Document:

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                                                                    Exhibit 4.2

                                  ANCHOR GAMING
                            2000 STOCK INCENTIVE PLAN

            1.     ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

        1.1 ESTABLISHMENT. This Anchor Gaming 2000 Stock Incentive Plan (the
"Plan") is hereby established effective as of September 24, 2000, 2000. The
Company previously established the Anchor Gaming 1995 Employee Stock Option Plan
("1995 Plan"); the 1995 Plan shall remain in effect solely with respect to any
options outstanding hereunder as of the effective date of this Plan.

        1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its stockholders by providing an incentive to attract, retain and
reward persons performing services for the Company and by motivating such
persons to contribute to the growth and profitability of the Company.

        1.3 TERM OF PLAN. The Plan will continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Options
and Restricted Stock granted under the Plan have lapsed. However, any Incentive
Stock Options must be granted within ten years after the earlier of the date the
Plan is adopted by the Board or the date the Plan is duly approved by the
stockholders of the Company.

            2. DEFINITIONS AND CONSTRUCTION.

        2.1 DEFINITIONS. Whenever used herein, the following terms will have
their respective meanings set forth below:

               (a) "Board" means the Board of Directors of the Company. If one
        or more Committees have been appointed by the Board to administer the
        Plan, "Board" also means such Committee(s).

               (b) "Cause" means that the Board reasonably finds that any one or
        more of the following events has occurred: (i) performance by
        Participant of illegal or fraudulent acts, criminal conduct, or willful
        misconduct relating to the activities of the Company, including, without
        limit, violation by Participant of any material gaming laws or
        regulations, which violation materially and adversely affects the
        ability of Participant to perform his duties to the Company or may
        subject the Company to liability; (ii) conviction of, or nolo contendere
        plea by Participant to, any criminal acts involving moral turpitude
        having a material adverse effect upon the Company, including, without
        limitation, upon its profitability, reputation, or goodwill; (iii)
        willful and material disregard of any reasonable directive(s) from the
        Board that are not inconsistent with the terms of any contract with the
        Company to which Participant is party, PROVIDED that the Board will
        provide Participant with written notice that such event has occurred

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        ("NOTICE OF DISREGARD") and will further allow Participant 30 days in
        which to cure such disregard, and PROVIDED FURTHER that the Board will
        provide an opportunity for Participant to be heard if there is no cure
        within 30 days of the Notice of Disregard; (iv) breach of fiduciary
        duty, PROVIDED that the Board will provide Participant with written
        notice that such event has occurred ("NOTICE OF BREACH OF FIDUCIARY
        DUTY") and will further allow Participant 30 days in which to cure such
        breach of fiduciary duty, and PROVIDED FURTHER that the Board will allow
        an opportunity for Participant to be heard if there is no cure within 30
        days of the Notice of Breach of Fiduciary Duty; (v) material violation,
        not cured in a reasonable time after notice from the Company, by
        Participant of any of the covenants and agreements contained in any
        agreement with the Company to which Participant is party; (vi) failure
        or inability of Participant to obtain or maintain required gaming
        licenses or approvals.

               (c) "Change of Control" means the occurrence of any of the
        following events, as a result of one transaction or a series of
        transactions: (i) any "person" (as that term is used in Sections 13(d)
        and 14(d) of the Securities Exchange Act of 1934, as amended, (the
        "Exchange Act"), but excluding the Company, its affiliates, and any
        qualified or non-qualified plan maintained by the Company or its
        affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3
        promulgated under the Exchange Act), directly or indirectly, of
        securities of the Anchor Gaming representing more than 50% of the
        combined voting power of the Anchor Gaming's then outstanding
        securities; (ii) individuals who constitute a majority of the Board of
        Directors of the Company immediately prior to a contested election for
        positions on the Board cease to constitute a majority as a result of
        such contested election; (iii) Anchor Gaming is combined (by merger,
        share exchange, consolidation, or otherwise) with another entity and as
        a result of such combination, less than 50% of the outstanding
        securities of the surviving or resulting entity are owned in the
        aggregate by the former shareholders of Anchor Gaming; (iv) the Company
        sells, leases, or otherwise transfers all or a majority of all of its
        properties, assets or income or revenue generating capacity to another
        person or entity; (v) a dissolution or liquidation of Anchor Gaming or;
        (vi) any other transaction or series of transactions is consummated that
        results in a required disclosure under Item 1 of Form 8-K or successor
        form.

               (d) "Code" means the Internal Revenue Code of 1986, as amended,
        and any applicable regulations promulgated thereunder.

               (e) "Committee" means the Compensation Committee or other
        committee of the Board duly appointed to administer the Plan and having
        such powers as may be specified by the Board. Unless the powers of the
        Committee have been specifically limited, the Committee will have all of
        the powers of the Board granted herein, including, without limitation,
        the power to amend or terminate the Plan at any time, subject to the
        terms of the Plan and any applicable limitations imposed by law. The
        Committee may appoint a subcommittee of two or more outside directors as
        defined for purposes of Section 162(m)(4)(C) of the Code (the "Outside
        Directors Committee"). The Outside Directors Committee, if appointed,
        will have the exclusive authority to approve grants under the Plan to
        the chief executive officer of the Company and to other executive
        officers whose compensation may otherwise exceed the deduction limit of

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        Section 162(m) of the Code. Grants approved by the Outside Directors
        Committee will be subject to ratification by the Committee as a whole or
        by the Board if the appointment of the Committee so provides.

               (f) "Company" means Anchor Gaming, a Nevada corporation, or any
        successor corporation thereto.

               (g) "Consultant" means any person, including an advisor, engaged
        by a Participating Company to render services other than as an Employee
        or a Director.

               (h) "Director" means a member of the Board or of the board of
        directors of any other Participating Company.

               (i) "Disability" means any medically determinable physical or
        mental impairment that, in the opinion of the Board, based upon medical
        reports and other evidence satisfactory to the Board, can reasonably be
        expected to prevent a Participant from performing substantially all of
        the Participant's customary duties of employment for a continuous period
        of not less than 12 months so as to be disabled within the meaning of
        Section 22(e)(3) of the Code.

               (j) "Employee" means any person treated as an employee (including
        an officer or a Director who is also treated as an employee) in the
        records of a Participating Company and, with respect to any Incentive
        Stock Option granted to such person, who is an employee for purposes of
        Section 422 of the Code; PROVIDED, HOWEVER, that neither service as a
        Director nor payment of a director's fee will be sufficient to
        constitute employment for purposes of the Plan.

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

               (l) "Fair Market Value" means, as of any date, the value of a
        share of Stock or other property as determined by the Board, in its
        discretion, or by the Company, in its discretion, if such determination
        is expressly allocated to the Company herein, subject to the following:

                   (i) If, on such date, the Stock is listed on a national or
               regional securities exchange or market system, the Fair Market
               Value of a share of Stock will be the closing price of a share of
               Stock (or the mean of the closing bid and asked prices of a share
               of Stock if the Stock is so quoted instead) as quoted on the
               Nasdaq National Market, The Nasdaq SmallCap Market or such other
               national or regional securities exchange or market system
               constituting the primary market for the Stock, as reported in THE
               WALL STREET JOURNAL or such other source as the Company deems
               reliable. If the relevant date does not fall on a day on which
               the Stock has traded on such securities exchange or market
               system, the date on which the Fair Market Value will be
               established will be the last day on which the Stock was so traded
               prior to the relevant date, or such other appropriate day as may
               be determined by the Board, in its discretion.

