Document:

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                                                                   EXHIBIT 10.24

                   MODUS MEDIA INTERNATIONAL HOLDINGS, INC.

                     1997 CLASS B REPLACEMENT OPTION PLAN
                     ------------------------------------

1.   PURPOSE
     -------

     The purpose of this 1997 Class B Replacement Option Plan (the "Plan") is to
enable Modus Media International Holdings, Inc., a Delaware corporation (the
"Company"), to grant options to purchase Common Stock of the Company, $.O1 par
value per share ("Common Stock") to certain individuals who hold options to
purchase Class B Common Stock, $.O1 par value per share, previously granted to
each such individual by Stream International Inc., a Delaware corporation
(formerly known as "Stream International Holdings Inc.") ("Stream") under its
1995 Replacement Stock Option Plan (the "1995 Plan"). Any participant in the
Plan is referred to herein as a "Participant."

     Options granted pursuant to the Plan are not intended to qualify as
incentive options. Options shall be granted in the form of Exhibit A hereto (as
it may be amended or modified from time to time by the Board of Directors).

2.   ADMINISTRATION
     --------------

     The Plan shall be administered by the Company's Board of Directors (the
"Board"). The Board shall have authority, not inconsistent with the express
provisions of the Plan, (a) to grant options to persons who hold options
previously granted by Stream under the 1995 Plan; (b) to determine the terms and
conditions of each option; (c) to prescribe the form or forms of any instruments
evidencing options and any other instruments necessary or advisable under the
Plan and if necessary to change such forms from time to time; (d) to adopt,
amend and rescind rules and regulations for the administration of the Plan; and
(e) to interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations of the Board shall be conclusive and shall bind all parties.
Subject to Section 9, the Board shall also have the authority, both generally
and in particular instances, to waive compliance by a Participant with any
obligation to be performed by him or her under an option, to waive any condition
or provision of an option, and to amend or cancel any option except that the
Board may not take any action with respect to an outstanding option that would
adversely affect the rights of the Participant under such option without such
Participant's consent. Nothing in the preceding sentence shall be construed as
limiting the power of the Board to make adjustments required by Section 4(a) and
Section 4(c) hereof.
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     The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to a committee (the "Committee"), in which event all
references (as appropriate) to the Board hereunder shall be deemed to refer to
the Committee. The Committee, if one is appointed, shall consist of at least two
members of the Board. A majority of the members on the Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of the Board. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by a
majority of the members of the Board on the Committee.

3.   EFFECTIVE DATE AND TERM OF PLAN
     -------------------------------

     The Plan shall become effective on January 9, 1998.

     No options shall be granted under the Plan other than to holders of Stream
Options as set forth in Section 6(a) below. This Plan shall terminate on January
31, 1998, but options previously granted may extend beyond that date.

4.   SHARES OF COMMON STOCK SUBJECT TO THE PLAN
     ------------------------------------------

     (a) Number of Shares. Subject to adjustment as provided in Section 4(c), an
         ----------------
aggregate of 550,000 shares of Common Stock may be delivered upon the exercise
of options granted under the Plan.

     (b) Shares of Common Stock to be Delivered. Common Stock delivered under
         --------------------------------------
the Plan shall be authorized but unissued shares or, if the Board so decides in
its sole discretion, previously issued shares acquired by the Company and held
in its treasury. No fractional shares of Common Stock shall be delivered under
the Plan.

     (c) Changes in Common Stock. In the event of a dividend, split or
         -----------------------
combination of Common Stock, recapitalization or other change in the Company's
capital structure, the number and kind of shares of the Company subject to
options then outstanding, the exercise price of such options, the maximum number
of shares that may be delivered under the Plan, and other relevant provisions
shall be appropriately adjusted by the Board, whose determination shall be
binding on all persons.

