STIPULATION OF SETTLEMENT

EXHIBIT 10.2

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

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: MASTER DOCKET NO. 95-4704 (AMW)
IN RE THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA : MDL NO. 1061
SALES PRACTICES LITIGATION
:
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:
THIS DOCUMENT RELATES TO:
ALL ACTIONS LISTED ON :
EXHIBIT A
:
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STIPULATION OF SETTLEMENT

1. WHEREAS. numerous actions that have been filed against defendant The
Prudential Insurance Company of America, and certain employees, officers and
directors of the foregoing, have been centralized by the Judicial Panel on
Multidistrict Litigation in the United States District Court for the District of
New Jersey as In re The Prudential Insurance Company of America Sales Practices
Litigation, MDL Docket No. 1061 before the Honorable Alfred M. Wolin (the
"Centralized Proceeding");

2. WHEREAS, the named plaintiffs in several of the constituent putative
class actions to the Centralized Proceeding filed a Consolidated Amended Class
Action Complaint on October 24, 1995, integrating the claims raised in several
of the original complaints which were filed in the actions beginning in
February, 1995;

3. WHEREAS, the Defendants moved to dismiss the Consolidated Amended
Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), and the Court,
by Order dated May 10, 1996 (as amended June 10, 1996), dismissed portions of
the aforesaid complaint without prejudice and allowed the Plaintiffs to proceed
with certain of their claims;

4. WHEREAS, on April 25, 1995, in part in response to allegations made in
the Actions, the New Jersey Commissioner of Insurance formed a Multi-State Life
Insurance Task Force (the "Task Force") to examine the sales and marketing
practices in the life insurance industry, in general, commencing with a market
conduct examination of Prudential, the largest life insurer in the United
States;

5. WHEREAS, thirty states and jurisdictions agreed to participate on the
Task Force;

6. WHEREAS, in connection with its examination, the Task Force stated it
reviewed and analyzed: (i) numerous documents; four (4) electronic data bases
created by Prudential at the Task Force's request consisting of millions of
complaint, policy transaction, agent discipline and commission recapture data
records; and (ii) market conduct examinations of Prudential from other
individual state Task Force members that had been conducted during the period
under review; and further, they also stated they interviewed 283 Prudential
agents and 27 Vice Presidents of Regional Marketing or Executive Directors;

7. WHEREAS, the Task Force issued a report on July 9, 1996, setting forth
the findings of its market conduct examination (the "Report");

8. WHEREAS, as part of its Report and in accordance with one of its stated
objectives, the Task Force also developed, with Prudential, a remediation plan
which both the Task Force and Prudential determined would provide fair and
appropriate relief to


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Policyholders who may have been harmed by misrepresentations made in the sale of
their Policies (the "Task Force Remediation Program"), and also recommended that
Prudential be fined in the amount of $35 million;

9. WHEREAS, forty-three states and the District of Columbia have executed
consent orders adopting the Report and directing Prudential to implement the
Task Force Remediation Program (the "Consent Orders"), and have received
payments of fines from Prudential in accordance with the Report;

10. WHEREAS, during the pendency of the Task Force examination, and
continuing to date, counsel for the putative class action plaintiffs in the
Centralized Proceeding (i) have conducted an extensive investigation of
Prudential's sales practices throughout the United States, including interviews
of Policyowners as well as former and present Prudential employees; (ii) were
provided all documentation, electronic data, and other information produced to
the Task Force in connection with its examination and used in the development of
its Report; (iii) were provided additionally with over 1 million pages of
documents, approximately 160 computer diskettes and cartridges, and over 500
video and audiotapes, concerning a wide variety of matters and business
functions at Prudential, pursuant to their requests which were made periodically
throughout the pending litigation; and (iv) have conducted depositions and
interviews of Prudential executives, senior management and other personnel;

11. WHEREAS, on September 20, 1996, plaintiffs in the constituent actions
identified in Exhibit A (collectively, the "Actions") filed a Consolidated
Second Amended Class Action Complaint in the Centralized Proceeding (the
"Consolidated Complaint") against Prudential and the Individual Defendants
reflecting both the Court's prior rulings on


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substantive issues and the knowledge obtained by counsel for plaintiffs through
the formal and informal discovery they have conducted;

12. WHEREAS, the Consolidated Complaint was brought on behalf of a
purported class of persons who purchased permanent life insurance policies from
Prudential during the period January 1, 1982 through December 31, 1995;

13. WHEREAS, the Consolidated Complaint asserts claims relating to the
Defendants' sales practices during the Class Period and contains allegations,
among other things, concerning: (i) the use of an existing policy's cash value
or dividend stream to purchase or maintain a new Policy or other policy by means
of a surrender, withdrawal/partial surrender or loan ; (ii) representations
regarding the number of out-of-pocket cash premium payments required to be paid
for a policy and/or the benefits to be realized or paid based on a particular
number of cash premium payments; and (iii) representations that the product
being sold was solely an investment or savings vehicle rather than a life
insurance policy and/or the relative appropriateness of permanent life insurance
versus other financial services products;

14. WHEREAS, the Defendants make no admissions respecting the merits of
the allegations made in the Actions nor any facts or claims that have been or
could have been alleged against them in the Actions, but consider it desirable
for the Actions to be dismissed because this Stipulation will, among other
things, (i) further Prudential's objective to fully and fairly remedy any
legitimate claims of policyowners, (ii) provide substantial benefits to
Prudential's present and former policyowners in addition to those provided in
the Task Force Remediation Program, (iii) finally put Plaintiffs' claims
(including claims that were or could have been asserted against other officers
and directors other than the Individual Defendants)


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and the underlying matters to rest, and (iv) avoid the substantial expense,
burdens and uncertainties associated with continued litigation of those claims,
including indemnification obligations and expenses;


15. WHEREAS, Plaintiffs and Prudential, by and through their duly
authorized counsel, executed the Settlement Agreement on September 22, 1996:


16. WHEREAS, Lead Counsel and Defendants' Counsel executed a Statement of
Intent of the Parties on September 27, 1996;

17. WHEREAS, Prudential shall commence, by mailing of appropriate notice
no later than February, 1, 1997, a remediation program as described below. This
notice will disclose that with respect to the program, the scoring, remedies and
options in the remediation program will be the same as those provided for in the
Proposed Settlement except that the Additional Remediation Amount contemplated
in this Stipulation and all guaranteed and minimum amounts in excess of pre-tax
costs would only be available to the extent the Proposed Settlement is approved,
upon the Final Settlement Date, and that with respect to the Basic Claim Relief,
any agreed upon additional alternative benefits will only be available to the
extent the Proposed Settlement is approved, upon the Final Settlement Date;

18. WHEREAS, Lead Counsel has, in good faith, conducted extensive
additional discovery since September 22, 1996, to determine whether the
underlying facts were consistent with their understandings as of the time they
entered into the Settlement Agreement;

19. WHEREAS, based upon Lead Counsel's extensive discovery and
investigation through the date of this Stipulation, and its evaluation of the
facts and law relating to the matters alleged in the pleadings, Lead Counsel and
the Defendants have agreed to settle the


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Actions pursuant to the provisions of this Stipulation of Settlement
(hereinafter referred to as this "Stipulation"), after considering such factors
as (i) the substantial additional benefits to Plaintiffs and the Class provided
under the terms of this Settlement, (ii) the risks of litigation, including the
defenses of the Defendants to the Consolidated Complaint, (iii) the desirability
of consummating settlement of these disputes promptly, and (iv) the benefits
provided in the Settlement to Plaintiffs and the Class; and

20. WHEREAS, Plaintiffs and Lead Counsel have concluded that this
Stipulation of Settlement is fair, reasonable and adequate because it provides
substantial benefits to the Class and is in the best interests of the Class;


NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by, between and
among Plaintiffs (individually and in their respective capacities as
representatives of the Class) and The Prudential Insurance Company of America,
and the Individual Defendants, that the Actions and the matters raised by the
Actions hereby are settled, compromised and dismissed on the merits and with
prejudice on the following terms and conditions, subject only to the conditions
specified herein and the approval of the Court.

A. DEFINITIONS

1. As used in this Stipulation and the annexed Exhibits (which are an
integral part of this Stipulation and are incorporated in their entirety by
reference), the following terms shall have the following meanings (unless a part
or subpart of this Stipulation or its Exhibits otherwise provides):

a. "Action" or "Actions" shall mean the Consolidated Complaint and
the Consolidated Policyholders Class Actions in In re The Prudential Insurance
Company of America Sales Practices Litigation, Master Docket No. 95-4704(AMW),
MDL No. 1061,


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pending for pre-trial purposes in the United State District Court for the
District of New Jersey, as further described in Exhibit A hereto.

b. "ADR Guidelines" shall mean the "Prudential Alternative Dispute
Resolution Guidelines" attached hereto as Exhibit B.

c. "ADR Manual" or "Manual of Procedures" shall mean the "Manual of
Procedures for Resolving Claims Under the Prudential Alternative Dispute
Resolution Guidelines" attached hereto as Exhibit C.

d. "Agent" shall mean any agent or other representative of
Prudential in respect of the sale, delivery and/or service of the Policy or
Policies which is/are the subject of the Claim.

e. "Alternative Dispute Resolution Process" or "ADR Process" shall
mean the procedures for presentation to and evaluation of Claims by the Claim
Evaluation Staff, the Independent Claim Evaluation Team, the Claim Review Staff
and the Appeals Committee, as described in the ADR Guidelines and the ADR Manual
taken together.

f. "Appeals Committee" or "APCOM" shall have the meaning set forth
in the ADR Guidelines.

g. "Attorneys' Fees" shall mean such funds paid by Prudential, on
behalf of the Defendants, as may be awarded to Lead Counsel and all other
plaintiffs' counsel in the Actions to compensate them for their fees and
expenses in connection with the Actions.

h. "Basic Claim Relief" shall mean, as more particularly described
in the


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"Guidelines for Prudential Basic Claim Relief," attached as Exhibit D hereto,
that relief comprising the following: Optional Premium Loans, Enhanced Value
Policies, Enhanced Value Annuities and Mutual Fund Enhancements.

i. "Board" shall mean the Board of Directors of The Prudential
Insurance Company of America.

j. "Claim" shall mean a claim by a Claimant submitted to the ADR
Process and meeting the criteria for eligibility set forth in Exhibits B and C
hereto.

k. "Claim Evaluation Staff" shall mean the qualified professional
and administrative staffs established by Prudential, wholly independent from
Prudential's marketing or sales functions, composed solely to perform the
evaluation of Claims, and to score and determine the level of relief of all
Claims, all as described in the ADR Manual.

l. "Claim Form" shall mean the form submitted by each Claimant to
establish his, her or its Claim pursuant to the ADR Guidelines.

m. "Claim Resolution Factor" shall have the meaning set forth in
Section I.B. of the ADR Guidelines.

n. "Claim Review Staff" shall mean the qualified professional and
administrative staffs established by Prudential, wholly independent from
Prudential's marketing or sales functions, composed to perform the oversight
functions, all as described in the ADR Manual.


o. "Claimant" shall mean all such Policyholder(s) having,
individually or together, a complete ownership interest in a Policy which is the
subject of a Claim.

p. "Claimant Group Administrator" shall mean any third party, agent
or administrator, including Boston Financial Data Services, Inc., which may be
retained by


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Prudential and must be approved by Lead Counsel and the Regulatory Oversight
Staff, to help implement the ADR Process, Basic Claim Relief and the terms of
the Settlement.

q. "Claimant Representative" shall mean that person, and his or her
two assistants, selected by Lead Counsel to act on the behalf of a Claimant as
described in the ADR Manual. Expenses directly incurred by, and the compensation
of, the Claimant Representative shall be borne by Prudential, on behalf of the
Defendants, as more fully provided for in the ADR Guidelines.

r. "Claimant Support Team" shall mean that wholly independent entity
designated and retained by Prudential, and approved by the Regulatory Oversight
Staff and Lead Counsel, to provide administrative assistance to Claimants in the
preparation of their respective Claims, including providing aid in completing
Claim Forms and responding to inquiries respecting the ADR Process during the
time prior to the submission of the Claim Form. Lead Counsel and the Regulatory
Oversight Staff shall monitor from time to time the Claimant Support Team's
training and telephone calls.

s. "Class" and "Class Members" shall mean, individually or
collectively, all persons or entities who (i) are Policyholders, as defined
herein, and (ii) do not exclude themselves from participation under this
Stipulation, pursuant to Section H herein and Section 9 of the Class Notice.

t. "Class Notice" shall mean the notice mailed to Policyholders
informing them of the Proposed Settlement.

u. "Class Period" shall mean the period commencing January 1, 1982
and terminating on December 31, 1995, inclusive.


