LIFE PARTNERS HOLDINGS, INC.
OMNIBUS EQUITY COMPENSATION PLAN
1. Establishment and Purpose of the Plan. Life Partners Holdings, Inc.
creates its Omnibus Equity Compensation Plan for the purpose of joining capable
and experienced people and entities to the Company's business purposes. The Plan
shall fulfill its purpose by compensating them with equity-based awards, whose
value is connected to the continued growth and profitability of the Company and
whose characteristics of ownership fosters a mutual interest with the Company's
shareholders.
2. Definitions.
(a) Affiliate: Any entity in which the Company has a substantial
direct or indirect interest, as determined by the Committee.
(b) Agent: An Employee, person, or entity performing services for
or referring sellers of life insurance policies or purchasers of such policies
to the Company or transacting business by or through its names, or an employee
of such person or entity.
(c) Award: A compensation grant related to the Company's equity,
including Restricted Stock, Options, Stock Appreciation Rights, and any
Equity-Based Award.
(d) Awardee: An Agent to whom an Award is made.
(e) Board of Directors: The Board of Directors of the Company.
(f) Common Stock: The common stock of the Company, par value $.01
a share, or such other class or kind of shares or other securities as may be
applicable under Section 10.
(g) Company: Life Partners Holdings, Inc., a Massachusetts
corporation, or any successor to substantially all its business, and any entity
owned in whole or in part by it, if the context requires or permits.
(h) Committee: The Compensation Committee of the Board of
Directors, or such other committee designated by the Board of Directors,
designated to administer the Plan under Section 4.
(i) Employee: A full-time managerial, administrative, or
professional person employed by the Company, including an officer or director
who is such an employee.
(k) Equity-Based Award. An award by the Committee under Section
9 of the Plan.
(1) Fair Market Value. If the Common Stock is traded on the
over-the-counter market, the mean between the highest closing bid and lowest
closing asked prices for a share of the Common Stock as reported by the National
Association of Securities Dealers Automated Quotation System, or if not reported
by that system, the mean between the closing bid and asked prices as quoted by a
source designated by the Committee; if the Common Stock is listed on a national
or regional stock exchange, the closing sales price per share on such exchange;
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or if the Common Stock is neither traded in the over-the-counter market nor
listed on an exchange, the per share value determined in good faith by the
Committee. The Committee may in its discretion average the Fair Market Value
over a period of time, may utilize a fair market value formula required by
Federal tax or securities laws, or may modify this definition in such ways as it
deems appropriate and consistent with the purposes of the Plan.
(m) Incentive Stock Option: Any Option which meets the
requirements of an incentive stock option as defined in Section 422A of the U.S.
Internal Revenue Code of 1986, as amended, or any statutory provision that may
replace such Section, other than an Option which states that it is not an
Incentive Stock Option.
(n) Non-Qualified Option: Any Option which is not an Incentive
Stock Option.
(o) Options: Any option or options granted from time to time
under the Plan.
(p) Plan: Life Partners Holdings, Inc. Omnibus Equity
Compensation Plan herein set forth, as the same may from time to time be
amended.
(q) Restricted Stock: Common Stock awarded by the Committee under
Section 7 of the Plan.
(r) Stock Appreciation Rights: Rights awarded by the Committee
under Section 8 of the Plan.
3. Eligibility. Any Agent is eligible to receive an Award.
4. Plan Administration.
(a) Administrator: The Plan shall be administered by the
Committee.
(b) Administrative Powers: The Committee shall have full power to
interpret and administer the Plan and full authority to act in selecting the
Agents or class of Agents to whom Awards will be granted, in determining the
type and amount of Award to be granted to each Agent or class of Agent, the
terms and conditions of Awards granted under the Plan and the terms of
agreements which will be entered into with Awardees. The Committee shall have
the power to make regulations for carrying out the Plan, and to make changes in
such regulations as they from time to time deem proper. Any interpretation by
the Committee of the terms and provisions of the Plan and the administration
thereof, and all action taken by the Committee, shall be final, binding, and
conclusive on the Company, its shareholders, Affiliates, all Agents, their
respective legal representatives, successors, and assigns and upon all other
persons claiming under or through any of them. As to the selection of and grants
of awards to Awardees who are not subject to Sections 16(a) and 16(b) of the
Act, the Committee may delegate any or all of its responsibilities to
appropriate Employees of the Company.
(c) Administration Liability: Members of the Board of Directors,
members of the Committee, or Employees acting under the Plan shall incur no
liability except for gross negligence or willful misconduct in the performance
of their duties.