     The Board may also adjust the number of shares of Common Stock subject to
outstanding options, the exercise price of outstanding options and the terms of
outstanding options, to take into consideration material changes in accounting
practices or principles, extraordinary dividends, consolidations or mergers,
acquisitions or dispositions of Common Stock or property or any other event if
it is

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determined by the Board that such adjustment is appropriate to avoid distortion
in the operation of the Plan.

5.   ELIGIBILITY FOR OPTIONS
     -----------------------

     Persons eligible to receive options under the Plan shall be limited to
holders of options granted by Stream under the 1995 Plan.

6.   TERMS AND CONDITIONS OF OPTIONS
     -------------------------------

     (a) Exercise Price; Number of Shares. The exercise price of each option
         --------------------------------
granted under the Plan (the "Replacement Option") shall be equal to the exercise
price of the option granted by Stream with respect to which the Replacement
Option is granted (the "Stream Option") multiplied by 0.119. The number of
shares of Common Stock covered by each such Replacement Option shall equal the
number of shares of Class B Common Stock of Stream covered by the Stream Option;
provided that the number of shares of Common Stock covered by each Replacement
Option granted under the Plan shall be proportionately adjusted to reflect the
proposed conversion of all shares of Class B Common Stock of Stream into shares
of Class A Common Stock.

     (b) Duration of Replacement Options. Except as otherwise agreed between the
         -------------------------------
Company and a Participant, each Replacement Option granted to such Participant
under the Plan shall be exercisable during the same period or periods during
which the Stream Option was exercisable.

     (c) Exercise of Replacement Options.
         -------------------------------

          (1)  Except as otherwise agreed between the Company and any
               Participant, each Replacement Option granted under the Plan shall
               be exercisable at such time or times and upon such terms and
               conditions as specified in the Replacement Option. In the case of
               a Replacement Option not immediately exercisable in full, the
               Board may at any time accelerate the time at which all or any
               part of the Replacement Option may be exercised.

          (2)  Any exercise of a Replacement Option shall be in writing, signed
               by the proper person and furnished to the Company, accompanied by
               (i) such documents as may be required by the Company and (ii)
               payment in full as specified below in Section 6(d) for the number
               of whole shares of Common Stock for which the Replacement Option
               is exercised.

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(3)  The Company shall have the right to require, prior to the delivery of any
     shares of Common Stock pursuant to the exercise of the Replacement Option,
     that the Participant exercising the Replacement Option remit to the Company
     an amount in cash or by personal check, certified check, bank draft or
     money order payable to the order of the Company sufficient to satisfy any
     federal, state or local withholding tax requirements arising in connection
     with the exercise of the Replacement Option (the date such obligation
     arises being referred to as the "Tax Date") (or make other arrangements
     satisfactory to the Company with regard to such taxes). If specified in the
     instrument evidencing a Replacement Option or permitted by the Board,
     either at the time of the grant of the Replacement Option or the time of
     exercise, the Participant may elect, at such time and in such manner as the
     Board may prescribe, to satisfy such withholding obligation by (i) delivery
     of an unconditional and irrevocable undertaking by a broker to deliver
     promptly to the Company sufficient funds to pay such withholding
     obligation, (ii) delivering to the Company whole shares of Common Stock
     (which the Participant has held for at least six months prior to the
     delivery of such shares or acquired on the open market and for which the
     Participant has good title, free and clear of all liens and encumbrances)
     having a fair market value, determined as of the Tax Date, equal to such
     withholding obligation, or (iii) requesting that the Company withhold from
     the shares of Common Stock to be delivered upon exercise of the Replacement
     Option a number of whole shares of Common Stock having a fair market value
     equal, determined as of the Tax Date, to such withholding obligation;
     provided, however, that the Company shall have sole discretion to
     disapprove of an election pursuant to any of clauses (i), (ii) or (iii),
     and that in the case of a Participant who is subject to Section 16 of the
     Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
     Company may require that the method of satisfying such an obligation be in
     compliance with Section 16 of the Exchange Act and the rules and
     regulations promulgated thereunder. Shares of Common Stock may be delivered
     or withheld having an aggregate fair market value in excess of the minimum
     amount required to be withheld, but not in excess of the amount determined
     by applying the Participant's maximum marginal tax rate. Any fractional
     share of a Common Stock which would be required to satisfy such an
     obligation shall be disregarded and the remaining amount due shall be paid
     in cash by the Participant.