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v. "Court" shall mean the United States District Court for the
District of New Jersey, by the Honorable Alfred M. Wolin.

w. "Defendants" shall mean, individually or collectively, The
Prudential Insurance Company of America and the Individual Defendants.

x. "Defendants' Counsel" shall mean the law firm of Sonnenschein
Nath & Rosenthal.

y. "Department" shall mean those state insurance departments set
forth on Exhibit 1 to the ADR Guidelines.

z. "Election Form" shall mean the form on which each Policyholder
elects (i) Basic Claim Relief or (ii) participation in the ADR Process.

aa. "Enhanced Value Annuity" or "EVA" shall mean a currently issued,
non-qualified single premium deferred fixed or variable annuity with the
characteristics described in Section D of this Stipulation and the Guidelines
for Prudential Basic Claim Relief.

ab. "Enhanced Value Policy" or "EVP" shall mean an Enhanced Value
Whole Life Policy, made available pursuant to the terms and conditions set
forth in Section D of this Stipulation and the Guidelines for Prudential Basic
Claim Relief.

ac. "Existing Policy" shall mean an insurance policy issued by
Prudential which funds, in whole or in part, a New Policy issued by Prudential.

ad. "File" shall mean all documents submitted by or on behalf of the
Claimant (including the Claim Form), the Agent and Prudential to the Claim
Evaluation Staff in connection with the Claim.


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ae. "Final Order and Judgment" shall mean the order issued by the
United States District Court for the District of New Jersey in the Actions
approving the Proposed Settlement and the judgment entered pursuant to that
order.

af. "Final Settlement Date" shall mean the date on which the
Settlement (as approved by the Final Order and Judgment) becomes Final. For
purposes of the Settlement: (1) if no appeal has been taken from the Final Order
and Judgment, "Final" means that the time to appeal therefrom has expired; or
(2) if any appeal has been taken from the Final Order and Judgment, "Final"
means that all appeals therefrom, including petition for rehearing or
reargument, petition for rehearing en banc and petitions for certiorari or any
other form of review have been finally disposed of in a manner that affirms the
Final Order and Judgment.

ag. "Final Settlement Notice" shall mean the published notice that
the Settlement (as approved by the Final Order and Judgment) is Final.

ah. "Hearing Order" shall mean the order entered by the Court
concerning Notice, Settlement Hearing and Administration, unless otherwise
agreed by the parties.

ai. "Individual Defendants" shall mean, in their official capacities
as former officers and/or directors of The Prudential Insurance Company of
America, Robert A. Beck, Ronald D. Barbaro and Robert C. Winters.

aj. "Individual Defendants' Counsel" shall mean the law firms of:
(i) LeBoeuf, Lamb, Greene & MacRae L.L.P., as legal counsel to Robert A. Beck;
and (ii) Crummy, Del Deo, Dolan, Griffinger & Vecchione, as legal counsel to
Robert C. Winters.


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ak. "Individualized Relief" shall mean that relief to be received by
Claimants in the ADR Process, as described in Section C herein.

al. "Lead Counsel" shall mean the law firms of Milberg Weiss Bershad
Hynes & Lerach LLP and Much Shelist Freed Denenberg Ament Bell & Rubenstein,
P.C.

am. "Misstatement" shall mean in respect of any Claim Resolution
Factor either:

(a) An untrue statement of material fact; or

(b) The failure to disclose a material fact necessary to make
the statements made not materially misleading, under the
circumstances.

an. "Mutual Fund Enhancement" or "MFE" shall mean a financial
contribution by Prudential with respect to shares in mutual funds purchased by
a Policyholder made available pursuant to the terms and conditions set forth in
Section D of this Stipulation and the Guidelines for Prudential Basic Claim
Relief.

ao. "New Policy" shall mean an insurance policy issued by Prudential
which is funded, in whole or in part, by an Existing Policy.

ap. "Notice Date" shall mean the date when the Class Notice is first
mailed or published to Policyholders.

aq. "Optional Premium Loan" shall mean a loan offered to Class
Members subject to the terms and conditions set forth in Section D of this
Stipulation and the Guidelines for Prudential Basic Claim Relief.

ar. "Plaintiffs" shall mean the named plaintiffs in the Actions.


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as. "Policy" or "Policies" shall mean one or more individual
permanent life insurance policies issued in the United States by Prudential with
an issue date during the Class Period.

at. "Policyholders" shall mean all Policyowners of one or more
Policies issued during the Class Period, but do not include (unless such persons
or entities are Policyholders by virtue of other Policies) (i) Policyowners
represented by counsel who executed a document in connection with a settlement
of a claim, action, lawsuit or proceeding, pending or threatened, that released
Prudential with respect to such Policies, (ii) Policyowners which are
corporations, banks, trusts or non-natural entities, which purchased Policies as
corporate- or trust-owned life insurance and under which either (a) there are 50
or more separate insured individuals or (b) the aggregate premium paid over an
eight (8) year period, ending with the close of 1996, exceeds one million
dollars, or (iii) Policyowners who were issued Policies in 1995 by Prudential
Select Life Insurance Company of America.

au. "Policyowners" shall mean all persons or entities who (i) own a
life insurance policy or other contract issued by Prudential in the United
States, or (ii) owned at its termination a life insurance policy or other
contract issued by Prudential in the United States.

av. "Post-Settlement Notice" shall mean the notice to be sent within
30 days after the date of the entry of the Final Order and Judgment to each of
the Policyholders at his, her or its last known address, informing Policyholders
of the Consent Orders between Prudential and the Department where applicable,
and that the Stipulation between the Plaintiffs and the Defendants has been
approved by the Court.


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aw. "Post-Settlement Notice Date" shall mean the date on which the
Post-Settlement Notice first is mailed to each individual Policyholder at his,
her or its last known address.

ax. "Post-Settlement Summary Notice" shall mean the published
summary of the Post-Settlement Notice, unless otherwise agreed by the parties,
as more fully described below.

ay. "Proposed Settlement" shall mean the terms of settlement as set
forth in this Stipulation.

az. "Prudential" shall mean The Prudential Insurance Company of
America, a mutual insurance company domiciled in the State of New Jersey and
each of its U.S. life insurance subsidiaries with respect to Policies issued by
them.

ba. "Regulatory Oversight Staff" shall mean those persons, appointed
or designated by the Department, assembled to provide oversight of the programs
described in the ADR Manual.

bb. "Releasees" shall mean the Defendants, individually and
collectively, and any other current, former and future parents, subsidiaries,
affiliates, partners, predecessors, successors and assigns of Prudential, and
each of their respective past, present and future officers, directors,
employees, agents, independent contractors, brokers, representatives, attorneys,
heirs, administrators, executors, predecessors, successors and assigns, or any
of them.

bc. "Released Transactions" shall mean the marketing, solicitation,
application, underwriting, acceptance, sale, purchase, operation, retention,
administration, servicing, or replacement by means of surrender, partial
surrender, loans respecting,


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withdrawal and/or termination of the Policies or any insurance policy or
annuity sold in connection with, or relating in any way directly or
indirectly to the sale or solicitation of, the Policies.

bd. "Settlement" shall mean the Proposed Settlement, with such
modifications as made and approved by the Court, as set forth in the Final Order
and Judgment.

be. "Settlement Agreement" shall mean the settlement agreement by
and between the Plaintiffs and Defendants, executed September 22, 1996, and its
attached Exhibits.

bf. "Settlement Hearing" shall mean the hearing at or after which
the Court will make its decision whether to approve this Stipulation as fair,
reasonable and adequate.

bg. "Settling Parties" shall mean Plaintiffs (in their individual
and representative capacities) and the Defendants, collectively.

bh. "Summary Notice" shall mean the published summary of the Class
Notice, including notice of the Proposed Settlement, the Settlement Hearing and
Policyholders' exclusion rights, as described more fully below.

2. All other capitalized terms used in this document shall have the
meanings ascribed to them by this Stipulation, the ADR Guidelines, the ADR
Manual or the Guidelines for Prudential Basic Claim Relief, respectively.

B. SETTLEMENT RELIEF

1. Pursuant to this Stipulation, Prudential, on behalf of the Defendants,
will make available to Class Members two alternative types of relief:
Alternative Dispute Resolution Relief and Basic Claim Relief. Basic Claim Relief
may take the form of an Optional


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Premium Loan, an Enhanced Value Policy, an Enhanced Value Annuity or a Mutual
Fund Enhancement, as described below in Section D. A Class Member may seek
either Individualized Relief or Basic Claim Relief, but not both, as to each
Policy owned by that Class Member.

2. Notwithstanding any other provision in this Stipulation, where more
than one person has an ownership interest or right in a Policy, all persons
having such an interest or right in such Policy must act jointly in exercising
any right (including any right to exclude him or herself from the Class) created
under this Stipulation or the ADR Guidelines.

3. Any amounts required to be paid hereunder shall be paid by Prudential,
on behalf of all of the Defendants.

C. ALTERNATIVE DISPUTE RESOLUTION PROCESS

1. Subject to and in accordance with the provisions of this Stipulation,
Prudential, on behalf of the Defendants, will provide ADR Relief via the ADR
Process to Policyholders who do not exclude themselves from the Class, upon the
Court's approval of the Proposed Settlement and issuance of the Final Order and
Judgment, except that the minimum payments, financial guarantees and Additional
Remediation Amount described in all of the subsections of Section C.5 shall not
become available unless and until the Settlement (as approved by the Final Order
and Judgment) becomes Final. The ADR Process is based on an individual analysis
and determination of these Policyholders' claims arising out of Misstatements or
improper sales practices by Prudential in connection with individual sales of
life insurance. Prudential's ADR Guidelines, attached as Exhibit B hereto, set
forth the categories of Claims, scoring process and rules, and remedies that
will be available to these


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Policyholders based on the nature of their Claims and the evidence available to
establish them. Taken as a whole, the ADR Guidelines provide for a
particularized review of the Claims that are filed, with remedies tailored to
the type of Claim and the weight of the evidence available from the Policyholder
and from Prudential's files.

2. Claims will be evaluated under four general categories, as set forth in
the ADR Guidelines and as summarized below:

(i) "Financed Insurance," where there have been alleged
Misstatements as to the use of loans, dividends or other values on
Existing Policies to pay premiums on New Policies (sometimes referred to
as "twisting" or "churning");

(ii) "Abbreviated Payment" or "APP," where there have been alleged
Misstatements as to the use of a Policy's dividends or contract values to
pay premiums on the same Policy (sometimes referred to as "vanishing
premium");

(iii) The sale of a Policy, where there have been alleged
Misstatements as to such Policy's being primarily an investment, savings
or retirement product, and not life insurance; and

(iv) Other alleged Misstatements and improper sales practices, not
included in the previous categories.

3. Scoring is based on the weight of evidence concerning the sale
contained in the Claim File. The Claim File itself will consist of information
drawn from a number of sources within Prudential, as well as that supplied by
the Policyholder, including statements made by the Policyholder on the Claim
Form. Information in the Claim File must meet the criteria set forth in Exhibits
B and C in order for the Policyholder to obtain relief. For each


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factor analyzed within the general categories, the score determines the nature
and the choices of relief.

4. Subject to and in accordance with the provisions of the ADR Manual,
attached as Exhibit C hereto, the Settling Parties hereto will provide a
comprehensive plan for the efficient and effective processing, administration
and resolution of Claims. This will include (i) assistance of the Claimant
Support Team to eligible Policyholders in the preparation and submission of
their Claims; (ii) both internal and external review and an independent audit of
Claims and the claims processing system; and (iii) a fully-independent appeals
process in order to resolve Policyholders' objections to the determination of
their Claims.

5. Remediation provided for in the ADR Process will be paid for by, or on
behalf of, the Defendants. The following additional amounts, as specified in
this Section C.5, will be provided by or on behalf of the Defendants.

(a) The aggregate pre-tax cost for remedies in the ADR Process for
each 110,000 of Claims Remedied (as defined below) will be $260 million (up to a
maximum number of 330,000 Claims Remedied). For purposes of this Section C.5,
"Claims Remedied" shall mean all Claims receiving a remedy of any type through
the conclusion of the ADR Process. In the event 330,000 or fewer Claims are
remedied through conclusion of the ADR Process, and the total pre-tax cost for
the Claims Remedied is less than the Allocated Cost (as defined below) for such
Claims Remedied, the difference shall be added to the Additional Remediation
Amount (as described below). In the event more than 330,000 Claims are remedied
through the conclusion of the ADR Process, the total pre-tax cost for such
Claims Remedied divided by the total number of Claims Remedied shall be
multiplied by 330,000, and such amount, if less than the Allocated Cost, shall
be added to the


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Additional Remediation Amount. The "Allocated Cost" shall be the product
obtained by multiplying $260 million by a fraction (i) the numerator of which
shall be the actual number of Claims Remedied and (ii) the denominator of which
shall be 110,000; provided, however, in no event shall the numerator in the
immediately preceding clause (i) be greater than 330,000.

(b) An Additional Remediation Amount, which will be a fixed dollar
amount for a specified number of Claims, as set forth below for Claims Remedied,
will be provided by or on behalf of the Defendants. The Additional Remediation
Amount will be paid with respect to the Claims Remedied on a proportional basis
based on the actual number of Claims Remedied (e.g., the Additional Remediation
Amount for 165,000 actual Claims Remedied shall be $200 million).