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                   (ii) If, on such date, there is no public market for the
               Stock, the Fair Market Value of a share of Stock will be as
               determined by the Board in good faith without regard to any
               restriction other than a restriction that, by its terms, will
               never lapse.

               (m) "Incentive Stock Option" means an Option designated in the
        Option Agreement as an incentive stock option within the meaning of
        Section 422(b) of the Code.

               (n) "Insider" means an officer or a Director of the Company or
        any other person whose transactions in Stock are subject to Section 16
        of the Exchange Act.

               (o) "Nonstatutory Stock Option" means an Option designated in the
        Option Agreement as not an Incentive Stock Option.

               (p) "Non-Exempt Employee" means an Employee who is not exempt
        from the overtime pay provisions of the Fair Labor Standards Act of
        1938, as amended.

               (q) "Option" means a right to purchase Stock (subject to
        adjustment as provided in Section 4.2) pursuant to the terms and
        conditions of the Plan. An Option may be either an Incentive Stock
        Option or a Nonstatutory Stock Option.

               (r) "Option Agreement" means a written agreement between the
        Company and a Participant setting forth the terms, conditions and
        restrictions of the Option granted to the Participant and any shares of
        Stock acquired upon the exercise thereof.

               (s) "Parent Corporation" means any present or future "parent
        corporation" of the Company, as defined in Section 424(e) of the Code.

               (t) "Participant" means any person who receives an Option or
        Restricted Stock pursuant to the Plan.

               (u) "Participating Company" means the Company or any Parent
        Corporation or Subsidiary Corporation.

               (v) "Participating Company Group" means, at any point in time,
        all corporations collectively that are then Participating Companies.

               (w) "Restricted Stock" means Stock awarded to a Participant
        pursuant to Section 8 of the Plan.

               (x) "Restricted Stock Agreement" means a written agreement
        between the Company and a Participant setting forth the terms,
        conditions and restrictions of the Restricted Stock granted to the
        Participant.

               (y) "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
        amended from time to time, or any successor rule or regulation.

               (z) "Securities Act" means the Securities Act of 1933, as
        amended.

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               (aa) "Service" means a Participant's employment or service with
        the Participating Company Group, whether in the capacity of an Employee,
        a Director or a Consultant. The Participant's Service may not be deemed
        to have terminated merely because of a change in the capacity in which
        the Participant renders Service to the Participating Company Group or a
        change in the Participating Company for which the Participant renders
        such Service, provided that there is no interruption or termination of
        the Participant's Service. Furthermore, a Participant's Service with the
        Participating Company Group may not be deemed to have terminated if the
        Participant takes any military leave, sick leave, or other bona fide
        leave of absence approved by the Company; PROVIDED, HOWEVER, that if any
        such leave exceeds 90 days, on the 91st day of such leave the
        Participant's Service will be deemed to have terminated unless the
        Participant's right to return to Service with the Participating Company
        Group is guaranteed by statute or contract. Notwithstanding the
        foregoing, unless otherwise designated by the Company or required by
        law, a leave of absence may not be treated as Service for purposes of
        determining vesting under the Participant's Option Agreement. The
        Participant's Service will be deemed to have terminated either upon an
        actual termination of Service or upon the corporation for which the
        Participant performs Service ceasing to be a Participating Company.
        Subject to the foregoing, the Company, in its discretion, will determine
        whether the Participant's Service has terminated and the effective date
        of such termination.

               (bb) "Stock" means the common stock of the Company, $.01 par
        value per share, as adjusted from time to time in accordance with
        Section 4.2.

               (cc) "Stock Appreciation Right" means a right granted to the
        holder of a Nonstatutory Stock Option pursuant to Section 7 of the Plan.

               (dd) "Subsidiary Corporation" means any present or future
        "subsidiary corporation" of the Company, as defined in Section 424(f) of
        the Code.

               (ee) "Ten Percent Owner Optionee" means a Participant who, at the
        time an Option is granted to the Participant, owns stock possessing more
        than 10% of the total combined voting power of all classes of stock of a
        Participating Company within the meaning of Section 422(b)(6) of the
        Code.

        2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and do not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular includes the plural and the plural includes the singular. Use of the
term "or" is not intended to be exclusive, unless the context clearly requires
otherwise.

             3. ADMINISTRATION.

        3.1 ADMINISTRATION BY THE BOARD. The Plan will be administered by the
Board. All questions of interpretation of the Plan or of any Option or
Restricted Stock will be determined by the Board, and such determinations will
be final and binding upon all persons having an interest in such Option or
Restricted Stock under the Plan.

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        3.2 AUTHORITY OF OFFICERS. Any officer of a Participating Company has
the authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that is
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, determination or election.

        3.3 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan must be administered in compliance with the requirements, if any,
of Rule 16b-3.

        3.4 POWERS OF THE BOARD. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Board will have the full
and final power and authority, in its discretion:

               (a) to determine the persons to whom, and the time or times when,
        Options or Restricted Stock will be granted and the number of shares of
        Stock to be subject to each Option and each Restricted Stock grant;

               (b) to designate Options as Incentive Stock Options or
        Nonstatutory Stock Options;

               (c) to determine the Fair Market Value of shares of Stock or
        other property;

               (d) to determine the terms, conditions and restrictions
        applicable to each grant of Restricted Stock, each Option (which need
        not be identical) and any shares acquired upon the exercise of the
        Option, including, without limitation, (i) the exercise price of the
        Option, (ii) whether Stock Appreciation Rights are granted to a holder
        of a Nonstatutory Stock Option, (iii) the method of payment for shares
        purchased upon the exercise of the Option, (iv) the method for
        satisfaction of any tax withholding obligation arising in connection
        with the grant of the Restricted Stock, the grant of the Option or upon
        exercise of the Option, including by the withholding or delivery of
        shares of Stock, (v) the timing, terms and conditions of the
        exercisability of the Option or the vesting of any shares acquired upon
        exercise thereof, (vi) the time of the expiration of the Option, (vii)
        the vesting of the Restricted Stock, (viii) the effect of the
        Participant's termination of Service with the Participating Company
        Group on any of the foregoing, and (ix) all other terms, conditions and
        restrictions applicable to the Option, shares purchased upon exercise of
        the Option, or the Restricted Stock, not inconsistent with the terms of
        the Plan;

               (e) to approve one or more forms of Option Agreement and
        Restricted Stock Agreement;

               (f) to amend, modify, extend, cancel, renew, reprice or otherwise
        adjust the exercise price of, or grant a new Option in substitution for,
        any Option or to waive any restrictions or conditions applicable to any
        Option, any shares acquired upon the exercise thereof, or any Restricted
        Stock, although no reduction in the exercise price, whether

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        directly or by cancellation of outstanding options in return for newly
        granted options with a lower price will be allowed without shareholder
        approval;

               (g) to accelerate, continue, extend or defer the exercisability
        of any Option, the vesting of any shares acquired upon the exercise
        thereof or the vesting of any Restricted Stock, including with respect
        to the period following a Participant's termination of Service with the
        Participating Company Group;

               (h) to prescribe, amend or rescind rules, guidelines and policies
        relating to the Plan, or to adopt supplements to, or alternative
        versions of, the Plan; and

               (i) to correct any defect, supply any omission or reconcile any
        inconsistency in the Plan, any Option Agreement or any Restricted Stock
        Agreement and to make all other determinations and take such other
        actions with respect to the Plan, any Option Agreement or any Restricted
        Stock Agreement as the Board may deem advisable to the extent consistent
        with the Plan and applicable law.

