Schedule 2.4(b), the methodologies utilized in preparing
     SLDI's Pro Forma Statements and SLDI's 2003 Statutory Statements, except
     that:

               (A) the SLDI Closing Statements will reflect any change in SAP
     since December 31, 2003, which changes shall be specifically described in
     the SLDI Closing Statements;

               (B) the SLDI Closing Statements will not reflect the recapture
     transaction contemplated by Section 5.28;

               (C) the SLDI Closing Statements will not reflect any change in
     assumptions with respect to mortality, persistency, expenses, letter of
     credit costs, interest, investment earnings or other actuarial assumptions
     from those assumptions utilized in preparing the December 31, 2003 balance
     sheet included in SLDI's Statutory Statements; and

               (D) Investment Assets will be valued at Estimated Market Value
     and Transferred Statutory Assets will be valued at their Estimated Book
     Value.

For illustrative purposes, an example of the SLDI Closing Statements, prepared
as at June 30, 2004, are attached as Exhibit T-2.

     (c) On the Closing Date, upon the terms and subject to the conditions set
forth in this Agreement, the SLD Coinsurance Agreement, the SLD Coinsurance /
Modified Coinsurance Agreement, the SLD Security Trust Agreement and the SLD
Reserve Trust Agreement, as part of the Transferred Assets to be transferred by
Sellers pursuant to Section 2.2 hereof, SLD will transfer:

          (i) (A) to SRUS, Transferred Statutory Assets, and (B) to the SLD
     Reserve Trust Account, Investment Assets and cash (if necessary), such
     Transferred Statutory Assets, Investment Assets and cash having an
     aggregate estimated value

                                       22
<PAGE>

     equal to the amount of the SLD Closing Date Liabilities as of the Closing
     Statement Date; and

          (ii) to the SLD Security Trust Account, Investment Assets and cash
     having an aggregate Estimated Market Value equal to $160 million;

all as reflected on the SLD Closing Statements.

     (d) On the Closing Date, upon the terms and subject to the conditions set
forth in this Agreement, the SLDI Coinsurance Agreement, the SLDI Coinsurance /
Modified Coinsurance Agreement, the SLDI Security Trust Agreement and the SLDI
Reserve Trust Agreement, as part of the Transferred Assets to be transferred by
Sellers pursuant to Section 2.2 hereof, SLDI will transfer:

          (i) (A) to Newco, cash in the amount of $70 million and Transferred
     Statutory Assets, and (B) to the SLDI Reserve Trust Account, Investment
     Assets and cash (if necessary), such cash, Transferred Statutory Assets,
     and Investment Assets having an aggregate estimated value equal to the sum
     of (x) the amount of the SLDI Closing Date Liabilities as of the Closing
     Statement Date plus (y) $70 million; and

          (ii) to the SLDI Security Trust Account, Investment Assets and cash
     having an aggregate Estimated Market Value equal to $330 million;

all as reflected on the SLDI Closing Statements.

     (e) No later than the second Business Day prior to the Closing Date,
Purchaser shall provide written instructions to Sellers regarding the allocation
of (i) Investment Assets owned by SLD between the SLD Reserve Trust Account and
the SLD Security Trust Account and (ii) Investment Assets owned by SLDI between
the SLDI Reserve Trust Account and the SLDI Security Trust Account. All cash
required to be transferred on the Closing Date pursuant to Section 2.4(c) or (d)
will be transferred by wire transfer of immediately available funds in U.S.
Dollars in the amounts and to the bank account or accounts designated in writing
by the relevant party at least three (3) Business Days prior to the Closing
Date.

     2.5 Closing Adjustment.
         ------------------

     (a) Purchaser shall, on or before the date that is sixty (60) calendar days
after the Closing Date, deliver to SLD: (i) pro forma financial statements
(consisting of a balance sheet and a statement of income) of SLD with respect to
the Business as of and for the period ended on the Effective Time (the "SLD
Revised Closing Statements"), in the same format as the SLD Closing Statements;
and (ii) a certification of Purchaser's Chief Financial Officer to the same
effect with respect to the SLD Revised Closing Statements as the certification
of SLD's Chief Financial Officer delivered with respect to the SLD Closing
Statements. The SLD Revised Closing Statements will specify the Market Value
rather than the Estimated Market Value with respect to Investment Assets, and
Book Value rather than the Estimated Book Value with respect to Transferred

                                       23
<PAGE>

Statutory Assets. For the avoidance of doubt, the exceptions set forth in
Sections 2.4(a)(iii)(A) through (C) with respect to the SLD Closing Statements
shall also apply with respect to the SLD Revised Closing Statements.

     (b) Purchaser shall, on or before the date that is sixty (60) calendar days
after the Closing Date, deliver to SLDI: (i) pro forma financial statements
(consisting of a balance sheet and a statement of income) of SLDI with respect
to the Business as of and for the period ended on the Effective Time (the "SLDI
Revised Closing Statements"), in the same format as the SLDI Closing Statements;
and (ii) a certification of Purchaser's Chief Financial Officer to the same
effect with respect to the SLDI Revised Closing Statements as the certification
of SLDI's Chief Financial Officer delivered with respect to the SLDI Closing
Statements. The SLDI Revised Closing Statements will specify the Market Value
rather than the Estimated Market Value with respect to Investment Assets, and
Book Value rather than the Estimated Book Value with respect to Transferred
Statutory Assets. For the avoidance of doubt, the exceptions set forth in
Sections 2.4(b)(iii)(A) through (C) with respect to the SLDI Closing Statements
shall also apply with respect to the SLDI Revised Closing Statements.

     (c) Sellers shall have the right to review the SLD Revised Closing
Statements and the SLDI Revised Closing Statements and comment thereon for a
period of sixty (60) calendar days after receipt thereof. Any changes in the SLD
Revised Closing Statements and the SLDI Revised Closing Statements that are
agreed to by Purchaser, on the one hand, and SLD and SLDI, on the other hand,
within such 60-day period shall be incorporated into final financial statements
of each of SLD and SLDI with respect to the Business as of and for the period
ended as of the Effective Time (the "Final Closing Statements"). In the event
that Purchaser, on the one hand, and SLD and SLDI, on the other hand, are unable
to agree on the manner in which any item or items should be treated in the Final
Closing Statements within such 60-day period, each of SLD and SLDI on the one
hand, and Purchaser, on the other hand, shall prepare separate written reports
of such item or items and refer such reports to Deloitte & Touche LLP (the
"Independent Accountant") within thirty (30) calendar days after the expiration
of such 60-day period. The Independent Accountant shall determine within thirty
(30) calendar days the manner in which such item or items shall be treated in
the Final Closing Statements; provided, however, that the dollar amount of each
item in dispute shall be determined within the range of dollar amounts proposed
by SLD and SLDI, on the one hand, and Purchaser, on the other hand. The
determinations by the Independent Accountant as to the items in dispute shall be
in writing and shall be Final and Binding on the parties and shall be so
reflected in the Final Closing Statements. For purposes of this Agreement,
"Final and Binding" shall mean that the aforesaid determinations and the
determinations, if any, made by the Independent Accountant shall have the same
preclusive effect for all purposes as if such determinations had been embodied
in a final judgment, no longer subject to appeal, entered by any court
identified in Section 11.5 to reduce such decision to judgment. The fees, costs
and expenses of retaining the Independent Accountant shall be allocated by the
Independent Accountant between SLD and SLDI, on the one hand, and Purchaser, on
the other hand, in accordance with the Independent Accountant's judgment as to
the relative merits of the parties' proposals in respect of the disputed items.
Following the resolution of all disputed items (or, if there is no dispute,
promptly

                                       24
<PAGE>

after the parties reach agreement on the Final Closing Statements), Purchaser
shall prepare the Final Closing Statements and shall deliver copies thereof to
SLD and SLDI.

     (d) In the event that the aggregate value of the Investment Assets and
Transferred Statutory Assets as of the Effective Time plus the amount of cash
transferred by SLD to SRUS and the SLD Trust Accounts on the Closing Date is
less than the sum of (i) $160 million plus (ii) the amount of the SLD Closing
Date Liabilities as of the Effective Time, all as reflected on SLD's Final
Closing Statements, SLD shall, within two (2) Business Days of the determination
thereof, transfer to the applicable SLD Trust Account the amount of such
difference, together with interest thereon from and including the Closing Date
to but not including the date of such transfer, computed at the 180-Day Treasury
Rate, by wire transfer of immediately available funds.

     (e) In the event that the aggregate value of the Investment Assets and
Transferred Statutory Assets as of the Effective Time plus the amount of cash
transferred by SLD to SRUS and the SLD Trust Accounts on the Closing Date is
greater than the sum of (i) $160 million plus (ii) the amount of the SLD Closing
Date Liabilities as of the Effective Time, all as reflected on SLD's Final
Closing Statements, SRUS shall, within two (2) Business Days of the
determination thereof, transfer to SLD the amount of such difference, together
with interest thereon from and including the Closing Date to but not including
the date of such transfer, computed at the 180-Day Treasury Rate, by wire
transfer of immediately available funds.

     (f) In the event that the aggregate value of the Investment Assets and
Transferred Statutory Assets as of the Effective Time plus the amount of cash
transferred by SLDI to Newco and the SLDI Trust Accounts on the Closing Date is
less than the sum of (i) the amount of the SLDI Closing Date Liabilities as of
the Effective Time plus (ii) $400 million, all as reflected on SLDI's Final
Closing Statements, SLDI shall, within two (2) Business Days of the
determination thereof, transfer to the applicable SLDI Trust Account the amount
of such difference, together with interest thereon from and including the
Closing Date to but not including the date of such transfer, computed at the
180-Day Treasury Rate, by wire transfer of immediately available funds.

     (g) In the event that the aggregate value of the Investment Assets and
Transferred Statutory Assets as of the Effective Time plus the amount of cash
transferred by SLDI to Newco and the SLDI Trust Accounts on the Closing Date is
greater than the sum of (i) the amount of the SLDI Closing Date Liabilities as
of the Effective Time plus (ii) $400 million, all as reflected on SLDI's Final
Closing Statements, Newco shall, within two (2) Business Days of the
determination thereof, transfer to SLDI the amount of such difference, together
with interest thereon from and including the Closing Date to but not including
the date of such transfer, computed at the 180-Day Treasury Rate, by wire
transfer of immediately available funds.

     (h) Concurrent with its delivery of the SLD Revised Closing Statements and
the SLDI Revised Closing Statements in accordance with Section 2.5(a) and (b),
Purchaser shall deliver to Sellers a calculation of an adjustment (the "2004
Production Adjustment") reflecting variations between the actual amount of 2004
business

                                       25
<PAGE>

production and certain agreed-upon assumptions. The amount of the 2004
Production Adjustment shall be determined, and such adjustment shall be made, in
accordance with Schedule 2.5(h) and shall be subject to review by Sellers
concurrent with their review of the SLD Revised Closing Statements and the SLDI
Revised Closing Statements, and any disputes shall be resolved by the
Independent Accountant in accordance with the procedures set forth in Section
2.5(c). "Exhibit A" to the SLDI Security Trust Agreement shall be adjusted to
reflect any additions to or withdrawals from the SLDI Security Trust Account
pursuant to this Section 2.5(h).

     (i) On the earlier of (i) the fifth (5th) Business Day following the
completion of the loading of all retrocessionaire information with respect to
periods prior to January 1, 2005 onto the Sage reinsurance administration system
(the "Sage System") and (ii) June 30, 2005, Purchaser shall deliver to Sellers a
detailed calculation (the "Retrocessionaire Accruals Calculation") of any net
difference between (i) the amounts reflected on the Final Closing Statements as
being payable to or receivable from any retrocessionaire under any Retroceded
Reinsurance Contract and (ii) the amounts calculated by the Sage System as being
payable or receivable from such retrocessionaires as of the Closing Date
following the inputting of data reflecting new business production in 2002, 2003
and 2004; provided, that Purchaser shall use commercially reasonable efforts to
complete loading of such information onto the Sage System as promptly as
practicable following the Closing. In making the Retrocessionaire Accruals
Calculation, Purchaser shall utilize the Sage System in the same manner as it is
currently being utilized by Sellers (except to the extent Sellers and Purchaser
mutually agree that Sellers had been utilizing the Sage System incorrectly) that
such calculations will reflect the completion of Sellers' ongoing process of
loading ceding company and retrocessionaire data into the Sage System and will
not reflect any modifications to the Sage System processes for calculating
payables or receivables as utilized by Sellers. Sellers shall be entitled to
review the Retrocessionaire Accruals Calculations for sixty (60) calendar days
following their receipt thereof, and any dispute regarding the Retrocessionaire
Accruals Calculations that the parties are unable to resolve during such period
shall be submitted to the Independent Accountant, and the Independent
Accountant's determinations as to such dispute shall be Final and Binding. Not
later than three (3) Business Days following the date upon which the parties
have agreed upon the appropriate calculations or the date upon which any
disputes have been resolved by the Independent Accountant, Purchaser shall
incorporate any changes to the Retrocessionaire Accruals Calculation that were
agreed upon by the parties or required by the final determination of the
Independent Accountant into a final calculation (the "Final Retrocessionaire
Accruals Calculation"). On the next following Business Day, the parties shall
make such payments in cash as are necessary to put each party in the same net
economic position as it would have been in had the amounts of payables and
receivables reflected on the Final Retrocessionaire Accruals Calculation been
included the Final Closing Statements, together with interest thereon from and
including the Closing Date to but not including the date of such payment,
computed at the 180-Day Treasury Rate. In no event will any payment be required
by this Section 2.5(i) be duplicative of any amount paid under any other
provision of this Article II.

                                       26
<PAGE>

     (j) Not later than three (3) Business Days prior to the Closing Date, SLD
shall provide to Purchaser an estimate of the interest maintenance reserve that
SRUS will be required to establish on the Effective Date with respect to the
Reserves of SLD allocable to the Business (the "IMR Amount"). Purchaser shall be
entitled to review the calculation of the IMR Amount for a period of sixty (60)
calendar days following its receipt thereof, and any dispute regarding the IMR
Amount that the parties are unable to resolve during such period shall be
submitted to the Independent Accountant, and the Independent Accountant's
determinations as to such dispute shall be Final and Binding. Not later than
three (3) Business Days following the date upon which the parties have agreed
upon the IMR Amount or the date upon which any disputes have been resolved by
the Independent Accountant, SLD shall deposit an amount equal to twenty percent
(20%) of the IMR Amount up to a maximum of $7.5 million, together with interest
thereon from and including the Closing Date to but not including the date of
such payment, computed at the 180-Day Treasury Rate, in the SLD Security Trust
Account.

     (k) Notwithstanding anything to the contrary in Section 2.4 or in any
investment guideline applicable to the SLD Security Trust and the SLDI Security
Trust, in the event that the amount of Investment Assets and cash transferred to
the SLD Trust Accounts or the SLDI Trust Accounts is less than the amount
required to fund such accounts, then Purchaser or Newco, as the case may be,
shall be permitted to fund the shortfall by including Transferred Statutory
Assets in the SLD Security Trust Account or the SLDI Security Trust Account, as
the case may be, for a period not to exceed one hundred twenty (120) calendar
days following the Closing. Following the end of such 120-day period, Purchaser
or Newco, as the case may be, shall transfer assets or cash to the SLD Security
Trust Account or the SLDI Security Trust Account, as the case may be, as may be
necessary to insure that such account is fully funded with investment assets or
cash in conformance with the applicable investment guidelines.

     (l) The parties hereto acknowledge and agree that no certification provided
by any individual pursuant to this Article II shall be the basis for any
personal liability of such individual, and none of the parties hereto will seek
any recovery from any such individual on the basis of any such certification.

                                  ARTICLE III

                    Representations and Warranties of Sellers
                    -----------------------------------------

     Sellers hereby represent and warrant, severally and not jointly, to
Purchaser as follows (it being understood that each Seller hereby makes only
those representations and warranties that specifically relate to it or to its
portion of the Business):

     3.1 Organization and Good Standing.
         ------------------------------

                                       27
<PAGE>

     Each Seller (a) is duly incorporated and is validly existing as a
corporation under the laws of its respective jurisdiction of incorporation; (b)
has full corporate power and authority to carry on the Business as it is now
being conducted and to own, lease and operate its properties and assets
primarily relating to the Business; and (c) is duly qualified or licensed to do
business as a foreign corporation in good standing in each jurisdiction in which
the conduct of the Business or the ownership, leasing or operation of its
properties or assets relating to the Business makes such qualification
necessary, except where the failure to so qualify, would not, individually or in
the aggregate, have a Material Adverse Effect.

     3.2 Enforceability.
         --------------

     (a) Each Seller and ING has full corporate power and authority to execute
and to deliver this Agreement, and to carry out the transactions contemplated
herein. Each Seller and ING has taken all necessary corporate action to
authorize its execution and performance of this Agreement. This Agreement has
been duly executed and is the valid and binding obligation of each Seller and
ING, and is enforceable against each Seller and ING in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors of insurance companies or creditors' rights generally and general
principles of equity (the "Enforceability Exceptions"). Assuming the consents
and approvals referred to in Sections 3.3 and 4.7 are obtained, the execution,
delivery and performance of this Agreement by Sellers and ING will not, with or
without the giving of notice or passage of time or both, (i) conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to any provision of any
mortgage, deed of trust, lease, license agreement or other agreement to which
either Seller or ING is a party or by which any of them is bound or affected,
(ii) conflict with or result in a default under any provision of the corporate
charter, by-laws or similar organizational documents of either Seller or ING, or
any effective resolution of the directors or stockholders of either Seller or
ING, or (iii) conflict with or result in a violation of any Legal Requirement;
provided, that no representation or warranty is made in the foregoing clauses
(i) or (iii) with respect to matters that, individually or in the aggregate,
would not be reasonably expected to have a Material Adverse Effect.

     (b) Each Seller, ING and any ING Affiliate that executes any Related
Agreement has full corporate power and authority, respectively, to execute and
to deliver the Related Agreements to which it is a party, and to carry out the
transactions contemplated therein. Each Seller, ING and any such Affiliate has
taken all necessary corporate action to authorize the execution and performance
of such Related Agreements. The Related Agreements, if executed by the relevant
Seller, ING or any such Affiliate will have been validly executed and will be
the valid and binding obligations, respectively, of such Seller, ING or such ING
Affiliate, and enforceable against such party in accordance with their terms,
subject to the Enforceability Exceptions. Assuming the consents and approvals
referred to in Sections 3.3 and 4.7 are obtained, the execution, delivery and
performance of the Related Agreements by the Sellers, ING and any ING Affiliate
will not, with or without the giving of notice or passage of time or both, (i)

                                       28
<PAGE>

conflict with, result in a default, right to accelerate or loss of rights under,
or result in the creation of any lien, charge or encumbrance pursuant to any
provision of any mortgage, deed of trust, lease, license agreement or other
agreement to which either Seller, ING or any such Affiliate is a party or by
which it is bound or affected, (ii) conflict with or result in a default under
any provision of the corporate charters or by-laws or similar organizational
documents of either Seller, ING or any such Affiliate, or any effective
resolution of the directors or stockholders of either Seller, ING or any such
Affiliate, or (iii) conflict with or result in a violation of any Legal
Requirement; provided, that no representation or warranty is made in the
foregoing clauses (i) or (iii) with respect to matters that, individually or in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect.

     3.3 Consents and Approvals.
         ----------------------

     Except as set forth on Schedule 3.3, no consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Authority or
any other Person, is required to be made or obtained by either Seller in
connection with the execution, delivery and performance of this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
and thereby, other than the consents, approvals, authorizations, declarations or
filings that, if not obtained or made, would not be reasonably expected to,
individually or in the aggregate, result in a Material Adverse Effect.

     3.4 Financial Statements.
         --------------------

     (a) Except as set forth on Schedule 3.4, Sellers have previously made
available to Purchaser (i) the annual audited statutory statements as of and for
the years ended December 31, 2001, 2002 and 2003 of each of SLD and SLDI,
including the audit reports thereon, and the annual statements (consisting of
balance sheets and statements of income and cash flows) as of and for the years
ended December 31, 2001, 2002 and 2003 of each of SLD and SLDI, including the
exhibits, schedules and notes thereto, and (ii) the unaudited quarterly
statutory statements of SLD for the calendar quarters ended March 31 and June
30, 2004 (collectively, the "Statutory Statements").

     (b) The Statutory Statements (i) present fairly, in all material respects,
the financial condition and results of operations of SLD and SLDI as of and for
the periods therein specified, and (ii) were prepared in accordance with SAP
consistently applied, except as expressly set forth within the subject Statutory
Statements, including the notes thereto; provided that the unaudited quarterly
statutory statements are subject to normal recurring year-end adjustments.

     (c) Except as set forth on Schedule 3.4, the reserves reflected on the
Statutory Statements as of the date specified in such statements (i) were
determined in accordance with generally accepted actuarial principles,
consistently applied, (ii) were based on actuarial assumptions that were
reasonable in relation to relevant policy and contract provisions, (iii) as of
their respective dates met the applicable requirements of the insurance laws and
regulations of the jurisdiction of domicile of SLD and SLDI, as

                                       29
<PAGE>

applicable, including applicable statutory accounting principles, and (iv) are
in compliance with SAP (it being understood by Purchaser that in making the
representations and warranties in Sections 3.4(b) and (c) Sellers are not
representing or warranting that the reserves reflected on the Statutory
Statements have been or will be sufficient or adequate for the purposes for
which they were established or that reinsurance recoverables taken into account
in determining the amount of such reserves will be collectible).

     (d) Except as set forth on Schedule 3.4, ING has previously made available
to Purchaser (i) the annual audited financial statements of ING for the years
ended December 31, 2001, 2002 and 2003, including the audit reports thereon, and
(ii) the unaudited quarterly financial statements of ING for the calendar
quarters ended March 31 and June 30, 2004 (collectively, the "ING Statements").
The ING Statements (i) present fairly, in all material respects, the financial
condition and results of operations of ING as of and for the periods therein
specified, and (ii) were prepared in accordance with GAAP, consistently applied,
except as expressly set forth within the ING Statements, including the notes
thereto; provided that the unaudited quarterly statements are subject to normal
recurring year-end adjustments.

     3.5 Pro Forma Statements.
         --------------------

     (a) Sellers have previously delivered to Purchaser pro forma financial
statements (consisting of balance sheets and statements of income) of each of
SLD and SLDI with respect to the Business as of and for the year ended December
31, 2003 and for the six months ended June 30, 2004 (respectively, the "SLD Pro
Forma Statements" and the "SLDI Pro Forma Statements" and together, the "Pro
Forma Statements") in each case, accompanied by supporting documentation.

     (b) Except as set forth on Schedule 3.5, the Pro Forma Statements present
fairly, in all material respects, the financial condition and results of
operations of the Business as of and for the year ended December 31, 2003 and
for the six months ended June 30, 2004, respectively, in accordance with SAP,
and were prepared in a manner consistent with the methodologies utilized in
preparing SLD's and SLDI's 2003 Statutory Statements and the accounting policies
generally described in Schedules 2.4 (a) and (b).

     (c) Except as set forth on Schedule 3.5, the reserves reflected on the Pro
Forma Statements as of the date specified in such statements (i) were determined
in accordance with generally accepted actuarial principles, consistently applied
for the periods presented, (ii) were based on actuarial assumptions that were
reasonable in relation to relevant policy and contract provisions, (iii) as of
their respective dates met the applicable requirements of the insurance laws and
regulations of the jurisdiction of domicile of SLD and SLDI, as applicable,
including applicable statutory accounting principles, (iv) are in compliance
with SAP, and (v) were prepared using methodologies consistent with those
utilized in the preparation of the 2003 Statutory Statements of SLD and SLDI and
the accounting policies generally described in Schedules 2.4(a) and (b) (it
being understood by Purchaser that in making the representations and warranties
in Sections 3.5(b) and (c) Sellers are not representing or warranting that the
reserves

                                    30

<PAGE>

reflected in the Pro Forma Statements have been or will be sufficient or
adequate for the purposes for which they were established or that reinsurance
recoverables taken into account in determining the amount of such reserves will
be collectible).

     3.6 Contingent Liabilities.
         ----------------------

     Except as set forth in Schedule 3.6, neither Seller has liabilities with
respect to the Business that should be reflected in its Statutory Statements,
including, without limitation, contingent liabilities required to be disclosed
under SAP regarding the Business, except for (i) liabilities set forth in the
balance sheet included in the Pro Forma Statements as of and for the six (6)
months ended June 30, 2004 and (ii) liabilities that were incurred after June
30, 2004 in the ordinary course of business and would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

     3.7 Assets.
         ------

     (a) Each Seller has good title to its respective assets, properties, rights
and privileges constituting the Transferred Assets free and clear of any
Encumbrance, except for (i) Encumbrances which are identified on Schedule
3.7(a), or (ii) Permitted Encumbrances. Each Seller has the power and right to
sell, transfer, convey, assign and deliver to Purchaser or a Purchaser
Subsidiary, and upon consummation of the transactions contemplated by this
Agreement, Purchaser or a Purchaser Subsidiary will acquire good, valid and
marketable title to all of its respective assets, properties, rights and
privileges constituting the Transferred Assets free and clear of any Encumbrance
other than any Encumbrance created by Purchaser or a Purchaser Subsidiary.

     (b) Other than (i) the assets and services identified on Schedule 3.7(b),
(ii) the rights to use the Retained Computer Programs, (iii) the assets and
services available to Purchaser and Purchaser Subsidiaries under the Transition
Services Agreement and (iv) the assets identified on Schedule 1.1(h)-2 that are
used primarily by Business Employees who are not Transferred Employees and the
services of such Business Employees, the Transferred Assets include all the
assets, properties, rights and privileges necessary to permit Purchaser or
Purchaser Subsidiaries to conduct the Business in all material respects in the
same manner as the Business has been conducted prior to the date hereof.

     (c) The Transferred Assets, taken as a whole, are in all material respects
in reasonable and usable operating condition and in a reasonable state of
maintenance and repair.

     3.8 Actions Pending; Orders and Proceedings.
         ---------------------------------------

     Except as set forth in Schedule 3.8, there are no outstanding orders,
judgments, injunctions, awards or decrees relating to the Business against or
involving either Seller, or any assets, properties, rights or privileges of
either Seller (including the Transferred Assets) by or before any Governmental
Authority, which individually or in the aggregate would reasonably be expected
to have a Material Adverse Effect. Except as set forth in Schedule 3.8, as of
the date of this Agreement there is no material claim, action, suit,

                                       31
<PAGE>

litigation, legal, administrative or arbitration proceeding relating to the
Business which is pending or, to the Knowledge of Sellers, threatened against or
involving either Seller, or any assets, properties, rights or privileges of
either Seller relating to the Business (including the Transferred Assets) or
challenging any of the transactions contemplated by this Agreement.

     3.9 Real Property.
         -------------

     Schedule 3.9 lists all real property used primarily in the Business,
identifies all leases and subleases relating to the use of such real property in
connection with the Business, and states the date and parties to each such lease
or sublease (the "Business Leases"), true and correct copies of which have
previously been provided to Purchaser. Each Business Lease is in full force and
effect and enforceable by Sellers or their Affiliates, as applicable, in
accordance with their terms, subject to Enforceability Exceptions. Except as
stated in Schedule 3.9, there are no material defaults under the Business
Leases, provided that as to defaults by parties to the Business Leases other
than Sellers or any Affiliate of Sellers, the only defaults required to be
disclosed in Schedule 3.9 are those of which Sellers have Knowledge. Neither
Sellers nor any of their Affiliates have assigned or placed any Encumbrance upon
any Business Lease.

     3.10 Business Contracts.
          ------------------

     Except as provided in this Section 3.10, Schedule 3.10(a) lists all of the
following written contracts to which either Seller or a Seller Affiliate is a
party and which relate primarily to the Business:

     (a) contracts the performance of which is expected to involve consideration
payable subsequent to the date of this Agreement in excess of $300,000 in the
aggregate or $100,000 in any twelve-month period and which are not terminable on
ninety (90) calendar days' notice or less without penalty or premium;

     (b) contracts pursuant to which any Encumbrance, other than a Permitted
Encumbrance, is placed or imposed on any Transferred Asset;

     (c) contracts under which either Seller is a licensor or licensee of any
Intellectual Property;

     (d) employment agreements, employee severance or change in control
agreements, employee confidentiality agreements, work for hire agreements, and
any other similar contracts with Business Employees;

     (e) partnership, joint venture or limited liability company agreements;

     (f) any agreements with third party administrators;

     (g) any material indemnification agreement or guarantee; or

                                    32

<PAGE>

     (h) any other contract material to the Business and not terminable upon
ninety (90) calendar days' written notice.

Schedule 3.10(a) excludes (i) ERISA Plans, (ii) Insurance Contracts, (iii)
licenses or other agreements relating to Computer Programs, and (iv) leases of
real property, which are discussed elsewhere in this Agreement. True and correct
copies of the contracts listed in Schedule 3.10(a) have been made available or
provided to Purchaser. Neither Seller has received written notice of a
cancellation of or an intent to cancel any contract listed on Schedule 3.10(a).
Except as stated in Schedule 3.10(b), neither Seller is in material default
under such contracts, and, to the Knowledge of Sellers, no third parties are in
material default under such contracts. Except for those contracts listed on
Schedule 3.10(b), the contracts listed in Schedule 3.10(a) are enforceable by
Sellers in accordance with their terms, subject to the Enforceability
Exceptions.

     3.11 Assigned Contracts.
          ------------------

     True and correct copies of each Assigned Contract have been provided to
Purchaser. Except as set forth in Schedule 3.11, (i) each of the Assigned
Contracts is in full force and effect and is valid and enforceable in accordance
with its terms, subject to the Enforceability Exceptions, (ii) there are no
breaches or defaults under any of the Assigned Contracts by Sellers or their
Affiliates or, to the Knowledge of Sellers, any other party thereto, (iii)
neither Seller has received written notice of a cancellation of or an intent to
cancel any Assigned Contracts, and (iv) each Assigned Contract is fully and
legally assignable by Sellers to the Purchaser.

     3.12 Intellectual Property.
          ----------------------

     For purposes of Sections 3.12, 3.13 and 5.9 and the definitions of Data and
Intellectual Property, "in the Business", "in connection with the Business", "in
the conduct of the Business" or "in the operation of the Business" shall mean
the line functions of Sellers' individual reinsurance business.

     (a) Except as identified on Schedule 3.12(a), and except for any Retained
IP Rights, neither Seller nor any Affiliate of Sellers owns, or is the licensee
(except for implied licenses existing in equipment or Computer Programs that
have been purchased, leased or licensed) of, any patents (including issued
patents and patent applications) which are used in the conduct of the Business.
For each scheduled item, the country or countries in which the application or
patent is filed is listed together with the date of filing and, if applicable,
of issuance, and the unique identifying number or file designation used by such
filing office.

     (b) Schedule 3.12(b) sets forth a list or description, except for any
Retained IP Rights, of (i) all registered copyrights owned by either Seller or
any Affiliate of Sellers and used in the conduct of the Business, (ii) all other
Trademarks that are the subject of federal or state or foreign registrations or
pending applications made or held by either Seller or any Affiliate of Sellers
pertaining to any products or services offered publicly by Sellers in connection
with the Business, (iii) any other Trademarks that are used in

                                       33
<PAGE>

connection with the Business but are not the subject of federal or state or
foreign registrations or pending applications, and (iv) any domain names of
either Seller used exclusively in the operation of the Business.

     (c) Except as provided in Schedule 3.12(c), (i) neither Sellers nor their
Affiliates have received any notice from any Person that the use of any
Intellectual Property other than Retained IP Rights in the operation of the
Business infringes upon the intellectual property rights or other rights of any
other Person, and (ii) neither Seller nor their Affiliates have any Knowledge of
any such infringement.

     (d) A Seller or an Affiliate of Sellers owns all right, title and interest
in and to the Intellectual Property identified on Schedule 3.12(a) and (b) as
owned by a Seller or an Affiliate of Sellers (the "Owned Intellectual Property")
free and clear of any Encumbrance, except any Permitted Encumbrances, and except
as described in Schedule 3.12(d). Except as set forth on Schedule 3.12(d), the
use of any Owned Intellectual Property in the operation of the Business does not
infringe upon the intellectual property rights or other rights of any other
Person.

     (e) A Seller or an Affiliate of Sellers has a license to use the
Intellectual Property as to which either Seller is a licensee pursuant to an
agreement listed in Schedule 3.12(e) ("Licensed Intellectual Property"). Except
as disclosed in Schedule 3.12(e), all licenses of Licensed Intellectual Property
are fully transferable at Closing to Purchaser. Neither Seller nor any of their
Affiliates is in breach of or default in any material respects under any license
or other agreement under which either Seller has rights to use the Licensed
Intellectual Property. Sellers have not licensed any of such Licensed
Intellectual Property for use by any third persons (including but not limited to
Affiliates of Sellers) except as disclosed in Schedule 3.12(e).

     (f) Except as described in Schedule 3.12(f), all registrations,
applications therefor, filings, issuances and other actions with respect to any
Owned Intellectual Property are in full force and effect at the United States
Patent and Trademark Office, the United States Copyright Office, any applicable
domain name registrar, or any other domestic or foreign filing offices, and, as
of the date hereof, there are no actions that must be taken within one hundred
eighty (180) calendar days following the Closing that, if not taken, will result
in the loss of any rights in any registrations of or applications to register
any Owned Intellectual Property, including without limitation, the payment of
any registration, maintenance or renewal fees or the filing of any responses,
documents, applications or certificates.

     (g) The Owned Intellectual Property, the Licensed Intellectual Property and
the Retained IP Rights constitute all of the Intellectual Property used in the
conduct of the Business as of the date of this Agreement.

     (h) Except as provided in Schedule 3.12(h), (i) neither Sellers nor their
Affiliates have received any notice from any Person that the use of any
Databases in the operation of the Business infringes upon the intellectual
property rights or other rights of any other Person, and (ii) neither Seller nor
their Affiliates have any Knowledge of any

                                       34
<PAGE>

such infringement. The relevant Seller or an Affiliate of Sellers has ownership
or other rights in the Databases such that Purchaser shall obtain, pursuant to
the Technology Transfer and License Agreement, subject to the Retained License,
all rights as are necessary for Purchaser to use the Databases in the same
manner as used by Sellers as of the date of this Agreement.

     3.13 Computer Programs.
          -----------------

     (a) Schedule 3.13(a) contains a list of all Computer Programs owned by
either Seller or any of their Affiliates that are used in the Business and will
be conveyed, assigned and set over to Purchaser or a Purchaser Affiliate at and
as of the Closing Date (the "Owned Principally-Used Computer Programs"). Subject
to the Retained License, at and as of the Closing Date, all of Sellers' and
their Affiliates' right, title and interest in the Owned Principally-Used
Computer Programs, including any utilities, macros and spreadsheet definitions
related thereto, will be conveyed, assigned and set over to Purchaser or a
Purchaser Affiliate. Except for the third-party rights and other exceptions
described in Schedule 3.13(a), the relevant Seller or an Affiliate of Sellers
has exclusive ownership of the Owned Principally-Used Computer Programs such
that Purchaser shall obtain, pursuant to the Technology Transfer and License
Agreement, subject to the Retained License and the third-party rights and other
exceptions described in Schedule 3.13(a), at and as of the Closing Date, the
exclusive ownership rights in the Owned Principally-Used Computer Programs
(including, subject to the Retained License, (i) all of Sellers' rights in the
Embedded Computer Programs thereof and (ii) any utilities, macros and
spreadsheet definitions related to the Owned Principally-Used Computer Programs
or the Embedded Computer Programs,) as are necessary for Purchaser to use the
Owned Principally-Used Computer Programs in the same manner as used by Sellers
as of the date of this Agreement. Except as described in Schedule 3.13(a),
Purchaser shall obtain, pursuant to the Technology Transfer and License
Agreement, all source code for the Owned Principally-Used Computer Programs,
except for any source code related to the Embedded Computer Programs.

     (b) Schedule 3.13(b) contains a list of all Computer Programs owned by
either Seller or any of their Affiliates that are used in the Business and in
other business operations of either Seller or its Affiliates and will be
licensed by the relevant Seller or an Affiliate of Sellers to Purchaser or an
Affiliate of Purchaser as of the Closing Date (the "Owned Generally-Used
Computer Programs"). Except for the third-party rights and other exceptions
described in Schedule 3.13(b), the relevant Seller or an Affiliate of Sellers
has ownership or other rights in the Owned Generally-Used Computer Programs such
that Purchaser shall obtain, pursuant to the Technology Transfer and License
Agreement, subject to the Retained License and the third-party rights and other
exceptions described in Schedule 3.13(b), all rights necessary for Purchaser to
use the Owned Generally-Used Computer Programs (including, subject to the
Retained License, (i) all of Sellers' rights in the Embedded Computer Programs
and (ii) any utilities, macros and spreadsheet definitions related to the Owned
Generally-Used Computer Programs) in the same manner as used by Sellers as of
the date of this Agreement.

                                       35
<PAGE>

     (c) Schedule 3.13(c) contains a complete and accurate list of (i) all
Embedded Computer Programs and (ii) all other Computer Programs, except for any
Retained Computer Programs, used in the Business under which a Seller or an
Affiliate of Sellers is a licensee, lessee, or otherwise has obtained the right
to use such Computer Programs and which both Purchaser and Sellers have agreed
are critical to the operation of the Business and are or can be segregated from
each Seller's other business operations (the current versions of such Computer
Programs described in subparagraphs (i) and (ii) above, including any
modifications thereto, are collectively referred to herein as the "Licensed
Computer Programs"). Each license, contract or other agreement governing the
Licensed Computer Programs is hereinafter referred to as the "Licensed Computer
Program Licenses." The relevant Seller or an Affiliate of Sellers (x) has the
right and license to use the Licensed Computer Programs, subject to the terms
and restrictions of the applicable Licensed Computer Program License and the
payment of license fees or royalties or other payments due thereunder; and (y)
is in compliance in all material respects with all provisions of the Licensed
Computer Program Licenses.

     (d) Schedule 3.13(d) sets forth a complete list of those Computer Programs
other than Shared Services Computer Programs used in the Business (all of which
are commercially available from third-party suppliers or licensors) all of which
will be retained by Sellers and their Affiliates for the reason that they are or
will be required for Sellers to meet their remaining responsibilities pertaining
to the Business, are used in other businesses of Sellers and their Affiliates,
are associated with equipment or systems that Sellers are not selling to
Purchaser, are not transferable, or are not expected to be needed by Purchaser.
The Computer Programs listed on Schedule 3.13(d) together with the Shared
Services Computer Programs, are collectively referred to herein as the "Retained
Computer Programs" .

     (e) Except as set forth in Schedule 3.13(e), Sellers have not received any
notice of any infringement pertinent to Sellers with respect to the Owned
Principally-Used Computer Programs, the Owned Generally-Used Computer Programs
or the Licensed Computer Programs. The use of the Owned Principally-Used
Computer Programs and the Owned Generally-Used Computer Programs, and to the
Knowledge of Sellers, the use of the Licensed Computer Programs in the conduct
of the Business does not infringe upon or otherwise violate the rights of any
Person. Sellers have not made, asserted or threatened any claim of infringement
against any Person with respect to the Owned Principally-Used Computer Programs,
the Owned Generally-Used Computer Programs or the Licensed Computer Programs. To
the Knowledge of Sellers, no other Person's operations or intellectual property
conflicts with or infringes on the use or registering of the Owned
Principally-Used Computer Programs, the Owned Generally-Used Computer Programs
or the Licensed Computer Program Licenses as such programs are currently used by
Sellers in the Business.

     (f) The Owned Principally-Used Computer Programs, the Owned Generally-Used
Computer Programs, the Licensed Computer Programs and the Retained Computer
Programs constitute all of the Computer Programs used in the conduct of the
Business as of the date of this Agreement.

                                       36
<PAGE>

     (g) Neither Sellers nor any of their Affiliates is in breach of or default
under any license or other agreements under which Sellers have the right to use
the Licensed Computer Programs, and, to the Knowledge of Sellers, no other party
thereto is in breach or default thereof. Sellers have made available to
Purchaser a copy of each Licensed Computer Program License. Except as set forth
in Schedule 3.13(g), each of the agreements under which Sellers have the right
to use the Licensed Computer Program Licenses is in full force and effect and is
valid and enforceable in accordance with its terms.

     (h) Except as set forth on Schedule 3.13(h), neither Seller nor any
Affiliate of Sellers has (i) licensed any of the Owned Principally-Used Computer
Programs, Owned Generally-Used Computer Programs or Licensed Computer Programs
to any other Person or (ii) entered into any agreements granting rights to such
Computer Programs to any other Person.

     (i) The Sellers have established and are in material compliance with a
security program, including technology, practices and procedures generally
consistent with common practice in its industry, that is designed to protect (i)
the integrity of transactions executed through their computer systems, including
encryption and/or other security protocols and techniques when appropriate, (ii)
the security, confidentiality and integrity of data housed in their systems,
(iii) the security, confidentiality and integrity of data and systems as to
which they have permitted access by third party service providers, and (iv)
against unauthorized access to their systems or the systems of third party
service providers which have access to their data.

     3.14 Compliance with Legal Requirements.
          ----------------------------------

     Except as set forth on Schedule 3.14, each Seller is in compliance in all
material respects with all Applicable Laws with respect to the Business. In
addition, except as disclosed in Schedule 3.14, (i) neither Seller has been
charged with or, to the Knowledge of Sellers, is now under investigation with
respect to, a violation of any Applicable Law with respect to the Business,
which violations or penalties would reasonably be expected, individually or in
the aggregate, to have or result in a Material Adverse Effect and (ii) neither
Seller is a party to or bound by any order, judgment, decree or award of a
Governmental Authority or other regulatory body with respect to the Business
which has or would reasonably be expected to have or result in, individually or
in the aggregate, a Material Adverse Effect.

     3.15 Permits.
          -------

     Schedule 3.15 contains a true and complete list of all material Permits
issued to the Sellers with respect to the Business as of the date of this
Agreement. Except as set forth in Schedule 3.15, (i) each Seller has all
material Permits required by Applicable Law for the operation of the Business
and is in material compliance with the terms of such Permits, (ii) all Permits
are in full force and effect, (iii) there is no proceeding pending or threatened
to revoke or suspend such Permits and (iv) Sellers have not received any written
notice from any Governmental Authority of the failure to have any

                                       37
<PAGE>

required Permits. Except as set forth in Schedule 3.15, as of the date of this
Agreement, there is no suit, proceeding or investigation with respect to
revocation, cancellation, suspension or nonrenewal of any such Permit, which is
pending or, to the Knowledge of Sellers, threatened in writing.

     3.16 Reinsurance Assumed.
          -------------------

     (a) Insurance Contracts under which either Seller has assumed any risk
included within the Business from insurers or other reinsurers as of the date
hereof are referred to herein as the "Assumed Reinsurance Contracts." Schedule
3.16(a) identifies each Assumed Reinsurance Contract under which (i) more than
$1,000,000,000 in face amount of new business was assumed by Sellers in 2003, or
(ii) there was more than $2,000,000,000 in face amount of in force assumed
business as of June 30, 2004. The aggregate face amount of new business assumed
during 2003 under the Assumed Reinsurance Contracts identified on Schedule
3.16(a) constitutes at least 80% of the aggregate face amount of new business
assumed by Sellers in 2003, and the aggregate face amount of in force business
assumed under such Assumed Reinsurance Contracts as of June 30, 2004 constitutes
at least 70% of the aggregate face amount of in force business assumed by
Sellers under all Assumed Reinsurance Contracts as of such date. The Assumed
Reinsurance Contracts identified on Schedule 3.16(a) are referred to herein as
the "Material Assumed Reinsurance Contracts." Sellers have made available to
Purchaser true and complete copies of the Material Assumed Reinsurance Contracts
and all amendments thereto. The Sellers shall use commercially reasonable
efforts to produce at or prior to the Closing a schedule of all Assumed
Reinsurance Contracts that are in-force as of September 30, 2004.

     (b) Except as set forth in Schedule 3.16(b), since December 31, 2003 no
reinsured has given notice of termination (provisional or otherwise) in respect
of any Material Assumed Reinsurance Contract. Neither the relevant Seller nor,
to the Knowledge of Sellers, the reinsured is in default in any material respect
under any Material Assumed Reinsurance Contracts, nor do Sellers have actual
knowledge that any such reinsured is the subject of a rehabilitation,
liquidation, conservatorship, receivership, bankruptcy or similar proceeding.
Except as disclosed on Schedule 3.16(b), each such Material Assumed Reinsurance
Contract is in full force and effect and is valid and enforceable in accordance
with its terms subject to the Enforceability Exceptions. Except as set forth in
Schedule 3.16(b), no Material Assumed Reinsurance Contract contains any
provision under which the reinsured may terminate such agreement by reason of
the transactions contemplated by this Agreement.

     (c) Except as set forth in Schedule 3.16(c), with respect to each Assumed
Reinsurance Contract that is not a Material Assumed Reinsurance Contract, (i)
since December 31, 2003 no reinsured has given notice of termination
(provisional or otherwise) in respect of such Assumed Reinsurance Contract, (ii)
neither the relevant Seller nor, to the Knowledge of Sellers, the reinsured is
in default in any material respect under such Assumed Reinsurance Contract, nor
do Sellers have actual knowledge that any such reinsured is the subject of a
rehabilitation, liquidation, conservatorship, receivership, bankruptcy or
similar proceeding, (iii) such Assumed Reinsurance Contract

                                       38
<PAGE>

is in full force and effect and is valid and enforceable in accordance with its
terms subject to the Enforceability Exceptions, and (iv) such Assumed
Reinsurance Contract does not contain any provision under which the reinsured
may terminate such agreement by reason of the transactions contemplated by this
Agreement, except for such inaccuracies in clauses (i) through (iv) as would
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.

     (d) Schedule 3.16(d) is a complete and accurate list of all Assumed
Reinsurance Contracts that have not been executed by some or all of the parties
thereto and are referred to herein as the "Unexecuted Assumed Reinsurance
Contracts." Sellers have previously delivered to Purchaser copies of the
Unexecuted Assumed Reinsurance Contracts that exist in written form (the
"Delivered Unexecuted Assumed Reinsurance Contracts"). Except as set forth on
Schedule 3.16(d), the terms of each Delivered Unexecuted Assumed Reinsurance
Contract reflect the "material terms" of the reinsurance arrangement with the
reinsured party named therein. For purposes of this Section, "material terms"
shall mean the terms with respect to pricing, recapture, termination of new
business, extra contractual obligations, ratings triggers and change of control
provisions.

     (e) Other than those Insurance Contracts listed in Schedule 1.1(i), (i)
each Assumed Reinsurance Contract involves a contract for individual life
reinsurance and does not involve any annuity, long-term care, health, disability
or group reinsurance and (ii) each Assumed Reinsurance Contract that is not a
Material Assumed Reinsurance Contract is substantially similar in nature to the
Material Assumed Reinsurance Contracts generally and involves payment of premium
by the ceding company for the assumption of individual mortality risk by SLD or
SLDI, as the case may be, under life insurance contracts.

     3.17 Reinsurance Retroceded.
         -----------------------

     (a) Insurance Contracts under which either Seller has ceded or retroceded
to reinsurers (other than Affiliates of the Sellers) risks included within the
Business as of the date hereof are referred to herein as the "Retroceded
Reinsurance Contracts." Schedule 3.17(a) identifies each Retroceded Reinsurance
Contract with any retrocessionaire to whom SLD or SLDI has retroceded business
having, in the aggregate, an in-force face amount in excess of $1,000,000,000 as
of June 30, 2004. As of June 30, 2004, the Retroceded Reinsurance Contracts
identified on Schedule 3.17(a) constitute at least 95% of the reinsurance
recoverable under all Retroceded Reinsurance Contracts and are referred to
herein as the "Material Retroceded Reinsurance Contracts." Sellers have made
available to Purchaser true and complete copies of the Material Retroceded
Reinsurance Contracts and all amendments thereto. Sellers shall use commercially
reasonable efforts to produce at or prior to the Closing a schedule of all
Retroceded Reinsurance Contracts as of September 30, 2004.

     (b) Except as set forth in Schedule 3.17(b), since December 31, 2003 no
retrocessionaire has given notice of termination (provisional or otherwise) in
respect of any Material Retroceded Reinsurance Contract. Neither the relevant
Seller nor, to the

                                       39
<PAGE>

Knowledge of Sellers, the retrocessionaire is in default in any material respect
under any Material Retroceded Reinsurance Contracts. Except as set forth in
Schedule 3.17(b), neither Seller has actual knowledge that any such
retrocessionaire is the subject of a rehabilitation, liquidation,
conservatorship, receivership, bankruptcy or similar proceeding, or that the
financial condition of any such retrocessionaire is impaired to the extent that
a default thereunder is reasonably anticipated. Except as disclosed on Schedule
3.17(b), each such Material Retroceded Reinsurance Contract is in full force and
effect and is valid and enforceable in accordance with its terms subject to the
Enforceability Exceptions. Except as set forth in Schedule 3.17(b), no Material
Retroceded Reinsurance Contract contains any provision under which the
retrocessionaire may terminate such agreement by reason of the transactions
contemplated by this Agreement.

     (c) Except as set forth in Schedule 3.17(c), with respect to each
Retroceded Reinsurance Contract that is not a Material Retroceded Reinsurance
Contract, (i) since December 31, 2003 no retrocessionaire has given notice of
termination (provisional or otherwise) in respect of such Retroceded Reinsurance
Contract, (ii) neither the relevant Seller nor, to the Knowledge of Sellers, the
retrocessionaire is in default in any material respect under such Retroceded
Reinsurance Contract, (iii) neither Seller has actual knowledge that any such
retrocessionaire is the subject of a rehabilitation, liquidation,
conservatorship, receivership, bankruptcy or similar proceeding, or that the
financial condition of any such retrocessionaire is impaired to the extent that
a default thereunder is reasonably anticipated, (iv) such Retroceded Reinsurance
Contract is in full force and effect and is valid and enforceable in accordance
with its terms subject to the Enforceability Exceptions, and (v) such Retroceded
Reinsurance Contract does not contain any provision under which the
retrocessionaire may terminate such agreement by reason of the transactions
contemplated by this Agreement, except for such inaccuracies in clauses (i)
through (v) as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.

     (d) Except as set forth on Schedule 3.17(d), each Retroceded Reinsurance
Agreement complies in all material respects with all relevant provisions
relating to credit for reinsurance of the insurance laws and regulations of all
relevant jurisdictions in which the Business is authorized to be conducted.

     (e) SLD's maximum retention limit as of the date of this Agreement is $4
million per life, plus certain additional amounts as described on Schedule
3.17(e). SLDI's maximum retention limit as of the date of this Agreement is $4
million per life.

     (f) Schedule 3.17(f) is a complete and accurate list of all Retroceded
Reinsurance Contracts that have not been executed by some or all of the parties
thereto and are referred to herein as the "Unexecuted Retroceded Reinsurance
Contracts." Sellers have previously delivered to Purchaser copies of the
unexecuted Retroceded Reinsurance Contracts that exist in written form (the
"Delivered Unexecuted Retroceded Reinsurance Contracts"). Except as set forth on
Schedule 3.17(f), the terms of each Delivered Unexecuted Retroceded Reinsurance
Contract reflect the "material terms" of the reinsurance arrangement with the
retrocessionaire named therein. For purposes of

                                       40
<PAGE>

this Section, "material terms" shall mean the terms with respect to pricing,
recapture, termination of new business, extra contractual obligations, ratings
triggers and change of control provisions.

     3.18 Investment Company.
          ------------------

     Neither Seller nor ING is an investment company subject to registration and
regulation under the Investment Company Act of 1940, as amended.

     3.19 Employees.
          ---------

     Schedule 3.19 is a true and complete list of each employee of each Seller
and any of such Seller's Affiliates (including each such Person on leave) who
spends fifty percent (50%) or more of his or her business time performing
services for the Business (other than services related to the transactions
contemplated hereby) as of the date hereof including each such Person on leave
but excluding any such employee who is performing such services in Bermuda (the
"Business Employees"), and sets forth each such Business Employee's
classification, hire date, department function, office location, current annual
salary and most recent annual bonus target and "eligible pay" for purposes of
Sellers' Severance Plan. Each Seller is and has been in material compliance with
all federal, state, local and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours.

     3.20 Employee Benefits.
          -----------------

     Each ERISA Plan and each bonus, incentive or deferred compensation,
employment, severance, termination, retention, change in control, equity-based,
performance or other fringe benefit, employee or retiree benefit plan, program,
policy, practice, agreement or arrangement in which Business Employees
participate or are eligible to participate, whether sponsored or maintained by
Sellers or a Seller Affiliate is a "Seller Plan" and, collectively, they are the
"Seller Plans." Sellers have provided or made available to Purchaser copies of
each such Seller Plan or a description of each such Seller Plan (if there is no
written plan document).

     3.21 Labor Relations.
          ---------------

     None of the Business Employees is a member of a labor union or subject to a
collective bargaining agreement or involved in any labor organization activities
with respect to their employment with Sellers or their Affiliates. Sellers are
not bound by or subject to (and none of their assets are bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested, or, to the Knowledge of
Sellers, has sought to represent any of the Business Employees. There are no
pending labor disputes with respect to any Business Employees.

     3.22 Brokers or Finders.
          ------------------

                                       41
<PAGE>

     Other than Lehman Brothers Inc., the fees of which will be paid by Sellers,
no broker or finder has acted directly or indirectly for Sellers, nor have
Sellers incurred any obligation to pay any brokerage or finder's fee or other
commission, in connection with the transactions contemplated by this Agreement
and the Related Agreements.

     3.23 Absence of Certain Changes and Events.
          -------------------------------------

     Except (i) as disclosed in Schedule 3.23, or (ii) as expressly contemplated
by this Agreement and the Related Agreements, since December 31, 2003 the
Business has been conducted in the ordinary course consistent with past
practices (including, without limitation, with regard to underwriting, pricing,
actuarial and investment policies generally) and there has not been:

     (a) any material change in the financial, underwriting, pricing, claims,
risk retention, retrocession, investment or accounting policies of Sellers
related to the Business, except for any such change as a result of a concurrent
change in Applicable Law or SAP;

     (b) to the extent affecting a Business Employee, any (i) employment,
deferred or incentive compensation, severance, change in control, retirement or
other similar agreement entered into or plan or arrangement established with or
with respect to any director, officer or employee (or any amendment to any such
existing agreement), (ii) grant of any severance or termination pay to any
director, officer or employee, or (iii) change in compensation or other benefits
payable to any director, officer or employee, other than increases in
compensation and bonuses made in the ordinary course of business consistent with
past practice;

     (c) any material transaction or commitment other than any Insurance
Contract by Sellers involving assets or rights of either of the Sellers related
primarily to the Business other than in the ordinary course of business
consistent with past practice (it being agreed that for this subsection (c) and
this subsection (c) only, in respect of transactions or commitments that can be
measured monetarily, "material" shall mean a transaction or commitment involving
the payment or receipt of amounts in excess of $100,000 in any one-year period
or $300,000 in the aggregate);

     (d) any loss or termination of any material agreement of the type described
in Section 3.10; or

     (e) any change, event or circumstance that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.

     3.24 Books and Records.
          -----------------

     The Books and Records are true, complete and correct in all material
respects, have been maintained in accordance with sound business practices and
accurately present and reflect in all material respects all of the transactions
and actions therein described and constitute all of the files and data necessary
for the operation of the Business.

                                       42
<PAGE>

     3.25 Taxes.
          -----

     Except as set forth with reasonable specificity in Schedule 3.25(a):

     (a) (i) Sellers have timely filed (or have had filed on their behalf), in
the manner required by Law, all material Tax Returns required to be filed by
Sellers and have paid (or have had paid on their behalf) all Taxes due as
reflected on such Tax Returns or otherwise due, and all such Tax Returns are
true, correct and complete; (ii) no adjustment relating to such Tax Returns has
been proposed formally or informally by any Tax Authority; and (iii) there are
no liens with respect to Taxes upon the Transferred Assets except for liens for
Taxes not yet due or for Taxes Sellers (or any Affiliate thereof) are contesting
in good faith through appropriate proceedings and such liability for Taxes is
appropriately reflected on the Books and Records of Sellers (or any Affiliate
thereof).

