Exhibit 10.2

 

TORCHMARK CORPORATION

2005 INCENTIVE PLAN

 

ARTICLE 1

PURPOSE

 

1.1. GENERAL. The purpose of the Torchmark Corporation 2005 Incentive Plan (the
“Plan”) is to promote the success, and enhance the value, of Torchmark
Corporation (the “Company”), by linking the personal interests of employees,
officers and consultants of the Company or any Affiliate (as defined below) to
those of Company shareholders and by providing such persons with an incentive
for outstanding performance. The Plan is further intended to provide flexibility
to the Company in its ability to motivate, attract, and retain the services of
employees, officers and consultants upon whose judgment, interest, and special
effort the successful conduct of the Company’s operation is largely dependent.
Accordingly, the Plan permits the grant of incentive awards from time to time to
selected employees, officers and consultants of the Company and its Affiliates.

 

ARTICLE 2

DEFINITIONS

 

2.1. DEFINITIONS. When a word or phrase appears in this Plan with the initial
letter capitalized, and the word or phrase does not commence a sentence, the
word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:

 

(a) “Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that
directly or through one or more intermediaries controls, is controlled by or is
under common control with, the Company, as determined by the Committee.

 

(b) “Award” means any Option or Restricted Stock Award granted to a Participant
under the Plan.

 

(b) “Award Certificate” means a written document, in such form as the Committee
prescribes from time to time, setting forth the terms and conditions of an
Award. Award Certificates may be in the form of individual award agreements or
certificates or a program document describing the terms and provisions of an
Awards or series of Awards under the Plan.

 

(c) “Board” means the Board of Directors of the Company.

 

(d) “Cause” as a reason for a Participant’s termination of employment shall have
the meaning assigned such term in the employment, severance or similar
agreement, if any, between such Participant and the Company or an Affiliate,
provided, however that if there is no such employment, severance or similar
agreement in which such term is defined, and unless otherwise defined in the
applicable Award Certificate, “Cause” shall mean any of the following acts by
the Participant, as determined by the Committee or the Board: gross neglect of
duty, prolonged absence from duty without the consent of the Company,
intentionally engaging in any activity that is in conflict with or adverse to
the business or other interests of the Company, or willful misconduct,
misfeasance or malfeasance of duty which is reasonably determined to be
detrimental to the Company.

 

(e) “Change in Control” means and includes the occurrence of any one of the
following events:

 

(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
25% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (1), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by a Person

 

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who is on the Effective Date the beneficial owner of 25% or more of the
Outstanding Company Voting Securities, (ii) any acquisition directly from the
Company, (iii) any acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (v) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this definition; or

 

(ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

 

(iii) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Voting Securities, and (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

 

(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

 

Notwithstanding the foregoing, for any Awards that may at any time constitute a
nonqualified deferred compensation plan within the meaning of Section 409A(d) of
the Code, Change in Control shall have the same meaning as set forth in any
regulations, revenue procedure or revenue rulings issued by the Secretary of the
United States Treasury applicable to such plans.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and includes a reference to the underlying final regulations.

 

(g) “Committee” means the committee of the Board described in Article 4.

 

(h) “Company” means Torchmark Corporation, a Delaware corporation, or any
successor corporation.

 

(i) “Continuous Status as a Participant” means the absence of any interruption
or termination of service as an employee, officer or consultant of the Company
or any Affiliate, as applicable; provided, however, that for purposes of an
Incentive Stock Option, “Continuous Status as a Participant” means the absence
of any interruption or termination of service as an employee of the Company or
any Parent or Subsidiary, as applicable, pursuant to applicable tax regulations.
Continuous Status as a Participant shall continue to the

 

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extent provided in a written severance or employment agreement during any period
for which severance compensation payments are made to an employee, officer or
consultant and shall not be considered interrupted in the case of any short-term
disability or leave of absence authorized in writing by the Company prior to its
commencement; provided, however, that for purposes of Incentive Stock Options,
no such leave may exceed 90 days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 91st day
of such leave any Incentive Stock Option held by the Participant shall cease to
be treated as an Incentive Stock Option and shall be treated for tax purposes as
a Nonstatutory Stock Option. Notwithstanding the foregoing, for any Awards that
constitute a nonqualified deferred compensation plan within the meaning of
Section 409A(d) of the Code, Continuous Status as a Participant shall mean the
absence of any “separation from service” or similar concept as set forth in any
regulations, revenue procedure or revenue rulings issued by the Secretary of the
United States Treasury applicable to such plans.

 

(j) “Covered Employee” means a covered employee as defined in Code Section
162(m)(3).

