Document:

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                                                                   Exhibit 10.16
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                             EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 8,
2000, is made and entered into by and between Scottish Annuity & Life Holdings,
Ltd., a Cayman Islands company (the "Company"), and Scott E. Willkomm (the
"Executive").

                                  WITNESSETH:

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

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

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

     1.   Certain Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:

          (a)  "Act"  means the Securities Exchange Act of 1934, as amended.

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

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

          (d)  "Cause" means that the Executive shall have committed any of the
following:
               (i)    an intentional act of fraud, embezzlement or theft in
     connection with his duties or in the course of his employment with the
     Company or any Subsidiary;

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

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

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

     and any such act shall have been materially harmful to the Company.  For
     purposes of this Agreement, no act or failure to act on the part of the
     Executive shall be deemed "intentional" if it was due primarily to an error
     in judgment or negligence, but shall be deemed "intentional" only if done
     or omitted to be done by the Executive not in good
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     faith and without reasonable belief that his action or omission was in the
     best interest of the Company. Notwithstanding the foregoing, the Executive
     shall not be deemed to have been terminated for "Cause" hereunder unless
     and until there shall have been delivered to the Executive a copy of a
     resolution duly adopted by the affirmative vote of not less than two-thirds
     of the Board then in office at a meeting of the Board called and held for
     such purpose, after reasonable notice to the Executive and an opportunity
     for the Executive, together with his counsel (if the Executive chooses to
     have counsel present at such meeting), to be heard before the Board,
     finding that, in the good faith opinion of the Board, the Executive had
     committed an act constituting "Cause" as herein defined and specifying the
     particulars thereof in detail. Nothing herein will limit the right of the
     Executive or his beneficiaries to contest the validity or propriety of any
     such determination.

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

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

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

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

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

     Notwithstanding the foregoing provisions of Paragraph (iii) above, a
     "Change in Control" shall not be deemed to have occurred for purposes of
     this Agreement:  (i) solely because (A) the Company, (B) a Subsidiary or
     (C) any Company-sponsored employee stock ownership plan or other employee
     benefit plan of the Company either files or becomes obligated to file a
     report or proxy statement under or in response to Schedule 13D, Schedule
     14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report
     or item therein) under the Act, disclosing beneficial ownership by it of
     shares, or because

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     the Company reports that a change of control of the Company has or may have
     occurred or will or may occur in the future by reason of such beneficial
     ownership; or (ii) solely because of a change in control of any Subsidiary
     other than Scottish Annuity & Life Insurance Company (Cayman) Ltd.

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

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

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

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

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

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

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

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

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

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

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

     3.   Positions and Duties.

          (a)  During the Term, the Executive will serve in the position of
President of the Company, or such other position as may be agreed upon by the
Company and the Executive, and will have such duties, functions,
responsibilities and authority as are (i) reasonably assigned to him by the
Board, consistent with the Executive's position as the Company's President or
(ii) assigned to his office in the Company's articles of association. The
Executive will report directly to the Chief Executive Officer of the Company.

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

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

     5.   Compensation and Related Matters.

          (a)  Annual Base Salary. During the Term, the Company will pay to the
Executive an annual base salary of not less than US $408,000, which annual base
salary may be increased (but not decreased) from time to time by the Board (or a
duly authorized committee thereof) in its sole discretion, payable at the times
and in the manner consistent with the Company's general policies regarding
compensation of executive employees. The Board may from time to time authorize
such additional compensation to the Executive, in cash or in property, as the
Board may determine in its sole discretion to be appropriate.

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

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

          (d)  Executive Benefits.  In addition to the compensation described in
Sections 5(a) and 5(b), the Company will make available to the Executive and his
eligible dependents, subject to the terms and conditions of the applicable
plans, including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit policies, plans, programs or
arrangements, including without limitation financial counseling services or any
equivalent successor policies, plans, programs or arrangements that may now
exist or be adopted hereafter by the Company.

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

          (f)  Options.  The Company shall grant Executive, upon the execution
of this Agreement, an option ("Option") to purchase up to 400,000 Ordinary
Shares of the Company, such Option to be exercisable at a per share price equal
to the Market Value Per Share (as defined in the Company's Second Amended and
Restated 1998 Stock Option Plan) on the date of grant and to be governed by the
option agreement, a form of which is attached hereto as Exhibit A.