     (b) Sellers (or any Affiliate thereof) have previously delivered to
Purchaser (or any Affiliate thereof) (i) copies of all written material
agreements or rulings entered into by Sellers (or any Affiliate thereof) with
any Tax Authority with respect to the Business or the ownership, use or
operation of the Transferred Assets that could (either pursuant to the terms of
such agreement or ruling or the expiration of such agreement or ruling) directly
affect the Taxes of Purchaser (or any Affiliate thereof), (ii) income and
material premium Tax Returns filed by or with respect to Sellers for their
2000-2003 taxable years and (iii) any revenue agents' report or similar claim
for a material amount of additional Taxes (a "Tax Claim") received by Sellers
(or any Affiliate thereof) from any Tax Authority for such taxable years and all
written materials provided by Sellers (or any Affiliate thereof) to any Tax
Authority in connection with any such Tax Claim.

     (c) To the Knowledge of Sellers, there are no Tax jurisdictions in which
Sellers (or any Affiliate thereof) own the Transferred Assets or conduct the
Business that require a notification to a Tax Authority of the transactions
contemplated by this Agreement, if the failure to make such notification, or
obtain Tax clearances in connection therewith, would either require Purchaser
(or any Affiliate thereof) to withhold any portion of the consideration or would
subject Purchaser (or any Affiliate thereof) to any liability for any Taxes of
Sellers (or any Affiliate thereof).

     (d) To the Knowledge of Sellers, the insurance or investment policies,
plans, or contracts, financial products, employee benefit plans, individual
retirement accounts, or any similar or related policy, contract, plan or
product, whether individual, group or otherwise, including annuity contracts,
life insurance contracts and variable contracts (the "Direct Insurance
Contracts") reinsured by the Sellers from any Person and constituting part of
the Business materially comply (and have materially complied since the time of
issuance, assumption, modification, exchange or sale) with all applicable
requirements, if any, of Code Sections 7702, 7702A and 7702B and the rules and
Treasury Regulations thereunder, relating to the qualifications and/or tax
treatment for which the Direct Insurance Contracts were intended to qualify
(including any record-keeping and administrative services requirements imposed
under such Code Sections).

                                       43
<PAGE>

                                   ARTICLE IV

     Representations and Warranties of Purchaser and Purchaser Subsidiaries
     ----------------------------------------------------------------------

     Purchaser and each Purchaser Subsidiary hereby represent and warrant to
Sellers as follows (it being understood that each Purchaser Subsidiary makes
only those representations and warranties that specifically relate to it):

     4.1 Status of Purchaser Entities.
         ----------------------------

     Each of Scottish Annuity & Life, Purchaser and each Purchaser Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation. Purchaser and each
Purchaser Subsidiary has full corporate power and authority to conduct its
business as it is now being conducted.

     4.2 Enforceability.
         --------------

     Each of Scottish Annuity & Life, Purchaser and each Purchaser Subsidiary
has full corporate power and authority to execute and to deliver this Agreement
and the Related Agreements, as applicable, and to carry out the transactions
contemplated herein and therein. Each of Scottish Annuity & Life, Purchaser and
each Purchaser Subsidiary has taken all necessary corporate action to authorize
its execution and performance of this Agreement and the Related Agreements, as
applicable. This Agreement and each of the Related Agreements is the valid and
binding obligation of each of Scottish Annuity & Life, Purchaser and each
Purchaser Subsidiary, as applicable, and enforceable against each of Scottish
Annuity & Life, Purchaser and each Purchaser Subsidiary, as applicable, in
accordance with its terms, except as such enforceability may be limited by the
Enforceability Exceptions. Assuming the consents and approvals referred to in
Sections 3.3 and 4.7 are obtained, the execution, delivery and performance of
this Agreement and each of the Related Agreements by each of Scottish Annuity &
Life, Purchaser and each Purchaser Subsidiary, as applicable, will not, with or
without the giving of notice or passage of time or both, (i) conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to any provision of any
mortgage, deed of trust, lease, license agreement or other agreement to which
Scottish Annuity & Life or Purchaser or any Purchaser Subsidiary is a party or
by which it is bound or affected, (ii) conflict with or result in a default
under any provision of the certificate of incorporation or by-laws of Scottish
Annuity & Life or Purchaser or any Purchaser Subsidiary, or any effective
resolution of the directors or stockholders of Scottish Annuity & Life or
Purchaser or any Purchaser Subsidiary, or (iii) conflict with or result in a
violation of any Legal Requirement; provided, that no representation or warranty
is made in the foregoing clause (i) or (iii) with respect to matters that,
individually or in the aggregate, would not be reasonably expected to have a
material adverse effect on the ability of Scottish Annuity & Life, Purchaser and
the Purchaser Subsidiaries to consummate the transactions contemplated by this
Agreement and the Related Agreements.

     4.3 Certain Proceedings.
         -------------------

                                       44
<PAGE>

     There is no pending action against Scottish Annuity & Life, Purchaser or
any Purchaser Subsidiary in any court or with any Governmental Authority that
challenges or may reasonably be expected to have the effect of preventing or
delaying or making unlawful the consummation of the transactions contemplated by
this Agreement and the Related Agreements. To Purchaser's Knowledge, no such
proceeding has been threatened.

     4.4 Financial Statements.
         --------------------

     Sellers have received the audited balance sheet and income statement of
Scottish Annuity & Life, Purchaser, SRUS and Scottish Re Life as of December 31,
2003, and the unaudited balance sheet and income statement of Purchaser, SRUS
and Scottish Re Life as of June 30, 2004 (the "Purchaser Financial Statements").
The Purchaser Financial Statements fairly present in accordance with SAP, or
with respect to the Purchaser, GAAP, the financial condition of Scottish Annuity
& Life, Purchaser, SRUS and Scottish Re Life as of and for the periods ending on
the dates thereof.

     4.5 Ratings.
         -------

     Purchaser has no reason to believe as of the date hereof that the
claims-paying ability, financial strength or other ratings by A.M. Best Company,
Inc. or any other rating agency of Scottish Annuity & Life, Purchaser or any
Purchaser Subsidiary (other than potential changes in "outlook" or "watch" or
similar terms employed by any such rating agency) will be adversely affected by
the announcement or consummation of the transactions contemplated hereby.

     4.6 Brokers or Finders.
         ------------------

     Other than Bear Stearns & Co. Inc., the fees and expenses of which shall be
paid by Purchaser, neither Purchaser nor any of its Affiliates has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement or the Related Agreements and the transactions contemplated hereby or
thereby.

     4.7 Purchaser's Approvals.
         ---------------------

     Except as set forth on Schedule 4.7, no consent, approval or authorization
of, or declaration, filing or registration with, any Governmental Authority or
any other Person, is required to be made or obtained by Scottish Annuity & Life,
Purchaser or any Purchaser Subsidiary in connection with the execution, delivery
and performance of this Agreement or the Related Agreements or the consummation
of the transactions contemplated hereby and thereby.

     4.8 Investment Company.
         ------------------

     None of Scottish Annuity & Life, Purchaser and the Purchaser Subsidiaries
is an investment company subject to registration and regulation under the
Investment Company Act of 1940, as amended.

                                       45
<PAGE>

     4.9 Financing.
         ---------

     Purchaser and its Affiliates have available, and at the Closing will have
available, sufficient capital to consummate the transactions contemplated by
this Agreement and the Related Agreements and sufficient cash to pay all related
fees and expenses required to be paid by Purchaser hereunder and thereunder.

     4.10 Purchaser Licenses.
         -------------------

     Each of Purchaser and Purchaser Subsidiaries has all Permits necessary to:
(a) conduct the Business in the manner and in the areas in which the Business is
presently being conducted; and (b) perform its obligations under this Agreement
and each Related Agreement. Purchaser and each Purchaser Subsidiary is in
material compliance with the terms of such Permits. As of the date of this
Agreement, there is no suit, proceeding or investigation with respect to
revocation, cancellation, suspension or nonrenewal of any such Permit, which is
pending or, to the Knowledge of Purchaser, threatened in writing.

                                   ARTICLE V

                  Additional Agreements of Seller and Purchaser
                  ---------------------------------------------

     5.1 Conduct of Business.
         -------------------

     Except as set forth on Schedule 5.1 or as otherwise expressly provided in
this Agreement or the Related Agreements or as expressly required to consummate
the transactions contemplated hereby and thereby, during the period from the
date hereof through the Closing Date (unless Purchaser shall otherwise approve
in writing, such approval not to be unreasonably withheld, conditioned or
delayed) each Seller with respect to the Business or the ownership, use or
operation of the Transferred Assets:

     (a) shall exercise its commercially reasonable efforts to maintain itself
at all times in all material respects as a corporation duly organized, validly
existing, in good standing, and duly qualified to conduct the Business;

     (b) shall conduct the Business and maintain its Books and Records in the
ordinary course consistent with past practice and it shall exercise its
commercially reasonable efforts not to commit any act which constitutes a
material breach of or default under any contract, agreement, plan, lease,
policy, or Permit or fail to comply in any material respect with any Applicable
Law;

     (c) shall use its commercially reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, reinsurers, retrocessionaires, agents, brokers,
distributors, creditors, lessors, employees and business associates;

     (d) shall not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, asserted or unasserted, contingent or otherwise) other
than the payment,

                                       46
<PAGE>

discharge or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms;

     (e) shall not enter into any material contract that would constitute an
Assigned Contract, other than in the ordinary course of business consistent with
past practice;

     (f) shall not acquire any material asset that would constitute a
Transferred Asset other than in the ordinary course of business consistent with
past practice;

     (g) shall not sell, transfer, pledge or otherwise convey or dispose of or
create any Encumbrance on any Transferred Assets other than a Permitted
Encumbrance and other than sales, transfers and disposals of any assets of the
type described under clause (vii) of the definition of Transferred Assets which
are not material;

     (h) shall not terminate, or in any manner material thereto modify, amend or
waive compliance with, any provision of any of the Insurance Contracts or any of
the contracts set forth in Schedule 3.10(a) other than in the ordinary course of
business consistent with past practice;

     (i) shall not enter into any new retrocession agreements relating to the
Business other than in the ordinary course of business consistent with past
practice;

     (j) shall not change any accounting, financial, underwriting, pricing,
actuarial, claims, administrative, marketing, reserving, risk retention,
retrocession, investment or accounting policies of Sellers related to the
Business, except for any such change as a result of a concurrent change in
Applicable Law or SAP;

     (k) except as previously agreed to in writing by Sellers and Purchaser,
shall not directly or indirectly, allow, or otherwise facilitate the transfer of
Business Employees to positions not involved in the Business or the transfer of
other Seller or Seller Affiliate employees to employment in the Business;

     (l) shall not (i) adopt any plan that would constitute a Seller Plan or
amend any Seller Plan in a manner that would increase any of the obligations of
Purchaser or an Affiliate of Purchaser specified in Section 5.8 other than as
required by Applicable Law, (ii) enter into any agreement with any Business
Employee regarding his or her employment, compensation or benefits, (iii)
increase the benefits of Business Employees, (iv) increase the compensation of
Business Employees, or (v) increase (other than as a result of a compensation
increase permitted by the preceding clause) the amount of severance payable to
any Business Employee;

     (m) shall not undertake any of the actions specified in Section 3.23;

     (n) shall not conduct the Business in any manner that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

     (o) shall not authorize or enter into an agreement or arrangement of any
kind to do any of the foregoing; and

                                       47
<PAGE>

     (p) shall not (i) file any Tax Return in a manner inconsistent with past
custom and practice, except as may be required by a change in Law after the date
hereof, (ii) make or change any election concerning any Taxes, change any Tax
accounting method, enter into any closing agreement with respect to Taxes, file
any amended Tax Return, settle any Tax Claim or assessment or (iii) obtain or
enter into any Tax ruling or other Tax agreement, contract, understanding,
arrangement or plan with a Governmental Authority, in each case only to the
extent such change could reasonably be expected to directly and materially
affect the Taxes of Purchaser (and any Affiliate thereof) for any Tax period (or
portion thereof) beginning after the Closing Date.

     5.2 Expenses.
         --------

     Regardless of whether any or all of the transactions contemplated by this
Agreement are consummated, and except as otherwise expressly provided herein,
Purchaser and Sellers shall each bear their respective direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement, the Related Agreements and the consummation of the transactions
contemplated hereby or thereby, including without limitation, all fees and
expenses of Representatives.

     5.3 Access; Certain Communications.
         ------------------------------

     (a) Between the date of this Agreement and the Closing Date, subject to any
Applicable Law relating to antitrust, employment or privacy issues and subject
to the rules applicable to visitors at Sellers' offices generally, Sellers shall
afford to Purchaser and its Representatives copies of (at Sellers' expense) and
access to, upon reasonable notice and during normal business hours, to all Books
and Records, contracts, documents and information of or relating to the assets,
liabilities, business, operations and other aspects of the Business. In the
event that any Purchaser request for such access would not violate any
Applicable Law relating to employment or privacy if a waiver were obtained from
any Business Employee, Sellers shall use commercially reasonable efforts to
obtain such a waiver. Sellers shall cause the Business Employees, other
employees of Sellers, their Affiliates and their respective Representatives to
provide reasonable assistance to Purchaser in its investigation of matters
relating to the transactions contemplated hereby; provided, however, that
Purchaser's investigation shall be conducted in a manner which does not
interfere with Sellers' or their Affiliates' normal operations, customers and
employee relations. Without limiting any of the terms thereof, the terms of the
Confidentiality Agreement shall govern Purchaser's and its Representatives'
obligations with respect to all confidential information with respect to the
Business and Sellers and their Affiliates and other related Persons, which has
been provided or made available to them at any time, including during the period
between the date of this Agreement and the Closing Date.

     (b) Notwithstanding anything to the contrary set forth in this Agreement,
the obligations of confidentiality hereof, as they relate to the transactions
contemplated hereby, shall not apply to the federal Tax structure or federal Tax
treatment of such transactions, and each party to this Agreement (and any
employee, representative, or

                                       48
<PAGE>

agent of any party hereto) may disclose to any and all persons, without
limitation of any kind, the federal Tax structure and federal Tax treatment of
such transaction.

     5.4 Regulatory Matters; Third Party Consents; Assigned Contracts.
         ------------------------------------------------------------

     (a) Sellers and Purchaser shall cooperate and use commercially reasonable
efforts to obtain all consents, approvals and agreements of, and to give and
make all notices and filings with, any Governmental Authority necessary to
authorize, approve or permit the consummation of the transactions contemplated
by this Agreement, the Related Agreements and any other agreements contemplated
hereby or thereby, including, without limitation, as set forth on Schedule 3.3
and Schedule 4.7. Sellers and Purchaser shall also cooperate and use
commercially reasonable efforts to obtain approval or non-disapproval letters
from the domiciliary insurance departments of SLD and any Purchaser Subsidiary
who is, or will become, a party to any Reinsurance Agreement. Purchaser and
Sellers will provide each other and their counsel the opportunity to review in
advance and comment on all such filings with any Governmental Authority.
Purchaser and Sellers will keep each other informed of the status of matters
relating to obtaining the regulatory approvals specified in Schedule 3.3 and
Schedule 4.7. Purchaser shall also provide Sellers opportunity to review and
comment on the business plan of Newco prior to Purchaser's filing with the
Bermuda Monetary Authority of such plan. It is expressly understood by the
parties hereto that each party shall use commercially reasonable efforts to
obtain permission for the Representatives of both Purchaser and Sellers to
attend and participate in any hearing, proceeding, meeting, conference or
similar event before or with a Governmental Authority or other organization
relating to this Agreement or a Related Agreement. In furtherance of the
foregoing, Purchaser and Sellers shall provide each other reasonable advance
notice of any such hearing, proceeding, meeting, conference or similar event.

     (b) Sellers and Purchaser shall cooperate and use commercially reasonable
efforts to obtain all consents, approvals and agreements of any third Person
other than a Governmental Authority set forth on Schedules 3.3 and 4.7,
respectively. In the event and to the extent that Sellers and Purchaser are
unable to obtain any such consents, approvals or agreements of any such Person
(i) Sellers shall use commercially reasonable efforts in cooperation with
Purchaser to (A) provide or cause to be provided to Purchaser or a Purchaser
Subsidiary the benefits of any agreement with any such Person, and (B) enforce
for the account of Purchaser or a Purchaser Subsidiary any rights of Sellers
arising from any such agreement, and (ii) Purchaser or a Purchaser Subsidiary
shall use commercially reasonable efforts to perform the obligations of Sellers
arising under any such agreement, to the extent that, by reason of the
transactions consummated pursuant to this Agreement or otherwise, Purchaser or a
Purchaser Subsidiary has control over the resources necessary to perform such
obligations to the extent such obligations are Assumed Liabilities. If and when
any such consent, approval or agreement shall be obtained with respect to any
Assigned Contract, the applicable Seller shall promptly assign all of its rights
and obligations thereunder to Purchaser or a Purchaser Subsidiary without the
payment of further consideration and Purchaser or a Purchaser Subsidiary shall,
without the payment of any further consideration therefor, assume such rights
and

                                       49
<PAGE>

obligations and the applicable Seller shall be relieved of any and all
obligation or liability hereunder.

     (c) In the event Purchaser or Sellers discover after Closing that one or
more contracts utilized in, but not material to, the Business (collectively the
"Nonmaterial Contracts") were inadvertently omitted from Schedule 1.1(a),
Sellers or Purchaser, as applicable, shall give prompt written notice to the
other party or parties identifying the Nonmaterial Contract and Sellers shall
provide Purchaser with a brief description of the terms thereof. Purchaser shall
thereafter notify Sellers as to whether Purchaser will:

          (i) accept the assignment of such Nonmaterial Contract, in which case,
as between Purchaser and Sellers, such Nonmaterial Contract shall, to the
maximum extent practicable and notwithstanding the failure to list such
Nonmaterial Contract on Schedule 1.1(a), be transferred as of the Closing
pursuant to the Assignment and Assumption Agreement; or

          (ii)reject the assignment of such Nonmaterial Contract, in which case
(A) neither this Agreement nor the Assignment and Assumption Agreement nor any
other Related Agreement shall constitute a sale, assignment, assumption,
conveyance or delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of such Nonmaterial Contract, and (B) Sellers shall
retain such Nonmaterial Contract and all liabilities arising therefrom or
relating thereto; provided, however, that in the event Purchaser rejects the
assignment of any such Nonmaterial Contract in accordance with the provisions of
this Section 5.4(c)(ii), Purchaser may not thereafter make a claim for
indemnification under Section 10.1 below based on such failure to identify
and/or transfer such Nonmaterial Contract to Purchaser.

     5.5 Further Assurances.
         ------------------

     Each of the parties hereto shall execute such documents and other papers
and perform such further acts as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby. Each such party
shall, at or prior to the Closing Date, use its commercially reasonable efforts
to fulfill or obtain the fulfillment of the conditions precedent to the
consummation of the transactions contemplated hereby, including the execution
and delivery of any documents, certificates, instruments or other papers that
are reasonably required for the consummation of the transactions contemplated
hereby. In the event that Purchaser believes, based upon further review of the
Business prior to Closing, that the aggregate amount to be deposited in the SLD
Security Trust Account and the SLDI Security Trust Account should be allocated
differently from the allocation set forth in Sections 2.4(c) and (d) hereof,
Sellers shall consider such reallocation in good faith and shall not
unreasonably withhold their consent to the proposed reallocation.

     5.6 Notification of Certain Matters.
         -------------------------------

     (a) Each party shall give prompt notice to the other party of (i) the
occurrence, or failure to occur, of any event or the existence of any condition,
fact, state of

                                       50
<PAGE>

circumstances, development, action or omission that (A) in the case of Sellers,
has had or would reasonably be expected to have a Material Adverse Effect or, in
the case of Purchaser and Purchaser Subsidiaries, has had or would reasonably be
expected to have a material adverse effect on Purchaser and the Purchaser
Subsidiaries to consummate the transactions contemplated by this Agreement and
the Related Agreements, or (B) has caused or would reasonably be expected to
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time after the date of this
Agreement, up to and including the Closing Date (except to the extent such
representations and warranties are given as of a particular date or period and
relate solely to such particular date or period), and (ii) any failure on its
part to comply with or satisfy, in any material respect, any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement.

     (b) Sellers shall, no less than three (3) calendar days prior to the
Closing, by notice to Purchaser, provide or supplement any Schedule to reflect
any change or event that occurs after the date of this Agreement; provided, that
such supplemental schedules shall not be deemed to have been disclosed as of the
date hereof, to constitute a part of, or an amendment or supplement to, Sellers'
disclosure schedules, or to cure any breach or inaccuracy of a representation or
warranty, unless so agreed to in writing by Purchaser.

     (c) Each party shall use commercially reasonable efforts to cause the
conditions set forth in Articles VI and VII to be satisfied.

     5.7 Maintenance and Transfer of Records.
         ----------------------------------

     Through the Closing Date, Sellers shall maintain the Books and Records in
all material respects in the same manner and with the same care that the Books
and Records have been maintained prior to the execution of this Agreement. At
the Closing, Sellers will transfer the Books and Records to Purchaser; provided
that Sellers shall be entitled to retain such copies of the Books and Records
(i) as are necessary for Sellers to provide services under the Transition
Services Agreement or (ii) as Sellers are required to retain under Applicable
Law. From and after the Closing Date, each of the parties hereto shall permit
any other party hereto reasonable access, subject to the rules applicable to
visitors at the relevant party's offices generally and provided such access does
not unreasonably interfere with the business or operations of the party
providing such access, to any applicable books and records in its possession
relating to the Business, to the extent that the requesting party has a
reasonable business purpose for requesting such access and such reason relates
to this Agreement, the Related Agreements or the transactions, rights and
obligations contemplated hereby and thereby. Sellers agree, (A) with respect to
the information that is existing and in Sellers' possession at Closing, for a
period of two (2) years from the Closing Date and (B) with respect to the
information that is created or comes into Sellers' possession after the Closing
Date, for a period of two (2) years after the relevant information is created or
comes into the possession of Sellers, to maintain the confidentiality of
information contained in any books and records to the same degree that Purchaser
is required to maintain the confidentiality of "Evaluation Materials" under the
Confidentiality Agreement. Notwithstanding any other provision of this Section
5.7,

                                       51
<PAGE>

access to any Books and Records may be denied to the requesting party if the
other party is required under any Applicable Law relating to antitrust,
employment or privacy issues to deny such access. In the event that any request
for such access would not violate any Applicable Law relating to employment or
privacy if a waiver were obtained from an employee, the party that employs such
employee shall use commercially reasonable efforts to obtain such a waiver.

     5.8 Employee Matters.
         ----------------

     (a) Beginning on the date of this Agreement, Sellers shall make reasonable
efforts to obtain from each Business Employee as soon as practicable thereafter
consent to release to Purchaser all information (the "Employee Information")
reasonably requested by Purchaser in writing about such Business Employees in
order for Purchaser or a Purchaser Affiliate to decide to whom Purchaser or such
Purchaser Affiliate will offer employment, subject, in each case, to any
restrictions on the provision of such information under Applicable Law. Sellers
shall provide the Employee Information to Purchaser within five (5) calendar
days after the date of this Agreement or, with respect to any specific Business
Employee, as soon as reasonably practical after Sellers obtain the Business
Employee's consent, if later. Sellers shall permit the Purchaser or a Purchaser
Affiliate to have reasonable access to the Business Employees beginning on the
date of this Agreement. No later than forty-five (45) calendar days after the
date of this Agreement, Purchaser or a Purchaser Affiliate shall identify and
provide to Sellers a written list of the Business Employees to whom Purchaser or
a Purchaser Affiliate will offer employment effective as of the Closing Date.
Each such offer of employment to a Business Employee shall be for a position
that provides equal or greater base pay plus bonus opportunity compared to the
position that the Business Employee held with a Seller or any Seller Affiliate
as of the day immediately preceding the Closing Date and at a jobsite not in
excess of fifty (50) miles from the Business Employee's jobsite on such date,
each as disclosed in Schedule 3.19. Sellers agree to cooperate with Purchaser or
a Purchaser Affiliate in its efforts to hire such Business Employees. Business
Employees who become employed by Purchaser or by a Purchaser Affiliate in
connection with the transactions contemplated by this Agreement shall be
referred to herein as "Transferred Employees." Purchaser shall have no liability
or responsibility for, and Sellers shall have sole liability and responsibility
for, any and all severance pay and other employment termination obligations for
all Business Employees who are not offered employment by Purchaser or a
Purchaser Affiliate or who otherwise do not become Transferred Employees.
Notwithstanding the foregoing, Sellers shall have no liability or responsibility
for any Purchaser Assumed Employee Liabilities. Sellers shall have no liability
or responsibility for, and Purchaser and its Purchaser Affiliates shall have
sole liability and responsibility for, any and all severance pay and other
employment termination obligations for Transferred Employees to the extent such
obligations relate to termination of employment with Purchaser or a Purchaser
Affiliate. Nothing in this Section 5.8(a) is intended to or shall require
Purchaser or its Affiliates to employ or continue to employ any such employee
for any period of time following the Closing Date or to continue to maintain any
term or condition of employment, including, without limitation, the position,
title, compensation, location or employer, with respect to any

                                       52
<PAGE>

such employee or otherwise to treat any such employee on any basis other than as
an employee-at-will.

     (b) Service by the Transferred Employees with Sellers or any of their
Affiliates shall be recognized under each benefit plan, program or arrangement
established, maintained or contributed to by Purchaser or any of its Affiliates
after the Closing Date for the benefit of the Transferred Employees, for
purposes of eligibility to participate, eligibility for early retirement,
vesting, and the amount or level of benefits under any vacation, disability,
sick pay or severance plan, but in no event shall such service prior to the
Closing Date be required to be taken into account in (i) determining the accrual
of benefits under any defined benefit pension plan or (ii) to the extent such
benefit plan, program or arrangement established, maintained or contributed to
by Purchaser or any of its Affiliates does not recognize service during such
period.

     (c) Any Transferred Employee whose employment is terminated for any reason
other than for Cause within twenty-four (24) months after the Closing Date shall
receive a severance benefit package that is the greater of (i) the severance
benefit package that would be provided under the Sellers' Severance Plan as in
effect for such employee on the day immediately prior to the Closing Date, and
(ii) the severance benefit package that would be provided under the severance
benefit arrangements, plans, programs or contracts as in effect on the day
immediately prior to the Closing Date for employees of the Purchaser or its
Affiliate that employs the Transferred Employee.

     (d) Purchaser shall, or shall cause the applicable entity to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Transferred
Employees under any welfare plan (within the meaning of section 3(1) of ERISA)
in which such Transferred Employees may be eligible to participate after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such Business Employees and that have not been satisfied
as of the Closing Date under any such welfare plan under which the Business
Employees are covered immediately prior to the Closing Date, and (ii) provide
each Transferred Employee with credit for any co-payments and deductibles paid
prior to the Closing Date (and during the then current plan year of the
applicable Purchaser welfare plan) in satisfying any applicable deductible or
out-of-pocket requirements under any such welfare plans that such Transferred
Employees are eligible to participate in after the Closing Date.

     (e) From and after the Closing Date, except as otherwise specified in this
Section 5.8, each Transferred Employee shall be eligible to participate in all
employee benefit plans, programs, policies and arrangements of Purchaser and its
Affiliates on the same basis as similarly situated employees of Purchaser. For
the avoidance of doubt, the determination of whether employees are similarly
situated will take into account the total mix of characteristics of each
employee's position, including, without limitation, job title, level of
responsibility and rate of compensation.

                                       53
<PAGE>

     (f) Sellers shall be solely responsible for providing required notices
under COBRA to any M&A Qualified Beneficiaries (as defined in Treas. Reg.
Section 54.4980B-9, Q&A 4) and Sellers shall provide or cause to be provided
continuation coverage under COBRA to such individuals. Sellers agree to
indemnify, defend and hold Purchaser and Purchaser Affiliates harmless from and
against any and all liabilities, losses, claims, demands, costs, expenses
(including, without limitation, actual attorneys' fees, expenses and costs) and
any other liability that Purchaser or Purchaser Affiliates may incur as a result
of either Seller's failure to provide the required COBRA continuation notice or
coverage to M&A Qualified Beneficiaries. With respect to any Transferred
Employee who has a "qualifying event" (as that term is defined in Code Section
4980 B(f)(3)) after the Closing Date, Purchaser or a Purchaser Affiliate shall
be solely responsible for any required COBRA continuation coverage under the
group health plan maintained by Purchaser or a Purchaser Affiliate in which such
Transferred Employee participated at the time of termination.

     (g) Sellers and their Affiliates shall retain all liabilities under or
relating to any liability or obligation arising under or relating to any
Employee Benefit established, maintained, sponsored or contributed to by either
Seller or any Seller ERISA Affiliate and any obligation to pay salaries, wages
and bonuses to the Business Employees other than the obligation to pay salaries,
wages and bonuses to Transferred Employees with respect to periods following the
Closing Date, and neither Sellers nor any Seller Affiliates shall assume any
liability or obligation arising under or relating to any Employee Benefit Plan
established, maintained, sponsored or contributed to by Purchaser or any
Purchaser ERISA Affiliate.

     (h) From and after the Closing Date, Sellers and Purchaser shall cooperate
to ensure an orderly transition of the Transferred Employees.

     (i) The parties agree to cooperate in good faith to determine whether any
notification may be required under the Worker Adjustment and Retraining
Notification Act (the "Warn Act") as a result of the transactions contemplated
by this Agreement. Sellers shall be responsible for providing any notification
that may be required under the Warn Act with respect to the Business Employees
to the extent such obligation arises prior to the Closing Date. From and after
the Closing Date, Purchaser shall be responsible for providing any notification
that may be required under the Warn Act with respect to its employees, including
the Transferred Employees.

     5.9 Intellectual Property; Computer Programs.
         ----------------------------------------

     (a) On the Closing Date, Sellers or an Affiliate of Sellers will enter into
the Trademark and Trade Name License Agreement with Purchaser or a Purchaser
Subsidiary to license to Purchaser or such Purchaser Subsidiary certain
Trademarks owned by Sellers or their Affiliates and used primarily in the
conduct of the Business.

     (b) On the Closing Date, Purchaser or a Purchaser Subsidiary will enter
into the Technology Transfer and License Agreement with Sellers or one or more
Affiliates of Sellers.

                                       54
<PAGE>

     (c) With respect to each Licensed Computer Program:

          (i) Sellers will use commercially reasonable efforts to (A) assign to
     Purchaser or an Affiliate of Purchaser the Licensed Computer Program
     License under which such Licensed Computer Program is currently used and
     provide to Purchaser or an Affiliate of Purchaser any utilities, macros and
     spreadsheet definitions related thereto, or (B) obtain on behalf of the
     Purchaser or an Affiliate of Purchaser, at Purchaser's request, a separate
     license agreement to use such programs (including such utilities, macros
     and spreadsheet definitions related thereto) for a duration equal to the
     term (or the portion thereof) remaining under the applicable Licensed
     Computer Program License so that as of the Closing Date Purchaser will have
     the right to use such Licensed Computer Program in the same manner used by
     Sellers prior to the Closing Date subject to the terms of the applicable
     Licensed Computer Program License and to such other written agreements as
     may be entered into pursuant to this Section 5.9.

          (ii) Sellers, on the one hand, and Purchaser, on the other hand, shall
     share equally the cost of procuring rights from third party vendors of each
     Licensed Computer Program in complying with the provisions of this Section
     5.9(c); provided that, each party shall bear its own costs of reviewing and
     negotiating any agreements required for the implementation of this Section
     5.9(c); provided, further, that Purchaser shall be exclusively responsible
     for payment of continuing seat charges, upgrade and maintenance fees, and
     for performance of other contractual obligations arising with respect to
     use by it after the Closing Date of such Computer Programs licensed or
     assigned to the Purchaser pursuant to this Section 5.9(c).

          (iii) Sellers shall keep Purchaser informed on a contemporaneous basis
     as to the general progress of negotiations with each of the licensors and
     Purchaser shall have the right to participate in such negotiations at its
     election.

     (d) Notwithstanding any other provision of this Section 5.9, if despite
commercially reasonable efforts of Sellers to obtain on behalf of Purchaser the
rights described in subsection (c) of this Section 5.9, such rights cannot be
obtained at a reasonable cost, or cannot be obtained at all,

          (i) with respect to any Embedded Computer Programs, Sellers shall, at
     their election, either (A) use commercially reasonable efforts during the
     term of the Transition Services Agreement to (x) subject to any required
     third-party consents, provide Purchaser with the benefits of any such
     Embedded Computer Program and (y) assist Purchaser in an orderly transition
     to an alternative solution; provided that Purchaser shall not incur any
     additional costs or fees under the Transition Services Agreement with
     respect to any such services, or (B) pay the full cost of Purchaser's
     procuring and licensing (which license shall contain reasonable market
     terms, be for the sole benefit of Purchaser or an Affiliate of Purchaser
     and be subject to Sellers' consent, which consent shall not be unreasonably
     withheld) substitute Computer Programs that will perform all of the

                                       55
<PAGE>

     functions of any Embedded Computers Programs the benefits of which Sellers
     were unable to provide to Purchaser and the Licensed Computer Program
     Licenses relating to the Embedded Computer Programs which Sellers were
     unable to assign to Purchaser; provided, that if the actions described in
     clause (A) above are insufficient to support the needs of the Business, as
     determined by Purchaser in good faith, then Sellers shall be required to
     take the actions described in clause (B); and

          (ii) with respect to any Licensed Computer Programs other than the
     Embedded Computer Programs, Sellers shall either (A) use commercially
     reasonable efforts during the term of the Transition Services Agreement to
     (x) subject to any required third-party consents, provide Purchaser with
     the benefits of any such Licensed Computer Programs that are material to
     the operation of the Business by Sellers at the time of Closing and (y)
     assist Purchaser in an orderly transition to an alternative solution;
     provided that Sellers on the one hand and Purchaser on the other hand shall
     share equally any costs or fees incurred with respect to any such services
     provided pursuant to this clause (ii)(A), or (B) if the actions described
     in clause (A) above are insufficient to support the needs of the Business,
     as determined by Purchaser in good faith, or at Sellers' option, share
     equally with Purchaser the cost of Purchaser's procuring and licensing
     (which license shall contain reasonable market terms and be for the sole
     benefit of Purchaser or an Affiliate of Purchaser) substitute Computer
     Programs that will perform all of the functions of any other Licensed
     Computer Programs the benefits of which Sellers were unable to provide to
     Purchaser and the Licensed Computer Program Licenses relating to which
     Sellers were unable to assign.

For the avoidance of doubt, the "Embedded Computer Programs" shall consist of
the e-Wam tools from Wyde obtained pursuant to the CGI agreement and the IMR
Framework Tools from CGI. The foregoing provisions in this Section 5.9(d) shall
not limit in any way Sellers' obligations under Section 3.13 or this Section
5.9, nor do they limit Purchaser's right to seek damages if Sellers fail to use
commercially reasonable efforts to obtain the rights for Purchaser as described
in this Section 5.9(c). Any services provided to Purchaser pursuant to clauses
(i)(A) or (ii)(A) of this Section 5.9(d) will be provided pursuant to the
Transition Services Agreement and in accordance with the terms and conditions
thereof.

     (e) If any Computer Program not previously scheduled is placed in service
in the Business between the date of this Agreement and the Closing Date, such
Computer Program shall be subject as of the Closing Date to the representations
and warranties set forth in Section 3.13 and shall be added as of the Closing
Date to Schedule 3.13(a) if it is an Owned Principally-Used Computer Program,
Schedule 3.13(b) if it is an Owned Generally-Used Computer Program, or Schedule
3.13(c) if it is a Licensed Computer Program, or Schedule 3.13(d) if it is a
Retained Computer Program required to be listed on such schedule pursuant to the
terms of Section 3.13(d). Sellers shall notify Purchaser in writing as soon as
reasonably practicable after Sellers' decision to add any such Computer Program
to a schedule (but in any event not less than fifteen (15) business days prior
to the Closing Date). If any new Data or Database is created between the date of

                                       56
<PAGE>

this Agreement and the Closing Date, such Data or Database shall be subject as
of the Closing Date to the representations and warranties set forth in Section
3.12.

     5.10 Real Property Leases.
          --------------------

     (a) With respect to each Business Lease, the lessee (either Seller or an
Affiliate) shall sublease or license to Purchaser or a Purchaser Subsidiary for
a period following Closing as determined by Purchaser and communicated to
Sellers within thirty (30) calendar days from the date hereof. The sublease or
license will provide that occupancy of such real property pursuant thereto shall
be subject to the terms of the relevant lease and shall be at a rental equal to
all rental and other charges provided in such lease. Such sublease or license
shall be in a form reasonably acceptable to Sellers and Purchaser.

     (b) If, after commercially reasonable efforts by Sellers to obtain landlord
consents to lease subleases and licenses described in Section 5.10(a), such
consents are not granted or are subject to price or other conditions deemed
unreasonably burdensome by Purchaser or Sellers, Purchaser or a Purchaser
Subsidiary agrees to vacate any applicable real property as soon as reasonably
practicable, but in no event later than ninety (90) Business Days after the
later of the (i) the Closing Date, or (ii) the date on which such negotiations
with respect to such consent are terminated. All costs of relocating Transferred
Employees pursuant to this subsection shall be borne by Sellers, but all rental
charges for replacement premises, shall be borne by Purchaser.

     5.11 Quarterly Financial Information.
          -------------------------------

     (a) From the date hereof through the Closing Date, SLD shall make available
to Purchaser, when completed, the unaudited statutory statements of SLD and
Purchaser shall make available to Sellers, when completed, the unaudited
statutory statements of SRUS and Scottish Re Life, as of the end of, and for,
each fiscal quarter (collectively, the "Quarterly Statutory Statements").

     (b) The Quarterly Statutory Statements when completed, will present fairly,
in all material respects, the financial condition and results of operations of
SLD, SRUS or Scottish Re Life, as the case may be, as of and for the periods
therein specified and, will be prepared in accordance with SAP, in the case of
SLD, and the statutory accounting practices prescribed or permitted by the
insurance regulatory authorities applicable to SRUS or Scottish Re Life, in the
case of SRUS and Scottish Re Life, except as expressly set forth within the
subject financial statements, including the notes thereto (subject to normal
year-end audit adjustments).

     5.12 Letters of Credit; Guaranties.
          -----------------------------

     (a) Other than any letter of credit that is the subject of Section 5.24
hereof, prior to Closing, with respect to any Assigned Contract or Assumed
Reinsurance Contract that requires a Seller or an Affiliate of Sellers to
maintain or guaranty a letter of credit for the benefit of the ceding company or
other party, the relevant account party of such letter of credit shall instruct
the issuing bank or banks not to renew any outstanding

                                       57
<PAGE>

letter of credit so that such letter of credit will expire on its first expiry
date after the Closing Date. Upon such expiration, Purchaser or a Purchaser
Affiliate shall substitute its own letter of credit for the expiring letter of
credit. With respect to any Assigned Contract or Assumed Reinsurance Contract as
to which such a substitution requires the consent of the ceding company or other
party to such Assigned Contract or Assumed Reinsurance Contract, the parties
shall use commercially reasonable efforts to obtain such consent. To the extent
any such consents have not been obtained prior to the Closing, the relevant
Seller or Affiliate of Sellers shall continue to maintain or guaranty the
relevant letters of credit and the parties hereto shall continue their efforts
to obtain such consents after the Closing; provided, however, that if either
Seller or an Affiliate of Sellers is required to maintain or guaranty any such
letters of credit after the Closing, Purchaser shall immediately reimburse such
Seller or such Affiliate for any cost incurred by such Seller following the
Closing to maintain or guaranty any such letter of credit and for the amount of
any draw against such letter of credit or guaranty (including without limitation
any interest imposed on such draw).

     (b) With respect to any Assumed Reinsurance Contract or Assigned Contract
the obligations under which are guaranteed by any Affiliate of the Sellers
(including, in the case of SLDI, any guaranty by SLD), Sellers and Purchaser
agree to use all commercially reasonable efforts to obtain all necessary
consents from the relevant ceding company or other party prior to the Closing to
substitute a guaranty of Purchaser with respect to such Assumed Reinsurance
Contract or Assigned Contract. To the extent any such consents have not been
obtained prior to the Closing, the relevant Seller shall cause the relevant
Affiliate to continue to maintain the relevant guaranty and the parties hereto
shall continue their efforts to obtain such consents after the Closing;
provided, however, that if any Affiliate of Sellers is required to maintain any
such guaranty after the Closing, Purchaser shall immediately reimburse such
Seller or Affiliate of Sellers for any amount paid or incurred by such entity
pursuant to such guaranty.

     (c) With respect to any Assumed Reinsurance Contract or Assigned Contract
under which either Seller or any Affiliate of the Sellers has a commitment to
assume such Assumed Reinsurance Contract or Assigned Contract or assumption
reinsure certain insurance policies (a "Standby Commitment"), to the extent
either Seller or any Affiliate of the Sellers is required to assume the relevant
Assumed Reinsurance Contract or Assigned Contract or assumption reinsure the
relevant policies, Purchaser or a Purchaser Subsidiary shall immediately assume
such Assigned Contract or reinsure on a 100% coinsurance basis such Assumed
Reinsurance Contract or such policies as if such Assumed Reinsurance Contract or
policies were Insurance Contracts.

     5.13 Cooperation after Closing.
          -------------------------

     After the Closing, Sellers and Purchaser shall cooperate with each other by
furnishing any additional information and executing and delivering any
additional documents as may be reasonably requested by the other to further
perfect or evidence the consummation of, or otherwise implement, any transaction
contemplated by this Agreement or the Related Agreements, or to aid in the
preparation of any regulatory filing or financial statement; provided, however,
that any such additional documents must

                                       58
<PAGE>

be reasonably satisfactory to each of the parties and not impose upon either
party any material liability, risk, obligation, loss, cost or expense not
contemplated by this Agreement or the Related Agreements.

     5.14 Regulatory Compliance.
          ---------------------

     Purchaser and Sellers and their agents, Representatives and Affiliates
shall comply in all material respects with all Applicable Law in performing
their obligations under this Agreement and the Related Agreements. In addition,
Purchaser shall ensure that each Purchaser Subsidiary shall hold any Permit
required for such Purchaser Subsidiary to perform such Related Agreement in
compliance in all material respects with Applicable Law.

     5.15 Use of Names.
          ------------

     (a) On the Closing Date, Purchaser, Purchaser Subsidiaries, Sellers and
certain Affiliates of Sellers, as applicable, shall enter into the Trademark and
Trade Name License Agreement.

     (b) Notwithstanding any inference contained herein or prior course of
conduct to the contrary, except as expressly provided herein or in the Trademark
and Trade Name License Agreement, in no event shall Purchaser or any of its
Affiliates have any right to use, nor shall Purchaser or any of its Affiliates
use, the Trademarks, trade names, service marks, corporate names or acronyms of
Sellers or any of their Affiliates, including the Trademarks, service marks,
names and acronyms set forth in Schedule 5.15(a), or any Intellectual Property,
domain name or URL (or any application or registration therefor) related to
those listed in Schedule 5.15(a), owned by, licensed to or used by Sellers or
any of their Affiliates, or any other name, mark, acronym or domain name that is
confusingly similar to such marks, corporate names or acronyms of Sellers. For
the avoidance of doubt, nothing in this Section 5.15(b) shall limit Purchaser's
rights in and to the Owned Intellectual Property identified as part of the
Transferred Assets on Schedule 1.1(h)-1 on and after the Closing.

     (c) The parties hereto acknowledge that any damage caused to Sellers or any
of their Affiliates by reason of the breach by Purchaser or any of its
Affiliates of this Section 5.15 would cause irreparable harm that could not be
adequately compensated for in monetary damages alone; therefore, each party
agrees that, in addition to any other remedies, at law or otherwise, Sellers and
any of their Affiliates shall be entitled to seek an injunction issued by a
court of competent jurisdiction restraining and enjoining any violation by
Purchaser or any of its Affiliates of this Section 5.15.

     5.16 Trust Arrangements.
          ------------------

     At the Closing, (i) SLD and SRUS shall execute and deliver to each other
the SLD Security Trust Agreement and the SLD Reserve Trust Agreement, and (ii)
SLDI and Newco shall execute and deliver to each other the SLDI Reserve Trust
Agreement and the SLDI Security Trust Agreement, each of which shall be
effective as of the Closing

                                       59
<PAGE>

Date and in each case such parties shall arrange for the Trustee to execute and
deliver such agreements.

     5.17 Tax Treatment of Transaction.
          ----------------------------

     (a) For Tax purposes, Sellers and Purchaser agree as follows: (i) the
values of the SLD Non-Compete and SLDI Non-Compete are $100,000 and $50,000,
respectively, and Sellers and Purchaser shall treat each such amount as an
amount paid to the respective Seller for its Non-Compete on the Closing Date;
and (ii) in the case of each of SLD and SLDI, for purposes of Treasury
Regulation Section 1.817.4, Sellers and Purchaser shall treat an amount equal to
the sum of the cash and fair market value of the Transferred Assets (other than
the deferred acquisition cost asset referenced in the definition of Transferred
Statutory Assets) transferred by it pursuant to Sections 2.4 and 2.5, plus
$100,000 (in the case of SLD) and $50,000 (in the case of SLDI), minus the
amount of Non-Insurance Liabilities (as defined below) attributable to SLD or
SLDI (as the case may be) as the insurance premium paid to the respective
Purchaser Affiliate for its assumption of the SLD Reinsured Liabilities or SLDI
Reinsured Liabilities (as the case may be). Sellers and Purchaser shall file (or
cause to be filed) all relevant Tax Returns in a manner consistent with this
Section 5.17(a). For purposes of this Agreement, the "Non-Insurance Liabilities"
of a Seller shall equal the excess of the Assumed Liabilities attributable to
such Seller over the Reinsured Liabilities attributable to the Seller.

     (b) Appropriate adjustments shall be made to the amount of the insurance
premium determined under Section 5.17(a)(ii) to reflect any adjustments to any
components of the premium made pursuant to this Agreement.

     (c) Notwithstanding anything to the contrary in this Section 5.17, in the
event that, due to a change in any relevant Applicable Law or Legal Requirement
(or the issuance of a written administrative interpretation of Applicable Law or
Legal Requirement) after the date of this Agreement and on or before the Closing
Date, Applicable Law or Legal Requirement as of the Closing Date reasonably
requires any different Tax treatment than that described in this Section 5.17,
Sellers and Purchaser shall apply such Tax treatment in a manner consistent with
such Applicable Law or Legal Requirement. Any dispute arising under this Section
5.17(c) shall be resolved by the Independent Accountant within thirty (30)
calendar days of the submission of the dispute to the Independent Accountant by
Sellers or Purchaser. The decision of the Independent Accountant shall be Final
and Binding on the parties hereto, and the costs, expenses, and fees of the
Independent Accountant shall be borne equally by Sellers, on the one hand, and
Purchaser, on the other.

     5.18 Enforcement of Rights.
          ---------------------

     Sellers and Purchaser acknowledge that any damage caused to the other party
by reason of the breach by Sellers, on the one hand, or by Purchaser or any
Purchaser Subsidiary on the other of any provision of the Related Agreements
relating to rights, including without limitation, Sellers' recapture rights with
respect to the Insurance

                                       60
<PAGE>

Contracts or to the trust arrangements contemplated hereby and thereby, could
not be adequately compensated for in monetary damages alone; therefore, each
party agrees that, in addition to any other remedies at law or otherwise, each
party shall be entitled to specific performance of such provisions of the
Related Agreements or an injunction to be issued by a court of competent
jurisdiction pursuant to Section 11.5 of this Agreement restraining and
enjoining any violation of such provisions, in addition to such other equitable
or legal remedies as such court may determine. Purchaser hereby further
acknowledges that, in light of the material obligations that are owed and will
be owed by Purchaser and Purchaser Subsidiaries to Sellers under this Agreement
and the Related Agreements in the future, the remedies available to Sellers
pursuant to this Agreement and the Related Agreements are a material and
integral part of the consideration to be received by Sellers hereunder and
thereunder and that, but for the availability of such remedies and Sellers'
ability to enforce them, Sellers would not consummate the transactions
contemplated by this Agreement and the Related Agreements. Accordingly,
Purchaser and each Purchaser Subsidiary (including any statutory or other
successors and permitted assigns) hereby agree that it will not assert in any
claim, or raise as a defense to any claim, that any remedy specifically provided
for in the Related Agreements, including without limitation, rights of recapture
or offset and recoupment, is not valid, binding or enforceable, or that the
terms of the SLD Reserve Trust Agreement, the SLDI Reserve Trust Agreement, the
SLD Security Trust Agreement, or the SLDI Security Trust Agreement are not
valid, binding or enforceable.

     5.19 Post-Closing Access.
          -------------------

     (a) Following the Closing Date, Sellers shall: (i) prior to the termination
of the Transition Services Agreement allow Purchaser or a Purchaser Subsidiary,
upon reasonable prior notice and during normal business hours and subject to the
rules applicable to visitors at Sellers' offices generally, through its
Representatives, the right, at Purchaser's expense, to examine and make copies
of any Books and Records necessary to be retained by Sellers under Applicable
Law or for purposes of providing the transition services under the Transition
Services Agreement, but only to the extent that such records of Sellers would
otherwise constitute Books and Records; (ii) allow Purchaser or a Purchaser
Subsidiary to interview the Sellers' employees in connection with Purchaser's or
such Purchaser Subsidiary's preparation or examination of regulatory and
statutory filings and financial statements and the conduct of any litigation
relating to the Business or otherwise, or the conduct of any regulatory,
contract holder, participant or other dispute resolution whether pending or
threatened; and (iii) maintain such records for Purchaser's or any Purchaser
Subsidiary's examination and copying until at least the third anniversary of the
Closing Date, after which the Sellers may destroy such records in their
discretion. Access to such employees and records shall not unreasonably
interfere with each Seller's or any successor company's business operations.

     (b) Following the Closing Date, Purchaser or a Purchaser Subsidiary shall:
(i) allow Sellers, upon reasonable prior notice and during normal business
hours, through their Representatives, the right to (x) examine and make copies,
at Sellers' expense, of the Books and Records transferred to Purchaser or a
Purchaser Subsidiary at the Closing and any other books and records that would
have been included in the Books and Records

                                       61
<PAGE>

had they been in existence at the Closing prepared by the Purchaser or any
Affiliate of Purchaser relating to the Business and (y) interview the
Purchaser's or a Purchaser Subsidiary's employees, in the case of either clause
(i)(x) or (i)(y), in connection with Sellers' preparation or examination of
regulatory and statutory filings and financial statements, Sellers' review of
the SLD Revised Closing Statements, the SLDI Revised Closing Statements, or
Sellers' conduct of any regulatory, contract holder, participant or other
dispute resolution whether pending or threatened; and (ii) maintain such Books
and Records for Sellers' examination and copying. Purchaser or a Purchaser
Subsidiary shall maintain and make available to Sellers the Books and Records
for at least three (3) years after the Closing Date or longer if legally
required to do so. Access to such employees, Books and Records shall not
unreasonably interfere with the business operations of Purchaser or its
Affiliates.

     5.20 Termination of New Business.
          ---------------------------

     Not later than the later to occur of (i) the first date upon which the
relevant Seller under each Assumed Reinsurance Contract is permitted by the
terms of such Assumed Reinsurance Contract to terminate the reinsurance of new
business thereunder and (ii) the 120th calendar day following the Closing Date,
the Purchaser Subsidiaries shall, in their respective capacities, as
administrator under the SLD Administrative Services Agreement and the SLDI
Administrative Services Agreement effectuate the termination of such Assumed
Reinsurance Contract as to new business in accordance with the terms thereof. In
the event that any Purchaser Subsidiary fails to terminate any Assumed
Reinsurance Contract as to new business as required by the foregoing sentence,
notwithstanding any contrary provision of this Agreement or any Related
Agreement, the relevant Seller shall be permitted to terminate such Assumed
Reinsurance Contract as to new business, and Purchaser shall reimburse Sellers
for any expenses incurred by such Seller in effectuating such termination.

     5.21 Non-Compete.
          -----------

     (a) Non-Compete. In consideration of the benefits of this Agreement and the
Related Agreements to Sellers and in order to induce Purchaser to enter into
this Agreement, Sellers hereby covenant and agree, subject to the exceptions in
Section 5.21(c), that for a period of three (3) years after the Closing Date
(the "Non-Compete Term"), neither Sellers nor any of their Affiliates shall,
without the prior written consent of Purchaser, directly or indirectly, operate,
engage in, manage or own any equity interest in any individual life reinsurance
business (a "Competing Business") in the Restricted Area (as defined below).

     (b) Restricted Area. The covenants contained in Section 5.21(a) shall be
construed as a series of separate covenants, one for each county or state of the
United States of America (including its territories and possessions) (together,
the "Restricted Area").

     (c) Exceptions. Notwithstanding any other provisions of this Agreement to
the contrary, the provisions of Section 5.21(a) shall not apply to:

                                       62
<PAGE>

          (i) any Person who becomes an Affiliate of either Seller by virtue of
     a Change of Control of ING or any of its subsidiaries except that Section
     5.21(a) shall continue to apply to each Seller and its subsidiaries in such
     event; or

          (ii) any reinsurance agreement or similar arrangement written by an
     ING Affiliate other than the Sellers that is limited to reinsuring: (A) the
     risk of accidental death under individual life insurance policies; (B)
     single premium pre-need life insurance policies; or (C) individual life
     insurance policies originating in conjunction with a reinsurance pool
     sponsored by Reinsurance Management Associates, Inc.; or

          (iii) the management of the Excluded Business; or

          (iv) the acquisition of any block of direct insurance business by
     means of assumption or indemnity reinsurance; or

          (v) any reinsurance transaction with any Affiliate of either Seller or
     the reinsurance of the Excluded Undelivered Contracts; or

          (vi) any reinsurance of any new business with a Person that is not an
     Affiliate of either Seller pursuant to reinsurance arrangements entered
     into with such Person at a time when such Person was an Affiliate of such
     Seller; or

          (vii) any reinsurance arrangement or agreement currently in effect or
     that will come into effect pursuant to this Agreement (including without
     limitation the Industry Risk Retrocession Agreements); or

          (viii) investments in the ordinary course of business by ING, Sellers
     or their Affiliates in not more than nine and nine/tenths percent (9.9%) of
     the outstanding voting stock or stock equivalents of any entity engaging in
     any lines of business constituting a Competing Business;

          (ix) any Business recaptured by either Seller pursuant to the
     Reinsurance Agreements;

          (x) any transaction or transactions, as a result of which ING or any
     of its Affiliates acquires any interest in any Person engaging in a
     Competing Business, if the total revenues of such Person attributable to
     the Competing Business for the fiscal year immediately preceding such
     acquisition are less than 20% of such Person's total revenues for the
     fiscal year immediately preceding such acquisition, and the retention of
     such interest; or

          (xi) any transaction or transactions, as a result of which ING or any
     of its Affiliates acquires any interest in any Person engaging in a
     Competing Business, if the total revenues of such Person attributable to
     the Competing

                                       63
<PAGE>

     Business for the fiscal year immediately preceding such acquisition are
     greater than 20% of such Person's total revenues for the fiscal year
     immediately preceding such acquisition if ING or its Affiliates as
     applicable dispose of such Competing Business within eighteen (18) months
     after such acquisition.

     5.22 Non-Solicitation.
          ----------------

     (a) Except as otherwise contemplated by Section 5.8 of this Agreement,
Purchaser hereby covenants and agrees that neither it nor any of its Affiliates
shall, for a period of two (2) years from the Closing Date, without the prior
written consent of Sellers, directly or indirectly, solicit for employment,
hire, or enter into an agency or consulting relationship with any personnel
employed by Sellers or their Affiliates engaged in the conduct of the Business,
in each case during such employment and for a period of six (6) months after any
termination thereof.

     (b) Each Seller hereby covenants and agrees that neither it nor any of its
Affiliates shall, for a period of two (2) years from the Closing Date, without
the prior written consent of Purchaser, directly or indirectly, solicit for
employment, hire or enter into an agency relationship with, any employee of
Purchaser or its Affiliates engaged in the conduct of the Business, during such
employment and for a period of six (6) months after any termination thereof;
provided, however, that in the event the Business is recaptured by Sellers
pursuant to the Reinsurance Agreements, nothing herein shall prohibit Sellers or
their Affiliates from, directly or indirectly, soliciting for employment, hiring
or entering into an agency relationship with, any employee of Purchaser or its
Affiliates engaged or previously engaged in the conduct of the Business, and
Sellers and their Affiliates shall not be required to obtain Purchaser's written
consent thereto.

     (c) Purchaser hereby covenants and agrees that in the event this Agreement
is terminated at any time prior to the Closing, neither it nor any of its
Affiliates shall, for a period of two (2) years from and including the date of
such termination, without the prior written consent of Sellers, directly or
indirectly, solicit for employment, hire or enter into an agency relationship
with, any personnel of either Seller or its Affiliates engaged in the conduct of
the Business.