 

(k) “Disability” or “Disabled” has the same meaning as provided in the long-term
disability plan or policy maintained by the Company or if applicable, most
recently maintained, by the Company or if applicable, an Affiliate, for the
Participant, whether or not such Participant actually receives disability
benefits under such plan or policy. If no long-term disability plan or policy
was ever maintained on behalf of Participant or if the determination of
Disability relates to an Incentive Stock Option, Disability means Permanent and
Total Disability as defined in Section 22(e)(3) of the Code. In the event of a
dispute, the determination whether a Participant is Disabled will be made by the
Committee and may be supported by the advice of a physician competent in the
area to which such Disability relates.

 

Notwithstanding the foregoing, for any Awards that may at any time constitute a
nonqualified deferred compensation plan within the meaning of Section 409A(d) of
the Code, Disability shall have the same meaning as set forth in any
regulations, revenue procedure or revenue rulings issued by the Secretary of the
United States Treasury applicable to such plans.

 

(l) “Effective Date” has the meaning assigned such term in Section 3.1.

 

(m) “Eligible Participant” means an employee, officer or consultant of the
Company or any Affiliate.

 

(n) “Exchange” means the New York Stock Exchange or any other national
securities exchange or, if applicable, the Nasdaq National Market on which the
Stock may from time to time be listed or traded.

 

(o) “Fair Market Value”, on any date, means (i) if the Stock is listed on a
securities exchange or is traded over the Nasdaq National Market, the closing
sales price on such exchange or over such system on such date or, in the absence
of reported sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, or (ii) if the Stock is not listed
on a securities exchange or traded over the Nasdaq National Market, the mean
between the bid and offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly reflected by
such Nasdaq quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable.

 

(p) “Good Reason” has the meaning assigned such term in the employment,
severance or similar agreement, if any, between a Participant and the Company or
an Affiliate, provided, however that if there is no such employment, severance
or similar agreement in which such term is defined, and unless otherwise defined
in the applicable Award Certificate, “Good Reason” shall mean a reduction by the
Company or an Affiliate in the Participant’s base salary (other than an overall
reduction in salaries that affects substantially all full-time employees of the
Company and its Affiliates).

 

(q) “Grant Date” of an Award means the first date on which all necessary
corporate action has been taken to approve the grant of the Award as provided in
the Plan, or such later date as is determined and specified as part of that
authorization process. Notice of the grant shall be provided to the grantee
within a reasonable time after the Grant Date.

 

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(r) “Incentive Stock Option” means an Option that is intended to be an incentive
stock option and meets the requirements of Section 422 of the Code or any
successor provision thereto.

 

(s) “Nonstatutory Stock Option” means an Option that is not an Incentive Stock
Option.

 

(t) “Option” means a right granted to a Participant under Article 7 of the Plan
to purchase Stock at a specified price during specified time periods. An Option
may be either an Incentive Stock Option or a Nonstatutory Stock Option.

 

(u) “Parent” means a corporation, limited liability company, partnership or
other entity which owns or beneficially owns a majority of the outstanding
voting stock or voting power of the Company. Notwithstanding the above, with
respect to an Incentive Stock Option, Parent shall have the meaning set forth in
Section 424(e) of the Code.

 

(v) “Participant” means a person who, as an employee, officer or consultant of
the Company or any Affiliate, has been granted an Award under the Plan; provided
that in the case of the death of a Participant, the term “Participant” refers to
a beneficiary designated pursuant to Section 9.5 or the legal guardian or other
legal representative acting in a fiduciary capacity on behalf of the Participant
under applicable state law and court supervision.

 

(w) “Person” means any individual, entity or group, within the meaning of
Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of
the 1934 Act.

 

(x) “Plan” means this Torchmark Corporation 2005 Incentive Plan, as amended or
supplemented from time to time.

 

(y) “Restricted Stock Award” means Stock granted to a Participant under Article
8 that is subject to certain restrictions and to risk of forfeiture.

 

(z) “Retirement” means a Participant’s termination of employment with the
Company or an Affiliate with the Committee’s approval after attaining any normal
or early retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company, or, in the event of the
inapplicability thereof with respect to the Participant in question, as
determined by the Committee in its reasonable judgment.

 

(aa) “Section 162(m) Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code or any successor provision thereto.

 

(bb) “Shares” means shares of the Company’s Stock. If there has been an
adjustment or substitution pursuant to Section 10.1, the term “Shares” shall
also include any shares of stock or other securities that are substituted for
Shares or into which Shares are adjusted pursuant to Section 10.1.

 

(cc) “Stock” means the $.1.00 par value common stock of the Company and such
other securities of the Company as may be substituted for Stock pursuant to
Article 10.

 

(dd) “Subsidiary” means any corporation, limited liability company, partnership
or other entity of which a majority of the outstanding voting stock or voting
power is beneficially owned directly or indirectly by the Company.
Notwithstanding the above, with respect to an Incentive Stock Option, Subsidiary
shall have the meaning set forth in Section 424(f) of the Code.

 

(ee) “1933 Act” means the Securities Act of 1933, as amended from time to time.

