THIS DEED is made the 20th day of August 1998

BY
A.L.O.T.  TRUSTEE LIMITED,  a limited liability  company  incorporated in Jersey
whose registered office is situated at Pirouet House,  Union Street, St. Helier,
Jersey, Channel Islands (the "Trustee").

SUPPLEMENTAL to:-

1.    a  settlement  made between BG Services  Limited and the Trustee  (therein
      called  "Agent  Loyalty   Opportunity  Trust")  dated  23  May  1997  (the
      "Settlement");

2.    a deed of amendment dated 16 July 1997; and

3.    a deed of amendment dated 13 August 1997.

WHEREAS:

1.    The Trustee is the present trustee of the Settlement.

2.    By clause 22.2 of the  Settlement  the Trustee has power from time to time
      by  instrument  in  writing  to  revoke,  alter or amend all or any of the
      provisions of the Rules.

3.    The Trustee is desirous of exercising  the power referred to above in such
      manner as hereinafter appears.

4.    The Trustee has  consented to the exercise of the  Settlor's  power as set
      out above and has evidenced such consent by signing as a party hereto.

5.    Where the context  permits  words and phrases  used herein  shall bear the
      same meaning as in the Settlement.


<PAGE>
NOW THIS DEED  WITNESSETH  that in exercise of the power  conferred upon them by
Clause 22.2 of the Settlement the Trustee HEREBY DECLARES that the Rules and the
Appendix  thereto shall be deleted in their entirety and replaced with the Rules
and Appendix contained in the Schedule hereto.

IN WITNESS  WHEREOF this deed has been  executed by the parties the day and year
first above written.


<PAGE>

           THE SCHEDULE TO THE DEED OF AMENDMENT DATED 20 AUGUST 1998

                                  SCHEDULE TWO

                        AGENT LOYALTY OPPORTUNITY TRUST

RULES

These  rules have been  established  pursuant to the Agent  Loyalty  Opportunity
Trust  established by Settlement  dated 23 May 1997, as amended 16 July 1997, 13
August 1997 and 20 August 1998.

1.    Definitions

1.1.  In this instrument wherever the context permits the following  expressions
      shall have the meanings set against them:-

      "Account Value" shall mean the accumulated value as determined by the Life
      Company of all in force deferred  annuities,  immediate annuities and life
      insurance policies issued by the Life Company and sold by an Award Holder,
      either alone or together  with other  principles  or employees  within his
      Agency, as the Life Company shall determine.

      "Agency" shall mean in relation to a Sales Agent who is an individual, the
      firm, or branch of a firm of which he or she is a principle or employee.

      "Award" shall mean an award of Units made to a Sales Agent  pursuant to an
      Award Agreement.

      "Award Agreement" shall mean the written  agreement  described in Rule 5.2
      evidencing  the  making of an Award to a Sales  Agent and  containing  the
      terms, conditions and restrictions pertaining to such Award.

      "Award Date" shall mean the date of the Award Agreement.

<PAGE>
      "Award Holder" shall mean a Sales Agent to whom an Award has been made.

      "Award  Price"  shall  mean the  price of a Unit  specified  in the  Award
      Agreement being a sum equivalent to the mid-market price of a Share on the
      Award Date or such other price as the Trustee shall determine.

      "Award Units" shall mean Units the subject of an Award.

      "Bonus" shall mean a cash bonus calculated and payable as provided in Rule
      8.

      "Company" shall mean London Pacific Group Limited, a company  incorporated
      with limited liability in Jersey, Channel Islands.

      "Exercise  Notice" shall mean the written  notice given by an Award Holder
      to exercise an Award as referred to in Rule 7.1 and described in Rule 7.2.

      "The Group" shall mean the Company and its subsidiaries.

      "The Life Company"  shall mean London  Pacific Life & Annuity  Company,  a
      North Carolina life assurance company.

      "Rules" unless the context clearly  indicates  otherwise shall mean a rule
      of the Trust as adopted by the Trustee and amended from time to time.