     (d) Nothing in this Section 5.22 shall prohibit any party from hiring any
person who responds to a general solicitation of employment in any newspaper,
magazine, trade publication, electronic medium or other media or from soliciting
or hiring any person whose employment with the other party terminated six (6)
months prior to such solicitation or hiring or was involuntarily terminated by
the other party.

     5.23 Enforcement.
          -----------

     Each of the parties specifically agrees that the covenants contained in
Sections 5.21 and 5.22 are an integral part of the inducement of the respective
parties to enter into this Agreement and that each party (or its successors or
assigns) shall be entitled to injunctive relief in addition to all other legal
and equitable rights and remedies available to it in connection with any breach
by the other party or any of its Affiliates of any

                                       64
<PAGE>

provision of Sections 5.21 and 5.22 and that, notwithstanding the foregoing, no
right, power or remedy conferred upon or reserved or exercised by a party in
Sections 5.21 and 5.22 is intended to be exclusive of any other right, power or
remedy, each and every one of which (now or hereafter existing at law, in
equity, by statute or otherwise) shall be cumulative and concurrent.

     5.24 Credit Support.
          --------------

     (a) Purchaser acknowledges that SLDI currently maintains certain credit
instruments (the "ING Facility") for the benefit of SLD in connection with the
Business retroceded by SLD to SLDI (the "Retroceded Business") pursuant to the
reinsurance agreements identified on Schedule 5.24(a) hereto (the "SLD-SLDI
Retrocession Agreements") in the amount required, at any given time, in order to
enable SLD to take full statutory reinsurance reserve credit for the SLD-SLDI
Retrocession Agreements (referred to herein as the "Excess Reserve Amount"). For
the avoidance of doubt and as a guide to the future calculation of the Excess
Reserves Amount, the parties acknowledge and agree that the Excess Reserves
Amount as of June 30, 2004 was $2,265,573,972.00.

     (b) Purchaser shall use commercially reasonable efforts to implement one or
more permanent capital relief facilities or financing facilities, including
without limitation trusts or other structured finance alternatives used to
collateralize reinsurance reserve credit, specifically covering the Retroceded
Business and providing reasonably comparable security for SLD as described in
the following sentence (any such facility being referred to herein as a
"Purchaser Facility"). Upon the establishment of any Purchaser Facility and upon
Sellers' review of such Purchaser Facility and reasonable satisfaction that the
documentation relating to such Purchaser Facility provides SLD with security
with respect to the collateral used to obtain such reinsurance reserve credit
that is reasonably comparable in terms of protection against other creditors to
the security provided to SLD by the SLD Security Trust Agreement, the parties
hereto agree to simultaneously (i) cause SLDI to recapture the Retroceded
Business that is covered by such Purchaser Facility (the "Recaptured Business")
from Newco, (ii) cause SLD to recapture the Recaptured Business from SLDI, (iii)
reinsure the Recaptured Business to SRUS or Scottish Re Life or another
Purchaser Affiliate (as specified in the following sentence) under a new
agreement or agreements substantially identical to one or more of the
Reinsurance Agreements (except that it will not include recapture rights), each
of which shall be deemed, for all purposes of this Agreement, to be a
Reinsurance Agreement, and (iv) release assets held in the SLD Security Trust
Account and SLDI Security Trust Account in accordance with the terms of the
relevant trust agreement. If at the time of such recapture and retrocession,
SRUS does not have all Permits necessary to insure that SLD receives full
reinsurance reserve credit in Colorado and New York, and if at such time
Scottish Re Life has all such permits, Scottish Re Life or another Purchaser
Affiliate having all such permits shall (x) reinsure such Recaptured Business
rather than SRUS, and (y) be deemed a Purchaser Subsidiary for all purposes
under this Agreement. If neither SRUS nor Scottish Re Life nor any other
Purchaser Affiliate has all such Permits at such time, SRUS shall reinsure such
Recaptured Business and shall obtain letters of credit, establish reinsurance
reserve credit trusts or take such other actions as will insure that SLD
receives full reinsurance reserve credit for such reinsurance.

                                       65
<PAGE>

Purchaser and Sellers acknowledge and agree that, as between the parties, such
recapture and retrocession to SRUS or Scottish Re Life or another Purchaser
Affiliate shall be effectuated in a manner designed to insure that there will be
no net negative economic effect on either Seller or any of their Affiliates.

     (c) Purchaser agrees that any time after December 31, 2005, if Purchaser is
preparing to implement a permanent capital relief facility or financing facility
used to collateralize reinsurance reserve credit with a duration longer than one
(1) year that is not a traditional bank financing or one of the facilities
currently being negotiated by Purchaser or one of its Affiliates as identified
on Schedule 5.24(c) (a "Permanent Facility"), prior to implementing such
Permanent Facility Purchaser will ascertain whether, viewed on a cumulative
basis, at least 50% of its Permanent Facilities implemented since December 31,
2005 cover the Retroceded Business. If not, Purchaser shall at SLD's request,
use commercially reasonable efforts to devote at least two-thirds of such
Permanent Facility and of each succeeding Permanent Facility implemented by
Purchaser to the Retroceded Business until the cumulative percentage of the
Permanent Facilities implemented after December 31, 2005 and used to cover the
Retroceded Business is at least fifty percent (50%). Notwithstanding the
foregoing sentence, if Purchaser or any of its Affiliates implements any
Permanent Facility prior to December 31, 2005 for any in-force business acquired
by Purchaser or any of its Affiliates on or after the Closing Date, then
Purchaser shall use commercially reasonable efforts to cause at least fifty
percent (50%) of such Permanent Facility to cover all or a portion of the
Retroceded Business.

     (d) As long as the ING Facility covers any of the Retroceded Business after
the Closing Date, Purchaser shall pay to Sellers, quarterly in arrears on the
last Business Day of each calendar quarter, a facility fee (the "Facility Fee")
based on the amount of the Excess Reserves Amount that was covered by the ING
Facility as of the end of the preceding calendar quarter (the "Covered Amount")
equal to:

          (A) for any calendar quarter ending in 2004 or 2005, one percent
     (1.00%) (calculated on a per annum basis) multiplied by the Covered Amount;
     provided that in the event any Retroceded Business is recaptured pursuant
     to Sections 5.24(b) and (c) during 2005, Sellers shall pay to Purchaser a
     refund equal to seventy-five percent (75%) of the portion of the Facility
     Fee payments previously paid by Purchaser with respect to such Recaptured
     Business;

          (B) for any calendar quarter ending in 2006, one percent (1.00%)
     (calculated on a per annum basis) multiplied by the Covered Amount;
     provided that in the event any Retroceded Business is recaptured pursuant
     to Sections 5.24(b) and (c) during 2006, Sellers shall pay to Purchaser a
     refund equal to fifty percent (50%) of the portion of the previous four
     Facility Fee payments made by the Purchaser with respect to such Recaptured
     Business;

          (C) for any calendar quarter ending in 2007, one and one-quarter
     percent (1.25%) (calculated on a per annum basis) multiplied by the Covered
     Amount; provided that in the event any Retroceded Business is recaptured

                                       66
<PAGE>

     pursuant to Sections 5.24(b) and (c) during 2007, Sellers shall pay to
     Purchaser a refund equal to twenty-five percent (25%) of the portion of the
     previous four Facility Fee payments made by the Purchaser with respect to
     such Recaptured Business;

          (D) for any calendar quarter ending in 2008, one and one-half percent
     (1.50%) (calculated on a per annum basis) multiplied by the Covered Amount;
     and

          (E) for any calendar quarter ending after December 31, 2008, one and
     three-quarters percent (1.75%) (calculated on a per annum basis) multiplied
     by the Covered Amount.

     (e) Purchaser hereby agrees that, so long as the ING Facility covers any of
the Retroceded Business, Sellers and their Affiliates shall have the sole
discretion to make adjustments with respect to the portions of the Excess
Reserves Amount that are secured by the letters of credit within the ING
Facility, any trust or any alternative facility established by Sellers.

     5.25 SLD-SLDI Retrocession Agreements.
          --------------------------------

     Prior to Closing, Sellers shall amend each SLD-SLDI Retrocession Agreement
identified on Schedule 5.24(a) to provide that effective as of the Effective
Time (i) assets held by SLD on funds withheld basis and modified coinsurance
basis pursuant to such SLD-SLDI Retrocession Agreements shall be segregated from
other assets of SLD to the extent reasonably necessary to permit separate
accounting for such assets, (ii) such segregated assets shall not be transferred
to the Purchaser Subsidiaries but shall be managed by Purchaser or an Affiliate
of Purchaser in accordance with an asset management agreement substantially on
the terms generally described in the last sentence of this Section 5.25 (the
"Asset Management Agreement"), and (iii) the investment income to be credited to
SLDI under the SLD-SLDI Retrocession Agreements shall be the actual total net
investment results on such segregated assets, including the amortization of the
interest maintenance reserve with respect to such assets attributable to
transactions effected prior to the Closing. Except as may be required by
Applicable Law, the segregation contemplated by this Section 5.25 shall not
require that such investment assets be legally segregated in a trust, escrow
account or otherwise. Not later than ten (10) calendar days prior to the Closing
Date, the Purchaser shall provide a notice to the Sellers identifying any
Investment Assets that it elects to have retained by SLD and included in the
segregated portfolio contemplated by this Section 5.25. Promptly following the
date of this Agreement, the parties hereto shall negotiate in good faith an
investment management agreement pursuant to which Purchaser or an Affiliate of
Purchaser will manage the segregated assets described in this Section 5.25 in
accordance with all Applicable Law and the investment guidelines attached as
Exhibit U hereto, taking into account the coordination of legal investment
limitations applicable on an entity-wide basis.

     5.26 Newco; Keepwell Agreements.
          --------------------------

                                       67
<PAGE>

     (a) Promptly following the date hereof, Purchaser shall use its reasonable
best efforts to form Newco under the laws of Bermuda and cause Newco to be
licensed as a Bermuda insurance company with full power and authority to enter
into this Agreement and any Related Agreement to which it is to be a party.
Prior to Closing, Purchaser shall cause Scottish Annuity & Life to enter into a
capital maintenance or so-called "keepwell" agreement with Newco (the "Newco
Keepwell") substantially in the form set forth in Exhibit Y. Prior to or at the
Closing, Purchaser shall cause Newco to execute a counterpart of this Agreement.
From and after the Closing, Newco shall not engage in any business other than
the operation of any Business it has reinsured pursuant to this Agreement and
any Related Agreement.

     (b) If despite Purchaser's reasonable best efforts, Newco is not duly
formed or licensed as a Bermuda insurance company at such time as all other
conditions to Closing set forth in Articles VI and VII have been satisfied,
Sellers may, but shall not be required to, elect to delay the Closing until such
time, if any, as Newco becomes so licensed, in which case Purchaser shall not be
entitled to terminate this Agreement pursuant to Section 8.1(c). Alternatively,
Sellers may, in their sole discretion, require Purchaser to designate another
subsidiary of Purchaser duly licensed as an insurance company (the "Substitute
Newco") to assume the obligations of Newco hereunder and under any Related
Agreement and the other agreements contemplated hereby, subject to the following
conditions: (i) Sellers shall have the right to perform such due diligence on
the proposed Substitute Newco as Sellers deem appropriate in their sole
discretion; and (ii) Purchaser shall cause Scottish Annuity & Life and
Substitute Newco to enter into an agreement identical to the Newco Keepwell, but
naming Substitute Newco as a party thereto. Purchaser shall cause Substitute
Newco to divest itself of all business other than that acquired from Sellers
hereunder not later than the third month after Closing.

     (c) In the event Scottish Re Life or another Purchaser Affiliate is
substituted for SRUS pursuant to Section 5.24(b), Purchaser shall also cause
Scottish Annuity & Life to enter into a keepwell agreement with Scottish Re Life
identical to the Net Worth Maintenance Agreement between Scottish Annuity & Life
and SRUS, but naming Scottish Re Life or such other Purchaser Affiliate as a
party thereto.

     5.27 Industry Risks Retrocession Arrangement.
          ---------------------------------------

     Effective as of the Effective Time, if a Purchaser Subsidiary that enters
into a Reinsurance Agreement covering any of the individuals for whom the risk
reinsured to such Purchaser Subsidiary under the applicable Reinsurance
Agreement (net of any retrocession by Sellers to any third party reinsurers)
with respect to the life of such individual that, taken together with the risk
assumed by such Purchaser Subsidiary with respect to such individual under other
reinsurance agreements and net of any retrocessions by such Purchaser Subsidiary
to any third party reinsurers, exceeds such Purchaser Subsidiary's retention
limit (i.e., $2 million per life) with respect to any single individual life
(the "Excess Retention Risk"), such Purchaser Subsidiary will retrocede to SLD
the Excess Retention Risk that is known to the parties hereto as of the Closing
Date pursuant to the Industry Risks Retrocession Agreement. Not later than June
30, 2005, Purchaser and Sellers shall mutually identify in good faith any

                                       68
<PAGE>

additional Excess Retention Risk based on complete data shown on the Sage
System, and such additional Excess Retention Risk shall be deemed to be included
in the applicable Industry Risks Retrocession Agreement effective as of the
Effective Time until such time as third party retrocessional coverage for such
Excess Retention Risk is in effect pursuant to the following sentence. On and
after the Closing Date, Purchaser and Purchaser Subsidiaries shall use
commercially reasonable efforts to obtain retrocessional coverage on the Excess
Retention Risk to be effective as of the Effective Time, from third party
reinsurers at rates and terms that are, within the reasonable discretion of the
Purchaser Subsidiaries, commercially reasonable.

     5.28 Recapture of Certain Business.
          -----------------------------

     Schedule 5.28 sets forth a list of Insurance Contracts retroceded by SLD to
SLDI under the SLD-SLDI Retrocession Agreements that may be recaptured by SLD in
accordance with this Section 5.28. Not later than thirty (30) calendar days
after the date of this Agreement, Purchaser and Sellers shall in good faith
mutually select those reinsurance contracts to be recaptured from among those
identified on Schedule 5.28. As of the Effective Time, SLD shall recapture such
Insurance Contracts and release SLDI from all obligations and liabilities with
respect thereto. Purchaser and Sellers acknowledge and agree that, as between
the parties, such recapture shall be effectuated in a manner designed to insure
that there will be no net negative economic effect on either Seller or any of
their Affiliates.

     5.29 Term Sheets.
          -----------

     Promptly following the execution of this Agreement, the parties shall
cooperate in good faith to reduce into a definitive agreement each of the term
sheets set forth in the Exhibits hereto such that (i) each of such agreements
required to be filed with any insurance regulator may be filed not later than
November 15, 2004 and (ii) all of such agreements will be ready for execution
not later than December 15, 2004.

     5.30 Experience Refunds.
          ------------------

     In the event that all or any portion of any experience refund earned in
calendar year 2004 pursuant to any Retroceded Reinsurance Contract is received
by either Seller prior to Closing, such Seller shall pay the amount so received
to SRUS or Newco, as applicable, at the Closing.

     5.31 Certain Unexecuted Reinsurance Contracts.
          ----------------------------------------

     Prior to the Closing, Sellers shall cooperate with Purchaser in providing
all information reasonably requested by Purchaser regarding Unexecuted Assumed
Reinsurance Contracts and Unexecuted Retroceded Reinsurance Contracts that are
not Delivered Unexecuted Assumed Reinsurance Contracts or Delivered Unexecuted
Assumed Reinsurance Contracts, as the case may be (collectively, the
"Undelivered Contracts"). Not later than thirty (30) calendar days following the
Closing Date, Purchaser shall identify in a notice to Sellers any Undelivered
Contracts it elects not to

                                       69
<PAGE>

reinsure under the Reinsurance Agreements (the "Excluded Undelivered
Contracts"), the Excluded Undelivered Contracts will not be deemed to be
"Insurance Contracts" for the purposes of this Agreement or the Reinsurance
Agreements. However, Purchaser or a Purchaser Affiliate will administer the
Excluded Undelivered Contracts pursuant to the terms of the SLD Administrative
Services Agreement and the SLDI Administrative Services Agreement, as the case
may be. Appropriate adjustments reflecting the exclusion of the Excluded
Undelivered Contracts, will be made in the Revised Closing Statements and the
Final Closing Statements.

     5.32 Investment Portfolio.
          --------------------

     On or prior to November 3, 2004, Sellers shall have delivered to Purchaser
a list of the Investment Assets in the Initial Portfolio together with a
calculation of the market value for each such Investment Asset in accordance
with the methodologies set forth in Schedule 1.1(b).

                                   ARTICLE VI

                     Conditions Precedent To The Obligation
                     --------------------------------------
                              Of Purchaser To Close
                              ---------------------

     Purchaser's obligation to consummate the transactions contemplated by this
Agreement and the Related Agreements is subject to the fulfillment on or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by Purchaser.

     6.1 Representations, Warranties and Covenants.
         -----------------------------------------

     The representations and warranties of each Seller contained in this
Agreement shall be true and correct on the date of this Agreement and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date, except that any such representations and warranties that are given
as of a particular date and relate solely to a particular date or period shall
be true and correct as of such date or period, and except where the failure to
be true and correct (without regard to any materiality qualifiers therein) would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Each Seller shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. On the Closing
Date, each Seller shall have delivered to Purchaser a certificate dated as of
the Closing Date, and signed by a senior officer of such Seller, to the effect
contemplated by this Section 6.1.

     6.2 Related Agreements.
         ------------------

     The Related Agreements shall have been duly executed and delivered by each
Seller and the Trustee, as applicable, on or prior to the Closing Date and such
agreements

                                       70
<PAGE>

shall be in full force and effect with respect to each Seller, as applicable, on
the Closing Date.

     6.3 Secretary's Certificates.
         -------------------------

     Each Seller shall have delivered to Purchaser a certificate of the
secretary or assistant secretary thereof, dated as of the Closing Date, as to
the resolutions of the Board of Directors (or other similar governing body) of
such party authorizing the execution, delivery and performance of this Agreement
and the Related Agreements to which it is a party, as to the status and
signature of each of its officers who executed and delivered this Agreement and
such Related Agreements and any other document delivered by it in connection
with the transactions contemplated by this Agreement and the Related Agreements,
and as to its due incorporation, existence and good standing.

     6.4 Approvals and Consents.
         ----------------------

     The approvals and consents of any Governmental Authority listed on Schedule
3.3 and Schedule 4.7 shall have been received or deemed received in each case
without any material conditions, restrictions or limitations. All applicable
waiting periods under any federal or state statute or regulation shall have
expired or been terminated.

     6.5 Injunction and Litigation.
         -------------------------

     There shall be in effect no injunction, writ, preliminary restraining order
or other order issued by any court of competent jurisdiction directing that the
transactions contemplated by this Agreement or the Related Agreements not be
consummated as herein or therein provided.

     6.6 Material Adverse Effect.
         -----------------------

     There shall not have been or occurred any change, event or circumstance
that, individually or in the aggregate with all other changes, events or
circumstances, has had or would reasonably be expected to have a Material
Adverse Effect.

     6.7 Sundry Assets.
         -------------

     Newco shall have received a consent from the Bermuda Monetary Authority for
the treatment of the deferred acquisition cost of SLDI described in Schedule
2.4(b) as a sundry asset.

     6.8 New Business Under Assumed Reinsurance Contracts.
         ------------------------------------------------

     Purchaser shall have received a certification from Sellers that as of
November 15, 2004, they have sent notices to each counter-party to each Assumed
Reinsurance Contract terminating such Assumed Reinsurance Contract for new
business.

                                       71
<PAGE>

                                  ARTICLE VII

                     Conditions Precedent To The Obligation
                     --------------------------------------
                               Of Sellers To Close
                               -------------------

     Sellers' obligation to consummate the transactions contemplated by this
Agreement and the Related Agreements is subject to the fulfillment on or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by Sellers.

     7.1 Representations, Warranties and Covenants.
         -----------------------------------------

     The representations and warranties of Purchaser and each Purchaser
Subsidiary contained in this Agreement shall be true and correct on the date of
this Agreement and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date, except that any such representations
and warranties that are given as of a particular date and relate solely to a
particular date or period shall be true and correct as of such date or period,
and except where the failure to be true and correct (without regard to any
materiality qualifiers therein) would not reasonably be expected to impair,
individually or in the aggregate, the ability of Purchaser or any Purchaser
Subsidiary to perform its obligations under this Agreement and the Related
Agreements. Purchaser and each Purchaser Subsidiary shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by Purchaser or such Purchaser
Subsidiary on or prior to the Closing Date. On the Closing Date, Purchaser shall
have delivered to Sellers a certificate dated as of the Closing Date, and signed
by a senior officer of Purchaser, to the effect contemplated by this Section
7.1.

     7.2 Related Agreements.
         ------------------

     The Related Agreements shall have been duly executed and delivered by
Purchaser or a Purchaser Subsidiary and the Trustee, as applicable, on or prior
to the Closing Date and such agreements shall be in full force and effect with
respect to Purchaser or such Purchaser Subsidiary.

     7.3 Secretary's Certificates.
         -------------------------

     Purchaser and each Purchaser Subsidiary shall have delivered to Sellers a
certificate of the secretary or assistant secretary of Purchaser and such
Purchaser Subsidiary, dated as of the Closing Date, as to the resolutions of the
Board of Directors (or other similar governing body) of Purchaser or such
Purchaser Subsidiary authorizing the execution, delivery and performance of this
Agreement and the Related Agreements to which it is a party, as to the status
and signature of each of its officers who executed and delivered this Agreement
and the Related Agreements and any other document delivered by it in connection
with the transactions contemplated by this Agreement and the Related Agreements
and as to its due incorporation, existence and good standing.

                                       72
<PAGE>

     7.4 Approvals and Consents.
         ----------------------

     The approvals and consents of any Governmental Authority listed in Schedule
3.3 and Schedule 4.7 shall have been received or deemed received in each case
without any material conditions, restrictions or limitations. All applicable
waiting periods under any federal or state statute or regulation shall have
expired or been terminated.

     7.5 Injunction and Litigation.
         -------------------------

     There shall be in effect no injunction, writ, preliminary restraining order
or any order of any nature directing that the transactions contemplated by this
Agreement and the Related Agreements not be consummated as herein or therein
provided.

     7.6 Purchaser Financial Condition.
         -----------------------------

     There shall not have been any material adverse change in the financial
condition of Purchaser, Scottish Annuity & Life or any Purchaser Subsidiary, and
Purchaser, Scottish Annuity & Life and each Purchaser Subsidiary shall be
solvent and paying its obligations in the ordinary course of business.

     7.7 Purchaser Financing.
         --------------------

     Purchaser shall have completed a financing pursuant to which the
consolidated statutory surplus of its insurance subsidiaries will be increased
by at least $150 million, raised in the form of common stock, ordinary shares,
warrants or convertible securities sold by Purchaser or an Affiliate of
Purchaser, without giving effect to the transactions contemplated by this
Agreement.

     7.8 Newco.
         -----

     Newco shall have been duly formed and licensed as a Bermuda insurance
company, and the keepwell agreements contemplated by Section 5.26 shall be in
full force and effect.

                                  ARTICLE VIII

                                   Termination
                                   -----------

     8.1 Termination of Agreement.
         -------------------------

     This Agreement may be terminated at any time prior to the Closing:

     (a) By Sellers in writing, without liability (except as provided in Section
8.2), if Purchaser or any Purchaser Subsidiary shall (i) fail to perform in any
material respect its agreements contained herein required to be performed by it
prior to the date of such termination, or (ii) breach any of its representations
or warranties contained herein so as to cause a condition to closing to be
incapable of satisfaction, which failure or breach is

                                       73
<PAGE>

not cured within thirty (30) calendar days after Sellers have notified Purchaser
in writing of their intent to terminate this Agreement pursuant to this
subsection (a) of Section 8.1.

     (b) By Purchaser in writing, without liability (except as provided in
Section 8.2), if Sellers shall (i) fail to perform in any material respect their
agreements contained herein required to be performed by them prior to the date
of such termination, or (ii) breach any of their representations or warranties
contained herein so as to cause a condition to closing to be incapable of
satisfaction, which failure or breach is not cured within thirty (30) calendar
days after Purchaser has notified Sellers in writing of its intent to terminate
this Agreement pursuant to this subsection (b) of Section 8.1.

     (c) By Purchaser (except as provided in Section 5.26(b)) or Sellers if the
Closing has not occurred on or before March 31, 2005 (the "End Date").

     (d) At any time on or prior to the Closing Date, by mutual written consent
of Sellers and Purchaser.

     (e) By either Sellers or Purchaser in the event of the issuance of a final,
nonappealable order restraining or prohibiting the transactions contemplated by
this Agreement and the Related Agreements.

     8.2 Procedure on Termination.
         -------------------------

     In the event of termination of this Agreement pursuant to Section 8.1
hereof, notice of termination shall be given pursuant to the notice provisions
herein, and the transactions contemplated by this Agreement shall be terminated
without further action by any party except that the provisions of Sections 5.2,
11.1, 11.2, 11.3, 11.5, 11.6, 11.8 and 11.9 shall remain in full force and
effect. If the transactions contemplated by this Agreement are terminated as
provided herein:

     (a) such termination shall not in any way limit or restrict the rights and
remedies of any party hereto against any other party which has breached any of
the representations, warranties, covenants, agreements or other provisions of
this Agreement prior to termination hereof; and

     (b) any confidentiality obligations of the parties (arising under this
Agreement or under any other confidentiality agreement entered into by Seller
and Purchaser, including, but not limited to, the Confidentiality Agreement)
shall survive the termination of this Agreement.

                                   ARTICLE IX

                                   Tax Matters
                                   -----------

     9.1 Tax Matters.
         -----------

     (a) Sellers (or any Affiliate thereof) agree to indemnify and hold harmless
Purchaser (and any Affiliate thereof) against the following Taxes and against
any Loss

                                       74
<PAGE>

incurred in contesting or otherwise in connection with any such Taxes: (i) any
Excluded Tax Liability; or (ii) any Taxes relating to any breach by Sellers (or
any Affiliate thereof) of a warranty or representation or any covenant of this
Agreement. Purchaser (or any Affiliate thereof) agrees to indemnify and hold
harmless Sellers (or any Affiliate thereof) against the following Taxes and
against any Loss incurred in contesting or otherwise in connection with any such
Taxes: (i) any Taxes relating to the Business or the Transferred Assets other
than any Excluded Tax Liability; or (ii) any Taxes relating to any breach by
Purchaser (or any Affiliate thereof) of a warranty or representation or any
covenant of this Agreement.

     (b) Sellers (or any Affiliate thereof) and Purchaser (or any Affiliate
thereof) will provide each other with such assistance and information relating
to the Business or the Transferred Assets as may reasonably be requested in
connection with the preparation and filing of any Tax rulings or request for
rulings with respect to Taxes, Tax Returns (or amendments thereto), audit or
other examination by any Tax Authority relating to liability for Taxes,
determining a liability for Taxes, or making representations to or furnishing
information to parties subsequently desiring to purchase all or a part of the
Business or the Transferred Assets, and will each retain and provide to the
other party all records and other information which may be relevant to any such
Tax Return, audit or examination, proceeding or determination, provided that
such cooperation shall not include providing copies of relevant Tax Returns or
portions thereof, accompanying schedules, or related work papers. In addition,
Sellers (on the one hand) and Purchaser (on the other) agree to timely notify
the other party of any proposed Tax Claims that reasonably could directly and
materially affect the Taxes of the other party (and any Affiliate thereof) for
any Tax period (or portion thereof) beginning after the Closing Date.

     (c) Sellers shall pay fifty percent (50%) and Purchaser shall pay fifty
percent (50%) of all Transfer Taxes arising out of or in connection with the
transactions effected pursuant to this Agreement, and shall indemnify, defend,
and hold harmless Purchaser or Sellers (as the case may be) with respect to such
Transfer Taxes. Sellers (or any Affiliate thereof) shall use their commercially
reasonable efforts to obtain Tax clearance certificates from the appropriate Tax
Authorities prior to the Closing Date or as soon as practicable thereafter, and
Purchaser shall cooperate with Sellers in obtaining such certificates. Sellers
(or any Affiliate thereof) shall within ninety (90) calendar days after the
Closing Date, file any Transfer Tax Returns required as a result of the transfer
to Purchaser (or any Affiliate thereof) of the Business or the Transferred
Assets. Purchaser shall remit fifty percent (50%) of the Taxes shown on such Tax
Returns (or the amount of any additional Transfer Taxes attributable to any
adjustment with respect to any such Tax Returns by any Tax Authority) to Sellers
within ten (10) calendar days of its receipt of a copy of such Tax Returns (or
evidence of the payment by Sellers of such additional Transfer Taxes).

     (d) Notwithstanding any provision in this Agreement to the contrary, the
obligations of Sellers (and any Affiliate thereof) to indemnify and hold
harmless Purchaser (and any Affiliate thereof) pursuant to this Agreement with
respect to Taxes or any Losses related thereto, shall terminate at the close of
business on the 30th calendar

                                       75
<PAGE>

day following the expiration of any applicable statute of limitations (giving
effect to any waiver, mitigation or extension thereof).

     (e) The parties agree to treat all payments made either to or for the
benefit of the other under this Section 9.1 and Article X as adjustments to the
consideration provided in Sections 2.4 and 2.5 of this Agreement and that such
treatment shall govern for purposes hereof, except to the extent that the Laws
of a particular jurisdiction provide otherwise, in which case such payments
shall be made in an amount sufficient to indemnify the relevant party on an
after-Tax basis, computed as though the indemnified party will be taxed on such
payment at the highest applicable marginal income Tax rate under federal, state
and local law.

     (f) The rights and obligations of each Party with respect to providing
notice regarding any Tax matters shall be governed by Section 10.3 and control
over any claim for Taxes made by a Tax Authority shall be determined as provided
under Section 10.3.

     (g) All powers of attorney granted by Sellers (or any Affiliate thereof)
with respect to the Business or the Transferred Assets that could affect the
Business or the Transferred Assets after the Closing Date shall terminate
immediately prior to the Closing and shall have no force or effect as of the
Closing Date. Any Tax Sharing Agreement that relates to the Transferred Assets
and that could affect the Business or the Transferred Assets after the Closing
Date shall be terminated immediately prior to the Closing and such agreements
will have no force or effect as of such time and no amounts will be due or
payable by Purchaser (or any Affiliate thereof) or Sellers (or any Affiliate
thereof) with respect to any such agreements.

                                   ARTICLE X

                                 Indemnification
                                 ---------------

     10.1 Sellers' Indemnification.
          ------------------------

     Subject to the limitations set forth in Section 10.4, from and after the
Closing Date, each Seller, severally and not jointly, shall indemnify, defend
and hold Purchaser, each of its Affiliates and each of their respective
directors, officers and employees (the "Purchaser Indemnified Parties") harmless
from and against any Loss arising or resulting from:

     (a) any breach of any representation or warranty made by such Seller
contained in this Agreement or from any misrepresentation in any certificate
furnished or to be furnished to Purchaser hereunder by such Seller;

     (b) any breach of any covenant of such Seller contained in this Agreement;

     (c) the Retained Liabilities of such Seller; and

                                       76
<PAGE>

     (d) any successful enforcement of the obligations contained in this Section
10.1 against such Seller.

     For the purposes of this Section 10.1, the Purchaser Indemnified Parties
shall not have the right to obtain indemnification, or to make a claim for
breach of any other provision of this Agreement or to any other remedy at law or
in equity with respect to any matter that was the subject of a dispute submitted
to, and specifically resolved by, the Independent Accountant pursuant to Section
2.5 or that was resolved by written agreement of the parties hereto pursuant to
the terms of Section 2.5.

     10.2 Purchaser's Indemnification.
          --------------------------

     Subject to the limitations set forth in Section 10.4, from and after the
Closing, each Purchaser Subsidiary, severally and not jointly, and Purchaser
jointly and severally with each Purchaser Subsidiary shall indemnify, defend and
hold Sellers, each of their Affiliates and their respective directors, officers
and employees harmless from and against any Loss resulting from:

     (a) any breach of any representation or warranty contained in this
Agreement on the part of Purchaser or any Purchaser Subsidiary or from any
misrepresentation in any certificate furnished or to be furnished to Sellers
hereunder;

     (b) any breach of any covenant of Purchaser or any Purchaser Subsidiary
contained in this Agreement;

     (c) the Assumed Liabilities (to the extent that the relevant Loss resulting
from the Assumed Liabilities does not relate to a breach of any representation
or warranty by Sellers contained in this Agreement or in any certificate
furnished by Sellers hereunder;) and

     (d) any successful enforcement of the obligations contained in this Section
10.2.

For the purposes of this Section 10.2, Sellers shall not have the right to
obtain indemnification, or to make a claim for breach of any other provision of
this Agreement or to any other remedy at law or in equity with respect to any
matter that was the subject of a dispute submitted to, and specifically resolved
by, the Independent Accountant pursuant to Section 2.5 or that was resolved by
written agreement of the parties hereto pursuant to the terms of Section 2.5.

     10.3 Indemnification Procedures.
          --------------------------

     (a) Promptly after receipt from any third party by a party hereto (the
"Indemnified Party") of a notice of any demand, claim or circumstance that,
immediately or with the lapse of time, would give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (a "Claim") that may result in a Loss for which indemnification
may be sought hereunder, the Indemnified Party shall give notice thereof (the
"Claims Notice") to the party obligated to provide

                                       77
<PAGE>

indemnification pursuant to Section 10.1 or 10.2 (the "Indemnifying Party");
provided, however, that a failure to give such notice shall not prejudice the
Indemnified Party's right to indemnification hereunder except to the extent that
the Indemnifying Party is actually prejudiced thereby. The Claims Notice shall
describe the Claim in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the Loss that has been or may be suffered by the
Indemnified Party.

     (b) The Indemnifying Party may elect to compromise or defend, at its own
expense and by its own counsel reasonably satisfactory to the Indemnified Party,
any Claim. If the Indemnifying Party elects to compromise or defend such Claim,
it shall, within a reasonable time following its receipt of the Claims Notice
notify the Indemnified Party of its intent to do so, and the Indemnified Party
shall cooperate, at the expense of the Indemnifying Party, in the compromise of,
or defense against, such Claim for so long as the Indemnifying Party continues
to conduct the defense against or compromise of such Claim in good faith. The
Indemnified Party shall have the right to employ separate counsel in defense of
such Claim and participate in such defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party; provided that
such fees and expenses shall be at the expense of the Indemnifying Party in the
event that (i) the Indemnifying Party has not employed counsel to represent the
Indemnified Party within a reasonable period of time or (ii) the use of counsel
of the Indemnifying Party's choice would reasonably be expected to give rise to
a conflict of interest. If the Indemnifying Party elects not to compromise or
defend the Claim, fails to notify the Indemnified Party of its election as
herein provided or contests its obligation to provide indemnification under this
Agreement, the Indemnified Party may pay, compromise or defend such Claim.
Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnified Party may settle or compromise any Claim without the consent of the
other party; provided, that such consent to settlement or compromise shall not
be unreasonably withheld, conditioned or delayed; further provided, the
Indemnifying Party may, without the Indemnified Party's prior written consent,
compromise or settle any Claim or consent to entry of any judgment with respect
to any Claim which requires solely money damages paid by the Indemnifying Party
(without any right of reimbursement or other recourse to the Indemnified Party),
and which includes as an unconditional term thereof the release by the claimant
or the plaintiff of the Indemnified Party from all liability in respect of such
Claim. If the Indemnifying Party chooses to defend any Claim, the Indemnified
Party shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.

     10.4 Indemnification Limits.
          ----------------------

     (a) Required payments by an Indemnifying Party pursuant to this Article X
shall be limited to the amount of any Loss remaining after deducting therefrom
(i) any insurance proceeds received by the Indemnified Party on account of the
Loss, (ii) any realized Tax benefit to the Indemnified Party, and (iii) any
indemnity, contribution, or other similar payment received by any Indemnified
Party from any third party, in each case with respect to such Loss. The
Indemnified Party shall use commercially reasonable efforts to collect all such
indemnity, contribution or other similar payments.

                                       78
<PAGE>

     (b) Except for the representations and warranties contained in Sections
3.1, 3.2, 3.4(b), 3.4(c), 3.4(d), 3.5(b), 3.5(c), 3.7(a), 4.1, and 4.2, all
representations and warranties made by Sellers and Purchaser in Articles III and
IV of this Agreement or in any document, certificate, schedule or instrument
delivered or executed in connection herewith shall survive the Closing for the
period of eighteen (18) calendar months after the Closing Date, whereupon they
shall expire, and all claims for inaccuracy or breach of said representations
and warranties will be deemed waived unless notice of the inaccuracy or breach
thereof shall have been given to the breaching party prior to the expiration of
said eighteen (18)-month period, in which event such representation or warranty
shall survive to the extent of the claim referred to in the notice until such
claim has been resolved. The representations and warranties in Sections 3.1,
3.2, 3.7(a), 4.1, and 4.2 shall continue in perpetuity. To the extent that the
representations and warranties contained in Sections 3.4(b), 3.4(d) and 3.5(b)
relate to the amount of Reserves, they shall expire at Closing; otherwise, the
representations and warranties contained in Sections 3.4(b), 3.4(d) and 3.5(b)
shall survive the Closing for the period of eighteen (18) calendar months after
the Closing Date, whereupon they shall expire, and all claims for inaccuracy or
breach of said representations and warranties will be deemed waived unless
notice of the inaccuracy or breach thereof shall have been given to the
breaching party prior to the expiration of said eighteen (18)-month period, in
which event such representation or warranty shall survive to the extent of the
claim referred to in the notice until such claim has been resolved. The
representations and warranties in Sections 3.4(c) and 3.5(c) shall not survive
the Closing. All covenants and agreements made by the parties to this Agreement
which contemplate performance following the Closing Date, including without
limitation, the covenants and agreements contained in Section 5.8, shall survive
the Closing Date. All other covenants and agreements shall not survive the
Closing Date and shall terminate as of the Closing to the extent that such
covenants were performed in accordance with their terms. All claims arising
under Sections 10.1(c) and 10.2(c) shall survive indefinitely.

     (c) Sellers shall have no obligation to indemnify Purchaser under Section
10.1(a) for breach of any representation or warranty made by Sellers under
Article III until Losses arising from such breaches which would otherwise be
indemnifiable hereunder incurred by Purchaser exceed $7,000,000, and thereafter
Sellers shall be responsible only for the excess of such aggregate amount over
$7,000,000; provided, however, that in no event shall the aggregate of all
indemnifiable claims paid by Sellers to Purchaser under Section 10.1(a) exceed
$150,000,000. The limitations on amount set forth in this Section 10.4(c) shall
not apply to limit recovery by Purchaser for indemnification under Section
10.1(b), 10.1(c) or 10.1(d).

     (d) Purchaser shall have no obligation to indemnify Seller under Section
10.2(b) for breach of any representation or warranty made by Purchaser under
Article IV until Losses arising from such breaches which would otherwise be
indemnifiable hereunder incurred by Purchaser exceed $7,000,000, and thereafter
Sellers shall be responsible only for the excess of such aggregate amount over
$7,000,000; provided, however, that in no event shall the aggregate of all
indemnifiable claims paid by Purchaser to Sellers under Section 10.2(a) exceed
$150,000,000. The limitations on

                                       79
<PAGE>

amount set forth in this Section 10.4(d) shall not apply to limit recovery by
Sellers for indemnification under Section 10.2(b), 10.2(c) or 10.2(d).

     10.5 Exclusive Remedy.
          ----------------

     The parties hereto expressly acknowledge that (i) except with respect to
intentional fraud and except as provided in Article IX, the provisions of this
Article X shall be the sole and exclusive remedy for Losses caused as a result
of breaches of the representations, warranties and agreements contained in this
Agreement, except that the parties shall not be limited to the remedies provided
in this Article X with respect to any agreements to be performed after the
Closing Date and except that the remedies of injunction and specific performance
shall remain available to the parties hereto, and (ii) no Indemnifying Party
shall be liable or responsible to any other party hereto or its Affiliates for
punitive, incidental, consequential or multiplied damages, in accordance with
Section 11.9.

     10.6 Tax Losses.
          ----------

     Any Losses with respect to Taxes shall be subject to indemnification solely
pursuant to the provisions of Article IX, and the provisions of this Article X
(other than Section 10.3) shall not apply to such Losses.

                                   ARTICLE XI

                            Miscellaneous Provisions
                            ------------------------

     11.1 Notices.
          -------

     Any notice, request or other communication to be given by any party
hereunder shall be in writing and shall be delivered personally, sent by
registered or certified mail, postage prepaid, by overnight courier with written
confirmation of delivery. Any such notice shall be deemed given when so
delivered personally, or if mailed, on the date shown on the receipt therefor,
or if sent by overnight courier, on the date shown on the written confirmation
of delivery. Such notices shall be given to the following address:

To Sellers:          Security Life of Denver Insurance Company
                     Security Life of Denver International Limited
                     Attention: Mark Tullis
                     c/o ING North America Insurance Corporation
                     5780 Powers Ferry Road NW
                     Atlanta, GA 30327

With a concurrent
copy to:             B. Scott Burton
                     Corporate General Counsel

                                       80
<PAGE>

                     ING North America Insurance Corporation
                     5780 Powers Ferry Road NW
                     Atlanta, GA 30327

                     and

                     David A. Massey, Esq.
                     Sutherland Asbill & Brennan LLP
                     1275 Pennsylvania Ave., NW
                     Washington, DC 20004-2415

 To Purchaser:       Scottish Re Group Limited
                     Scottish Annuity & Life Insurance Company (Cayman) Ltd.
                     Newco
                     Crown House, Third Floor
                     4 Par-la-ville Road
                     Hamilton HM 08 Bermuda

                     Scottish Re (U.S.) Inc.
                     Scottish Re Life Corporation
                     13840 Ballantyne Corporate Place, Suite 500
                     Charlotte, NC  28277
                     Attention:  Paul Goldean, Esq.

With a copy to:      Hugh T. McCormick, Esq.
                     Stephen G. Rooney, Esq.
                     LeBoeuf, Lamb, Greene & MacRae, LLP
                     125 West 55th Street
                     New York, NY 10019

     11.2 Sole Agreement.
          --------------

     This Agreement may not be amended or modified in any respect whatsoever
except by instrument in writing signed by the parties hereto. This Agreement,
the Related Agreements and the Confidentiality Agreement, and other documents
delivered pursuant hereto, constitute the entire agreement among the parties
hereto and their respective Affiliates with respect to the subject matter hereof
and supersede all prior negotiations, discussions, writings and agreements
between them with respect thereto.

     11.3 Successors and Assigns.
          ----------------------

     The rights and obligations of the parties under this Agreement shall not be
subject to assignment and any attempted assignment shall be invalid ab initio.
The terms of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by and against the successors of the parties hereto.

                                       81
<PAGE>

     11.4 Captions.
          --------

     The captions of this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.

     11.5 Governing Law and Jurisdiction.
          ------------------------------

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts entered into therein,
without reference to principles of choice of law or conflicts of laws. Each
party hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of any State or Federal Court sitting in New York, over any suit,
action or proceeding arising out of or relating to this Agreement. Each party
hereto agrees that service of any process, summons, notice or document by U.S.
registered mail addressed to such party shall be effective service of process
for any action, suit or proceeding brought against such party in such court.
Each party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any such suit, action or proceeding brought in any such court
and any claim that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each party hereto agrees that final
judgment in any such action, suit or proceeding brought in any such court shall
be conclusive and binding upon such party and may be enforced in any other
courts to whose jurisdiction such party may be subject, by suit upon such
judgment.

     11.6 No Third Party Beneficiaries.
          ----------------------------

     Except as otherwise expressly set forth in any provision of this Agreement,
nothing in this Agreement is intended or shall be construed to give any Person,
other than the parties hereto, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein. For the
avoidance of doubt, nothing in this Agreement shall be construed to give any
Business Employee or former employee of Sellers or their Affiliates or any
beneficiary thereof of any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.

     11.7 Counterparts.
          ------------

     This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each signed by less
than all, but together signed by all of the parties hereto. Each counterpart may
be delivered by facsimile transmission, which transmission shall be deemed
delivery of an originally executed document.

     11.8 Severability.
          ------------

     Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms

                                       82
<PAGE>

or provisions of this Agreement in any other jurisdiction, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. If any provision of this
Agreement is so broad as to be unenforceable, that provision shall be
interpreted to be only so broad as is enforceable.

     11.9 Waiver of Jury Trial; Multiplied and Punitive Damages.
          -----------------------------------------------------

     Each of the parties hereto irrevocably waives, with respect to any first
party action filed by the other party (but not as to any action by one party
against the other seeking indemnification for a third party claim against the
party initiating the action, to the extent that such damages may be recoverable
as part of the indemnification by the indemnified party) (i) any and all right
to trial by jury, and (ii) any right to punitive, incidental, consequential or
multiplied damages, either pursuant to common law or statute, in any legal
proceedings arising out of or related to this Agreement or the transactions
contemplated hereby.

     11.10 Purchaser Guaranty.
           ------------------

     In consideration of the substantial benefits accruing to each Purchaser
Subsidiary under this Agreement, Purchaser hereby unconditionally guarantees the
prompt performance when due of all obligations of each Purchaser Subsidiary in
Article X. Sellers shall not be required to make any demand upon, or deliver any
notice to, any Purchaser Subsidiary in order for Sellers to enforce their rights
against Purchaser under this Section 11.10. Purchaser's obligation under this
Section 11.10 shall continue in full force and effect subject to any amendment
or waiver of any provision of this Agreement.

     11.11 ING Guaranty and Covenant.
           -------------------------

     (a) In consideration of the substantial benefits accruing to each Seller
under this Agreement, ING hereby unconditionally guarantees the prompt
performance when due of all obligations of each Seller in Article X. The
Purchaser Subsidiaries shall not be required to make any demand upon, or deliver
any notice to, either Seller in order for the Purchaser Subsidiaries to enforce
their rights against ING under this Section 11.11. ING's obligation under this
Section 11.11 shall continue in full force and effect subject to any amendment
or waiver of any provision of this Agreement.

     (b) Until such time as all of the Retroceded Business has been recaptured
by SLD and ceded to SRUS as contemplated by Section 5.24, ING shall cause SLDI
to take such actions as may be necessary to insure that SLD receives full
reinsurance reserve credit for such Business.

                                       83
<PAGE>

     IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.

SELLERS:                                    SECURITY LIFE OF DENVER INSURANCE
                                            COMPANY

                                            By: /s/ Mark A. Tullis
                                               -------------------------------
                                            Name:  Mark A. Tullis
                                            Title: President

                                            SECURITY LIFE OF DENVER
                                            INTERNATIONAL LIMITED

                                            By: /s/ David S. Pendergrass
                                               -------------------------------
                                            Name:   David S. Pendergrass
                                            Title:  Vice President

PURCHASER:                                  SCOTTISH RE GROUP LIMITED

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

ING America Insurance Holdings, Inc. hereby executes this Agreement solely for
purposes of Section 11.11.

ING AMERICA INSURANCE HOLDINGS, INC.

By: /s/ B. Scott Burton
-------------------------------
Name:   B. Scott Burton
Title:  Corporate General Counsel & Assistant Secretary

                                       84
<PAGE>

PURCHASER SUBSIDIARIES:

                                    SCOTTISH RE (U.S.), INC.

                                    By: /s/ Oscar R. Scofield
                                        -------------------------------
                                    Name:   Oscar R. Scofield
                                    Title:  Chairman & CEO President

DATE: ___________                   [NEWCO]

                                    By:______________________________
                                    Name:
                                    Title:

Scottish Annuity & Life hereby executes this Agreement solely for purposes of
Section 5.26.

SCOTTISH ANNUITY & LIFE INSURANCE COMPANY (CAYMAN) LTD.

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

Scottish Re Life Corporation hereby executes this Agreement solely for purposes
of Section 5.24.

SCOTTISH RE LIFE CORPORATION

By: /s/ Oscar R. Scofield
  --------------------------
Name:   Oscar R. Scofield
Title:  President & CEO

                                       85EXECUTION COPY

                            SCOTTISH RE GROUP LIMITED

                          SECURITIES PURCHASE AGREEMENT

                                October 17, 2004

<PAGE>

                                Table of Contents

                                                                            Page

Article I Defined Terms......................................................2

      1.1. Certain Definitions...............................................2
      1.2. Other Defined Terms...............................................5
      1.3. Interpretation....................................................6

Article II Agreement to Sell and Purchase....................................7

      2.1. Sale and Purchase.................................................7
      2.2. Purchase/Conversion Price; Purchase Price Adjustment..............7

Article III Closing, Delivery and Payment...................................10

      3.1. Closing..........................................................10
      3.2. Payment and Delivery; Post-Closing Adjustments...................11

Article IV Representations and Warranties of the Company....................11

      4.1. Organization, Good Standing and Qualification; Subsidiaries......11
      4.2. Capitalization; Voting Rights....................................12
      4.3. Authorization; Binding Obligations...............................13
      4.4. Consents and Approvals...........................................14
      4.5. Compliance with Other Instruments................................14
      4.6. Transactions with Affiliates.....................................15
      4.7. SEC Documents; Other Reports; Internal and Disclosure
            Controls........................................................15
      4.8. Financial Statements.............................................17
      4.9. Insurance Reports................................................18
      4.10. Absences of Certain Changes or Events...........................19
      4.11. Contracts.......................................................20
      4.12. Litigation......................................................22
      4.13. Liabilities and Reserves........................................22
      4.14. Taxation........................................................22
      4.15. Title to Tangible Property......................................23
      4.16. Compliance with Laws, etc.......................................23
      4.17. Insurance for Company's Operations..............................23
      4.18. Insurance Business..............................................24
      4.19. Intellectual Property, etc......................................24
      4.20. Reinsurance Agreements..........................................25
      4.21. Pensions........................................................25
      4.22. Labor Matters...................................................27
      4.23. Environmental Matters...........................................28
      4.24. Investment Advisory and Investment Company Matters..............28
      4.25. Derivatives.....................................................28
      4.26. Brokers' Fees...................................................28
      4.27. Offering Valid..................................................28
      4.28. Financing.......................................................29

                                       i

<PAGE>

      4.29. No Other Representations or Warranties..........................29
      4.30. Ratings.........................................................29

Article V Representations and Warranties of the Investors...................29

      5.1. Organization, Good Standing and Qualification....................29
      5.2. Requisite Power and Authority....................................29
      5.3. Consents and Approvals...........................................30
      5.4. Compliance with Other Instruments................................30
      5.5. Unregistered Securities..........................................30
      5.6. Financial Capability.............................................31
      5.7. Proxy Statement..................................................31
      5.8. Brokers' Fees....................................................31
      5.9. No Other Representations or Warranties...........................31

Article VI Covenants of the Parties.........................................31

      6.1. Operations in the Ordinary Course................................31
      6.2. Restrictions.....................................................32
      6.3. Related Matters..................................................34
      6.4. Tax Matters......................................................34
      6.5. Access to Information............................................34
      6.6. Filings and Authorizations.......................................35
      6.7. Confidentiality..................................................35
      6.8. Competing Transaction............................................36
      6.9. Proxy Statement..................................................36
      6.10. Shareholder Meeting.............................................37
      6.11. Use of Proceeds.................................................37
      6.12. Public Announcements............................................37
      6.13. Further Assurance...............................................38
      6.14. Failed Condition................................................38
      6.15. Sell-Down of Purchased Securities...............................38
      6.16. Preparation of Pro Forma Statements.............................39
      6.17. Financial Strength Ratings......................................39

Article VII Conditions to Closing...........................................39

      7.1. Conditions to the Each Party's Obligations at the Closing........39
      7.2. Conditions to the Investors' Obligations at the Closing..........40
      7.3. Conditions to Obligations of the Company at the Closing..........41

Article VIII Indemnification................................................42

      8.1. Survival of Representations, etc.................................42
      8.2. Indemnification..................................................42
      8.3. Indemnification Procedures.......................................43

Article IX Termination......................................................44

      9.1. Termination Prior to the Closing Date............................44
      9.2. Effect of Termination............................................45

                                       ii
<PAGE>

Article X Miscellaneous.....................................................45

      10.1. Governing Law; Consent to Jurisdiction and Services of
            Process; Waiver of Jury Trial...................................45
      10.2. Fees and Expenses...............................................46
      10.3. Payments and Currency...........................................46
      10.4. Successors and Assigns..........................................47
      10.5. Entire Agreement................................................47
      10.6. Severability....................................................47
      10.7. Amendment and Waiver............................................47
      10.8. Delays or Omissions.............................................47
      10.9. Notices.........................................................47
      10.10. Specific Performance...........................................48
      10.11. Controlling Provisions.........................................49
      10.12. Titles and Subtitles...........................................49
      10.13. Counterparts...................................................49

                                LIST OF SCHEDULES

     Investment Amounts at the Closing                          Schedule I

                                LIST OF EXHIBITS

     Form of 7.00% Convertible Junior Subordinated Note         Exhibit A
     Form of Class C Warrants                                   Exhibit B
     Form of Shareholders' Agreement                            Exhibit C
     Form of Amended and Restated Articles of Association       Exhibit D

                                      iii

<PAGE>

                            SCOTTISH RE GROUP LIMITED

                          SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 17, 2004, by and among Scottish Re Group Limited, a Cayman
Islands exempted company (the "Company"), and Cypress Merchant B Partners II
(Cayman) L.P., a Cayman Islands exempted limited partnership, Cypress Merchant
Banking II-A C.V., a Netherlands limited partnership, Cypress Side-by-Side
(Cayman) L.P., a Cayman Islands exempted limited partnership, and 55th Street
Partners II (Cayman) L.P., a Cayman Islands exempted limited partnership
(collectively, the "Investors").

                                    RECITALS

     WHEREAS, the Company is entering into an asset purchase agreement on or
about the date hereof (the "ING Transaction Agreement") with Security Life of
Denver Insurance Company and Security Life of Denver International Limited
(collectively, the "Sellers") and the other parties named therein, providing for
the acquisition of the individual life reinsurance business of the Sellers (the
"ING Transaction");

     WHEREAS, in order to provide additional capital to the Company in respect
of the ING Transaction, the Company has authorized the issuance and sale to the
Investors of (i) the number of its ordinary shares, par value US$ 0.01 per share
(the "Ordinary Shares"), equal to 9.9% of the aggregate number of Ordinary
Shares issued and outstanding at Closing (taking into account such issuance),
(ii) an aggregate principal amount of 7.00% Convertible Junior Subordinated
Notes due 203_, with a maturity date 30 years from issuance, in the form
attached hereto as Exhibit A (the "Subordinated Notes"), equal to the excess of
US$ 180,000,000, over the sum of (A) the product of (1) the Preliminary
Purchase/Conversion Price or the Purchase/Conversion Price, as may be applicable
at the time of Closing, and (2) the number of Ordinary Shares issued to the
Investors as provided in clause (i) above, plus (B) the product of (1) the
Preliminary Purchase/Conversion Price or the Purchase/Conversion Price, as may
be applicable at the time of Closing, and (2) the number of Class C Warrants
issued to the Investors as provided in clause (iii) below, such aggregate
principal amount subject to adjustment as provided in Section 2.2(c) hereof, and
(iii) Class C Warrants (the "Class C Warrants"), in the form attached hereto as
Exhibit B, to purchase the number of Ordinary Shares equal to the difference
between (A) 19.9% of the Ordinary Shares issued and outstanding at Closing
(without taking into account the issuance of Ordinary Shares hereunder) and (B)
the number of Ordinary Shares issued to the Investors as provided in clause (i)
above;

     WHEREAS, the Investors desire to purchase from the Company, and the Company
desires to issue and sell to the Investors, the Purchased Ordinary Shares (as
hereinafter defined), the Subordinated Notes and the Class C Warrants on the
terms and conditions set forth herein;

     WHEREAS, concurrently with the execution hereof and as a condition and
inducement to the willingness of the Investors to enter into this Agreement,
Pacific Life Insurance Company and certain of the directors and officers of the
Company have each executed a voting agreement with the Investors (collectively,
the "Voting Agreements") pursuant to which each such

                                       1
<PAGE>

shareholder of the Company agrees in its capacity as such to vote all of its
Ordinary Shares in favor of the adoption of the Shareholder Resolutions (as
hereinafter defined); and

     WHEREAS, concurrently with the execution hereof, the Investors and the
Company are entering into a shareholders' agreement substantially in the form
attached hereto as Exhibit C (the "Shareholders' Agreement" and, together with
this Agreement, the Voting Agreements, the Subordinated Notes and the Class C
Warrants, the "Transaction Agreements").