Non-Cumulative
Additional Remediation Amount
Claims Remedied (in millions)
--------------- -----------------------------

110,000 $150

220,000 $250

330,000 $300

440,000 $250

550,000 $150

660,000 and above $ 50

(c) The distribution of the Additional Remediation Amount (including
any further amount determined in accordance with Section C.5.a. above) to
Claimants will be made upon the completion of the ADR Process as set forth in
the ADR Guidelines. The Additional Remediation Amount, as finally determined
upon the completion of the ADR Process, shall bear interest beginning from the
date of the Notice of Hearing by the Court in


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the Actions with respect to the allocation of the Additional Remediation Amount
(the "Notice Date"), and shall accrue as part of the Additional Remediation
Amount until distributed. Interest shall be based upon the weekly average yield
on U.S. Treasury Securities adjusted to a constant maturity of one year as made
available by the Federal Reserve Board, adjusted and compounded annually upon
the anniversary of the Notice Date.

(d) In no event will Prudential, on behalf of the Defendants, expend
less than a total amount of $410 million, which shall include both the pre-tax
cost for remedies to Claimants in the ADR Process and the Additional Remediation
Amount regardless of the number of Claims Remedied.

(e) In determining whether the amounts specified in Section C.5.a-d.
have been properly calculated, incurred and/or disbursed, as soon as practicable
after the conclusion of the ADR Process, Prudential shall provide such data,
information and reports regarding such matters to an actuary, actuaries, and
such other consultants designated by Lead Counsel as are reasonably necessary to
permit him, her or them to perform this function. If Lead Counsel and Prudential
cannot agree as to whether the amounts specified in Section C-5.a-d. have been
properly calculated, incurred and/or disbursed, the Court in the Actions will
resolve any such dispute.

D. BASIC CLAIM RELIEF

1. Subject to and in accordance with the provisions of this Stipulation,
Prudential, on behalf of the Defendants, will make Basic Claim Relief available
to Policyholders who do not exclude themselves from the Class, upon the Court's
approval of the Proposed Settlement and issuance of the Final Order and
Judgment, except with respect to the additional provisions of Basic Claim Relief
described in Section D.2. These Policyholders may, in


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their discretion, elect to receive this Basic Claim Relief, on a "no-proof"
basis without the submission of a claim requiring proof or other evidence. Basic
Claim Relief, as more fully described in the Guidelines for Prudential Basic
Claim Relief, attached as Exhibit D hereto, will be offered in the form of (i) a
low-interest rate "optional premium loan" that can be used to pay for insurance
policy premiums, (ii) a life insurance policy with an enhanced death benefit,
(iii) an annuity with an enhanced fund amount, and/or (iv) a contribution by
Prudential with respect to the purchase of shares in selected mutual funds.

2. The provisions respecting (i) all aspects of Mutual Fund Enhancement
(as described in Section V of the Guidelines for Prudential Basic Claim Relief),
(ii) Prudential's payment into a paid-up additional insurance rider to purchase
additional insurance coverage in the seventh policy year of Enhanced Value
Policies (as described in Section III of the Guidelines for Prudential Basic
Claim Relief), and (iii) Prudential's paying an additional amount in the third
contract year of Enhanced Value Annuities (as described in Section IV of the
Guidelines for Prudential Basic Claim Relief), will only become effective if and
when the Settlement (as approved by the Final Order and Judgment) becomes
Final.

E. BINDING EFFECT OF THIS STIPULATION

1. The terms of the Proposed Settlement as set forth in this Stipulation
(i) reflect the knowledge Lead Counsel has obtained through its extensive
informal and formal discovery completed prior to the execution of this
Stipulation and (ii) include modifications and additions to the Task Force
Remediation Program to ensure implementation of the mutually shared goal of Lead
Counsel and the Defendants that legitimately aggrieved Policyholders receive
fair and appropriate remediation.


-21-

2. Lead Counsel and the Defendants have entered into this binding
Stipulation based upon their belief that it is fair, reasonable and adequate. In
this respect and subject to the conditions set forth in Section F hereof, this
Stipulation shall be binding upon the Settling Parties.

F. CONDITIONS SUBSEQUENT

The binding effect of this Stipulation is subject to the satisfaction of
the following conditions subsequent to the date of execution (written below) of
this Stipulation:

1. The Settling Parties agree to stipulate to, and the Court shall enter
in the Actions, an order (i) conditionally certifying the Class as a class, for
settlement purposes only, (ii) staying all other pending motions in the Actions,
and (iii) designating the Plaintiffs as class representatives, Lead Counsel as
lead counsel for the Class and Arnzen, Parry & Wentz, P.S.C.; Hopkins
Goldenberg, P.C.; and Perry & Windels (who are Executive Committee Members), and
Goldstein, Till & Lite; Bonnett, Fairbourn, Friedman, Hienton, Miner & Fry,
P.C.; Cantilo, Maisel & Hubbard, LLP.; DeFalice & Coleman, P.C.; Law Offices of
Douglas B. Thayer; Drubner, Hartley, O'Connor and Mengacci; Law Office of Jay R.
Tomerlin; Specter Law Offices; Ziegler, Ziegler & Altman; Heins, Mills & Olson,
P.L.C.; Giebel, Gilbert & Mandel; Levin, Fishbein, Sedran & Berman; Allen,
Lippes & Shonn; Zwerling, Schachter, Zwerling & Koppell, L.L.P.; Goodkind,
Labaton, Rudoff & Sucharow, L.L.P.; Hagens and Berman and The Law Offices of
Eric D. Freed, all as additional counsel for the Class. Such order shall be in
the form of Exhibit E attached hereto.

2. Lead Counsel and Prudential (in consultation with the Regulatory
Oversight Staff) have agreed to the form and substance of, and drafted and
finalized the Class Notice


-22-

(including the cover letter (attached hereto as Exhibit F-l), the Notice of
Class Action, Proposed Settlement, Settlement Hearing and Right to Appear
(attached hereto as Exhibit F-2) and questions and answers brochure (attached
hereto as Exhibit F-3) referenced in Section G.1), the Summary Notice (attached
hereto as Exhibit G) and the Claim Form (attached hereto as Exhibit H)).
Additionally, Lead Counsel and Defendants' Counsel (in consultation with the
Regulatory Oversight Staff) shall agree, in good faith, to the form and
substance of, and to draft and finalize, the Post-Settlement Notice, the
Post-Settlement Summary Notice, the Final Settlement Notice, and any other
documents to be sent to Class Members about the Settlement (collectively, all
above documents shall be referred to as "Notices"). Lead Counsel and Defendants
further agree that the Court in the Actions shall approve the Class Notice,
Summary Notice, Post-Settlement Notice, Post-Settlement Summary Notice, Claim
Form, the Notices and any other notices or letters about the Settlement to be
sent or provided to Class Members.

3. Neither of the Settling Parties shall have exercised any of its rights
under the termination provisions in Section N herein.

4. The Court shall have entered the Final Order and Judgment, dismissing,
with prejudice, the Consolidated Complaint and each of the Actions described in
Exhibit A hereto, from which the time to appeal has expired and which has
remained unmodified after any appeal(s) in any material respect in the sole
judgment and discretion of either of the Settling Parties.

G. NOTICE TO THE CLASS AND COMMUNICATIONS
WITH POLICYHOLDER/CLASS MEMBERS


-23-

1. OVERVIEW. (a) Subject to the requirements of the Hearing Order, no
later than 60 days before the Settlement Hearing, the Settling Parties will
send individual notices to all Policyholders by first-class mail, postage
prepaid, to their last known addresses. The Class Notice will also include
Prudential's cover letter summarizing the Class Notice as well as a brochure in
question-and-answer format responding to anticipated questions. The Class Notice
will include, to the extent practicable, (i) each Policyholder's name and
address, (ii) the policy number of each Policy in which the Policyholder has or
had an ownership interest, (iii) a notation as to the form(s) of relief for
which the Policyholder may be eligible; and (iv) the identity of any co-owners
of the Policies as reflected in Prudential's records. In addition, notice will
be published as further described below in subsection G.2.

(b) GENERAL TERMS OF CLASS NOTICE. The Class Notice will inform
Policyholders that, depending on the status of their Policies, if they do not
exclude themselves from the Class with respect to a particular Policy, they will
be eligible to receive one or more forms of Basic Claim Relief or to participate
in the ADR Process with respect to that Policy. The Class Notice will (i)
contain a short, plain statement of the background of the Actions, the
conditional Class certification and the Proposed Settlement; (ii) describe the
proposed Basic Claim Relief outlined above in section D; (iii) describe the ADR
Process outlined above in Section C; (iv) explain the procedures for receiving
Basic Claim Relief or participating in the ADR Process; and (v) state that (A)
the provision of any relief to Class Members is contingent on the Court's
approval of the Proposed Settlement and issuance of the Final Order and
Judgment, and (B) the provision of the Additional Remediation Amount, including
the amounts described in all sub-sections of Section C.5. above, and the
additional provisions of Basic Claim Relief described in Section D.2 above, are
contingent on the


-24-

Settlement (as approved by the Final Order and Judgment) becoming Final. The
Class Notice also will conform to all applicable requirements of Rule 23 of the
Federal Rules of Civil Procedure and the Due Process Clause of the United States
Constitution and will otherwise be in the manner and form agreed upon by the
Settling Parties and approved by the Court.

(c) NOTICE OF EXCLUSION, OBJECTION AND APPEAL RIGHTS. The Class
Notice will advise Policyholders that (i) they may exclude themselves from the
Class by submitting written exclusion requests postmarked no later than December
19, 1996, (ii) any Policyholder who has not submitted a written request for
exclusion may object to the Proposed Settlement by filing and serving a written
statement of same, no later than December 19, 1996, (iii) any Policyholder who
has filed and served a written objection to the Proposed Settlement may enter an
appearance at the Settlement Hearing either personally or through counsel; and
(iv) any judgment entered in the Actions, whether favorable or unfavorable to
the Class, will include and be binding on all Policyholders who have not been
excluded from the Class, even if they have objected to the Proposed Settlement
and even if they have any other claim, lawsuit or proceeding pending against
Prudential.

(d) NOTICE OF FEES AND COSTS. The Class Notice will provide
information about the Attorneys' Fees to be paid by, or on behalf of, the
Defendants, which will be in addition to the relief provided by the ADR Process
and Basic Claim Relief. It will also state that any costs arising from
notifying the Class, administering the Settlement and the ADR Process, and the
performance of the Claimant Representative, will be provided by or on behalf of
Defendants, except that individual Class Members will be responsible for any
fees


-25-

and costs of any counsel they may retain to represent them individually at the
Settlement Hearing or thereafter, or in connection with the ADR Process.

2. PUBLICATION OF NOTICE. In addition to mailing the Class Notice to
Policyholders, Prudential will publish the Summary Notice (attached hereto as
Exhibit G) of the Proposed Settlement, the Settlement Hearing and Class Members'
exclusion, objection and appeal rights in the national editions of The New York
Times (business section) and The Wall Street Journal, in USA Today, The Star
Ledger and in such other newspapers and/or periodicals and on such dates as are
determined by Prudential in consultation with Lead Counsel and subject to
approval by the Court as to the form and dates of such notice. Notice will be
published at least once in each of the above-named publications no later than 50
days before the Settlement Hearing.

3. REMAILING AND ADDITIONAL NOTICE. Prudential, or the Claimant Group
Administrator, shall (i) remail any notices returned by the United States Postal
Service (the "Postal Service") with a forwarding address that are received by
Prudential or the Claimant Group Administrator at least 30 days, if practicable,
before the Settlement Hearing, (ii) retain an address research firm to research
any returned notices that do not include a forwarding address and (iii) provide
copies of any returned notices to the address research firm as soon as is
practicable following receipt. The address research firm will return to
Prudential or the Claimant Group Administrator, promptly after receipt of a
returned notice, either an updated address or a statement that, following due
research, it has not been possible to update the address. Prudential or the
Claimant Group Administrator will remail notice to any Class Member for whom the
address research firm provides an updated address, so long


-26-

as the updated address is provided to Prudential or the Claimant Group
Administrator at least 30 days before the Settlement Hearing.

4. POST-SETTLEMENT NOTICE. Within 30 days after the date of the entry of
the Final Order and Judgment, subject to the requirements of the Final Order and
Judgment contemplated by Section M of this Stipulation, Prudential will send the
Post-Settlement Notice to all Class Members (i.e. those Policyholders who have
not timely requested exclusion from the Class).

(a) The Post-Settlement Notice will (i) inform Class Members that
the Court has approved the Proposed Settlement and has issued the Final Order
and Judgment, (ii) invite Class Members to choose the type of relief they
prefer, and (iii) inform Class Members that the provision of the minimum payment
obligations, financial guarantees and Additional Remediation Amount, described
in all sub-sections of Section C.5. above and the additional provisions of Basic
Claim Relief described in Section D.2 above, are contingent on the Settlement
(as approved by the Final Order and Judgment) becoming Final.