        Notwithstanding the forgoing, the Board may take no action to impair the
rights of any Participant under outstanding Option Agreements or Restricted
Stock Agreements without the consent of the Participant affected thereby.

            4. SHARES SUBJECT TO PLAN.

        4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan is 650,000 shares, consisting of authorized but unissued
or reacquired shares of Stock or any combination thereof. All of such shares of
Stock may, but need not, be issued pursuant to the exercise of Incentive Stock
Options. If an outstanding Option for any reason expires or is terminated or
canceled, or if shares of Stock are issued and thereafter are reacquired by the
Company pursuant to rights reserved upon issuance thereof, such shares of Stock
will again be available for issuance under the Plan. Notwithstanding the
foregoing, subject to adjustment pursuant to Section 4.2 no additional shares
may be subject to Options or Stock Appreciation Rights that are intended to be
"performance-based compensation," as that term is used in Section 162(m)(4)(C)
of the Code, granted to any one Participant in any fiscal year; solely for
purposes of this limitation, Options or Stock Appreciation Rights that are
cancelled continue to count against the limit.

        4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments will be made in the number and class of shares subject
to the Plan and to any outstanding Options or Stock Appreciation Rights and in
the exercise price per share of any outstanding Options or Stock Appreciation
Rights. If a majority of the shares that are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event) shares
of another corporation (the "New Shares"), the Board may unilaterally amend the
outstanding Options or Stock Appreciation Rights to provide that such Options or
Stock Appreciation Rights are exercisable for or with respect to New Shares. In
the event of any such amendment, the number of shares subject to,

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and the exercise price per share of, the outstanding Options will be adjusted in
a fair and equitable manner as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 will be rounded down to the nearest whole number,
and in no event may the exercise price of any Option be decreased to an amount
less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section 4.2 will be final,
binding and conclusive.

            5. ELIGIBILITY AND LIMITATIONS.

        5.1 PERSONS ELIGIBLE FOR OPTIONS AND RESTRICTED STOCK. Options and
Restricted Stock may be granted to Employees, Consultants and Directors selected
by the Board, in its discretion. For purposes of the foregoing sentence,
"Employees," "Consultants" and "Directors" includes prospective Employees,
prospective Consultants and prospective Directors to whom Options are granted in
connection with written offers of an employment or other service relationships
with the Participating Company Group. Eligible persons may be granted more than
one Option and may receive more than one grant of Restricted Stock.

        5.2 GRANT RESTRICTIONS. Any person who is not an Employee on the
effective date of the grant of an Option to such person may be granted only a
Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee will be deemed
granted effective on the date such person commences Service with a Participating
Company, with an exercise price determined as of such date in accordance with
Section 6.1.

        Options or Stock Appreciation Rights (but not Restricted Stock) may be
granted under this Plan to Employees who are Non-Exempt Employees. Options or
Stock Appreciation Rights granted to a Non-Exempt Employee must comply with the
exercise price and exercise period restrictions set forth in Sections 6.1 and
6.2 below, and other provisions of the "Worker Economic Opportunity Act" of
2000, P.L. 106-202, or other provisions of law, sufficiently to insure that such
Options, and any profits, gains or income resulting from such Options, are
excluded from such Non-Exempt Employee's overtime pay calculations.

        5.3 FAIR MARKET VALUE LIMITATION. To the extent that options designated
as Incentive Stock Options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by a
Participant for the first time during any calendar year for Stock having a Fair
Market Value greater than $100,000, the portions of such options that exceed
such amount will be treated as Nonstatutory Stock Options. For purposes of this
Section 5.3, options designated as Incentive Stock Options will be taken into
account in the order in which they were granted, and the Fair Market Value of
stock will be determined as of the time the option with respect to such stock is
granted. If the Code is amended to provide for a different limitation from that
set forth in this Section 5.3, such different limitation will be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section 5.3, the Participant may
designate which portion of such Option the Participant is exercising. In the
absence of such designation, the Participant will be deemed to have exercised

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the Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion will be issued upon the exercise of the Option.

               6. TERMS AND CONDITIONS OF OPTIONS.

        Options will be evidenced by Option Agreements specifying the number of
shares of Stock covered thereby, in such form as the Board may from time to time
establish. No Option or purported Option will be a valid and binding obligation
of the Company unless evidenced by a fully executed Option Agreement.

        Option Agreements may incorporate all or any of the terms of the Plan by
reference and will comply with and be subject to the following terms and
conditions:

        6.1    EXERCISE PRICE. The exercise price for each Option will be
established in the discretion of the Board; PROVIDED, HOWEVER, that (a) the
exercise price per share for an Incentive Stock Option must be not less than the
Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option granted
to a Non-Exempt Employee must be not less than 85% of the Fair Market Value of a
share of Stock on the effective date of grant of the Option, (c) no Incentive
Stock Option granted to a Ten Percent Owner Optionee may have an exercise price
per share less than 110% of the Fair Market Value of a share of Stock on the
effective date of grant of the Incentive Stock Option, and (d) the exercise
price per share for any Option that is intended to be performance-based
compensation under Section 162(m)(4)(C) of the Code must be not less than the
Fair Market Value of a share of stock as of the effective date of grant of the
Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying under the provisions of Section 424(a) of the Code.

        6.2    EXERCISE PERIOD. Options may be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as may be determined by the Board and set
forth in the Option Agreement evidencing such Option; PROVIDED, HOWEVER, that
(a) no Incentive Stock Option may be exercisable after the expiration of 10
years after the effective date of grant of such Option, (b) no Incentive Stock
Option granted to a Ten Percent Owner Optionee may be exercisable after the
expiration of five years after the effective date of grant of such Option, (c)
no Option granted to a Non-Exempt Employee may be exercisable less than six
months after the effective date of the grant of such Option, except in the case
of death, Disability, retirement or Change of Control, and (d) no Option granted
to a prospective Employee, prospective Consultant or prospective Director may
become exercisable prior to the date on which such person commences Service with
a Participating Company. Subject to the foregoing, unless otherwise specified by
the Board in the grant of an Option, any Option granted hereunder will have a
term of 10 years from the effective date of grant of the Option.

        6.3    PAYMENT OF EXERCISE PRICE.

               (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
        provided below, payment of the exercise price for the number of shares
        of Stock being

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        purchased pursuant to any Option may be made (i) in cash, by check or
        cash equivalent, (ii) by tender to the Company, or attestation to the
        ownership, of shares of Stock owned by the Participant having a Fair
        Market Value (as determined by the Company without regard to any
        restrictions on transferability applicable to such stock by reason of
        federal or state securities laws or agreements with an underwriter for
        the Company) not less than the exercise price, (iii) by the assignment
        of the proceeds of a sale or loan with respect to some or all of the
        shares being acquired upon the exercise of the Option (including,
        without limitation, through an exercise complying with the provisions of
        Regulation T as promulgated from time to time by the Board of Governors
        of the Federal Reserve System) (a "Cashless Exercise"), (iv) by such
        other consideration as may be approved by the Board from time to time to
        the extent permitted by applicable law, or (v) by any combination
        thereof. The Board may at any time or from time to time, by adoption of
        or by amendment to the standard forms of Option Agreement described in
        Section 7, or by other means, grant Options that do not permit all of
        the foregoing forms of consideration to be used in payment of the
        exercise price or that otherwise restrict one or more forms of
        consideration.