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties, and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE I
                                  DEFINED TERMS

          1.1. Certain Definitions. As used in this Agreement, the following
terms will have the respective meanings set forth below:

          "Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, but shall not include
officers and directors of a Person solely as a result of such relationship. For
the purposes of this definition, "control," when used with respect to any
particular Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of Voting
Securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

          "Approval Deadline" shall mean (i) June 30, 2005, if the Closing Date
occurs on or before December 31, 2004, or (ii) the date that is 180 days after
the Closing Date, if the Closing Date occurs on or after January 1, 2005.

          "Board of Directors" shall mean the board of directors of the Company.

          "Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or the Cayman Islands are
authorized or required by Law to close.

          "Code" shall mean the U.S. Internal Revenue Code of 1986, as amended,
or any successor thereto.

          "Companies Law" shall mean the Companies Law (2004 Revision) of the
Cayman Islands, as amended, and every statutory modification or re-enactment
thereof in effect.

          "Company Disclosure Schedule" shall mean a schedule delivered by the
Company to the Investors simultaneously with the execution and delivery of this
Agreement

                                       2
<PAGE>

setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
Article IV, or as an exception to one or more of the Company's representations
or warranties contained in Article IV or to one of the Company's covenants
contained in Article V.

          "Contract" shall mean any contract, license, consent, agreement,
instrument, commitment or other arrangement, written or unwritten, including any
deed, loan or credit agreement, note, bond, mortgage, indenture or lease to
which a Person is a party or by which any of its material assets or properties
is bound (other than Reinsurance Agreements or Retrocession Agreements).

          "Environmental Claim" shall mean any notice, claim, demand, action,
suit, complaint, proceeding or other communication by any person alleging any
violation of, or any action or potential liability under, any Environmental
Laws.

          "Environmental Law" shall mean any order of any court or arbitration
board or tribunal, or any Law, relating to environmental contamination,
pollution or the protection of the environment, natural resources or human
health and safety.

          "ERISA" shall mean the Employee Retirement Income and Security Act of
1974, as amended.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.

          "Failed Condition" shall mean the failure to obtain the Shareholder
Approval by the Approval Deadline.

          "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

          "ING" shall mean ING America Insurance Holdings, Inc.

          "Investment Advisers Act" shall mean the Investment Advisers Act of
1940, and the rules and regulations promulgated thereunder, as the same may be
amended from time to time.

          "Investment Company Act" shall mean the Investment Company Act of
1940, and the rules and regulations promulgated thereunder, as the same may be
amended from time to time.

          "Investment Policies" shall mean the overall investment policies used
in the management of a Person's investment portfolio, including a Person's
policies with respect to duration, liquidity, currency, asset allocation and
asset quality.

          "Law" shall mean any U.S. federal, state, local, foreign or
international law, constitution, statute, rule, regulation, ordinance or
principle of common law of any Governmental Authority.

                                       3
<PAGE>

          "NYSE" shall mean The New York Stock Exchange, Inc.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation.

          "Person" shall mean any individual, corporation, limited liability
company, partnership, firm, joint venture, association, trust, joint stock
company, unincorporated organization or other entity.

          "Purchased Ordinary Shares" shall mean the aggregate Ordinary Shares
purchased pursuant to Section 2.1(a).

          "Purchased Securities" shall mean, collectively, the Purchased
Ordinary Shares, the Purchased Subordinated Notes and the Class C Warrants.

          "Purchased Subordinated Notes" shall mean the aggregate Subordinated
Notes purchased pursuant to Section 2.1(c), as the principal amount thereof may
be adjusted pursuant to Section 2.2(c) or Section 3.2(b).

          "Reinsurance Agreement" shall mean any agreement by which a Person has
assumed reinsurance from any ceding insurer, and associated trust agreements.

          "Restated Articles" shall mean the Amended and Restated Articles of
Association of the Company substantially in the form attached hereto as Exhibit
D.

          "Retrocession Agreement" shall mean any agreement by which any Person
has ceded insurance or reinsurance assumed by it to another reinsurer, and
associated trust agreements.

          "SEC" shall mean the U.S. Securities and Exchange Commission.

          "Securities" shall mean any stock or other equity securities of a
Person, including, in the case of mutual insurance companies, insurance policies
with the power to vote with respect to the election of directors generally.

          "Securities Act" shall mean the Securities Act of 1933, and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time.

          "Shareholder Approval" shall mean the approval by shareholders of the
Company of the Shareholder Resolutions and the transactions contemplated by this
Agreement in accordance with the Companies Law, which shall constitute the
requisite shareholder approval for purposes of the NYSE Listed Company Manual,
including Para. 312.03 thereof.

          "S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Company.

          "Subsidiary" or "Subsidiaries" shall mean any corporate or other
entity (including joint ventures, partnerships, limited liability companies and
other business associations) in which such party directly or indirectly owns
Voting Securities having the power to elect a majority of

                                       4
<PAGE>

the directors (or similar members of such corporation's or other entity's
governing body), or otherwise direct the management and polices of such
corporation or other entity.

          "Tax Return" shall mean any report, return, declaration, claim for
refund, information return or any other statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

          "Taxes" shall mean all taxes, levies, charges, fees, duties or other
assessments of any kind whatsoever, including any income, corporation, gross
receipts, transfer, excise, property, sales, use, value-added, license, payroll,
withholding, social security and franchise or other governmental taxes or
charges, imposed by the United States or any state, county, local or foreign
government, including any interest, penalties or additions attributable to such
taxes.

          "Voting Securities" shall mean Securities with the power to vote with
respect to the election of directors (or similar members of an entity's
governing body) generally. For purposes of this Agreement, any options or
warrants with respect to Voting Securities, and any Securities that are
convertible or exchangeable for Voting Securities, shall be treated as Voting
Securities only to the extent such instruments are currently exercisable or "in
the money."

          1.2. Other Defined Terms.

          Action..........................................Section 4.12
          Agreement.......................................Preamble
          Class C Warrants................................Recitals
          Closing.........................................Section 3.1(a)
          Closing Date....................................Section 3.1(a)
          Co-Investors....................................Section 6.15
          Company.........................................Preamble
          Company Employees...............................Section 4.21(a)
          Company Indemnitee .............................Section 8.2(a)
          Company Insurance Entities......................Section 4.9
          Company Material Adverse Effect.................Section 4.1
          Company Plans...................................Section 4.21(a)
          Company Reports.................................Section 4.7(a)
          Company SAP Statements..........................Section 4.9
          Competing Transaction...........................Section 6.8
          Consents........................................Section 4.4
          Confidentiality Agreement.......................Section 6.7
          Cypress Vehicle.................................Section 6.15
          Damages.........................................Section 8.2(a)
          Deductible......................................Section 8.2(e)
          Derivatives.....................................Section 4.27
          Equity Securities...............................Section 2.2(c)
          Foreign Benefit Plans...........................Section 4.21(g)
          Forward-Looking Statement.......................Section 4.7(a)
          Governmental Authority..........................Section 4.4
          HyCU Preferred Shares...........................Section 4.2(a)
          Indemnified Person..............................Section 8.3(a)

                                       5
<PAGE>

          Indemnifying Person.............................Section 8.3(a)
          ING Transaction.................................Recitals
          ING Transaction Agreement.......................Recitals
          Intellectual Property Right.....................Section 4.19
          Insurance Laws..................................Section 4.9
          Investors.......................................Preamble
          Liens...........................................Section 2.1
          Material Contract...............................Section 4.11(a)
          Negative Adjustment Amount......................Section 2.2(c)
          Negotiating Period..............................Section 2.2(b)
          Neutral Accounting Firm.........................Section 2.2(b)
          Notes Increase Amount...........................Section 2.2(c)
          Notes Reduction Amount..........................Section 2.2(c)
          Order...........................................Section 4.12
          Operating Income................................Section 2.2(b)
          Ordinary Resolution.............................Section 6.10
          Ordinary Shares.................................Recitals
          Permit..........................................Section 4.18
          PFIC............................................Section 4.14(b)
          Positive Adjustment Amount......................Section 2.2(c)
          Pro Forma Statements............................Section 6.16
          Proxy Statement.................................Section 4.4
          Purchase/Conversion Price.......................Section 2.2(a)
          Q3 Operating Income.............................Section 2.2(b)
          Representatives.................................Section 6.7
          Requisite Approvals.............................Section 6.6
          Requisite Regulatory Approvals..................Section 6.6
          Resolution Date.................................Section 2.2(c)
          Resolutions.....................................Section 6.10
          SAP.............................................Section 4.9
          Sarbanes-Oxley Act..............................Section 4.7(a)
          Sellers.........................................Recitals
          Senior Notes....................................Section 4.2(a)
          Shareholder Meeting.............................Section 4.4
          Shareholders' Agreement.........................Recitals
          Shareholder Resolutions.........................Section 6.10
          Side Letter.....................................Section 9.1(e)
          Special Resolution..............................Section 6.10
          Subordinated Notes..............................Recitals
          Third Parties...................................Section 6.8
          Transaction Agreements..........................Recitals
          Unaudited Financials............................Section 2.2(b)
          US GAAP.........................................Section 2.2(b)
          Voting Agreements...............................Recitals

          1.3. Interpretation. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
clauses, Exhibits and Schedules shall

                                       6
<PAGE>

be deemed references to such parts of this Agreement, unless the context
otherwise requires. The table of contents and headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. The phrase "to the Company's
knowledge" or any similar phrase shall be deemed to refer to the knowledge of
any executive officers of the Company or any of its Subsidiaries, with such
executive officers being deemed to have made reasonable inquiry of the
appropriate personnel of the Company and its Subsidiaries with respect to the
matter in question. The definitions of terms in this Agreement shall be
applicable to both the singular and the plural forms of the terms defined where
either such form is used in this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The word "herein," "hereof" and
"hereunder," and other words of similar import, refer to this Agreement as a
whole and not to any particular Section or clause. The adoption of the various
monetary amounts as de minimis or maximum levels or as a criterion resulting in
certain occurrences is not intended by the parties to be, and should not be
construed as, an indication of immateriality or materiality for purposes of any
of the Transaction Agreements.

                                   ARTICLE II
                         AGREEMENT TO SELL AND PURCHASE

          2.1. Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing, the Company hereby agrees to issue and sell to each Investor, and
each Investor agrees to purchase from the Company, free and clear of all liens,
pledges, mortgages, options, encumbrances, claims or other third party rights
(including rights of preemption), restrictions or limitations, in each case of
any nature whatsoever (collectively, "Liens"), (a) the number of Ordinary Shares
equal to the percentage set forth opposite such Investor's name on Schedule I
multiplied by the aggregate number of Ordinary Shares to be issued to the
Investors at Closing to be calculated pursuant to the Recitals, (b) a
Subordinated Note in the principal amount equal to the percentage set forth
opposite such Investor's name on Schedule I multiplied by the aggregate
principal amount of Subordinated Notes to be issued to the Investors at Closing
to be calculated pursuant to the Recitals, subject to adjustment as provided in
Section 2.2(c) hereof, and (c) the number of Class C Warrants equal to the
percentage set forth opposite such Investor's name on Schedule I multiplied by
the aggregate number of Class C Warrants to be issued to the Investors at
Closing to be calculated pursuant to the Recitals.

          2.2. Purchase/Conversion Price; Purchase Price Adjustment.

          (a) Preliminary Purchase/Conversion Price. The aggregate amount paid
by the Investors for the Purchased Securities at the Closing shall equal US$
180,000,000. Subject to Section 2.2(c), (i) the purchase price for the Ordinary
Shares and the Class C Warrants shall be equal to US$ 19.375 per Ordinary Share
or Class C Warrant, respectively, and (ii) the price at which the Subordinated
Notes shall initially be convertible into Ordinary Shares shall be equal to US$
19.375 (the "Preliminary Purchase/Conversion Price" and, as finally determined
and, if applicable, adjusted pursuant to Section 2.2(c) below, being referred to
in this Agreement as the "Purchase/Conversion Price").

                                       7
<PAGE>

          (b) Adjustment to Purchase/Conversion Price and Aggregate Principal
Amount of Purchased Subordinated Notes.

               (i) Promptly following the preparation of the Company's unaudited
          consolidated balance sheet and unaudited consolidated statements of
          income and cash flows as at and for the three-month period ended
          September 30, 2004 (including any related notes and schedules thereto,
          the "Unaudited Financials"), the Company shall deliver or cause to be
          delivered to the Investors at the same time as a copy thereof is
          delivered to the Board of Directors (A) a copy of such Unaudited
          Financials, together with a certificate of the Company's Chief
          Financial Officer certifying that such Unaudited Financials have been
          prepared in accordance with accounting principles generally accepted
          in the United States of America ("US GAAP") consistently applied and
          on a basis consistent with the financial statements of theCompany
          referred to in Section 4.8, (B) a schedule setting forth in reasonable
          detail the Company's calculation of Operating Income for the
          three-month period ended September 30, 2004 ("Q3 Operating Income"),
          and (C) a calculation of the adjustment, if any, to be made to the
          Preliminary Purchase/Conversion Price pursuant to paragraph (c) below.

          For purposes of this Agreement, "Operating Income" shall mean net
          income (loss) as set forth in the Unaudited Financials, adjusted to
          exclude (1) realized investment gains (losses), (2) any change in the
          fair value of the Company's embedded derivatives reported pursuant to
          SFAS 133 "Accounting for Derivative Instruments and Hedging
          Activities", and SFAS No. 149, "Amendment of SFAS 133 on Derivative
          Instruments and Hedging Activities", as further discussed in
          Derivatives Implementation Group Issue No. B36 "Embedded Derivatives:
          Bifurcation of a Debt Instrument that Incorporates Both Interest Rate
          and Credit Rate Risk Exposures that are Unrelated or Only Partially
          Related to the Creditworthiness of the Issuer of the Instrument", and
          (3) direct out-of-pocket expenses incurred by the Company for legal,
          accounting, actuarial and other advisory services and related expenses
          in connection with potential acquisition transactions that were
          terminated in the period covered in the Unaudited Financials and
          expensed therein, in each case net of any tax benefits or charges.

               (ii) The Investors shall have a period of 30 days following their
          receipt of the Unaudited Financials and draft calculations of Q3
          Operating Income and the adjusted Purchase/Conversion Price from the
          Company during which they may review such financials and calculations.
          During such 30-day period, the Company shall provide, and cause each
          of its Subsidiaries to provide, the Investors and their accountants
          and other representatives with such reasonable access to the books,
          records and personnel of the Company and its Subsidiaries and their
          accountants, at reasonable times and upon reasonable notice, as the
          Investors may reasonably request. If within such 30-day period the
          Investors determine that they do not agree that the draft calculations
          of Q3 Operating Income and the adjusted Purchase/Conversion Price by
          the Company were prepared in accordance with the provisions of this
          Section 2.2, they may submit a notice of objection to the Company
          setting forth in reasonable detail the basis of

                                       8
<PAGE>

          their objections and the adjustments to the draft calculations of Q3
          Operating Income and the adjusted Purchase/Conversion Price prepared
          by the Company that the Investors believe should be made in order for
          such amounts to be in accordance with the provisions of this Section
          2.2. If the Investors do not notify the Company of any such objections
          within such 30-day period, the draft calculation of Q3 Operating
          Income and the adjusted Purchase/Conversion Price as prepared by the
          Company shall become final and binding for purposes of this Agreement.
          If the Investors do notify the Company of any such objections, the
          Investors and the Company shall negotiate in good faith for a period
          not to exceed 30 days (the "Negotiating Period") to resolve all of
          such objections.

               (iii) If the Company and the Investors are unable to resolve any
          disagreements regarding the calculations of Q3 Operating Income and
          the adjusted Purchase/Conversion Price within the Negotiating Period,
          then, upon the expiration of the Negotiating Period, any remaining
          disputes shall be referred for resolution to an internationally
          recognized accounting firm that is mutually acceptable to the Company
          and the Investors (the "Neutral Accounting Firm"). The Neutral
          Accounting Firm shall be instructed to resolve only the outstanding
          disagreements relating to the calculations of Q3 Operating Income and
          the adjusted Purchase/Conversion Price, and shall be instructed not to
          otherwise investigate such matters independently. The Neutral
          Accounting Firm shall investigate only those items which are in
          dispute and shall not assign a value to any item that is (i) greater
          than the greatest value for such item claimed by either of the Company
          or the Investors or (ii) lower than the lowest value for such item
          claimed by either of the Company or the Investors. The Neutral
          Accounting Firm's determination shall be based only upon written
          submissions by the Company and the Investors, and not upon an
          independent review by the Neutral Accounting Firm. The parties shall
          instruct the Neutral Accounting Firm to render its determination
          within 30 days of the referral of such matter thereto, and the
          determination of the Neutral Accounting Firm shall be final, binding
          and non-appealable upon all parties to this Agreement for all purposes
          of this Agreement. Neither the Company nor the Investors shall have
          any ex parte communications or meetings with the Neutral Accounting
          Firm without the prior consent of the Investors (in the case of the
          Company) or the Company (in the case of the Investors). The fees and
          expenses of the Neutral Accounting Firm shall be borne equally by the
          Company, on the one hand, and the Investors, on the other hand.

          (c) Final Adjustment. Promptly following the final resolution of all
disputes, if any, relating to the calculations of Q3 Operating Income and the
adjusted Purchase/Conversion Price in accordance with this Section 2.2, but in
no event more than five Business Days thereafter (such date, the "Resolution
Date"), (1) if the finally-determined Q3 Operating Income exceeds US$
22,000,000, then the Preliminary Purchase/Conversion Price shall be increased by
an amount equal to the Positive Adjustment Amount and as so adjusted shall be
the Purchase/Conversion Price for all purposes of this Agreement and the
Exhibits hereto, and (2) if the finally-determined Q3 Operating Income is less
than US$ 19,000,000, then the Preliminary Purchase/Conversion Price shall be
reduced by an amount equal to the Negative Adjustment Amount and as so adjusted
shall be the Purchase/Conversion Price for all purposes of this

                                       9
<PAGE>

Agreement and the Exhibits hereto. Upon any such adjustment to the
Purchase/Conversion Price, the aggregate principal amount of the Purchased
Subordinated Notes to be purchased by each Investor at the Closing shall be
adjusted as follows:

               (i) if there is a Positive Adjustment Amount, then the aggregate
          principal amount of Purchased Subordinated Notes to be issued to such
          Investor at the Closing shall be reduced by an amount equal to the
          product of (x) the Positive Adjustment Amount multiplied by (y) the
          aggregate number of Purchased Ordinary Shares and Ordinary Shares
          issuable upon exercise of the Class C Warrants (collectively, "Equity
          Securities") being purchased by such Investor at the Closing as set
          forth on Schedule I (the "Notes Reduction Amount"); and

               (ii) if there is a Negative Adjustment Amount, then the aggregate
          principal amount of Purchased Subordinated Notes to be issued to such
          Investor at the Closing shall be increased by an amount equal to the
          product of (x) the Negative Adjustment Amount multiplied by (y) the
          aggregate number of Equity Securities being purchased by such Investor
          at the Closing as set forth on Schedule I (the "Notes Increase
          Amount").

          For purposes of this Agreement:

               (A) "Positive Adjustment Amount" means, in the event that Q3
          Operating Income exceeds US$ 22,000,000, an amount equal to the
          quotient of (1) the amount by which Q3 Operating Income exceeds US$
          22,000,000 divided by (2) the number of Ordinary Shares outstanding
          immediately before the Closing (assuming the full exercise of warrants
          and options and conversion of all other equity securities of the
          Company convertible (directly or indirectly) into Ordinary Shares,
          including the HyCU Preferred Shares, which were outstanding
          immediately before the Closing, and excluding the Senior Notes); and

               (B) "Negative Adjustment Amount" means, in the event that Q3
          Operating Income is less than US$ 19,000,000, an amount equal to the
          quotient of (1) the amount by which US$ 19,000,000 exceeds Q3
          Operating Income divided by (2) the number of Ordinary Shares
          outstanding immediately before the Closing (assuming the full exercise
          of warrants and options and conversion of all other equity securities
          of the Company convertible (directly or indirectly) into Ordinary
          Shares, including the HyCU Preferred Shares, which were outstanding
          immediately before the Closing, and excluding the Senior Notes).

                                  Article III
                          CLOSING, DELIVERY AND PAYMENT

          3.1. Closing. The closing of the sale and purchase of the Purchased
Securities under this Agreement (the "Closing") shall take place at the same
time and place as the closing of the ING Transaction, or at such other time or
place as the Company and the Investors may mutually agree (such date is
hereinafter referred to as the "Closing Date"); provided that the Company shall
use its reasonable best efforts to provide at least 10 Business Days' prior
notice

                                       10
<PAGE>

to the Investors of the Closing Date. At the Closing, the Investors will
purchase the Purchased Ordinary Shares, the Purchased Subordinated Notes and the
Class C Warrants.

          3.2. Payment and Delivery; Post-Closing Adjustments. (a) At the
Closing, subject to the terms and conditions hereof, (i) the Company shall
deliver to each Investor (A) the Shareholders' Agreement duly executed by the
Company, (B) share certificates representing the Purchased Ordinary Shares
purchased by such Investor, (C) notes representing the aggregate principal
amount of the Purchased Subordinated Notes (as adjusted pursuant to Section
2.2(c), if applicable) purchased by such Investor and (D) certificates
evidencing the Class C Warrants issued to such Investor and (ii) each Investor
shall deliver to the Company (A) an amount equal to the sum of (1) the aggregate
principal amount of the Purchased Subordinated Notes set forth opposite such
Investor's name on Schedule I (as adjusted pursuant to Section 2.2(c), if
applicable), plus (2) the product of (x) the Purchase/Conversion Price, if the
Resolution Date shall have occurred prior to the Closing (or the Preliminary
Purchase/Conversion Price, if the Resolution Date shall not have occurred prior
to the Closing), multiplied by (y) the aggregate number of Purchased Ordinary
Shares and Class C Warrants set forth opposite such Investor's name on Schedule
I, by wire transfer of immediately available funds to the account designated in
writing by the Company to the Investors not less than 10 Business Days prior to
the Closing, and (B) the Shareholders' Agreement duly executed by such Investor.

          (b) If the Resolution Date occurs after the Closing, then:

               (i) the purchase price paid per Equity Security by each Investor
          shall be deemed to be the Purchase/Conversion Price; and

               (ii) the aggregate principal amount of Purchased Subordinated
          Notes held by each Investor shall be increased by the Notes Increase
          Amount or reduced by the Notes Reduction Amount, as the case may be,
          in each case with retroactive effect from the Closing Date so that all
          interest accruing on such Purchased Subordinated Notes shall be
          calculated based on the principal amount thereof as adjusted pursuant
          hereto. If the principal amount of the Purchased Subordinated Notes is
          so adjusted, then the Company will promptly exchange the certificates
          held by the Investors evidencing such Purchased Subordinated Notes for
          certificates evidencing the adjusted principal amount of such notes.

                                   Article IV
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to each of the Investors as
follows (it being understood the "Company" as used in this Article IV does not
include any business or assets to be acquired in connection with the ING
Transaction):

          4.1. Organization, Good Standing and Qualification; Subsidiaries. The
Company is a company limited by shares duly incorporated, validly existing and
in good standing under the Laws of the Cayman Islands. Except as set forth in

                                       11
<PAGE>

Section 4.1 of the Company Disclosure Schedule, each of its Subsidiaries is duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization. Except as set forth in Section 4.1 of the
Company Disclosure Schedule, the Company and each of its Subsidiaries are duly
authorized to conduct business and in good standing under the Laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on (i) the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole, or
(ii) the Company's ability to consummate the transactions contemplated by the
Transaction Agreements within the timeframes set forth therein (a "Company
Material Adverse Effect"); provided, however, that with respect to the foregoing
clause (i) only, the following shall be excluded from the definition of "Company
Material Adverse Effect" and from any determination as to whether a Company
Material Adverse Effect has occurred or may occur: (x) any adverse change or
effect that (A) is caused by or that arises out of conditions affecting the
economy or financial, banking, currency or capital markets in general and (B)
does not have a disproportionate effect on the business of the Company; (y) any
adverse change or effect that is caused by or that arises out of conditions that
(A) affect the life reinsurance industry, or the insurance or financial services
industries generally, including without limitation changes in applicable Law,
and (B) do not have a disproportionate effect on the business of the Company;
and (z) any adverse change or effect resulting from the announcement or the
pendency of the transactions contemplated by this Agreement. Except as set forth
in Section 4.1 of the Company Disclosure Schedule, the Company and each of its
Subsidiaries have all requisite corporate power and authority to own and operate
their respective properties and assets and to carry on their respective
businesses as presently conducted and proposed to be conducted. True and correct
copies of its Memorandum and Articles of Association and all certificates of
designations related thereto of the Company as amended and currently in effect
have been delivered to the Investors. The Company has no Subsidiaries, or any
debt or equity investment in any other Person, except in its investment
portfolio in the ordinary course of business and as set forth in Section 4.1 of
the Company Disclosure Schedule. All of the outstanding shares of capital stock
of each Subsidiary of the Company listed in Section 4.1 of the Company
Disclosure Schedule have been duly authorized and validly issued and are fully
paid and non-assessable and are owned by the Company either directly or through
wholly-owned Subsidiaries, free and clear of all Liens, except, in each case, as
set forth in Section 4.1 of the Company Disclosure Schedule.

          4.2. Capitalization; Voting Rights. (a) The authorized share capital
of the Company consists of (i) 100,000,000 Ordinary Shares and (ii) 50,000,000
preferred shares. As of the date hereof, there are issued and outstanding and
credited as fully paid (i) 35,905,962 Ordinary Shares, (ii) 5,750,000
convertible preferred shares, par value US$ 0.01 per share ("HyCU Preferred
Shares"), (iii) Class A warrants to purchase an aggregate of 2,650,000 Ordinary
Shares, (iv) no Class B warrants, (v) no Class C warrants, (vi) US$ 115,000,000
aggregate principal amount of 4.50% Senior Convertible Notes due 2022 (the
"Senior Notes"), (vii) no Subordinated Notes and (viii) options to purchase an
aggregate of 2,553,236 Ordinary Shares.

          (b) Other than as set forth in this Section 4.2 or described in
Section 4.2 of the Company Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any Voting
Securities of the Company or any of its Subsidiaries. Other than as set forth in
Section 4.2 of the Company Disclosure Schedule, there are no standstill, voting
or

                                       12
<PAGE>

similar agreements or any Contract, or any rights of first offer or first
refusal, to which the Company is a party that currently or in the future will
limit the ability of any Person to acquire, vote, sell, hold or otherwise deal
with the Purchased Securities and any interest therein or right in respect
thereof. Upon consummation of the transactions contemplated by this Agreement,
the Investors will acquire from the Company record and beneficial ownership of
the Purchased Securities, free and clear of all Liens, together with all rights
which may become attached to the Purchased Securities at or after the Closing.

          4.3. Authorization; Binding Obligations. (a) This Agreement, the other
Transaction Agreements and the transactions contemplated hereby and thereby have
been duly authorized by all requisite corporate, shareholder and other action of
the Company, other than the Shareholder Approval (which is, with respect to the
Special Resolution, the affirmative vote by special resolution of at least
two-thirds (66 2/3%) of the holders of the Ordinary Shares then issued and
outstanding and entitled to vote in person or proxy at a duly convened and
quorate extraordinary general meeting of the Company, and, with respect to the
Ordinary Resolution, the affirmative vote by ordinary resolution of the holders
of at least the majority of the Ordinary Shares then issued and outstanding and
entitled to vote in person or proxy at a duly convened and quorate extraordinary
general meeting of the Company), and the Company has full corporate power and
authority to execute and deliver this Agreement and the other Transaction
Agreements and to perform its obligations hereunder and thereunder. This
Agreement has been, and at the Closing Date the other Transaction Agreements
will be, duly executed and delivered by the Company, and, assuming due execution
and delivery by the other parties thereto, this Agreement constitutes, and, upon
each of their execution and delivery, each of the other Transaction Agreements
will constitute, a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws now or hereafter in effect affecting creditors' rights generally or
by general principles of equity.

          (b) The issuance and sale of the Purchased Securities is not and will
not be subject to any preemptive rights or rights of first refusal or first
offer that have not been properly waived or complied with.

          (c) The Purchased Ordinary Shares and the Ordinary Shares issuable
upon exercise of the Class C Warrants and upon conversion of the Subordinated
Notes have been duly authorized by all necessary corporate action on the part of
the Company and no further corporate action is necessary for the issuance of
such shares pursuant to the terms of this Agreement or the Class C Warrants or
Subordinated Notes, as applicable, except, in the case of Ordinary Shares
issuable upon exercise of the Class C Warrants or conversion of the Subordinated
Notes, for the Shareholder Approval. When so issued pursuant to the terms of
this Agreement or upon exercise of the Class C Warrants or conversion of the
Subordinated Notes, such Ordinary Shares will be validly issued, fully paid and
non-assessable and free of any preemptive rights.

          (d) The Class C Warrants and the Subordinated Notes have been duly
authorized by all necessary corporate action on the part of the Company and no
further corporate action is necessary for the issuance and delivery thereof to
the Investors at the Closing. When so delivered in accordance with the terms of
this Agreement, the Class C Warrants and the Subordinated Notes will constitute
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability

                                       13
<PAGE>

may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws now or hereafter in effect affecting creditors' rights generally
or by general principles of equity.

          4.4. Consents and Approvals. Except for (a) the filing required under
the HSR Act, (b) any filings of applications and notices with the insurance
regulatory authorities in the jurisdictions listed in Section 4.4(b) of the
Company Disclosure Schedule and the approval of such applications or the grant
of required licenses by such authorities, in each case with respect to the
exercise of the Class C Warrants and conversion of the Purchased Subordinated
Notes by the Investors (but not the issuance, sale and delivery to the Investors
of the Purchased Securities), (c) the filing with the SEC of the proxy statement
(as amended and/or supplemented from time to time, the "Proxy Statement")
relating to the meeting of the Company's shareholders to be held for the purpose
of obtaining the Shareholder Approval (the "Shareholder Meeting"), (d) any
filings, approvals or other requirements under applicable securities Laws or
applicable insurance company stock issuance Laws as set forth in Section 4.4(d)
of the Company Disclosure Schedule, and (e) the filing of the Special
Resolutions and the Restated Articles with the appropriate authority in the
Cayman Islands following receipt of the Shareholder Approval, no consent,
approval, permit or authorization of, license or order of, or registration,
declaration, filing with, or notice to, any United States federal, state,
foreign, supranational, national, municipal or local government, any court, any
instrumentality, subdivision, administrative agency or commission, insurance or
securities regulatory authority or other governmental authority or
instrumentality or industry self-regulatory body (each, a "Governmental
Authority") (such consents, approvals, authorizations, licenses, orders,
registrations, filings and notices, together with any consents, approvals,
actions or notices required to be obtained from any Governmental Authority,
collectively, the "Consents") is required to be obtained, made or given by or
with respect to the Company or by an investor in the Company in connection with
(i) the execution and delivery by the Company of the Transaction Agreements,
(ii) the performance by the Company of its obligations under the Transaction
Agreements or (iii) the consummation by the Company of the transactions
contemplated by the Transaction Agreements subject to the conditions set forth
therein, except where failure to obtain any such Consent would not reasonably be
expected to (i) have, individually or in the aggregate, a Company Material
Adverse Effect or (ii) adversely affect the Investors' rights under the
Transaction Agreements.

          4.5. Compliance with Other Instruments. (a) Neither the Company nor
any of its Subsidiaries is in violation or default of any provision of (i) any
Contract to which any of them is party or by which any of them is bound, or (ii)
any Order of any Governmental Authority or (iii) any of their respective
memorandum and articles of association, certificate of incorporation, bylaws or
other organizational documents, as applicable, except, in the case of clauses
(i) or (ii), for any violation or default which would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

          (b) Neither the execution nor the delivery by the Company of the
Transaction Agreements, the performance by it of its obligations under the
Transaction Agreements nor the consummation by it of the transactions
contemplated by the Transaction Agreements, including the issuance, sale and
delivery of the Purchased Securities, will:

               (i) other than the requirement to obtain the Shareholder
          Approval, conflict with or result in a breach of any provision of the
          Memorandum and

                                       14
<PAGE>

          Articles of Association of the Company or the memorandum and articles
          of association, certificate of incorporation, bylaws or other
          organizational documents, as applicable, of any of its Subsidiaries;
          or

               (ii) result in any conflict with, breach or violation of, or
          default (or an event that, with notice or lapse of time or both, would
          constitute a default) under, require any Consent which has not been
          obtained with respect to, give rise to any right of termination,
          cancellation or acceleration of any obligations or loss of any benefit
          under, cause the incurrence of additional liabilities or fees or
          result in the imposition of any Liens on any of the properties or
          assets of the Company or any of its Subsidiaries or the creation or
          enforcement of any Lien on any of the properties or assets of the
          Company or any of its Subsidiaries under, or result in the suspension,
          revocation, impairment, forfeiture or nonrenewal of any permit,
          license, authorization or approval applicable to the Company or any of
          its Subsidiaries, any of their business or operations or any of their
          assets or properties pursuant to: (A) any note, bond, mortgage,
          indenture, deed of trust, license, lease, contract, agreement or other
          instrument or obligation, permit, concession, franchise or license to
          which the Company or any of its Subsidiaries is a party or by which
          they or any of their properties or assets are bound; or (B) any Order
          or Law applicable to the Company or any of its Subsidiaries or any of
          their properties or assets, except where such conflict, breach,
          violation or default, or failure to obtain Consent, or right of
          termination, cancellation or acceleration, loss of benefit or
          imposition of additional liabilities or fees or of any Lien or
          suspension, revocation, impairment, forfeiture or nonrenewal would not
          reasonably be expected to have, individually or in the aggregate, a
          Company Material Adverse Effect.

          4.6. Transactions with Affiliates. Except as set forth in the Company
Reports filed and publicly available prior to the date hereof and as set forth
in Section 4.6 of the Company Disclosure Schedule, since December 31, 2003,
there have been no contracts, agreements, arrangements or understandings of any
kind between any director or officer of the Company or any of its Subsidiaries
or any other Affiliate of the Company, on the one hand, and the Company or any
of its Subsidiaries, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act or require approval of
the shareholders of the Company under the Cayman Islands Companies Law or the
NYSE rules.

          4.7. SEC Documents; Other Reports; Internal and Disclosure Controls.
(a) The Company has filed all required reports, schedules, registration
statements and other documents, together with amendments thereto, with the SEC
since December 31, 2001(the "Company Reports"). As of their respective dates of
filing with the SEC (or, if amended or superseded by a subsequent filing prior
to the date hereof, as of the date of such subsequent filing), (i) the Company
Reports complied, and each such Company Report filed subsequent to the date
hereof will comply, in all material respects with the applicable requirements of
the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") and the related rules and regulations promulgated under
such acts, and (ii) did not or will not, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the

                                       15
<PAGE>

circumstances under which they were made, not misleading. There are no
outstanding comments from, or unresolved issues raised by, the SEC with respect
to any of the Company Reports. None of the Company's Subsidiaries is required to
file periodic reports with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. No executive officer of the Company has failed in any respect to
make the certifications required of him or her under Sections 302 or 906 of the
Sarbanes-Oxley Act and no enforcement action (including formal or informal
investigation or inquiry) has been initiated against the Company by the SEC
relating to disclosures contained in any Company Report. Notwithstanding clause
(ii) of the second sentence of this Section 4.7(a), any projection, business
plan or similar forward-looking statement (a "Forward-Looking Statement")
contained in a Company Report shall not be deemed to have contained an untrue
statement of a material fact or omitted to state any fact necessary to make the
statements therein not misleading if such Forward-Looking Statement was prepared
in good faith and was based upon reasonable assumptions and the Company did not
believe and had no reasonable grounds to believe that such Forward-Looking
Statement contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading at the
time of preparation or delivery thereof.

          (b) The Company and each of its Subsidiaries have timely filed all
material reports, registrations, applications, statements and other filings,
together with any amendments required to be made with respect thereto, that they
were required to file since December 31, 2001 with any Governmental Authority
(other than the SEC) and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Governmental
Authority in the regular course of the business of the Company and its
Subsidiaries or as set forth in Section 4.7(b) of the Company Disclosure
Schedule, no Governmental Authority has initiated any proceeding or, to the
Company's knowledge, threatened an investigation into the business or operations
of the Company or any of its Subsidiaries since December 31, 2001. Except as set
forth in Section 4.7(b) of the Company Disclosure Schedule, there is no material
unresolved violation, criticism or exception by any Governmental Authority with
respect to any report, registration or statement filed by, or relating to any
examinations by any such Governmental Authority of, the Company or any of its
Subsidiaries.

          (c) Except as set forth in Section 4.7(c) of the Company Disclosure
Schedule, the records, systems, controls, data and information of the Company
and its Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a materially adverse
effect on the system of internal accounting controls described in the following
sentence. The Company and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with US GAAP, including
that (i) transactions are executed only in accordance with management's
authorization; (ii) transactions are recorded as necessary to permit preparation
of the financial statements of the Company and to maintain accountability for
the Company's assets; (iii) access to the Company's assets is permitted only in
accordance with management's authorization; (iv) the reporting of the Company's
assets is

                                       16
<PAGE>

compared with existing assets at regular intervals; and (v) accounts, notes and
other receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current and
timely basis. The Company (A) has designed disclosure controls and procedures
(within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
ensure that material information relating to the Company and its Subsidiaries is
made known to the management of the Company by others within those entities as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications required by the Exchange Act with respect to the Company
Reports, and (B) has disclosed, based on its most recent evaluation prior to the
date hereof, to the Company's auditors and the audit committee of the Board of
Directors (1) any significant deficiencies in the design or operation of
internal controls which could adversely affect in any material respect the
Company's ability to record, process, summarize and report financial data and
has identified for the Company's auditors any material weaknesses in internal
controls and (2) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal controls.
The Company has made available to the Investors a summary of any such disclosure
made by management to the Company's auditors and audit committee since December
31, 2001. The Company has initiated its process of compliance with Section 404
of the Sarbanes-Oxley Act and has a good faith expectation that it will be in
compliance therewith in all material respects by the SEC mandated compliance
date.

          (d) Except as set forth in Section 4.7(d) of the Company Disclosure
Schedule, since December 31, 2001, (i) neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any director, officer, employee,
auditor, accountant or representative of the Company or any of its Subsidiaries
has received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any of its Subsidiaries
or their respective internal accounting controls, including any material
complaint, allegation, assertion or claim that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices, and
(ii) no attorney representing the Company or any of its Subsidiaries, whether or
not employed by the Company or any of its Subsidiaries, has reported evidence of
a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board of Directors or any committee thereof or to any director or officer
of the Company.

          4.8. Financial Statements.

          (a) The audited consolidated balance sheets and audited consolidated
statements of income and cash flows of the Company as at December 31, 2003 and
2002 and for the three years ended December 31, 2003 and the unaudited
consolidated balance sheets and unaudited consolidated statements of income and
cash flows of the Company as at and for the periods ended March 31, 2004 and
June 30, 2004 (including in each case any related notes and schedules thereto)
included in the Company Reports filed on or prior to the date hereof complied,
and the financial statements of the Company (including any related notes and
schedules thereto) included in any Company Reports filed after the date hereof
will comply, as to form, as of their respective dates of filing with the SEC
(or, if amended or superseded by a subsequent filing prior to the date hereof,
as of the date of such subsequent filing), in all material respects, with all
applicable accounting requirements and with the published rules and regulations
of the SEC with respect

                                       17
<PAGE>

thereto (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), have been or will be, as the case may be, prepared in accordance
with US GAAP applied on a consistent basis during the periods involved (except
as may be disclosed therein), and fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
and the consolidated results of operations, changes in stockholders' equity and
cash flows of such companies as of the dates and for the periods shown. The
books and records of the Company and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with US GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.

          (b) The reserves reflected on the financial statements referred to in
clause (a) above (i) were determined in accordance with generally accepted
actuarial principles, consistently applied for the periods presented, (ii) were
based on actuarial assumptions that were, in the Company's good faith judgment,
reasonable in relation to relevant policy and contract provisions, (iii) as of
their respective dates met the applicable requirements of the insurance laws and
regulations of the jurisdiction of domicile of the Company or its applicable
Subsidiaries, including applicable statutory accounting principles, (iv) are in
compliance with SAP, and (v) were prepared using methodologies consistent with
those utilized in the preparation of the financial statements of the Company
referred to in clause (a) above (it being understood by the Investors that, in
making the representations and warranties in this clause (b), the Company is not
representing or warranting that the reserves reflected in such financial
statements have been or will be sufficient or adequate for the purposes for
which they were established or that reinsurance recoverables taken into account
in determining the amount of such reserves will be collectible).

          4.9. Insurance Reports. Each of the Subsidiaries through which the
Company conducts its insurance operations (collectively, the "Company Insurance
Entities") is listed in Section 4.9 of the Company Disclosure Schedule, along
with the jurisdiction in which each Subsidiary is domiciled or commercially
domiciled. Each of the Company Insurance Entities has filed all annual and
quarterly statements, together with all exhibits, interrogatories, notes,
schedules and any actuarial opinions, affirmations or certifications or other
supporting documents in connection therewith, required to be filed with or
submitted to the appropriate insurance regulatory authorities of the
jurisdiction in which it is domiciled or commercially domiciled on forms
prescribed or permitted by such authority (collectively, the "Company SAP
Statements"), except for such failures to file that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. The Company has delivered or made available to the Investors copies of
all of the Company SAP Statements for each Company Insurance Entity for the
periods beginning January 1, 2002 and through the date hereof, each in the form
(including exhibits, annexes and any amendments thereto) filed with the
applicable state insurance regulatory authority and true and complete copies of
all examination reports of insurance departments and any insurance regulatory
authorities received by the Company on or after January 1, 2002 and through the
date hereof relating to the Company Insurance Entities. The financial statements
included in the Company SAP Statements, including the notes thereto, were
prepared in conformity with statutory accounting practices ("SAP") prescribed or
permitted by the applicable insurance regulatory authority, in each case
consistently applied for the periods covered thereby, and present fairly, in all
material respects, the statutory financial position of the relevant Company
Insurance Entity as at the respective

                                       18
<PAGE>

dates thereof and the results of operations of such Company Insurance Entity for
the respective periods then ended. The Company SAP Statements complied in all
material respects with all applicable Laws when filed, and no material
deficiency has been asserted by any Governmental Authority with respect to any
Company SAP Statements. Except as indicated therein, all assets that are
reflected as admitted assets on the Company SAP Statements comply in all
material respects with all applicable foreign, U.S. federal, state and local
Laws regulating the business and products of insurance and all applicable orders
and directives of insurance regulatory authorities (collectively, the "Insurance
Laws") with respect to admitted assets, as applicable, and are in an amount at
least equal to the minimum amounts required by Insurance Laws, except for such
failures to comply or failures to be at least equal to minimum amounts that
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The annual statutory balance sheets and income
statements included in the Company SAP Statements have been audited by the
Company's independent auditors, and the Company has delivered or made available
to the Investors true and complete copies of all audit opinions related thereto
for periods beginning January 1, 2002.

          4.10. Absences of Certain Changes or Events. Except as set forth in
the Company Reports filed and publicly available prior to the date hereof or as
disclosed in Section 4.10 of the Company Disclosure Schedule, since December 31,
2003, the Company and its Subsidiaries have conducted their business only in the
ordinary course consistent with past practices and there has not been:

          (a) any damage, destruction or loss to any of the assets of the
Company or its Subsidiaries, whether covered by insurance or reinsurance or not,
that has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;

          (b) any declaration or payment or making of any dividend or other
distribution (whether in cash, securities or other property or any combination
thereof) in respect of the capital of the Company, other than regular cash
dividends paid by the Company on the Ordinary Shares and the HyCU Preferred
Shares with usual record and payment dates and in accordance with the Company's
past dividend policy and dividends paid by the Company's Subsidiaries to the
Company or other Subsidiaries, or any repurchase, redemption or other
acquisition by the Company of any of its Ordinary Shares, or any proposal by the
Company to effect any of the foregoing;

          (c) other than (i) pursuant to employee benefit plans being developed
and disclosed to the Investors prior to the date hereof or (ii) required by the
terms of employment agreements existing on the date hereof, any (A) increase in
the compensation or fringe benefits of any present or former director or officer
of the Company or its Subsidiaries, other than in the ordinary course of
business consistent with past practice, (B) grant of any severance or
termination pay to any present or former director or officer of the Company or
its Subsidiaries, other than in the ordinary course of business consistent with
past practice, (C) loan of money or other property by the Company or its
Subsidiaries to any of their present or former directors, officers or employees,
(D) establishment, adoption, entrance into, amendment or termination of any
Company Plan (other than as may be required by applicable Law), or (E) grants of
any equity or equity-based awards;

                                       19
<PAGE>

          (d) any entry into any Material Contract;

          (e) any division, consolidation or reclassification of the share
capital of the Company or any issuance or authorization of any issuance of any
securities in respect of, in lieu of or in substitution for the shares of the
Company's share capital;

          (f) any acquisition or disposal or any agreement to acquire or dispose
of any material business or asset or the assumption of any material liability,
except in each case at value and terms agreed on an arms-length basis;

          (g) any material change in accounting methods, principles or practices
by the Company or any of its Subsidiaries except as required by U.S. GAAP and
with the concurrence of its independent accountants or auditors;

          (h) any material change in the underwriting, pricing or actuarial
policies, practices, procedures, methods or assumptions or Investment Policies
of the Company or any of its Subsidiaries outside the ordinary course of
business; or

          (i) any other change, event, condition (financial or otherwise) which
has had or that would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

          4.11. Contracts. (a) Except as disclosed in the Company Reports filed
and publicly available prior to the date hereof or as disclosed in the filings
with the SEC publicly available prior to the date hereof or as set forth in
Section 4.11(a) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries is a party to or is bound by any Contract (each, a "Material
Contract"):

               (i) which is a material contract as defined in Item 601(b)(10) of
          Regulation S-K of the SEC to be performed in whole or in part after
          the date of this Agreement;

               (ii) relating to the borrowing of money, guarantees, security
          agreements and deferred purchase Contracts, including obligations for
          reimbursement under letters of credit or reimbursement agreements
          therefor (other than letters of credit or reimbursement agreements
          therefor that are related to Reinsurance Agreements and Retrocession
          Agreements entered into by the Company or any of its Subsidiaries in
          the ordinary course of business consistent with past practice) in any
          case representing future liabilities in excess of US$ 5,000,000 with
          respect to any single Contract;

               (iii) with any Company Employee pursuant to which the Company or
          any of its Subsidiaries owes or could owe any monetary obligation that
          would become due and payable or increase in amount as a result of the
          consummation of the transactions contemplated by this Agreement, the
          other Transaction Agreements or the ING Transaction Agreement;

                                       20
<PAGE>

               (iv) containing any provision or covenant limiting the ability of
          the Company or any of its present or future Affiliates (other than the
          Investors and their Affiliates) to engage in any line of business or
          compete with any Person in any geographical area or requiring the
          Company or any of its present or future Affiliates (other than the
          Investors and their Affiliates) to use any product or service on a
          priority or exclusive basis or give any other person a priority or
          exclusive right with respect to business opportunities;

               (v) between the Company or any of its Subsidiaries, on the one
          hand, and any of their Affiliates (other than the Company and its
          Subsidiaries), on the other hand;

               (vi) involving the purchase, sale, transfer, assignment or other
          disposition of assets or liabilities of the Company or any of its
          Subsidiaries having a value in any case in excess of US$ 5,000,000 and
          which is to be performed in whole or in part after the date of this
          Agreement, other than (A) an agreement for proposed dispositions that
          have been disclosed to the Investors prior to the date hereof, (B)
          agreements for the disposition of assets held by the Company or any of
          its Subsidiaries in their investment portfolios in accordance with
          their respective Investment Policies and in the ordinary course of
          business consistent with past practice, (C) dispositions pursuant to
          Retrocession Agreements or Reinsurance Agreements in the ordinary
          course of business consistent with past practice and (D) the ING
          Transaction Agreement;

               (vii) representing future liabilities in any case in excess of
          US$ 5,000,000 individually that are subject to termination upon the
          consummation of the transactions contemplated hereby; or

               (viii) pursuant to which the Company or any of its Subsidiaries
          has agreed to grant or has granted an option or similar right to
          another Person affecting any material asset of the Company or any of
          its Subsidiaries, other than (A) assets held by the Company or any of
          its Subsidiaries in its investment portfolio in accordance with its
          Investment Policies or (B) assets disposed in connection with one or
          more proposed plans or transactions that have been disclosed to the
          Investors prior to the date hereof.

          (b) True and complete copies of each Material Contract or, if none
exist, written descriptions thereof, have been made available to the Investors
prior to the date of this Agreement. Each of the Material Contracts is in full
force and effect and is binding upon and enforceable against the Company or its
Subsidiary, as the case may be, in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect affecting creditors' rights generally or by general principles of equity.
Neither the Company nor any of its Subsidiaries is in material breach or
default, or has received written notice of a claimed material breach or default,
under any of the Material Contracts and, to the Company's knowledge, there does
not exist under any of the Material Contracts any event which, with the giving
of notice or lapse of time or both, would constitute a material breach or
default by the Company or any of its Subsidiaries or any other party thereto.

                                       21
<PAGE>

          4.12. Litigation. There is no action, suit, proceeding, investigation,
claim, case, litigation or arbitration ("Action") pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries that
questions the validity of the Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby or which would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, and neither the Company, any of its Subsidiaries nor any of their
directors or officers (in each of their capacity as such) are a party or subject
to the provisions of any order, writ, injunction, judgment, decree, award,
settlement or stipulation rendered by or subject to any Government Authority
("Order") which would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, or would prevent or materially
delay the consummation of the transactions contemplated hereby or thereby.

          4.13. Liabilities and Reserves. (a) Except as set forth in Section
4.13(a) of the Company Disclosure Schedule or to the extent specifically
disclosed, reflected or reserved against in the financial statements of the
Company referred to in Section 4.8 and the notes thereto, and except pursuant to
the express terms of the ING Transaction Agreement, neither the Company nor any
of its Subsidiaries has any material obligations or liabilities of any nature
(whether accrued, absolute, contingent or otherwise, and whether or not due, or
arising out of transactions entered into, or any state of facts existing, prior
to such date), other than (i) liabilities incurred in the ordinary course of
business consistent with past practice which would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, and
(ii) any other liabilities which are not, individually or in the aggregate,
material to the Company and its Subsidiaries taken as a whole (it being
understood by the Investors that, in making the representations and warranties
in this clause (a), the Company is not making any representation and warranty
concerning the reserves reflected in its financial statements, the subject of
which is covered by Section 4.8 hereof).

          (b) No external study of the Company's or any of its Subsidiaries'
reserves has been prepared during the five-year period immediately preceding the
date of this Agreement other than in connection with the preparation of the
financial statements of the Company referred to in Section 4.8.

          4.14. Taxation. (a) Except as disclosed in Section 4.14(a) of the
Company Disclosure Schedule, the Company and each of its Subsidiaries have
accurately prepared and timely filed all material Tax Returns that are required
to be filed by each of them and have paid or made provision for the payment of
all material Taxes, including without limitation, all material Taxes which the
Company and each of its Subsidiaries are obligated to withhold from amounts
owing to employees, creditors and third parties, with respect to the periods
covered by such Tax Returns (whether or not such amounts are shown as due on any
tax return). No deficiency assessment with respect to a proposed adjustment of a
material amount of Taxes of the Company or any of its Subsidiaries is pending
or, to the best of the Company's knowledge, threatened.

          (b) Based upon and subject to the qualifications set froth in the
prospectus supplement of the Company dated December 11, 2003 with respect to the
offering of the HyCU Preferred Shares, (i) the Company believes that it should
not currently be characterized as "passive foreign investment company" ("PFIC")
as defined in Section 1291(a) of the Code and (ii) the Company believes that its
non-U.S. insurance subsidiaries should currently satisfy at

                                       22
<PAGE>

least one of the "related person insurance income" inclusion exceptions provided
in Sections 953(c)(3)(A) or (B) of the Code. The Company currently intends to
operate its insurance business so that (A) Company should not be characterized
as a PFIC and (B) its non-U.S. insurance subsidiaries should satisfy at least
one of the "related person insurance income" inclusion exceptions provided in
Section 953(c)(3)(A) or (B) of the Code.

          4.15. Title to Tangible Property.

          (a) Real Property. Neither the Company nor any of its Subsidiaries
owns any real property.

          (b) Personal Property. The Company and its Subsidiaries have good,
valid and marketable title to all tangible personal property owned by them, free
and clear of all Liens except as disclosed in the Company Reports filed and
publicly available prior to the date hereof or as set forth in Section 4.15(b)
of the Company Disclosure Schedule or as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.

          (c) Leased Property. All leases of real property and all other leases
material to the operation of the Company and its Subsidiaries under which the
Company or a Subsidiary, as lessee, leases personal property are valid and
binding in accordance with their respective terms, there is not under such lease
any material existing default by the Company or such Subsidiary or, to the
Company's knowledge, any other party thereto, or any event which with notice or
lapse of time would constitute such a default, and, in the case of leased
premises, the Company or such Subsidiary quietly enjoys the premises provided
for in such lease, except in any such case as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

          4.16. Compliance with Laws, etc. Each of the Company and its
Subsidiaries is in compliance with all Laws applicable to it or any of its
properties, assets, operations or business, including without limitation all
applicable provisions of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and
all applicable money laundering and similar Laws, except where the failure of
the Company or its Subsidiary, as the case may be, to be so in compliance would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Except as otherwise disclosed in Section 4.16 of the
Company Disclosure Schedule, since December 31, 2001, there have been no
material disputes or controversies with, or, to the Company's knowledge,
investigations undertaken by, any Governmental Authority with respect to any
material matter involving the Company or any of its Subsidiaries or their
respective businesses or operations.

          4.17. Insurance for Company's Operations. The Company and its
Subsidiaries have insured against all risks normally insured against by
companies carrying on similar businesses or owning property of a similar nature
and the Company and its Subsidiaries have at all times maintained adequate
insurance for this purpose, and all premiums due on all such insurance Contracts
of the Company or any of its Subsidiaries have been paid, no notice of
termination or non-renewal of any such insurance Contract of the Company or any
of its Subsidiaries has been received and all such insurance Contracts of the
Company or any of its

                                       23
<PAGE>

Subsidiaries are in full force and effect, except, in each case, as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

          4.18. Insurance Business. The Company and its Subsidiaries possess all
material licenses, certificates of authority, accreditations, permits, orders,
approvals or other authorizations (each, a "Permit") required to transact or
accept insurance or reinsurance in or from all jurisdictions in or from which
the Company or its Subsidiaries now transact or accept insurance or reinsurance,
except where the failure to so possess would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and such
Permits are not subject to any limitations, conditions or restrictions imposed
by the relevant Governmental Authority that would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. All
such Permits are in full force and effect. Neither the Company nor any of its
Subsidiaries has received any written or, to the Company's knowledge, oral
notice of any event, inquiry, investigation or proceeding that would reasonably
be expected to result in the suspension, revocation, non-renewal or limitation
of any such Permit or the imposition of any restrictions or requirements with
respect thereto and, to the Company's knowledge, there is no sustainable basis
that would reasonably be expected to result in any such suspension, revocation,
non-renewal or limitation or the imposition of any restrictions or requirements
with respect thereto.