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          (4)  If a Replacement Option is exercised by the executor or
               administrator of a deceased Participant, or by the person or
               persons to whom the Replacement Option has been transferred by
               the Participant's will or applicable laws of descent and
               distribution or pursuant to any beneficiary designation
               procedures established by the Company, the Company shall be under
               no obligation to deliver shares of Common Stock pursuant to such
               exercise until the Company is satisfied as to the authority of
               the person or persons exercising the Replacement Option.

     (d)  Payment for Shares. Shares of Common Stock purchased upon exercise of
          ------------------
a Replacement Option under the Plan shall be paid for as follows: (i) in cash or
by personal check, certified check, bank draft or money order payable to the
order of the Company or (ii) if specified in the instrument evidencing the
Replacement Option or permitted by the Board, (A) through the delivery of whole
shares of Common Stock (which the Participant has held for at least six months
prior to the delivery of such shares or acquired on the open market and for
which the Participant has good title, free and clear of all liens and
encumbrances) having a fair market value on the last business day preceding the
date of exercise equal to the purchase price or (B) by delivery of a full
recourse promissory note of the Participant to the Company, such note to be
payable on such terms as are specified by the Company, or (C) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (D) by any combination of
the permissible forms of payment. The Company shall have sole discretion to
disapprove of an election pursuant of Common Stock to any of clauses (A)-(D),
and in the case of a Participant who is subject to Section 16 of the Exchange
Act, the Company may require that the method of making such payment be in
compliance with Section 16 and the rules and regulations promulgated thereunder.
Any fractional share of Common Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall be paid
in cash by the Participant. No instrument representing shares of Common Stock
shall be delivered until the full purchase price therefor has been paid.

     (e)  Delivery of Shares. A Participant shall not have the rights of a
          ------------------
holder of shares of Common Stock of the Company with regard to Replacement
Options under the Plan except as to shares actually received by him or her under
the Plan.

     The Company shall not be obligated to deliver any shares (i) until, in the
opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with, and (ii) if the outstanding shares of
Common Stock are at the time listed on any stock exchange, until the shares of
Common Stock to be delivered have been listed or authorized to be listed on such
exchange upon official notice of issuance, and (iii) until all other legal
matters in connection with the issuance and delivery of such shares have been
approved by the Company's counsel.

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If the sale of shares of Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), the Company may
require, as a condition to exercise of the Replacement Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Securities Act and may require that the
instruments evidencing such shares of Common Stock bear an appropriate legend
restricting transfer.

     (f)  Nontransferability of Options. No Replacement Options may be
          -----------------------------
transferred other than by will or by the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except
as permitted by the foregoing sentence, during a Participant's lifetime a
Replacement Option may be exercised only by him or her. Except as permitted by
the second preceding sentence, no Replacement Options may be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any Replacement Options, such Replacement
Options and all rights thereunder shall immediately become null and void.

     (g)  Death. If a Participant dies, each Replacement Option held by the
          -----
Participant immediately prior to death may be exercised, to the extent it was
exercisable immediately prior to death, by his or her executor or administrator,
or by the person or persons to whom the option is transferred by will or
applicable laws of descent and distribution or pursuant to beneficiary
designation procedures established by the Company, at any time within the period
ending with the first anniversary of the Participant's death but in no event
beyond the "Final Exercise Date" (as specified in the option). All Replacement
Options held by a Participant immediately prior to death that are not then
exercisable shall terminate on the date of death.