5. Shares Subject to Grant.
(a) Subject to adjustment as provided in Section 10, the total
number of shares of Common Stock which the Company may grant under the Plan
shall be 3,000,000. Any shares issued by the Company through the assumption or
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substitution of outstanding grants from an acquired company shall not reduce the
shares available for grants under the Plan. Any shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares (if any). If any shares necessary to an Award are forfeited or the Award
otherwise terminates without the issuance of shares, the shares subject to such
Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan.
6. Option Rules and Conditions. The grant of Options shall be upon the
following rules and conditions:
(a) Options and Grants: Options shall be evidenced by Option
agreements. The agreements shall conform to the requirements of the Plan, and
may contain such other provisions (including restrictions upon the exercise of
the Option, and provisions for the protection of Options in the event of
mergers, consolidations, dissolutions, and liquidations) as the Committee shall
deem advisable.
(b) Option Price: The price at which Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee in
accordance with its rules, or, in their absence, by the Committee's discretion.
(c) Terms of Options: The Option agreements shall specify when an
Option may be exercisable and the terms and conditions applicable in the event
of the Awardee's termination of employment during the Option's term.
(d) Incentive Stock Option: Each provision of the Plan and each
Option agreement relating to an Incentive Stock Option shall be construed so
that each Incentive Stock Option shall be an incentive stock option as defined
in Section 422A of the Internal Revenue Code of 1986, as amended, or any
statutory provision that may replace such Section, and any provisions thereof
that cannot be so construed shall be disregarded. In no event may an Awardee be
granted Incentive Stock Options which do not comply with such grant and vesting
limitations as may be prescribed by Section 422A(b)(7) of the Internal Revenue
Code of 1986 as amended, or any successor section or limitation and any
implementing regulations.
(e) Payment of Option Price: The Option price of the shares of
Common Stock for which an Option shall be exercised shall be paid in full in
cash at the time of the exercise or, with the consent of the Committee, in whole
or in part in other consideration. An Awardee shall have no rights of a
shareholder with respect to any shares of Common Stock subject to an Option
unless and until a stock certificate for such shares shall have been issued to
him or her.
7. Restricted Stock Rules and Conditions. The grant of Restricted Stock
shall be upon the following rules and conditions:
(a) Restricted Stock Grants: Restricted Stock shall be evidenced
by Restricted Stock agreements. The agreements shall conform to the requirements
of the Plan and may contain such other provisions (including provisions for the
protection of Restricted Stock in the event of mergers, consolidations,
dissolutions, and liquidations, affecting either the agreement or the stock
issued thereunder) as the Committee shall deem advisable.
(b) Issuance of Restricted Stock: Upon determination of the
number of shares of Restricted Stock to be granted to an Awardee, the Committee
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shall direct that a certificate representing the number of shares of Common
Stock be issued to the Awardee with the Awardee as the registered owner. The
certificate representing such shares shall either be legended to restrict the
sale, transfer, assignment, pledge, or other encumbrances during the restricted
period or deposited by the Awardee, together with a stock power endorsed in
blank, with the Company.
(c) Dividends and Voting Rights: During the restricted period the
Awardee shall have the right to receive dividends from and to vote the shares of
Restricted Stock.
(d) Delivery: The Restricted Stock agreement shall specify the
duration of the restricted period and the performance and/or employment
conditions under which the Restricted Stock may be forfeited to the Company. At
the end of the restricted period the restrictions imposed hereunder shall lapse
with respect to the number of shares of Restricted Stock as determined by the
Committee, and the legend may be removed or the shares delivered, as the case
may be, with respect to such number. The Committee may, in its sole discretion,
modify or accelerate the vesting of shares of Restricted Stock.
(e) Directors' Restricted Stock. Directors may receive, in lieu
of some or all of their authorized cash compensation, Restricted Stock awards
having a value not greater than the cash foregone, with the Committee's consent
(excluding the electing director, if he or she is a member). The awards shall
have such terms and conditions as the Committee shall determine in its
discretion.
8. Stock Appreciation Rights. The grant of Stock Appreciation Rights
("SARs") shall be subject to the following rules and conditions:
(a) Stock Appreciation Right Grants: Stock Appreciation Rights
are rights to receive a payment in cash, Common Stock, Restricted Stock, or
other Equity-Based Awards as selected by the Committee. These rights, which are
determined by the appreciation in Common Stock, shall be evidenced by Stock
Appreciation Rights agreements. Such agreements shall conform to the
requirements of the Plan and may contain such other provisions as the Committee
shall deem advisable. SARs may be granted in tandem with all or a portion of a
related Option under the Plan ("Tandem SARs"), or may be granted separately
("Freestanding SARs"). Tandem SARs may be granted either at the time of the
grant of the option or at any time thereafter during the term of the option and
shall be capable of being exercised only to the extent that the related stock
option is capable of being exercised. If held by an Awardee subject to Section
16(b) of the Act, Freestanding SARs shall not be exercisable within the first
six months of its grant, or in the case of Tandem SARs, within the first six
months of the grant of the related Option.