          4.19. Intellectual Property, etc. (a) Except as set forth in Section
4.19(a) of the Company Disclosure Schedule, the Company or its Subsidiary owns
or possesses, or has enforceable rights or licenses to use, (i) the patents,
inventions, discoveries, processes, designs, techniques, developments,
technology and know-how; (ii) the copyrights and works of authorship in any
media, including software, applications, files, Internet site content, databases
and compilations, documentation and related items, advertising, marketing and
promotional materials; (iii) the trademarks, service marks, trade names, brand
names, corporate names, domain names, logos, trade dress and other source
indicators, and the goodwill of any business symbolized thereby; and (iv) the
trade secrets, confidential, proprietary or non-public information, documents,
analyses, research and lists (including current and potential customer and user
lists); (v) the registrations, applications and recordings related thereto; and
(vi) the right to obtain renewals, extensions, substitutions, continuations,
continuations-in-part, divisions, re-issues, re-examinations or similar legal
protections related thereto, in each case necessary to carry on its business as
now conducted (each, an "Intellectual Property Right"). To the Company's
knowledge, all of the material Intellectual Property Right is valid and
enforceable, has not expired or been abandoned. Neither the Company nor any of
its Subsidiaries has received any written or, to the Company's knowledge, oral
notice of any infringement of the rights of others with respect to any
Intellectual Property Right that, if such infringement is determined to be
unlawful, would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

          (b) No Action or Order is pending or, to the Company's knowledge,
threatened, in each case that seeks to cancel, limit or challenge the validity,
enforceability, ownership or use of any Intellectual Property Right, and the
Company knows of no valid basis for same. To the Company's knowledge, no use by
the Company or any of its Subsidiaries of any Intellectual Property Right owned
by the Company or any of its Subsidiaries infringes, misappropriates, dilutes or
otherwise violates any patent, trade name, service mark, trade secret,
trademark,

                                       24
<PAGE>

copyright or other intellectual property rights of any third party and no such
Intellectual Property Right owned by the Company is being infringed,
misappropriated, diluted or otherwise violated by any third party. The Company
takes all reasonable actions to protect and maintain the Intellectual Property
Rights, including any Intellectual Property Rights that are confidential in
nature. The Company takes all reasonable actions to protect the confidentiality,
integrity and security of its software, databases, systems, networks and
Internet sites and all information stored or contained therein or transmitted
thereby from any unauthorized use, access, interruption or modification by third
parties.

          4.20. Reinsurance Agreements. (a) Each in-force material Reinsurance
Agreement or Retrocession Agreement to which the Company or any of its
Subsidiaries is a party is in full force and effect, and is binding upon and
enforceable against the Company or such Subsidiary in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect affecting creditors' rights generally or by general principles of equity.
Neither the Company nor any of its Subsidiaries is in material breach or default
under any of the in-force material Reinsurance Agreements or Retrocession
Agreements or has received written notice of any such material breach or claimed
material breach or default, and, to the Company's knowledge, there does not
exist under any of the material Reinsurance Agreements or Retrocession
Agreements any event which, with the giving of notice or lapse of time or both,
would constitute a material breach or default by the Company or its Subsidiary,
as the case may be. Except as listed on Section 4.20(a) of the Company
Disclosure Schedule, to the Company's knowledge, no other party to an in-force
material Reinsurance Agreement or Retrocession Agreement is in material breach
or default thereunder. There are no material disputes with any party with
respect to the terms of any material Reinsurance Agreement or Retrocession
Agreement, or balances due thereunder. None of the transactions contemplated by
the Transaction Agreements or the ING Transaction Agreement will give any
reinsurer or retrocessionaire the right to terminate any material Reinsurance
Agreement or Retrocession Agreement.

          (b) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, each Company Insurance Entity is entitled to
take full credit in its Company SAP Statements pursuant to Insurance Laws for
all reinsurance, coinsurance or excess insurance ceded pursuant to any
reinsurance, coinsurance, excess insurance, ceding of insurance, assumption of
insurance or indemnification with respect to insurance or similar arrangements
to which it is a party.

          4.21. Pensions.

          (a) Section 4.21(a) of the Company Disclosure Schedule contains a true
and complete list of each material Company Plan. For purposes of this Agreement,
"Company Plan" shall mean each "employee benefit plan" (within the meaning of
Section 3(3) of ERISA, including, without limitation, multiemployer plans within
the meaning of Section 3(37) of ERISA), and all stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation, employee loan and all other employee
benefit plans, agreements, programs, policies or other arrangements, whether or
not subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by this
Agreement or otherwise), under which

                                       25
<PAGE>

(i) any current or former employee, director or consultant of the Company or its
Subsidiaries (the "Company Employees") has any present or future right to
benefits and which are contributed to, sponsored by or maintained by the Company
or any of its Subsidiaries or (ii) the Company or any of its Subsidiaries has
had or has any present or future liability. All such plans, agreements,
programs, policies and arrangements shall be collectively referred to as the
"Company Plans".

          (b) With respect to each Company Plan, the Company has made available
to the Investors a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable, and (iii) for the most
recent year (A) the Form 5500 and attached schedules, (B) audited financial
statements and (C) actuarial valuation reports.

          (c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable Laws, except for such noncompliance as
would not have a Company Material Adverse Effect; (ii) each Company Plan which
is intended to be qualified within the meaning of Section 401(a) of the Code has
received a favorable determination letter as to its qualification, and nothing
has occurred, whether by action or failure to act, that could reasonably be
expected to cause the loss of such qualification; (iii) no event has occurred
and no condition exists that would subject the Company or its Subsidiaries,
either directly or by reason of their Affiliation with any member of their
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Sections 414(b), (c),
(m) or (o) of the Code), to any tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable Laws that would have a Company
Material Adverse Effect; (iv) no "reportable event" (as such term is defined in
Section 4043 of the Code) that would have a Company Material Adverse Effect, no
nonexempt "prohibited transaction" (as such term is defined in Section 406 of
ERISA and Section 4975 of the Code) or "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA and Section 412 of the Code (whether or
not waived)) has occurred with respect to any Company Plan that would have a
Company Material Adverse Effect; (vi) there is no present intention that any
Company Plan be materially amended, suspended or terminated, or otherwise
modified to adversely change benefits (or the levels thereof) under any Company
Plan at any time within the twelve months immediately following the date hereof
and (vii) neither the Company nor any of its Subsidiaries has incurred any
current or projected liability in respect of post-employment or post-retirement
health, medical or life insurance benefits for current, former or retired
employees of Company or any of its Subsidiaries, except as required to avoid an
excise tax under Section 4980B of the Code or otherwise except as may be
required pursuant to any other applicable Law.

          (d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Closing Date, the assets of each such
Company Plan are at least equal in value to the present value of the accrued
benefits (vested and unvested) of the participants in such Company Plan on a
projected benefit obligation basis, based on the actuarial methods and
assumptions indicated in the most recent applicable actuarial valuation reports.

          (e) No Company Plan is a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) and neither the Company, its Subsidiaries nor any member of
their

                                       26
<PAGE>

Controlled Group has at any time sponsored or contributed to, or has or had any
liability or obligation in respect of, any multiemployer plan.

          (f) With respect to any Company Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or
threatened that would have a Company Material Adverse Effect, (ii) no facts or
circumstances exist that could give rise to any such actions, suits or claims
that would have a Company Material Adverse Effect, (iii) no written or oral
communication has been received from the PBGC in respect of any Company Plan
subject to Title IV of ERISA concerning the funded status of any such plan or
any transfer of assets and liabilities from any such plan in connection with the
transactions contemplated herein, and (iv) no administrative investigation,
audit or other administrative proceeding by the Department of Labor, the PBGC,
the Internal Revenue Service or other governmental agencies are pending,
threatened or in progress (including, without limitation, any routine requests
for information from the PBGC).

          (g) Except as set forth in Section 4.21(g) of the Company Disclosure
Schedule, no Company Plan is maintained outside the jurisdiction of the United
States, or covers any employee residing or working outside the United States
(any such Company Plan set forth in Section 4.21(g) of the Company Disclosure
Schedule, a "Foreign Benefit Plans"). With respect to any Foreign Benefit Plans,
(i) all Foreign Benefit Plans have been established, maintained and administered
in compliance with their terms and all applicable Laws of any controlling
governmental authority or instrumentality except where the failure to do so
would have a Company Material Adverse Effect; (ii) all Foreign Benefit Plans
that are required to be funded are fully funded, and with respect to all other
Foreign Benefit Plans, adequate reserves therefore have been established on the
accounting statements of the applicable Company or Subsidiary entity; and (iii)
no material liability or obligation of the Company or its Subsidiaries exists
with respect to such Foreign Benefit Plans that has not been disclosed on
Section 4.21(g) of the Company Disclosure Schedule.

          (h) No Company Plan exists that, as a result of the execution of this
Agreement, shareholder approval of this Agreement, or consummation of the
transactions contemplated by this Agreement (whether alone or in connection with
any subsequent event(s)), (i) will entitle any Company Employee to severance pay
or any increase in severance pay upon any termination of employment after the
date of this Agreement, (ii) could result in the acceleration of the time of
payment or vesting or result in any payment or funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the Company Plans,
(iii) would limit or restrict the right of the Company to merge, amend or
terminate any of the Company Plans, (iv) would cause the Company to record
additional compensation expense on its income statement with respect to any
outstanding stock option or other equity-based award, or (v) would result in
payments under any of the Company Plans which would not be deductible under
Section 280G of the Code.

          4.22. Labor Matters. Except as set forth in Section 4.22 of the
Company Disclosure Schedule, as of the date hereof, with respect to the Company
Employees, (a) to the Company's knowledge, there is not now in existence,
pending or threatened, nor has there been within the last 12 months, any strike,
slowdown, stoppage, organizational effort, grievance proceeding, arbitration,
administrative hearing, or claim of unfair labor practice; and (b) the Company
and its Subsidiaries are not a party to any collective bargaining agreement or
other

                                       27
<PAGE>

Contract with any labor union, staff association, works council or any other
employee representative or similar organization.

          4.23. Environmental Matters. The Company and its Subsidiaries are, and
at all times since January 1, 2001 have been, in compliance with all
Environmental Laws; (b) neither the Company nor any of its Subsidiaries has
received any written Environmental Claim, and, to the Company's knowledge, there
is no threatened Environmental Claim; and (c) neither the Company nor any of its
Subsidiaries has assumed, contractually or by operation of Law, any liabilities
under any Environmental Laws, except, in each case, as would not have,
individually or in the aggregate, a Company Material Adverse Effect.

          4.24. Investment Advisory and Investment Company Matters. Neither the
Company nor any of its Subsidiaries conducts activities of or is otherwise
deemed under Law to control an "investment adviser," as such term is defined in
Section 2(a)(20) of the Investment Company Act, whether or nor registered under
the Investment Advisers Act, or any Person required to be registered as an
investment company under the Investment Company Act. Neither the Company nor any
of its Subsidiaries is an "investment company" as defined in the Investment
Company Act, and neither the Company nor any of its Subsidiaries is a promoter
(as such term is defined in Section 2(a)(30) of the Investment Company Act) of
any Person that is such an investment company. 4.25. Derivatives. (a) The
Company and its Subsidiaries have in place risk management policies and
procedures sufficient in scope and operation to protect against risks of the
type and in amounts reasonably expected to be incurred by Persons of similar
size and in similar lines of business as the Company and its Subsidiaries.

          (b) All material derivative instruments, including, without
limitation, swaps, caps, floors and option agreements, whether entered into for
the Company's own account or for the account of one or more of its Subsidiaries
or their customers, were entered into (i) only for purposes of mitigating
identified risk or as a means of managing the Company's long-term business
objectives, (ii) in accordance with prudent practices and in compliance in all
material respects with all applicable laws, rules, regulations and regulatory
policies, and (iii) with counterparties believed by the Company to be
financially responsible at the time; and each of them constitutes a valid and
legally binding obligation of the Company or one of its Subsidiaries,
enforceable in accordance with its terms, and is in full force and effect,
except, in each case, as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. Neither the Company nor
any of its Subsidiaries, nor, to the Company's knowledge, any other party
thereto, is in breach of any of its material obligations under any such
agreement or arrangement, except where such breach would not have, individually
or in the aggregate, a Company Material Adverse Effect.

          4.26. Brokers' Fees. Other than Bear, Stearns & Co. Inc., the Company
and its Subsidiaries have no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement or the other Transaction Agreements.

          4.27. Offering Valid. Assuming the accuracy of the representations and
warranties of the Investors contained in Section 5.4 hereof, the offer, sale and
issuance of the

                                       28
<PAGE>

Purchased Securities will be exempt from the registration requirements of the
Securities Act, and are exempt from registration and qualification under the
registration, permit or qualification requirements of all applicable state
securities Laws. Neither the Company nor any agent on its behalf has solicited
or will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Purchased Securities to any Person or Persons so as to
bring the sale of such Purchased Securities by the Company within the
registration provisions of the Securities Act or any state securities Laws.

          4.28. Financing. Assuming the purchase of the Purchased Securities by
the Investors in accordance with the terms of this Agreement, the Company will
have at Closing sufficient financial resources to consummate the ING Transaction
on the terms set forth in the ING Transaction Agreement.

          4.29. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither the Company
nor any of its Subsidiaries nor any other Person has made or makes any other
express or implied representation or warranty, either oral or written, on behalf
of the Company or its Subsidiaries with respect to the matters covered by this
Agreement.

          4.30. Ratings. To the Company's knowledge and except as disclosed in
writing to the Investors prior to the date hereof, there is no threatened or
pending downgrade of the financial strength ratings from A.M. Best Company,
Inc., S&P, Moody's Investor Services or Fitch Ratings Ltd. of the Company or any
of its Subsidiaries which are engaged in the business of insurance or
reinsurance.

                                   Article V
                 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

          Each Investor, solely as to itself, severally and not jointly, hereby
represents and warrants to the Company as follows:

          5.1. Organization, Good Standing and Qualification. Such Investor is
an entity duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its organization.

          5.2. Requisite Power and Authority. Such Investor (acting through its
general partner) has all requisite corporate power and authority to execute and
deliver the Transaction Agreements, to purchase the Purchased Securities as
contemplated by this Agreement and to carry out the provisions of the
Transaction Agreements. This Agreement, the other Transaction Agreements and the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate, shareholder/limited partner, general partner and other
action of such Investor. This Agreement has been, and on the Closing Date the
other Transaction Agreements will be, duly executed and delivered by or on
behalf of such Investor, and, assuming the due execution and delivery thereof by
the other parties thereto, this Agreement constitutes, and, upon each of their
execution and delivery, each of the other Transaction Agreements will
constitute, a valid and legally binding obligation of such Investor, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency,

                                       29
<PAGE>

reorganization, moratorium or similar Laws now or hereafter in effect affecting
creditors' rights generally or by general principles of equity.

          5.3. Consents and Approvals. Except for (a) filing required under the
HSR Act, (b) any filings of applications and notices with the insurance
regulatory authorities in the jurisdictions listed in Section 4.4(b) of the
Company Disclosure Schedule and the approval of such applications or the grant
of required licenses by such authorities, in each case with respect to the
exercise of the Class C Warrants and conversion of the Purchased Subordinated
Notes by the Investors (but not the issuance, sale and delivery to the Investors
of the Purchased Securities), (c) the filing with the SEC of the Proxy
Statement, (d) any filings, approvals or other requirements under applicable
securities Laws or applicable insurance company stock issuance Laws as set forth
in Section 4.4(d) of the Company Disclosure Schedule, and (e) the filing of the
Restated Articles with the appropriate authority in the Cayman Islands following
receipt of the Shareholder Approval, no Consent of any Governmental Authority is
required to be obtained, made or given by or with respect to the Company in
connection with (i) the execution and delivery by such Investor of the
Transaction Agreements, (ii) the performance by such Investor of its obligations
under the Transaction Agreements or (iii) the consummation by such Investor of
the transactions contemplated by the Transaction Agreements, except for such
Consents, the failure of which to be made or obtained would not interfere in any
material way with the ability of such Investor to consummate the transactions
contemplated by the Transaction Agreements.

          5.4. Compliance with Other Instruments. Neither the execution and
delivery of this Agreement or the Transaction Agreements by such Investor nor
the performance by such Investor of its obligations hereunder or thereunder, nor
the consummation by such Investor or the transactions contemplated hereby or
thereby, will result in (a) a violation of or a conflict with any provision of
the limited partnership agreement or constitutional document of such Investor,
(b) a breach or violation of, or a default under (with or without notice or
lapse of time or both), any term or provision of, or any right of termination,
cancellation, modification or acceleration arising under, any Contract or Permit
to which such Investor is a party or is subject or by which any of its
properties or assets are bound, (c) a violation by such Investor of any Order or
Law to which such Investor is subject or by which any of its properties or
assets are bound, or (d) the imposition of any Encumbrance on the business,
properties or assets of such Investor, except in the case of clauses (a), (b),
(c) and (d), for those breaches, defaults, rights, violations or impositions
which, individually or in the aggregate, would not reasonably be expected to
interfere in any material way with the ability of such Investor to consummate
the transactions contemplated by the Transaction Agreements.

          5.5. Unregistered Securities. Such Investor acknowledges that it has
been advised by the Company that the Purchased Securities have not been and will
not be registered under the Securities Act or any state securities laws, except
as provided in the Shareholders' Agreement. Such Investor (a) is an accredited
investor as that term is defined in Rule 501 of Regulation D under the
Securities Act, (b) is acquiring its respective Purchased Securities pursuant to
an exemption from registration under the Securities Act solely for its own
account for investment with no present intention to distribute any of its
Purchased Securities to any Person, (c) will not sell or otherwise dispose of
any of its Purchased Securities, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any other
applicable securities laws, and (d) has had an opportunity to conduct a due
diligence

                                       30
<PAGE>

investigation of the Company and has such knowledge and experience in financial
and business matters and in investments of this type that it is capable of
evaluating the merits and risks of its investment in the Purchased Securities.

          5.6. Financial Capability. Such Investor has or, on the Closing Date,
will have sufficient funds to purchase the Purchased Securities on the terms and
conditions contemplated by this Agreement.

          5.7. Proxy Statement. None of the information supplied or to be
supplied by such Investor for inclusion in the Proxy Statement will cause the
Proxy Statement, when first mailed to the shareholders of the Company and at the
time of the Shareholder Meeting, to contain any untrue statement of a material
fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          5.8. Brokers' Fees. Other than Merrill Lynch & Co., Inc., whose
expenses shall be paid by such Investor or one of its pre-Closing Affiliates,
such Investor has no liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement and the other Transactions Agreements for which such Investor or
the Company could become liable or obligated.

          5.9. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V, neither such
Investor nor any other Person has made or makes any other express or implied
representations or warranty, either oral or written, on behalf of such Investor
with respect to the matters covered by this Agreement.

                                   Article VI
                            COVENANTS OF THE PARTIES

          6.1. Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement and the Transaction Agreements or required by the
terms of the ING Transaction Agreement and agreements related thereto or
consented to in writing by the Investors, from the date of this Agreement
through the Closing Date, the Company will, and it will cause each of its
Subsidiaries to, conduct its business only in the usual, regular and ordinary
course consistent with past practice. Without limiting the generality of the
foregoing, the Company will, and it will cause each of its Subsidiaries to:

          (a) maintain insurance coverages on its assets and properties on a
basis consistent with past practice;

          (b) maintain its books, accounts and records on a basis consistent
with past practice;

          (c) comply in all material respects with all applicable Laws and
preserve in full force and effect all Permits material to business and
operations;

                                       31
<PAGE>

          (d) perform in all material respects its obligations under the ING
Transaction Agreement and under all Material Contracts; and

          (e) use its reasonable efforts to maintain and preserve its business
organization, retain the services of senior management, and maintain its
relationships with its agents, policyholders, suppliers and customers, in each
case, to the extent that failure to do so would reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

          6.2. Restrictions. Except as (i) otherwise contemplated by this
Agreement or the Transaction Agreements, (ii) set forth on Section 6.2 of the
Company Disclosure Schedule, (iii) required by the terms of the ING Transaction
Agreement or agreements related thereto or (iv) consented to in writing by the
Investors (which consent shall not be unreasonably withheld), from the date of
this Agreement until the earlier of the Closing Date or the termination of this
Agreement, the Company will not, and it will not permit any of its Subsidiaries
to:

          (a) incur any indebtedness for borrowed money in excess of US$
1,000,000 or guarantee any such indebtedness or issue or sell any debt
securities of the Company or any Subsidiary or guarantee any debt securities of
other Persons other than short-term indebtedness incurred to refinance existing
indebtedness or in the ordinary course of business consistent with past
practice;

          (b) grant or create any Lien on any of its assets other than Liens
granted or created in the ordinary course of business consistent with past
practice;

          (c) make any material changes in its Investment Policies or make any
material change in its financial or tax accounting methods, principles or
practices (including any material change with respect to the establishment of
reserves for future policy benefits or any change in depreciation or
amortization policies or rates adopted by it), except as may be required by Law
or applicable statements of standard accounting practice and/or financial
reporting standards issued or adopted by the United States Financial Accounting
Standards Board;

          (d) other than (i) pursuant to employee benefit plans being developed
and disclosed to the Investors prior to the date hereof or (ii) required by the
terms of employment agreements existing on the date hereof, (A) increase the
compensation or fringe benefits of any present or former director or officer of
the Company or its Subsidiaries, (B) grant any severance or termination pay to
any present or former director or officer of the Company or its Subsidiaries,
other than in the ordinary course of business consistent with past practice, (C)
loan any money or other property to any of their present or former directors,
officers or employees, (D) establish, adopt, enter into, amend or terminate any
Company Plan or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Company Plan if it were in existence as of the date
of this Agreement (other than as may be required by applicable Law), or (E)
grant any equity or equity-based awards;

          (e) authorize, allot, issue, deliver or sell to any Person (other than
the Company or any of its Subsidiaries) any shares in the capital of the Company
or its Subsidiaries or obligations or securities convertible into or
exchangeable for, or warrants, options or other rights in respect of, any such
shares, except for (i) issuances pursuant to paragraph (d) above and

                                       32
<PAGE>

(ii) issuances approved by the Board of Directors in a public offering by the
Company at an offering price above the closing trading price on the date hereof;

          (f) amend the Company's memorandum of association, articles of
association, certificate of incorporation, bylaws or other organizational
documents, as applicable;

          (g) declare, pay or make any dividends or other distributions (whether
in cash, securities or other property or any combination thereof) or reduce,
repurchase, redeem or otherwise acquire any of its share capital, other than
regular cash dividends paid by the Company on the Ordinary Shares and the HyCU
Preferred Shares with usual record and payment dates and in accordance with the
Company's past dividend policy and dividends paid by the Company's Subsidiaries
to the Company or to other Subsidiaries;

          (h) enter into any material new line of business other than any life
reinsurance business in which the Company and its Subsidiaries are not engaged
on the date of this Agreement;

          (i) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner (including a loss
portfolio transfer, assumption of a book of insurance or reinsurance business or
similar means), any business or any Person or otherwise acquire any assets or
properties that are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole, other than in the ordinary course of
business consistent with past practice;

          (j) sell, lease or otherwise dispose of any of its assets or
properties that are material, either individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, other than transactions involving
securities in its investment portfolio in accordance with its Investment
Policies and in the ordinary course of business consistent with past practice;

          (k) make any capital expenditure or execute any capital lease or incur
any commitment or liability therefor in excess of US$ 5,000,000, individually or
in the aggregate, and not contained in a written budget prepared by the
management of the Company or any of its Subsidiaries on or before the date of
this Agreement;

          (l) make any payments to its Affiliates (other than the Company and
its Subsidiaries), except pursuant to the terms of the Material Contracts
described in Section 4.11(a)(v) and except as regular dividends to the
shareholders of the Company in the ordinary course of business consistent with
past practice;

          (m) settle pending or threatened Litigation (other than insurance or
reinsurance litigation in the ordinary course of business consistent with past
practice) involving monetary damages in an amount exceeding US$ 1,000,000 for a
single litigation or related group of litigation in the aggregate or consent to
the issuance of any injunction, decree, order or judgment, or enter into any
settlement agreement, which would materially restrict the conduct of its
business or otherwise have a Company Material Adverse Effect;

          (n) take any action, or omit to take any action, that would result in
(i) any of the representations and warranties of the Company that are qualified
as to materiality becoming

                                       33
<PAGE>

untrue or any of such representations or warranties that are not so qualified
becoming untrue in any material respect at the Closing or (ii) any of the
conditions to the Closing being incapable of being satisfied; or

          (o) authorize any of, or commit or agree to take any of, the actions
prohibited by this Section 6.2.

          6.3. Related Matters. Except as otherwise contemplated by this
Agreement or consented to in writing by the other party from the date hereof
until the Closing:

          (a) The Company shall promptly report to the Investors the termination
of employment of, or a written threat to terminate employment made by, any of
the executive officers of the Company or any of its Subsidiaries.

          (b) The Company shall promptly notify the Investors in writing of any
event, condition, change or effect having, or which, insofar as reasonably can
be foreseen, would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

          (c) The Company, on the one hand, and the Investors, on the other
hand, shall promptly notify the other party in writing of any matter or change
that affects or, insofar as reasonably can be foreseen, would affect in any
material respect the accuracy or completeness of any representation or warranty
made by such party in this Agreement. If such representation or warranty is of a
nature that can be made accurate, the Company or such Investor, as the case may
be, shall use its reasonable efforts to promptly effect appropriate curative
action and shall provide the other parties with evidence thereof reasonably
satisfactory to the other party.

          (d) The Company, on the one hand, and the Investors, on the other
hand, shall promptly notify the other party in writing if it fails to perform or
observe any covenant or agreement to be performed or observed by it under this
Agreement and shall use its reasonable efforts to promptly effect appropriate
curative action and shall provide the other party with evidence thereof
reasonably satisfactory to the other party.

          6.4. Tax Matters. If the Company or any of its Subsidiaries deducts or
withholds any Taxes from or in respect of any sum payable to the Investor and
pays such amount deducted or withheld to a tax authority, the Company shall use
its reasonable best efforts to obtain from the applicable authority (or from
such other person) an original or certified copy of a receipt evidencing payment
of such Taxes and furnish such receipt to the Investor in respect of the
Investor's share of such payment. The Company will and will cause its
Subsidiaries to provide the Investor with such cooperation and information as
may reasonably be requested in connection with any liability or other obligation
that the Investor may have with respect to Taxes, including without limitation
filing any return, form, statement, certification, amended return or claim for
refund, making any election (including for the avoidance of doubt any "qualified
electing fund" election) and determining the amount of any liability or the
right to a refund.

          6.5. Access to Information. From the date hereof until the Closing,
the Company shall afford to the Investors, and to the Investors' accountants,
counsel, financial

                                       34
<PAGE>

advisers and other representatives, at reasonable times (during normal business
hours), access to all of the Company's and its Subsidiaries' books, records,
Contracts, facilities and personnel, including management and employees, so that
each Investor may investigate the Company and its Subsidiaries (including their
financial statements, accounting methods, assets, liabilities, insurance and
reinsurance Contracts and other arrangements, client lists, administrative
procedures, operations and business plans, prospects); provided that any
requests for such access by the Investors shall be made through one
representative. From the date hereof until the Closing, the Company shall
furnish promptly to the Investors from the date hereof until the Closing: (a)
updated financial statements comparable to those described in Section 4.8
promptly after such financial statements have been prepared by the Company and
its Subsidiaries and in accordance with past practice, in the case of each
quarterly financial statement, certified by the Chief Financial Officer of the
Company and, in the case of each annual financial statement, audited by the
independent auditors of the Company; (b) copies of any internal monthly
consolidated or consolidating financial statements prepared by management of the
Company and its Subsidiaries; and (c) copies of any information presented to the
Board of Directors.

          6.6. Filings and Authorizations. Each of the Company and each of the
Investors shall, as promptly as practicable, file or supply, or cause to be
filed or supplied, all applications, notifications and information required to
be filed or supplied by it pursuant to applicable Law in connection with the
transactions contemplated by this Agreement, including without limitation, any
filings required under the HSR Act. Each of the Company and each of the
Investors, as promptly as practicable, shall (a) make, or cause to be made, all
such filings and submissions under the Laws applicable to it or to its
Affiliates as may be required for it to consummate the transactions contemplated
by this Agreement and the other Transaction Agreements, (b) use its reasonable
best efforts to obtain or cause to be obtained, all authorizations,
certifications, consents, orders and approvals of the Governmental Authorities
that are or may become necessary for the consummation of the transactions
contemplated by the Transaction Agreements (the "Requisite Regulatory Approvals"
and, together with the Shareholder Approval, the "Requisite Approvals"), (c)
cooperate fully with the other parties in promptly seeking to obtain all such
authorizations, certifications, consents, orders and approvals and (d) use its
reasonable best efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order for it to fulfill its obligations
hereunder. The Company and the Investors will coordinate and cooperate with one
another in exchanging such information and supplying such reasonable assistance
as may be reasonably requested by each in connection with the foregoing.

          6.7. Confidentiality. Following the date hereof, each party hereto
will hold, and will use its reasonable best efforts to cause its respective
officers, directors, employees, agents, investment bankers, attorneys, financial
advisors or other representatives (collectively, "Representatives") to hold, in
strict confidence all documents and information concerning the other parties or
any of their Affiliates furnished to it by the other parties hereto or such
other parties' Representatives in connection with this Agreement or the
transactions contemplated hereby, including without limitation pursuant to
Section 6.5, except to the extent that such documents or information can be
shown to have been (a) previously known by the party receiving such documents or
information, (b) in the public domain (either prior to or after the furnishing
of such documents or information hereunder) through no fault of such receiving
party, (c) later acquired by the receiving party from another source if the
receiving party is not aware

                                       35
<PAGE>

that such source is under an obligation to another party hereto to keep such
documents and information confidential or (d) compelled to be disclosed by
judicial or administrative process, as advised, in the case of this clause (d),
by such party's outside counsel (including in connection with obtaining the
necessary approvals of this Agreement and the transactions contemplated hereby
by Governmental Authorities or by other requirements of Law, including,
securities Laws, or rules of any applicable stock exchange). Notwithstanding the
foregoing, all information provided or obtained pursuant to Section 6.5 hereof
shall be held by the Investors (and the Investors shall inform their
representatives of the confidential nature of such information) in accordance
with and subject to the terms of the confidentiality agreement between the
Company and Cypress Advisors, Inc. dated as of June 2, 2004 (the
"Confidentiality Agreement").

          6.8. Competing Transaction. From the date hereof until the earlier of
the Closing or the termination of this Agreement in accordance with its terms,
neither the Company or any of its Affiliates nor the respective Representatives
of the Company or such Affiliates shall, directly or indirectly, (i) solicit or
encourage the submission of any inquiries, indications of interest, proposals or
offers from any Person other than an Investor (collectively, "Third Parties")
concerning the sale of any equity or equity-linked securities or all or any
substantial part of the assets (other than in the ordinary course of business)
of the Company or any of its Subsidiaries to, or any merger or other business
combination transaction involving the Company or any of its Subsidiaries with,
or the obtaining of funds for the ING Purchase from, any such Third Party, in
any such case for the primary purpose of obtaining funds or capital necessary in
connection with the ING Transaction (a "Competing Transaction") or (ii)
participate with any Third Party in any discussions or negotiations regarding,
or enter into any agreements with any Third Party relating to, a Competing
Transaction with such Third Party, or provide any information concerning the
Company or any of its Subsidiaries to any Third Party with respect to a
Competing Transaction with such Third Party, including any Third Parties that
the Company or its Affiliates or Representatives had conducted negotiations with
prior to the date of this Agreement. The Company will promptly notify the
Investors upon receipt by it or any of its Affiliates, from a Third Party, of
any bona fide written proposal for a Competing Transaction, of the principal
terms of such proposal and the identity of the Third Party making such proposal.

          6.9. Proxy Statement.

          (a) As promptly as practicable following the Closing Date, the Company
shall prepare and file with the SEC the Proxy Statement in accordance with the
Exchange Act and shall use reasonable best efforts to have the Proxy Statement
cleared by the SEC; provided, however, that prior to filing, the Company shall
deliver a copy of the proposed filings to the Investors and provide the
Investors with a reasonable time period in which to review and comment upon such
filings, it being agreed that the Company will not make any such filings without
the prior consent of each Investor, such consent not to be unreasonably
withheld. The Company shall promptly provide to the Investors copies of any
written comments received from the SEC and shall promptly advise the Investors
of any oral comments received from the SEC. The Investors shall be entitled to
review and comment on any proposed amendments to the Proxy Statement. As
promptly as practicable after the Proxy Statement has been cleared by the SEC,
the Company shall mail the Proxy Statement to its shareholders as of the record
date for the Shareholder Meeting. The Company shall take such action as may be
required to be taken under

                                       36
<PAGE>

applicable state securities or "blue sky" Laws in connection with issuance of
the Purchased Securities. The Proxy Statement shall include the recommendation
of the Board of Directors that shareholders of the Company vote in favor of the
Shareholder Resolutions and the other transactions contemplated by this
Agreement and the other Transaction Agreements.

          (b) The Proxy Statement and any other document filed by the Company or
any of its Subsidiaries with any Governmental Authority in connection with the
Transaction Agreements, the ING Transaction Agreement and the transactions
contemplated thereby will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading, except that the
Company makes no representation or warranty with respect to any information
supplied by the Investors in writing specifically for inclusion therein. The
Proxy Statement (except for such portions thereof as relate only to the
Investors or any of their Affiliates) will comply as to form in all material
respects with the provisions of the Exchange Act.

          6.10. Shareholder Meeting. The Company shall take all actions
necessary in accordance with Cayman Islands Law and its Memorandum and Articles
of Association to duly call, give notice of, convene and hold the Shareholder
Meeting as promptly as practicable after the Closing Date to consider and vote
upon the resolutions regarding (a) the adoption and approval of amendments to
its Articles of Association in the form of Exhibit D hereto through a special
resolution (the "Shareholder Resolution") and (b) the approval of the other
transactions contemplated by this Agreement, for purposes of the NYSE Listed
Company Manual, through an ordinary resolution (the "Ordinary Resolution" and,
together with the Shareholder Resolution, the "Resolutions"). The Company shall,
through the Board of Directors, recommend to its shareholders approval of the
Shareholder Resolutions, and the Company shall use best efforts to obtain the
Shareholder Approval and, upon such Shareholder Approval, the Company shall take
all action necessary to cause the Restated Articles to become effective under
Cayman Islands Law.

          6.11. Use of Proceeds. The Company shall use the proceeds from the
sale of the Purchased Securities primarily to consummate the ING Transaction by
the Company on the terms in effect on the date hereof by contributing capital to
its Subsidiaries that will acquire the business of ING's individual life
reinsurance business in the ING Transaction to increase their statutory surplus.

          6.12. Public Announcements. The Company and the Investors will consult
with each other before issuing any press release or otherwise making any public
statements regarding the transactions contemplated by the Transaction
Agreements, and will not issue any such release or make any such statement,
prior to such consultation or, after such consultation, if any party is not
reasonably satisfied with the substance of such release or statement.
Notwithstanding the foregoing, any party hereto may make any disclosure required
to be made by it under applicable Law (including U.S. federal securities Law),
stock exchange regulations or order of a court of competent jurisdiction if it
determines in good faith, upon advice of counsel, that it is necessary to do so
and gives prior notice to the other parties hereto, using its reasonable efforts
(given any time constraints) to contact the other parties hereto and discuss
such disclosure with such other parties.

                                       37
<PAGE>

          6.13. Further Assurance. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its reasonable efforts to fulfill
or obtain the fulfillment of the conditions to the Closing as promptly as
practicable.

          6.14. Failed Condition. If there shall have occurred a Failed
Condition, then the Company shall make the following payments as adjustments to
the Purchase/Conversion Price: (a) a cash payment to each Investor on the Class
C Warrants held by such Investors equal to, on a per annum basis, 5% of the
product of (i) the number of Ordinary Shares underlying the Class C Warrants
then held by such Investor, multiplied by (ii) the Purchase/Conversion Price
(provided that the Company may, in lieu of such cash payment, issue additional
Subordinated Notes to the Investors with an equivalent aggregate principal
amount), such payment or issuance to be made on the Business Day immediately
following the date of occurrence of the Failed Condition and on each six-month
anniversary thereafter, unless prior to the relevant payment date the
Shareholder Approval shall have been obtained, and (b) additional cash payments
on the Class C Warrants in the form of a special payment in addition to and
equal to the dividend then payable on Ordinary Shares (which current dividend
shall be assumed to be no less than US$ 0.20 per share per annum) on each
dividend payment date for the Ordinary Shares until the Shareholder Approval
shall have been obtained. The parties agree to treat any payments pursuant to
this Section 6.14 as an adjustment to the Purchase/Conversion Price of the Class
C Warrants.

          6.15. Sell-Down of Purchased Securities. The Investors together shall
have the right to assign, on or prior to Closing, a portion of their aggregate
commitments set forth in Section 2.1 to one or more limited liability companies
or partnerships controlled by the Investors or their Affiliates (each, a
"Cypress Vehicle") or to a limited number of third party investment partnerships
or limited liability companies (collectively, the "Co-Investors") not affiliated
with any of the Investors, but only if (a) such Co-Investors are reasonably
satisfactory to the Company, (b) such Cypress Vehicles and Co-Investors satisfy
the representations under Article V, (c) the Investors or any Affiliates thereof
retain sole discretion with respect to all voting and disposition decisions
(including exercises of registration rights pursuant to the Shareholders'
Agreement) to be made with respect to all of the Ordinary Shares to be acquired
by such Cypress Vehicles and Co-Investors in connection with the transactions
contemplated by this Agreement, and (d) the Investors retain not less that 75%
of their aggregate commitments set forth in Section 2.1. Such assignments shall
not relieve any of the Investors from their obligations hereunder and such third
parties shall not be required to be bound by the terms of this Agreement (other
than representations and warranties under Article V) or any of the other
Transaction Agreements other than the Shareholders' Agreement. In connection
with the assignment by any of the Investors to any Cypress Vehicles and
Co-Investors on the terms set forth in this Section 6.15, the Company agrees to
cooperate with the Investors in entering into customary confidential
arrangements with such Co-Investors and investors in the Cypress Vehicles with
respect to confidential information relating to the Company and its
Subsidiaries. Any request by the Co-Investors and investors in the Cypress
Vehicles for information concerning the Company and its Subsidiaries made
pursuant to Section 6.5 shall be directed through the Investors.

                                       38
<PAGE>

          6.16. Preparation of Pro Forma Statements.

          (a) As promptly as practicable after the date hereof and in any event
no later than 75 days following the Closing Date, the Company will deliver to
the Investors true and complete copies of the consolidated pro forma financial
statements (consisting of balance sheets and statements of income) of the
Company and its consolidated Subsidiaries as of and for the year ended December
31, 2004, giving effect to the ING Transaction and the issuance of the Purchased
Securities as if they had occurred on January 1, 2004 (the "Pro Forma
Statements"), in each case, accompanied by supporting documentation. Assuming
that the representations and warranties set forth in Sections 3.4 and 3.5 of the
ING Transaction Agreement are true and correct, the Pro Forma Statements will
present fairly, in all material respects, the financial condition and results of
operations of the Company (on a pro forma basis giving effect to the ING
Transaction and the issuance of the Purchased Securities as if they had occurred
on January 1, 2004) for the year ended December 31, 2004, in accordance with US
GAAP, and will be prepared on a basis consistent with the financial statements
of the Company referred to in Section 4.8.

          (b) Assuming that the representations and warranties set forth in
Sections 3.4 and 3.5 of the ING Transaction Agreement are true and correct, the
reserves reflected on the Pro Forma Statements referred to in clause (a) above
(i) shall be determined in accordance with generally accepted actuarial
principles, consistently applied for the periods presented, (ii) shall be based
on actuarial assumptions that were, in the Company's good faith judgment,
reasonable in relation to relevant policy and contract provisions, (iii) as of
their respective dates shall meet the applicable requirements of the insurance
laws and regulations of the jurisdiction of domicile of the Company, including
applicable statutory accounting principles, (iv) shall be in compliance with
SAP, and (v) shall be prepared using methodologies consistent with those
utilized in the preparation of the financial statements of the Company referred
to in Section 4.8 (it being understood by the Investors that, in making the
representations and warranties in this clause (b), the Company is not
representing or warranting that the reserves reflected in such financial
statements will be sufficient or adequate for the purposes for which they were
established or that reinsurance recoverables taken into account in determining
the amount of such reserves will be collectible).

          6.17. Financial Strength Ratings. The Company shall use its reasonable
best efforts to maintain the current financial strength ratings of the Company
Insurance Entities and shall not take, or cause to be taken, any actions that
would reasonably be expected to lead to a downgrading of such ratings (it being
understood that the entering into of the ING Transaction Agreement and the
Transaction Agreements shall not be a prohibited action).

                                  Article VII
                              CONDITIONS TO CLOSING

          7.1. Conditions to the Each Party's Obligations at the Closing. The
respective obligations of each party to consummate the Closing of the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or prior to the Closing Date of each of the following conditions (provided
that any such condition may be waived to the extent permitted by applicable
law):

                                       39
<PAGE>

          (a) No Illegality. No Law shall have been adopted, promulgated,
enforced or issued by any governmental authority having the effect of making
illegal or otherwise prohibiting the consummation of the sale and purchase by
the Investor of any of the Purchased Securities pursuant to this Agreement, and
there shall not be in effect any Order issued by a court of competent
jurisdiction that prohibits the consummation of the sale and purchase by the
Investor of any of the Purchased Securities pursuant to this Agreement;
provided, however, that the party invoking this condition shall have used its
reasonable best efforts to have such Order vacated or denied.

          (b) Governmental Consents and Approvals. All consents, authorizations,
"no objection" notices, orders and approvals of (or filings or regulations with)
any Governmental Authority required to be obtained at or prior to the Closing in
connection with the issuance of the Purchased Securities at the Closing shall
have been obtained and shall be in full force and effect and all statutory
waiting periods in respect thereof shall have expired without the imposition of
any conditions which would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect or a material adverse effect on
the business or operations of any of the Investors.

          (c) HSR Act. The required filings of notice shall have been made under
the HSR Act) and the applicable waiting period shall have expired or been
terminated early.

          (d) ING Transaction. The ING Transaction shall, concurrently with the
purchase of the Purchased Securities by the Investors hereunder, be consummated
by the Company on substantially the same terms and conditions as set forth in
the draft ING Transaction Agreement dated October 15, 2004, except to the extent
that any amendment, modification or waiver of such terms has been consented to
in writing by each of the Investors.

          7.2. Conditions to the Investors' Obligations at the Closing. Each
Investor's obligation to purchase the Purchased Securities at the Closing is
subject to the satisfaction (or waiver by such Investor), at or prior to the
Closing Date, of the following conditions:

          (a) Representations and Warranties; Performance of Obligations. Each
of the representations and warranties set forth in Article IV that is qualified
as to materiality shall be true and correct, and each of the representations and
warranties set forth in Article IV that is not so qualified shall be true and
correct in all material respects, in each case as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date (except to
the extent expressly made as of an earlier date or with respect to a specific
time period, in which case as of such earlier date or with respect to such
period), and the Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by it on
or prior to the Closing.

          (b) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Investor, and the Investor shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.

                                       40
<PAGE>

          (c) Secretary's Certificate. The Company shall have delivered to such
Investor a secretary's certificate, executed by the Secretary of the Company,
dated the Closing Date, attaching true, complete and correct copies of the
Memorandum and Articles of Association of the Company.

          (d) Officers' Certificate. The Company shall have delivered to such
Investor an officers' certificate, executed by each of the Chief Executive
Officer and the Chief Financial Officer of the Company, dated the Closing Date,
to the effect that the condition specified in Section 7.2(a) has been satisfied.

          (e) Material Adverse Effect. There shall not have occurred or arisen
after the date hereof, and prior to the Closing, any change, event, condition
(financial or otherwise), or state of circumstances or facts with respect to the
Company or its Subsidiaries, which has had or which would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

          (f) Legal Opinions.

               (i) Maples & Calder, Cayman Islands counsel to the Company, shall
          have furnished to the Investors, at the request of the Company, their
          written opinion, dated the Closing Date and addressed to the
          Investors, in form and substance reasonably satisfactory to the
          Investors.

               (ii) LeBoeuf, Lamb, Greene & MacRae, L.L.P., U.S. counsel to the
          Company, shall have furnished to the Investors, at the request of the
          Company, their written opinion, dated the Closing Date and addressed
          to the Investors, in form and substance reasonably satisfactory to the
          Investors.

          (g) Shareholders' Agreement. The Company shall have duly executed and
delivered the Shareholders' Agreement.

          7.3. Conditions to Obligations of the Company at the Closing. The
Company's obligation to issue and sell the Purchased Securities at the Closing
is subject to the satisfaction (or waiver by the Company), on or prior to the
Closing, of the following conditions:

          (a) Representations and Warranties. Each of the representations and
warranties set forth in Article V that is qualified as to materiality shall be
true and correct, and each of the representations and warranties set forth in
Article V that is not so qualified shall be true and correct in all material
respects, in each case as of the Closing Date with the same force and effect as
if they had been made as of the Closing Date (except to the extent expressly
made as of an earlier date or with respect to a specific time period, in which
case as of such earlier date or with respect to such period).

          (b) Performance of Obligations. Each of the Investors shall have
performed in all material respects all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.

                                       41
<PAGE>

          (c) Officer's Certificate. Each of the Investors shall each have
delivered to the Company an officer's certificate, executed by the President or
a Vice President of such Investor, dated the Closing Date, to the effect that
the conditions specified in Section 7.3(a) and (b) have been satisfied with
respect to such Investor.

          (d) Shareholders' Agreement. Each Investor shall have duly executed
and delivered the Shareholders' Agreement.

                                  Article VIII
                                 INDEMNIFICATION

          8.1. Survival of Representations, etc. (a) All representations and
warranties contained in Articles IV and V or made pursuant thereto shall not be
affected by any right of investigation by the parties or any knowledge of facts
determined as a result thereof, and shall survive the Closing until the date
that is the 18-month anniversary of the Closing Date, except that (i) the
representations and warranties in Section 4.14 shall survive the Closing until
the expiration of the applicable statute of limitations and (ii) the
representations and warranties in Sections 4.1, 4.2, 4.3, 5.1 and 5.2 shall
survive the Closing and continue indefinitely. No action for indemnification
under this Article VIII may be brought with respect to such representations and
warranties after the expiration dates indicated in the preceding sentence
unless, prior to the date such representations and warranties expire, the party
seeking indemnification has notified in reasonable detail the party from whom
indemnification is sought of a claim for indemnity hereunder.

          (b) All covenants and agreements made by the parties to this Agreement
which contemplate performance following the Closing shall survive the Closing.
All other covenants and agreements shall not survive the Closing and shall
terminate as of the Closing; provided, however, that if any such covenant is
breached on or prior to the Closing the non-breaching party shall retain all
rights and remedies with respect to such breach following the Closing.

          8.2. Indemnification. (a) Subject to Sections 8.1 and 8.2(b), from and
after the Closing, the Company agrees to indemnify each Investor and its
Affiliates (collectively, the "Company Indemnitees") against, and hold each
Company Indemnitee harmless from, any damage (excluding any consequential,
special, punitive and treble damages, except to the extent a third party has
sought to recover such types of damages from such Company Indemnitee), claim,
liability or expense, including interest, fines, penalties and reasonable
attorneys' fees, in each case whether incurred in connection with a final
judgment, award or disposition of the matter or settlement or otherwise
(collectively "Damages"), arising out of (i) the breach of any representation or
warranty of the Company and (ii) the breach of any covenant or agreement of the
Company, in each case contained in this Agreement; provided that, except to the
extent Damages are payable by the Company Indemnitees to third parties and
except in case of fraud or willful misconduct by the Company, any Damages
indemnified by the Company hereunder shall not exceed the diminution in the
value of the Investors' Purchased Securities held by the Investors arising out
of such breach.

          (b) Except with respect to a breach of a representation or warranty
contained in Section 4.3, the aggregate liability of the Company under Section
8.2(a)(i) shall not exceed 50%

                                       42
<PAGE>

of the aggregate purchase price paid by the Investors for the Purchased
Securities purchased by them on the Closing Date.

          (c) Subject to Sections 8.1 and 8.2(d), from and after the Closing,
each Investor agrees to indemnify, severally and not jointly, the Company and
its Subsidiaries and to hold the Company and its Subsidiaries harmless from any
Damages arising out of (i) the breach of any representation or warranty of such
Investor and (ii) the breach of any covenant or agreement of such Investor, in
each case contained in this Agreement.

          (d) The aggregate liability of each Investor under Section 8.2(c)(i)
shall not exceed an amount equal to 50% of the aggregate purchase price paid by
such Investor for the Purchased Securities purchased by it on the Closing Date.

          (e) Notwithstanding the foregoing, (i) no Damages may be claimed under
Section 8.2(a) by the Company Indemnitees or indemnified against by the Company
until the aggregate amount of Damages incurred by the Company Indemnitees
exceeds US$ 1,000,000 in the aggregate (the "Deductible") and then only to the
extent of any excess over the Deductible, and (ii) no Damages may be claimed
under Section 8.2(c) by the Company or its Subsidiaries or indemnified against
by the Investors until the aggregate amount of Damages incurred by the Company
and its Subsidiaries exceeds the Deductible and then only to the extent of any
excess over the Deductible.

          (f) Neither party shall be liable for duplicative indemnification
payments under the Transaction Agreements.

          8.3. Indemnification Procedures. (a) Upon any Person entitled to be
indemnified under Section 8.2 (the "Indemnified Person") receiving notice of any
claim or the commencement of any action, or otherwise becoming aware of a fact,
condition or event for which indemnification is provided under Section 8.2, the
Indemnified Person will notify as promptly as reasonably practicable the Person
from whom indemnification is sought (the "Indemnifying Person") in writing of
such fact, condition or event; provided, however, that the failure to provide
such notice shall not relieve the Indemnifying Person of its indemnification
obligations hereunder unless such failure materially prejudices the ability of
such Indemnifying Person to contest such Damages. If such fact, condition or
event is the assertion of a claim or the bringing of any action or proceeding by
a third party, then the Indemnifying Person will be entitled to participate in
or take charge of the defense or investigation of such claim, action or
proceeding (or that part of any claim, action or proceeding for which
indemnification is being provided) with counsel reasonably satisfactory to the
Indemnified Person; provided, however, that the Indemnifying Person and its
counsel shall proceed with diligence and in good faith with respect thereto. If
such fact, condition or event involves a dispute or review by any Governmental
Authority, then the Indemnifying Person shall advise the Indemnified Person
regarding the Indemnifying Person's course of action. After notice to the
Indemnified Person of the Indemnifying Person's election to assume the defense
or investigation of any such claim, action or proceeding or part thereof (as the
case may be), the Indemnifying Person shall not be liable to the Indemnified
Person under this Article VIII for any legal or other expenses in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the Indemnified Person shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim, action
or proceeding or part thereof (as

                                       43
<PAGE>

the case may be) if (i) the Indemnified Person has reasonably concluded that use
of counsel of the Indemnifying Person's choice would reasonably be expected to
give rise to a conflict of interest or (ii) the Indemnifying Person shall not
have employed counsel to represent the Indemnified Person within a reasonable
time after notice of the assertion of any such claim or institution of any such
action or proceeding. In the event that an Indemnifying Person elects not to
assume the defense of a claim, action or proceeding or part thereof (as the case
may be), the Indemnifying Person will not be obligated to pay the reasonable
fees and expenses of more than one counsel for all Indemnified Persons with
respect to such claim, action or proceeding (in addition to local counsel). The
parties hereto agree to render to each other assistance as may be reasonably
requested in order to insure the proper and adequate defense of any such claim,
action or proceeding.

          (b) If the Indemnifying Person has elected to assume the defense or
investigation of any claim, action or proceeding or part thereof pursuant to
Section 8.3(a), the Indemnifying Person shall be entitled to settle or
compromise such claim, action or proceeding or part thereof; provided, however,
that any such settlement or compromise involving the imposition of equitable
remedies or involving the imposition of any obligations on the Indemnified
Person shall require the prior written consent of the Indemnified Person. If the
Indemnifying Person elects not to assume the defense of a claim, action or
proceeding pursuant to Section 8.3(a), the Indemnified Person shall be entitled
to settle or compromise such claim, action or proceeding only with the consent
of the Indemnifying Person (which consent shall not be unreasonably withheld).
If the Indemnified Person is represented by separate counsel pursuant to Section
8.3(a), such settlement or compromise shall be effected only with the prior
written consent of the Indemnified Person (which consent shall not be
unreasonably withheld). No Indemnified Person shall be required to consent to
entry of any judgment or enter into any settlement or compromise which does not
include as an unconditional terms thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release from all liability in respect
to such claim or litigation.

                                   ARTICLE IX
                                   TERMINATION

          9.1. Termination Prior to the Closing Date. This Agreement may be
terminated at any time prior to the Closing Date:

          (a) by mutual agreement in writing of the Company and each Investor;

          (b) by the Company, on the one hand, or the Investors, on the other
hand, upon written notice to the other party(ies) (i) if the Closing shall not
have occurred by March 31, 2005 or such later date as the parties shall have
agreed to in writing, provided that the nonoccurrence of the Closing is not
attributable to the failure of the party seeking to terminate this Agreement to
perform or comply with its covenants set forth in this Agreement, or (ii) if any
Governmental Authority shall have issued an Order or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Closing and such
Order or other action shall have become final and non-appealable;

          (c) by either the Company, on the one hand, or the Investors, on the
other hand, by notice to the other party in the event that (i) the other party
shall have breached or failed to

                                       44
<PAGE>

perform any of its representations, warranties, covenants or other agreements
contained herein, (ii) such breach or failure to perform either cannot be cured
or is not cured within 30 days after receipt of written notice from the
non-breaching party, and (iii) such breach or failure to perform would entitle
the non-breaching party to elect not to consummate the transactions contemplated
by this Agreement pursuant to Article VII hereof;

          (d) by either the Company, on the one hand, or the Investors, on the
other hand, by notice to the other party in the event that the ING Transaction
Agreement is terminated; or

          (e) by the Investors, pursuant to the terms of the letter agreement
dated as of the date hereof (the "Side Letter") by and among the Company and the
Investors.

          9.2. Effect of Termination. In the event of the termination of this
Agreement by the Company or the Investors as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any of the Investors or the Company or their
respective directors, officers or Affiliates, except that the provisions of
Sections 6.7 (Confidentiality), 6.12 (Public Announcements), this Section 9.2
and Article X (Miscellaneous) shall continue in full force and effect; provided,
however, that no party hereto shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement.

                                   Article X
                                  MISCELLANEOUS

          10.1. Governing Law; Consent to Jurisdiction and Services of Process;
Waiver of Jury Trial.

          (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

          (b) Each party to this Agreement hereby irrevocably and
unconditionally, with respect to any matter or dispute arising under, or in
connection with, this Agreement:

               (i) submits for itself and its property in any Action relating to
          this Agreement, or for recognition and enforcement of any judgment in
          respect thereof, to the exclusive general jurisdiction of the courts
          of the State of New York, the courts of the United States of America
          for the Southern District of New York, and appellate courts from any
          thereof (and covenants not to commence any Action in any other venue
          or jurisdiction);

               (ii) consents that any such Action may be brought in such courts
          and waives any objection that it may now or hereafter have to the
          venue of any such Action in any such court or that such Action was
          brought in an inconvenient court and agrees not to plead or claim the
          same;

               (iii) agrees that service of process in any such Action will be
          in accordance with the Laws of the State of New York;

                                       45
<PAGE>

               (iv) waives in connection with any such Action any and all rights
          to a jury trial; and

               (v) agrees that nothing herein shall affect the right to effect
          service of process in any other manner permitted by Law.

          10.2. Fees and Expenses.

          (a) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated pursuant to Section 10.1, except for
(i) payment of all stamp duties or similar taxes applicable to the issuance of
Purchased Securities to the Investors, which shall be paid by the Company, (ii)
as provided in Section 10.2(b) and (c) hereof, and (iii) as expressly provided
in the other Transaction Agreements, all fees and expenses incurred in
connection with the Transaction Agreements and the transactions contemplated by
this Agreement shall be paid by the party incurring such fees or expenses.

          (b) Upon the Closing, the Company shall pay to the Investors, by wire
transfer of immediately available funds to an account or accounts designated in
writing by the Investors, an equity commitment fee of US$ 2,000,000, plus
reimbursement of reasonable out-of-pocket fees and expenses incurred or paid by
or on behalf of the Investors or any of their Affiliate in connection with the
transactions contemplated by this Agreement and the Transaction Agreements,
including all reasonable fees and expenses of counsel, investment accountants,
actuaries, lenders, experts and consultants; provided that any expense
reimbursement shall not include any fees or expenses of any broker or finder,
including without limitation, Merrill Lynch & Co., Inc.

          (c) In the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute shall be
entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

          10.3. Payments and Currency. (a) Any and all amounts payable
hereunder, at the Closing or otherwise, shall be paid to the appropriate party
in United States dollars. No payment obligation hereunder shall be discharged by
amounts paid in another currency.