     (h)  Other Termination of Service. If an employee's employment with the
          ----------------------------
Company and its subsidiaries terminates for any reason, other than death, all
Replacement Options held by the employee that are not then exercisable shall
terminate; provided, that the Board in its sole discretion may provide (either
prior to or following termination) that any or all of such portion of a
Replacement Option which is not exercisable immediately prior to termination
shall be treated as having become exercisable immediately prior to termination.
Replacement Options that are exercisable on the date employment terminates for
any reason other than death shall continue to be exercisable for a period of
three months (or such longer period as the Company may determine, but in no
event beyond the Final Exercise Date) unless the employee was terminated for
cause which in the opinion of the Board casts such discredit on him or her as to
justify termination of his or her Replacement Options. Subject to Section 6(g),
after completion of that three-month period, such Replacement Options shall
terminate to the extent not previously exercised, expired or terminated.

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For purposes of this Section 6(h), employment shall not be considered terminated
(i) in the case of sick leave or other bona fide leave of absence approved for
purposes of the Plan by the Company or (ii) in the case of a transfer of
employment between the Company and a subsidiary or between subsidiaries, or to
the employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming a Replacement Option in a transaction to which
Section 424(a) of the Internal Revenue Code of 1986, as amended from time to
time (the "Code") applies.

     In the case of a Participant who is not an employee, all Replacement
Options held by such Participant that are not exercisable immediately prior to
termination of service for any reason other than death shall terminate upon such
termination of service. Replacement Options that are exercisable immediately
prior to termination of service as a consultant, director or adviser for any
reason other than death shall continue to be exercisable for period of three
months (or such longer period as the Company may determine, but in no event
beyond the Final Exercise Date) unless the Participant was terminated for cause
which in the opinion of the Board casts such discredit on him or her as to
justify termination of his or her Replacement Options. Subject to Section 6(g),
after completion of that three-month period such Replacement Options shall
terminate to the extent not previously exercised, expired or terminated.

     If a Participant is employed by Stream or Corporate Software & Technology
Holdings, Inc. ("CST"), including a subsidiary of any of the foregoing, at the
time that Replacement Options are granted hereunder, then, solely for purposes
of Sections 6(h) and 7 hereof, such Participant shall be deemed to be employed
by the Company for so long as such Participant is employed by such either CST or
Stream (or a subsidiary thereof), as applicable. For purposes of this paragraph,
"employment" shall include service for the applicable company as contemplated by
the preceding paragraph.

     (i)  Acquisition Events. An "Acquisition Event" shall mean any of the
          ------------------
following events following the effective date hereof: (a) any merger or
consolidation which results in the voting securities of the Company, CST or
Stream outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity or its parent) less than 50% of the combined
voting power of the voting securities of such company or such surviving or
acquiring entity or its parent outstanding immediately after such merger or
consolidation; (b) any sale of all or substantially all of the assets of the
Company, CST or Stream; or (c) the complete liquidation of the Company, CST or
Stream.

     All Replacement Options outstanding hereunder (x) be assumed or an
equivalent option shall be substituted by the successor corporation or a parent
or subsidiary of the successor corporation (unless the successor corporation
refuses to assume or substitute for the option), and (y) shall become
immediately exercisable in

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full immediately prior to the effectiveness of an Acquisition Event and, unless
assumed or substituted by the successor corporation, will terminate, to the
extent unexercised, upon the consummation of an Acquisition Event, (i) if a
Participant is employed by the Company, CST or Stream (or a subsidiary thereof)
at the time of the occurrence of an Acquisition Event with respect to the
Company, (ii) a Participant is employed by CST (or a subsidiary thereof) at the
time of an occurrence of an Acquisition Event with respect to CST or (iii) a
Participant is employed by Stream (or a subsidiary thereof) at the time of an
occurrence of an Acquisition Event with respect to Stream. This paragraph shall
also apply to a Participant whose employment with the Company, CST or Stream, as
applicable, is terminated prior to the consummation of an Acquisition Event to
the extent such Participant's Replacement Options remain exercisable upon the
consummation of such Acquisition Event. For purposes of this paragraph,
"employment" shall include service for the applicable company as contemplated by
the second paragraph of Section 6(h) above.