 

(ff) “1934 Act” means the Securities Exchange Act of 1934, as amended from time
to time.

 

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ARTICLE 3

EFFECTIVE TERM OF PLAN

 

3.1. EFFECTIVE DATE. The Plan shall be effective as of the date it is approved
by the shareholders of the Company (the “Effective Date”).

 

3.2. TERMINATION OF PLAN. The Plan shall terminate on the tenth anniversary of
the Effective Date unless earlier terminated as provided herein. The termination
of the Plan on such date shall not affect the validity of any Award outstanding
on the date of termination.

 

ARTICLE 4

ADMINISTRATION

 

4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the
Board (which Committee shall consist of at least two directors) or, at the
discretion of the Board from time to time, the Plan may be administered by the
Board. It is intended that at least two of the directors appointed to serve on
the Committee shall be “non-employee directors” (within the meaning of Rule
16b-3 promulgated under the 1934 Act) and “outside directors” (within the
meaning of Code Section 162(m)) and that any such members of the Committee who
do not so qualify shall abstain from participating in any decision to make or
administer Awards that are made to Eligible Participants who at the time of
consideration for such Award (i) are persons subject to the short-swing profit
rules of Section 16 of the 1934 Act, or (ii) are reasonably anticipated to
become Covered Employees during the term of the Award. However, the mere fact
that a Committee member shall fail to qualify under either of the foregoing
requirements or shall fail to abstain from such action shall not invalidate any
Award made by the Committee which Award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be changed at
any time and from time to time in the discretion of, the Board. The Board may
reserve to itself any or all of the authority and responsibility of the
Committee under the Plan or may act as administrator of the Plan for any and all
purposes. To the extent the Board has reserved any authority and responsibility
or during any time that the Board is acting as administrator of the Plan, it
shall have all the powers of the Committee hereunder, and any reference herein
to the Committee (other than in this Section 4.1) shall include the Board. To
the extent any action of the Board under the Plan conflicts with actions taken
by the Committee, the actions of the Board shall control.

 

4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering
the Plan, the Committee may from time to time adopt rules, regulations,
guidelines and procedures for carrying out the provisions and purposes of the
Plan and make such other determinations, not inconsistent with the Plan, as the
Committee may deem appropriate. The Committee’s interpretation of the Plan, any
Awards granted under the Plan, any Award Certificate and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties. Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished to that member
by any officer or other employee of the Company or any Affiliate, the Company’s
or an Affiliate’s independent certified public accountants, Company counsel or
any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.

 

4.3. AUTHORITY OF COMMITTEE. Except as provided below, the Committee has the
exclusive power, authority and discretion to:

 

(a) Grant Awards;

 

(b) Designate Participants;

 

(c) Determine the type or types of Awards to be granted to each Participant;

 

(d) Determine the number of Awards to be granted and the number of Shares or
dollar amount to which an Award will relate;

 

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(e) Determine the terms and conditions of any Award granted under the Plan,
including but not limited to, the exercise price, grant price, or purchase
price, any restrictions or limitations on the Award, any schedule for lapse of
forfeiture restrictions or restrictions on the exercisability of an Award, and
accelerations or waivers thereof, based in each case on such considerations as
the Committee in its sole discretion determines;

 

(f) Determine whether, to what extent, and under what circumstances an Award may
be settled in, or the exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be canceled, forfeited, or
surrendered;

 

(g) Prescribe the form of each Award Certificate, which need not be identical
for each Participant;

 

(h) Decide all other matters that must be determined in connection with an
Award;

 

(i) Establish, adopt or revise any rules, regulations, guidelines or procedures
as it may deem necessary or advisable to administer the Plan;

 

(j) Make all other decisions and determinations that may be required under the
Plan or as the Committee deems necessary or advisable to administer the Plan;

 

(k) Amend the Plan or any Award Certificate as provided herein; and

 

(l) Adopt such modifications, procedures, and subplans as may be necessary or
desirable to comply with provisions of the laws of non-U.S. jurisdictions in
which the Company or any Affiliate may operate, in order to assure the viability
of the benefits of Awards granted to participants located in such other
jurisdictions and to meet the objectives of the Plan.

 

Notwithstanding the above, the Board or the Committee may, by resolution,
expressly delegate to a special committee, consisting of one or more directors
who are also officers of the Company, the authority, within specified
parameters, to (i) designate Eligible Participants to be recipients of Awards
under the Plan, and (ii) to determine the number of such Awards to be granted to
any such Participants; provided that a limit on the total number or dollar value
of Awards to be granted to any such Participants shall be approved in advance by
the Board or the Committee and provided further that such delegation of duties
and responsibilities to such special committee may not be made with respect to
the grant of Awards to Eligible Participants (a) who are subject to Section
16(a) of the 1934 Act at the Grant Date, or (b) who as of the Grant Date are
reasonably anticipated to be become Covered Employees during the term of the
Award. The acts of such delegates shall be treated hereunder as acts of the
Board and such delegates shall report regularly to the Board and the
Compensation Committee regarding the delegated duties and responsibilities and
any Awards so granted.