          (b) Except as otherwise specifically provided in this Agreement, if
(i) any monies owing under or pursuant to this Agreement are received or
recovered by one party hereunder from any other party hereunder in a currency
other than United States dollars or (ii) any judgment, settlement or final
adjudication of amounts owing under or pursuant to this Agreement by one party
hereunder to any other party hereunder is denominated in a currency other than
United States dollars, then such monies, judgment, settlement or final
adjudication shall be converted into United States dollars at the New York
foreign exchange selling rate applicable to trading among banks in amounts of
US$ 1,000,000 or more (as quoted at 3:00 p.m. Eastern time) as set forth in The
Wall Street Journal (Eastern Edition) with respect to the date on which such
monies are received or recovered or the date on which payment pursuant to such
judgment, settlement or final adjudication is due and owing.

                                       46
<PAGE>

          10.4. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, permitted assigns and heirs. No party may assign its
obligations under this Agreement to any person without the other parties' prior
written consent; provided, however, that the Investors may assign any or all of
their rights, in whole or in part, to one or more of their Affiliates, but no
such assignment will relieve the Investors of their obligations under this
Agreement.

          10.5. Entire Agreement. This Agreement, the other Transaction
Agreements and the Side Letter, the exhibits and schedules hereto and thereto
and any other documents delivered pursuant hereto and thereto and the
Confidentiality Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subject matters hereof and
supersede all prior understandings and agreements, and no party shall be liable
or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and in the
Transaction Agreements, in the Side Letter and in the Confidentiality Agreement.

          10.6. Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

          10.7. Amendment and Waiver. This Agreement may be amended or modified
only upon the written consent of the Company and the Investors. No waiver by any
party of any default, misrepresentation, or breach of warranty or covenant
hereunder, shall be valid unless expressly set forth in writing and signed on
behalf of the party entitled to the benefits of such waived term or provision,
and no such waiver shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

          10.8. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
an Investor's part of any breach, default or noncompliance under this Agreement
or any waiver on such party's part of any provisions or conditions of the
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.

          10.9. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next Business
Day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications sent to a party shall be
sent to it at the address as set forth below or at such

                                       47
<PAGE>

other address as the Company or an Investor may designate by ten days' advance
written notice to the other parties hereto:

          If to the Company:

                   Scottish Re Group Limited
                   Crown House, Third Floor
                   4 Par-la-Ville Road
                   Hamilton HM12, Bermuda
                   Attn: Paul Goldean, Esq.
                   Facsimile: (441) 298-4364

          with a copy to:

                   LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                   125 West 55th Street
                   New York, NY 10019
                   Attn:  Stephen G. Rooney, Esq.
                   Facsimile:  (212) 424-8500

          If to any of the Investors:

                   Cypress Merchant B Partners II (Cayman) L.P.
                   Cypress Merchant Banking II-A C.V.
                   Cypress Side-by-Side (Cayman) L.P.
                   55th Street Partners II (Cayman) L.P.
                   c/o The Cypress Group L.L.C.
                   65 East 55th Street, 28th Floor
                   New York, New York  10022
                   Attn:  William L. Spiegel
                   Facsimile:  212-705-0198

          with a copy to:

                   Simpson Thacher & Bartlett LLP
                   425 Lexington Avenue
                   New York, New York 10017
                   Attn:  Lee Meyerson
                   Facsimile:  212-455-2502

          10.10. Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine
and the parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or equity.

                                       48
<PAGE>

          10.11. Controlling Provisions. If any provision of this Agreement
conflicts with or is contrary to any provision of the other Transaction
Agreements, such provision of the other Transaction Agreements shall control.

          10.12. Titles and Subtitles. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

          10.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                                       49
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

                            SCOTTISH RE GROUP LIMITED

                            By:  /s/ Paul Goldean
                                 -----------------------------------------------
                                 Name:     Paul Goldean
                                 Title:    Executive Vice President & General
                                           Counsel
                                 Address:  Crown House, Third Floor
                                           4 Par-la-Ville Road
                                           Hamilton HM12, Bermuda

                            Cypress Merchant B Partners II (Cayman) L.P.

                            By:    Cypress Associates II (Cayman) L.P., its
                                   general partner

                                   By: CMBP II (Cayman) Ltd., its general
                                       partner

                                       By:  /s/ Jeffrey P. Hughes
                                            -----------------------
                                            Name:   Jeffrey P. Hughes
                                            Title:  Director

                            Cypress Merchant Banking II-A C.V.

                            By:    Cypress Associates II (Cayman) L.P., its
                                   managing general partner

                                   By: CMBP II (Cayman) Ltd., its general
                                       partner

                                       By:  /s/ Jeffrey P. Hughes
                                            -----------------------
                                            Name:   Jeffrey P. Hughes
                                            Title:  Director

<PAGE>

                            Cypress Side-by-Side (Cayman) L.P.

                            By:    Cypress Associates II (Cayman) L.P., its
                                   general partner

                                   By: CMBP II (Cayman) Ltd., its general
                                       partner

                                       By:  /s/ Jeffrey P. Hughes
                                            -----------------------
                                            Name:   Jeffrey P. Hughes
                                            Title:  Director

                            55th Street Partners II (Cayman) L.P.

                            By:    Cypress Associates II (Cayman) L.P., its
                                   general partner

                                   By: CMBP II (Cayman) Ltd., its general
                                       partner

                                       By:  /s/ Jeffrey P. Hughes
                                            -----------------------
                                            Name:   Jeffrey P. Hughes
                                            Title:  Director

<PAGE>

                                   SCHEDULE I

                        INVESTMENT AMOUNTS AT THE CLOSING

                 INVESTOR                                     PERCENTAGE
                 --------                                     ----------

Cypress Merchant B Partners II (Cayman) L.P.                   94.85234%

Cypress Merchant Banking II-A C.V.                              4.03232%

Cypress Side-by-Side (Cayman) L.P.                              0.20000%

55th Street Partners II (Cayman) L.P.                           0.91534%
                                                             ---------------

                  TOTAL                                        100.0000%

<PAGE>

                                    EXHIBIT A

               FORM OF 7.00% CONVERTIBLE JUNIOR SUBORDINATED NOTE

NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF
HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION. NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON
CONVERSION OR EXCHANGE HEREOF MAY BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND SUCH LAWS OR IN A TRANSACTION OUTSIDE THE UNITED
STATES NOT SUBJECT TO THE SECURITIES ACT.

THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION
(EACH A "TRANSFER") OF THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OR
EXCHANGE HEREOF ARE RESTRICTED BY THE TERMS OF THE SHAREHOLDERS' AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDERS NAMED THEREIN, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY, AND BY THE COMPANY'S ARTICLES OF
ASSOCIATION. THE COMPANY WILL NOT REGISTER THE TRANSFER OF THIS NOTE OR THE
SECURITIES ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS
OF THE SHAREHOLDERS' AGREEMENT AND THE COMPANY'S ARTICLES OF ASSOCIATION.

                            SCOTTISH RE GROUP LIMITED

       7.00% CONVERTIBLE JUNIOR SUBORDINATED NOTE DUE __________ __, 203_
--------------------------------------------------------------------------------

US$ __,___,___                                                 ________ __, 200_

          SCOTTISH RE GROUP LIMITED, a Cayman Islands exempted company
(including its permitted successors, the "Company"), for value received hereby
promises to pay to _____________________ (the "Holder"), or its registered
permitted assigns or transferees, the principal sum of ______________ U.S.
DOLLARS (US$ __,___,___) on ________ __, 203_ (the "Maturity Date"), together
with interest on the principal amount (including interest added to the principal
amount as provided in the immediately following sentence) from ________ __, 200_
(the "Issue Date"), which interest shall be payable, unless otherwise expressly
provided to the contrary in this Note, in-kind (which, for the avoidance of
doubt, shall require the issuance of

<PAGE>

                                                                               2

additional convertible junior subordinated notes of the same kind and series and
having the same terms as this Note) on December 1 and June 1 (each, an "Interest
Payment Date") of each year commencing June 1, 2005 and shall accrue at the rate
of 7.00% per annum (compounded on each Interest Payment Date); provided that
upon the occurrence and during the continuance of a Failed Condition, this Note
shall instead bear interest at a rate per annum equal to the applicable Penalty
Rate (applied retroactively to the Issue Date and due and payable on each
Interest Payment Date). Except as set forth in the immediately following
sentence, on each Interest Payment Date, interest that has accrued since the
prior Interest Payment Date and is not paid on such Interest Payment Date by the
issuance of additional convertible junior subordinated notes shall be added to
the principal amount hereof. With respect to any Interest Payment Date occurring
(a) after the third anniversary of the Issue Date and on or prior to the tenth
anniversary of the Issue Date, the Company shall have the right to elect to pay,
and (b) after the tenth anniversary of the Issue Date for so long as the Notes
remain outstanding, the Holder, by giving written notice to the Company at least
60 days prior to such Interest Payment Date, shall have the right to require the
Company to pay, in the case of either clause (a) or (b) above, up to 100% of the
accrued but unpaid interest payable on such Interest Payment Date in cash to the
Holder (or its registered permitted assigns or transferees).

          This Note shall be payable in full (together with any accrued but
unpaid interest) on the Maturity Date.

          This Note shall also be subject to the following terms:

     1.   Subordination.

          (a) Subordination Agreement. The Company, for itself, its successors
     and assigns, covenants and agrees, and the Holder by its acceptance hereof
     likewise covenants and agrees for itself, its successors and assigns, that,
     subject to the other terms and provisions of this Note, the payment of the
     principal of, and interest on, and all other amounts due with respect to
     this Note is hereby wholly subordinated and junior in right of payment, to
     the extent and in the manner hereinafter set forth herein, to prior payment
     in full of all other Indebtedness (the "Senior Indebtedness") of the
     Company now or hereafter incurred, provided, however, that this Note shall
     be pari passu with all other Indebtedness of the Company that expressly
     provides by its terms that it ranks pari passu with the Notes and shall be
     senior to all other Indebtedness of the Company that expressly provides by
     its terms that it is subordinated to the Notes.

          (b) Maturity of Senior Indebtedness. Upon the maturity of any Senior
     Indebtedness by lapse of time, acceleration or otherwise, all principal
     thereof, premium, if any, and interest due thereon, together with all fees
     and other expenses with respect thereto, shall first be paid in full, or
     such payment duly provided for in cash or in a manner satisfactory to the
     holder or holders of such Senior Indebtedness, before any payment is made
     on account of the principal of, and all other amounts due with respect to,
     this Note; provided that this Section 1(b) shall not prevent or prohibit
     the conversion or exchange of this Note pursuant to Section 5 hereof nor
     the payment of interest hereon in the form of additional convertible junior
     subordinated notes.

<PAGE>

                                                                               3

          (c) Dissolution, Liquidation or Reorganization. Upon any distribution
     of assets of the Company pursuant to any dissolution, winding up, total or
     partial liquidation or reorganization of the Company (whether in
     bankruptcy, insolvency or receivership proceedings or upon an assignment
     for the benefit of creditors or otherwise), the holders of all Senior
     Indebtedness shall first be entitled to receive payment in full of the
     principal thereof, premium, if any, and interest due thereon, together with
     all fees and other expenses incurred with respect thereto, before the
     Holder shall be entitled to receive any payment on account of principal or
     interest with respect to this Note. In the event that notwithstanding the
     foregoing provision of this Section 1(c), any payment or distribution of
     assets of the Company (including, without limitation, any received by
     set-off or as damages) of any kind or character, whether in cash, property
     or securities, shall be received by the Holder of this Note in respect of
     obligations owed to the Holder under this Note before all Senior
     Indebtedness is paid in full, or effective provision made for its payment,
     such payment or distribution shall be received and held in trust for and
     shall be paid over to the holders of the Senior Indebtedness remaining
     unpaid or unprovided for or their representative or representatives (after
     due written notice of the names of such holders and the respective amounts
     payable to them by the Holder of this Note), for application to the payment
     of such Senior Indebtedness until all such Senior Indebtedness shall have
     been paid in full, after giving effect to any concurrent payment or
     distribution or provision therefor to the holders of such Senior
     Indebtedness.

          (d) Effect of Acts or Omissions. No right of any present or future
     holders of any Senior Indebtedness to enforce subordination as herein
     provided shall at any time in any way be prejudiced or impaired by any act
     or failure to act on the part of the Company or by any act or failure to
     act, in good faith, by any such holder, or by any noncompliance by the
     Company with the terms of this Note.

          (e) No Implied Covenants. With respect to the holders of Senior
     Indebtedness, the Holder shall be required to observe only such obligations
     as are specifically set forth in this Note, and no implied covenants or
     obligations with respect to the holders of Senior Indebtedness shall be
     read into this Note against the Holder. The Holder shall not be deemed to
     have any fiduciary duty to the holders of the Senior Indebtedness.

          (f) Provisions Solely to Define Relative Rights. The provisions of
     this Section 1 are intended solely for the purpose of defining the relative
     rights of the Holder on the one hand and the holders of Senior Indebtedness
     on the other hand. Nothing contained in this Section 1 or elsewhere in this
     Note is intended to or shall (i) impair, as among the Company, its
     creditors other than holders of Senior Indebtedness and the Holder, the
     obligation of the Company, which is absolute and unconditional, to pay to
     the Holder the principal of, premium, if any, and interest on this Note as
     and when the same shall become due and payable in accordance with its
     terms; or (ii) affect the relative rights against the Company of the Holder
     and creditors of the Company other than the holders of Senior Indebtedness;
     or (iii) except as provided in Sections 1(b) and (c), prevent the Holder
     from exercising all remedies otherwise permitted by applicable law upon
     default under this Note, subject to the rights, if any, under this Section
     1 of the holders of Senior Indebtedness.

<PAGE>

                                                                               4

     2. Transferability of Note. This Note shall be subject to the same
restrictions on transfer (including Article II of the Shareholders' Agreement)
that would exist at such time on the Ordinary Shares into which this Note is
then (or upon satisfaction of the conditions set forth in Section 5 would be)
convertible.

     3. Certain Definitions. As used in this Note, the following terms shall
have the following meanings:

          "Affiliate" of any Person shall mean any Person that, directly or
     indirectly through one or more intermediaries, controls, is controlled by
     or is under common control with such Person. The term "control" means the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management and policies of a Person, whether through
     ownership of voting securities, by contract or otherwise.

          "Approval Deadline" shall mean (i) June 30, 2005, if the Issue Date is
     December 31, 2004 or earlier, or (ii) the date that is 180 days after the
     Issue Date, if the Issue Date is January 1, 2005 or later.

          "Board of Directors" shall mean the board of directors of the Company.

          "Business Day" shall mean a day other than a Saturday, Sunday or other
     day on which commercial banks in New York City, New York or the Cayman
     Islands are authorized or required by law to close.

          "Change of Control" shall be deemed to have occurred if: (i) the
     Company is merged or consolidated or reorganized into or with another
     corporation or other Person, and as a result of such merger, consolidation
     or reorganization less than a majority of the then-outstanding Voting
     Securities of such corporation or other Person immediately after such
     transaction are held in the aggregate by the Persons who were holders of
     Ordinary Shares immediately prior to such transaction; (ii) the Company
     sells or otherwise transfers all or substantially all of its assets to any
     other corporation or other Person, and less than a majority of the
     then-outstanding Voting Securities of such corporation or other Person
     immediately after such sale or transfer is held in the aggregate by the
     Persons who were holders of Ordinary Shares immediately prior to such sale
     or transfer; (iii) any Person or group (as such term is defined in Sections
     13(d) and 14(d) of the U.S. Securities Exchange Act of 1934 and the rules
     promulgated thereunder by the U.S. Securities and Exchange Commission) of
     Persons (other than the Investors and Co-Investors (as such terms are
     defined in the Securities Purchase Agreement)) acquires beneficial
     ownership (as defined in such Act and rules) of more than 50% of the total
     voting power of all outstanding Voting Securities of the Company then
     outstanding; (iv) during any period of two consecutive years, individuals
     who at the beginning of any such period constitute the Board of Directors
     cease for any reason to constitute a majority thereof, unless the election,
     or the nomination for election by the Company's shareholders, of each
     director of the Company first elected during such period was approved by a
     vote of at least two-thirds of the directors of the Company then still in
     office who were directors of the Company at the beginning of any such
     period; or (v) the shareholders of the Company vote to adopt or approve a
     plan or proposal for the liquidation, dissolution or winding up of the
     Company. Notwithstanding the foregoing provisions of this

<PAGE>

                                                                               5

     definition, a Change of Control shall not be deemed to have occurred for
     purposes of this Note solely because (A) the Company, (B) a subsidiary of
     the Company, or (C) any Company-sponsored employee share ownership plan or
     other employee benefit plan of the Company acquires beneficial ownership of
     Voting Securities.

          "Class C Warrants" shall mean the warrants to purchase Ordinary Shares
     issued by the Company to Cypress under the Securities Purchase Agreement
     and any Class C Warrants issued in exchange for the Notes, and any and all
     Class C Warrants which are issued in exchange or substitution for any
     outstanding Class C Warrants pursuant to the terms of the Class C Warrants.

          "Conversion Price" shall mean US$ 19.375, as such amount may be
     adjusted from time to time pursuant to Section 7 hereof; provided that it
     no event shall it be less than the par value of the Ordinary Shares.

          "Failed Condition" shall mean the shall mean the failure to obtain by
     the Approval Deadline the approval by shareholders of the Company (the
     "Shareholder Approval" and, together with all authorizations,
     certifications, consents, orders and approvals of any federal, state,
     foreign, supranational, national, municipal or local government, court,
     instrumentality, subdivision, administrative agency or commission,
     insurance or securities regulatory authority or other governmental
     authority or instrumentality or industry self-regulatory body, whether U.S.
     or foreign (including, without limitation, the approvals of the insurance
     commissioners of the states of Delaware and Missouri and the Finance
     Services Authority of the United Kingdom) that may be necessary under
     applicable law for the Purchasers to convert or exchange the Notes and to
     exercise the Class C Warrants and own the Ordinary Shares issued upon the
     conversion or exercise thereof, the "Requisite Approvals") of (i) the
     special resolution (the "Special Resolution") to approve the amendment of
     the Company's Articles of Association (the "Articles") set forth in Exhibit
     D to the Securities Purchase Agreement and (ii) the ordinary resolution
     (together with the Special Resolution, the "Shareholder Resolutions") to
     approve the other transactions contemplated by the Securities Purchase
     Agreement, for purposes of The New York Stock Exchange, Inc. Listed Company
     Manual (the "NYSE Listing Rules"), and the due filing of such amendment
     with the Registrar of Companies of the Cayman Islands by the Approval
     Deadline.

          "Guarantee" shall mean any obligation, contingent or otherwise, of any
     Person directly or indirectly guaranteeing any Indebtedness of any other
     Person.

          "Indebtedness" of any Person at any date shall mean, without
     duplication, (a) all indebtedness of such Person for borrowed money, (b)
     all obligations of such Person evidenced by notes, bonds, debentures or
     other similar instruments, (c) all indebtedness created or arising under
     any conditional sale or other title retention agreement with respect to
     property acquired by such Person, (d) all capital lease obligations of such
     Person, (e) all obligations of such Person, contingent or otherwise, as an
     account party under acceptance, letter of credit or similar facilities, (f)
     all obligations for Guarantees in respect of obligations of the kind
     referred to in clauses (a) through (e) above; and (g) all obligations of
     the kind referred to in clauses (a) through (f) above secured by (or for
     which the holder of such obligation has an existing right, contingent or
     otherwise, to be secured by) any Lien on

<PAGE>

                                                                               6

     property (including accounts and contract rights) owned by such Person,
     whether or not such Person has assumed or become liable for the payment of
     such obligation.

          "Lien" shall mean any mortgage, pledge, security interest,
     encumbrance, lien or charge of any kind (including any conditional sale or
     other title retention agreement or lease in the nature thereof) whether or
     not recorded, filed or otherwise perfected under applicable law.

          "Lock-Up Period" shall mean the period from and including the Issue
     Date through the 12-month anniversary of the Issue Date; provided, however,
     that if the Shareholder Approval is not obtained on or before the six-month
     anniversary of the Issue Date, the Lock-Up Period shall terminate upon such
     six-month anniversary.

          "Make-Whole Amount" shall mean an amount equal to: (a) if the date of
     closing of a transaction resulting in a Change of Control or the date of
     redemption, as applicable, occurs prior to the third anniversary of the
     Issue Date, the sum of (i) the initial aggregate principal amount of this
     Note, plus (ii) an amount calculated based on an internal rate of return
     compounded semi-annually applying a per-annum interest rate of 19% on such
     investment for the period from the Issue Date through the third anniversary
     of the Issue Date, or (b) if such closing date or redemption date occurs
     after the third anniversary of the Issue Date, the sum of (i) the aggregate
     principal amount of this Note, plus (ii) the accrued but unpaid interest
     thereon through the date of repurchase or redemption, as applicable.

          "Market Price" shall mean the average of the daily closing prices of
     an Ordinary Share for the 10 consecutive trading days ending on the trading
     day immediately preceding the date of determination on the principal U.S.
     securities exchange on which the Ordinary Shares are then listed or
     admitted to trading or, if not listed or admitted to trading on any U.S.
     securities exchange, the average of the reported daily closing bid and
     asked prices during such period as furnished by the National Quotation
     Bureau, Inc.

          "Number of Shares Outstanding" shall mean, at any given time, the
     number of Ordinary Shares actually issued and outstanding at such time,
     plus the number of Ordinary Shares issuable upon the conversion or exercise
     in full of all Convertible Securities and Options (each as defined in
     Section 7(b)(i) below) then-outstanding, whether or not the Convertible
     Securities or Options are convertible into or exercisable for Ordinary
     Shares at such time, but shall not include (a) any Ordinary Shares or
     Convertible Securities held for the account of the Company or any of its
     subsidiaries, and (b) any Ordinary Shares issued or reserved for issuance
     under share option, restricted share, retirement or executive ownership
     plans to the extent that such shares or Options to purchase such shares are
     issued or granted after the Issue Date.

          "Ordinary Shares" shall mean the ordinary shares, par value US$ 0.01
     per share, of the Company.

          "Penalty Rate" shall mean the rate per annum equal to: (i) if a Failed
     Condition occurs on or before December 31, 2005, 15% applicable from the
     Issue Date through December 31, 2005; or (ii) if a Failed Condition occurs
     or continues on or after January 1, 2006, 17% applicable from January 1,

<PAGE>

                                                                               7

     2006 through December 31, 2006 and if a Failed Condition occurs or
     continues thereafter, 19% applicable from January 1, 2007 and thereafter.

          "Person" shall mean any individual, corporation, partnership, limited
     liability company, joint venture, association, joint stock company, trust,
     unincorporated organization, government or any agency or political
     subdivision thereof or any other entity.

          "Shareholders' Agreement" shall mean the Shareholders' Agreement,
     dated as of _________ __, 200_, by and among Cypress Merchant B Partners II
     (Cayman) L.P., Cypress Merchant Banking II-A C.V., Cypress Side-by-Side
     (Cayman) L.P. and 55th Street Partners II (Cayman) L.P. (collectively,
     "Cypress") and the Company.

          "Securities Purchase Agreement" shall mean the Securities Purchase
     Agreement, dated as of October 17, 2004, by and among the Company and
     Cypress.

          "Transfer" shall mean any direct or indirect transfer, sale,
     assignment, distribution, contribution, exchange, gift, hypothecation,
     encumbrance or other disposition of this Note or any Ordinary Shares or
     Class C Warrants issued upon the conversion or exchange hereof, or any
     interest therein; provided that "Transfer" shall not include, with respect
     to the Purchasers and their respective Affiliates, any acquisition of
     voting securities of or membership or partnership interests in such entity
     by any Person or any merger or consolidation of any such entity with or
     into any other Person.

          "Voting Securities" shall mean, with respect to any Person, any class
     of share capital or debt of such Person having general voting power under
     ordinary circumstances to elect a majority of the board of directors,
     trustees, managers or other voting members of the governing body of such
     Person.

     4. Notices and Demands. All notices, demands and communications provided
for in this Note or made under this Note shall be delivered as provided in the
Shareholders' Agreement.

     5. Conversion.

          (a) Mandatory Conversion into Ordinary Shares. Upon the receipt of all
     Requisite Approvals, this Note shall be automatically converted in full
     into Ordinary Shares, subject to the following terms and conditions:

               (i)  The number of Ordinary Shares issuable upon conversion of
                    this Note shall be equal to the quotient of (A) the sum of
                    (1) the outstanding principal amount of this Note, plus (2)
                    all accrued but unpaid interest from the Issue Date to the
                    conversion date, divided by (B) the Conversion Price in
                    effect on the conversion date.

               (ii) Promptly upon receipt of all Requisite Approvals, the Holder
                    agrees to surrender this Note, duly assigned to the Company
                    or in blank, accompanied by written notice to the Company of
                    such conversion.

<PAGE>

                                                                               8

               (iii) This Note shall be deemed to have been converted at the
                    close of business on the day on which the last Requisite
                    Approval is received, and at such time the rights of the
                    Holder under this Note shall cease, and the Holder shall be
                    treated as the holder of the Ordinary Shares issuable upon
                    such conversion. Subject to the foregoing, as promptly as
                    possible on or after the conversion date but in no event
                    more than five (5) Business Days thereafter, the Company
                    shall issue and shall deliver to the Holder a certificate
                    for the number of full Ordinary Shares issuable upon such
                    conversion, together with payment of cash in lieu of any
                    fraction of an Ordinary Share.

          (b) Mandatory Exchange for Class C Warrants. Upon the receipt of
     Shareholder Approval, if any Requisite Approval has not been obtained, this
     Note shall be exchanged in full for Class C Warrants, subject to the
     following terms and conditions:

               (i)  The Class C Warrants issuable upon exchange of this Note
                    shall be exercisable to purchase a number of Ordinary Shares
                    equal to the quotient of (A) the sum of (1) the outstanding
                    principal amount of this Note, plus (2) all accrued but
                    unpaid interest from the Issue Date to the exchange date,
                    divided by (B) the Conversion Price in effect on the
                    exchange date. The Class C Warrants so issued shall expire
                    20 years after the Issue Date and shall have an exercise
                    price equal to US$ 0.01.

               (ii) Promptly upon receipt of the Shareholder Approval, the
                    Holder agrees to surrender this Note, duly assigned to the
                    Company or in blank, for exchange as herein provided.

               (iii) This Note shall be deemed to have been exchanged for Class
                    C Warrants at the close of business on the day on which the
                    Shareholder Approval has been received, and at such time the
                    rights of the Holder under this Note shall cease, and the
                    Holder shall be treated as the holder of the Class C
                    Warrants issuable upon such exchange. Subject to the
                    foregoing, as promptly as possible on or after the exchange
                    date but in no event more than five (5) Business Days
                    thereafter, the Company shall issue and shall deliver to the
                    Holder a certificate for the number of full Class C Warrants
                    issuable upon such exchange, together with payment of cash
                    in lieu of a Class C Warrant exercisable for fraction of an
                    Ordinary Share.

          (c) Conversion/Exchange in Part. Notwithstanding anything herein to
     the contrary, no mandatory conversion or exchange of this Note shall occur
     pursuant to Sections 5(a) or (b), if upon such exchange or conversion the
     total Controlled Shares of the Investors (as defined in the Securities
     Purchase Agreement) would exceed 24.9% of the issued and outstanding
     Ordinary Shares, and in such event only such portion of this Notes shall be
     so converted or exchanged as would result in the total Controlled Shares of
     the Investors not to exceed 24.9% of the issued and outstanding Ordinary
     Shares, and the portion of this Note not so converted or exchanged shall
     remain outstanding and in full force and effect in accordance with its
     terms.

<PAGE>

                                                                               9

     6. Certain Covenants of the Company. The Company covenants and agrees that
all Ordinary Shares that may be issued upon the conversion of this Note, all
Class C Warrants that may be issued upon the exchange of this Note and all
Ordinary Shares that may be issued upon the exercise of such Class C Warrants
will, upon issuance, be duly and validly issued, fully paid and nonassessable
and free from all stamp, issuance, transfer and other similar taxes, liens and
charges with respect to the issue thereof. The Company further covenants and
agrees that, for so long as any amounts remain outstanding under this Note, the
Company will at all times have authorized, and reserved for the purpose of issue
upon conversion of this Note or exercise of the purchase rights evidenced by
such Class C Warrants, a sufficient number of Ordinary Shares to provide for the
conversion of this Note or exercise of the rights represented by such Class C
Warrants, as applicable.

     7. Conversion Price and Other Adjustments.

          (a) In order to protect against dilution of the rights granted to the
     Holder hereunder, the Conversion Price shall be subject to adjustment from
     time to time in accordance with this Section 7. Except as provided in
     Sections 7(c) and 7(d) hereof, if and whenever on or after the Issue Date
     the Company shall issue or sell, or shall in accordance with paragraphs (i)
     to (ix) of Section 7(b) hereof, inclusive, be deemed to have issued or
     sold, any Ordinary Shares for a consideration per share less than the
     Market Price immediately prior to such issue or sale or, if such issue or
     sale is pursuant to any contract or agreement, the Market Price as of the
     date the Company became legally bound to issue or sell such Ordinary
     Shares, then, forthwith upon such issue or sale or deemed issue or sale
     (the "Triggering Transaction"), the Conversion Price in effect immediately
     prior to the time of such Triggering Transaction shall (subject to
     paragraphs (i) to (ix) of Section 7(b)), be reduced to the Conversion Price
     (calculated to the nearest tenth of a cent) determined by multiplying the
     Conversion Price in effect immediately prior to the time of such Triggering
     Transaction by a fraction, the numerator of which shall be the sum of (i)
     the product of (x) the Number of Shares Outstanding immediately prior to
     such Triggering Transaction, multiplied by (y) the Market Price immediately
     prior to such Triggering Transaction, plus (ii) the consideration received
     by the Company upon such Triggering Transaction, and the denominator of
     which shall be the product of (A) the sum of (1) the Number of Shares
     Outstanding immediately prior to such Triggering Transaction, plus (2) the
     number of shares issued or deemed to be issued pursuant to Section 7(b) in
     such Triggering Transaction, multiplied by (B) the Market Price immediately
     prior to such Triggering Transaction.

          (b) For purposes of determining the adjusted Conversion Price under
     Section 7(a), the following paragraphs (i) to (ix), inclusive, shall be
     applicable:

               (i)  In case the Company, at any time after the date hereof,
                    shall in any manner grant (whether directly or by assumption
                    in a merger or otherwise) any rights to subscribe for or to
                    purchase, or any options for the purchase of, Ordinary
                    Shares or any shares or other securities convertible into or
                    exchangeable for Ordinary Shares (such rights or options
                    being herein called "Options" and such convertible or
                    exchangeable shares or securities being herein called
                    "Convertible Securities"), whether or not such Options or
                    the right to convert or exchange any such Convertible
                    Securities are immediately exercisable, and the

<PAGE>

                                                                              10

                    price per share for which the Ordinary Shares are issuable
                    upon exercise, conversion or exchange (determined by
                    dividing (A) the total amount, if any, received or
                    receivable by the Company as consideration for the granting
                    of such Options, plus the minimum aggregate amount of
                    additional consideration payable to the Company upon the
                    exercise of all such Options, plus, in the case of such
                    Options which relate to Convertible Securities, the minimum
                    aggregate amount of additional consideration, if any,
                    payable upon the issue or sale of such Convertible
                    Securities and upon the conversion or exchange thereof, by
                    (B) the total maximum number of Ordinary Shares issuable
                    upon the exercise of such Options or the conversion or
                    exchange of such Convertible Securities) shall be less than
                    the Market Price immediately prior to the time of the
                    granting of such Options, then the total maximum amount of
                    Ordinary Shares issuable upon the exercise of such Options
                    (including, without limitation, by means of accretion or
                    accrual of interests or dividends) or in the case of Options
                    for Convertible Securities, upon the conversion or exchange
                    of such Convertible Securities shall (as of the date of
                    granting of such Options) be deemed to be outstanding and to
                    have been issued and sold by the Company for such price per
                    share. No adjustment of the Conversion Price shall be made
                    upon the actual issue of such Ordinary Shares or such
                    Convertible Securities upon the exercise of such Options,
                    except as otherwise provided in paragraph (iii) below.

               (ii) In case the Company, at any time after the date hereof,
                    shall in any manner issue (whether directly or by assumption
                    in a merger or otherwise) or sell any Convertible
                    Securities, whether or not the rights to exchange or convert
                    thereunder are immediately exercisable, and the price per
                    share for which Ordinary Shares are issuable upon such
                    conversion or exchange (determined by dividing (x) the total
                    amount received or receivable by the Company as
                    consideration for the issue or sale of such Convertible
                    Securities, plus the minimum aggregate amount of ----
                    additional consideration, if any, payable to the Company
                    upon the conversion or exchange thereof, by (y) the total
                    maximum number of Ordinary Shares issuable upon the
                    conversion or exchange of all such Convertible Securities)
                    shall be less than the Market Price immediately prior to the
                    time of such issue or sale, then the total maximum number of
                    Ordinary Shares issuable upon conversion or exchange of all
                    such Convertible Securities shall (as of the date of the
                    issue or sale of such Convertible Securities) be deemed to
                    be outstanding and to have been issued and sold by the
                    Company for such price per share. No adjustment of the
                    Conversion Price shall be made upon the actual issue of such
                    Ordinary Shares upon exercise of the rights to exchange or
                    convert under such Convertible Securities, except as
                    otherwise provided in paragraph (iii) below.

               (iii) If the additional consideration payable upon the exercise
                    of any Options referred to in paragraph (i), the additional
                    consideration, if any, payable upon the conversion or
                    exchange of any Convertible Securities referred to in
                    paragraphs (i) or (ii), or the rate at which any Convertible
                    Securities referred to in paragraphs (i) or (ii) are
                    convertible into or exchangeable for Ordinary Shares shall
                    change at any time (other than under or by reason of
                    provisions providing

<PAGE>

                                                                              11

                    for a weighted average anti-dilution adjustment, whether
                    based on issuances at below the applicable conversion or
                    exercise price or below market value), the Conversion Price
                    in effect at the time of such change shall forthwith be
                    readjusted to the Conversion Price which would have been in
                    effect at such time had such Options or Convertible
                    Securities still outstanding provided for such changed
                    additional consideration or conversion rate, as the case may
                    be, at the time initially granted, issued or sold.

               (iv) On the expiration of any Option or the termination of any
                    right to convert or exchange any Convertible Securities as
                    to which an adjustment to the Conversion Price was made
                    pursuant to paragraph (i) or (ii) above, the Conversion
                    Price then in effect hereunder shall forthwith be increased
                    to the Conversion Price which would have been in effect at
                    the time of such expiration or termination had such Option
                    or Convertible Securities, to the extent outstanding
                    immediately prior to such expiration or termination, never
                    been issued.

               (v)  In case any Options shall be issued in connection with the
                    issue or sale of other securities of the Company, together
                    comprising one integral transaction in which no specific
                    consideration is allocated to such Options by the parties
                    thereto, such Options shall be deemed to have been issued
                    for the consideration determined in good faith by the Board
                    of Directors to be attributable to such Options.

               (vi) In case any Ordinary Shares, Options or Convertible
                    Securities shall be issued or sold or deemed to have been
                    issued or sold for cash, the consideration received therefor
                    shall be deemed to be the amount received by the Company
                    therefor. In case any Ordinary Shares, Options or
                    Convertible Securities shall be issued or sold for a
                    consideration other than cash, the amount of the
                    consideration other than cash received by the Company shall
                    be the fair value of such consideration as determined in
                    good faith by the Board of Directors. In case any Ordinary
                    Shares, Options or Convertible Securities shall be issued in
                    connection with any merger in which the Company is the
                    surviving corporation (including the assumption or exchange
                    of Options and Convertible Securities of the non-surviving
                    corporation), the amount of consideration received by the
                    Company therefor shall be deemed to be the fair value of
                    such portion of the net assets and business of the
                    non-surviving corporation as shall be attributed by the
                    Board of Directors in good faith to such Ordinary Shares,
                    Options or Convertible Securities, as the case may be. The
                    consideration received by the Company in connection with the
                    issuance and sale or deemed issuance and sale of any
                    Ordinary Shares, Options or Convertible Securities shall be
                    computed based upon the total consideration received or
                    determined to be received by the Company in accordance with
                    the terms hereof before giving effect to any customary
                    underwriting discounts or commissions, placement agency fees
                    or other customary transaction expenses typically borne by
                    an issuer but after giving effect to any other discounts or
                    fees.

<PAGE>

                                                                              12

               (vii) The number of Ordinary Shares outstanding at any given time
                    shall not include shares owned or held by or for the account
                    of the Company, and the disposition of any shares so owned
                    or held shall be considered an issue or sale of Ordinary
                    Shares for the purpose of this Section 7(b).

               (viii) In case the Company shall declare a dividend or make any
                    other distribution upon the shares of the Company payable in
                    Options or Convertible Securities, then, unless each Holder
                    receives its pro rata share of such dividend or
                    distribution, any Options or Convertible Securities, as the
                    case may be, issuable in payment of such dividend or
                    distribution shall be deemed to have been issued or sold
                    without consideration.

               (ix) For purposes of this Section 7(b), in case the Company shall
                    take a record of the holders of its shares for the purpose
                    of entitling them (x) to receive a dividend or other
                    distribution payable in Ordinary Shares, Options or in
                    Convertible Securities, or (y) to subscribe for or purchase
                    Ordinary Shares, Options or Convertible Securities, then
                    such record date shall be deemed to be the date of the issue
                    or sale of the Ordinary Shares deemed to have been issued or
                    sold upon the declaration of such dividend or the making of
                    such other distribution or the date of the granting of such
                    right or subscription or purchase, as the case may be.

          (c) In case the Company shall at any time (i) subdivide the
     outstanding Ordinary Shares or (ii) issue a dividend on its outstanding
     Ordinary Shares payable in Ordinary Shares, the applicable Conversion Price
     in effect immediately prior to such dividend or subdivision shall be
     proportionately decreased by the same ratio as the subdivision or dividend.
     In case the Company shall at any time combine its outstanding Ordinary
     Shares, the Conversion Price in effect immediately prior to such
     combination shall be proportionately increased by the same ratio as the
     combination.

          (d) The provisions of this Section 7 shall not apply to the following
     Ordinary Shares issued, issuable or deemed outstanding under paragraphs (i)
     to (ix) of Section 7(b) inclusive: (i) Class C Warrants granted to Cypress
     and Ordinary Shares issued or issuable upon exercise thereof; (ii) Ordinary
     Shares issued or issuable pursuant to any share option, restricted share,
     retirement, share purchase or similar plan or arrangement for the benefit
     of the employees, directors or consultants of the Company or its
     subsidiaries, duly adopted by the Board of Directors; (iii) Ordinary Shares
     issued in a bona fide underwritten public offering underwritten by a
     nationally recognized investment bank pursuant to an effective registration
     under the Securities Act or any similar federal statute then in force at a
     purchase price not less than 93% of the then-current Market Price prior to
     taking into account any underwriting discounts and commissions granted in
     connection with such offering; (iv) Ordinary Shares issued upon conversion
     of the outstanding US$ 115 million aggregate principal amount of the
     Company's 4.50% Senior Convertible Notes due 2022, upon settlement of the
     Company's 5,750,000 HyCUs or in connection with the exercise of warrants or
     conversion or exchange of securities convertible into, or exchangeable for,
     Ordinary Shares, in each such case, in accordance with their terms as in
     effect on October 15, 2004; and (v) rights to purchase Ordinary Shares
     pursuant to a Company plan for reinvestment of dividends or

<PAGE>

                                                                              13

     interest available to securityholders of the Company generally in
     accordance with the terms of the plan.

          (e) If at any time or from time to time on or after the date hereof,
     the Company shall grant, issue or sell any Options, Convertible Securities
     or rights to purchase property (the "Purchase Rights") pro rata to the
     record holders of Ordinary Shares and such grants, issuances or sales do
     not result in an adjustment of the Conversion Price under Section 7(a)
     hereof, then each Holder that did not have an adjustment made to its
     Conversion Price shall be entitled to acquire (within thirty (30) days
     after the later to occur of the initial exercise date of grant, issue or
     sale of such Purchase Rights) upon the terms applicable to such Purchase
     Rights either:

               (i)  the aggregate Purchase Rights which such Holder could have
                    acquired if it had held the number of Ordinary Shares
                    acquirable upon conversion of such Notes (assuming that all
                    Requisite Approvals had been obtained) immediately before
                    the grant, issue or sale of such Purchase Rights; provided,
                    that if any Purchase Rights were distributed to holders of
                    Ordinary Shares without the payment of additional
                    consideration by such holders, corresponding Purchase Rights
                    shall be distributed to the exercising Holder as soon as
                    possible after such exercise and it shall not be necessary
                    for the exercising Holder specifically to request delivery
                    of such rights; or

               (ii) in the event that any such Purchase Rights shall have
                    expired or shall expire prior to the end of said thirty (30)
                    day period, the number of Ordinary Shares or the amount of
                    property which such Holder could have acquired upon such
                    exercise at the time or times at which the Company granted,
                    issued or sold such expired Purchase Rights.

          (f) If after the date hereof there shall be any reclassification,
     capital reorganization or change of the Ordinary Shares (other than as a
     result of a subdivision, combination or dividend provided for in Sections
     7(a), (b), (c), (d) and (e) hereof), or any consolidation of the Company
     with, or merger of the Company into, another corporation or other business
     organization, then, as a condition of such reclassification,
     reorganization, change, consolidation or merger, lawful provisions shall be
     made, and duly executed documents evidencing the same from the Company or
     its successor shall be delivered to the Holder, so that the Holder shall
     thereafter have the right to purchase, at a total price not to exceed that
     payable upon the conversion of this Note in full, the kind and amount of
     Ordinary Shares and other securities and property receivable upon such
     reclassification, reorganization, change, consolidation or merger by a
     holder of the number of Ordinary Shares which the Holder would have held
     upon conversion of this Note immediately prior to such reclassification,
     reorganization, change, consolidation or merger, and in any such case
     appropriate provisions shall be made with respect to the rights and
     interest of the Holder to the end that the provisions hereof (including
     without limitation, provisions for the adjustment of the Conversion Price
     and the number of Ordinary Shares issuable hereunder) shall thereafter be
     applicable in relation to any shares or other securities and property
     thereafter deliverable upon exercise hereof; provided that if the holders
     of Ordinary Shares were entitled to exercise a right of election as to the
     kind or amount of securities, cash or other assets

<PAGE>

                                                                              14

     receivable upon such consolidation or merger, then the kind and amount of
     securities, cash or other assets for which this Note shall become
     convertible shall be deemed to be the kind and amount so receivable per
     share by a plurality of the holders of Ordinary Shares in such
     consolidation or merger.

          (g) If any event occurs as to which, in the opinion of the Board of
     Directors, the provisions of this Section 7 are not strictly applicable or
     if strictly applicable would not fairly protect the rights of the Holder in
     accordance with the essential intent and principles of such provisions,
     then the Board of Directors shall make an adjustment in the application of
     such provisions, in accordance with such essential intent and principles,
     so as to protect such rights as aforesaid, but in no event shall any such
     adjustment have the effect of increasing the Conversion Price as otherwise
     determined pursuant to any of the provisions of this Section 7, except in
     the case of a combination of shares of a type contemplated in Section 7(c)
     hereof and then in no event to an amount greater than the Conversion Price
     as adjusted pursuant to Section 7(c) hereof.

          (h) Upon any adjustment to the Conversion Price pursuant to this
     Section 7, the Company shall promptly cause to be given to the Holder a
     notice of adjustment together with a certificate from the Company's
     independent public accounts briefly stating the facts requiring the
     adjustment and the manner of computing it.

          (i) In the event that: (i) the Company shall offer for subscription
     pro rata to the holders of its Ordinary Shares any additional shares of any
     class or other rights; or (ii) there shall be a potential or proposed
     Change of Control; then, in connection with such event, the Company shall
     give to the Holder: (A) at least twenty (20) days' prior written notice of
     the date on which the books of the Company shall close or a record shall be
     taken for such subscription rights or for determining rights to vote in
     respect of any such Change of Control; and (B) in the case of any Change of
     Control, to the extent possible, at least twenty (20) days' prior written
     notice of the date when the same shall take place. Such notice in
     accordance with the foregoing clause (A) shall also specify, in the case of
     any such subscription rights, the date on which the holders of Ordinary
     Shares shall be entitled thereto, and such notice in accordance with the
     foregoing clause (B) shall also specify the date, if any, on which the
     holders of Ordinary Shares shall be entitled to exchange their Ordinary
     Shares for securities or other property deliverable upon such Change of
     Control. Each such written notice shall be given by first class mail,
     postage prepaid, addressed to the Holder at the address of the Holder as
     shown on the books of the Company.

     8. Redemption.

          (a) Optional Redemption. At any time on or after the expiration of the
     Lock-Up Period, if during such period the Company held at least two
     non-adjourned shareholder meetings at which the Shareholder Resolutions
     were voted upon but were not approved in accordance with Cayman Islands law
     and the NYSE Listing Rules, then, notwithstanding the Company's reasonable
     best efforts to obtain such approvals, the Company shall be entitled, but
     not required, to redeem this Note in full upon payment to the Holder of the
     greater of (x) the Make-Whole Amount and (y) the Market Price on the date
     of such redemption of the number of Ordinary Shares into which this Note
     would then be convertible (assuming that all

<PAGE>

                                                                              15

     Requisite Approvals had been obtained). The Company shall give the Holder
     at least 30 days' prior notice of such redemption. The Company shall have
     no right to redeem or prepay this Note prior to the satisfaction of the
     condition to redemption in this Section 7(a), and, upon exercise of this
     optional redemption, the Company may not redeem less than all of the Notes.

          (b) Upon a Change of Control. Upon or at any time after a Change of
     Control, the Holder shall have the right:

               (i)  To continue to hold the Notes in any surviving entity
                    resulting from such Change of Control (with equitable and
                    appropriate adjustment to the conversion ratio of the Notes)
                    or, in the case of a sale of the Company's assets which
                    results in a Change of Control, the entity purchasing such
                    assets (the Conversion Price with respect to the surviving
                    entity's common stock to be adjusted in accordance with
                    Section 7(d) hereof), provided, however, that the
                    subordination provisions set forth in Section 1 hereof shall
                    be appropriately modified to subordinate the Notes to the
                    surviving entity's Senior Indebtedness (substituting in the
                    definition thereof such surviving entity for the term
                    "Company"); or

               (ii) Exercisable within sixty days after the date of a Change of
                    Control, to require that the Company repurchase this Note
                    within ten (10) Business Days following such Holder's notice
                    to the Company of such election for cash equal to the
                    greater of (A) the Make-Whole Amount and (B) the closing
                    price of an Ordinary Share on the first Business Day
                    preceding the closing date of such Change of Control
                    transaction, as reported on the principal U.S. securities
                    exchange on which the Ordinary Shares are then listed or
                    admitted to trading, or if not listed or admitted to trading
                    on any U.S. securities exchange, the average of the reported
                    closing bid and asked price on such trading day as furnished
                    by the National Quotation Bureau, Inc., of the number of
                    Ordinary Shares which the Holder would have received upon
                    conversion of this Note at such time (assuming that all
                    Requisite Approvals had been obtained).

          (c) Method of Payment. All payments of the redemption price under this
     Section 8 shall be made by the Company by wire transfer of immediately
     available funds to an account designated by the Holder against surrender of
     this Note. All payments by the Company under this Note shall be made
     without set-off, defense or counterclaim and be free and clear and without
     any deduction or withholding for any taxes or fees of any nature whatever,
     unless the obligation to make such deduction or withholding is imposed by
     law.

     9. Payment of Taxes. All Ordinary Shares issued upon the conversion of this
Note, all Class C Warrants issued in exchange for this Note and all Ordinary
Shares issued upon the exercise of such Class C Warrants shall be validly
issued, fully paid and nonassessable, and the Company shall pay all stamp,
issuance, transfer and other similar taxes and other governmental charges that
may be imposed in respect of the issue or delivery thereof. The Company shall
not be required, however, to pay any transfer tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for
Ordinary Shares or Class C Warrants in any name other than that of the
registered holder of the Notes surrendered in connection with the

<PAGE>

                                                                              16

conversion to or exchange for such securities, as applicable, or involved in the
issue of any certificate for Ordinary Shares in any name other than that of the
registered holder of such Class C Warrants surrendered in connection with the
purchase of such shares, and in such case the Company shall not be required to
issue or deliver any share or warrant certificate until such transfer tax or
other charge has been paid or it has been established to the Company's
satisfaction that no transfer tax or other charge is due.

     10. No Dilution or Impairment. The Company will not, by amendment of the
Articles or through reorganization, reclassification, consolidation,
amalgamation, merger, dissolution, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Note, but shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the Company
will not increase the par value of any Ordinary Shares receivable upon the
conversion of this Note or upon the exercise of the Class C Warrants for which
this Note is exchangeable above the amount payable therefor upon such conversion
or exercise, as applicable, and at all times will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Ordinary Shares upon the conversion of this Note,
Class C Warrants upon the exchange of this Note and Ordinary Shares upon the
exercise of such Class C Warrants.

     11. Events of Default.

          (a) Definition. For purposes of this Note, an "Event of Default" shall
     be deemed to have occurred if:

               (i)  the Company shall default in the payment of principal of
                    this Note on the date when due, whether at maturity, by
                    acceleration or otherwise; or

               (ii) the Company shall default in the payment of interest when
                    due and such default continues for thirty (30) days after
                    notice to the Company thereof; or

               (iii) the Company makes a general assignment for the benefit of
                    creditors; or an order, judgment or decree is entered
                    adjudicating the Company bankrupt or insolvent; or any order
                    for relief with respect to the Company is entered under the
                    Federal Bankruptcy Code; or the Company petitions or applies
                    to any tribunal for the appointment of a custodian, trustee,
                    receiver or liquidator of the Company of any substantial
                    part of the assets of the Company, or commences any
                    proceeding relating to the Company under any bankruptcy,
                    reorganization, arrangement, insolvency, readjustment of
                    debt, dissolution or liquidation law of any jurisdiction; or
                    any such petition or application is filed, or any such
                    proceeding is commenced, against the Company and either (A)
                    the Company by any act indicates its approval thereof,
                    consent thereto or acquiescence therein or (B) such
                    petition, application or proceeding is not dismissed within
                    90 days.

          (b) Consequences of the Occurrence of an Event of Default.

<PAGE>

                                                                              17

               (i)  If an Event of Default has occurred and is continuing, the
                    holder of the Notes representing a majority of the aggregate
                    principal amount of the Notes then outstanding may declare
                    all or any portion of the outstanding principal amount of
                    the Notes due and payable and demand immediate payment of
                    all or any portion of the outstanding principal amount of
                    the Notes. If the holders of the Notes representing a
                    majority of the aggregate principal amount of the Notes then
                    outstanding demand immediate payment of all or any portion
                    of the Notes, the Company shall immediately pay to such
                    holders the principal amount of the Notes requested to be
                    paid plus accrued and unpaid interest thereon.

               (ii) If an Event of Default has occurred and is continuing, the
                    Holder shall be entitled to exercise any other rights which
                    the Holder may have been afforded under any contract or
                    agreement at any time and any other rights which the Holder
                    may have pursuant to applicable law.

     12. Other Agreements. The Holder, upon conversion of this Note into
Ordinary Shares, shall have the rights set forth in the Shareholders' Agreement
and agrees to be bound by the terms of the Shareholders' Agreement, a copy of
which has been delivered by the Company to the Holder.

     13. Miscellaneous Provisions.

          (a) Mutilated or Missing Notes. If this Note is lost, stolen,
     mutilated or destroyed, the Company shall issue, in exchange and
     substitution for and upon cancellation of this Note if mutilated, or in
     lieu of and substitution if this Note is lost, stolen or destroyed, upon
     receipt of a proper affidavit or other evidence reasonably satisfactory to
     the Company (and surrender of the mutilated Note) and bond of indemnity at
     the Holder's expense in form and amount and with corporate surety
     reasonably satisfactory to the Company in each instance protecting the
     Company, a new Note of like tenor and principal amount as the Note so lost,
     stolen, mutilated or destroyed. Any such new Note shall constitute an
     original contractual obligation of the Company, whether or not the
     allegedly lost, stolen, mutilated or destroyed Note shall be at any time
     enforceable by anyone. An applicant for such substitute Note shall also
     comply with such other reasonable regulations and pay such other reasonable
     charges as the Company may prescribe. All Notes shall be held and owned
     upon the express condition that the foregoing provisions are exclusive with
     respect to the replacement of lost, stolen, mutilated or destroyed Note,
     and shall preclude any and all other rights or remedies notwithstanding any
     law or statute existing or hereafter enacted to the contrary with respect
     to the replacement of negotiable instruments or other securities without
     their surrender.

          (b) No Oral Modifications. Neither this Note nor any term of this Note
     may be changed, waived, discharged or terminated orally, but may only be
     amended or modified by an instrument in writing signed by the Holder and
     the Company.

          (c) Binding Effect. This Note shall be binding upon and inure to the
     benefit of the Company, the Holder and their respective heirs, successors
     and assigns.

          (d) Governing Law, Jurisdiction; Jury Trial Waiver. This Note shall be
     governed by the laws of the State of New York. The Company and the Holder
     hereby irrevocably submit to

<PAGE>

                                                                              18

     the exclusive jurisdiction of the United States District Court for the
     Southern District of New York located in the borough of Manhattan in the
     City of New York, or, if such court does not have jurisdiction, the Supreme
     Court of the State of New York, New York County, for the purposes of any
     suit, action or other proceeding arising out of this Note. The Company and
     the Holder hereby further agree that service of any process, summons,
     notice or document by U.S. registered mail to their respective addresses
     set forth in Section 4 hereof shall be effective service of process for any
     action, suit or proceeding in New York with respect to this Note. Each of
     the parties hereto irrevocably and unconditionally waives, to the extent
     permitted by applicable law, any objection to the laying of venue of any
     action, suit or proceeding arising out of this Note in (a) the United
     States District Court for the Southern District of New York or (b) the
     Supreme Court of the State of New York, New York County, and hereby further
     irrevocably and unconditionally waives, to the extent permitted by
     applicable law, and agrees not to plead or claim in any such court that any
     such action, suit or proceeding brought in any such court has been brought
     in an inconvenient forum. To the extent permitted by applicable law, the
     Company and the Holder waive the right to trial by jury in any such action
     or proceeding.

          (e) Recourse. Recourse under this Note shall be to the assets of the
     Company only and in no event to the officers, directors or shareholders of
     the Company.

                  [remainder of page intentionally left blank]

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Note to be executed by a
duly authorized person on _________ __, 200_.

                                          SCOTTISH RE GROUP LIMITED

                                          By: __________________________________
                                               Name:
                                               Title:

Agreed and Accepted:

_________________________

By: __________________________________
     Name:
     Title:

<PAGE>

                                    EXHIBIT B

                             FORM OF CLASS C WARRANT

NEITHER THIS CLASS C WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION. NEITHER THIS CLASS C WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF MAY BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND SUCH LAWS OR IN A TRANSACTION OUTSIDE THE UNITED
STATES NOT SUBJECT TO THE SECURITIES ACT.

THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION
(EACH A "TRANSFER") OF THIS CLASS C WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF ARE RESTRICTED BY THE TERMS OF THE SHAREHOLDERS' AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDERS NAMED THEREIN, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY, AND BY THE COMPANY'S ARTICLES OF
ASSOCIATION. THE COMPANY WILL NOT REGISTER THE TRANSFER OF THIS CLASS C WARRANT
OR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ON THE BOOKS OF THE COMPANY
UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE
SHAREHOLDERS' AGREEMENT AND THE COMPANY'S ARTICLES OF ASSOCIATION.

                 CLASS C WARRANT TO PURCHASE ORDINARY SHARES OF
                            SCOTTISH RE GROUP LIMITED
                            -------------------------

                                       Date: _______ __, 200_ (the "Issue Date")

Void after 5:00 P.M. (United States Eastern Time), on the Termination Date, as
defined and provided herein.

THIS CERTIFIES that, for value received, _____________ (the "Warrant Holder"
and, together with ______________, _____________ and ______________, the
"Purchasers") or registered assigns, is entitled to purchase from Scottish Re
Group Limited (including its permitted successors, "Company"), upon the
satisfaction of the conditions stated herein and during the period (subject to
Section 2 hereof) from and after the date hereof to 5:00 p.m. (United States
Eastern Time) on the twentieth anniversary of the date hereof (the "Termination
Date"), ________ ordinary shares, par value US$ 0.01 per share, of the Company
(the "Ordinary Shares"), subject to adjustment as provided herein, at a purchase
price per Ordinary Share equal to the Warrant Exercise Price.