7.   NO EMPLOYMENT RIGHTS
     --------------------

     Neither the adoption of the Plan nor the grant of a Replacement Option
shall confer upon any Participant any right to continue as an employee or
director of, or consultant or adviser to, the Company, CST or Stream or any
parent or subsidiary or affect in any way the right of the Company, CST, or
Stream or any parent or subsidiary to terminate such Participant at any time.
Except as specifically provided by the applicable board in any particular case,
the loss of existing or potential profit in Replacement Options granted under
this Plan shall not constitute an element of damages in the event of termination
of the relationship of a Participant even if the termination is in violation of
an obligation of the Company, CST, or Stream to the Participant by contract or
otherwise.

8.   AMENDMENT
     ---------

     With the consent of the Participant, the Board may at any time cancel an
existing Replacement Option in whole or in part and grant another option for
such number and class of shares as the Board specifies. The Board may at any
time or times amend the Plan or any outstanding Replacement Option for any
purpose that may at the time be permitted by law, provided that, except to the
extent expressly permitted by the Plan, no such amendment shall, without the
approval of the stockholders of the Company, effectuate a change for which
approval of the stockholders is required in order for the Plan to continue to
qualify under Rule 16b-3 (if applicable). No such amendment shall adversely
affect the rights of any Participant, without his or her consent, under any
Replacement Option previously granted.

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================================================================================

                           SHARE PURCHASE AGREEMENT

                                  dated as of

                               December 31, 1999

                                    between

                    SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                                      and

                            SCOTTISH HOLDINGS, LTD.

================================================================================
<PAGE>

                           SHARE PURCHASE AGREEMENT

     SHARE PURCHASE AGREEMENT (this "Agreement") dated as of December 31, 1999,
between Scottish Annuity & Life Holdings, Ltd., a company organized and existing
under the laws of the Cayman Islands ("Purchaser"), and Scottish Holdings, Ltd.,
a company organized and existing under the laws of the Cayman Islands (the
"Seller").

                                   RECITALS:
                                   --------

     A.   Seller is the registered and beneficial owner of all of the issued and
outstanding ordinary shares, par value $1.00 (the "Shares"), of The Scottish
Annuity Company (Cayman) Ltd. (the "Company").

     B.   Seller and Purchaser have determined to enter into this Agreement
which provides for Seller to sell, transfer and convey to Purchaser, and
Purchaser to purchase and receive from Seller, all of the Shares.

     NOW, THEREFORE, in consideration of the warranties, covenants and
agreements set forth herein, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller
hereby agree as follows:

                                   ARTICLE I
                        PURCHASE AND SALE OF THE SHARES

     Section 1.1  Sale and Transfer of the Transferred Shares.  Subject to the
                  -------------------------------------------
provisions of this Agreement, Seller agrees to sell, and Purchaser agrees to
purchase, the Shares as of and with effect from the Closing.

     Section 1.2  Payment.  (a) The total purchase price payable by Purchaser to
                  -------
Seller (the "Purchase Price"), shall be (i) $10,500,000.00 in cash and (ii)
$1,062,161.84 in cash, representing purchase price consideration for current
assets of the Company consisting of cash of $250,000.00, fees receivables in the
amount of $826,503.30, and a deposit on the phone system in the amount of
$3,658.54 less audit fees payable in the amount of $18,000.00.

             (b)  The portion of the purchase price set forth in Section
1.2(a)(ii) above will be subject to a positive or negative adjustment at Closing
to reflect, on a dollar-for-dollar basis, changes in the current liabilities,
cash, and cash equivalents of the Company on the Closing Date.