 

4.4. AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate.
Each Award Certificate shall include such provisions, not inconsistent with the
Plan, as may be specified by the Committee.

 

ARTICLE 5

SHARES SUBJECT TO THE PLAN

 

5.1. NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2, the
aggregate number of Shares reserved and available for issuance pursuant to
Awards granted under the Plan shall be 5,625,000. The maximum number of Shares
that may be issued upon exercise of Incentive Stock Options granted under the
Plan shall be 1,000,000. The maximum number of Shares that may be issued as
Restricted Stock under the Plan shall be 50,000.

 

5.2. SHARE COUNTING. To the extent that an Award is canceled, terminates,
expires, is forfeited or lapses for any reason, any unissued Shares from such
Award will again be available for issuance pursuant to Awards granted under the
Plan.

 

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5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist,
in whole or in part, of authorized and unissued Stock, treasury Stock or Stock
purchased on the open market.

 

5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the
contrary, the maximum number of Shares with respect to one or more Options that
may be granted during any one calendar year under the Plan to any one
Participant shall be 800,000. The maximum aggregate grant with respect to
Restricted Stock Awards in any one calendar year to any one Participant shall be
7,000.

 

ARTICLE 6

ELIGIBILITY

 

6.1. GENERAL. Awards may be granted only to Eligible Participants; except that
Incentive Stock Options may be granted to only to Eligible Participants who are
employees of the Company or a Parent or Subsidiary as defined in Section 424(e)
and (f) of the Code.

 

ARTICLE 7

STOCK OPTIONS

 

7.1. GENERAL. The Committee is authorized to grant Options to Participants on
the following terms and conditions:

 

(a) EXERCISE PRICE. The exercise price per Share under an Option shall be
determined by the Committee; provided, however, that the exercise price of an
Option shall not be less than the Fair Market Value as of the Grant Date.

 

(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, subject to
Section 7.1(d). The Committee shall also determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised or vested. Except under certain circumstances contemplated by
Section 9.9 or as may be set forth in an Award Certificate with respect to
death, Disability or Retirement of a Participant, Options granted after June 30,
2005 will not be exercisable before the expiration of one year from the Grant
Date. The Committee may permit an arrangement whereby receipt of Stock upon
exercise of an Option is delayed until a specified future date.

 

(c) PAYMENT. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without
limitation, cash, Shares, or other property (including “cashless exercise”
arrangements), and the methods by which Shares shall be delivered or deemed to
be delivered to Participants; provided, however, that if Shares are used to pay
the exercise price of an Option, such Shares must have been held by the
Participant for at least such period of time, if any, as necessary to avoid the
recognition of an expense under generally accepted accounting principles as a
result of the exercise of the Option.

 

(d) EXERCISE TERM. In no event may any Option be exercisable for more than seven
years from the Grant Date.

 

7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted
under the Plan must comply with the following additional rules:

 

(a) EXERCISE PRICE. The exercise price of an Incentive Stock Option shall not be
less than the Fair Market Value as of the Grant Date.

 

(b) LAPSE OF OPTION. Subject to any earlier termination provision contained in
the Award Certificate, an Incentive Stock Option shall lapse upon the earliest
of the following circumstances; provided,

 

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however, that the Committee may, prior to the lapse of the Incentive Stock
Option under the circumstances described in subsections (3), (4) or (5) below,
provide in writing that the Option will extend until a later date, but if an
Option is so extended and is exercised after the dates specified in subsections
(3) and (4) below, it will automatically become a Nonstatutory Stock Option:

 

(1) The expiration date set forth in the Award Certificate.

 

(2) The seventh anniversary of the Grant Date.

 

(3) Three months after termination of the Participant’s Continuous Status as a
Participant for any reason other than the Participant’s Disability or death.

 

(4) One year after the Participant’s Continuous Status as a Participant by
reason of the Participant’s Disability.

 

(5) One year after the Participant’s death if the Participant dies while
employed, or during the three-month period described in paragraph (3) or during
the one-year period described in paragraph (4) and before the Option otherwise
lapses.

 

Unless the exercisability of the Incentive Stock Option is accelerated as
provided in Article 9, if a Participant exercises an Option after termination of
employment, the Option may be exercised only with respect to the Shares that
were otherwise vested on the Participant’s termination of employment. Upon the
Participant’s death, any exercisable Incentive Stock Options may be exercised by
the Participant’s beneficiary, determined in accordance with Section 9.5.

 

(c) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as
of the Grant Date) of all Shares with respect to which Incentive Stock Options
are first exercisable by a Participant in any calendar year may not exceed
$100,000.00.