(b) Each Post-Settlement Notice will include a separate Election
Form for each Policy in which the Class Member has or had an ownership interest.
Each Election Form will include, to the extent practicable, (i) the Class
Member's name and address, (ii) the policy number of the Policy in which he or
she has or had an ownership interest, (iii) the status of each Policy as of a
date to be specified by Prudential, but not more than 90 days before the date on
which the Post-Settlement Notice is first mailed to Class Members, (iv) a
notation as to the form(s) of Basic Claim Relief that the Class Member is
eligible to receive. Election Forms will also include a statement of the Class
Member's eligibility for the ADR Process; and (v) the identity of any co-owners
of the Policies as reflected in


-27-

Prudential's records. Class Members will be told to return the Election Form(s)
no later than 75 days after the mailing of the Post-Settlement Notice.

(c) Class Members who wish to obtain an Optional Premium Loan, an
Enhanced Value Policy, an Enhanced Value Annuity and/or a Mutual Fund
Enhancement (if and when the Settlement becomes Final), will be instructed to
(i) return their Election Forms no later than 75 days after the mailing of the
Post-Settlement Notice, (ii) complete any necessary application or other forms
for the loan, policy, annuity or mutual fund shares (after receipt of
prospectus), (iii) provide the information and cooperate in the procedures
required for underwriting, if any, and (iv) make the required payments for the
product being obtained. The Post-Settlement Notice will further inform Class
Members that a failure to comply with these requirements will result in making
them ineligible for relief.

(d) Class Members who want to participate in the ADR Process will be
instructed (i) to return their Election Forms no later than 75 days after the
mailing of the Post-Settlement Notice and (ii) to file the Claim Form (attached
hereto as Exhibit H) within 90 days after the mailing by Prudential of the Claim
Form. The Post-Settlement Notice will inform Class Members that each claim
should consist of (w) all documents related to the sale of the Policy, and which
the Class Member believes are proof or other evidence of the alleged claim, (x)
all other documents in the Claimant's possession relating to his or her Policy
and claim, (y) a completed Claim Form, to be provided by Prudential, including a
declaration, given under penalty of perjury, attesting to the nature, history
and authenticity of any documents submitted and representing that the Claimant
has submitted all documents in his or her possession relating to the Policy, and
(z) any other affidavits or materials the Claimant wishes to file. The
Post-Settlement Notice will further inform Class Members that


-28-

a failure to provide a completed Claim Form (or other material information) may
result in the Policyholder being ineligible for relief or an adverse scoring
determination under the ADR Process.

5. PUBLICATION OF POST-SETTLEMENT NOTICE AND PUBLICITY.

(a) In addition to mailing the Post-Settlement Notice to Class
Members, Prudential will publish a Post-Settlement Summary Notice in the
national editions of The New York Times (business section) and The Wall Street
Journal, in USA Today, The Star Ledger, such regional newspapers so that
publication would occur in each of the 50 states and the District of Columbia,
and in such other newspapers and/or periodicals and on such dates as are
determined by Prudential in consultation with Lead Counsel, subject to the
approval of the Court as to the form and publication dates of the
Post-Settlement Summary Notice. The Post-Settlement Summary Notice will be
published twice in each of the above-described publications.

(b) In addition, Prudential, in consultation with Lead Counsel, in
order to reach out to former and current Policyholders who may have legitimate
grievances regarding improper sales practices, will conduct a comprehensive
communication program aimed at publicizing the Post-Settlement Notice and
advising aggrieved Policyholders to seek relief under the Settlement. This
communication program shall be implemented through the following means: (i)
selected television advertisements on stations having representative regional
coverage (with video limited to text only); (ii) radio advertisements on
stations having representative regional coverage; and (iii) print advertising in
the publications described in Section G.5.(a) above. All the communications
described in this Section G.5(b) will be in such form and content as agreed to
by Prudential in consultation with Lead


-29-

Counsel. If Prudential and Lead Counsel cannot agree on the form, frequency or
content of these communications, either party shall have the right to ask the
Court to resolve the dispute.

6. RETENTION OF CLAIMANT GROUP ADMINISTRATOR. Prudential may retain, with
agreement of Lead Counsel and the Regulatory Oversight Staff, one or more
Claimant Group Administrators, including Boston Financial Data Services, Inc.,
to help implement the ADR Process, Basic Claim Relief and the terms of the
Settlement.

7. RIGHT OF COMMUNICATION WITH CLAIMANTS. Prudential expressly reserves
the right to communicate with and respond to inquiries from Class Members orally
and/or in writing in connection with the Settlement, and it may do so through
any appropriate means, including (without limitation) in the following respects:

(a) The Settling Parties will establish, at Prudential's expense, a
telephone bank with a toll-free "800" telephone number for responding to
inquiries from Class Members about the Settlement and any issues related to the
Actions. Prudential, with monitoring of Lead Counsel as described below, will be
responsible for (i) staffing the telephone bank with telephone representatives,
(ii) educating the telephone representatives about the background of the
Actions, all product concepts relevant to the Settlement, and the notice, terms
and chronology of the Settlement, (iii) training the telephone representatives
to answer Claimants' and policyowners' inquiries, (iv) providing scripts and
model questions and answers for the telephone representatives to use in
answering Claimants' and policyowners' inquiries, and (v) taking any other steps
to promote accurate and efficient communications with Claimants and
policyowners. Lead Counsel may monitor the education and training process by
reviewing drafts of telephone scripts before their use and by observing training
sessions to


-30-

ensure proper communication and conformance to the Settlement. Additionally,
Lead Counsel may monitor the calls to the toll-free "800" telephone number.

(b) Prior to the earlier of February 1, 1997, or the date of the entry of
the Final Order and Judgment, Prudential, through its Policyholder Relations
Center, will continue to process in the ordinary course and respond to
complaints from Class Members that may concern claims that otherwise could be
eligible for Basic Claim Relief or relief under the ADR Process.

8. FINAL SETTLEMENT NOTICE.

(a) Within 30 days after the Settlement (as approved by the Final Order
and Judgment) becomes Final, subject to the requirements of the Final Order and
Judgment contemplated by Section M of this Stipulation, Prudential will
publish a Final Settlement Notice informing Class Members that (i) the
Settlement (as approved by the Final Order and Judgment) is Final, (ii) the
provision of the Additional Remediation Amount, as described in Section C.5.,
will now be undertaken by or on behalf of the Defendants, with the allocation
and distribution to be in accordance with Section VI of the ADR Guidelines, and
(iii) the additional provisions of Basic Claims Relief, as described in Section
D.2 will now be available.

(b) The Final Settlement Notice will be published in the national editions
of The New York Times (business section) and The Wall Street Journal, in USA
Today, The Star Ledger, such regional newspapers so that publication would occur
in each of the 50 states and the District of Columbia, and in such other
newspapers and/or periodicals and on such dates as are determined by Prudential
in consultation with Lead Counsel, subject to the approval of the Court as to
the form and publication dates of the Final Settlement Notice.


-31-

The Final Settlement Notice will be published twice in each of the
above-described publications.

H. REQUESTS FOR EXCLUSION

1. Any Policyholder who wishes to be excluded from the Class must mail a
written request for exclusion to the Clerk of the Court, in care of the
post-office box rented for that purpose, postmarked no later than December 19,
1996, or as the Court otherwise may direct. The original requests for exclusion
shall be filed with the Court by Lead Counsel at or before the Settlement
Hearing.

2. Any Policyholder who does not file a timely written request for
exclusion with respect to a Policy as provided in the preceding subsection H.1
shall be bound with respect to that Policy by all subsequent proceedings, orders
and judgments in the Actions, even if he or she has pending or subsequently
initiates litigation against Defendants or any of them relating to that Policy
and the claims released in the Actions.

I. OBJECTIONS TO SETTLEMENT

1. Any Policyholder who has not filed a written request for exclusion for
all of his or her Policies and who wishes to object to the fairness,
reasonableness or adequacy of this Stipulation or the Proposed Settlement must
serve on Lead Counsel and Defendants' Counsel and file with the Court, no later
than December 19, 1996, or as the Court otherwise may direct, a statement of the
objection, as well as the specific reason(s), if any, for each objection,
including any legal support the Policyholder wishes to bring to the Court's
attention and any evidence the Policyholder wishes to introduce in support of
the objection. Policyholders may do so either on their own or through an
attorney hired at their own expense. Policyholders and their own attorneys at
their expense may obtain access to the


-32-

deposition transcripts, attached exhibits and/or any other documents generated
in the Actions by entering into a Stipulation of Confidentiality (attached
hereto as Exhibit I). These documents will be made available at the offices of
Lead Counsel at: (i) One Pennsylvania Plaza, New York, New York; (ii) 600 W.
Broadway, San Diego, California; and (iii) 200 N. LaSalle Street, Suite 2100,
Chicago, Illinois. Lead Counsel will inform Defendants' Counsel promptly of any
requests by Policyholders or their attorneys for access to such documents. If a
Policyholder hires an attorney to represent him or her, the attorney must (i)
file a notice of appearance with the Clerk of Court, no later than December 19,
1996, or as the Court otherwise may direct, and (ii) serve on Lead Counsel and
Defendants' Counsel, to be received no later than December 19, 1996, a copy of
the same.

2. Any Policyholder who files and serves a written objection, as described
in the preceding subsection, may appear at the Settlement Hearing, either in
person or through personal counsel hired at the Policyholder's expense, to
object to the fairness, reasonableness or adequacy of this Stipulation or the
Proposed Settlement. Policyholders, or their attorneys, intending to make an
appearance at the Settlement Hearing must serve on Lead Counsel and Defendants'
Counsel and file with the Court, to be received no later than December 19, 1996,
or as the Court otherwise may direct, a notice of intention to appear.

3. Any Policyholder who fails to comply with the provisions of the
preceding subsection shall waive and forfeit any and all rights he or she may
have to appear separately and/or object, and shall be bound by all the terms of
this Stipulation and by all proceedings, orders and judgments in the Actions.


-33-

J. RELEASE AND WAIVER, ORDER OF DISMISSAL

1. RELEASE AND WAIVER. Plaintiffs and all Class Members will agree to a
release and waiver as follows:

a. Plaintiffs and all Class Members hereby expressly agree that they
shall not now or hereafter institute, maintain or assert against the Releasees,
either directly or indirectly, on their own behalf, on behalf of the Class or
any other person, and release and discharge the Releasees from, any and all
causes of action, claims, damages, equitable, legal and administrative relief,
interest, demands or rights, of any kind or nature whatsoever, whether based on
federal, state or local statute or ordinance, regulation, contract, common law,
or any other source, that have been, could have been, may be or could be alleged
or asserted now or in the future by Plaintiffs or any Class Member against the
Releasees in the Actions or in any other court action or before any
administrative body (including any state Department of Insurance or other
regulatory commission), tribunal or arbitration panel on the basis of, connected
with, arising out of, or related to, in whole or in part, the Released
Transactions and servicing relating to the Released Transactions, which include
without limitation:

(i) any or all of the acts, omissions, facts, matters, transactions or
occurrences that were directly or indirectly alleged, asserted,
described, set forth or referred to in the Action;

(ii) any or all of the acts, omissions, facts, matters, transactions,
occurrences, or any oral or written statements or representations
allegedly made in connection with or directly or indirectly relating
to the Released Transactions, including without limitation any acts,
omissions, facts, matters, transactions, occurrences, or oral or
written statements or representations relating to:

(a) the number of out-of-pocket payments that would need to be
paid for the Policies;

(b) the ability to keep or not to keep a Policy in force based on
a fixed number and/or amount of premium payments (less than
the number and/or amount of payments required by the terms of
such Policy), and/or the amount that would be realized or paid
under a Policy based on a fixed number and/or amount of cash
payments (less than the number and/or amount of payments
required by the terms of such Policy), whether in the form of
(x) cash value and/or (y) death, retirement or periodic
payment benefits and/or (z) investment plan-type benefits;

(c) the nature, characteristics, terms, appropriateness,
suitability, descriptions and operation of Policies;


-34-

(d) whether such Policies were, would operate or could function as
investment, savings or retirement funding vehicles, or
investment plans;

(e) the relationship between a Policy's cash surrender value and
the cumulative amount of premiums paid;

(f) the fact that a part of the premiums paid would not be
credited toward an investment or savings account or a
Policies' cash value, but would be used to offset the
Prudential's commission, sales, administration and/or
mortality expenses;

(g) the rate of return on premiums paid in terms or cash value or
cash surrender value;

(h) the relative suitability or appropriateness of life insurance
policies, versus other investment plans;

(i) the use of an existing policy's or Policy's cash value or
cash--surrender value by means of a surrender,
withdrawal/partial surrender or loan to purchase or maintain a
Policy;

(j) the Prudential's dividend, interest crediting and cost of
insurance and administrative charge policies; dividend scales;
illustrations of dividend values, cash values or death
benefits; or any other matters relating to dividends, interest
crediting rates or illustrations, or cost of insurance and
administrative charges;

(k) the adequacy of the description of those items in clause (j)
above;

(l) the use of loans or contract values from existing policies or
Policies to pay premiums on new policies, or any
representations, promotions or advertising regarding such
matters;

(m) the "Abbreviated Payment Plan" or "APP", or the use of a
Policy's dividends or other contract values to pay premiums on
the same policy, or any representations, promotions or
advertising regarding such matters;