               (b)    LIMITATIONS ON FORMS OF CONSIDERATION.

                      (i) TENDER OF STOCK. Notwithstanding the foregoing, an
               Option may not be exercised by tender to the Company, or
               attestation to the ownership, of shares of Stock to the extent
               such tender or attestation would constitute a violation of the
               provisions of any law, regulation or agreement restricting the
               redemption of the Company's stock. Unless otherwise provided by
               the Board, an Option may not be exercised by tender to the
               Company, or attestation to the ownership, of shares of Stock
               unless such shares either have been owned by the Participant for
               more than six months or were not acquired, directly or
               indirectly, from the Company.

                      (ii) CASHLESS EXERCISE. The Company reserves, at any and
               all times, the right, in the Company's sole and absolute
               discretion, to establish, decline to approve or terminate any
               program or procedures for the exercise of Options by means of a
               Cashless Exercise.

        6.4    TAX WITHHOLDING. The Company has the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Participant the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company, equal
to all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof. Alternatively
or in addition, in its discretion, the Company has the right to require the
Participant, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
has no obligation to deliver shares of Stock or to release shares of Stock from
an escrow established pursuant to the Option Agreement until the Participating
Company Group's tax withholding obligations have been satisfied by the
Participant.

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        6.5    EARLY EXERCISE. Any Option may, but need not, include a provision
whereby the Participant may elect, at any time while an Employee, Director or
Consultant, to exercise such Option as to any part or all of the shares of Stock
subject to such Option prior to the time the Option would otherwise be
exercisable. Any shares of Stock so purchased will be subject to a repurchase
right in favor of the Company described in Section 6.6, upon refund of the
exercise price paid by the Participant, and may be subject to further
restrictions set forth in the pertinent Option Agreement or an agreement with
respect to early exercise.

        6.6    REPURCHASE RIGHTS. Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its discretion at the time the
Option is granted. The Company has the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company. Upon request by the
Company, each Participant must execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and must promptly
present to the Company any and all certificates representing shares of Stock
acquired hereunder for the placement on such certificates of appropriate legends
evidencing any such transfer restrictions.

               7. STOCK APPRECIATION RIGHTS.

        Stock Appreciation Rights may be granted in conjunction with the grant
of any Nonstatutory Stock Option and will be subject to such terms and
conditions consistent with the Plan as the Board may impose from time to time,
including the following:

               (a) A Stock Appreciation Right may be granted with respect to an
        Option at the time of its grant or at any time thereafter up to six
        months prior to its expiration.

               (b) Stock Appreciation Rights will permit the holder to surrender
        any related Option or portion thereof that is then exercisable and elect
        to receive in exchange therefor cash in an amount equal to:

                      (i) The excess of the Fair Market Value of one share of
               Stock on the date of such election over the exercise price,
               multiplied by

                      (ii) The number of shares issuable upon exercise of such
               Option or portion thereof that is so surrendered.

               (c) The Board may satisfy a Participant's right to receive the
        amount of cash determined under paragraph (b) above in whole or in part
        by delivering shares of Stock equal in value to such amount as of the
        date of the Participant's election.

               (d) In the event of the exercise of a Stock Appreciation Right,
        the number of shares reserved for issuance under the Plan will be
        reduced by the number of shares covered by the Option or portion thereof
        surrendered.

               8. RESTRICTED STOCK.

<PAGE>

        The Board shall determine the number of shares of Stock to be granted to
particular Employees, Consultants and Directors as Restricted Stock from time to
time under the Plan. The Board in its discretion may award shares of Restricted
Stock under the Plan without requiring the payment of cash consideration for
such shares by the Participant. Restricted Stock shall be non-transferable and
subject to forfeiture under such terms and conditions as the Board prescribes in
the pertinent Restricted Stock Agreement, and may, without limitation, be
subject to repurchase rights pursuant to Section 6.6 above. Share certificates
issued for Restricted Stock shall be legended appropriately.

               9. STANDARD FORMS OF AGREEMENTS.

        9.1    GENERAL. Unless otherwise provided by the Board at the time an
Option or Restricted Stock is granted, the Option or Restricted Stock must
comply with and be subject to the terms and conditions set forth in the
appropriate standard form of Option Agreement or Restricted Stock Agreement, as
the case may be, adopted by the Board concurrently with its adoption of the Plan
and as amended from time to time.

        9.2    AUTHORITY TO VARY TERMS. The Board has the authority from time to
time to vary the terms of any of the standard forms of Option Agreement and
Restricted Stock Agreement described in this Section 9 either in connection with
the grant or amendment of an individual Option or the grant of Restricted Stock
or in connection with the authorization of a new standard form or forms;
PROVIDED, HOWEVER, that the terms and conditions of any such new, revised or
amended standard form or forms of Option Agreement and Restricted Stock
Agreement are not inconsistent with the terms of the Plan.

               10. EFFECT OF TERMINATION OF SERVICE.

        10.1   DISABILITY. Subject to earlier termination of an Option as
otherwise provided herein, after a Participant's Service with the Participating
Company Group is terminated because of the Disability of the Participant, the
Option, to the extent unexercised and exercisable on the date on which the
Participant's Service terminated, may be exercised by the Participant (or the
Participant's guardian or legal representative) at any time prior to the
expiration of one year (or such longer period of time as determined by the
Board, in its discretion) after the date on which the Participant's Service
terminated, but in any event no later than the date of expiration of the
Option's term as set forth in the Option Agreement evidencing such Option (the
"Option Expiration Date"). Restricted Stock issued to a Participant will
continue to vest for six months after the date of the Participant's Disability.
The date of Disability of a Participant will be determined by the Board.

        10.2   DEATH. Subject to earlier termination of an Option as otherwise
provided herein, after a Participant's Service with the Participating Company
Group is terminated because of the death of the Participant, the Option, to the
extent unexercised and exercisable on the date on which the Participant's
Service terminated, may be exercised by the Participant's legal representative
or other person who acquires the right to exercise the Option by reason of the
Participant's death at any time prior to the expiration of one year (or such
longer period of time as determined by the Board, in its discretion) after the
date on which the Participant's Service terminated, but in any event no later
than the Option Expiration Date. Restricted Stock issued to a Participant will
continue to vest for six months after the date of the Participant's death. The

<PAGE>

Participant's Service will be deemed to have terminated on account of death if
the Participant dies within 30 days (or such longer period of time as determined
by the Board, in its discretion) after the Participant's termination of Service.

        10.3   CAUSE. Subject to earlier termination of an Option as otherwise
provided herein, if a Participant's Service with the Participating Company Group
is terminated for Cause, or grounds for termination for Cause existed as of the
date the Participant's Service terminated, his Options will expire, and will
immediately cease to be exercisable with respect to any unexercised and
exercisable portion; and any Restricted Stock held by such Participant with
respect to which all restrictions have not lapsed will be forfeited immediately.
A Participant's Option Agreement or Restricted Stock Agreement may prescribe
additional consequences of termination for cause.