 

(d) TEN PERCENT OWNERS. No Incentive Stock Option shall be granted to any
individual who, at the Grant Date, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary unless the exercise price per share of such Option is at
least 110% of the Fair Market Value per Share at the Grant Date and the Option
expires no later than five years after the Grant Date.

 

(e) EXPIRATION OF AUTHORITY TO GRANT INCENTIVE STOCK OPTIONS. No Incentive Stock
Option may be granted pursuant to the Plan after the day immediately prior to
the tenth anniversary of the Effective Date of the Plan, or the termination of
the Plan, if earlier.

 

(f) RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Stock
Option may be exercised only by the Participant or, in the case of the
Participant’s Disability, by the Participant’s guardian or legal representative.

 

(g) ELIGIBLE GRANTEES. The Committee may not grant an Incentive Stock Option to
a person who is not at the Grant Date an employee of the Company or a Parent or
Subsidiary.

 

ARTICLE 8

RESTRICTED STOCK AWARDS

 

8.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards of
Restricted Stock to Participants in such amounts and subject to such terms and
conditions as may be selected by the Committee, subject to Section 5.4

 

8.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation,

 

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limitations on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock) covering a period of time specified by the
Committee (the “Restricted Period”). These restrictions may lapse separately or
in combination at such times, under such circumstances, in such installments,
upon the satisfaction of performance goals or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter. Except as
otherwise provided in an Award Certificate or any special Plan document
governing an Award, the Participant shall have all of the rights of a
shareholder with respect to the Restricted Stock.

 

8.3. FORFEITURE. Except for certain limited situations (including the death,
Disability or Retirement of the Participant or a Change in Control referred to
in Section 9.8), Restricted Stock Awards subject solely to continued employment
restrictions shall have a Restriction Period of not less than five years from
the Grant Date (but permitting pro-rata vesting over such time). Except as
otherwise determined by the Committee at the time of the grant of the Award or
thereafter, immediately after termination of Continuous Status as a Participant
during the applicable Restriction Period or upon failure to satisfy a
performance goal during the applicable Restriction Period, Restricted Stock that
is at that time subject to restrictions shall be forfeited.

 

8.4. DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered
to the Participant at the time of grant either by book-entry registration or by
delivering to the Participant, or a custodian or escrow agent (including,
without limitation, the Company or one or more of its employees) designated by
the Committee, a stock certificate or certificates registered in the name of the
Participant. If physical certificates representing shares of Restricted Stock
are registered in the name of the Participant, such certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.

 

ARTICLE 9

PROVISIONS APPLICABLE TO AWARDS

 

9.1. STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, any other Award granted under the Plan. Subject to Section 9.2,
Awards granted in addition to or in tandem with other Awards may be granted
either at the same time as or at a different time from the grant of such other
Awards.

 

9.2. TERM OF AWARD. The term of each Award shall be for the period as determined
by the Committee, provided that in no event shall the term of any Stock Option
exceed a period of seven years from its Grant Date (or, if Section 7.2(d)
applies, five years from its Grant Date).

 

9.3. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Certificate, payments or transfers to be made by the
Company or an Affiliate on the grant or exercise of an Award may be made in such
form as the Committee determines at or after the Grant Date, including without
limitation, cash, Stock, or other property, or any combination, and may be made
in a single payment or transfer, in installments, or on a deferred basis, in
each case determined in accordance with rules adopted by, and at the discretion
of, the Committee.

 

9.4. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or an Affiliate, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or an Affiliate. No unexercised or restricted Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution or, except in the case of an Incentive Stock
Option, pursuant to a domestic relations order that would satisfy Section
414(p)(1)(A) of the Code if such Section applied

 

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to an Award under the Plan; provided, however, that the Committee may (but need
not) permit other transfers where there is no consideration whatsoever to any
party for said transfer and the Committee concludes that such transferability
(i) does not result in accelerated taxation, (ii) does not cause any Option
intended to be an Incentive Stock Option to fail to be described in Code Section
422(b), and (iii) is otherwise appropriate and desirable, taking into account
any factors deemed relevant, including without limitation, state or federal tax
or securities laws applicable to transferable Awards.

 

9.5. BENEFICIARIES. Notwithstanding Section 9.4, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant’s death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Certificate applicable to the
Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant’s estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Company.

 

9.6. STOCK CERTIFICATES. All Stock issuable under the Plan is subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal or state securities laws, rules and regulations
and the rules of any national securities exchange or automated quotation system
on which the Stock is listed, quoted, or traded. The Committee may place legends
on any Stock certificate or issue instructions to the transfer agent to
reference restrictions applicable to the Stock.

 

9.7. ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award, upon the
Participant’s death or Disability during his or her Continuous Status as a
Participant, (i) all of such Participant’s outstanding Options shall become
fully exercisable and (ii) all time-based vesting restrictions on the
Participant’s outstanding Awards shall lapse. To the extent that this provision
causes Incentive Stock Options to exceed the dollar limitation set forth in
Section 7.2(c), the excess Options shall be deemed to be Nonstatutory Stock
Options.