<PAGE>

          1. DEFINITIONS. For the purpose of this Class C Warrant:

          "Affiliate" of any Person shall mean any Person that, directly or
     indirectly through one or more intermediaries, controls, is controlled by
     or is under common control with such Person. The term "control" means the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management and policies of a Person, whether through
     ownership of voting securities, by contract or otherwise.

          "Approval Date" shall mean the first date on which (i) (A) the special
     resolution to approve the amendment the Company's Articles of Association
     (the "Articles") set forth in Exhibit D to the Securities Purchase
     Agreement and (B) the ordinary resolution to approve the issuance to the
     Purchasers, for purposes of The New York Stock Exchange, Inc. Listed
     Company Manual, of securities representing on an as-converted basis 20% or
     more of the voting power of the existing voting securities of the Company,
     have been approved by the shareholders of the Company in accordance with
     the Articles and the Statute (as defined in the Articles) and such
     amendment to the Articles shall have been duly filed with the Registrar of
     Companies of the Cayman Islands (the approvals of clauses (A) and (B), the
     "Shareholder Approval"), and (ii) all authorizations, certifications,
     consents, orders and approvals of any federal, state, foreign,
     supranational, national, municipal or local government, court,
     instrumentality, subdivision, administrative agency or commission,
     insurance or securities regulatory authority or other governmental
     authority or instrumentality or industry self-regulatory body, whether U.S.
     or foreign (including, without limitation, the approvals of the insurance
     commissioners of the states of Delaware and Missouri and the Finance
     Services Authority of the United Kingdom) that may be necessary under
     applicable law for the Purchasers to exercise the rights represented by the
     Class C Warrants and to own the Ordinary Shares issued upon exercise
     thereof, and to convert or exchange the 7.00% Convertible Junior
     Subordinated Notes due 2034 of the Company (the "Notes") and to own the
     Ordinary Shares and Class C Warrants issued upon the conversion or exchange
     thereof, have been duly obtained.

          "Board of Directors" shall mean the board of directors of the Company.

          "Business Day" shall mean a day other than a Saturday, Sunday or other
     day on which commercial banks in New York City, New York or the Cayman
     Islands are authorized or required by law to close.

          "Capital Stock" shall mean the Company's Ordinary Shares and any other
     shares of any class, or series within a class, whether now or hereafter
     authorized, which has the right to participate in the distribution of
     earnings or assets of the Company without limit as to amount or percentage.

          "Class C Warrants" shall mean the original Class C warrants to
     purchase Ordinary Shares of the Company issued by the Company pursuant to
     the Securities Purchase Agreement and any Class C warrants issued in
     exchange for the Notes held by any of the Purchasers or their Affiliates,
     and any and all Class C warrants which are issued in

                                        2

<PAGE>

     exchange or substitution for any outstanding Class C warrant pursuant to
     the terms of the Class C warrants.

          "Market Price" shall mean the average of the daily closing prices of
     an Ordinary Share for the 10 consecutive trading days ending on the trading
     day immediately preceding the date of determination on the principal U.S.
     securities exchange on which the Ordinary Shares are then listed or
     admitted to trading or, if not listed or admitted to trading on any U.S.
     securities exchange, the average of the reported daily closing bid and
     asked prices as furnished by the National Quotation Bureau, Inc.

          "Number of Shares Outstanding" shall mean, at any given time, the
     number of Ordinary Shares actually issued and outstanding at such time,
     plus the number of Ordinary Shares issuable upon the conversion or exercise
     in full of all Convertible Securities and Options (each as defined in
     Section 6(a)(i) below) then-outstanding, whether or not the Convertible
     Securities or Options are convertible into or exercisable for Ordinary
     Shares at such time, but shall not include (a) any Ordinary Shares or
     Convertible Securities held for the account of the Company or any of its
     subsidiaries, and (b) any Ordinary Shares issued or reserved for issuance
     under share option, restricted share, retirement or executive ownership
     plans to the extent that such shares or Options to purchase such shares are
     issued or granted after the date hereof.

          "Person" shall mean any individual, corporation, partnership, limited
     liability company, joint venture, association, joint stock company, trust,
     unincorporated organization, government or any agency or political
     subdivision thereof or any other entity.

          "Securities Purchase Agreement" shall mean the Securities Purchase
     Agreement, dated as of October 17, 2004, by and among the Purchasers and
     the Company.

          "Shareholders' Agreement" shall mean the Shareholders' Agreement,
     dated as of the date hereof, by and among the Purchasers and the Company.

          "Transfer" shall mean any direct or indirect transfer, sale,
     assignment, distribution, contribution, exchange, gift, hypothecation,
     encumbrance or other disposition of this Warrant or any Warrant Shares or
     any interest therein; provided that "Transfer" shall not include, with
     respect to the Purchasers and their respective Affiliates, any acquisition
     of voting securities of or membership or partnership interests in such
     entity by any Person or any merger or consolidation of any such entity with
     or into any other Person.

          "Voting Securities" shall mean, with respect to any Person, any class
     of share capital or debt of such Person having general voting power under
     ordinary circumstances to elect a majority of the board of directors,
     trustees, managers or other voting members of the governing body of such
     Person.

          "Warrant Exercise Price" shall mean US$ 0.01.

                                        3

<PAGE>

          "Warrant Shares" shall mean the Ordinary Shares purchasable upon
     exercise of Class C Warrants.

          2. EXERCISE OF CLASS C WARRANTS.

               (a) This Class C Warrant may be exercised (i) by the Warrant
Holder at any time or from time to time on and after the Approval Date (or prior
to the Approval Date to the extent that the exercise of this Class C Warrant
would not cause the Purchasers to beneficially own Controlled Shares (as such
term is defined in the Articles) in excess of 9.9% of the then-outstanding
Ordinary Shares and would otherwise be permitted by applicable law), or (ii) at
any time or from time to time from and after its transfer to a Person that is
not an Affiliate of the Purchasers provided that such transfer complies with the
ownership limitations contained in the Articles and would otherwise be permitted
by applicable law. This Class C Warrant shall be automatically exercised on the
Business Day after the Approval Date, subject to the Articles as amended
pursuant to the Shareholder Approval, and upon such exercise the Warrant Holder
agrees to surrender this Class C Warrant at the Principal Office (as hereinafter
defined) or at the office of the transfer agent for the Ordinary Shares,
together with payment of an amount equal to the aggregate Warrant Exercise
Price, against delivery to the Warrant Holder of certificates evidencing the
Warrant Shares for which this Class C Warrant is then exercisable. Subject to
the foregoing, this Class C Warrant may be exercised in whole or from time to
time in part (but not as to fractional shares) prior to 5:00 p.m. United States
Eastern Time on the Termination Date, at which time this Class C Warrant and all
of the Warrant Holder's rights hereunder shall terminate, except as expressly
provided herein. Notwithstanding the foregoing, upon a Change of Control (as
defined below) of the Company this Class C Warrant shall become immediately
exercisable, whether prior to the Approval Date or otherwise, for the full
number of Warrant Shares provided for on page 1 hereof as the same may have been
adjusted from time to time prior to the date of such Change of Control pursuant
to Section 6 hereof, subject to the provisions of the Articles. For purposes of
this Section 2(a), a "Change of Control" of the Company shall be deemed to have
occurred if:

               (i) the Company is merged or consolidated or reorganized into or
     with another corporation or other Person, and as a result of such merger,
     consolidation or reorganization less than a majority of the
     then-outstanding Voting Securities of such corporation or other Person
     immediately after such transaction are held in the aggregate by the Persons
     who were holders of Ordinary Shares immediately prior to such transaction;

               (ii) the Company sells or otherwise transfers all or
     substantially all of its assets to any other corporation or other Person,
     and less than a majority of the then-outstanding Voting Securities of such
     corporation or other Person immediately after such sale or transfer is held
     in the aggregate by the Persons who were holders of Ordinary Shares
     immediately prior to such sale or transfer;

               (iii) any Person or group (as such term is defined in Sections
     13(d) and 14(d) of the U.S. Securities Exchange Act of 1934 and the rules
     promulgated thereunder by the U.S. Securities and Exchange Commission) of
     Persons (other than the Purchasers and their Affiliates) acquires
     beneficial ownership (as defined in such Act and

                                        4

<PAGE>

     rules) of more than 50% of the total voting power of all outstanding Voting
     Securities of the Company then outstanding;

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

               (v) the shareholders of the Company vote to adopt or approve a
     plan or proposal for the liquidation, dissolution or winding up of the
     Company.

Notwithstanding the foregoing provisions of this Section 2(a), a Change of
Control shall not be deemed to have occurred for purposes of this Class C
Warrant solely because (A) the Company, (B) a subsidiary of the Company, or (C)
any Company-sponsored employee share ownership plan or other employee benefit
plan of the Company acquires beneficial ownership of Voting Securities.

               (b) In the event that a Change of Control shall occur and the
Warrant Holder shall not be permitted, either by the terms of the Articles (or
the constituent documents of any successor company in a merger, consolidation or
reorganization) or by applicable law, to exercise this Class C Warrant in full
for Ordinary Shares, then such Warrant Holder may by written notice to the
Company require the Company to repurchase this Class C Warrant in full for a
purchase price, payable in cash, equal to the closing price of an Ordinary Share
on the first Business Day preceding the closing date of such Change of Control,
as reported on the principal U.S. securities exchange on which the Ordinary
Shares are then listed or admitted to trading, or if not listed or admitted to
trading on any U.S. securities exchange, the average of the reported closing bid
and asked price on such trading day as furnished by the National Quotation
Bureau, Inc., of the number of Warrant Shares for which this Class C Warrant is
then (or upon satisfaction of the conditions set forth in Section 2(a) hereof
would be) exercisable. The Company shall pay the repurchase price by wire
transfer of immediately available funds to an account designated by the Warrant
Holder, against surrender of this Class C Warrant to the Company.

               (c) This Class C Warrant may be exercised at the time(s) or upon
the occurrence of the event(s) specified in Section 2(a) hereof by the surrender
of this Class C Warrant, with the Exercise Notice attached hereto as Annex A
properly completed and duly executed, at the principal office of the Company at
Crown House, Third Floor, 4 Par-la-Ville Road, Hamilton HM12, Bermuda, or such
other location which shall at that time be the principal office of the Company
and of which the Company shall have notified the Warrant Holder in writing (the
"Principal Office"), or at the office of the transfer agent for the Ordinary
Shares and upon payment to the Company of the Warrant Exercise Price for the
Warrant Shares to be purchased upon such exercise. The person entitled to the
Warrant Shares so purchased shall be treated for all purposes as the holder of
such shares as of the close of business on the date of exercise and certificates
for the shares so purchased shall be delivered to the person so entitled within
a reasonable time, not exceeding five (5) Business Days, after such exercise.
Certificates

                                        5

<PAGE>

representing the Warrant Shares issued upon exercise of this Class C Warrant
shall bear a legend referring to the restrictions on transfer set forth herein.
Unless this Class C Warrant has expired, a new Class C Warrant, representing the
right to purchase the number of Ordinary Shares with respect to which this Class
C Warrant shall not have been exercised, shall also be issued to the holder of
this Class C Warrant within such time.

               (d) The Warrant Exercise Price shall be payable by wire transfer
of immediately available funds to such account as the Company may designate.

          3. EXCHANGE. This Class C Warrant is exchangeable, upon its surrender
by the Warrant Holder to the Company at its Principal Office, or to the
Company's share transfer agent at its office, for new Class C Warrants of like
tenor registered in the Warrant Holder's name and representing in the aggregate
the right to purchase the same number of Ordinary Shares purchasable hereunder,
each of such new Class C Warrants to represent the right to subscribe for and
purchase such number of Ordinary Shares as shall be designated by the Warrant
Holder at the time of such surrender.

          4. TRANSFER. This Class C Warrant is transferable (subject to the same
restrictions on transfer (including Article II of the Shareholders' Agreement)
that would exist at such time on the Ordinary Shares for which this Class C
Warrant is then (or upon satisfaction of the conditions set forth in Section
2(a) hereof would be) exercisable), in whole or in part, by the holder thereof
at the Principal Office of the Company or at the office of its share transfer
agent, in person or by duly authorized attorney, upon presentation of this Class
C Warrant properly endorsed for transfer, the Assignment attached hereto as
Annex B duly executed, and payment of funds sufficient to pay any transfer tax
(the "Transfer Documents"). Within a reasonable time after receiving the
Transfer Documents, not exceeding five (5) Business Days, the Company shall
execute and deliver a new Class C Warrant in the name of the assignee named in
the Assignment and this Class C Warrant shall be canceled. Each holder of this
Class C Warrant, by holding it, agrees that this Class C Warrant, when endorsed
in blank, may be deemed negotiable, and that, when this Class C Warrant shall
been so endorsed, the holder of this Class C Warrant may be treated by the
Company and all other persons dealing with this Class C Warrant as the absolute
owner of this Class C Warrant for any purpose and as the person entitled to
exercise the rights represented by this Class C Warrant, or to the transfer of
this Class C Warrant on the books of the Company, any notice to the contrary
notwithstanding.

          5. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and agrees
that all Ordinary Shares that may be issued upon the exercise of this Class C
Warrant, will, upon issuance, be duly and validly issued, fully paid and
nonassessable and free from all stamp, issuance, transfer and other similar
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Class C Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of issue upon exercise of the purchase
rights evidenced by this Class C Warrant, a sufficient number of Ordinary Shares
to provide for the exercise of the rights represented by this Class C Warrant.

          6. ADJUSTMENT OF NUMBER OF WARRANT SHARES. In order to protect against
dilution of the rights granted to the Warrant Holder hereunder, the number and

                                        6

<PAGE>

kind of securities purchasable upon the exercise of this Class C Warrant shall
be subject to adjustment from time to time upon the happening of certain events
as follows:

          (a) Issuances Below Market Value. Except as provided for in Sections
6(b) and (c) hereof, if the Company at any time while this Class C Warrant is
outstanding shall issue or sell, or shall in accordance with paragraphs (i) to
(ix) below, inclusive, be deemed to have issued or sold, any Ordinary Shares for
a consideration per share less than the Market Price immediately prior to such
issue or sale or, if such issue or sale is pursuant to any contract or
agreement, the Market Price as of the date the Company became legally bound to
issue or sell such Ordinary Shares, then, forthwith upon such issue or sale or
deemed issue or sale (the "Triggering Transaction"), the number of Warrant
Shares for which this Class C Warrant is then (or upon the satisfaction of the
conditions set forth in Section 2(a) hereof would be) exercisable shall (subject
to paragraphs (i) to (ix) below, inclusive) be increased to such number of
Warrant Shares as shall be determined by multiplying the number of Warrant
Shares in effect immediately prior to the time of such Triggering Transaction by
a fraction, the numerator of which shall be the product of (A) the sum of (1)
the Number of Shares Outstanding immediately prior to such Triggering
Transaction, plus (2) the number of shares issued or deemed to be issued
pursuant to clauses (i) through (ix) below, inclusive, in such Triggering
Transaction, multiplied by (B) the Market Price immediately prior to such
Triggering Transaction, and the denominator of which is the sum of (i) the
product of (x) the Number of Shares Outstanding immediately prior to such
Triggering Transaction, multiplied by (y) the Market Price immediately prior to
such Triggering Transaction, plus (ii) the consideration received by the Company
upon such Triggering Transaction.

          For purposes of determining the adjusted number of Warrant Shares
under this Section 6(a), the following paragraphs (i) to (ix), inclusive, shall
be applicable:

                    (i) In case the Company, at any time after the date hereof,
     shall in any manner grant (whether directly or by assumption in a merger or
     otherwise) any rights to subscribe for or to purchase, or any options for
     the purchase of, Ordinary Shares or any shares or other securities
     convertible into or exchangeable for Ordinary Shares (such rights or
     options being herein called "Options" and such convertible or exchangeable
     shares or securities being herein called "Convertible Securities"), whether
     or not such Options or the right to convert or exchange any such
     Convertible Securities are immediately exercisable, and the price per share
     for which the Ordinary Shares are issuable upon exercise, conversion or
     exchange (determined by dividing (A) the total amount, if any, received or
     receivable by the Company as consideration for the granting of such
     Options, plus the minimum aggregate amount of additional consideration
     payable to the Company upon the exercise of all such Options, plus, in the
     case of such Options which relate to Convertible Securities, the minimum
     aggregate amount of additional consideration, if any, payable upon the
     issue or sale of such Convertible Securities and upon the conversion or
     exchange thereof, by (B) the total maximum number of Ordinary Shares
     issuable upon the exercise of such Options or the conversion or exchange of
     such Convertible Securities) shall be less than the Market Price
     immediately prior to the time of the granting of such Options, then the
     total maximum amount of Ordinary Shares issuable upon the exercise of such
     Options (including, without limitation, by means of accretion or accrual of
     interests or dividends) or in the case of Options for Convertible

                                        7

<PAGE>

     Securities, upon the conversion or exchange of such Convertible Securities
     shall (as of the date of granting of such Options) be deemed to be
     outstanding and to have been issued and sold by the Company for such price
     per share. No adjustment of the number of Warrant Shares for which this
     Class C Warrant is then (or upon the satisfaction of the conditions set
     forth in Section 2(a) hereof would be) exercisable shall be made upon the
     actual issue of such Ordinary Shares or such Convertible Securities upon
     the exercise of such Options, except as otherwise provided in paragraph
     (iii) below.

                    (ii) In case the Company, at any time after the date hereof,
     shall in any manner issue (whether directly or by assumption in a merger or
     otherwise) or sell any Convertible Securities, whether or not the rights to
     exchange or convert thereunder are immediately exercisable, and the price
     per share for which Ordinary Shares are issuable upon such conversion or
     exchange (determined by dividing (x) the total amount received or
     receivable by the Company as consideration for the issue or sale of such
     Convertible Securities, plus the minimum aggregate amount of additional
     consideration, if any, payable to the Company upon the conversion or
     exchange thereof, by (y) the total maximum number of Ordinary Shares
     issuable upon the conversion or exchange of all such Convertible
     Securities) shall be less than the Market Price immediately prior to the
     time of such issue or sale, then the total maximum number of Ordinary
     Shares issuable upon conversion or exchange of all such Convertible
     Securities shall (as of the date of the issue or sale of such Convertible
     Securities) be deemed to be outstanding and to have been issued and sold by
     the Company for such price per share. No adjustment of the number of
     Warrant Shares for which this Class C Warrant is then (or upon the
     satisfaction of the conditions set forth in Section 2(a) hereof would be)
     exercisable shall be made upon the actual issue of such Ordinary Shares
     upon exercise of the rights to exchange or convert under such Convertible
     Securities, except as otherwise provided in paragraph (iii) below.

                    (iii) If the additional consideration payable upon the
     exercise of any Options referred to in paragraph (i), the additional
     consideration, if any, payable upon the conversion or exchange of any
     Convertible Securities referred to in paragraphs (i) or (ii), or the rate
     at which any Convertible Securities referred to in paragraphs (i) or (ii)
     are convertible into or exchangeable for Ordinary Shares shall change at
     any time (other than under or by reason of provisions providing for a
     weighted average anti-dilution adjustment, whether based on issuances at
     below the applicable conversion or exercise price or below market value),
     the number of Warrant Shares for which this Class C Warrant is then (or
     upon the satisfaction of the conditions set forth in Section 2(a) hereof
     would be) exercisable in effect at the time of such change shall forthwith
     be readjusted to the number of Warrant Shares for which this Class C
     Warrant is then (or upon the satisfaction of the conditions set forth in
     Section 2(a) hereof would be) exercisable which would have been in effect
     at such time had such Options or Convertible Securities still outstanding
     provided for such changed additional consideration or conversion rate, as
     the case may be, at the time initially granted, issued or sold.

                    (iv) On the expiration of any Option or the termination of
     any right to convert or exchange any Convertible Securities as to which an
     adjustment to the

                                        8

<PAGE>

     number of Warrant Shares for which this Class C Warrant is then (or upon
     the satisfaction of the conditions set forth in Section 2(a) hereof would
     be) exercisable was made pursuant to paragraph (i) or (ii) above, the
     number of Warrant Shares for which this Class C Warrant is then (or upon
     the satisfaction of the conditions set forth in Section 2(a) hereof would
     be) exercisable then in effect hereunder shall forthwith be decreased to
     the number of Warrant Shares for which this Class C Warrant is then (or
     upon the satisfaction of the conditions set forth in Section 2(a) hereof
     would be) exercisable which would have been in effect at the time of such
     expiration or termination had such Option or Convertible Securities, to the
     extent outstanding immediately prior to such expiration or termination,
     never been issued.

                    (v) In case any Options shall be issued in connection with
     the issue or sale of other securities of the Company, together comprising
     one integral transaction in which no specific consideration is allocated to
     such Options by the parties thereto, such Options shall be deemed to have
     been issued for the consideration determined in good faith by the Board of
     Directors to be attributable to such Options.

                    (vi) In case any Ordinary Shares, Options or Convertible
     Securities shall be issued or sold or deemed to have been issued or sold
     for cash, the consideration received therefor shall be deemed to be the
     amount received by the Company therefor. In case any Ordinary Shares,
     Options or Convertible Securities shall be issued or sold for a
     consideration other than cash, the amount of the consideration other than
     cash received by the Company shall be the fair value of such consideration
     as determined in good faith by the Board of Directors. In case any Ordinary
     Shares, Options or Convertible Securities shall be issued in connection
     with any merger in which the Company is the surviving corporation
     (including the assumption or exchange of Options and Convertible Securities
     of the non-surviving corporation), the amount of consideration received by
     the Company therefor shall be deemed to be the fair value of such portion
     of the net assets and business of the non-surviving corporation as shall be
     attributed by the Board of Directors in good faith to such Ordinary Shares,
     Options or Convertible Securities, as the case may be. The consideration
     received by the Company in connection with the issuance and sale or deemed
     issuance and sale of any Ordinary Shares, Options or Convertible Securities
     shall be computed based upon the total consideration received or determined
     to be received by the Company in accordance with the terms hereof before
     giving effect to any customary underwriting discounts or commissions,
     placement agency fees or other customary transaction expenses typically
     borne by an issuer but after giving effect to any other discounts or fees.

                    (vii) The number of Ordinary Shares outstanding at any given
     time shall not include shares owned or held by or for the account of the
     Company, and the disposition of any shares so owned or held shall be
     considered an issue or sale of Ordinary Shares for the purpose of this
     Section 6(a).

                    (viii) In case the Company shall declare a dividend or make
     any other distribution upon the shares of the Company payable in Options or
     Convertible Securities, then, unless each Warrant Holder receives its pro
     rata share of such dividend or distribution, any Options or Convertible
     Securities, as the case may be, issuable in

                                        9

<PAGE>

     payment of such dividend or distribution shall be deemed to have been
     issued or sold without consideration.

                    (ix) For purposes of this Section 6(a), in case the Company
     shall take a record of the holders of its shares for the purpose of
     entitling them (x) to receive a dividend or other distribution payable in
     Ordinary Shares, Options or in Convertible Securities, or (y) to subscribe
     for or purchase Ordinary Shares, Options or Convertible Securities, then
     such record date shall be deemed to be the date of the issue or sale of the
     Ordinary Shares deemed to have been issued or sold upon the declaration of
     such dividend or the making of such other distribution or the date of the
     granting of such right or subscription or purchase, as the case may be.

               (b) Subdivision or Combination of Shares. If the Company at any
time while this Class C Warrant remains outstanding and unexpired shall
subdivide or combine the Ordinary Shares, the number of Warrant Shares for which
this Class C Warrant is then (or upon satisfaction of the conditions set forth
in Section 2(a) hereof would be) exercisable shall be proportionately increased,
in case of subdivision of such shares, as of the effective date of such
subdivision, or, if the Company shall take a record of holders of the Ordinary
Shares for the purpose of so subdividing, as of such record date, whichever is
earlier, or shall be proportionately decreased, in the case of combination of
such shares, as of the effective date of such combination, or, if the Company
shall take a record of holders of the Ordinary Shares for the purpose of so
combining, as of such record date, whichever is earlier.

               (c) No Adjustments Upon Certain Issuances. The provisions of this
Section 6 shall not apply to the following Ordinary Shares issued, issuable or
deemed outstanding under paragraphs (i) to (ix) of Section 6(a) hereof,
inclusive: (i) Notes issued to the Purchasers and Class C Warrants or Ordinary
Shares issued or issuable upon conversion, exchange or exercise thereof, as the
case may be; (ii) Ordinary Shares issued or issuable pursuant to any share
option, restricted share, retirement, share purchase or similar plan or
arrangement for the benefit of the employees, directors or consultants of the
Company or its subsidiaries, duly adopted by the Board of Directors; (iii)
Ordinary Shares issued in a bona fide underwritten public offering underwritten
by a nationally recognized investment bank pursuant to an effective registration
under the Securities Act or any similar federal statute then in force at a
purchase price not less than 93% of the then-current Market Price prior to
taking into account any underwriting discounts and commissions granted in
connection with such offering; (iv) Ordinary Shares issued upon conversion of
the outstanding US$ 115 million aggregate principal amount of the Company's
4.50% Senior Convertible Notes due 2022, upon settlement of the Company's
5,750,000 HyCUs or in connection with the exercise of warrants or conversion or
exchange of securities convertible into, or exchangeable for, Ordinary Shares,
in each such case, in accordance with their terms as in effect on October 15,
2004; and (v) rights to purchase Ordinary Shares pursuant to a Company plan for
reinvestment of dividends or interest available to securityholders of the
Company generally in accordance with the terms of the plan.

               (d) Purchase Rights. If at any time or from time to time on or
after the date hereof, the Company shall grant, issue or sell any Options,
Convertible Securities or rights to purchase property (the "Purchase Rights")
pro rata to the record holders of Ordinary Shares and such grants, issuances or
sales do not result in an adjustment of the number of Warrant

                                       10

<PAGE>

Shares for which this Class C Warrant is then (or upon satisfaction of the
conditions set forth in Section 2(a) hereof would be) exercisable under Section
6(a) hereof, then, if the Warrant Holder did not have an adjustment made to the
number of Warrant Shares for which this Class C Warrant is then (or upon
satisfaction of the conditions set forth in Section 2(a) hereof would be)
exercisable, it shall be entitled to acquire (within thirty (30) days after the
later to occur of the initial exercise date of grant, issue or sale of such
Purchase Rights) upon the terms applicable to such Purchase Rights either:

          (i)  the aggregate Purchase Rights which the Warrant Holder could have
               acquired if it had held the number of Warrant Shares for which
               this Class C Warrant is then (or upon satisfaction of the
               conditions set forth in Section 2(a) hereof would be) exercisable
               immediately before the grant, issue or sale of such Purchase
               Rights; provided, that if any Purchase Rights were distributed to
               holders of Ordinary Shares without the payment of additional
               consideration by such holders, corresponding Purchase Rights
               shall be distributed to the exercising Warrant Holder as soon as
               possible after such exercise and it shall not be necessary for
               the exercising Warrant Holder specifically to request delivery of
               such rights; or

          (ii) in the event that any such Purchase Rights shall have expired or
               shall expire prior to the end of said thirty (30) day period, the
               number of Ordinary Shares or the amount of property which the
               Warrant Holder could have acquired upon such exercise at the time
               or times at which the Company granted, issued or sold such
               expired Purchase Rights.

               (e) Reclassification, Consolidation or Merger. At any time while
this Class C Warrant remains outstanding and unexpired, in case of any
reclassification or change of outstanding Ordinary Shares (other than a change
in par value, or from par value to no par value or as a result of a subdivision
or combination of outstanding Ordinary Shares) or in case of any consolidation
or merger of the Company with or into another corporation (other than a merger
with another corporation in which the Company is a continuing corporation and
which does not result in any reclassification or change of the outstanding
Ordinary Shares other than a change in par value or from par value to no par
value), the Company, or such successor corporation, as the case may be, shall,
without payment of any additional consideration therefor and as a condition to
such reclassification, change, consolidation or merger, execute a new Class C
Warrant providing that the Warrant Holder shall have the right to exercise such
new Class C Warrant (upon terms not less favorable to the Warrant Holder than
those then applicable to this Class C Warrant) and to receive upon such
exercise, in lieu of each Ordinary Share theretofore issuable upon exercise of
this Class C Warrant, the kind and amount of shares, other securities, money or
property receivable upon such reclassification, change, consolidation or merger,
by the holder of one Ordinary Share in connection with such reclassification,
change, consolidation or merger; provided that if the holders of Ordinary Shares
were entitled to exercise a right of election as to the kind or amount of
securities, cash or other assets receivable upon such reclassification, change,
consolidation or merger, then the kind and amount of securities, cash or other
assets for which this Class C Warrant shall become exercisable shall be deemed
to be the kind and amount so receivable per share by a plurality of the holders
of Ordinary Shares in such reclassification, change, consolidation or merger.
Such new Class C Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section

                                       11

<PAGE>

6. The provisions of this Section 6(e) shall similarly apply to successive
reclassifications, changes, consolidations and mergers.

               (f) Certain Dividends and Distributions. If the Company at any
time while this Class C Warrant remains outstanding and unexpired shall:

                    (i) Share Dividends. Pay a dividend on the Ordinary Shares
     in shares of, or make any other distribution of shares of, its Capital
     Stock, then the number of Warrant Shares for which this Class C Warrant is
     then (or upon satisfaction of the conditions set forth in Section 2(a)
     hereof would be) exercisable shall be adjusted, as of the date the Company
     shall take a record of the holders of the Ordinary Shares for the purpose
     of receiving such dividend or other distribution (or if no such record is
     taken, as of the date of such payment or other distribution), to that
     number of Warrant Shares determined by multiplying the number of Warrant
     Shares for which this Class C Warrant is then (or upon satisfaction of the
     conditions set forth in Section 2(a) hereof would be) exercisable in effect
     immediately prior to such payment or other distribution by a fraction (A)
     the numerator of which shall be the total number of shares of Ordinary
     Shares outstanding immediately after such dividend or distribution, and (B)
     the denominator of which shall be the total number of shares of Ordinary
     Shares outstanding immediately prior to such dividend or distribution;

                    (ii) Cash Dividends. Pay a cash dividend on the Ordinary
     Shares, then the Company shall make a cash adjustment payment on each Class
     C Warrant equal to the dividends paid on the number of Ordinary Shares for
     which such Class C Warrant is then (or upon satisfaction of the conditions
     set forth in Section 2(a) hereof would be) exercisable. Such dividend
     equivalency payments shall be made at the same time and in the same form as
     the dividends paid on the Ordinary Shares; or

                    (iii) Liquidating Dividends, Etc. Make a distribution of its
     assets to the holders of the Ordinary Shares as a dividend in liquidation
     or by way of return of capital or other than as a dividend payable out of
     earnings or surplus legally available for dividends under applicable law,
     the Warrant Holder shall be entitled to receive upon the exercise hereof,
     in addition to the number of Ordinary Shares receivable thereupon, and
     without payment of any additional consideration therefor, a sum equal to
     the amount of such assets as would have been paid on the number of Ordinary
     Shares for which this Class C Warrant is then (or upon satisfaction of the
     conditions set forth in Section 2(a) hereof would be) exercisable on the
     record date for such distribution, or if no such record is taken, as of the
     date of such distribution, and an appropriate provision therefor shall be
     made a part of any such distribution.

               (g) Other Adjustments. If any event occurs as to which, in the
opinion of the Board of Directors, the provisions of this Section 6 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the Warrant Holder in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such rights as aforesaid, but
in no event shall any such adjustment have the effect of decreasing the number
of Warrant Shares for which this Class C Warrant is

                                       12

<PAGE>

then (or upon the satisfaction of the conditions set forth in Section 2(a)
hereof would be) exercisable as otherwise determined pursuant to any of the
provisions of this Section 6, except in the case of a combination of shares of a
type contemplated in Section 6(b) hereof and then in no event to an amount less
than the number of Warrant Shares for which this Class C Warrant is then (or
upon the satisfaction of the conditions set forth in Section 2(a) hereof would
be) exercisable as adjusted pursuant to Section 6(b) hereof.

               (h) No Adjustment of Warrant Exercise Price. No adjustment to the
number of Warrant Shares for which this Class C Warrant is (or upon satisfaction
of the conditions set forth in Section 2(a) hereof would be) exercisable shall
result in any adjustment to or change in the Warrant Exercise Price.

               (i) Notice to Warrant Holders of Adjustment. Upon any adjustment
to the number of Warrant Shares for which this Class C Warrant is then (or upon
satisfaction of the conditions set forth in Section 2(a) hereof would be)
exercisable pursuant to this Section 6, the Company shall promptly cause to be
given to each Warrant Holder a notice of adjustment together with a certificate
from the Company's independent public accounts briefly stating the facts
requiring the adjustment and the manner of computing it.

               (j) Notice to Warrant Holders of Certain Events. In the event
that: (i) the Company shall offer for subscription pro rata to the holders of
its Ordinary Shares any additional shares of any class or other rights; or (ii)
there shall be a potential or proposed Change of Control; then, in connection
with such event, the Company shall give to the Warrant Holder: (A) at least
twenty (20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such subscription rights or
for determining rights to vote in respect of any such Change of Control; and (B)
in the case of any Change of Control, to the extent possible, at least twenty
(20) days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall specify, in the case of
any such subscription rights, the date on which the holders of Ordinary Shares
shall be entitled thereto, and such notice in accordance with the foregoing
clause (B) shall also specify the date, if any, on which the holders of Ordinary
Shares shall be entitled to exchange their Ordinary Shares for securities or
other property deliverable upon such Change of Control. Each such written notice
shall be given by first class mail, postage prepaid, addressed to the Warrant
Holder at the address of the Warrant Holder as shown on the books of the
Company.

          7. PAYMENT OF TAXES. All Ordinary Shares issued upon the exercise of
this Class C Warrant shall be validly issued, fully paid and nonassessable, and
the Company shall pay all stamp, issuance, transfer and other similar taxes and
other governmental charges that may be imposed in respect of the issue or
delivery thereof. The Company shall not be required, however, to pay any
transfer tax or other charge imposed in connection with any transfer involved in
the issue of any certificate for Ordinary Shares in any name other than that of
the registered holder of the Class C Warrant surrendered in connection with the
purchase of such shares, and in such case the Company shall not be required to
issue or deliver any share certificate until such transfer tax or other charge
has been paid or it has been established to the Company's satisfaction that no
transfer tax or other charge is due.

                                       13

<PAGE>

          8. FRACTIONAL SHARES. No fractional Ordinary Shares will be issued in
connection with any purchase hereunder but in lieu of such fractional shares,
the Company shall make a cash refund therefor equal in amount to the product of
the applicable fraction multiplied by the Market Price of one Ordinary Share on
the last trading day preceding the date of such exercise.

          9. LOSS, THEFT, DESTRUCTION OR MUTILATION. Upon receipt by the Company
of evidence reasonably satisfactory to it that this Class C Warrant has been
mutilated, destroyed, lost or stolen, and in the case of a destroyed, lost or
stolen Class C Warrant, a bond of indemnity reasonably satisfactory to the
Company, or in the case of a mutilated Class C Warrant, upon surrender and
cancellation of this Class C Warrant, the Company will execute and deliver in
the Warrant Holder's name, in exchange and substitution for the Class C Warrant
so mutilated, destroyed, lost or stolen, a new Class C Warrant of like tenor
substantially in the form hereof with appropriate insertions and variations.

          10. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
the Articles or through reorganization, reclassification, consolidation,
amalgamation, merger, dissolution, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Class C Warrant, but shall at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company will not increase the par value of any Ordinary Shares receivable
upon the exercise of this Class C Warrant above the amount payable therefor upon
such exercise, and at all times will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Ordinary Shares upon the exercise of this Class C Warrant.

          11. NOTICES. Except as provided for in Section 2(c), 3 or 6(j) hereof,
all other notices or communications provided for in this Class C Warrant shall
be delivered as provided in the Shareholders' Agreement.

          12. HEADINGS. The descriptive headings of the several sections of this
Class C Warrant are inserted for convenience only and do not constitute a part
of this Class C Warrant.

                                       14

<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Class C Warrant to be
signed by its duly authorized officer under its corporate seal, attested by its
duly authorized officer, on the date of this Class C Warrant.

                                            SCOTTISH RE GROUP LIMITED

                                            By: ________________________________
                                                Name:
                                                Title:

ACCEPTED, ACKNOWLEDGED
AND AGREED:

[WARRANT HOLDER]

By:   _______________________________
      Name:
      Title:

<PAGE>

                                                                         Annex A

                                 EXERCISE NOTICE

Date: __________________________
TO:
The undersigned, pursuant to the provisions set forth in the attached Class C
Warrant, hereby agrees to purchase _________________ Ordinary Shares covered by
such Class C Warrant, and makes payment herewith in full therefor at the price
per share provided by this Class C Warrant.
Signature: _______________________
Address: _______________________

<PAGE>

                                                                         Annex B

                                   ASSIGNMENT

                  For Value Received, ________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
Class C Warrant with respect to _________ of the number of Ordinary Shares
covered by such Class C Warrant, to:

NAME OF ASSIGNEE            ADDRESS                                NO. OF SHARES

Dated:

Signature:
                  -----------------------------------

Address
         -----------------------------------

<PAGE>

                                    EXHIBIT C

                                     FORM OF

                             SHAREHOLDERS' AGREEMENT

                                  by and among

                           SCOTTISH RE GROUP LIMITED,

                CYPRESS MERCHANT B PARTNERS II (CAYMAN) L.P.,

                       CYPRESS MERCHANT BANKING II-A C.V.,

                        CYPRESS SIDE-BY-SIDE (CAYMAN) L.P.

                                       and

                      55TH STREET PARTNERS II (CAYMAN) L.P.

                          Dated as of ________ __, 200_

<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

ARTICLE I Definitions........................................................1
  Section 1.1   Definitions..................................................1
  Section 1.2   Other Definitions............................................4
  Section 1.3   Other Definitional Provisions; Interpretation................4

ARTICLE II Transfer Restrictions.............................................5
  Section 2.1   Transfer Restrictions........................................5
  Section 2.2   Cypress's "Sell Down" Rights.................................5
  Section 2.3   Compliance with Securities Laws..............................7
  Section 2.4   Transfers to Affiliates, etc.................................7
  Section 2.5   Legend on Equity Securities..................................8
  Section 2.6   Transfer Restrictions Following Transfer Restriction Period..9
  Section 2.7   Company Register of Members..................................9

ARTICLE III Board and Committee Representation...............................9
  Section 3.1   Board Representation.........................................9
  Section 3.2   Committees..................................................10
  Section 3.3   D&O Insurance...............................................10

ARTICLE IV Preemptive Rights................................................10
  Section 4.1   New Issuances of Securities.................................10
  Section 4.2   Exercise of Preemptive Rights...............................11
  Section 4.3   Termination of Preemptive Rights............................11

ARTICLE V Information Rights................................................12
  Section 5.1   Information Rights..........................................12
  Section 5.2   VCOC Investor Information Rights............................12

ARTICLE VI Registration Rights..............................................14
  Section 6.1   Demand Registration.........................................14
  Section 6.2   Piggyback Registrations.....................................17
  Section 6.3   Hold-Back Agreements........................................18
  Section 6.4   Registration Procedures.....................................19
  Section 6.5   Registration Expenses.......................................23
  Section 6.6   Indemnification.............................................23
  Section 6.7   Rules l44 and 144A..........................................25
  Section 6.8   Underwritten Registrations..................................26
  Section 6.9   Covenants of Holders........................................26
  Section 6.10   Assignment of Registration Rights..........................26

ARTICLE VII ADDITIONAL Covenant of the Company..............................26
  Section 7.1   Limitation on Share Repurchases.............................26

ARTICLE VIII Miscellaneous..................................................26

                                       i

<PAGE>

  Section 8.1   After-Acquired Securities...................................26
  Section 8.2   Injunctive Relief...........................................27
  Section 8.3   Successors and Assigns......................................27
  Section 8.4   Amendments; Waiver..........................................27
  Section 8.5   Notices.....................................................28
  Section 8.6   Governing Law; Consent to Jurisdiction and Services of
  Process; Waiver of Jury Trial.............................................28
  Section 8.7   Headings....................................................29
  Section 8.8   Entire Agreement............................................29
  Section 8.9   Severability................................................29
  Section 8.10   Counterparts...............................................30

                                       ii

<PAGE>

     This SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of ________ __,
200_, is entered into by CYPRESS MERCHANT B PARTNERS II (CAYMAN) L.P., a Cayman
Islands exempted limited partnership, CYPRESS MERCHANT BANKING II-A C.V., a
Netherlands limited partnership, CYPRESS SIDE-BY-SIDE (CAYMAN) L.P., a Cayman
Islands exempted limited partnership, and 55TH STREET PARTNERS II (Cayman) L.P.,
a Cayman Islands exempted limited partnership (collectively, the
"Shareholders"), and Scottish Re Group Limited, a Cayman Islands company limited
by shares (the "Company"). Capitalized terms not defined herein shall have the
respective meanings ascribed to them in the Securities Purchase Agreement (as
defined below).

                                   WITNESSETH:

     WHEREAS, the Company has entered into a securities purchase agreement with
the Shareholders, dated as of October 17, 2004 (the "Securities Purchase
Agreement"), pursuant to which the Shareholders have agreed to acquire the
Purchased Securities at the Closing under the Securities Purchase Agreement; and

     WHEREAS, the execution of this Agreement is an inducement and a condition
precedent to the purchase by the Shareholders of the Purchased Securities under
the Securities Purchase Agreement.

      NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
Company and the Shareholders hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:

     "Affiliate" of any Person shall mean any Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. All Cypress Co-investors and Cypress
Vehicles shall be deemed to be Affiliates of Cypress. The term "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.

     "Beneficial Owner" (and, with correlative meanings, "Beneficially Own" and
"Beneficial Ownership") shall have the meaning given such term in Rule 13d-3
promulgated under the Exchange Act, and a Person's Beneficial Ownership of
securities for purposes of this Agreement shall be calculated in accordance with
the provisions of such rule; provided that, for purposes of determining
Beneficial Ownership hereunder, a Person shall be deemed to be the Beneficial
Owner of any security which such Person has the right to acquire (whether or not
such right is exercisable immediately or only after the passage of time, upon
the occurrence of certain events and/or the satisfaction of certain conditions)
pursuant to any agreement, arrangement or

<PAGE>

understanding, or upon the exercise, conversion or exchange of any option,
warrant, right or other instrument, or otherwise.

     "Board" shall mean the board of directors of the Company.

     "Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City or the Cayman Islands are authorized
or required by law to close.

     "Change of Control" shall have the meaning set forth in Section 2(a) of the
Class C Warrant issued by the Company on the date hereof.

     "Commission" shall mean the U.S. Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.

     "Cypress" shall mean, collectively, Cypress Merchant B Partners II (Cayman)
L.P., Cypress Merchant Banking II-A C.V., Cypress Side-by-Side (Cayman) L.P.,
55th Street Partners II (Cayman) L.P. and their respective Affiliates.

     "Closing Date" shall mean the date of the Closing.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.

     "Equity Securities" shall mean (i) the Purchased Securities, (ii) any
Ordinary Shares or other securities issued upon conversion, exercise or exchange
thereof, or as a dividend, distribution or other payment thereon or in respect
thereof, and (iii) any other securities issued in exchange for or in respect of
any of the foregoing, whether pursuant to a merger or consolidation, as a result
of any stock split or reclassification of, or share dividend on, any of the
foregoing or otherwise.

     "Holder" shall mean any Person, including the Shareholders, holding
Registrable Securities, including any transferee pursuant to Section 6.10.

     "Nominating Committee" shall mean the committee comprised of members of the
Board whose functions include recommendations to the Board of nominees for
election as directors. In the event there shall not be such a committee,
"Nominating Committee" shall mean the Board itself.

      "Ordinary Shares" shall have the meaning assigned in the Securities
Purchase Agreement, and shall also include any securities issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend, spin-off or combination, or any reclassification, recapitalization,
merger, consolidation, exchange or other similar reorganization or business
combination.

      "Ordinary Share Equivalents" shall mean any stock, warrants, rights,
calls, options, debt or other securities exchangeable or exercisable for or
convertible into Ordinary Shares (including, without limitation, the Class C
Warrants and the Subordinated Notes). Any reference

                                        2
<PAGE>

herein to the number of Ordinary Share Equivalents shall be deemed to refer to
the number of Ordinary Shares into which such Ordinary Share Equivalents are
exchangeable or exercisable for or convertible into (or would be so
exchangeable, exercisable or convertible upon the happening of any events or the
satisfaction of any conditions set forth therein).

     "Person" shall mean any individual, corporation, limited liability company,
partnership, firm, joint venture, association, trust, joint stock company,
unincorporated organization or other entity.

     "Public Offering" shall mean a public offering of Equity Securities
pursuant to an effective Registration Statement or in accordance with Rule 144
promulgated under the Securities Act.

     "Registrable Securities" shall mean, at any time, the Equity Securities,
except that for purposes of this Agreement, any Registrable Securities shall
cease to be Registrable Securities when (a) a Registration Statement covering
such Registrable Securities has been declared effective and such Registrable
Securities have been disposed of pursuant to such effective Registration
Statement, (b) such Registrable Securities shall have been disposed of pursuant
to Rule 144 promulgated under the Securities Act, (c) such Registrable
Securities are sold by a Person in a transaction in which the rights under
Article VI are not assigned, or (d) such Registrable Securities shall cease to
be outstanding.

     "Register," "registered" and "registration" shall refer to a registration
effected by preparing and filing a Registration Statement or similar document in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such Registration Statement or document.

     "Registration Statement" shall mean any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related prospectus
and any information deemed to be a part of such prospectus pursuant to Rule 430A
promulgated under the Securities Act, all amendments and supplements to such
registration statement or prospectus, including pre-and post-effective
amendments (including any registration statement filed pursuant to Rule 462(b)
promulgated under the Securities Act), all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.

     "Securities Act" shall mean the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as the same may be amended from time to
time.

      "Shareholders" shall have the meaning assigned in the preamble to this
Agreement and such transferees of such Persons as may be provided in Section 2.2
or 2.4.

     "Transfer" shall mean any direct or indirect transfer, sale, assignment,
distribution, contribution, exchange, gift, hypothecation, encumbrance or other
disposition of any Equity Securities or any interest therein, including pursuant
to the creation of a derivative security, the grant of an option or other right,
the imposition of a restriction on disposition or voting or transfer by
operation of law; provided that "Transfer" shall not include, with respect to
Cypress,

                                        3
<PAGE>

any acquisition of voting securities of or membership or partnership interests
in such entity by any Person or any merger or consolidation any such entity with
or into any other Person.

      "Transferee" shall mean any Person to whom Purchased Securities are
transferred.

      "Voting Securities" shall mean securities with the power to vote with
respect to the election of directors generally.

     Section 1.2 Other Definitions. The following terms are defined in the
Sections indicated:

           Term                                Section
           ----                                -------
           Agreement.........................  Preamble
           Company...........................  Preamble
           Confidential Information..........  5.2(c)
           Cypress Co-investor...............  2.2(a)
           Cypress Director..................  3.1(a)
           Cypress Observer..................  3.1(a)
           Cypress Vehicle...................  2.2(a)
           Delay Period......................  6.1(e)
           Demand Holder.....................  6.1(a)
           Demand Notice.....................  6.1(a)
           Demand Registration...............  6.1(a)
           Interruption Period...............  6.4(o)
           Issuance..........................  4.1(a)
           Losses............................  6.6(a)
           Misstatement/Omission.............  6.6(a)
           Other Security Holders............  6.1(g)
           Piggyback Registration............  6.2(a)
           Preemptive Right..................  4.1(a)
           Securities Purchase Agreement.....  Recitals
           Transfer Restriction Period.......  2.1(c)
           Unwinding Event...................  2.4(b)
           VCOC Investor.....................  5.2(a)

     Section 1.3 Other Definitional Provisions; Interpretation.

          (a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article and Section
references are to this Agreement unless otherwise specified. Any pronoun used
herein shall be deemed to cover all genders.

          (b) The headings in this Agreement are included for convenience of
reference only and shall not limit or otherwise affect the meaning or
interpretation of this Agreement.

          (c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

                                        4
<PAGE>

          (d) Unless the context otherwise requires, the words "include,"
"includes" and "including" and words of similar import when used in this
Agreement shall be deemed to be followed by the phrase "without limitation."

          (e) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises regarding this Agreement, this Agreement will be
construed as if drafted jointly by the parties and no presumption or burden of
proof will arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.

                                   ARTICLE II
                              TRANSFER RESTRICTIONS

     Section 2.1 Transfer Restrictions.

          (a) Prior to the expiration of the Transfer Restriction Period, no
Transfers by the Shareholders of any Equity Securities shall be permitted unless
expressly permitted by Section 2.2 or 2.4 (and subject, in each such case, to
the transferee executing and delivering to the Company an instrument in form and
substance reasonably satisfactory to the Company agreeing to be bound hereby as
a Shareholder).

          (b) Any purported Transfer not permitted by this Agreement will be
null and void, and the Company shall not record on its share transfer books,
register of members or shareholders or otherwise any such purported Transfer.

          (c) For purposes of this Agreement, the "Transfer Restriction Period"
shall begin on the Closing Date and shall end on the 12-month anniversary of the
Closing Date; provided, however, that the Transfer Restriction Period shall
automatically terminate upon the earliest to occur of (i) the six-month
anniversary of the Closing Date if Shareholder Approval (as defined in the
Securities Purchase Agreement) is not obtained by such date, (ii) such time as
all directors and officers of the Company (other than retired officers) shall
have Transferred, in one or more transactions, more than 450,000 Ordinary Shares
or Ordinary Share Equivalents in the aggregate, (iii) such time as any single
director or officer of the Company (other than retired officers) shall have
Transferred, in one or more transactions, more than 112,500 Ordinary Shares or
Ordinary Share Equivalents in the aggregate, and (iv) upon a Change of Control.
Nothing in this Agreement shall be deemed to restrict any Transfer or other
disposition of Equity Securities pursuant to the terms of any merger,
consolidation or other business combination transaction, or pursuant to any
tender or exchange offer, provided that such merger, consolidation or other
business combination shall have been approved by, or such tender offer shall
have been recommended to, the holders of the Ordinary Shares by the Board.

     Section 2.2 Cypress's "Sell Down" Rights.

          (a) Whether or not the Transfer Restriction Period is otherwise in
effect, (i) Cypress may Transfer all or a portion of the Equity Securities held
by it to one or more limited liability companies or partnerships controlled by
it (each, a "Cypress Vehicle") to the extent permitted by, and subject to the
requirements of, this Section 2.2 and Section 6.15 of the Securities Purchase
Agreement, and (ii) Cypress may Transfer all or a portion of the Equity

                                        5
<PAGE>

Securities held by it to one or more third parties (each, a "Cypress
Co-investor") to the extent permitted by, and subject to the requirements of,
this Section 2.2 and Section 6.15 of the Securities Purchase Agreement.

          (b) Whether or not the Transfer Restriction Period is otherwise in
effect:

               (i) Cypress may itself Transfer (or it may indirectly Transfer by
          means of a Cypress Vehicle issuing additional equity interests) to one
          or more third parties an equity interest in a Cypress Vehicle, but
          only if following such Transfer and except as otherwise permitted by
          the terms and conditions of this Agreement, (A) Cypress retains sole
          discretion (subject only to this Agreement and the Company's
          Memorandum and Articles of Association) with respect to all voting and
          disposition decisions (including exercise of registration rights
          hereunder) to be made with respect to all of the Equity Securities
          held in each Cypress Vehicle, including those Equity Securities with
          respect to which such third parties may hold an indirect pecuniary
          interest, and (B) Cypress retains a direct or indirect pecuniary
          interest in the Equity Securities held by Cypress of not less than 75%
          of the aggregate original purchase price paid by Cypress for all of
          the Purchased Securities on the Closing Date.

               (ii) Cypress may Transfer all or a portion of the Equity
          Securities held by it to a Cypress Co-investor; provided that (A)
          Cypress retains sole discretion (subject only to this Agreement and
          the Company's Memorandum and Articles of Association) with respect to
          all voting and disposition decisions (including exercise of
          registration rights hereunder) to be made with respect to all of the
          Equity Securities held by any Cypress Co-investor as if such Cypress
          Co-investor invested directly in a Cypress Vehicle and (B) Cypress
          retains a direct or indirect pecuniary interest in Equity Securities
          held by Cypress of not less than 75% of the aggregate original
          purchase price paid by Cypress for all of the Purchased Securities on
          the Closing Date.

          (c) As a condition to the Transfer of Purchased Securities to a
Cypress Vehicle or a Cypress Co-investor, such transferee shall agree in
accordance with Section 2.4 to abide by the provisions of this Agreement to the
same extent as the transferor(s), and any such transferee Cypress Vehicle or
Cypress Co-investor shall thereupon be deemed to be a "Shareholder" for purposes
of this Agreement. In connection with such Transfer, the Board shall make any
necessary determination pursuant to Article 9(b) of the Company's Articles of
Association necessary to register and effectuate such Transfer.

          (d) Prior to the Closing, Cypress shall have the right to direct the
Company to issue Purchased Securities directly to Cypress Vehicles or Cypress
Co-investors, as the case may be, to the extent Cypress would have otherwise had
the right to Transfer such Purchased Securities to Cypress Vehicles or Cypress
Co-investors pursuant to this Section 2.2 following the Closing; provided,
however, that Cypress and any such Cypress Vehicles and Cypress Co-investors, as
the case may be, shall be bound by this Section 2.2 upon signing an agreement as
contemplated by Section 2.2(c) as if such issuance had been a Transfer made
pursuant to Section

                                        6
<PAGE>

2.2(b), whereupon any such Cypress Vehicle or Cypress Co-investor shall be
deemed to be a "Shareholder" for purposes of this Agreement.

     Section 2.3 Compliance with Securities Laws. Each of the Shareholders
hereby agrees that it shall not, directly or indirectly, Transfer any Equity
Securities unless such Transfer complies with the provisions hereof and (a) such
Transfer is made pursuant to an effective Registration Statement and, if
required, has been registered under all applicable state securities or blue sky
laws or (b) no such registration is required because of the availability of an
exemption from registration under the Securities Act and all applicable state
securities or blue sky laws, and, at the request of the Company, the transferor
shall provide to the Company a legal opinion to such effect in form and
substance, and from counsel, reasonably satisfactory to the Company; provided,
however, that no such legal opinion shall be necessary in order to effectuate a
Transfer pursuant to a Public Offering.

     Section 2.4 Transfers to Affiliates, etc.

          (a) Notwithstanding anything in this Agreement to the contrary, each
Shareholder is entitled, from time to time and at any time, without the consent
of the Company, to Transfer any or all of the Equity Securities owned by it to
(i) any of its Affiliates, including any investment fund or similar investment
vehicle, whether organized as a partnership or otherwise, the investments of
which are directed by such Shareholder or by the funds manager for such
Shareholder, subject to any applicable restriction in the Company's Articles of
Association, and (ii) after the Transfer Restriction Period, the partners,
investors or participants of such Shareholder on a pro rata basis pursuant to
the terms of the limited partnership agreement, operating agreement or similar
agreement of such Shareholder. Any such transferee pursuant to clause (i) of
this Section 2.4(a) must execute and deliver to the Company an instrument in
form and substance reasonably satisfactory to the Company agreeing to become a
party to, and be bound by the provisions of, this Agreement, to the same extent
as its transferor, and any such transferee shall thereupon be deemed to be a
"Shareholder" for purposes of this Agreement. Transferees pursuant to clause
(ii) of this Section 2.4(a) shall not become "Shareholders" for purposes of this
Agreement but shall become Holders of Registrable Securities to the extent
applicable pursuant to the terms of such definitions.

          (b) If, while any Affiliated transferee under Section 2.4(a) holds any
Equity Securities, and prior to the end of the Transfer Restriction Period, a
transaction is contemplated in which such transferee will cease to qualify as a
permitted transferee within the contemplation of Section 2.4(a) (an "Unwinding
Event"), then:

               (i) such Affiliated transferee and the original transferring
          Shareholder will promptly notify the Company of the pending occurrence
          of such Unwinding Event; and

               (ii) prior to such Unwinding Event, such Affiliated transferee
          and such Shareholder will take all actions necessary to effect a
          Transfer of all the Equity Securities held by such Affiliated
          transferee either back to such Shareholder or, to the extent permitted
          by this Section 2.4, to another Person that qualifies as a permitted
          transferee of such Shareholder under Section 2.4(a).

                                        7
<PAGE>

     Section 2.5 Legend on Equity Securities.

          (a) A copy of this Agreement shall be filed with the Secretary of the
Company and kept with the records of the Company.