     6.   Termination Following the Date of this Agreement.

          (a)  The Executive's employment may be terminated by the Company
during the Term and the Executive shall be entitled to the severance
compensation provided by

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Section 7 unless such termination is the result of the occurrence of one or more
of the following events:

               (i)    The Executive's death;

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

               (iii)  Cause.

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

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

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

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

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

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     30 calendar days after written notice to the Company from the Executive of
     such determination;

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

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

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

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

     7.   Severance Compensation.

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

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          (b)  There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation against any payment to or benefit for the
Executive provided for in this Agreement.

          (c)  Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment required to be made hereunder on a
timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then-applicable interest rate
prescribed by the Pension Benefit Guarantee Corporation for benefit valuations
in connection with non-multiemployer pension plan terminations assuming the
immediate commencement of benefit payments.

      8.   Certain Additional Payments by the Company.

          (a)  Anything in this Agreement to the contrary notwithstanding, in
the event that this Agreement shall become operative and it shall be determined
(as hereafter provided) that any payment (other than the Gross-Up payments
provided for in this Section 8) or distribution by the Company or any of its
affiliates to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, performance
share, performance unit, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or
any successor provision thereto) by reason of being considered "contingent on a
change in ownership or control" of the Company, within the meaning of Section
280G of the Code (or any successor provision thereto)or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
tax (such tax or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment or payments (collectively, a
"Gross-Up Payment"); provided; however, that no Gross-up Payment shall be made
with respect to the Excise Tax, if any, attributable to (i) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement, or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO described in clause (i).
The Gross-Up Payment shall be in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.

          (b)  Subject to the provisions of Section 8(f), all determinations
required to be made under this Section 8, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a Gross-
Up Payment is required to be paid by the Company to the Executive and the amount
of such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and the
Executive within 30 calendar days after the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is

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     payable by the Executive, the Company shall pay the required Gross-Up
     Payment to the Executive within five business days after receipt of such
     determination and calculations with respect to any Payment to the
     Executive. If the Accounting Firm determines that no Excise Tax is payable
     by the Executive, it shall, at the same time as it makes such
     determination, furnish the Company and the Executive an opinion that the
     Executive has substantial authority not to report any Excise Tax on his
     federal, state or local income or other tax return. As a result of the
     uncertainty in the application of Section 4999 of the Code (or any
     successor provision thereto) and the possibility of similar uncertainty
     regarding applicable state or local tax law at the time of any
     determination by the Accounting Firm hereunder, it is possible that Gross-
     Up Payments which will not have been made by the Company should have been
     made (an "Underpayment"), consistent with the calculations required to be
     made hereunder. In the event that the Company exhausts or fails to pursue
     its remedies pursuant to Section 8(f) and the Executive thereafter is
     required to make a payment of any Excise Tax, the Executive shall direct
     the Accounting Firm to determine the amount of the Underpayment that has
     occurred and to submit its determination and detailed supporting
     calculations to both the Company and the Executive as promptly as possible.
     Any such Underpayment shall be promptly paid by the Company to, or for the
     benefit of, the Executive within five business days after receipt of such
     determination and calculations.

          (c)  The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, record and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 8(b). Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.

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

          (e)  The fees and expenses of Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 8(b)
shall be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of his payment thereof.

          (f)  The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if successful,
would require the

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

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

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

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

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

provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses.  Without limiting the foregoing provisions of
this Section 8(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 8(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the Company's control of any such contested
claim shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive shall be

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entitled to settle or contest as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

          (g)  If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(f), the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 8(f)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(f), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to this Section 8.

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

     10.  Competitive Activity; Confidentiality; Nonsolicitation.

          (a)  The Executive acknowledges that during the course of his
employment with the Company the Executive will learn business information
valuable to the Company and will form substantial business relationships with
the Company's clients. To protect the Company's legitimate business interests in
preserving its valuable confidential business information and client
relationships, the Executive shall not without the prior written consent of the
Company, which consent shall not be unreasonably withheld, (i) engage in any
Competitive Activity during the Term and (ii) if the Executive shall have
received or shall be receiving benefits under Section 7, engage in any
Competitive Activity for a period ending on the first anniversary of the
Termination Date or date of expiration of this Agreement, as the case may be.