      "Sales Agent" shall mean any independent sales agent, in the United States
      who is party to an  Agency  Agreement  with the Life  Company  or who is a
      principle or employee of an Agency  which is party to an Agency  Agreement
      with the Life  Company  which (in either  case)  remains in full force and
      effect for the sale of the Life Company's life and annuity products.

<PAGE>
      "Settlement"  shall  mean the  Settlement  dated 23 May 1997  known as the
      Agent Loyalty Opportunity Trust.

      "Share" shall mean an Ordinary Share of 5c each in the Company,  as traded
      on the London Stock Exchange.

      "Specified  Percentage"  shall  mean  the  percentage  set out in an Award
      Agreement required to determine whether an Award Holder's Award shall vest
      in accordance with Rule 6.2.

      "Special Sales Target" shall mean the absolute dollar amount set out in an
      Award Agreement  representing deferred annuities,  immediate annuities and
      life insurance policies required to be achieved in sales, by a Sales Agent
      either  alone or together  with other  principles  or  employees  with the
      Agency,  as the  Life  Company  shall  determine  in a  calendar  year  to
      determine  whether an Award Holder's  Award shall vest in accordance  with
      Rule 6.2.

      "$" or "dollar" or "c" or "cent"  refers to the legal tender of the United
      States of America.

      "Trust"  shall  mean  the  Agent  Loyalty  Opportunity  Trust as it may be
      amended from time to time.

      "Trustee"  shall mean the  Trustee or  Trustees  for the time being of the
      Trust.

      "Unit" shall mean a unit representing the right granted to an Award Holder
      pursuant to an Award  requiring  that the Trustee pays that Award Holder a
      Bonus sum  calculated in accordance  with Rule 8 by reference to the value
      of a Share on the basis that one Unit shall be representative of the value
      of one Share;

<PAGE>
      "Vesting  Conditions"  shall mean the conditions set out in the provisions
      of Rule 6; and

      "Year" shall mean calendar year

1.2   The single includes the plural and vice versa.

1.3   The  masculine  includes  the  feminine  and vice versa and each  includes
      neuter.

2.    Administration

2.1   The Trustee shall have full power and  discretion,  subject to the express
      provisions of these Rules:

      2.1.1 To determine from time to time to which Sales Agents Awards shall be
            made, the term of each Award,  the Award Price, the time or times at
            which all or portions of an Award may be exercised and the number of
            Units the subject of an Award;

      2.1.2 To construe and interpret these Rules and Awards granted thereunder,
            and to amend and revoke the Rules.  In the  exercise  of this power,
            the Trustee  shall  generally  determine all questions of policy and
            interpretation that may arise, and may correct any defect,  omission
            or  inconsistency  in these  Rules or in any  Award  Agreement  in a
            manner and to the extent it shall deem  necessary  or  expedient  to
            make these Rules fully effective;

      2.1.3 To  prescribe  the terms and  conditions  of each  Award,  including
            without limitation the bonus provisions;

<PAGE>
      2.1.4 Subject to  applicable  legal  restrictions  and the  consent of the
            Award Holder  affected,  to amend any outstanding  Award  Agreement,
            including but without  limitation  the  acceleration  in whole or in
            part.

      2.1.5 Generally,  to exercise  such powers and to perform such acts as are
            deemed  necessary or expedient to promote the best  interests of the
            Company.

2.2   All decisions,  interpretations  and other actions of the Trustee shall be
      final and binding on all Award  Holders.  The Trustee  shall not be liable
      for any  action  that it has taken or failed  to take in good  faith  with
      respect to these Rules or any Award.

2.3   In the exercise of any power or  discretion  under these Rules the Trustee
      shall  first have  regard to any  written  recommendations  which it shall
      receive from the Company or any committee of the Company.

3.    Eligibility

Awards may be granted to any Sales Agents.