     Section 1.3  Closing.  Unless this Agreement has been terminated and the
                  -------
transactions contemplated under this Agreement have been abandoned pursuant to
Section 5.1, the closing of the transfer of the Shares (the "Closing") will take
place at the offices of the Purchaser, at 10:00 a.m. on December 31, 1999 (the
"Closing Date").  The Closing will be effective as of 11:59 p.m. on the Closing
Date.  At the Closing, Purchaser shall pay the Cash Payment via wire transfer of
immediately available funds to the account designated by Seller, and Seller
shall deliver to Purchaser at the Closing the Shares free and clear of any
mortgage, lien, pledge, charge, security interest, restriction on voting or
transfer, or other encumbrance ("Lien") with the certificate or certificates (i)
evidencing the Shares duly endorsed or (ii) accompanied by a duly executed share
transfer power.

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                                  ARTICLE II
                           REPRESENTATIONS OF SELLER

     Seller hereby represents to Purchaser as follows:

     Section 2.1  Corporate Organization and Qualification. The Company is a
                  ----------------------------------------
company duly organized and validly existing under the laws of the Cayman
Islands.

     Section 2.2  Corporate Authority. Seller has the requisite corporate power
                  -------------------
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and the execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated to be
performed hereunder have been duly authorized by all necessary corporate actions
of Seller. This Agreement is a valid and binding agreement of Seller,
enforceable against it in accordance with the terms hereof except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally.

     Section 2.3  Capital of the Company
                  ----------------------

             (a)  The authorized capital of the Company consists of 1,000,000
ordinary shares, $1.00 par value, of which 250,000 shares are issued and
outstanding, and the Shares constitute all of the issued and outstanding shares
of the Company. Seller is the registered and beneficial owner of the Shares free
and clear of any Lien.

             (b)  The Shares have been duly authorized and validly issued and
are fully paid and non-assessable. There are no (i) securities of the Company
convertible into or exchangeable for shares of the Company, (ii) warrants,
options or other rights to acquire from the Company, or other obligations of the
Company, to issue any shares or securities convertible into or exchangeable for
shares of the Company, or (iii) bonds, debentures, notes or other obligations or
securities of the Company, the holders of which have the right to vote with the
shareholders of the Company, on any matter submitted for the vote of the Company
shareholders.

     Section 2.4  Information; Financial Condition; No Material Adverse Change.
                  ------------------------------------------------------------
Purchaser has received from the Company its Memorandum of Association and its
Articles of Association (the "Company Corporate Documents") and its audited
balance sheet dated December 31, 1998, its audited statement of income,
shareholder's equity, and cash flows for the year ended December 31, 1998, its
unaudited balance sheet dated September 30, 1999, and its unaudited statement of
income, shareholder's equity, and cash flows for the period ended September 30,
1999 in the form attached as Exhibit A hereto (the "Company Financial
Statements").  Purchaser has also received an unaudited, pro forma balance sheet
dated December 31, 1999 and unaudited, pro forma statement of income,
shareholder's equity, and cash flows for the period ended December 31, 1999 in
the form attached to Exhibit B.  Seller represents that (a) the Company
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles and present fairly the financial
condition and results of operations of the Company as of such dates and for the
periods indicated, (b) all material liabilities and obligations of the Company
are reflected on or reserved against in such balance sheets or in the notes to
such financial statements, and (c) since September 30, 1999,

                                       2
<PAGE>

there has not been, and at Closing there will not be, any material adverse
change in the financial condition, results of operations or business of the
Company nor any condition, event or development that may reasonably be expected
to result in any such material adverse change, except as otherwise disclosed in
Exhibit B.
---------

     Section 2.5  Company Authority. The Company possesses all licenses and
                  -----------------
authority required for the conduct of its business as presently conducted and
the purchase of the Shares by Purchaser will not conflict with or terminate, or
create a condition permitting the termination of, such licenses and authority.

     Section 2.6  Further Assurances.  From and after Closing, Seller shall
                  ------------------
execute and deliver any assignments or assurances and shall take and do any
other actions or things reasonably necessary to carry out the intention of this
Agreement.

                                  ARTICLE III
                         REPRESENTATIONS OF PURCHASER

     Purchaser hereby represents to Seller as follows:

     Section 3.1  Corporate Organization and Qualification. Purchaser is a
                  ----------------------------------------
company validly existing and in good standing under the laws of the Cayman
Islands.