(n) the sale of Policies as investment, savings or retirement
funding vehicles, or any representations, promotions or
advertising regarding such matters;

(o) violations of the "twisting" or "churning" statutes or
regulations under applicable state law;


-35-

(p) violations of the "replacement" statutes or regulations under
applicable state law;

(q) the suitability of particular types of life insurance policies
or products for particular types of Policy purchasers;

(r) any actual or alleged violation of any state statute or
regulation relating to life insurance sales practices; and

(iii) any or all acts, omissions, facts, matters, transactions,
occurrences or oral or written statements or representations in
connection with or directly or indirectly relating to the
Stipulation or the settlement of the Actions, except as provided in
paragraph g below.

b. Plaintiffs and all Class Members expressly agree that this
Release will be, and may be raised as, a complete defense to and will preclude
any action or proceeding encompassed by the release of Defendants herein.

c. Nothing in this Release shall be deemed to alter a Class Member's
contractual rights (except to the extent that such rights are altered or
affected by the election and award of relief under the Stipulation) to make a
claim for benefits that will become payable in the future pursuant to the
express written terms of the policy form issued by Prudential; provided,
however, that this provision shall not entitle a Class Member to assert claims
which relate to the allegations contained in the Actions or to the matters
described in Paragraph J.1.a. above.

d. Without in any way limiting the scope of the Release, this
Release covers, without limitation, any and all claims for attorneys' fees,
costs or disbursements incurred by Lead Counsel or any other counsel
representing Plaintiffs or Class Members (including counsel to Claimants in the
ADR Process), or by Plaintiffs or the Class Members, or any of them, in
connection with or related in any manner to the Actions, the settlement of the
Actions, the administration of such settlements and/or the Released Transactions
except to the extent otherwise specified in the Stipulation.

e. Plaintiffs and Class Members expressly understand that Section
1542 of the Civil Code of the State of California provides that a general
release does not extend to claims which a creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor pertaining to the
Defendants' insurance sales practices. To the extent that, notwithstanding the
choice of law provisions in the Stipulation, California or other law may be
applicable, Plaintiffs and the Class Members hereby agree that the provisions of
Section 1542 and all similar federal or state laws, rights, rules, or legal
principles of any other jurisdiction (including, without limitation, North
Dakota and South Dakota) which may be applicable herein, are hereby knowingly
and voluntarily waived and relinquished by Plaintiffs and the Class Members with
respect to the Defendants' insurance sales practices, and


-36-

Plaintiffs and the Class Members hereby agree and acknowledge that this is an
essential term of this Release.

f. It is the intention of Plaintiffs and the Class Members in
executing this Release fully, finally and forever to settle and release all
matters, and all claims relating thereto, which exist, hereafter may exist, or
might have existed pertaining to the Defendants' insurance sales practices
(whether or not previously or currently asserted in any Actions) with regard to
the Policies.

g. Nothing in this Release shall preclude any action to enforce the
terms of the Stipulation, including participation in any of the processes
detailed therein.

2. ORDER OF DISMISSAL AND RELEASES. The Settling Parties will seek and
obtain from the Court before which the Actions are pending, as a condition of
settlement, a Final Order and Judgment (as to which the time for appeal had
expired without any modifications in the Final Order and Judgment). The Final
Order and Judgment shall, among other things, (i) approve the Stipulation as
fair, adequate and reasonable, (ii) dismiss the Actions with prejudice and on
the merits, and (iii) incorporate the terms of the Release.

3. RELEASE AND WAIVER UPON PARTICIPATION IN THE ADR PROCESS OR ELECTION OF
BASIC CLAIM RELIEF. In addition to the release and waiver by Plaintiffs and all
Class Members, as described in Section J.1. above and incorporated in the Final
Order and Judgment, the Settling Parties agree that all Policyholders submitting
Claims pursuant to the ADR Process or electing Basic Claim Relief shall also
provide an individual release (in the form contained in Part IV of the Claim
Form) in favor of the Defendants and the other Releasees. However, Class Members
who participate in the ADR Process shall have the right, within 60 days of the
receipt of notice by Prudential that the Settlement has not become Final, to
rescind such individual release and return any benefits received as part of the
Settlement and thereby return to the position they were in prior to the
Settlement.


-37-

K. ATTORNEYS' FEES, COSTS AND EXPENSES

1. Lead Counsel agrees to make, and the Defendants agree not to oppose, an
application for an award of Attorneys' Fees in the Centralized Proceeding not to
exceed a total of $90 million (the "Total Fees"). Additionally, Class Members
will not be required to pay any portion of the Attorneys' Fees.

2. The Total Fees will be paid by or on behalf of the Defendants, in two
stages, subject to the conditions in this sub-section: (i) one-half (50 percent)
of fees plus all reasonable and documented expenses incurred as of the date of
the Settlement Hearing will be paid within 5 business days of the entry of the
Final Order and Judgment; and (ii) the balance will be paid within 5 business
days of the Final Settlement Date. If the award of Attorneys Fees and costs in
the Final Order and Judgment is reversed, vacated, modified, or remanded for
further proceedings, so as to reduce the total award below one-half of the Total
Fees, then Lead Counsel shall be obligated within 30 days of the entry of the
Final Order and Judgment to return to the Defendants the amount of said award
below one-half of the Total Fees and expenses paid. If the Final Order and
Judgment is reversed, vacated, modified, remanded for further proceedings or
otherwise disposed of in any manner other than an affirmance of the Final Order
and Judgment as to any matter other than a reduction of the award of Attorneys'
Fees and costs below one-half of the Total Fees and expenses paid, and the
Defendants or Lead Counsel properly and timely terminates this Stipulation, in
accordance with Section N of this Stipulation, then Lead Counsel shall within 30
days of such termination return to the Defendants the first stage payment of
Attorney's Fees. Lead Counsel's obligation to return all or a portion of the
first stage Attorney's Fees, as described in the preceding two sentences, is
express and is assumed, without reservation, by Milberg


-38-

Weiss Bershad Hynes & Lerach LLP and Much Shelist Freed Denenberg Ament Bell &
Rubenstein, P.C. on their own behalf, and not on behalf of the Plaintiffs or the
Class. Lead Counsels' absolute obligation in this respect shall be evidenced by
their signatures below. Lead Counsel will allocate and distribute this award of
Attorneys' Fees and expenses among counsel for the Class and others providing
services in support of the Actions.

3. After the Final Settlement Date, Lead Counsel may request, and
Prudential will not oppose, an incentive award to be paid by or on behalf of the
Defendants, mutually agreed upon by the Settling Parties not to be greater than
$10,000, for each named Plaintiff in the Actions.

4. The following additional expenses reasonably incurred after the
execution of this Stipulation will be paid by or on behalf of the Defendants:
publication, printing and mailing costs of the Class Notice, the Summary
Notice, the Post-Settlement Notice and the Post-Settlement Summary Notice, the
Final Settlement Notice; post-office box rental costs; telephone costs for
establishing and using the 800 telephone numbers set forth in this Stipulation;
any processing costs for requests for exclusion; fees and disbursements to the
Claimant Group Administrator and any other third-party contractors or
administrators; any processing costs for Election Forms; administration costs of
Optional Premium Loans and other forms of Basic Claim Relief; all other
administration costs and expenses of the ADR Process not specified in this
paragraph; and fees and disbursements to the Claimant Representative, the
Representatives, the Independent Claim Evaluation Team and Appeals Committee
members as provided for in the ADR Manual. In connection with the payment of the
costs and expenses specified in the prior sentence, none of such payments shall
directly


-39-

or indirectly reduce, limit or modify the remedies provided in the ADR Process
or Basic Claim Relief.

5. Neither Prudential nor its current, former and future parents,
subsidiaries, affiliates, partners, predecessors, successors and assigns, nor
any of their respective past, present and future officers, directors, employees,
agents, independent contractors, brokers, representatives, attorneys, heirs,
administrators, executors, predecessors, successors and assigns shall be liable
or obligated to pay any fees, expenses, costs or disbursements to, or incur any
expense on behalf of, any person, either directly or indirectly, in connection
with the Actions, this Stipulation, or the Proposed Settlement, other than the
amount or amounts expressly provided for in this Stipulation; provided, however,
that nothing in this paragraph is intended to preclude the payment of attorneys'
fees, other expenses or liabilities in connection with this Stipulation, on
behalf of the Individual Defendants.

L. ORDER OF NOTICE, SETTLEMENT HEARING AND ADMINISTRATION

1. Immediately upon the execution of this Stipulation of Settlement, the
Settling Parties will submit this Stipulation of Settlement to the Court and
apply for a Hearing Order, unless otherwise agreed to by the Settling Parties:

(a) providing for the conditional certification of the Class for
settlement purposes only;

(b) finding that the Proposed Settlement is sufficient to warrant
sending notice to the Class;

(c) scheduling the Settlement Hearing to be held on such date as the
Court may direct, to consider the fairness, reasonableness and adequacy of the
Proposed Settlement and whether it should be approved by the Court;


-40-

(d) approving the proposed Class Notice, publication of the notice
and notice methodology described in the Stipulation;

(e) directing Prudential, on behalf of the Defendants (or their
assignees), to cause the Class Notice to be mailed to all Policyholders by first
class mail, postage prepaid, at their last known address as presently reflected
in Prudential's records no later than 60 days before the Settlement Hearing;

(f) directing Prudential, on behalf of the Defendants, or their
designee(s) to publish the Summary Notice as provided in the Stipulation no
later than 50 days before the Settlement Hearing;

(g) determining that the Class Notice, together with the Summary
Notice, is reasonable and the best practicable notice; is reasonably calculated,
under the circumstances, to apprise Policyholders of the pendency of the Actions
and of their right to object to or exclude themselves from the Proposed
Settlement; constitutes due, adequate and sufficient notice to all persons
entitled to receive notice; and meets the requirement of due process, the
Federal Rules of Civil Procedure, and the Rules of the Court;

(h) ruling that Prudential, or the Claimant Group Administrator,
shall (i) remail any notices returned by the Postal Service with a forwarding
address that are received by Prudential or the Claimant Group Administrator at
least 30 days before the Settlement Hearing;

(i) requiring Prudential to file proof of the mailing of the Class
Notice, and the Summary Notice, at or before the Settlement Hearing;

(j) as further described above in subsection G.7, authorizing
Prudential, including its representatives and any other retained personnel, to
communicate with


-41-

Policyholders, Class Members and other present or former Policyowners about the
Actions and the terms of the Proposed Settlement, subject to monitoring by Lead
Counsel, and to engage in any other communications within the normal course of
Prudential's business;

(k) requiring each Policyholder who wishes to exclude himself or
herself from the Class to submit an appropriate written request for exclusion,
postmarked no later than December 19, 1996, to the Clerk of the Court, in care
of the post-office box rented for that purpose;

(l) declaring that no Policyholder, or any person acting on behalf
of or in concert or participation with that Policyholder, may exclude any other
Policyholder from the Class and preliminarily enjoining all Policyholders unless
and until they have timely excluded themselves from the Class from filing,
commencing, prosecuting, continuing, litigating, intervening in or participating
as class members in, or seeking to certify a class in, any lawsuit in any
jurisdiction based on or relating to the Released Transactions or facts and
circumstances underlying the claims and causes of action in the Actions;

(m) ruling that any Policyholder who does not submit a timely,
written request for exclusion will be bound by all proceedings, orders and
judgments in the Actions, which will be preclusive in all pending or future
lawsuits or other proceedings;

(n) requiring each Policyholder who wishes to object to the
fairness, reasonableness or adequacy of the Proposed Settlement to serve on Lead
Counsel and Defendants' Counsel and to file with the Court, no later than
December 19, 1996, or at such other time as the Court may direct, a statement of
the objection, as well as the specific reasons, if any, for each objection,
including any legal support the Policyholder wishes to


-42-

bring to the Court's attention and any evidence the Policyholder wishes
to introduce in support of his or her objection, or be forever barred from
separately objecting;

(o) requiring any attorneys hired by Policyholders at Policyholders'
expense for the purpose of objecting to the Proposed Settlement to file and
serve on Lead Counsel and Defendants' Counsel a notice of appearance with the
Clerk of Court, no later than December 19, 1996, or as the Court otherwise may
direct;

(p) requiring any Policyholder who files and serves a written
objection and who intends to make an appearance at the Settlement Hearing,
either in person or through personal counsel hired at the Policyholder's
expense, in order to object to the fairness, reasonableness or adequacy of the
Proposed Settlement, to serve on Lead Counsel and Defendants' Counsel and file
with the Court, no later than December 19, 1996, or as the Court otherwise may
direct, a notice of intention to appear;

(q) authorizing Prudential to establish the means necessary to
administer the Proposed Settlement relief, process Election Forms and implement
the ADR Process, subject to monitoring from time to time by Lead Counsel and the
Regulatory Oversight Staff, and authorizing Prudential to retain the Claimant
Group Administrator to help administer the Proposed Settlement, including the
notice provisions;

(r) directing Prudential or its designated agents to rent a
post-office box in the name of the Clerk of the Court, to be used for receiving
requests for exclusion and any other communications, and providing that, other
than the Court or the Clerk of Court, only Prudential, Lead Counsel and their
designated agents shall have access to this post-office box;


-43-

(s) directing Defendants' Counsel, Lead Counsel, and any other
counsel for Plaintiffs or the Class promptly to furnish each other and any
counsel who has filed a notice of appearance with copies of any and all
objections or written requests for exclusion that might come into their
possession;

(t) providing a means for those filing objections to obtain access
at Lead Counsel's office to depositions and deposition exhibits in the Actions
at the expense of those filing objections, provided that such individuals enter
into a Stipulation of Confidentiality;

(u) containing any additional provisions that might be necessary to
implement and administer the terms of the Stipulation and the Proposed
Settlement.