          (b)  During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 10(b)) to the extent necessary for Executive to carry out his
obligations to the Company. The Executive hereby acknowledges the Company has a
legitimate business interest in protecting its confidential and proprietary
information and hereby covenants and agrees that he will not, without the prior
written consent of the Company, during the Term or thereafter (i) disclose to
any person not employed by the

                                       11
<PAGE>

Company, or use in connection with engaging in competition with the Company, any
confidential or proprietary information of the Company or (ii) remove, copy or
retain in his possession any Company files or records. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available (other than by Executive's breach of this Section
10(b)) or generally known to persons engaged in businesses similar or related to
those of the Company. Confidential or proprietary information will include,
without limitation, the Company's financial matters, customers, employees,
industry contracts, strategic business plans, product development (or other
proprietary product data), marketing plans, and all other secrets and all other
information of a confidential or proprietary nature. For purposes of the
preceding two sentences, the term "Company" will also include any Subsidiary
(collectively, the "Restricted Group"). The foregoing obligations imposed by
this Section 10(b) will not apply (i) during the Term, in the course of the
business of and for the benefit of the Company, (ii) if such confidential or
proprietary information will have become, through no fault of the Executive,
generally known to the public or (iii) if the Executive is required by law to
make disclosure (after giving the Company notice and an opportunity to contest
such requirement).

          (c)  The Executive hereby covenants and agrees that during the Term
and for one year thereafter Executive will not, without the prior written
consent of the Company, which consent shall not unreasonably be withheld, on
behalf of Executive or on behalf of any person, firm or company, directly or
indirectly, attempt to influence, persuade or induce, or assist any other person
in so persuading or inducing, any employee of the Restricted Group to give up
employment or a business relationship with the Restricted Group.

          (d)  The Executive agrees that on or before the Termination Date the
Executive shall return all Company property, including without limitation all
credit, identification and similar cards, keys and documents, books, records and
office equipment. The Executive agrees that he shall abide by, through the
Termination Date, the Company's policies and procedures for worldwide business
conduct.

      11.  Legal Fees and Expenses.  It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder.  Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such

                                       12
<PAGE>

counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such counsel.
Without respect to whether the Executive prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be solely
financially responsible for any and all attorneys' and related fees and expenses
incurred by the Executive in connection with any of the foregoing.

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

     13.  Successors and Binding Agreement.

          (a)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.

          (b)  This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.

          (c)  This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 13(a) and 13(b). Without limiting the generality or effect
of the foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 13(c), the Company shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.

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

                                       13
<PAGE>

party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address shall be effective only upon receipt.

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

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

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

     18.  Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.

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

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

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

                                /s/ Scott E. Willkomm
                                ---------------------------------------------
                                Scott E. Willkomm

                                SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                                By:  /s/ Michael C. French
                                   ------------------------------------------
                                   Name:  Michael C. French
                                   Title:  Chairman of the Board and
                                   Chief Executive Officer

                                       15
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                    Form of
                      NONQUALIFIED STOCK OPTION AGREEMENT
                      -----------------------------------

          This AGREEMENT (the "Agreement") is made as of _________________, 2000
by and between SCOTTISH ANNUITY & LIFE HOLDINGS, LTD., a Cayman Islands company
(the "Company") and Scott E. Willkomm (the "Optionee").

          1.  Grant of Share Option.  Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement and in the Company's Second Amended
and Restated 1998 Stock Option Plan (the "Plan"), the Company hereby grants to
the Optionee a stock option (the "Option") to purchase 400,000 of the Company's
Ordinary Shares (the "Optioned Shares").  The Option may be exercised from time
to time in accordance with the terms of this Agreement.  The price at which the
Optioned Shares may be purchased pursuant to this Option shall be $____ per
share, subject to adjustment as hereinafter provided (the "Option Price").  The
Option is intended to be a nonqualified stock option and shall not be treated as
an "incentive stock option" within the meaning of that term under Section 422 of
the Code, or any successor provision thereto.

          2.  Term of Option.  The term of the Option shall commence on the date
set forth above of the grant (the "Date of Grant") and, unless earlier
terminated in accordance with Section 6 hereof, shall expire ten (10) years from
the Date of Grant.