     Section 3.2  Corporate Authority. Purchaser has the requisite corporate
                  -------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Purchaser and the consummation by it of the transactions contemplated to be
performed hereunder have been duly authorized by all necessary corporate
actions. This Agreement is a valid and binding obligation of Purchaser,
enforceable against it in accordance with the terms hereof except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally.

     Section 3.3  Suitability and Sophistication. Purchaser (a) is an
                  ------------------------------
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act, (b) has such knowledge and experience in financial and business affairs
generally and in the fixed annuity business in particular that it is capable of
evaluating the risks and merits of purchasing the Shares, (c) has independently
evaluated the risks and merits of purchasing the Shares and has independently
determined that the Shares are a suitable investment for the Purchaser, which
has a current on- going business arrangement with the Company and is therefore
knowledgeable about the Company's business, (d) has sufficient financial
resources to bear the loss of its entire investment in the Shares, (e) has
received from Seller and the Company, or had made available to it, financial and
other information related to the Company, and the Company and its officers, as
well as the Seller, have made themselves available to answer any questions about
the Company, its business and the Shares and have agreed to provide all
information about the Company, its business and the Shares reasonably available
to the Company or the Seller and (f) understands that the Shares have not been
registered under the Securities Act or any state or foreign securities law, and
may not be transferred unless subsequently registered thereunder or pursuant to
an

                                       3
<PAGE>

exemption from regulation and that a legend indicating such restriction should
be placed on the certificates representing the Shares.

     Section 3.4  Further Assurances.  From and after the Closing Purchaser
                  ------------------
shall execute and deliver any assignments or assurances and shall take and do
any other actions or things reasonably necessary to carry out the intention of
this Agreement.

                                  ARTICLE IV
                          CONDITIONS TO THE TRANSFER

     Section 4.1  Conditions to the Obligations of Seller.  The obligation of
                  ---------------------------------------
Seller to consummate the transfer of the Shares is subject to the satisfaction
(or waiver by Seller) of the condition that (a) Purchaser shall have performed
and complied with in all material respects all obligations and covenants
required to be performed or complied with by it under this Agreement at or prior
to the Closing Date and (b) the transactions contemplated in Exhibit B shall
have been consummated.

     Section 4.2  Conditions to the Obligations of Purchaser.  The obligation of
                  ------------------------------------------
Purchaser to consummate the transfer of the Shares is subject to the
satisfaction (or waiver by Purchaser) of the condition that Seller shall have
performed and complied with in all material respects all obligations and
covenants required to be performed or complied with by it under this Agreement
at or prior to the Closing Date.

                                   ARTICLE V
                                  TERMINATION

     Section 5.1  Termination.  This Agreement may be terminated and the
                  -----------
transactions contemplated hereby may be abandoned at any time prior to the
Closing by mutual written consent of Seller and Purchaser.

     Section 5.2  Effect of Termination.  In the event of the termination of
                  ---------------------
this Agreement pursuant to Section 5.1 hereof, this Agreement shall forthwith
become null and void and have no effect, without any liability on the part of
any party or their respective directors, officers or shareholders. Nothing in
this Article V shall, however, relieve any party to this Agreement of liability
for breach of this Agreement occurring prior to such termination, or for breach
of any provision of this Agreement which specifically survives termination
hereunder.

                                  ARTICLE VI
                                TRANSFER TAXES

     Section 6.1  Transfer Taxes.  Purchaser shall be responsible for the
                  --------------
payment of all national, state, local, municipal and other transfer, stamp,
sales, use or other similar taxes (and all recording or filing fees) resulting
from the transactions contemplated by this Agreement.

                                       4
<PAGE>

                                  ARTICLE VII
                                 MISCELLANEOUS

     Section 7.1  Entire Agreement.  This Agreement constitutes the entire
                  ----------------
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, with
respect to the subject matter hereof. It is agreed that neither party has
entered into this Agreement in reliance upon any representation, warranty or
undertaking of the other party which is not expressly set forth in this
Agreement.