 

9.8. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award if a
Participant’s employment is terminated without Cause or the Participant resigns
for Good Reason within one year after the effective date of a Change in Control,
(i) all outstanding Options shall become fully exercisable and (ii) all
time-based vesting restrictions on outstanding Awards shall lapse.

 

9.9. DISCRETIONARY ACCELERATION. Regardless of whether an event has occurred as
described in Section 9.7 or 9.8 above, the Committee may in its sole discretion
at any time determine that, upon the death, Disability, Retirement or
termination of service of a Participant, all or a portion of such Participant’s
Options shall become fully or partially exercisable, and/or that all or a part
of the restrictions on all or a portion of the Participant’s outstanding Awards
shall lapse as of such date as the Committee may, in its sole discretion,
declare. The Committee may discriminate among Participants and among Awards
granted to a Participant in exercising its discretion pursuant to this Section
9.9.

 

9.10. TERMINATION OF EMPLOYMENT. Whether military, government or other service
or other leave of absence shall constitute a termination of employment shall be
determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A Participant’s
Continuous Status as a Participant shall not be deemed to terminate (i) in a
circumstance in which a Participant transfers from the Company to an Affiliate,
transfers from an Affiliate to the Company, or transfers from one Affiliate to
another Affiliate, or (ii) in the discretion of the Committee as specified at or
prior to such occurrence, in the case of a spin-off, sale or disposition of the
Participant’s employer from the Company or any Affiliate. To the extent that
this provision causes Incentive Stock Options to extend beyond three months from
the date a

 

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Participant is deemed to be an employee of the Company, a Parent or Subsidiary
for purposes of Sections 424(e) and 424(f) of the Code, the Options held by such
Participant shall be deemed to be Nonstatutory Stock Options.

 

9.11. FORFEITURE EVENTS. The Committee may specify in an Award Certificate that
the Participant’s rights and benefits with respect to an Award shall be subject
to reduction, cancellation, forfeiture or recoupment upon the occurrence of
certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include, but are not limited
to, termination of employment for cause, violation of material Company or
Affiliate policies, breach of non-competition, confidentiality or other
restrictive covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company or
any Affiliate.

 

9.12. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another
entity who become employees of the Company or an Affiliate as a result of a
merger or consolidation of the former employing entity with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the former employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

 

ARTICLE 10

CHANGES IN CAPITAL STRUCTURE

 

10.1. GENERAL. In the event of a corporate event or transaction involving the
Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
authorization limits under Section 5.1 and 5.4 shall be adjusted
proportionately, and the Committee may adjust the Plan and Awards to preserve
the benefits or potential benefits of the Awards. Action by the Committee may
include: (i) adjustment of the number and kind of shares which may be delivered
under the Plan; (ii) adjustment of the number and kind of shares subject to
outstanding Awards; (iii) adjustment of the exercise price of outstanding
Awards; and (iv) any other adjustments that the Committee determines to be
equitable. In addition, the Committee may, in its sole discretion, provide (i)
that Awards will be settled in cash rather than Stock, (ii) that Awards will
become immediately vested and exercisable and will expire after a designated
period of time to the extent not then exercised, (iii) that Awards will be
assumed by another party to a transaction or otherwise be equitably converted or
substituted in connection with such transaction, (iv) that outstanding Awards
may be settled by payment in cash or cash equivalents equal to the excess of the
Fair Market Value of the underlying Stock, as of a specified date associated
with the transaction, over the exercise price of the Award, or (v) any
combination of the foregoing. The Committee’s determination need not be uniform
and may be different for different Participants whether or not such Participants
are similarly situated. Without limiting the foregoing, in the event of a
subdivision of the outstanding Stock (stock-split), a declaration of a dividend
payable in Shares, or a combination or consolidation of the outstanding Stock
into a lesser number of Shares, the authorization limits under Section 5.1 and
5.4 shall automatically be adjusted proportionately, and the Shares then subject
to each Award shall automatically be adjusted proportionately without any change
in the aggregate purchase price therefor. To the extent that any adjustments
made pursuant to this Article 10 cause Incentive Stock Options to cease to
qualify as Incentive Stock Options, such Options shall be deemed to be
Nonstatutory Stock Options.