        10.4   CHANGE OF CONTROL. Subject to earlier termination of an Option as
otherwise provided herein, and subject to Section 17 below, upon a Change of
Control, each outstanding Option will automatically become fully exercisable and
each outstanding share of Restricted Stock will automatically become fully
vested. Notwithstanding the foregoing, (i) shares acquired upon exercise of an
Option prior to the Change of Control and any consideration received pursuant to
the Change of Control with respect to such shares will continue to be subject to
all applicable provisions of the Option Agreement evidencing such Option except
as otherwise provided in such Option Agreement, and (ii) shares of Restricted
Stock granted prior to the Change of Control and any consideration received
pursuant to the Change of Control with respect to such shares will continue to
be subject to all applicable provisions of the Restricted Stock Agreement except
as otherwise provided in such Restricted Stock Agreement. The Participant's
Option Agreement may, in the Board's discretion, contain additional provisions
applicable in the event of a Change of Control.

        10.5   OTHER TERMINATION OF SERVICE. If the Participant's Service with
the Participating Company Group terminates for any reason, except Disability,
death or Cause, an Option, to the extent unexercised and exercisable by the
Participant on the date on which the Participant's Service terminated, may be
exercised by the Participant within one year (or such longer period of time as
determined by the Board, in its discretion) after the date on which the
Participant's Service terminated, but in any event no later than the Option
Expiration Date. An Incentive Stock Option, if the pertinent Option Agreement so
provides, may permit exercise more than three months after the Participant
ceases to be an Employee for reasons other than death, Disability, or Cause, but
in such event the Option shall be treated as a Nonstatutory Stock Option. Any
Restricted Stock held by such Participant with respect to which all restrictions
have not lapsed will be forfeited immediately.

        10.6   EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth in this Section 10 is prevented by the provisions of Section 13 below, the
Option will remain exercisable until 30 days (or such longer period of time as
determined by the Board, in its discretion) after the date the Participant is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

        10.7   EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in this

<PAGE>

Section 10 of shares acquired upon the exercise of the Option would subject the
Participant to liability under Section 16(b) of the Exchange Act, the Option
will remain exercisable until the earliest to occur of (i) the 10th day
following the date on which a sale of such shares by the Participant would no
longer be subject to such liability, (ii) the 190th day after the Participant's
termination of Service, or (iii) the Option Expiration Date.

               11.    PROVISION OF INFORMATION.

        [RESERVED]

               12.    TRANSFERABILITY.

        During the lifetime of the Participant, an Incentive Stock Option will
be exercisable only by the Participant or the Participant's guardian or legal
representative. No Incentive Stock Option may be assignable or transferable by
the Participant, except by will or by the laws of descent and distribution.
Participants may transfer Nonstatutory Stock Options only as provided by the
Board. Unless the Company otherwise agrees in writing, shares of Stock acquired
hereunder may not be sold, or otherwise transferred, other than by will or under
the laws of descent and distribution upon the Participant's death, until and
unless (i) any holding period or other restriction on such a sale or other
transfer has expired, and (ii) the Company has waived in writing any right to
buy back such shares that it may have under the applicable Option Agreement or
Restricted Stock Agreement. As a condition to the transfer of the shares of
Stock issued under the Plan, the Company may require an opinion of counsel,
satisfactory to the Company, to the effect that such transfer will not be in
violation of the Securities Act or any other applicable securities laws or that
such transfer has been registered under federal and all applicable state
securities laws. The Board may impose such additional restrictions on the
ownership and transfer of shares of Stock issued pursuant to the Plan as it
deems desirable; any such restrictions must be set forth in any Option Agreement
or Restricted Stock Agreement entered into hereunder. Further, the Company is
authorized to refrain from delivering or transferring shares of Stock issued
under the Plan until the Board has determined that the Participant has tendered
to the Company any federal, state or local tax owed by the Participant as a
result of exercising the Option, receiving a grant of Restricted Stock or
disposing of any Stock, when the Company has a legal liability to satisfy such
tax. The Company will not be liable to any party for damages due to a delay in
the delivery or issuance of any stock certificate for any reason whatsoever.

               13.    COMPLIANCE WITH SECURITIES LAW.

        The grant of Options, the issuance of shares of Stock upon exercise of
Options and the grant of Restricted Stock will be subject to compliance with all
applicable requirements of federal and state law with respect to such
securities. Options may not be exercised if the issuance of shares of Stock upon
exercise would constitute a violation of any applicable federal or state
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act will at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration

<PAGE>

requirements of the Securities Act. The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares hereunder will relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite authority will
not have been obtained. As a condition to the exercise of any Option, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

               14.    LIABILITY OF COMPANY.

        No Participating Company nor any of the directors, officers or employees
of any Participating Company will be liable to any Participant or other person
(a) if it is determined for any reason by the Internal Revenue Service or any
court having jurisdiction that any Incentive Stock Option granted hereunder does
not qualify for tax treatment as an Incentive Stock Option under Section 422 of
the Code, or (b) for refusing to sell or issue any shares covered by any Option
or for refusing to issue Restricted Stock if the Company cannot obtain authority
from the appropriate regulatory bodies deemed by the Company to be necessary to
sell or issue such shares in compliance with all applicable federal and state
securities laws and the requirements of any national exchange or trading system
on which the Stock is then listed or traded; provided that an Option Agreement
or Restricted Stock Agreement may require the Company to register Stock under
applicable securities laws. In addition, the Company will have no obligation to
any Participant, express or implied, to list, register or otherwise qualify the
shares of Stock covered by any Option or Restricted Stock.

               15.    INDEMNIFICATION.

        In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is delegated
will be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding. Such indemnification shall apply regardless of whether the
indemnified person has been solely or contributorily negligent or otherwise at
fault, except in relation to matters as to which it is adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties. Within 60 days after the institution of such
action, suit or proceeding, such person must offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

               16.    TERMINATION OR AMENDMENT OF PLAN.

        The Board may terminate or amend the Plan at any time. However, subject
to changes in applicable law, regulations or rules that would permit otherwise,
without the approval of the

<PAGE>

Company's stockholders, there may be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued pursuant to Incentive Stock Options
under the Plan (except by operation of the provisions of Section 4.2), (b) no
change in the class of persons eligible to receive Incentive Stock Options, (c)
no change in the material provisions regarding performance-based compensation
pursuant to Section 162(m)(4)(C) of the Code, and (d) no other amendment of the
Plan that would require approval of the Company's stockholders under any
applicable law, regulation or rule, including applicable stock exchange listing
requirements. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option, or any unexercised portion
thereof, or Restricted Stock without the consent of the Participant, unless such
termination or amendment is required to enable an Option designated as an
Incentive Stock Option to qualify as an Incentive Stock Option or is necessary
to comply with any applicable law, regulation or rule.

               17. EXCESS PARACHUTE PAYMENTS.

               (a) For purposes of the Plan, the term "Excess Parachute Payment"
        means any payment or any portion thereof that would be an "excess
        parachute payment" within the meaning of Section 280G(b)(1) of the Code,
        and would result in the imposition of an excise tax under Section 4999
        of the Code, on the advice of tax counsel selected by the Company ("Tax
        Counsel").