4.    Awards subject to Rules

4.1   Restrictions

      No Award  granted under the terms of these Rules shall be capable of being
      sold,  transferred,  pledged,  encumbered or otherwise  alienated or dealt
      with by an Award Holder.

<PAGE>
4.2   No Rights as a Shareholder

      An Award Holder shall have no rights as a shareholder  with respect to any
      Units the  subject of an Award or in respect of Shares held by the Trustee
      at any time and without limitation of the generality of the foregoing. The
      Award   Holder   shall  not  be  entitled  to   dividends   (ordinary   or
      extraordinary,   whether   in  cash,   securities   or  other   property),
      distributions, or other rights with respect to any Units or Shares and the
      making of an Award  shall not  entitle  the Award  Holder to any rights in
      respect of any Units or Shares.

5.    Grant of Awards

5.1   General

      The  Trustee  may make Awards at any time and from time to time during the
      Trust Period of the  Settlement.  The Trustee shall specify the Award date
      (the  "Award  Date") or, if it fails to do so, the Award Date shall be the
      date of the action taken by the Trustee to make an Award.

5.2   Award Agreement

      As soon as  practicable  after  making an Award,  the Award Holder and the
      Trustee shall enter into a written Award  Agreement  substantially  in the
      form of the Appendix  hereto  which  specifies  the Award Date,  the Award
      Price,  the number of Award  Units,  the Vesting  Conditions,  the Vesting
      Schedule and the other terms and conditions of the Award.

5.3   Award Term

      An Award  which has not been  exercised  seven  years after the Award Date
      shall be forfeited on the seventh  anniversary of the Award Date and shall
      have no further effect.

<PAGE>
6.    Vesting Conditions

6.1   No Award  Holder  shall be entitled to exercise  his rights under an Award
      Agreement unless and until the Vesting  Conditions  applicable to an Award
      have been satisfied.  In order to determine whether the Vesting Conditions
      have been satisfied in respect of any year as soon as practicable  after 1
      January of each year the Life Company  shall notify the Trustee in writing
      of:-

      (a)   the Account Value for each Award Holder which shall be calculated as
            at 31 December (the "Calculation Date") of the immediately preceding
            year (the "Ending Value")

      (b)   the Account Value for each Award Holder calculated as at 31 December
            of the year prior to the immediately  preceding year (the "Beginning
            Value").

6.2   Vesting Hurdle

      Subject  to the  provision  of this  Rule 6 that  proportion  of an  Award
      Holder's  Award as  determined  by  reference  to the Vesting  Schedule as
      defined in Rule 6.3 hereof shall vest and his right under the Award become
      exercisable from the next following  Vesting Date otherwise on and subject
      to the terms of the Award Agreement if either:-

      (a)   his Ending Value exceeds the  Specified  Percentage of his Beginning
            Value in respect of the same year, or

      (b)   the  aggregate  Ending  Value  less the  aggregate  Beginning  Value
            exceeds the Special Sales Target in respect of the same year.

<PAGE>
6.3   Vesting Schedule

      Each Award  Agreement  shall  specify  in a "Vesting  Schedule " a date or
      dates on which, subject to satisfaction of the Vesting Conditions relevant
      for that year,  all or a  proportion  of that Award  Holder's  Award Units
      shall become capable of being exercised.

6.4   Vesting Date

      The  proportion  of the Award  Holders'  Award for any year  determined by
      reference  to the  Vesting  Schedule  shall  vest and be  capable of being
      exercised  subject to  fulfilment  of the  provisions  of this Rule 6 on 1
      March in the year following the  Calculation  Date, and such date shall be
      known as the Vesting Date.

6.5   Failure to Vest

      In the event that an Award  Holder  does not meet the  Vesting  Conditions
      contained in this Rule in respect of any year then the  proportion of that
      Award Holders' Award  determined by reference to the Vesting  Schedule for
      that year shall not vest and become  exercisable in that year and shall be
      forfeited and of no further effect.