     Section 7.2  Notices.  All notices, requests and other communications to
                  -------
any party hereunder shall be in writing (including facsimile) and signed by or
on behalf of the party giving it and shall be given by personal delivery,
certified or registered mail or telecopy

     if to Seller, to:        Scottish Holdings, Ltd.
                              P.O. Box 10658 APO
                              5th Floor
                              Ugland House
                              Grand Cayman
                              Attn:  Manager, Finance and Administration
     Facsimile:               (345) 949-2519
     Telephone:               (345) 949-2519

     If to Purchaser to:      Scottish Annuity & Life Holdings, Ltd.
                              P.O. Box 10657 APO
                              Grand Pavilion Commercial Centre
                              802 West Bay Road
                              Grand Cayman
                              Cayman Islands, BWI
                              Attn:  President and Chief Executive Officer
     Facsimile:               (345) 945-0300
     Telephone:               (345) 949-2800

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto.  Each such notice,
request or other communication shall be effective (i) if given by facsimile
transmission, three hours after the time of dispatch to the facsimile number
specified in this Section 7.2 provided the appropriate confirmation is received,
or (ii) if given by any other means allowed under this Section 7.2, twenty-four
hours after being sent to the address specified in this Section 7.2.

     Section 7.3  Amendments; No Waivers.
                  -----------------------

             (a)  Any provision of this Agreement may be amended or waived prior
to the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an

                                       5
<PAGE>

amendment, by Seller and Purchaser or in the case of a waiver, by the party
against whom the waiver is to be effective.

             (b)  No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege.

     Section 7.4  Expenses.  Except as otherwise provided herein, all costs and
                  --------
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.

     Section 7.5  Successors and Assigns.  The provision of this Agreement
                  ----------------------
shall be binding upon and insure to the benefit of the parties hereto and their
respective successors and assigns, provided that, no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.  Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person, other than the
parties hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

     Section 7.6  Certain Interpretive Matters.
                  ----------------------------

             (a)  Unless the context otherwise requires, (i) all references in
this Agreement to Sections or Articles are to Sections or Articles of this
Agreement, (ii) each term defined in this Agreement has the meaning ascribed to
it, and (iii) words in the singular include the plural and vice versa. All
                                                           ---- -----
references to "$" or dollar amounts will be to lawful currency of the United
States of America.

             (b)  Titles and headings to Sections herein are inserted for
convenience of reference only, and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

     Section 7.7  Counterparts; Effectiveness.  This Agreement may be signed in
                  ---------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

     Section 7.8. Severability.  If any term, provision, covenant or restriction
                  ------------
of this Agreement is determined to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
will remain in full force and effect and will in no way be affected, impaired or
invalidated.

                                       6
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                        BY PURCHASER:

                        SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                        By:  /s/ Henryk Sulikowski
                            ----------------------------------------------------
                        Name:  Henryk Sulikowski
                              --------------------------------------------------
                        Title: Senior Vice President and Chief Insurance Officer
                               -------------------------------------------------

                        BY SELLER:

                        SCOTTISH HOLDINGS, LTD.

                        By:  /s/ Karla Bodden
                            ---------------------------------------------------
                        Name:  Karla Bodden
                              -------------------------------------------------
                        Title: Director
                               ------------------------------------------------

                                       7
<PAGE>

                                   EXHIBIT A

                             FINANCIAL STATEMENTS
<PAGE>

                                   EXHIBIT B

     Prior to the Closing, SAC will declare a dividend in the amount of
$12,213,031.15 and a return of capital in the amount of $23,591,346.11.  The
unaudited, pro forma balance sheet dated December 31, 1999 and the unaudited,
pro forma statement of income, shareholder's equity, and cash flows for the year
ending December 31, 1999 are attached to this Exhibit B.

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