          3.  Right to Exercise.  Subject to expiration or earlier termination,
on each anniversary of the Date of Grant the number of Optioned Shares equal to
thirty-three and one-third percent (33 %) multiplied by the initial number of
Optioned Shares specified in this Agreement shall become exercisable on a
cumulative basis until the Option is fully exercisable.  To the extent the
Option is exercisable, it may be exercised in whole or in part.  In no event
shall the Optionee be entitled to acquire a fraction of one Optioned Share
pursuant to this Option.  The Optionee shall be entitled to the privileges of
ownership with respect to Optioned Shares purchased and delivered to him upon
the exercise of all or part of this Option.

          4.  Transferability.  The Option granted hereby shall be transferable
in whole or part, by the Optionee upon five business days prior notice to the
Company.

          5.  Notice of Exercise; Payment.

          (a)  To the extent then exercisable, the Option may be exercised by
written notice to the Company stating the number of Optioned Shares for which
the Option is being exercised and the intended manner of payment.  The date of
such notice shall be the exercise date.  Payment equal to the aggregate Option
Price of the Optioned Shares being exercised shall be tendered in full with the
notice of exercise to the Company in cash in the form of currency or check or
other cash equivalent acceptable to the Company.  The requirement of payment in
cash shall be deemed satisfied if, with the consent of the Board, the Optionee
makes arrangements

                                      A-1
<PAGE>

that are satisfactory to the Company with a broker that is a member of the
National Association of Securities Dealers, Inc. to sell a sufficient number of
Optioned Shares which are being purchased pursuant to the exercise, so that the
net proceeds of the sale transaction will at least equal the amount of the
aggregate Option Price, and pursuant to which the broker undertakes to deliver
to the Company the amount of the aggregate Option Price not later than the date
on which the sale transaction will settle in the ordinary course of business.
The Optionee may also, with the consent of the Board, tender the Option Price by
a combination of the foregoing methods of payment.

          (b)  Within ten (10) days after notice, the Company shall direct the
due issuance of the Optioned Shares so purchased.

          (c)  As a further condition precedent to the exercise of this Option,
the Optionee shall comply with all regulations and the requirements of any
regulatory authority having control of, or supervision over, the issuance of
Ordinary Shares and in connection therewith shall execute any documents which
the Board shall in its sole discretion deem necessary or advisable.

     6.   Termination of Agreement.  The Agreement and the Option granted
hereby shall terminate automatically and without further notice on the earliest
of the following dates:

          (a)  Two (2) years after the Optionee's death if the Optionee dies
while in the employ of the Company;

          (b)  Two (2) years after the date of the Optionee's permanent and
total disability if the Optionee becomes permanently and totally disabled while
an employee of the Company;

          (c)  Except as provided on a case-by-case basis, 60 days after the
date the Optionee ceases to be an employee of the Company, or a Subsidiary, for
any reason other than as described in this Section 6; or

          (d)  Ten (10) years from the Date of Grant.

In the event that the Optionee's employment is terminated for cause, the
Agreement shall terminate at the time of such termination notwithstanding any
other provision of this Agreement.  For purposes of this provision, "cause"
shall mean the Optionee shall have committed prior to termination of employment
any of the following acts:

               (i)    an intentional act of fraud, embezzlement, theft, or any
other material violation of law in connection with the Optionee's duties or in
the course of the Optionee's employment;

               (ii)   intentional wrongful damage to material assets of the
Company;

               (iii)  intentional wrongful disclosure of material confidential
information of the Company;

                                      A-2
<PAGE>

               (iv)   intentional wrongful engagement in any competitive
activity that would constitute a material breach of the duty of loyalty; or

               (v)    intentional breach of any stated material employment
policy of the Company.

Any determination of whether an Optionee's employment was terminated for cause
shall be made by the Board, whose determination shall be binding and conclusive.
This Agreement shall not be exercisable for any number of Optioned Shares in
excess of the number of Optioned Shares for which this Agreement is then
exercisable, pursuant to Sections 3 and 7 hereof, on the date of termination of
employment.  For the purposes of this Agreement, the continuous employment of
the Optionee with the Company shall not be deemed to have been interrupted, and
the Optionee shall not be deemed to have ceased to be an employee of the
Company, by reason of the transfer of his employment among the Company and its
Subsidiaries or a leave of absence approved by the Board.

     7.   Acceleration of Option.  Notwithstanding Section 3, but subject to
earlier termination, the Option granted hereby shall become immediately
exercisable in full in the event of a Change of Control, as defined in the Plan.

     8.   No Employment Contract.  Nothing contained in this Agreement shall
confer upon the Optionee any right with respect to continuance of employment by
the Company, nor limit or affect in any manner the right of the Company to
terminate the employment or adjust the compensation of the Optionee.