6.6   Notification of Vesting

      The Trustee  shall be under no  obligation to notify an Award Holder whose
      Award has  vested in  accordance  with this Rule but an Award  Holder  may
      enquire as to whether or not his Award has vested by  application to Chief
      Marketing Officer,  London Pacific Life & Annuity Company,  1755 Creekside
      Oaks Drive, Sacramento, California 95833.

<PAGE>
7.    Exercise of an Award following Vesting

7.1   Subject to the  provisions of these Rules an Award Holder may exercise his
      Award at any time in whole or in part by giving an Exercise  Notice signed
      by the Award Holder in accordance with the provisions of Rule 7.2.

7.2   The Exercise Notice shall be addressed to Chief Marketing Officer,  London
      Pacific Life & Annuity  Company,  1755 Creekside  Oaks Drive,  Sacramento,
      California  95833 and  notice of  exercise  shall only be  effective  upon
      receipt of the Exercise Notice.  The Award Holder shall specify the number
      of Award Units the subject of the  exercise  and details of how payment of
      Bonus should be made including  where  relevant,  payment details for wire
      transfers to an Award Holder's bank account.

7.3   Notwithstanding  any  other  provision  of these  Rules no Award  shall be
      capable of being  exercised  during any period or periods when the Company
      or its  Directors  or  either  of them are  unable  to deal in Shares as a
      result  of the  provisions  of the  Listing  Rules  of  the  London  Stock
      Exchange.  Any such period or periods shall be known as a "Closed Period".
      The Trustee, the Life Company and the Company shall be under no obligation
      to inform Award Holders of the time or existence of a Closed  Period,  but
      it shall be the responsibility of the Award Holder to establish whether or
      not a Closed  Period is operating  before  exercising  any rights under an
      Award.

8.    Payment of Bonus following Exercise

8.1   In respect of an Award which has vested, the Trustee shall upon receipt of
      a duly completed  Exercise Notice by the Life Company  calculate the Bonus
      payable to the Award Holder by reference to the following formula:-

      B  =  (EP-AP) x U

<PAGE>
      Where B     = the Bonus payable;

            EP    = a sum equal to the average  closing middle market price of a
                  Share on the London Stock  Exchange for the five business days
                  following  receipt of the Exercise  translated into dollars by
                  reference to an appropriate  dollar / pound sterling  exchange
                  rate  which  shall  be  determined  by the  Life  Company  and
                  notified  to the  Trustee  less 1% of such price  representing
                  dealing  costs  involved  in the  Trustee  selling  Shares  to
                  realise an amount equal to the Bonus;

            AP    = the Award Price; and

            U     = the total  number of Units in  respect of which the Award is
                  being exercised

The Bonus shall be paid by cheque or wire transfer to the Award Holder within 30
days of the receipt by the Life Company of the Exercise Notice.

8.2   Any payment of any Bonus to an Award  Holder shall be made net of any tax,
      duty or other amounts  which the Trustee,  the Life Company or the Company
      shall be obliged or entitled to deduct  therefrom.  The Trustee shall have
      power to withhold all or any part of an Award  Holder's  Bonus to meet any
      obligations of the Award Holder due to the Trustee,  the Life Company, the
      Company or otherwise.

<PAGE>
9.    Termination of an Award Holder's Agency Agreement

9.1   If the Trustee receives written notification (the "Notice of Termination")
      from the Life Company that,  for any reason  including  death or permanent
      and total  disability,  an Award Holder's Agency Agreement has terminated,
      the Award Units held at the date of termination  for that Award Holder but
      not  vested in  accordance  with Rule 6 shall be  forfeited  and the Award
      Agreement shall have no further effect.

9.2   The Trustee  shall be entitled  to rely on the Notice of  Termination  and
      shall not be obliged to make any further  investigations  or  enquiries in
      order to verify the authenticity of the Notice of Termination.

9.3   The  Trustee  shall not be liable  for any  action it may take or fails to
      take  following  receipt  of Notice of  Termination  from the  Company  or
      otherwise.