               (b) In no event will any Participant be entitled to any right or
        any amount that would be an Excess Parachute Payment except as the Board
        specifically provides in individual Stock Option Agreements or
        Restricted Stock Agreements. In the event the Board determines that an
        Excess Parachute Payment would result, then, at the option of the Board
        as set forth in the pertinent individual agreement, payments to the
        Participant may be reduced, a "Gross Up" payment (as defined below) may
        be made to the Participant, or such other action as the Board may
        consider equitable and in the best interests of the Company may be
        taken. If (i) it is established pursuant to a final determination of a
        court or an Internal Revenue Service administrative appeals proceeding
        that, notwithstanding the good faith of the Participant and the Company
        in reducing the amount of the payment to avoid excise tax under Section
        4999 of the Code, a payment (or portion thereof) made is an Excess
        Parachute Payment or (ii) the Participant's agreement permits Excess
        Parachute Payments to be made, then, the Company will pay to the
        Participant an additional amount in cash (a "Gross-Up Payment") equal to
        the amount necessary to cause the amount of the aggregate after-tax
        compensation and benefits received by the Participant hereunder (after
        payment of the excise tax under Section 4999 of the Code with respect to
        any Excess Parachute Payment, and any state and federal income taxes
        with respect to the Gross-Up Payment) to be equal to the aggregate
        after-tax compensation and benefits such Participant would have received
        as if Sections 280G and 4999 of the Code had not been enacted.

               (c) Subject to the provisions of Section 17(a) of the Plan, the
        amount of any Gross-Up Payment and the assumptions to be utilized in
        arriving at such amount, will be determined by a nationally recognized
        certified public accounting firm designated by the Company (the
        "Accounting Firm"). All fees and expenses of the Accounting Firm shall
        be borne solely by the Company. Any Gross-Up Payment, as determined
        pursuant to this Section 17(c), will be paid by the Company to the
        Participant within five days after the

<PAGE>

        receipt of the Accounting Firm's determination. Any determination by the
        Accounting Firm will be binding upon the Company and the Participant.

               (d) The Participant must notify the Company in writing of any
        claim by the Internal Revenue Service that, if successful, would require
        the payment by Company of a Gross-Up Payment. Such notification must be
        given no later than ten business days after the Participant is informed
        in writing of such claim and must apprise the Company of the nature of
        the claim and the date of requested payment. The Participant will not
        pay the claim prior to the expiration of the thirty day period following
        the date on which it gives notice to the Company. If the Company
        notifies the Participant in writing prior to the expiration of the
        period that it desires to contest such claim, the Participant must:

                      (i)  give the Company any information reasonably requested
               by the Company relating to such claim;

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

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

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

               Without limitation on the foregoing provisions of this Section,
        the Company will control all proceedings taken in connection with such
        contest and, at its sole option, may pursue or forego any and all
        administrative appeals, proceedings, hearings and conferences with the
        taxing authority in respect of such claim and may, at its sole option,
        either direct the Participant to pay the tax claimed and sue for a
        refund or contest the claim in any permissible manner, and the
        Participant agrees to prosecute such contest to a determination before
        any administration tribunal, in a court of initial jurisdiction and in
        one or more appellate courts, as the Company may determine; PROVIDED,
        HOWEVER, that the Company will bear and pay directly all costs and
        expenses (including additional interest and penalties) incurred in
        connection with such contest and will indemnify and hold the Participant
        harmless, on an after-tax basis, for any Excise Tax or income tax
        (including interest and penalties with respect thereto) imposed as a
        result of the contest; PROVIDED, FURTHER, that if the Company directs
        the Participant to pay any claim and sue for a refund, the Company will
        advance the amount of the payment to the Participant, on an
        interest-free basis, and will indemnify and hold Participant harmless,
        on an after-tax basis, from any Excise Tax or income tax (including
        interest or penalties with respect thereto) imposed with respect to the
        advance or with respect to any imputed income with respect to the
        advance.

               (e) In the event that the Company exhausts its remedies pursuant
        to Section 17(d) and the Participant thereafter is required to make a
        payment of any Excise Tax, the

<PAGE>

        Accounting Firm will determine the amount of the Gross-Up Payment
        required and the Company will promptly pay such payment to or for the
        benefit of the Participant.

               (f) If, after the receipt of the Participant of an amount
        advanced by the Company pursuant to Section 17(d), the Participant
        becomes entitled to receive any refund with respect to such claim, the
        Participant will promptly after receiving such refund pay to the Company
        the amount of such refund (together with any interest paid or credited
        thereon after taxes applicable thereto). If, after the receipt by the
        Participant of an amount advanced by the Company pursuant to Section
        17(d), a determination is made that the Participant is not entitled to
        any refund with respect to such claim and the Company does not notify
        the Participant in writing of its intent to contest such denial of
        refund prior to the expiration of 30 days after such determination, then
        such advance will be forgiven and will not be required to be repaid and
        the amount of such advance will offset, to the extent thereof, the
        amount of Gross-Up Payment required to be paid.

               18.    SEVERABILITY OF PROVISIONS.

        If any provision of the Plan is determined to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability will not affect
the remaining provisions of the Plan, but such invalid, illegal or unenforceable
provision will be fully severable, and the Plan will be construed and enforced
as if an enforceable provision, accomplishing the intent of the severed
provision as nearly as practicable, had been inserted herein in lieu of the
severed provision.

               19.    STOCKHOLDER APPROVAL.

        The Plan or any increase in the maximum aggregate number of shares of
Stock issuable thereunder as provided in Section 4.1 (the "Authorized Shares")
must be approved by the stockholders of the Company within 12 months after the
date of adoption thereof by the Board. Options granted prior to stockholder
approval of the Plan or in excess of the Authorized Shares previously approved
by the stockholders may become exercisable no earlier than the date of
stockholder approval of the Plan or such increase in the Authorized Shares, as
the case may be. Options granted to executive officers that are designated as
performance based under Section 162(m) of the Code must be contingent on
stockholder approval of the material terms of the Plan to the extent required
under Section 162(m) of the Code.

<PAGE>

        IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing 2000 Stock Incentive Plan was duly adopted by the Board on
September 24, 2000.

                                              ------------------------------
                                              Secretary

<PAGE>

                                  PLAN HISTORY

<TABLE>
<S>                          <C>
September 24, 2000           Board adopts Plan, with an initial reserve of
                             650,000 shares.

December 15, 2001            Stockholders approve Plan.
</TABLE>AMENDMENT TO SHARE PURCHASE AGREEMENT

     This Amendment to the Share Purchase Agreement (this "Amendment") is
entered into as of November 8, 2001 between Scottish Annuity & Life Holdings,
Ltd., a Cayman Islands company ("Buyer"), and Pacific Life Insurance Company, a
California corporation ("Seller").

                                    RECITALS

     WHEREAS, Seller and Buyer are parties to a Share Purchase Agreement entered
into as of August 6, 2001 (the "Share Purchase Agreement") providing for the
purchase by Buyer from Seller of all of the issued and allotted share capital of
World-Wide Holdings Limited, an English private company limited by shares, for
consideration and on the terms as set forth in the Share Purchase Agreement; and

     WHEREAS, Seller and Buyer desire to amend the Share Purchase Agreement as
provided in this Amendment.

     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, and for other valuable consideration, receipt of
which is hereby acknowledged, the parties hereby agree that the Share Purchase
Agreement shall be amended as follows:

                                    AMENDMENT

     1. Defined Terms. (a) (a) All capitalized terms not otherwise defined in
this Amendment shall have the same meaning as in the Share Purchase Agreement.

     (b) The term "Registration Statement" is deleted from the list of
Definitions in the Table of Contents.

     2. Sections 2.2(c) of the Share Purchase Agreement. Section 2.2(c) of the
Share Purchase Agreement is amended and restated in its entirety by deleting the
phrase "Audited Company Financials for the year ended September 30, 2001" and
inserting the phrase "Intentionally left blank" in its place.