2. Plaintiffs will not request exclusion from the Class, will not object
to the Proposed Settlement, and will not file an appeal from or seek review of
any order approving the Proposed Settlement.

M. FINAL APPROVAL AND FINAL ORDER AND JUDGMENT

1. After the Settlement Hearing, and upon the Court's approval of the
Stipulation, the Court shall enter a Final Order and Judgment. The Final Order
and Judgment will (among other things):

(a) find that the Court has personal jurisdiction over all Class
Members and that the Court has subject matter jurisdiction to approve the
Stipulation and all exhibits thereto;

(b) approve the Proposed Settlement as fair, reasonable and
adequate; direct the Settling Parties and their counsel to comply with and
consummate the terms of the Stipulation; and declare the Stipulation to be
binding on all Class Members and preclusive in all pending and future lawsuits
or other proceedings;


-44-

(c) certify the Class for settlement purposes only;

(d) find that the Class Notice, the Summary Notice and the notice
methodology implemented pursuant to the Stipulation (i) constitute reasonable
and the best practicable notice; (ii) constitute notice that is reasonably
calculated, under the circumstances, to apprise Policyholders of the pendency of
the Actions, their right to object to or exclude themselves from the Proposed
Settlement and to appear at the Settlement Hearing; (iii) constitute due,
adequate and sufficient notice to all persons entitled to receive notice; and
(iv) meet the requirements of due process, the Federal Rules of Civil Procedure,
and the Rules of the Court;

(e) find that the Post-Settlement Notice, the Post-Settlement
Summary Notice, the Final Settlement Notice, and the Post-Settlement Summary
Notice and Final Settlement Notice methodology to be implemented pursuant to
the Stipulation (i) constitute the most effective and practicable notice of the
Final Order and Judgment, the relief available to Class Members pursuant to the
Final Order and Judgment, and applicable time periods, and (ii) constitute due,
adequate and sufficient post-settlement and final settlement notice for all
other purposes to all Class Members;

(f) find that Lead Counsel and the Plaintiffs adequately represented
the Class for purposes of entering into and implementing the Settlement;

(g) dismiss the Actions on the merits and with prejudice, without
fees or costs to any party except as provided in the Stipulation;

(h) incorporate the Release set forth above in Section J, and
forever discharge the Releasees from any claims or liabilities constituting the
Released Transactions;


-45-

(i) bar and enjoin (i) all Class Members from filing, commencing,
prosecuting, participating or intervening in any lawsuit in any jurisdiction
based on or relating to the facts and circumstances underlying the claims and
causes of action in the Actions and/or the Released Transactions, and (ii) all
Class Members from organizing Policyholders into a separate class for purposes
of pursuing as a purported class action any lawsuit (including by seeking to
amend a pending complaint to include class allegations, or seeking class
certification in a pending action) based on or relating to the claims and causes
of action, or the facts and circumstances relating thereto, in the Actions
and/or the Released Transactions;

(j) retain jurisdiction over the administration of the Settlement,
to supervise the Settlement relief, to protect and effectuate the Final Order
and Judgment, and for any other necessary purpose.

N. MODIFICATION OR TERMINATION OF THE STIPULATION

1. The terms and provisions of this Stipulation may be amended, modified
or expanded by agreement of the Settling Parties.

2. The Stipulation will terminate at the sole option and discretion of
Defendants or Plaintiffs if:

(a) the Court, or any appellate court(s), rejects, modifies or
denies approval of any portion of the Proposed Settlement that
the terminating party in its (or their) sole judgment and
discretion reasonably determines is material; or

(b) the Court, or any appellate court(s), does not enter or
completely affirm, or alters or expands, any portion of the
Final Order and


-46-

Judgment that the terminating party in its (or their) sole
judgment and discretion believes is material.

The terminating party must exercise the option to withdraw from and terminate
the Stipulation, as provided in this subsection N.2, no later than 10 days after
receiving conclusive written notice of the event prompting the termination.

3. Notwithstanding the preceding subsection N.2, the Settling Parties may
not terminate the Stipulation solely because of the amount of Attorneys' Fees
awarded by the Court or any appellate court(s).

4. Prudential may unilaterally withdraw from and terminate the Stipulation
if those persons, who elect to exclude themselves from the Class with respect to
any Policy, together number more than such number which has been filed with the
Court in camera. Such withdrawal and termination by Prudential must be made no
later than 10 days after the expiration of the time period during which such
exclusions must be filed and receipt of notice of this event.

5. If an option to withdraw from and terminate the Stipulation arises
under subsections N.2, N.3 or N.4, neither Defendants nor Plaintiffs are
required for any reason or under any circumstance, to exercise their option.

6. If the Stipulation is terminated pursuant to subsections N.2, N.3 or
N.4, then:

(a) this Stipulation shall be null and void and shall have no force
or effect, and no party to this Stipulation shall be bound by any of its terms,
except for the terms of this subsection N.6.a;

(b) this Stipulation, all of its provisions, and all negotiations,
statements and proceedings relating to it shall be without prejudice to the
rights of Defendants, Plaintiffs


-47-

or any other Class Member, all of whom shall be restored to their respective
positions (regarding the provisions of this Stipulation) existing immediately
before the execution of this Stipulation, to the extent that they have not
provided an individual release and waiver as described in J.3 herein, which has
not been rescinded in accordance with the terms thereof;

(c) neither this Stipulation, nor the fact of its having been made,
shall be admissible or entered into evidence for any purpose whatsoever;

(d) any order or judgment entered after the date of this Stipulation
will be deemed vacated and will be without any force or effect; and

(e) any costs incurred pursuant to subsection K.2, prior to
termination of this Stipulation, will nevertheless be paid by or on behalf of
the Defendants.

O. REPRESENTATIONS AND WARRANTIES


1. Lead Counsel represents and warrants that (i) it has undertaken
appropriate and adequate formal and informal discovery (including extensive
document review, depositions and interviews) and has performed an examination
and evaluation of the relevant law and facts in order to assess the merits of
the claims and potential claims of the Class, and (ii) as a result of such
activities described in (i) above, the proposed settlement terms described
herein are fair, reasonable and adequate, and no issue of law or fact has come
to its attention which would cause it not to enter into this Stipulation with
the Defendants.

2. Subject to approval by the Court in the Actions, Lead Counsel
represents and warrants that it (i) is authorized to enter into this Stipulation
on behalf of the Plaintiffs and all Class Members (upon the Court's
certification of the Class), and any other attorneys who have represented or who
now represent the Plaintiffs and all Class Members (upon the Court's
certification of the Class), (ii) has the legally requisite ability to
adequately represent


-48-

the Plaintiffs and all Class Members, and (iii) is seeking to protect the
interests of the entire Class.

3. Each of the Plaintiffs represents and warrants that he or she (i) has
agreed to serve as a representative of the Class proposed to be certified
herein; (ii) is willing, able and ready to perform any of the duties and
obligations of a representative of the Class including the need to be available
for, and involved in, discovery and factfinding by Plaintiffs' counsel; (iii)
has received the pleadings in this action, including the Consolidated Complaint
filed herein; (iv) is familiar with the results of the factfinding undertaken by
Plaintiffs' counsel; (v) has consulted with Lead Counsel or any other counsel
they may have about the Actions, the Stipulation and the obligations of a Class
representative; and (vi) will remain and serve as a representative of the Class,
until the terms of the Stipulation are effectuated, the Stipulation is
terminated in accordance with the terms of this Stipulation, or the Court at any
time determines that said Plaintiff cannot represent the Class.

4. Defendants' Counsel represents and warrants that it is authorized to
enter into this Stipulation on behalf of The Prudential Insurance Company of
America and any attorneys who have represented or who now represent The
Prudential Insurance Company of America in the Actions.

5. Each of the Individual Defendants' Counsel represents and warrants that
it is authorized to enter into this Stipulation on behalf of each of the
Individual Defendants, respectively, and any attorneys who have represented or
who now represent their respective Individual Defendants in the Actions.


-49-

P. GENERAL MATTERS AND RESERVATIONS

1. Within thirty days after the conclusion of the ADR Process or promptly
after the termination of this Stipulation (unless the time is extended by
agreement of the Settling Parties), whichever comes first, Plaintiffs and their
counsel will return to Prudential all documents (and all copies of such
documents in whatever form made or maintained) produced by Prudential in the
Actions after August 20, 1996, as well as the transcripts of any deposition
testimony provided by Prudential or its current or former employees and any
exhibits to those depositions; provided, however, that (a) all such documents
shall be preserved by Prudential, and (b) this subsection shall not apply to
any documents gathered or made part of the record in connection with a claim
made under the ADR Process.

2. By execution hereof, this Stipulation does not release any claim of the
Defendants against any insurer for any cost or expense hereunder, including
attorneys' fees and costs.

3. This Stipulation sets forth the entire agreement among the Settling
Parties with respect to its subject matter, and it may not be altered or
modified except by written instrument executed by Lead Counsel, Defendants'
Counsel and the Individual Defendants' Counsel. The Settling Parties expressly
acknowledge that no other agreements, arrangements or understandings, excepting
the Statement of Intent of the Parties executed by Lead Counsel and Defendants'
Counsel on September 27, 1996, not expressed in this Stipulation exist among or
between them.

4. This Stipulation, its Exhibits and any ancillary agreements shall be
governed by and interpreted according to the substantive law of the State of New
Jersey, excluding its conflict of laws provisions.


-50-

5. Any action to enforce this Stipulation shall be commenced and
maintained only in the United States District Court for the District of New
Jersey.

6. Whenever this Stipulation requires or contemplates that one party shall
or may give notice to the others, notice shall be provided as follows:

(a) If to Plaintiffs, then to:

Melvyn I. Weiss, Esq.
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119

and

Michael B. Hyman, Esq.
Much Shelist Freed Denenberg Ament
Bell & Rubenstein, P.C.
200 North LaSalle Street, Suite 2100
Chicago, Illinois 60601

(b) If to Defendants, then to:

Reid L. Ashinoff, Esq.
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
New York, New York 10020

and

Frederick B. Lacey, Esq.
LeBoeuf, Lamb, Greene & MacRae L.L.P.
Legal Center
One Riverfront Plaza
Newark, New Jersey 07102

and

Michael R. Griffinger, Esq.
Crummy, Del Deo, Dolan,
Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102-5497


-51-

7. All time periods set forth herein shall be computed in calendar days
unless otherwise expressly provided. In computing any period of time prescribed
or allowed by this Stipulation or by order of court, the day of the act, event,
or default from which the designated period of time begins to run shall not be
included. The last day of the period so computed shall be included, unless it is
a Saturday, a Sunday or a legal holiday, or, when the act to be done is the
filing of a paper in court, a day on which weather or other conditions have made
the office of the clerk of the court inaccessible, in which event the period
shall run until the end of the next day that is not one of the aforementioned
days. As used in this paragraph, "legal holiday" includes New Year's Day,
Birthday of Martin Luther King, Jr., Presidents' Day, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day,
Christmas Day and any other day appointed as a holiday by the President or the
Congress of the United States, or by the State of New Jersey.

8. The Settling Parties reserve the right, subject to the Court's
approval, to make any reasonable extensions of time that might be necessary to
carry out any of the provisions of the Stipulation.

9. In no event shall the Stipulation, any of its provisions or any
negotiations, statements or proceedings relating to it in any way be construed
as, offered as, received as, used as or deemed to be evidence of any kind in the
Actions, any other action, or in any judicial, administrative, regulatory or
other proceeding, except in a proceeding to enforce this Stipulation, or as may
be necessary in any insurance coverage litigation. Without limiting the
foregoing, neither this Stipulation nor any related negotiations, statements or
proceedings shall be construed as, offered as, received as, used as or deemed to
be evidence


-52-

or an admission or concession of any liability or wrongdoing whatsoever on the
part of any person, including but not limited to the Defendants, Plaintiffs or
the Class, or as a waiver by the Defendants of any applicable defense in any
legal proceeding, including without limitation any applicable statute of
limitations or statute of frauds, or as a waiver by Plaintiffs or the Class of
any claims.

10. This Stipulation neither constitutes an admission (i) by the
Defendants respecting the merits of the allegations made in the Consolidated
Complaint or any of the Actions, or regarding any facts or claims that have been
or could have been alleged against them in this litigation, nor (ii) by
Plaintiffs that any of the allegations made in the Consolidated Complaint or any
of the Actions lack merit.