 

ARTICLE 11

AMENDMENT, MODIFICATION AND TERMINATION

 

11.1. AMENDMENT, MODIFICATION AND TERMINATION.

 

(a) The Board or the Committee may, at any time and from time to time, amend,
modify or terminate the Plan without shareholder approval; provided, however,
that if an amendment to the Plan would, in the

 

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reasonable opinion of the Board or the Committee, either (i) materially increase
the benefits accruing to Participants, (ii) materially increase the number of
Shares available under the Plan, (iii) expand the types of awards under the
Plan, (iv) materially expand the class of participants eligible to participate
in the Plan, (v) materially extend the term of the Plan, or (vi) otherwise
constitute a material change requiring shareholder approval under applicable
laws, policies or regulations or the applicable listing or other requirements of
an Exchange, then such amendment shall be subject to shareholder approval; and
provided, further, that the Board or Committee may condition any other amendment
or modification on the approval of shareholders of the Company for any reason,
including by reason of such approval being necessary or deemed advisable to (i)
permit Awards made hereunder to be exempt from liability under Section 16(b) of
the 1934 Act, (ii) to comply with the listing or other requirements of an
Exchange, or (iii) to satisfy any other tax, securities or other applicable
laws, policies or regulations.

 

(b) No termination, amendment, or modification of the Plan shall adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant affected thereby. An outstanding Award shall not be deemed to
be “adversely affected” by a Plan amendment if such amendment would not reduce
or diminish the value of such Award determined as if the Award had been
exercised, vested or otherwise settled on the date of such amendment (with the
per-share value of an Option for this purpose being calculated as the excess, if
any, of the Fair Market Value as of the date of such amendment over the exercise
or base price of such Award).

 

11.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:

 

(a) Subject to the terms of the applicable Award Certificate, such amendment,
modification or termination shall not, without the Participant’s consent, reduce
or diminish the value of such Award determined as if the Award had been
exercised, vested or otherwise settled on the date of such amendment or
termination (with the per-share value of an Option for this purpose being
calculated as the excess, if any, of the Fair Market Value as of the date of
such amendment or termination over the exercise or base price of such Award);

 

(b) The original term of an Option may not be extended without the prior
approval of the shareholders of the Company; and

 

(c) Except as otherwise provided in Article 10, the exercise price of an Option
may not be reduced, directly or indirectly, without the prior approval of the
shareholders of the Company.

 

ARTICLE 12

GENERAL PROVISIONS

 

12.1. NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS. No Participant or any
Eligible Participant shall have any claim to be granted any Award under the
Plan. Neither the Company, its Affiliates nor the Committee is obligated to
treat Participants or Eligible Participants uniformly, and determinations made
under the Plan may be made by the Committee selectively among Eligible
Participants who receive, or are eligible to receive, Awards (whether or not
such Eligible Participants are similarly situated).

 

12.2. NO SHAREHOLDER RIGHTS. No Award gives a Participant any of the rights of a
shareholder of the Company unless and until Shares are in fact issued to such
person in connection with such Award.

 

12.3. WITHHOLDING. The Company or any Affiliate shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy federal, state, and local taxes (including the
Participant’s FICA obligation) required by law to be withheld with respect to
any exercise, lapse of restriction or other taxable event arising as a result of
the Plan or an Award. If Shares are permitted to be surrendered to the Company
to satisfy tax obligations in excess of the minimum tax withholding obligation,
such

 

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Shares must have been held by the Participant as fully vested shares for such
period of time, if any, as necessary to avoid the recognition of an expense
under generally accepted accounting principles. The Company shall have the
authority to require a Participant to remit cash to the Company in lieu of the
surrender of Shares for tax withholding obligations if the surrender of Shares
in satisfaction of such withholding obligations would result in the Company’s
recognition of expense under generally accepted accounting principles. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require or permit
that any such withholding requirement be satisfied, in whole or in part, by
withholding from the Award Shares having a Fair Market Value on the date of
withholding equal to the minimum amount (and not any greater amount) required to
be withheld for tax purposes, all in accordance with such procedures as the
Committee establishes.

 

12.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan, any Award Certificate
or any other document or statement made with respect to the Plan, shall
interfere with or limit in any way the right of the Company or any Affiliate to
terminate any Participant’s employment or status as an officer or consultant at
any time, nor confer upon any Participant any right to continue as an employee,
officer or consultant of the Company or any Affiliate, whether for the duration
of a Participant’s Award or otherwise.

 

12.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan
for incentive and deferred compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Certificate shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Affiliate. This Plan is not
intended to be subject to ERISA.

 

12.6. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, savings,
profit sharing, group insurance, welfare or benefit plan of the Company or any
Affiliate unless provided otherwise in such other plan.

 

12.7. EXPENSES. The expenses of administering the Plan shall be borne by the
Company and its Affiliates.

 

12.8. TITLES AND HEADINGS. The titles and headings of the Sections in the Plan
are for convenience of reference only, and in the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.

 

12.9. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

 

12.10. FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given in lieu of
fractional Shares or whether such fractional Shares shall be eliminated by
rounding up or down.