     9.   Taxes and Withholding.  If the Company shall be required to
withhold any federal, state, local or foreign tax in connection with the
exercise of the Option, and the amounts available to the Company for such
withholding are insufficient, the Optionee shall pay the tax or make provisions
that are satisfactory to the Company for the payment thereof. The Company will
pay any and all issue and other taxes in the nature thereof which may be payable
by the Company in respect of any issue or delivery upon a purchase pursuant to
this Option.

     10.  Compliance with Law.  The Company shall make reasonable efforts
to comply with all applicable federal and state securities laws; provided,
however, notwithstanding any other provision of this Agreement, the Option shall
not be exercisable if the exercise thereof would result in a violation of any
such law.

     11.  Adjustments.  The Board may make or provide for such adjustments
in the number of Optioned Shares covered by this Option, in the Option Price
applicable to such Option, and in the kind of shares covered thereby, as the
Board in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the Optionee's rights
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization, or other change in the capital
structure of the Company, (b) any merger, consolidation, spin-off,
reorganization, partial or complete liquidation, or issuance of rights or
warrants to purchase securities, or (c) any other corporate transaction or event
having an effect similar to any of the foregoing.  In the event of any such
transaction or

                                      A-3
<PAGE>

event, the Board may provide in substitution for this Option such alternative
consideration as it may determine to be equitable in the circumstances and may
require in connection therewith the surrender of this Option. Any fractional
shares resulting from the foregoing adjustments shall be eliminated.

     12.  Relation to Other Benefits.  Any economic or other benefit to the
Optionee under this Agreement shall not be taken into account in determining any
benefits to which the Optionee may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company and
shall not affect the amount of any life insurance coverage available to any
beneficiary under any life insurance plan covering employees of the Company.

     13.  Amendments.  Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee under this Agreement without the Optionee's consent.

     14.  Severability.  In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

     15.  Relation to Plan.  This Agreement is subject to the terms and
conditions of the Plan.  In the event of any inconsistent provisions between
this Agreement and the Plan, the Plan shall govern.  Capitalized terms used
herein without definition shall have the meanings assigned to them in the Plan.
The Board acting pursuant to the Plan, as constituted from time to time, shall,
except as expressly provided otherwise herein, have the right to determine any
questions which arise in connection with this option or its exercise.

     16.  Successors and Assigns.  The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of the Optionee, and the successors and
assigns of the Company.

     17.  Governing Law.  The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the Cayman Islands, without
giving effect to the principles of conflict of laws thereof.

     18.  Notices.  Any notice to the Company provided for herein shall be
in writing to the Company, marked Attention: Chief Executive Officer, and any
notice to the Optionee shall be addressed to said Optionee at his or her address
currently on file with the Company.  Except as otherwise provided herein, any
written notice shall be deemed to be duly given if and when delivered personally
or deposited in the mail, postage and fees prepaid, and addressed as aforesaid.
Any party may change the address to which notices are to be given hereunder by
written notice to the other party as herein specified (provided that for this
purpose any mailed notice shall be deemed given on the third business day
following deposit of the same in the United States mail).

                                      A-4

<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Optionee has also
executed this Agreement as of the day and year first above written.  If this
Agreement is executed in duplicate counterparts, each counterpart shall be
deemed an original, but the duplicate counterparts together constitute one and
the same instrument.

                                SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                                By:
                                   ------------------------------------------
                                Name:
                                     ----------------------------------------
                                Title:
                                      ---------------------------------------

                                ---------------------------------------------
                                Scott E. Willkomm

                                      A-5

<PAGE>

                                                                       Exhibit B
                                                                       ---------

                                Form of Release
                                ---------------

          WHEREAS, Scott E. Willkomm's (the "Executive") employment has been
terminated either by (a) the Company other than pursuant to Section 6(a)(i),
6(a)(ii) or 6(a)(iii) in accordance with the Employment Agreement, dated as of
_____________, 2000, by and between the Executive and Scottish Annuity & Life
Holdings, Ltd. (the "Agreement"), (b) the Executive pursuant to Section 6(b) of
the Agreement or (c) the Company giving the Executive written notice of
nonrenewal of the Agreement no later than 90 days prior to the second
anniversary or any subsequent anniversary of the Agreement.