     3. Section 2.2 (n)(i)(B) of the Share Purchase Agreement. Section
2.2(n)(i)(B) of the Share Purchase Agreement is amended to read in full as
follows:

     "recording the appointment of such persons as the directors, the Secretary
and the auditors of the Company as Buyer shall nominate, provided that
appointment of such persons shall be contingent upon any required notices with
and approvals of the FSA;"

     4. Section 3.25 of the Share Purchase Agreement. Section 3.25 of the Share
Purchase Agreement is amended to read in full as follows:

<PAGE>

     "3.25 Proxy Statement.

     None of the information supplied or to be supplied by Seller for inclusion
in the Proxy Statement will cause the Proxy Statement, when first mailed to the
shareholders of Buyer and at the time of the Meeting, to contain any untrue
statement of a material fact, or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading."

     5. Section 4.3 of the Share Purchase Agreement. Section 4.3 of the Share
Purchase Agreement is amended to read in full as follows:

     "4.3 Consents and Approvals.

     Except for (i) any filing required under the HSR Act and the expiration or
early termination of any applicable waiting period thereunder, (ii) any filings
of applications and notices, as applicable, with the insurance regulatory
authorities in the jurisdictions in which any insurance company Subsidiaries of
Buyer operate their respective businesses and the approval of such applications
or the grant of required licenses by such authorities, (iii) any filings,
approvals or other requirements under applicable securities laws or applicable
insurance company stock issuance laws, (iv) the filing with the Securities and
Exchange Commission (the "SEC") of the proxy statement (as amended and/or
supplemented from time to time, the "Proxy Statement") relating to the meeting
of its shareholders to be held for purposes of obtaining shareholder approval of
the Charter Amendment, the transactions contemplated by this Agreement and the
adoption of a 2001 stock option plan (the "Meeting"), (v) any filings of
applications and notices with the FSA in relation to the change of controller of
the Company that will take effect on Closing, (vi) the filing of an amendment to
the Company's Articles of Association with the appropriate authority in the
Cayman Islands, and (vii) any other approvals set forth on Schedule 4.3 of the
Buyer's Disclosure Schedule, no Consent is required to be obtained, made or
given by or with respect to Buyer in connection with the execution and delivery
by Buyer of any of the Transaction Documents to which Buyer is a party, the
performance by Buyer of its obligations under any of such Transaction Documents
or the consummation of the transactions contemplated by the Transaction
Documents, except for such Consents, the failure of which to be made or obtained
would not reasonably be expected to have a Buyer Material Adverse Effect or
which would not interfere in any material way with the ability of Buyer or its
Subsidiaries to consummate the transactions contemplated by the Transaction
Documents."

     6. Section 5.9 of the Share Purchase Agreement. Section 5.9 of the Share
Purchase Agreement is amended to read in full as follows:

     "5.9 Proxy Statement.

     As promptly as practicable following the date of this Agreement, Buyer
shall prepare and file with the SEC the Proxy Statement in accordance with the
Securities Act and the Exchange Act and shall use all reasonable efforts to have
the Proxy Statement cleared by the SEC; provided, however, that prior to filing,
Buyer shall deliver a copy of the proposed filing to Seller and provide Seller
with a reasonable time period in which to review and comment upon such filing,
it being agreed that Buyer will not make any such filing without the prior
consent of

                                       2
<PAGE>

Seller, such consent not to be unreasonably withheld. Buyer shall promptly
provide to Seller copies of any written comments received from the SEC and shall
promptly advise Seller of any oral comments received from the SEC. Seller shall
be entitled to review and comment on any proposed amendments to the Proxy
Statement. As promptly as practicable after the Proxy Statement has been cleared
by the SEC, Buyer shall mail the Proxy Statement to its shareholders as of the
record date for the Meeting. Buyer shall take such action as may be required to
be taken under applicable state securities or "blue sky" laws in connection with
issuance of the Shares. The Proxy Statement shall include the recommendation of
Buyer's Board of Directors that shareholders of the Buyer vote in favor of the
Charter Amendment and the other transactions contemplated by this Agreement."

     7. Section 6.1(b) of the Share Purchase Agreement. Section 6.1(b) of the
Share Purchase Agreement is amended and restated in its entirety by deleting the
heading and all of the text therein and inserting the phrase "Intentionally left
blank" in its place.

     8. Exhibit F of the Share Purchase Agreement. Exhibit F of the Share
Purchase Agreement is amended to read in full as set forth in the attached
Exhibit A to this Amendment.

     9. Continued Effect of the Share Purchase Agreement. Except as amended
hereby, the Share Purchase Agreement shall remain in full force and effect.

     10. Severability. If at any time any provision of this Amendment is or
becomes illegal, invalid, void or unenforceable in any respect under the law of
any jurisdiction, neither the legality, validity, nor enforceability of the
remaining provisions hereof nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be affected
or impaired thereby, the remainder of the provisions of this Amendment shall
remain in full force and effect. The parties shall endeavor in good faith
negotiations to replace any invalid, illegal, void or unenforceable provision
with a valid, legal and enforceable provision, the economic effect of which
comes as close as possible to the invalid, illegal, void or unenforceable
provision.

     11. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.

     12. Waiver of Jury Trial. Each party hereby waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection
with this Amendment.

     13. Counterparts. This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.

                                       3
<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed and delivered this
Amendment as of the date first above written.

SELLER:                                        BUYER:
PACIFIC LIFE INSURANCE COMPANY                 SCOTTISH ANNUITY & LIFE HOLDINGS,
                                               LTD.

By:/s/ Sharon A. Cheever                       By:/s/ Scott E. Willkomm
   ---------------------------                    ------------------------------
       Sharon A. Cheever                              Scott E. Willkomm
       Vice President, Investment Counsel             President

By:/s/ Brian D. Klemens
   ---------------------------
       Brian D. Klemens
       Vice President and Treasurer

                                       4
<PAGE>

                                    EXHIBIT A

                     SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

             Text of the Amendments to the Memorandum of Association

     Bracketed bold text indicates text to be deleted upon effectiveness of
     amendments. Underlined bold text indicates text to be added upon
     effectiveness of amendments.

     The following Sections of the Memorandum of Association shall be amended
and restated in their entirety to read as set forth below:

     Clause 3(i)(a) of the Memorandum of Association

     3. The objects for which the Company is established are, subject to section
(i) of this Clause 3, unrestricted and shall include, but without limitation,
the following:

     (i) (a) To own, hold, purchase or otherwise acquire equity or debt
     securities in companies, firms or other persons engaged in all or any forms
     of insurance or reinsurance business and to promote the establishment of
     such entities. [, NOTWITHSTANDING any other provisions of this Memorandum
     of Association and of this Clause 3 in particular, the objects for which
     the Company is established are restricted to holding shares in one or more
     majority-owned subsidiaries, each of which operates as an insurance company
     (i) incorporated under the laws of the Cayman Islands, British West Indies,
     (ii) regulated as such by the government of the Cayman Islands and (iii)
     engaged primarily and predominantly in the writing of insurance agreements
     of the type specified in section 3(a)(8) of the United States Securities
     Act of 1933, as amended (except for the substitution of supervision by
     Cayman Islands insurance regulators for the regulators referred to in that
     section), or the reinsurance of risks on such agreements underwritten by
     insurance companies.]