11. The Settling Parties, their successors and assigns, and their
attorneys agree to cooperate fully with one another in seeking court approval of
the Stipulation and to use their best efforts to effect the prompt consummation
of the Stipulation and the Proposed Settlement.

12. This Stipulation, together with all documents contemplated herein,
constitutes the entire agreement and understanding between the Settling Parties
and supersedes all prior agreements and understandings, including the Settlement
Agreement, and excepting the Statement of Intent of the Parties executed by Lead
Counsel and Defendants' Counsel on September 27, 1996, as to the matters set
forth herein. This Stipulation may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same instrument.


-53-

IN WITNESS WHEREOF, the undersigned stipulate and have entered into this
Stipulation of Settlement as of the 28th day of October, 1996.

APPROVED AND AGREED TO BY
AND ON BEHALF OF THE NAMED
PLAINTIFFS, IN THEIR INDIVIDUAL
AND REPRESENTATIVE CAPACITIES


By: /s/ Melvyn I. Weiss
--------------------------------
Melvyn I. Weiss, Esq.
Milberg Weiss Berhard Hynes &
Lerach LLP


By: /s/ Michael B. Hyman
--------------------------------
Michael B. Hyman, Esq.
Much Shelist Freed Denenberg
Ament Bell & Rubenstein, P.C.


APPROVED AND AGREED TO BY
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA


By: /s/ Mark B. Grier
---------------------------------
Mark B. Grier
Chief Financial Officer


COUNSEL TO THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA


By: /s/ Reid L. Ashinoff
--------------------------------
Reid L. Ashinoff, Esq.
Sonnenschein Nath & Rosenthal


-54-

APPROVED AND AGREED TO BY
AND BEHALF OF
ROBERT A. BECK


By: /s/ Frederick B. Lacey
--------------------------------
Frederick B. Lacey, Esq.
Charles M. Lizza, Esq.
LeBoeuf, Lamb, Greene &
MacRae L.L.P.


-55-

APPROVED AND AGREED TO BY


By: /s/ Ronald D. Barbaro
----------------------------------
Ronald D. Barbaro


-56-

APPROVED AND AGREED TO BY
AND ON BEHALF OF
ROBERT C. WINTERS


By: /s/ Michael R. Griffinger
----------------------------------
Michael R. Griffinger, Esq.
Crummy, Del Deo, Dolan,
Griffinger & Vecchione


-57-

EXHIBIT A

George A. Zoller v. Prudential Insurance Company of America, District of New
Jersey, Civil Action No. 95-1093 (AMW).

Lester H. Groth, et al. v. The Prudential Insurance Company of America, District
of New Jersey, Civil Action No. 95-1104 (AMW).

Martin Dorfner v. The Prudential Insurance Company of America, District of New
Jersey, Civil Action No. 95-1107 (AMW).

Toni Wachtler, et al. v. Prudential Insurance Company of America, District of
New Jersey, Civil Action No. 95-2473 (AMW).

Elizabeth Kuchas, et al. v. Prudential Insurance Company of America, District of
Connecticut, Civil Action No. 3:95-353.

Carol Nicholson, et al. v. The Prudential Insurance Company of America, Southern
District of Illinois, Civil Action No. 3:95-206.

Allan W. Amlee, et al. v. Prudential Insurance Company of America, District of
Minnesota, Civil Action No. 3:95-380.

Gary Dugan, et al. v. Prudential Life Insurance Company of America, et al.,
Southern District of New York, Civil Action No. 1:94-1195.

E. Eugene Price, et al. v. Prudential Insurance Company of America, Western
District of Pennsylvania, Civil Action No. 2:94-75.

Charles J. Harris, et al. v. Prudential Insurance Company of America, Southern
District of Illinois, Civil Action No. 95-203-WLB.

John A. Hunter, et al. v. The Prudential Life Insurance Company of America,
Western District of New York, Civil Action No. 95-CV-0364E(F).

EXHIBIT B

PRUDENTIAL ALTERNATIVE
DISPUTE RESOLUTION GUIDELINES

TABLE OF CONTENTS

Page
I. INTRODUCTION ........................................................... 1
A. General ............................................................... 1
B. Overview of Process ................................................... 1
C. Definitions ........................................................... 2
D. General Scoring of Claim Resolution Factors ........................... 9
E. Complaint History Scoring Adjustments ................................. 9
F. Non-Specific Evidentiary Considerations ............................... 10
1. Considerations Which May Increase Score (Positive Considerations). 10
2. Considerations Which May Decrease Score (Negative Considerations). 11
G. Cumulative, Alternative and Discretionary Relief .......................12
H. Defendants' Defenses Waived ............................................13
I. Deceased Insureds ......................................................13
1. Policy Lapse Prior to Insured's Death .............................13
2. Insured's Death While Claim is Pending.............................14
J. Other Insurance Products ...............................................15

II. FINANCED INSURANCE ...................................................... 16
A. Assessment Of Claim/Claim Resolution Factors .......................... 16
B. Specific Evidentiary Considerations ................................... 17
C. Determination of Relief ............................................... 18

III. ABBREVIATED PAYMENT ("APP") ............................................ 26
A. Assessment of Claim/Claim Resolution Factors .......................... 26
B. Specific Evidentiary Considerations ................................... 26
C. Determination of Relief ............................................... 28

IV. LIFE INSURANCE SOLD AS AN INVESTMENT, SAVINGS OR RETIREMENT
VEHICLE ................................................................ 34
A. Assessment Of Claim/Claim Resolution Factors .......................... 34
B. Specific Evidentiary Considerations ................................... 34
C. Determination of Relief ............................................... 35

V. OTHER CLAIMS ............................................................. 37
A. Assessment of Claim/Claim Resolution Factors .......................... 37
B. Determination of Relief ............................................... 37

VI. ALLOCATION OF ADDITIONAL REMEDIATION AMOUNT ............................. 39


i

PRUDENTIAL ALTERNATIVE DISPUTE RESOLUTION GUIDELINES

I. INTRODUCTION

A. GENERAL


With respect to any Policy, a Policyholder may assert a Claim under
the procedures for assessment and evaluation described in these ADR
Guidelines. The procedures and rules set forth in the Manual of
Procedures shall govern the prompt and fair processing of Claims
submitted by Policyholders pursuant to the Stipulation of Settlement
entered into between Plaintiffs and the Defendants (the
"Stipulation") and pursuant to the consent orders and agreements,
and all amendments thereto, issued by the State Insurance
Departments identified in Exhibit 1 hereto ("Consent Orders").

B. OVERVIEW OF PROCESS

The Alternative Dispute Resolution ("ADR") Process, which offers the
opportunity to resolve Claims in an orderly and comprehensive
manner, will begin on the Post-Settlement Notice Date. One or more
of the Claim Evaluation Staff, the Independent Claim Evaluation
Team, the Claim Review Staff and the Appeals Committee will evaluate
each Claim and base its decision on the facts and circumstances of
each case, as more particularly described herein. Sections II.A.,
III.A. IV.A. and V.A. of these ADR Guidelines set forth a list of
claim-specific resolution factors, which form the basis of a
Policyholder's contention of wrongdoing (the "Claim Resolution
Factors"), for each of the designated categories. Provided that one
or more Claim Resolution Factors is alleged directly or indirectly
in connection with a Claim and is established hereunder, it will
lead to a prescribed type of relief described in Sections II.C.,
III.C., IV.C. and V.B. respectively, herein. Each Claim Resolution
Factor will be scored on a scale of 0 to 3. The range of scores is
closely related to the weight of evidence made available to the
Claim Evaluation Staff, the Independent Claim Evaluation Team, the
Claim Review Staff, or the Appeals Committee to support or undermine
any subject allegation. Scores assigned to each individual Claim
Resolution Factor are not to be aggregated in determining whether a
score sufficient to justify relief has been received. Sections
II.B., III.B. and IV.B. of these ADR Guidelines provide evidentiary
considerations specific to the corresponding Claim-Specific
Category. In addition, there are other factors not directly related
to the specific Claim Resolution Factors that will be considered in
arriving at a determination of the applicable score. The score given
to a Claim will determine the nature and scope of the choices of
relief to be afforded to the Claimant. The scoring system is set
forth in Sections I.D., I.E. and I.F. below.

C. DEFINITIONS

For purposes of the ADR Guidelines, the following terms shall have
the following respective meanings:

"ADR Guidelines" shall mean this Exhibit to each of the Stipulation
and the Consent Orders, as amended or modified from time to time in
accordance with the terms and provisions of each of the Stipulation
and the Consent Orders.

"Abbreviated Payment" or "APP" shall mean, for purposes of this
Exhibit, a feature using a Policy's existing dividend credits for
traditional whole-life policies and contract fund amounts for VAL/AL
policies to limit the number of cash or "out-of-pocket" payments
required of the Policyholder to keep the Policy in force.

"Abbreviation Point" shall mean (i) in the case of Policies other
than VAL, which apply dividend credits toward premium, the Policy
anniversary when the existing and future dividend credits would be
sufficient to pay all remaining premiums as they become due,
assuming the continuation in all future years of the current
dividend scale in effect as of a specified date, or (ii) in the case
of VAL/AL, the Policy anniversary when the contract fund (including
for VAL, future investment returns at an express or implied
hypothetical interest rate and including for AL, future interest at
an express or implied interest crediting rate) would be sufficient
to keep the Policy in force, assuming the continuation in all future
years of the current charges on the Policy in effect as of a
specified date. In each of the foregoing cases, it is assumed that
there are no loans and no surrenders of or withdrawals from any such
Policy.

"Action" means the Consolidated Policyholders Class Actions in In re
The Prudential Insurance Company of America Sales Practices
Litigation, Master Docket No. 95-4704(AMW), MDL No. 1061, pending in
the United State District Court for the District of New Jersey.

"Agent" shall mean any agent or other representative of the Company
in respect of the sale, delivery and/or service of the Policy or
Policies which is/are the subject of the Claim.

"Agent Statement" shall mean the statement of the Agent as defined
in the Manual of Procedures.

"AL" shall mean the Company's Appreciable Life Insurance Policy.

"Alternative Dispute Resolution Process" or "ADR Process" shall mean
the procedures for presentation to and evaluation of Claims by the
Claim Evaluation Staff, the Independent Claim Evaluation Team, the
Claim Review Staff and the


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Appeals Committee, as described in the ADR Guidelines and the Manual
of Procedures taken together.

"Appeals Committee" or "APCOM" shall mean those individuals
assembled, supervised and monitored by Lead Counsel and the
Regulatory Oversight Staff (as defined in the Manual of Procedures),
to review Claimants' objections to ADR Process determinations. The
50 members (or such greater number as mutually agreed upon by the
Regulatory Oversight Staff, Lead Counsel and the Company) of the
Appeals Committee will be chosen by Lead Counsel and the Regulatory
Oversight Staff from lists drawn from the American Arbitration
Association, the CPR Institute for Dispute Resolution or another
dispute resolution entity, based upon such persons' experience
either (i) with the life insurance industry or life insurance
products, (ii) with the resolution of insurance-related complaints,
or (iii) as arbitrators or other adjudicators so as to have the
appropriate expertise to serve as members of the Appeals Committee.
Both the identification of any such other dispute resolution entity
and the list of potential Appeals Committee members shall be
mutually agreeable to the Regulatory Oversight Staff, Lead Counsel
and the Company, all as more specifically described in the Manual of
Procedures.

"Associated Complaint" shall mean, with respect to any given Claim
evaluation, a Policyowner complaint made prior to September 20,
1996, against the Agent involved in the Claim by another
Policyowner, asserting a Misstatement relating to any of the
Claim-Specific Categories; provided, however, in determining the
number of Associated Complaints against the Agent (i) multiple
complaints by any other Policyowner relating to any of the
Claim-Specific Categories, regardless of the number of policies
which are the subject of any or all of such complaints, shall be
deemed one (1) Associated Complaint, and (ii) complaints from
members of the same household as the other Policyowner shall be
deemed another Associated Complaint only in the event the policy,
which is the subject of such complaint, is different than the other
Policyowner's policy.

"Available Evidence" shall mean all original or true copies of any
written certificates, agreements, instruments, or documents,
letters, memoranda or notes of any kind with respect to any Policy
or insured, taken as a whole, including, without limitation,
illustrations, sales materials and the contract, the application
documentation, data or documents relating to the Complaint History
of the Agent who sold and/or serviced the Policy, the Claim Form,
the Agent Statement and correspondence concerning the Policy or the
Claim, all as existing in the File. Available Evidence includes,
without limitation, any and all Company Documentation.

"Basic Claim Relief" shall mean, as more particularly described in
the "Guidelines for Prudential Basic Claim Relief," that relief
comprising the following: optional


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premium loans, enhanced value policies, enhanced value annuities and
mutual fund enhancements.

"Claim" shall mean a claim by a Claimant submitted to the ADR
Process and meeting the criteria for eligibility set forth herein
and in the Manual of Procedures.

"Claimant" shall mean all such Policyholder(s) having, individually
or together, a complete ownership interest in a Policy which is the
subject of a Claim.