(b) SAR Price: The exercise price of a Tandem SAR shall be the
option price under the related Option. The exercise price of a Freestanding SAR
shall be determined by the Committee. Notwithstanding the foregoing, the
Committee may unilaterally limit the appreciation in value of the Common Stock
attributable to the SAR at any time prior to its exercise.
(c) Exercise of SARs: Tandem SARs and Freestanding SARs shall
entitle the Awardee to receive a payment equal to the excess of the fair market
value of the shares of Common Stock covered by the SARs on the date of exercise
over the exercise price of the SARs or such lesser amount as determined by the
Committee. Such payment may be in cash, in shares of Common Stock, or Restricted
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Stock, or any combination, as the Committee shall determine. Upon exercise of
Tandem SARs as to some or all of the shares covered by the grant, the related
Option shall be cancelled automatically to the extent of the number of shares
covered by such exercise. Conversely, if the related Option is exercised as to
some or all of the shares covered by the grant, the related Tandem SARs, if any,
shall be cancelled automatically to the extent of the number of shares covered
by the Option exercise. To the extent an SAR (or the related Option) has not
been exercised on its expiration, it will be exercised automatically and paid in
the form determined by the Committee.
(d) Terms of SARs: SARs shall be subject to the terms and other
conditions imposed by Rule 16(b)-3 of the Act, if the SARs are granted to an
Awardee who is subject to Section 16(b) of the Act. SARs shall also be subject
to such other terms and conditions not inconsistent with the Plan as shall be
determined by the Committee.
9. Equity-Based Awards. The grant of Equity-Based Awards shall be upon
the following rules and regulations:
(a) Equity-Based Awards: The Committee may grant awards which are
valued, in whole or in part, by reference to or otherwise based on the Common
Stock. All grants shall be evidenced by written agreements which conform to the
requirements of the Plan and may contain such other provisions as the Committee
shall deem advisable.
(b) In Conjunction With Other Awards: Any Equity Based Award may
be granted alone, in addition to, or in tandem with Restricted Stock, Options,
SARs, or other Equity-Based Awards as the Committee may determine.
10. Adjustments Upon Changes in Capitalization. In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation or any other change in the corporate structure of
the Company affecting Common Stock, or a sale by the Company of all or part of
its assets, or any distribution to shareholders other than a normal cash
dividend, the Board of Directors shall make appropriate adjustment in the number
and kind of shares authorized by the Plan and any adjustments to outstanding
Awards as it determines appropriate. No fractional shares of Common Stock shall
be issued pursuant to such an adjustment, however, and the Fair Market Value of
any fractional shares resulting from adjustments pursuant to this section shall
be paid in cash to the Awardee.
11. Effective Date; Termination and Amendment. The Plan shall become
effective on May 31, 2000, subject to shareholder approval. The Plan shall
remain in full force and effect until terminated by the Board of Directors, who
shall have the power to amend, suspend or terminate the Plan at any time.
12. Forfeiture. Awards may be forfeited if the Awardee terminates his or
her employment or contractual relationship with the Company or an Affiliate for
any reason other than death or retirement, except that the Committee shall have
the authority to provide for the Award's continuation in whole or in part
whenever it shall determine that such continuation is in the best interests of
the Company. Awards may furthermore be forfeited by an Awardee if the Committee
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determines that the Awardee has at any time engaged in any activity harmful to
the interest of or in competition with the Company or Affiliates or accepts
employment with a competitor.
13. Transferability. Unless otherwise restricted in the Award agreement,
an Employee may assign or transfer an Award to any relative or spouse, or any
relative of such spouse, provided such relative is no further removed than the
fourth degree; to any trust or estate in which the Employee, relative, spouse,
or combination thereof have a beneficial interest of 10% or more; to any
corporation or other organization in which the Employee, relative, spouse, or
combination thereof have a beneficial interest of 10% or more; or to any other
person or entity if the Committee permits. Unless otherwise restricted in the
Award agreement, a non-Employee Agent may assign or transfer an Award to any
other person or entity if the Committee permits.