     Clause 4 of the Memorandum of Association

     4. Except as prohibited or limited by the Companies Law [1998 Revision]
(2001 Second Revision), the Company shall have full power and authority to carry
----------------------
out any object and shall have and be capable of, from time to time and at all
times, exercising any and all of the powers at any time or from time to time
exercisable by a natural person or body corporate in doing in any part of the
world whether as principal, agent, contractor or otherwise whatever may be
considered by it necessary for the attainment of its objects and whatever else
may be considered by it as incidental or conducive thereto or consequential
thereon, including, but without in any way restricting the generality of the
foregoing, the power to make any alterations or amendments to this Memorandum of
Association and the Articles of Association of the Company considered necessary
or convenient in the manner set out in the Articles of Association of the
Company, and the power to do any of the following acts or things, viz:

to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to acts as
guarantors; to borrow or raise money on the security of the undertaking or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to purchase Directors and
officers liability insurance and to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be

                                       5
<PAGE>

conveniently or profitably or usefully acquired and dealt with, carried on,
executed or done by the Company in connection with the business aforesaid.
[PROVIDED THAT the Company shall only carry on the businesses permitted in
accordance with section (i) of Clause 3 of this Memorandum of Association and
for which a license is required under the laws of the Cayman Islands when so
licensed under the terms of such laws.]

                                       6
<PAGE>

                                    EXHIBIT A

                     SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                Text of the Amendments to Articles of Association

     Bracketed bold text indicates text to be deleted upon effectiveness of
     amendments.

     Underlined bold text indicates text to be added upon effectiveness of
     amendments.

     The following Sections of the Articles of Association shall be amended and
restated in their entirety to read as set forth below:

6. (b) Notwithstanding Article 6(a) of these Articles, the Company shall not
issue any shares in a manner that the Board of Directors of the Company believes
would cause, by reason of such issuance, the total Controlled Shares of any
Person to equal or exceed 10% of a class of the Company's shares; provided,
however, that this provision shall not apply to (i) the issuance of shares to
                                                -----------------------------
Pacific Life Insurance Company in such amount so that Pacific Life Insurance
----------------------------------------------------------------------------
Company's Controlled Shares do not exceed 24.9% of a class of the Company's
---------------------------------------------------------------------------
shares and (ii) any issuance of shares to a person acting as an underwriter in
---------------
the ordinary course of its business, purchasing such shares pursuant to a
purchase agreement to which the company is a party, for resale.

9. (b) Except with respect to transfers of the Company's shares executed on the
NASDAQ National Market, the Directors shall decline to register a transfer of
shares if the Directors have reason to believe that the effect of such transfer
would be to increase the number of total Controlled Shares of any Person to ten
percent (10%) or any higher percentage of a class of the Company's shares on an
Unadjusted Basis. Notwithstanding the foregoing, Pacific Life Insurance Company,
                  --------------------------------------------------------------
Pacific Mutual Holding Company, Pacific LifeCorp and/or any direct or indirect
------------------------------------------------------------------------------
wholly-owned subsidiary of Pacific Mutual Holding Company (each, a "Pacific Life
--------------------------------------------------------------------------------
Entity", provided however, that any Pacific Life Entity shall cease to be a
--------------------------------------------------------------------------------
Pacific Life Entity in the event it is no longer a 100% direct or indirect
--------------------------------------------------------------------------
subsidiary of Pacific Mutual Holding Company), shall each be permitted to
-------------------------------------------------------------------------
transfer shares of the Company to another Pacific Life Entity, provided that the
--------------------------------------------------------------------------------
Controlled Shares of the Pacific Life Entities in the aggregate do not exceed
-----------------------------------------------------------------------------
24.9% of a class of the Company's shares.
-----------------------------------------

47. (a) Subject to Article 6, every Member of record present in person or by
proxy shall have one vote for each issued and outstanding Ordinary Share
registered in his name in the register; PROVIDED THAT, subject to the following
provisions of this Article 47, if and for so long as the number of Controlled
Shares of any Person other than a Pacific Life Entity would constitute 10% or
                     --------------------------------
more of the total combined voting rights attaching to the issued shares of the
                                                                        ------
Company (calculated after giving effect to any prior reductions in voting rights
--------------------------------------------------------------------------------
attaching to Controlled Shares of other persons as provided in this Article
---------------------------------------------------------------------------
47), or the total number of Controlled Shares of the Pacific Life Entities'
---------------------------------------------------------------------------
would constitute 25% or more of the total combined voting rights attaching to
-----------------------------------------------------------------------------
the issued shares of the Company (calculated after giving effect to any prior
-----------------
reductions in voting rights attaching to Controlled Shares of other persons as
provided in this Article 47), each such issued controlled Share, regardless of
the identity of the registered holder thereof, shall confer only a fraction of a
vote as determined by the following formula (the "Formula"):

     (T-C)/([9.1]XxC)
                 -

Where:    "T" is the aggregate number of votes conferred by all the issued
          shares immediately prior to that application of the Formula adjusted
          to take into account any prior reduction taken with respect to any
          other Member pursuant to Article 47(d) as at the same date;

          "C" is the number of issued Controlled Shares attributable to such
          Person; and

          "X" is (i) 9.1 if such Person is any Person other than a Pacific Life
          ---------------------------------------------------------------------
          Entity or (ii) 3.016 if the Formula is being applied to determine the
          ---------------------------------------------------------------------
          reduction in total combined voting rights attributable to the total
          -------------------------------------------------------------------
          number of Controlled Shares of the Pacific Life Entities.
          ---------------------------------------------------------

                                       7
<PAGE>

47. (d) The Formula shall be applied successively as many times as may be
necessary to ensure that no Person other than a Pacific Life Entity shall be a
                                   --------------------------------
10% Shareholder at any time, and that the total combined voting rights attached
                             --------------------------------------------------
to the Controlled Shares of the Pacific Life Entities shall not exceed 24.9% at
-------------------------------------------------------------------------------
any time. For the purposes of determining the votes exercisable by Members as at
--------
any date, the Formula shall be applied first to the votes of Controlled Shares
attributable to the Person to whom the greatest number of Controlled Shares are
attributed and successively to the Controlled Shares attributable to them, in
each case calculations being made on the basis of the aggregate number of votes
conferred by the issued shares as at such date as reduced by the application of
the Formula to any larger number of Controlled Shares as at such date.

47. (e) Notwithstanding the provisions of Articles 47(a) and (d) above, having
applied the provisions thereof as best as they consider reasonably practicable,
the Directors may make such final adjustments to the aggregate number of votes
attaching to the shares of any Member that they consider fair and reasonable in
all the circumstances to ensure that no Person other than a Pacific Life Entity
                                               --------------------------------
shall be a 10% Shareholder at any time, and that the voting rights attached to
                                        --------------------------------------
the Controlled Shares of the Pacific Life Entities shall not exceed 24.9 % at
-----------------------------------------------------------------------------
any time.
--------

89. (b) If the Company redeems or purchases shares or directs the sale and
transfer of such shares pursuant to this Article 89, it shall do so only in a
manner the Board believes would not result, upon consummation of such redemption
or purchase, in the total number of Controlled Shares of any Person other than
                    -----                                           ----------
a Pacific Life Entity, increasing to ten percent (10%) or any higher percentage
---------------------
of a class of the Company's shares on an Unadjusted Basis or the total number of
                                                          ----------------------
Controlled Shares of the Pacific Life Entities increasing to twenty-five percent
--------------------------------------------------------------------------------
(25%) or any higher percentage of a class of the Company's shares on a
----------------------------------------------------------------------
Unadjusted Basis.
----------------

                                       8

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