          (b) Each certificate representing Equity Securities acquired by any
Shareholder at the Closing or thereafter shall bear legends substantially in the
following forms:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
          "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
          STATES OR ANY OTHER JURISDICTION. THE SECURITIES MAY NOT BE
          TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
          UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR
          PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
          OF THE SECURITIES ACT AND SUCH LAWS OR IN A TRANSACTION OUTSIDE THE
          UNITED STATES NOT SUBJECT TO THE SECURITIES ACT.

          THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
          DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
          REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF A
          SHAREHOLDERS' AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDERS NAMED
          THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY,
          AND BY THE COMPANY'S ARTICLES OF ASSOCIATION. THE COMPANY WILL NOT
          REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY
          UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE
          TERMS OF THE SHAREHOLDERS' AGREEMENT AND THE COMPANY'S ARTICLES OF
          ASSOCIATION.

          (c) In the event that any Equity Securities are Transferred in a
Public Offering, the Company shall promptly upon request, but in any event not
later than is necessary in order to consummate such Transfer, deliver a
replacement certificate not containing the legend set forth in Section 2.5(c) in
connection with such Transfer.

          (d) Upon the delivery to the Company of a legal opinion satisfactory
to the Company or a no-action letter from the Commission and the appropriate
state regulatory agencies to the effect that the first paragraph of the legend
set forth in Section 2.5(c) is not required in order to establish compliance
with the provisions of the Securities Act and any applicable state securities
law, the Company shall promptly upon request deliver a replacement

                                        8
<PAGE>

certificate not containing the first paragraph of the legend set forth in
Section 2.5(c) in exchange for the legended certificate.

          (e) Upon the termination of the Transfer Restriction Period, the
Company shall promptly upon request deliver a replacement certificate not
containing the second paragraph of the legend set forth in Section 2.5(c) in
exchange for the legended certificate.

          Section 2.6 Transfer Restrictions Following Transfer Restriction
Period. Following the end of the Transfer Restriction Period, the Equity
Securities held by the Shareholders shall not be subject to any restrictions on
Transfer except as specifically set forth in Section 2.3.

          Section 2.7 Company Register of Members. The Company hereby agrees to
promptly update and record in the appropriate registers of the Company records
any Transfers made pursuant to and in accordance with this Agreement.

                                  ARTICLE III
                       BOARD AND COMMITTEE REPRESENTATION

     Section 3.1 Board Representation. (a) Effective as of the Closing, the
Company shall cause one person designated by Cypress, by written notice to the
Company not less than 10 Business Days prior to the Closing Date, to be
appointed by the Board of Directors by resolution to the Board as a director
(the "Cypress Director") and one person designated by Cypress to be appointed as
a non-voting observer to the Board (the "Cypress Observer"). Thereafter, and for
such period of time as Cypress (including for purposes of this Article III any
Cypress Vehicles and Cypress Co-investors) continues to Beneficially Own in the
aggregate the lesser of (i) Ordinary Shares and Ordinary Share Equivalents
representing, on an as-converted basis, not less than 9.9% of the total voting
power of the Company's then-outstanding Voting Securities or (ii) Equity
Securities of the Company that constitute not less than 35% of the Purchased
Securities (on an as-converted basis) acquired by Cypress on the Closing Date,
the Company shall cause (A) one person designated by Cypress in a written notice
delivered to the Company not less than 60 days prior to the annual meeting of
the shareholders of the Company to be nominated by the Nominating Committee for
election or reelection to the Board at the next annual meeting of the
shareholders of the Company as the Cypress Director and (B) one person
designated by Cypress in a written notice delivered to the Company at any time
to be appointed as a non-voting observer to the Board as the Cypress Observer.
Any Cypress Director shall meet all applicable requirements for the
qualification of membership in the board of directors as specified in the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and The New York Stock
Exchange, Inc.'s Listed Company Manual (the "NYSE Listing Rules").

          (b) At all times during which Cypress is entitled to designate a
Cypress Director, the Company shall take all action as may be necessary or
appropriate under applicable law and the Company's Memorandum and Articles of
Association, and use all other reasonable best efforts, to (i) include the
Cypress Director in the slate of nominees for election to the Board at each
annual or special meeting of shareholders at which the Cypress Director's term
of office is to expire or in which a Cypress Director is otherwise nominated for
election, and (ii) solicit the vote of such shareholders in favor of the
election, and against the removal from office, of the Cypress Director.

                                        9
<PAGE>

          (c) Cypress shall be entitled at any time (with or without cause) to
cause any Cypress Director or Cypress Observer nominated pursuant to Section
3.1(a) to be removed from the Board, and in such event the Company will take
such action as is reasonably required to effectuate such removal. In the event
that a vacancy is created at any time by the death, disability, retirement,
resignation or removal (with or without cause) of any director or observer
specified in Section 3.1(a), the Company shall cause the vacancy created thereby
to be filled by an appropriate individual designated by Cypress by written
notice as soon as reasonably practicable thereafter.

          (d) The Company shall reimburse each Cypress Director and Cypress
Observer for all reasonable out-of-pocket expenses of such director in
connection with the performance of his or her duties as director or observer (as
the case may be), and each such Cypress Director shall also be entitled to
receive compensation and indemnity arrangements equivalent to that received by
all other outside directors of the Company.

     Section 3.2 Committees. The Company shall cause the Cypress Director to be
included as a voting member of each of the Compensation Committee, the Corporate
Governance Committee and the Finance and Investment Committee; provided that
such Cypress Director satisfies the qualifications for membership on such board
committee as specified in the Sarbanes-Oxley Act and the NYSE Listing Rules.

     Section 3.3 D&O Insurance. At all times during which Cypress is entitled to
designate the Cypress Director or the Cypress Observer, the Company shall
maintain director and officer liability insurance for the Company and its
subsidiaries on same or similar terms as it currently maintains.

                                  ARTICLE IV
                                PREEMPTIVE RIGHTS

     Section 4.1 New Issuances of Securities.

          (a) Subject to Section 4.1(b), the Company shall not issue (an
"Issuance") any Ordinary Shares or Ordinary Share Equivalents unless, prior to
such Issuance, the Company notifies each of the Shareholders in writing of the
proposed Issuance and grants to each of the Shareholders the right (the
"Preemptive Right") to subscribe for and purchase a portion of such Ordinary
Shares or Ordinary Share Equivalents proposed to be issued at the same price per
security and upon the same terms and conditions (including, in the event such
securities are issued as a unit together with other securities, the purchase of
such other securities) as issued in the Issuance such that:

               (i) immediately after giving effect to the Issuance and exercise
          of the Preemptive Right, the Ordinary Shares and Ordinary Share
          Equivalents, on an as-converted basis, Beneficially Owned by each of
          the Shareholders shall represent on a fully diluted basis the same
          percentage of the aggregate number of Ordinary Shares outstanding on a
          fully diluted basis as was Beneficially Owned, on an as-converted
          basis, by such Shareholder immediately prior to the Issuance; and

                                       10
<PAGE>

               (ii) in the case of an Issuance in which only Ordinary Share
          Equivalents are to be issued, each of the Shareholders shall have the
          Preemptive Right to acquire a percentage of the Ordinary Share
          Equivalents to be issued in the Issuance equal to the percentage of
          the Ordinary Shares on a fully diluted basis that was Beneficially
          Owned, on an as-converted basis, by such Shareholder immediately prior
          to the Issuance.

          (b) The preemptive rights set forth in this Article IV shall not be
applicable to the issuance of Ordinary Shares or Ordinary Share Equivalents (i)
in connection with an employee stock option plan or other bona fide employment
compensation arrangement that is approved by the Board, (ii) pursuant to a
ratable stock split, stock dividend, reclassification or recapitalization, (iii)
pursuant to the exercise of any option, warrant or convertible security (A)
issued and outstanding on the date hereof, or (B) theretofore issued in an
Issuance for which the Shareholders were permitted to exercise their Preemptive
Rights pursuant to this Section 4.1, (iv) pursuant to a Public Offering, (v)
pursuant to the Securities Purchase Agreement, (vi) pursuant to any conversion
of the Purchased Securities, or (vii) as consideration issued to the security
holders of an acquired company pursuant to a bona fide acquisition by the
Company or any of its subsidiaries.

     Section 4.2 Exercise of Preemptive Rights.

          (a) Not less than 20 days prior to the date of the proposed Issuance,
the Company shall send a written notice to each Shareholder stating the number
of Ordinary Shares or Ordinary Share Equivalents to be offered in such Issuance
and the price and terms on which it proposes to offer such Ordinary Shares or
Ordinary Share Equivalents.

          (b) Within 15 days after the receipt of the notice, each Shareholder
may elect, by written notice to the Company, to purchase Ordinary Shares or
Ordinary Share Equivalents, at the price and on the terms specified in the
notice, up to an amount equal to the product of the number of Ordinary Shares or
Ordinary Share Equivalents of each class offered for sale by the Company
multiplied by a fraction, the numerator of which is the number of Ordinary
Shares and Ordinary Share Equivalents Beneficially Owned by such Shareholder and
the denominator of which is the number of Ordinary Shares and Ordinary Share
Equivalents Beneficially Owned by all of the holders of outstanding Ordinary
Shares or Ordinary Share Equivalents, calculated on a fully-diluted basis.

          (c) The closing of the purchase of Ordinary Shares or Ordinary Share
Equivalents subscribed for by the Shareholders pursuant to this Article IV shall
occur within 60 days after the last day that notices of the exercise of
Preemptive Rights are due to be received by the Company from the Shareholders
and concurrently with the closing of the Issuance.

     Section 4.3 Termination of Preemptive Rights. The Preemptive Rights
provided for in this Article IV shall terminate when the Shareholders no longer
Beneficially Own in the aggregate at least the lesser of (i) Ordinary Shares and
Ordinary Share Equivalents representing, on an as-converted basis, 9.9% or more
of the total voting power of the Company's then-outstanding Voting Securities or
(ii) Equity Securities of the Company that constitute 35% or

                                       11
<PAGE>

more of the Purchased Securities (on an as-converted basis) acquired by Cypress
on the Closing Date.

                                    ARTICLE V
                               INFORMATION RIGHTS

     Section 5.1 Information Rights. For so long as Cypress (including for
purposes of this Article V any Cypress Vehicles and any Cypress Co-investors)
Beneficially Owns in the aggregate Equity Securities at least the lesser of (i)
Ordinary Shares and Ordinary Share Equivalents representing, on an as-converted
basis, 9.9% or more of the total voting power of the Company's then-outstanding
Voting Securities or (ii) Equity Securities of the Company that constitute 35%
or more of the Purchased Securities (on an as-converted basis) acquired by
Cypress on the Closing Date, each Shareholder will be entitled to receive from
the Company (at the Company's expense) such monthly, quarterly and annual
financial and operating reports as they may reasonably request as soon as
reasonably practicable following the end of each such period.

     Section 5.2 VCOC Investor Information Rights.

          (a) The Company shall, at its expense, for each entity included within
the definition of "Cypress" and any Cypress Vehicle or Cypress Coinvestor that
is intended to qualify as a "venture capital operating company" within the
meaning of 29 C.F.R. ss. 2510.3-101(d) (each such entity, Cypress Vehicle and
Cypress Coinvestor, a "VCOC Investor") and for so long as any such VCOC Investor
continues to hold any Equity Securities or other securities of the Company:

               (i) provide each VCOC Investor or its designated representative
          with (A) the right to inspect and copy the books and records of the
          Company and its subsidiaries, (B) copies of all audited financial
          statements of the Company and its subsidiaries and (C) copies of all
          materials provided to the Board;

               (ii) make appropriate officers and/or directors of the Company
          available periodically for consultation with each VCOC Investor or its
          designated representative with respect to matters relating to the
          business and affairs of the Company, including significant changes in
          management personnel and compensation of employees, introduction of
          new products or services or new lines of business, the purchasing or
          selling of important trademarks, licenses or concessions or the
          proposed commencement or compromise of significant litigation;

               (iii) to the extent consistent with applicable law (and with
          respect to events which require public disclosure, only following the
          Company's public disclosure thereof through applicable securities law
          filings or otherwise), inform each VCOC Investor or its designated
          representative in advance with respect to any significant corporate
          actions, including extraordinary dividends, mergers, acquisitions or
          dispositions of assets, issuances of significant amounts of debt or
          equity and material amendments to the constituent documents of the
          Company

                                       12
<PAGE>

          and its principal subsidiaries, and provide the VCOC Investor or its
          designated representative with the right to consult with the Company
          with respect to such actions; and

               (iv) provide each VCOC Investor or its designated representative
          with such other rights of consultation which the VCOC Investor's
          counsel may determine to be reasonably necessary under applicable
          legal authorities promulgated after the date of this Agreement to
          qualify its investment in the Company as a "venture capital
          investment" for purposes of the United States Department of Labor
          Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i).

The obligation of the Company to deliver the materials described in clause
(i)(B) and (C) above shall be deemed satisfied if delivered by the Company to a
designated representative of the VCOC Investors (it being understood that the
designated representative shall be entitled to distribute copies of such
materials to each VCOC Investor).

          (b) The Company agrees to consider, in good faith, the recommendations
of each VCOC Investor or its designated representative in connection with the
matters on which it is consulted as described above, it being understood that
the ultimate discretion with respect to such matters shall be retained by the
Company.

          (c) Each VCOC Investor agrees to and shall keep strictly confidential
and shall not disclose or divulge any confidential, proprietary or secret
information ("Confidential Information") which such VCOC Investor obtains as a
result of this Section 5.2; provided that any VCOC Investor may disclose such
information to any of its auditors, attorneys and other representatives who
agree to be bound by the provisions of this Section 5.2(c). In the event that
any VCOC Investor or any Person to whom such VCOC Investor is entitled to
disclose information hereunder is required to disclose any Confidential
Information in order to comply with applicable law, regulation or legal or
judicial process (by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigation demand or similar process), such
VCOC Investor shall in advance of such disclosure provide the Company with
prompt notice of such requirement(s) and shall cooperate with the Company so
that the Company may, at its expense, seek a protective order or other
appropriate remedy. If, in the absence of a protective order or the receipt of a
waiver from the Company after a request in writing therefor is made by such VCOC
Investor (such request to be made as soon as reasonably practicable to allow the
Company a reasonable amount of time to respond thereto), such VCOC Investor or
other Person is legally required to disclose Confidential Information, such VCOC
Investor or other Person may disclose such information without liability
hereunder. The term Confidential Information shall not include information (i)
which is or becomes generally available to the public other than as a result of
disclosure of such information by any VCOC Investor in violation of this Section
5.2 or any Person to whom such VCOC Investor is entitled to disclose such
information hereunder, (ii) which is or becomes available to the recipient of
such information on a non-confidential basis from a source which is not, to the
recipient's knowledge, bound by a confidentiality or other similar agreement or
any other legal or fiduciary obligation to the Company or its subsidiaries which
prohibits disclosure of such information or (iii) information that was known by
such VCOC Investor prior to disclosure by the Company (as evidenced by

                                       13
<PAGE>

written records), provided that such information was not known by such VCOC
Investor to be subject to any legal or contractual obligation of confidentiality
owed to the Company.

          (d) In the event a VCOC Investor transfers all or any portion of the
Equity Securities or any other securities of the Company to an entity (or to a
direct or indirect wholly-owned conduit subsidiary of any such entity) that is
intended to qualify as a "venture capital operating company", such entity shall
be afforded the same rights with respect to the Company afforded to the VCOC
Investor pursuant to this Section 5.2 and shall be treated, for such purposes,
as a third party beneficiary under this Agreement.

                                   ARTICLE VI
                               REGISTRATION RIGHTS

     Section 6.1 Demand Registration.

          (a) Demand Registration. At any time commencing 45 days prior to the
end of the Transfer Restriction Period, any Holder (the "Demand Holder") shall
have the right to require the Company to file a Registration Statement in
respect of all or a portion of the Registrable Securities of such Demand Holder
(a "Demand Registration"), by delivering to the Company written notice stating
that such right is being exercised, specifying the number of the Registrable
Securities to be included in such registration and describing the intended
method of distribution thereof (a "Demand Notice"); provided, however, that the
Company shall not be required to file a Registration Statement unless the total
aggregate proposed offering price of the Registrable Securities, as of the date
of the Demand Notice, proposed to be registered by the Demand Holder pursuant to
such Registration Statement shall be at least US$ 25 million. Within 10 Business
Days after receiving such Demand Notice, the Company shall give written notice
to all other Holders of such proposed Demand Registration. As promptly as
practicable, but in no event later than 45 days after the Company receives a
Demand Notice, the Company shall file with the Commission and thereafter use its
reasonable best efforts to cause to be declared effective as promptly as
practicable a Registration Statement providing for the registration of such
number of Registerable Securities that the Demand Holder shall have demanded be
registered for distribution in accordance with such intended method of
distribution, together with such number of Registrable Securities as may have
been requested to be included by the other Holders by written notice to the
Company within 15 Business Days after the date of the aforesaid notice from the
Company.

          (b) Number of Demand Registrations. The Holders shall be entitled to
request an aggregate of six Demand Registrations pursuant to this Section 6.1;
provided, however, that the Holders shall not be entitled to request more than
two (2) Demand Registrations during any 12-month period. A registration shall
not count as one of the permitted Demand Registrations unless (i) it has been
declared or ordered effective and (ii) it shall have remained effective for the
applicable period specified in Section 6.1(e).

          (c) Shelf Registrations. Notwithstanding anything to the contrary in
this Section 6.1, if the Company is eligible to register the Registrable
Securities on Form S-3 (or F-3), the Holders shall have the right to require up
to four of such number of Demand Registrations permissible under Section 6.1 to
be "shelf" registrations pursuant to Rule 415 promulgated under

                                       14
<PAGE>

the Securities Act. The Company shall be required to keep effective each such
"shelf" Registration Statement for a period of one year, subject to paragraph
(e) below.

          (d) Subsequent Shelf Registrations. If the shelf registration referred
to in Section 6.1(c) ceases to be effective for any reason at any time during
the Effectiveness Period (other than because of the sale of all of the
securities registered thereunder), the Company shall use its reasonable best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend such shelf registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company shall use its reasonable efforts to
cause the Subsequent Shelf Registration to be declared effective under the
Securities Act as soon as practicable after such filing and to keep such
Registration Statement continuously effective for a period of one year.

          (e) Effectiveness of Registration Statements. Subject to Section
6.1(e), upon the occurrence of any event that would cause the Registration
Statement (i) to contain a material misstatement or omission or (ii) to be not
effective and usable for resale of Registrable Securities during the period that
such Registration Statement is required to be effective and usable, the Company
shall file an amendment to the Registration Statement as soon as reasonably
practicable, in the case of clause (i), correcting any such misstatement or
omission and, in the case of either clause (i) or (ii), use its reasonable best
efforts to cause such amendment to be declared effective and such Registration
Statement to become usable as soon as reasonably practicable thereafter. The
Company agrees to use its reasonable best efforts to keep any Registration
Statement filed pursuant to this Section 6.1 continuously effective and usable
for the sale of Registrable Securities until the earlier of (A) 120 days from
the date on which the Commission declares such Registration Statement effective
(or one year in the case of a shelf Registration Statement filed pursuant to
Section 6.1(c) or (d)) or (B) all the Registrable Securities covered by such
Registration Statement have been sold pursuant to such Registration Statement,
if earlier, in either case as such period may be extended pursuant to this
Section 6.1.

          (f) Restrictions on Demand Registrations. The Company shall have the
right to delay the filing of any Registration Statement otherwise required to be
prepared and filed by the Company pursuant to this Section 6.1, or to suspend
the use of any Registration Statement, for such period as set forth below (a
"Delay Period"), if:

               (i) the Board determines that, in the Board's reasonable judgment
          and good faith, the registration and distribution of the Registrable
          Securities covered or to be covered by such Registration Statement
          would materially interfere with any pending material financing,
          acquisition, reorganization or other material transaction involving
          the Company or any of its subsidiaries or would require disclosure of
          any other material corporate development that the Company is not
          otherwise required to disclose and, in any such case, such
          interference or disclosure would be significantly detrimental to the
          Company and its shareholders, for a period not in excess of 75
          consecutive days or more than 120 days in any 12-month period; or

                                       15
<PAGE>

               (ii) the Demand Registration would require that the Company
          prepare audited financial statements as of a date other than its
          fiscal year end, until such time as year-end audited financial
          statements become available.

               (iii) The Company will promptly give the Demand Holder written
          notice of such determination and an approximation of the period of the
          anticipated delay. The Demand Holder agrees to cease all public
          disposition efforts under such Registration Statement with respect to
          Registrable Securities immediately upon receipt of notice of the
          beginning of any Delay Period. The Company shall provide written
          notice to the Demand Holder of the end of each Delay Period. The time
          period for which the Company is required to maintain the effectiveness
          of a Registration Statement referred to in Section 6.1(d) hereto shall
          be extended by the aggregate number of days of all Delay Periods and
          Interruption Periods affecting such Registration.

          (g) Other Registration Rights.

               (i) The Company represents and warrants that it has not entered
          into any agreement granting any other holders of securities of the
          Company ("Other Security Holders") (A) rights to include their
          securities in Demand Registrations, except for registration rights
          pursuant to (1) the Omnibus Registration Rights Agreement dated
          November, 1998 by and among the Company and the initial shareholders
          of the Company parties thereto, (2) the Registration Rights Agreement
          dated December 31, 2001 between the Company and Pacific Life Insurance
          Company, and (3) the Registration Rights Agreement dated November 22,
          2002 by and among the Company, Bear, Stearns & Co. Inc. and Putnam
          Lovell Securities Inc., (B) any other registration rights in which the
          Other Security Holders have the right to include Registrable
          Securities on a priority basis more favorable to such Other Security
          Holders than is provided to the Holders pursuant to Section 6.2(b) or
          (C) rights which are otherwise inconsistent with the rights granted to
          the Holders of Registrable Securities in this Agreement or otherwise
          conflict with the provisions hereof.

               (ii) Other Registration Rights. If the Company at any time grants
          to any other holders of its securities any rights to register such
          securities under the Securities Act on terms more favorable to such
          holders than the terms set forth in this Article VI, then the terms of
          this Agreement shall be deemed amended or supplemented to the extent
          necessary to provide the Holders with such more favorable rights or
          benefits and the Company shall promptly give written notice to the
          Holders describing such deemed amendments or supplements.

          (h) Withdrawal of Demand Notice. In connection with a Demand Notice
delivered by the Demand Holder pursuant to this Section 6.1, the Demand Holder
may, at any time prior to the effective date of the Registration Statement in
respect thereof, withdraw such Demand Notice by providing written notice to
Company to such effect; provided, however, that no such withdrawn Demand Notice
shall be deemed to have been a Demand Registration if (i) such Demand Notice is
withdrawn prior to the filing by the Company of a Registration Statement
pursuant thereto, (ii) the Demand Holder elects to bear all expenses associated
with such withdrawn Demand Notice and the Registration

                                       16
<PAGE>

Statement pursuant thereto, or (iii) such withdrawal is due to the disclosure of
material adverse information relating specifically to the Company that was not
known by the Demand Holder at the time it submitted its Demand Notice.

          (i) Preemption of Demand Registration. Notwithstanding anything to the
contrary contained herein, after receiving a written request for a Demand
Registration, the Company may elect to effect an underwritten primary
registration in lieu of the Demand Registration if the Board believes that such
primary registration would be in the best interests of the Company. If the
Company so elects to effect a primary registration, the Company shall give
prompt written notice (which shall be given not later than 20 days after the
date of the Demand Notice) to all of the Holders of its intention to effect such
a registration and shall afford the Holders the rights contained in Section 6.2
with respect to Piggyback Registrations. In the event that the Company so elects
to effect a primary registration after receiving a request for a Demand
Registration, the Company shall use its reasonable best efforts to have the
Registration Statement declared effective by the Commission as soon as
reasonably practicable. In addition, the request for a Demand Registration shall
be deemed to have been withdrawn and such primary registration shall not be
deemed to be a Demand Registration.

          (j) Priority on Demand Registration. If a Demand Registration involves
an underwritten offering by or through one or more underwriters of recognized
standing and the lead underwriters advise the Demand Holders that, in their good
faith judgment, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
materially and adversely affecting the marketability of the offering, then the
Company will include in the Registration Statement relating to such
registration: (i) first, if the Demand Holders include Cypress, the number of
Registrable Securities requested to be included in such registration by Cypress,
reduced on a pro rata basis based on the amount of Registrable Securities owned
by Cypress; (ii) second, the number of Registrable Securities requested to be
included in such registration by all other Demand Holders, reduced on a pro rata
basis based on the amount of Registrable Securities owned by such requesting
Demand Holders; and (iii) third, the number of Registrable Securities which the
Other Security Holders and the Company have requested to be included in such
registration which can be sold without such adverse effect referred to above.

     Section 6.2 Piggyback Registrations.

          (a) Right to Piggyback. Whenever the Company proposes to register any
of its Ordinary Shares or Ordinary Share Equivalents (other than Registrable
Securities) under the Securities Act (other than a registration statement on
Form S-4 (or F-4) or S-8 (or F-8) (or any successor forms to such Forms)),
whether or not for sale for its own account, the Company will give prompt
written notice of such proposed filing to each of the Holders at least 30 days
before the anticipated filing date. Such notice shall offer each Holder the
opportunity to register such amount of Registrable Securities of such Holder as
it shall request (a "Piggyback Registration"). Subject to Sections 6.2(b) and
6.2(c), the Company shall include in each such Piggyback Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 days after such notice has been given
by the requesting Holder(s) to the Company. If the Registration Statement
relating to the Piggyback Registration

                                       17
<PAGE>

is to cover an underwritten offering, such Registrable Securities shall be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. The requesting Holder(s) shall be
permitted to withdraw all or part of the Registrable Securities from a Piggyback
Registration at any time prior to the effective time of such Piggyback
Registration.

          (b) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company by or through one
or more underwriters of recognized standing and the lead underwriters advise the
Company that, in their good faith judgment, the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the marketability of the
offering, then the Company will include in the Registration Statement relating
to such registration (i) first, the securities the Company proposes to sell, and
(ii) second, the Registrable Securities requested to be included in such
registration by the Holder(s) and any Other Security Holders reduced on a pro
rata basis, based on the amount of Registrable Securities owned by the
requesting Holder(s) and, if applicable, the securities owned by each such Other
Security Holder.

          (c) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of Other Security Holders by
or through one or more underwriters of recognized standing and the lead
underwriters advise the Company that, in their good faith judgment, the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the marketability of the offering, the Company will include in such registration
the securities owned by such Other Security Holders and the Registrable
Securities requested to be included in such registration by the Holder(s),
reduced, in each case, on a pro rata basis, based on the amount of Registrable
Securities owned by the requesting Holder(s) and the securities owned by each
such Other Security Holder.

     Section 6.3 Hold-Back Agreements.

          (a) Company Holdback. The Company agrees (i) if so required by the
lead underwriters of an underwritten offering effected pursuant to a
Registration Statement under Section 6.1 or 6.2, not to effect any public or
private sale or distribution of securities of the same type (including any
underlying securities) as the Registrable Securities included in such
underwritten registration, or any securities convertible into or exchangeable or
exercisable for such securities, during the ten (10) days prior to the pricing
of such offering and until the earlier of (A) the end of the 90-day period
beginning on the date of pricing of such offering (except as part of such
underwritten offering and except pursuant to registrations on Form S-4 (or F-4)
or Form S-8 (or F-8) (or any successor forms to such Forms)), unless the lead
underwriters for such offering otherwise agree, and (B) the abandonment of such
offering, and (ii) to use its reasonable best efforts to cause each (A) director
and executive officer of the Company, and (B) Person who then Beneficially Owns
more than 5% of the Ordinary Shares, or Ordinary Share Equivalents, to agree not
to effect any public or private sale or distribution or otherwise dispose
(including sales pursuant to Rule 144 promulgated under the Securities Act) of
any Ordinary Shares or Ordinary Share Equivalents during such period (except as
part of such underwritten registration, if otherwise permitted), unless the lead
underwriters for such offering otherwise agree.

                                       18
<PAGE>

          (b) Holder Holdback. If the Company registers Ordinary Shares or
Ordinary Share Equivalents in connection with an underwritten public offering of
such Ordinary Shares by the Company, the Holders, if so required by the lead
underwriters of such underwritten offering, agree not to effect any public sale
or distribution of any of the Registrable Securities, including any sale
pursuant to Rule 144 promulgated under the Securities Act (other than as a part
of such underwritten public offering) without the consent of the Company or such
lead underwriters during the period commencing on a date specified by the lead
underwriters, such date not to exceed 10 days prior to the effective date of
such Registration Statement, and ending on the earlier of (i) 90 days after the
pricing of such offering, unless the lead underwriters for such offering
otherwise agree, (ii) the abandonment of such offering and (iii) the first date
on which the Company or any director, executive officer or other Affiliate of
the Company is permitted to sell Ordinary Shares.

     Section 6.4 Registration Procedures. Whenever the Company is required to
register Registrable Securities pursuant to Section 6.1 or 6.2, the Company will
use its reasonable best efforts to effect the registration to permit the sale of
such Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:

          (a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities as prescribed by Section 6.1 or 6.2 on a
form available for the sale of the Registrable Securities by the Holders in
accordance with the intended method or methods of distribution thereof and use
its reasonable best efforts to cause each such Registration Statement to become
and remain effective within the time periods and otherwise as provided herein;

          (b) prepare and file with the Commission such amendments (including
post-effective amendments) to the Registration Statement and such supplements to
the prospectus as may be necessary to keep such Registration Statement effective
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Registration Statement (or such shorter time as is provided in Section
6.1(d));

          (c) furnish to the Holders of such Registrable Securities and to each
underwriter, if any, such number of copies of such Registration Statement, each
amendment and post-effective amendment thereto, the prospectus included in such
Registration Statement (including each preliminary prospectus and any supplement
to such prospectus and any other prospectus filed under Rule 424 of the
Securities Act), in each case including all exhibits, and such other documents
as the Holders of such Registrable Securities may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holders
or to be disposed of by such underwriter (the Company hereby consenting to the
use in accordance with all applicable law of each such Registration Statement
(or amendment or post-effective amendment thereto) and each such prospectus (or
preliminary prospectus or supplement thereto) by such Holders and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Registration Statement or prospectus);

                                       19
<PAGE>

          (d) use its reasonable best efforts to register or qualify and, if
applicable, to cooperate with the Holders of such Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, the Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Holders of such
Registrable Securities or lead underwriters (if any) shall reasonably request,
to keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided, however, that the
Company will not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph or (ii) to consent to general service of process or taxation in any
such jurisdiction where it is not so subject;

          (e) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which securities of the
same class as the Registrable Securities are then listed and, if not so listed,
to be listed on NASDAQ or a national securities exchange selected by the
Company;

          (f) provide a transfer agent and registrar for all such Registrable
Securities and a CUSIP number or other recognized securities identification
number for all such Registrable Securities not later than the effective date of
such Registration Statement;

          (g) comply with all applicable rules and regulations of the
Commission, and make available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (or in each case within
such shorter period of time as may be required by the Commission for filing the
applicable report with the Commission) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in an
underwritten offering or (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company after the
effective date of a Registration Statement, which earnings statement shall cover
said 12-month period;

          (h) use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities included therein for sale in any jurisdiction, and, in the event of
the issuance of any stop order suspending the effectiveness of a Registration
Statement, or of any order suspending the qualification of any Registrable
Securities included in such Registration Statement for sale in any jurisdiction,
the Company will use its reasonable best efforts promptly to obtain the
withdrawal of such order at the earliest possible moment;

          (i) obtain "cold comfort" letters and updates thereof (which letters
and updates (in form, scope and substance) shall be reasonably satisfactory to
the lead underwriters, if any, and the Holders of such Registrable Securities)
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public

                                       20
<PAGE>

accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each of the
underwriters, if any, and the Holders of such Registrable Securities, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings and
such other matters as the lead underwriters, if any, or the Holders of such
Registrable Securities may reasonably request;

          (j) obtain opinions of independent counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the lead underwriters, if any, and the Holders of
such Registrable Securities), addressed to the Holders of such Registrable
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions of issuer's counsel requested in underwritten
offerings, such as the effectiveness of the Registration Statement and such
other matters as may be reasonably requested by such counsel and lead
underwriters, if any;

          (k) promptly notify the Holders of such Registrable Securities and the
lead underwriters, if any, and confirm such notice in writing:

               (i) when a prospectus or any supplement or post-effective
          amendment to such prospectus has been filed and, with respect to a
          Registration Statement or any post-effective amendment thereto, when
          the same has become effective,

               (ii) of any request by the Commission or any other federal or
          state governmental authority for amendments or supplements to a
          Registration Statement or related prospectus or for additional
          information,

               (iii) of the issuance by the Commission of any stop order
          suspending the effectiveness of a Registration Statement or of any
          order preventing or suspending the use of any prospectus or the
          initiation of any proceedings by any Person for that purpose,

               (iv) of the receipt by the Company of any notification with
          respect to the suspension of the qualification or exemption from
          qualification of a Registration Statement or any of the Registrable
          Securities for offer or sale under the securities or blue sky laws of
          any jurisdiction, or the contemplation, initiation or threatening of
          any proceeding for such purpose, and

               (v) of the happening of any event or the existence of any facts
          that make any statement made in such Registration Statement or
          prospectus untrue in any material respect or that require the making
          of any changes in such Registration Statement or prospectus so that it
          will not contain any untrue statement of a material fact or omit to
          state any material fact required to be stated therein or necessary to
          make the statements therein, in light of the circumstances under which
          they were made (in the case of any prospectus), not misleading (which
          notice shall be accompanied by an instruction to the Holders of such

                                       21
<PAGE>

          Registrable Securities and the lead underwriters, if any, to suspend
          the use of the prospectus until the requisite changes have been made);

          (l) if requested by the lead underwriters, if any, or the Holders of
such Registrable Securities, promptly incorporate in a prospectus, supplement or
post-effective amendment such information as the lead underwriters, if any, and
such Holders reasonably request to be included therein relating to the sale of
the Registrable Securities, including, without limitation, information with
respect to the number of shares of Registrable Securities being sold to the
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering, and make all required filings of such
prospectus, supplement or post-effective amendment promptly following
notification of the matters to be incorporated in such supplement or
post-effective amendment;

          (m) furnish to the Holders of such Registrable Securities and the lead
underwriters, without charge, at least one signed copy of the Registration
Statement;

          (n) as promptly as practicable upon the occurrence of any event
contemplated by clause 6.4(k)(v) above, prepare a supplement or post-effective
amendment to the Registration Statement or the prospectus, or any document
incorporated therein by reference, or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold hereunder, the prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated in a
Registration Statement or prospectus or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and

          (o) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders of such Registrable Securities or by
the lead underwriters (including cooperating in reasonable marketing efforts,
including participation by the senior executives of the Company in any
"roadshow" or similar meeting with potential investors) in order to expedite or
facilitate the disposition of such Registrable Securities and, in connection
therewith, provide indemnification provisions and procedures substantially to
the effect set forth in Section 6.6 with respect to all parties to be
indemnified pursuant to said Section.

          (p) The Holders of such Registrable Securities agree that, upon
receipt of written notice from the Company of the happening of any event of the
kind described in Section 6.4(k)(iii), (iv) or (v), such Holders will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement until such Holders' receipt of the copies of the
supplemented or amended Registration Statement contemplated by Section 6.4(n),
or until they are advised in writing by the Company that the use of the
applicable prospectus may be resumed, and have received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by
reference in such prospectus (such period during which disposition is
discontinued being an "Interruption Period"), and, if so directed by the
Company, such Holder will deliver to the Company all copies of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

                                       22
<PAGE>

     Section 6.5 Registration Expenses.

          (a) Expenses Generally. The Company shall bear all expenses incurred
in connection with the registration or attempted registration of the Registrable
Securities pursuant to Sections 6.1 and 6.2 of this Agreement as provided
herein. Such expenses shall include, without limitation, all printing, legal and
accounting expenses incurred by the Company or the Holders of such Registrable
Securities (including the reasonable fees and expenses of counsel to the Holders
of such Registrable Securities, provided that the Company shall be required to
bear the fees and expenses of no more than one deal counsel with respect to all
Holders, it being understood that local counsel shall not be deemed deal counsel
for such purposes) and all registration and filing fees imposed by the
Commission, any state securities commission or the principal national securities
exchange or national market system on which such Registrable Securities are then
traded or quoted. Notwithstanding the foregoing sentence, the Holders of such
Registrable Securities shall be responsible for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of Registrable
Securities.

          (b) Withdrawal of Registration Statement. The obligation of the
Company to bear the expenses described in Section 6.5(a) shall apply
irrespective of whether a registration, once properly demanded, if applicable,
becomes effective, is withdrawn or suspended or is converted to another form of
registration.

     Section 6.6 Indemnification.

          (a) Indemnification by Company. The Company agrees to indemnify, to
the fullest extent permitted by law, each Holder, each affiliate thereof and
each officer, director, employee, counsel, agent or representative of each
Holder and its Affiliates and each Person who controls any such Person (within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) against, and hold it and them harmless from, all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees and disbursements) and expenses, including expenses of
investigation (collectively, "Losses") arising out of, caused by or based upon
any untrue or alleged untrue statement of material fact contained in any
Registration Statement, or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (a "Misstatement/Omission"), or any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities law,
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities law; provided, however, that the Company shall not be
liable insofar as such Misstatement/Omission or violation is made in reliance
upon and in conformity with information furnished in writing to the Company by
such Holder expressly for use therein. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) to
the same extent as provided above with respect to the indemnification of the
Holder. This indemnity shall be in addition to any other indemnification
arrangements to which Company may otherwise be party.

                                       23
<PAGE>

          (b) Indemnification by Holder. In connection with any Registration
Statement in which a Holder is participating, such Holder agrees (severally and
not jointly with any other Holder) to indemnify, to the fullest extent permitted
by law, the Company and each Affiliate, employee, counsel, agent,
representative, director or officer of the Company and each Person who controls
the Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) against, and hold it harmless from, any Losses
arising out of or based upon any Misstatement/Omission contained in the
Registration Statement, if and to the extent that such Misstatement/Omission
arose out of or was based upon information furnished in writing by such Holder
expressly for use therein. The obligation of such Holder to indemnify will be
limited to the net amount of proceeds (net of payment of all expenses) received
by such Holder from the sale of Registrable Securities pursuant to such
Registration Statement giving rise to such indemnification obligation.

          (c) Conduct of Indemnification Proceedings. In case any action, claim
or proceeding shall be brought against any Person entitled to indemnification
hereunder, such indemnified party shall promptly notify each indemnifying party
in writing, and such indemnifying party shall assume the defense thereof
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses incurred in connection with the
defense thereof. The failure to so notify such indemnifying party shall not
affect any obligation it may have to any indemnified party under this Agreement
or otherwise except to the extent that (as finally determined by a court of
competent jurisdiction (which determination is not subject to review or appeal))
such failure materially prejudiced such indemnifying party. Each indemnified
party shall have the right to employ separate counsel in such action, claim or
proceeding and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of each indemnified party unless: (i) such
indemnifying party has agreed to pay such expenses; (ii) such indemnifying party
has failed promptly to assume the defense and employ counsel reasonably
satisfactory to such indemnified party; or (iii) the named parties to any such
action, claim or proceeding (including any impleaded parties) include both such
indemnified party and such indemnifying party or an affiliate or controlling
person of such indemnifying party, and such indemnified party shall have been
advised by counsel that either (A) there may be one or more legal defenses
available to it which are different from or in addition to those available to
such indemnifying party or such affiliate or controlling person or (B) a
conflict of interest may exist if such counsel represents such indemnified party
and such indemnifying party or its affiliate or controlling person; provided,
however, that such indemnifying party shall not, in connection with any one such
action or proceeding, or separate but substantially similar or related actions
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be responsible hereunder for the fees and expenses
of more than one separate firm of attorneys (in addition to any local counsel),
which counsel shall be designated by such indemnified party.

          (d) No indemnified party shall be liable for any settlement effected
without its written consent. Each indemnifying party agrees, jointly and
severally, that it will not, without the indemnified party's prior written
consent, consent to entry of any judgment or settle or compromise any pending or
threatened claim, action or proceeding in respect of which indemnification or
contribution may be sought hereunder unless the foregoing contains an
unconditional release, in form and substance reasonably satisfactory to the
indemnified parties, of the indemnified parties from all liability and
obligation arising therefrom. The indemnifying

                                       24
<PAGE>

party's liability to any such indemnified party hereunder shall not be
extinguished solely because any other indemnified party is not entitled to
indemnity hereunder.

          (e) Survival. The indemnification provided for under this Agreement
will (i) remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party, (ii) survive the transfer of securities and
(iii) survive the termination of this Agreement.

          (f) Right to Contribution. If the indemnification provided for in this
Section 6.6 is unavailable to, or insufficient to hold harmless, an indemnified
party under Section 6.6(a) or Section 6.6(b) above in respect of any Losses
referred to in such Sections, then each applicable indemnifying party shall have
an obligation to contribute to the amount paid or payable by such indemnified
party as a result of such Losses in such proportion as is appropriate to reflect
the relative fault of the Company, on the one hand, and of the indemnifying
Holder, on the other, in connection with the Misstatement/Omission which
resulted in such Losses, taking into account any other relevant equitable
considerations. The amount paid or payable by a party as a result of the Losses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 6.6(c) above, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation, lawsuit or legal or
administrative action or proceeding.

The relative fault of the Company, on the one hand, and of the indemnifying
Holder, on the other, shall be determined by reference to, among other things,
whether the relevant Misstatement/Omission relates to information supplied by
the Company or by such Holder and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
Misstatement/Omission.

The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 6.6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 6.6(e), none of the Holders shall be required to contribute any
amount in excess of the amount by which (i) the amount (net of payment of all
expenses) at which the securities that were sold by such Holder and distributed
to the public were offered to the public exceeds (ii) the amount of any damages
which such Holder has otherwise been required to pay by reason of such
Misstatement/Omission.

No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

     Section 6.7 Rules l44 and 144A. The Company shall timely file the reports
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 promulgated under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any Holder, make publicly available other information) and
will take such further action as any Holder may reasonably request, all to the
extent required from time to time to

                                       25
<PAGE>

enable the Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
and Rule 144A promulgated under the Securities Act, as such Rules may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission.

     Section 6.8 Underwritten Registrations. In the case of any underwritten
offering pursuant to a Demand Registration under Section 6.1, the lead
underwriters thereof shall be selected by the Holders and shall be reasonably
satisfactory to the Company.

     Section 6.9 Covenants of Holders. Each of the Holders hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information in
connection with the preparation of any Registration Statement and any filings
with any state securities commissions as the Company may reasonably request in
order to comply with applicable law and the Commission's rules and regulations,
(b) to the extent required by the Securities Act, to deliver or cause delivery
of the prospectus contained in any Registration Statement, and any amendment or
supplement thereto, to any purchaser from such Holder of the Registrable
Securities covered by the Registration Statement and (c) to notify the Company
within 10 days after any sale of Registrable Securities by such Holder.

     Section 6.10 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Article VI may be
assigned (but only together with all related obligations) by any Holder to (i)
any Affiliate of such Holder, or (ii) any transferee or assignee of such
Holder's Registrable Securities (to the extent permitted at such time by Article
II) representing (on an as-converted basis, if applicable) at least 1% of the
then-outstanding Ordinary Shares, provided that the Company is within a
reasonable time after such transfer or assignment furnished with written notice
of the name and address of such transferee or assignee and the amount and type
of Registrable Securities which have been so transferred or assigned.

                                  ARTICLE VII
                       ADDITIONAL COVENANT OF THE COMPANY

     Section 7.1 Limitation on Share Repurchases. The Company agrees that, prior
to the receipt of the Shareholder Approval, it shall not redeem or purchase any
Ordinary Shares or knowingly take any other action which would, in either case,
result, upon completion of such redemption or purchase, in the total Controlled
Shares (as defined in the Company's Articles of Association) of the Shareholders
(assuming that all of the securities of the Company held by the Shareholders,
other than Ordinary Shares, are immediately convertible, exchangeable or
exercisable, as applicable), as of such date, increasing to 25% or any higher
percentage of the issued and outstanding Ordinary Shares on an Unadjusted Basis
(as defined in the Company's Articles of Association).

                                  ARTICLE VIII
                                  MISCELLANEOUS

     Section 8.1 After-Acquired Securities. All of the provisions of this
Agreement shall apply to all of the Equity Securities now owned or that may be
issued to any Shareholder by the

                                       26
<PAGE>

Company in consequence of any additional issuance, exchange or reclassification
of any of the Equity Securities, corporate reorganization, or any other form of
recapitalization, consolidation, merger, share split or share dividend.

     Section 8.2 Injunctive Relief. Each party hereto acknowledges that it would
be impossible to determine the amount of damages that would result from any
breach of any of the provisions of this Agreement and that the remedy at law for
any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies which it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.

     Section 8.3 Successors and Assigns. The provisions of this Agreement shall
be binding upon and shall inure to the benefit of the Company, the Shareholders
and their permitted transferees (including any Affiliate of a Shareholder or
Cypress Vehicle or Cypress Co-investor that becomes a Shareholder pursuant to
Section 2.2 or 2.4) and any of the permitted successors of the foregoing. Except
to the extent set forth in Section 2.2, 2.4 or 6.10, no party hereto may assign
or delegate its rights or obligations hereunder and any such assignment or
delegation shall be void ab initio. Notwithstanding the foregoing, in the event
that a Failed Condition shall occur, the Shareholders may assign their rights
and obligations under this Agreement to any Person to whom they have transferred
Equity Securities in accordance with Article II representing (on an as-converted
basis) 50% or more of the Purchased Securities acquired by the Shareholders on
the Closing Date, provided such transferee shall have agreed to be bound by the
terms of this Agreement. Except as provided in Section 6.6, this Agreement is
not intended to confer upon any Person other than the parties hereto and their
permitted transferees any rights or remedies hereunder.

     Section 8.4 Amendments; Waiver.

          (a) This Agreement may only be amended by an agreement in writing
executed by the parties hereto.

          (b) Either party may waive in whole or in part any benefit or right
provided to it under this Agreement, such waiver being effective only if
contained in a writing executed by the waiving party. No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon breach
thereof shall constitute a waiver of any such breach or of any other covenant,
duty, agreement or condition, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.

                                       27
<PAGE>

     Section 8.5 Notices. Except as otherwise provided in this Agreement, all
notices, requests, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand, when delivered personally or by courier, three days after being
deposited in the mail (registered or certified mail, postage prepaid, return
receipt requested), or when received by facsimile transmission if promptly
confirmed by one of the foregoing means, as follows:

     If to the Company:

               Scottish Re Group Limited
               Crown House, Third Floor
               4 Par-la-Ville Road
               Hamilton HM12, Bermuda
               Attn: Paul Goldean, Esq.
               Facsimile: (441) 298-4364

      with a copy to:

               LeBoeuf, Lamb, Greene & MacRae, L.L.P.
               125 West 55th Street
               New York, NY 10019
               Attn:  Stephen G. Rooney, Esq.
               Facsimile:  (212) 424-8500

     If to the Shareholders:

               c/o The Cypress Group L.L.C.
               65 East 55th Street, 28th Floor
               New York, New York  10022
               Attn:  William L. Spiegel
               Facsimile:   (212) 705-0198

     with a copy to:

               Simpson Thacher & Bartlett LLP
               425 Lexington Avenue
               New York, NY 10022
               Attention:  Lee Meyerson
               Fax:  (212) 455-2502

or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.

     Section 8.6 Governing Law; Consent to Jurisdiction and Services of Process;
Waiver of Jury Trial.

                                       28
<PAGE>

          (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

          (b) Each party to this Agreement hereby irrevocably and
unconditionally, with respect to any matter or dispute arising under, or in
connection with, this Agreement:

               (i) submits for itself and its property in any Action relating to
          this Agreement, or for recognition and enforcement of any judgment in
          respect thereof, to the exclusive general jurisdiction of the courts
          of the State of New York, the courts of the United States of America
          for the Southern District of New York, and appellate courts from any
          thereof (and covenants not to commence any Action in any other venue
          or jurisdiction);

               (ii) consents that any such Action may be brought in such courts
          and waives any objection that it may now or hereafter have to the
          venue of any such Action in any such court or that such Action was
          brought in an inconvenient court and agrees not to plead or claim the
          same;

               (iii) agrees that service of process in any such Action will be
          in accordance with the Laws of the State of New York;

               (iv) waives in connection with any such Action any and all rights
          to a jury trial; and

               (v) agrees that nothing herein shall affect the right to effect
          service of process in any other manner permitted by Law.

     Section 8.7 Headings. The descriptive headings of the several sections in
this Agreement are for convenience only and do not constitute a part of this
Agreement and shall not be deemed to limit or affect in any way the meaning or
interpretation of this Agreement.

     Section 8.8 Entire Agreement. This Agreement and the other Transaction
Agreements (as defined in the Securities Purchase Agreement), the exhibits and
schedules hereto and thereto and any other documents delivered pursuant hereto
and thereto and the Confidentiality Agreement (as defined in the Securities
Purchase Agreement) constitute the full and entire understanding and agreement
between the parties with regard to the subject matters hereof and supersede all
prior understandings and agreements, and no party shall be liable or bound to
any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and in the Transaction
Agreements and in the Confidentiality Agreement.

     Section 8.9 Severability. If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.

                                       29
<PAGE>

     Section 8.10 Counterparts. This Agreement may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

                                       30
<PAGE>

     IN WITNESS WHEREOF, the Company and the Shareholders have caused this
Agreement to be duly executed by their respective authorized officers as of the
date first above written.

                                    SCOTTISH RE GROUP LIMITED

                                    By:
                                       ------------------------------------
                                       Name:
                                       Title:

                                    CYPRESS MERCHANT B PARTNERS II
                                    (CAYMAN) L.P.

                                    By: Cypress Associates II (Cayman) L.P.,
                                        its general partner

                                        By:CMBP II (Cayman) Ltd., its
                                           general partner

                                           By:__________________________
                                              Name:
                                              Title:

                                    CYPRESS MERCHANT BANKING II-A C.V.

                                    By: Cypress Associates II (Cayman) L.P.,
                                        its managing general partner

                                        By:CMBP II (Cayman) Ltd., its
                                           general partner

                                           By:__________________________
                                              Name:
                                              Title:

                                       31
<PAGE>

                                    CYPRESS SIDE-BY-SIDE (CAYMAN) L.P.

                                    By: Cypress Associates II (Cayman) L.P.,
                                        its general partner

                                        By:CMBP II (Cayman) Ltd., its
                                           general partner

                                           By:__________________________
                                              Name:
                                              Title:

                                    55TH STREET PARTNERS II (CAYMAN) L.P.

                                    By: Cypress Associates II (Cayman) L.P.,
                                        its general partner

                                        By:CMBP II (Cayman) Ltd., its
                                           general partner

                                            By:__________________________
                                               Name:
                                               Title:

                                       32

<PAGE>

                                    EXHIBIT D

              FORM OF AMENDED AND RESTATED ARTICLES OF ASSOCIATION

              Text of the Amendments to the Articles of Association

BE IT RESOLVED, by special resolution, that the following articles of the
Articles of Association of the Company be amended and restated in their entirety
to read as set forth below:

                  6. (b) Notwithstanding Article 6(a) of these Articles, the
                  Company shall not issue any shares in a manner that the Board
                  of Directors of the Company believes would cause, by reason of
                  such issuance, the total Controlled Shares of any Person to
                  equal or exceed 10% of a class of the Company's shares;
                  provided, however, that this provision shall not apply to (i)
                  the issuance of shares to Cypress Merchant B Partners II
                  (Cayman) L.P., Cypress Merchant Banking II-A C.V., 55th Street
                  Partners II (Cayman) L.P., Cypress Side-by-Side (Cayman) L.P.
                  (the "Cypress Purchasers") and any other Shareholder (as such
                  capitalized term is determined by the Board of Directors by
                  reference to the definition of such term in the Shareholders'
                  Agreement by and among the Company and the Cypress Purchasers
                  dated as of December [ ], 2004) (together with the Cypress
                  Purchasers, the "Cypress Entities" and each, a "Cypress
                  Entity") in such amount so that the Cypress Entities'
                  Controlled Shares do not exceed 24.9% of a class of the
                  Company's shares and (ii) any issuance of shares to a person
                  acting as an underwriter in the ordinary course of its
                  business, purchasing such shares pursuant to a purchase
                  agreement to which the company is a party, for resale.

                  9. (b) Except with respect to transfers of the Company's
                  shares executed on any recognized securities exchange or
                  inter-dealer quotation system, including without limitation
                  the New York Stock Exchange and the Nasdaq National Market,
                  the Directors shall decline to register a transfer of shares
                  if the Directors have reason to believe that the effect of
                  such transfer would be to increase the number of total
                  Controlled Shares of any Person to ten percent (10%) or any
                  higher percentage of a class of the Company's shares on an
                  Unadjusted Basis. Notwithstanding the foregoing, the Cypress
                  Entities shall each be permitted to transfer shares of the
                  Company to another Cypress Entity, provided that the
                  Controlled Shares of the Cypress Entities in the aggregate do
                  not exceed 24.9% of a class of the Company's shares.

                  47. (a) (i) Subject to Article 6, every Member of record
                  present in person or by proxy shall have one vote for each
                  issued and outstanding Ordinary Share registered in his name
                  in the register; PROVIDED THAT, subject to the following
                  provisions of this Article 47, if and for so long as the
                  number of Controlled Shares of any Person other than a Cypress
                  Entity would constitute 10% or more of the total combined
                  voting rights attaching to the issued shares of the Company
                  (calculated after giving effect to any prior reductions in
                  voting rights attaching to Controlled Shares of other persons
                  as provided in this Article 47), or the total number of
                  Controlled Shares of the Cypress Entities would constitute 25%
                  or more of the total combined voting rights attaching to the
                  issued Shares of the Company (calculated after giving effect
                  to any prior reductions in voting rights attaching to
                  Controlled Shares of other persons as provided in this Article
                  47), each such issued Controlled Share, regardless of the
                  identity of the registered holder thereof, shall confer only a
                  fraction of a vote as determined by the following formula (the
                  "Formula"):

                                    (T-C)/(XxC)

                  Where:   "T" is the aggregate number of votes conferred by all
                  the issued shares immediately prior to that application of the
                  Formula adjusted to take into account any prior reduction
                  taken with respect to any other Member pursuant to Article
                  47(d) as at the same date;

                                    "C" is the number of issued Controlled
                  Shares attributable to such Person;

                  "X" is (i) 9.1 if such Person is any Person other than a
                  Cypress Entity or (ii) 3.016 if the Formula is being applied
                  to determine the reduction in total combined voting rights
                  attributable to the total number of Controlled Shares of the
                  Cypress Entities.47. The Formula shall be applied successively
                  as many times as may be necessary to ensure that no Person
                  other than a Cypress Entity shall be a 10% Shareholder at any
                  time, and that the voting rights attached to the Controlled
                  Shares of the Cypress Entities shall not exceed 24.9% at any
                  time. For the purposes of determining the votes exercisable by
                  Members as at any date, the Formula shall be applied first to
                  the votes of Controlled Shares attributable to the Person to
                  whom the greatest number of Controlled Shares are attributed
                  and successively to the Controlled Shares attributable to
                  them, in each case calculations being made on the basis of the
                  aggregate number of votes conferred by the issued shares as at
                  such date as reduced by the application of the Formula to any
                  larger number of Controlled Shares as at such date.

                  47. (e) Notwithstanding the provisions of Articles 47(a) and
                  (d) above, having applied the provisions thereof as best as
                  they consider reasonably practicable, the Directors may make
                  such final adjustments to the aggregate number of votes
                  attaching to the shares of any Member that they consider fair
                  and reasonable in all the circumstances to ensure that no
                  Person other than a Cypress Entity shall be a 10% Shareholder
                  at any time, and that the voting rights attached to the
                  Controlled Shares of the Cypress Entities shall not exceed
                  24.9% at any time.

                  89. If the Company redeems or purchases shares or directs the
                  sale and transfer of such shares pursuant to this Article 89,
                  it shall do so only in a manner the Board believes would not
                  result, upon consummation of such redemption or purchase, in
                  the total number of Controlled Shares of any Person other than
                  a Cypress Entity, increasing to ten percent (10%) or any
                  higher percentage of a class of the Company's shares on an
                  Unadjusted Basis or the total number of Controlled Shares of
                  the Cypress Entities increasing to twenty-five percent (25%)
                  or any higher percentage of a class of the Company's shares on
                  a Unadjusted Basis.

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