 

12.11. GOVERNMENT AND OTHER REGULATIONS.

 

(a) Notwithstanding any other provision of the Plan, no Participant who acquires
Shares pursuant to the Plan may, during any period of time that such Participant
is an affiliate of the Company (within the meaning of the rules and regulations
of the Securities and Exchange Commission under the 1933 Act), sell such Shares,
unless such offer and sale is made (i) pursuant to an effective registration
statement under the 1933 Act, which is current and includes the Shares to be
sold, or (ii) pursuant to an appropriate exemption from the registration
requirement of the 1933 Act, such as that set forth in Rule 144 promulgated
under the 1933 Act.

 

(b) Notwithstanding any other provision of the Plan, if at any time the
Committee shall determine that the registration, listing or qualification of the
Shares covered by an Award upon any Exchange or under any foreign, federal,
state or local law or practice, or the consent or approval of any governmental
regulatory

 

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body, is necessary or desirable as a condition of, or in connection with, the
granting of such Award or the purchase or receipt of Shares thereunder, no
Shares may be purchased, delivered or received pursuant to such Award unless and
until such registration, listing, qualification, consent or approval shall have
been effected or obtained free of any condition not acceptable to the Committee.
Any Participant receiving or purchasing Shares pursuant to an Award shall make
such representations and agreements and furnish such information as the
Committee may request to assure compliance with the foregoing or any other
applicable legal requirements. The Company shall not be required to issue or
deliver any certificate or certificates for Shares under the Plan prior to the
Committee’s determination that all related requirements have been fulfilled. The
Company shall in no event be obligated to register any securities pursuant to
the 1933 Act or applicable state or foreign law or to take any other action in
order to cause the issuance and delivery of such certificates to comply with any
such law, regulation or requirement.

 

12.12. GOVERNING LAW. To the extent not governed by federal law, the Plan and
all Award Certificates shall be construed in accordance with and governed by the
laws of the State of Delaware.

 

12.13. ADDITIONAL PROVISIONS. Each Award Certificate may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of the Plan.

 

12.14. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in
any way affect the right or power of the Company to make adjustments,
reclassification or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets. The Plan shall not restrict the authority of the Company,
for proper corporate purposes, to draft or assume awards, other than under the
Plan, to or with respect to any person. If the Committee so directs, the Company
may issue or transfer Shares to an Affiliate, for such lawful consideration as
the Committee may specify, upon the condition or understanding that the
Affiliate will transfer such Shares to a Participant in accordance with the
terms of an Award granted to such Participant and specified by the Committee
pursuant to the provisions of the Plan.

 

12.15. INDEMNIFICATION. Each person who is or shall have been a member of the
Committee, or of the Board, or an officer of the Company to whom authority was
delegated in accordance with Article 4 shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or except
as expressly provided by statute. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s charter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

12.16. FOREIGN PARTICIPANTS. In order to facilitate the granting of Awards to
Eligible Participants who are foreign nationals or who are employed outside of
the United States of America, the Committee may provide for such special terms
and conditions, including without limitation substitutes for Awards, as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom. The Committee may approve any supplements to,
or amendments, restatements or alternative versions of this Plan as it may
consider necessary or appropriate for the purposes of this Section 12.16 without
thereby affecting the terms of this Plan as in effect for any other purpose, and
the Secretary or other appropriate officer of the Company may certify any such
documents as having been approved and adopted pursuant to properly delegated
authority; provided, that no such supplements, amendments, restatements or
alternative versions shall include any

 

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provisions that are inconsistent with the spirit of this Plan, as then in
effect. Participants subject to the laws of a foreign jurisdiction may request
copies of, or the right to view, any materials that are required to be provided
by the Company pursuant to the laws of such jurisdiction.

 

12.17. NOTICE. Except as otherwise provided in this Plan, all notices or other
communications required or permitted to be given under this Plan to the Company
shall be in writing and shall be deemed to have been duly given if delivered
personally or mailed, postage pre-paid, as follows: (i) if to the Company, at
its principal business address to the attention of the Secretary; and (ii) if to
any Participant, at the last address of the Participant known to the sender at
the time the notice or other communication is sent.

 

12.18. INUREMENT OF RIGHTS AND OBLIGATIONS. The rights and obligations under
this Plan and any related documents shall inure to the benefit of, and shall be
binding upon, the Company, its successors and assigns, and the Participants and
their beneficiaries.

 

12.19. COSTS AND EXPENSES. Except as otherwise provided herein, the costs and
expenses of administering this Plan shall be borne by the Company, and shall not
be charged to any Award nor to any Participant receiving an Award. Costs and
expenses associated with the redemption or exercise of any Award under this
Plan, including, but not limited to, commissions charged by any agent of the
Company, may be charged to the Participant.

 

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The foregoing is hereby acknowledged as being the Torchmark Corporation 2005
Incentive Plan as adopted by the Board on             , 2005 and approved by the
shareholders on             , 2005.

 

TORCHMARK CORPORATION

By:

   

Its:

   

 

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