9.4   On the  termination of the Award Holder's Agency  Agreement,  vested Award
      Units can be  exercised  in whole or in part for a period of 90 days after
      the date of the Notice of Termination.

10    Modification, Extension and Renewal of Awards

Within the limitations of these Rules,  the Trustee may modify,  extend or renew
outstanding  Awards or may accept the  cancellation  thereof  (to the extent not
previously  exercised) for the making of new Awards in  substitution  therefore.
Notwithstanding the foregoing, no modification shall, without the consent of the
Award Holder, alter or impair his rights or obligations under an Award.

<PAGE>
11.   No Rights in respect of Agency Agreement

Neither  these Rules nor any Award made  hereunder  shall  confer upon any Award
Holder any right as against the Life Company other than the rights determined by
the terms of the Agency  Agreement nor shall the existence of an Award interfere
in any way with the Life Company's  rights to terminate the Agency  Agreement of
any Award Holder in accordance with its terms.

12.   Duration and Amendments

12.1  Duration

      These  Rules  shall  become  effective  on the  date of  execution  of the
      Settlement and terminate  automatically  on expiration of the Trust Period
      under the Settlement.

12.2  Amendment; Termination

      The Trustee may amend,  suspend or  terminate  these Rules at any time and
      for any reason.

12.3  Effect of Amendment or Termination

      No Award  shall be made to an Award  Holder  under  these  Rules after the
      termination  hereof,  except pursuant to an Award made before termination.
      Termination  or  amendment  of these  Rules  shall  not  affect  any Award
      previously made or any Award previously made under these Rules.

13.   Proper Law

These  Rules and all  Award  Agreements  entered  into  pursuant  to it shall be
governed by and construed in accordance with the laws of the Island of Jersey.

<PAGE>
                        AGENT LOYALTY OPPORTUNITY TRUST

                                AWARD AGREEMENT

THIS AGREEMENT is made on the day set out in the First Schedule hereto.

BETWEEN

(1)   A.L.O.T.  Trustee Limited as Trustee (the "Trustees") of the Agent Loyalty
      Opportunity Trust (the "Trust"); and

(2)   The Sales Agent whose name appears below.

WHEREAS

The Trustee  has  resolved to award to the Sales Agent the number of Award Units
specified in the First  Schedule to this  agreement  and the Sales Agent accepts
the said Award Units upon and subject to the terms of this agreement.

NOW IT IS HEREBY AGREED as follows:-

(1)   Words and  expressions  used in this Award  Agreement  shall where context
      permits bear the same meaning as in the Agent  Loyalty  Opportunity  Trust
      Rules (the  "Rules")  a copy of which are set out in the  Second  Schedule
      hereto.

(2)   The Rules are hereby  incorporated into this agreement and the Sales Agent
      agrees to be bound thereby.

<PAGE>
(3)   In  consideration  of the Sales Agent  continuing  to be a Sales Agent the
      Trustees hereby awards to the Sales Agent the Award Units specified in the
      First Schedule hereto.

(4)   Provided  that in any year the Vesting  Conditions  described in the Rules
      are  satisfied  that  proportion of the Sales Agent's Award Units for that
      year as determined by reference to the Vesting  Schedule  contained in the
      First Schedule hereto shall vest on the Vesting Date and be exercisable.

(5)   None of the Sales Agent's  Award Units shall be capable of vesting  before
      the Earliest Vesting Date as defined in the First Schedule hereto.

(6)   If in any year the Vesting Conditions are not satisfied by the Sales Agent
      then the relevant  proportion of the Sales Agent's Award Units which would
      otherwise  have vested for that year will be  forfeited  and of no further
      effect.

(7)   Provided  the  Vesting  Conditions  as  described  in the  Rules and where
      relevant more particularly  defined in the First Schedule hereto have been
      satisfied  in relation to this Award the Trustee  agrees that at such time
      as they shall  receive an Exercise  Notice from the Sales Agent in respect
      of vested  Award  Units they shall pay to the Sales  Agent a Bonus in such
      amount  and on such  terms  and at such  time as  shall be  determined  in
      accordance with the provisions of the Rules.