14. Beneficiary Upon Awardee's Death. An Awardee's Award shall be
transferable at his or her death to the beneficiary designated by the Awardee on
forms prescribed by and filed with the Committee. Upon the death of an Awardee,
such beneficiary shall succeed to the rights of the Awardee. If no such
designation of a beneficiary has been made, the Awardee's Awards shall succeed
to his or her legal representative and shall be transferable by will or pursuant
to the laws of descent and distribution.
15. Incorporation of Prior Awards. All prior Awards made by the Company
shall be incorporated into this Plan and made a part of it and be considered
subject and entitled to all of its obligations and privileges, as if such Awards
had been originally adopted and made under this Plan. Approval by the Company's
shareholders of this Plan shall presume their approval of all incorporated
Awards.
16. General Provisions.
(a) Nothing contained in the Plan, or in any Award granted
pursuant to the Plan, shall confer upon any Employee any right of continued
employment by the Company or Affiliate, nor alter the right of the Company or
Affiliate to terminate the Employee's employment at any time with or without
cause.
(b) For purposes of this Plan, transfer of employment between the
Company and its Subsidiaries and Affiliates shall not be deemed termination of
employment.
(c) Nothing in this Plan, or in any Award granted pursuant to
this Plan, shall confer upon any non-Employee Agent any right of continued
relationship with the Company or Affiliate, or alter the relationship between
them, including any right of the Company or Affiliate to terminate its
relationship with the non-Employee Agent.
(d) Appropriate provision may be made for all taxes required to
be withheld in connection with any Award, the exercise thereof and the transfer
of shares of Common Stock in respect of any Federal, state, or local withholding
taxes whether domestic or foreign. In the case of the payment of Awards in the
form of Common Stock, the Company shall have the right to retain the number of
shares of Common Stock whose fair market value equals the amount to be withheld.
(e) If any day on or before which action under the Plan must be
taken falls on a Saturday, Sunday or legal holiday, such action may be taken on
the next succeeding day not a Saturday, Sunday or legal holiday.
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(f) Without amending the Plan, awards may be granted to Agents
who are foreign nationals or employed outside the United States or both, on such
terms and conditions different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to further the purpose of
the Plan.
(g) To the extent that Federal laws (such as the Securities
Exchange Act of 1934, the Internal Revenue Code of 1986, or the Employee
Retirement Income Security Act of 1974) do not otherwise control, the Plan and
all determinations made and actions taken pursuant hereto shall be governed by
the law of Massachusetts and construed accordingly.
(h) The Committee may amend or substitute any outstanding Awards
to the extent it deems appropriate. Such amendment or substitution may be
unilateral by the Company, provided that Award substitutions shall be for
comparable value.
(i) The Committee may defer or permit an Awardee to defer the
receipt of consideration under an Award pursuant to such rules as the Committee
may promulgate or as provided in an Award agreement. The Committee may provide
in Award agreements for the receipt of interest, dividends, or other
consideration which would have been received on the Common Stock underlying or
tied to the Award.
(j) Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:
(l)(a) The restrictions and limitations applicable to any
Options, Restricted Stock, and other Equity-Based Awards, in each case to the
extent not already vested under the Plan, shall lapse and such shares and awards
shall be deemed fully vested;
(l)(b) Any SARs outstanding for at least six months and any
Options awarded under the Plan not previously exercisable and vested shall
become fully exercisable and vested;
(l)(c) The value of all outstanding Options, SARs, Restricted
Stock, and other Equity-Based Awards, in each case to the extent vested, shall
unless otherwise determined by the Committee in its sole discretion at or after
grant but prior to any Change in Control, be cashed out on the basis determined
by the Committee as of the date such Change in Control is determined to have
occurred or such other date as the Committee may determine prior to the Change
in Control.
(2) Definition: "Change in Control" shall mean a change in
control of the Company of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, a Change in Control shall be deemed to have occurred if (A)
any individual, partnership, firm, corporation, association, trust,
unincorporated organization, or other entity, or any syndicate or group deemed
to be a person under Section 14(d)(2) of the Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the
Act), directly or indirectly, of securities of the Company representing 20% or
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more of the combined voting power of the company's then outstanding securities
entitled to vote in the election of directors of the Company; or (B) during any
period of two (2) consecutive years (not including any period prior to the
execution of this Plan), individuals who at the beginning of such period
constitute the Board of Directors and any new directors, whose election by the
Board of Directors or nomination for election by the Company's shareholders was
approved by a vote of at least three quarters (3/4) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof. A change in control shall not be deemed
to be a Change in Control for purposes of this Plan if the Board of Directors
has approved such change in control prior to either (i) the occurrence of any of
the events described in the foregoing clauses (A) and (B), or (ii) the
commencement by any person other than the Company of a tender offer for the
Common Stock.
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