          WHEREAS, the Executive is required to sign this Release in order to
receive the Severance Payment as described in Section 7 of the Agreement and the
other benefits described in the Agreement.

          NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:

     1.   This Release is effective on the date hereof and will continue in
effect as provided herein.

     2.   In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payments and benefits which the Executive would
be entitled to receive absent the Agreement, the Executive, for himself and his
dependents, successors, assigns, heirs, executors and administrators (and his
and their legal representatives of every kind), hereby releases, dismisses,
remises and forever discharges Scottish Annuity & Life Holdings, Ltd., its
predecessors, parents, subsidiaries, divisions, related or affiliated companies,
officers, directors, stockholders, members, employees, heirs, successors,
assigns, representatives, agents and counsel (the "Company") from any and all
arbitrations, claims, including without limitation claims for attorney's fees,
demands, damages, suits, proceedings, actions and/or causes of action of any
kind and every description, whether known or unknown, which Executive now has or
may have had for, upon, or by reason of any cause whatsoever ("claims"), against
the Company, including but not limited to:

          (a)  any and all claims arising out of or relating to the Executive's
     employment by or service with the Company and his termination from the
     Company;

          (b)  any and all claims of discrimination, including without
     limitation claims of discrimination on the basis of sex, race, age,
     national origin, marital status, religion or handicap, including,
     specifically, but without limiting the generality of the foregoing, any
     claims under the Age Discrimination in Employment Act, as amended, Title
     VII of the Civil Rights Act of 1964, as amended, and the Americans with
     Disabilities Act; and

          (c)  any and all claims of wrongful or unjust discharge or breach of
     any contract or promise, express or implied.

                                      B-1
<PAGE>

     3.   The Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of his rights and that
any such violation, liability or invasion is expressly denied. The consideration
provided for this Release is made for the purpose of settling and extinguishing
all claims and rights (and every other similar or dissimilar matter) that the
Executive ever had or now may have against the Company to the extent provided in
this Release. The Executive further agrees and acknowledges that no
representations, promises or inducements have been made by the Company other
than as appear in the Agreement.

     4.   The Executive further agrees and acknowledges that:

          (a)  The release provided for herein releases claims to and including
     the date of this Release;

          (b)  He has been advised by the Company to consult with legal counsel
     prior to executing this Release, has had an opportunity to consult with and
     to be advised by legal counsel of his choice, fully understands the terms
     of this Release, and enters into this Release freely, voluntarily and
     intending to be bound;

          (c)  He has been given a period of 21 days to review and consider the
     terms of this Release, prior to its execution and that he may use as much
     of the 21 day period as he desires; and

          (d)  He may, within seven days after execution, revoke this Release.
     Revocation shall be made by delivering a written notice of revocation to
     the Company. For such revocation to be effective, written notice must be
     actually received by the Company no later than the close of business on the
     seventh day after the Executive executes this Release. If the Executive
     does exercise his right to revoke this Release, all of the terms and
     conditions of the Release shall be of no force and effect and the Company
     shall not have any obligation to make payments or provide benefits to the
     Executive as set forth in Section 7 of the Agreement.

     5.   The Executive agrees that he will never file a lawsuit or other
complaint asserting any claim that is released in this Release.

     6.   The Executive waives and releases any claim that he has or may have to
reemployment after __________________.

          IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.

Dated:_____________________      ___________________________________
                                 Scott E. Willkomm

                                      B-2Exhibit 4.1

[GRAPHIC OMITTED]

             NUMBER                                    SHARES

                               CATHAYONLINE, INC.
               INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA

PAR VALUE $0.001                                       CUSIP NO. 14915R 105
COMMON STOCK

THIS CERTIFIES THAT         SPECIMEN CERTIFICATE-VOID

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE OF $0.001
                                     EACH OF

                               CATHAYONLINE, INC.

transferable  on the books of the  Corporation  in person or by duly  authorized
attorney upon surrender of this Certificate properly endorsed.  This Certificate
is not valid until  countersigned  by the Transfer  Agent and  registered by the
Registrar.

Witness the facsimile seal of the  Corporation  and the facsimile  signatures of
its duly authorized officers.

                                             DATED:

                                             Countersigned and Registered:

                                                  SIGNATURE STOCK TRANSFER, INC.
                                                  (Dallas, Texas) Transfer Agent

                                             By
PRESIDENT

                                                  Authorized Signature

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