(8)   All vested  Award Units which are not  exercised by the Sales Agent by the
      Termination  Date  as  defined  in the  First  Schedule  hereto  shall  be
      forfeited and of no further effect.

(9)   This agreement  shall be governed by and construed in accordance  with the
      laws of the  Island  of  Jersey  and the Sales  Agent  hereto  irrevocably
      submits to the non-exclusive jurisdiction of the said Island of Jersey.

<PAGE>
IN WITNESS WHEREOF

The parties  hereto have caused this agreement to be executed as of the date set
out below.

The common seal of
A.L.O.T. TRUSTEE LIMITED
was hereby affixed in the presence of:-



.. . . . . . . . . . . . . . . . . . . .       . . . . . . . . . . . . . . .
DIRECTOR                                      DIRECTOR/SECRETARY



.. . . . . . . . . . . . . . . . . . . .
SALES AGENT SIGNATURE



.. . . . . . . . . . . . . . . . . . . .
SALES AGENT NAME



.. . . . . . . . . . . . . . . . . . .
WITNESS NAME


<PAGE>
                        AGENT LOYALTY OPPORTUNITY TRUST

                         AWARD AGREEMENT FIRST SCHEDULE

Sales Agent's Name      ........................................................


Award Date              ........................................................


Award Price             US$.....................................................


Number of Units Awarded ........................................................


Earliest Vesting Date   ........................................................


Specified Percentage    ........................................................


Termination Date        ........................................................


Vesting Schedule

--------------------------------------------------------------------------------
|               |                                     |                        |
| DATE/YEAR     | PROPORTION OF AWARD                 | NUMBER OF AWARD UNITS  |
|               | UNITS CAPABLE OF VESTING            | CAPABLE OF VESTING     |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------

<PAGE>
                        AGENT LOYALTY OPPORTUNITY TRUST

                         AWARD AGREEMENT FIRST SCHEDULE

                             (SPECIAL SALES TARGET)

Sales Agent's Name      ........................................................


Agency Name             ........................................................


Award Date              ........................................................


Award Price             US$.....................................................


Number of Units Awarded ........................................................


Earliest Vesting Date   ........................................................


Special Sales Target    ........................................................


Termination Date        ........................................................


Vesting Schedule

--------------------------------------------------------------------------------
|               |                                     |                        |
| DATE/YEAR     | PROPORTION OF AWARD                 | NUMBER OF AWARD UNITS  |
|               | UNITS CAPABLE OF VESTING            | CAPABLE OF VESTING     |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------
|               |                                     |                        |
|               |                                     |                        |
|               |                                     |                        |
--------------------------------------------------------------------------------


<PAGE>
                        AGENT LOYALTY OPPORTUNITY TRUST

                                EXERCISE NOTICE

NOTE:

The tax  consequences of exercising your award may vary according to the time of
exercise.

YOU ARE THEREFORE ADVISED TO CONSULT YOUR PROFESSIONAL ADVISERS BEFORE
EXERCISING YOUR AWARD.

To:   Chief  Marketing  Officer,  London  Pacific Life & Annuity  Company,  1755
      Creekside Oaks Drive, Sacramento, California 95833.

1. I hereby exercise the award referred to in the enclosed Award Agreement in
   respect of

   .................. Award Units at the price of US$................. Per Unit.


2. Payment of Bonus should be made to the following bank account:

   Bank           .............................................

                  .............................................

   ABA No.        .............................................

   Account        .............................................

   Account No.    .............................................


3. Full Name of Award Holder ...................................................

 Address........................................................................

 Signature......................................................................


4. Date received by London Pacific Life & Annuity Company.......................

<PAGE>
THE COMMON SEAL of
A.L.O.T. TRUSTEE LIMITED
was hereunto affixed
in the presence of:-

/s/ R J PIROUET
Director

/s/ R W GREEN
Director