"Claim Category" shall mean the Claim-types described in Sections
II.A., III.A., IV.A. and V.A.

"Claim Evaluation Staff" shall mean the qualified professional and
administrative staffs established by the Company, wholly independent
from the Company's marketing or sales functions, composed solely to
perform the evaluation of Claims, and to score and determine the
level of relief of all Claims. The administrative staff shall
consist of persons adequately trained or experienced to perform the
functions required herein and to assist the professional staff. The
professional staff shall consist of persons from the Company's
Policyowner Relations, Compliance, Individual Insurance and/or Law
Departments, none of whom shall have acted as a licensed agent for
the Company or shall have directly supported, or acted in the field
supervision of the Company's licensed agents.

"Claim Form" shall mean the form submitted by each Claimant to
establish his, her or its Claim pursuant to the ADR Guidelines.

"Claim Resolution Factors" shall have the meaning set forth in
Section I.B. of this Exhibit.

"Claim Review Staff" shall mean the qualified professional and
administrative staffs established by the Company, wholly independent
from the Company's marketing or sales functions, composed to perform
the oversight functions more specifically described in Sections II
and III of the Manual of Procedures. The administrative staff shall
consist of persons adequately trained or experienced to perform the
functions required therein and to assist the professional staff. The
professional staff shall consist of certain of the Company's senior
complaint handlers from the Policyowner Relations Department,
attorneys from the Company's Law Department and/or experienced
members of the Company's Compliance Department, none of whom shall
have acted as a licensed agent for the Company or shall have
directly supported, or acted in the field supervision of the
Company's licensed agents.

"Claim-Specific Category" shall mean the Claim-types described in
Sections II.A., III.A. and IV.A.


-4-

"Class Period" shall mean the period commencing January 1, 1982 and
terminating on December 31, 1995, inclusive.

"Company" shall mean Prudential, as defined herein. With respect to
the provision of relief as described in Sections II.C, III.C, IV.C
and V.B herein and with respect to any amounts required to be paid
under the Manual of Procedures, the Guidelines for Prudential Basic
Claim Relief or under these ADR Guidelines, such actions or
payments, respectively, will be by or on behalf of each of The
Prudential Insurance Company of America, its United States life
insurance subsidiaries and the Individual Defendants.

"Company Documentation" shall mean (i) originally executed, or true
copies thereof, of written correspondence from an Agent or the
Company, including illustrations or other sales materials whether or
not on letterhead of the Company or (ii) a validly executed policy
application.

"Complaint History" shall mean, with respect to any Agent, that such
Agent has had prior to September 20, 1996, three (3) or more
Associated Complaints (documented in the Company's files).

"Defendants" shall mean The Prudential Insurance Company of America
and the Individual Defendants (as defined in the Stipulation of
Settlement).

"Department" shall mean those State Insurance Departments set forth
on Exhibit 1 hereto which have issued Consent Orders.

"Designated New Policy" shall mean those life insurance policies
within the Company's portfolio of individual permanent life
insurance policies available on the date of the award as more
particularly described on Schedule A hereto; provided that such
Schedule may be modified and supplemented by notice to and approval
by the Regulatory Oversight Staff (as defined in the Manual of
Procedures) and Lead Counsel.

"Election Form" shall mean the form on which each Policyholder
elects (i) Basic Claim Relief or (ii) participation in the ADR
Process.

"Existing Policy" shall mean an insurance policy issued by the
Company which funds, in whole or in part, a New Policy issued by the
Company.

"File" shall mean all documents submitted by or on behalf of the
Claimant (including the Claim Form), the Agent and the Company to
the Claim Evaluation Staff in connection with the Claim.


-5-

"Final Order and Judgment" shall mean the order to be issued by the
United States District Court for the District of New Jersey in the
Actions approving the Settlement and the judgment entered pursuant
to that order.

"Final Settlement Date" shall mean the date on which the Settlement
(as approved by the Final Order and Judgment) becomes Final. For
purposes of the Settlement: (1) if no appeal has been taken from the
Final Order and Judgment, "Final" means that the time to appeal
therefrom has expired; or (2) if any appeal has been taken from the
Final Order and Judgment, "Final" means that all appeals therefrom,
including petition for rehearing or reargument, petition for
rehearing en banc and petitions for certiorari or any other form of
review have been finally disposed of in a manner that affirms the
Final Order and Judgment.

"Independent Claim Evaluation Team" or "ICET" shall mean the
qualified individuals wholly independent from the Company who will
evaluate all Claims receiving less than a score of "3" from the
Claim Evaluation Staff and make recommendations respecting such
scoring to the Claim Review Staff, as more fully described in the
Manual of Procedures. The ICET shall follow the criteria, guidelines
and remedies established herein and in the Manual of Procedures.

"Interest Rate" shall mean, with respect to any given Policy,
interest at the actual rate(s) of the Company on its "interest-only"
settlement option plus 1.5% in effect for the period commencing on
the date the Policy was issued and ending on the date of the award.
Beginning in 1997, the Interest Rate will be adjusted on an annual
basis to reflect changes to the rate offered by the Company on its
"interest-only'" settlement option provided that no annual decrease
in the Interest Rate will occur unless the decrease would be at
least .5%.

"Lead Counsel" shall mean the law firms of Milberg Weiss Bershad
Hynes & Lerach LLP and Much Shelist Freed Denenberg Ament Bell &
Rubenstein, P.C.

"Manual of Procedures" shall mean the "Manual of Procedures for
Resolving Claims Under the Prudential Alternative Dispute Resolution
Guidelines," as may be amended or modified from time to time in
accordance with the terms and provisions applicable thereto.

"Misstatement" shall mean in respect of any Claim Resolution Factor
either:

(a) An untrue statement of material fact; or

(b) The failure to disclose a material fact necessary to
make the statements made not materially misleading, under the
circumstances.


-6-

"New Policy" shall mean an insurance policy issued by the Company
which is funded, in whole or in part, by an Existing Policy.

"Plaintiffs" shall mean the named plaintiffs in the Action.

"Policy" or "Policies" shall mean one or more individual permanent
life insurance policies issued in the United States by Prudential
with an issue date during the Class Period.

"Policyholders" shall mean all Policyowners of one or more Policies
issued during the Class Period, but do not include (unless such
persons or entities are Policyholders by virtue of other Policies)
(i) Policyowners represented by counsel who executed a document in
connection with a settlement of a claim, action, lawsuit or
proceeding, pending or threatened, that released Prudential with
respect to such Policies, (ii) Policyowners which are corporations,
banks, trusts or non-natural entities, which purchased Policies as
corporate- or trust-owned life insurance and under which either (a)
there are 50 or more separate insured individuals or (b) the
aggregate premium paid over an eight (8) year period, ending with
the close of 1996, exceeds one million dollars, or (iii)
Policyowners who were issued Policies in 1995 by Prudential Select
Life Insurance Company of America.

"Policyowners" shall mean all persons or entities who (i) own a life
insurance policy or other contract issued by the Company in the
United States or (ii) owned at its termination a life insurance
policy or other contract issued by the Company in the United
States.

"Post-Settlement Notice" shall mean the notice to be sent within 30
days after the date of the entry of the Final Order and Judgment to
each of the Policyholders at his, her or its last known address,
informing Policyholders of the Consent Orders between the Company
and the Department, where applicable, and that the Stipulation
between the Plaintiffs and the Defendants has been approved.

"Post-Settlement Notice Date" shall mean the date on which the
Post-Settlement Notice first is mailed to each individual
Policyholder at his, her or its last known address.

"Prudential" shall mean The Prudential Insurance Company of America,
a mutual insurance company domiciled in the State of New Jersey, and
each of its United States life insurance subsidiaries with respect
to Policies issued by them.

"PUA" shall mean paid-up additional insurance.

"Settlement" shall have the meaning set forth in the Stipulation.


-7-

"Term Insurance Costs" shall mean, with respect to any Policy, a
charge for providing death benefit coverage for the period
commencing on the date the Policy was issued and ending on the date
of the award (or in the case of a Policy that has lapsed, ending on
the last day of coverage under such Policy). With respect to
traditional whole-life policies, the charge shall be computed on the
Policy's face amount exclusive of term insurance riders and PUAs
using 85% of The Commissioners' 1980 Standard Ordinary Ultimate
Mortality Tables for Males and Females as appropriate (i.e., sex
distinct rates). With respect to VAL/AL Policies, the charge shall
be computed using the Company's mortality tables applied to the net
amount at risk of the respective VAL/AL Policies. In no event,
however, will the Term Insurance Costs, as calculated pursuant to
the foregoing and deducted as provided in these ADR Guidelines in
connection with the rescission of any Policy or New Policy, exceed
50% of the applicable premiums paid on the Policy or New Policy
(before subtracting from such premium amount any cash withdrawals,
surrenders, loans and/or dividends paid in cash or used to reduce
premiums on the respective Policy or New Policy).

"Transaction Documents" shall mean Company documents or forms
required to be signed by the Policyholder in connection with a
transaction respecting the Policy which is the subject of a Claim.
Such documents or forms shall only include the Policy application,
disbursement forms, withdrawal forms, change forms and check
endorsements.

"VAL" shall mean the Company's Variable Appreciable Life Insurance
Policy.

"VAL/AL" shall mean either or both of the Company's Variable
Appreciable Life (VAL) or Appreciable Life (AL) Insurance Policies.


-8-

D. GENERAL SCORING OF CLAIM RESOLUTION FACTORS

POINTS

3 A score of "3" is assigned in the event that either (i)
Company Documentation expressly supports the Misstatement, or
(ii) the Agent Statement confirms the Claimant's allegation of
the Misstatement and this confirmation is not undermined by
Available Evidence.

2 A score of "2" is assigned in the event that the alleged
Misstatement is not expressly in writing and the Agent
Statement denies the allegation, but (i) Available Evidence,
on balance, supports the Claimant's allegation of the
Misstatement, or (ii) the Agent has a Complaint History.

1 A score of "1" is assigned in the event that the alleged
Misstatement is not expressly in writing and the Agent
Statement denies the allegation, and Available Evidence, on
balance, neither supports nor undermines the Claimant's
allegation of the Misstatement.

0 A score of "0" is assigned in the event that Available
Evidence exists which undermines the Claimant's allegation of
the Misstatement and suggests that no Misstatement occurred.

N/A "N/A" is assigned in the event that the Claim Resolution
Factor is "not applicable" to the Claim submitted.

For purposes of all the above scoring, any statement in the
illustration and/or contract (which are part of the Available
Evidence) indicating solely that dividends for traditional
Policies, investment returns for VAL Policies, or interest
crediting rates for AL Policies, are "not guaranteed" or
"non-guaranteed", without further explanation or description,
shall not, by itself, be deemed to undermine the alleged
Misstatement.

E. COMPLAINT HISTORY SCORING ADJUSTMENTS

In the event a Claim receives a mandatory score of "2" based solely
on the existence of a Complaint History (not subject to downward
adjustment), such score automatically will be raised to a score of
"3" only if one or more of the following is found to exist:

1. There was an unauthorized execution by the Agent of the
Policyholder's or insured's signature on any Transaction
Document;


-9-

2. Company Documentation expressly supports the Misstatement alleged in
the Claim; or

3. The Agent Statement confirms the Claimant's allegation of the
Misstatement and such confirmation is not undermined by Available
Evidence (for purposes of this subsection, any statement in the
illustration and/or contract (which are part of the Available
Evidence) indicating solely that dividend for traditional Policies,
investment returns for VAL Policies, or interest crediting rates for
AL Policies, are "not guaranteed" or "non-guaranteed", without
further explanation or description, shall not, by itself, be deemed
to undermine the alleged Misstatement).

F. NON-SPECIFIC EVIDENTIARY CONSIDERATIONS

The following considerations (if not previously applied) shall be
considered after a preliminary score has been assigned to the Claim
Resolution Factors in Sections II.A., III.A., IV.A. and V.A. The Claim
Evaluation Staff, the Claim Review Staff or the Appeals Committee, as the
case may be, may raise or lower the score by one (except that a score of
"3" as result of the presence of Company Documentation may not be
lowered), unless expressly provided for otherwise herein, upon application
of the considerations set forth in Section I.F.1. ("Positive
Considerations") and the considerations set forth in Section I.F.2.
("Negative Considerations") determined to be applicable. The Positive
Considerations and the Negative Considerations are to be reviewed in light
of the totality of the facts and circumstances pertaining to the
particular Claim. They are to provide additional guidance to the Claim
Evaluation Staff, the Claim Review Staff or the Appeals Committee, as the
case may be, particularly in instances where there is an absence of
Available Evidence of the alleged Misstatement, but where it appears that
the Claimant was misled as to any one or more of the itemized Claim
Resolution Factors herein.

1. CONSIDERATIONS WHICH MAY INCREASE SCORE (POSITIVE CONSIDERATIONS)

a. There was an unauthorized execution by the Agent of the
Policyholder's or insured's signature on any Transaction Document
(which in the case of a Section II Claim Resolution Factor, shall
automatically increase the score to a 3).

b. The use of unauthorized or altered sales materials, including
illustrations, occurred.


-10-

c. The Agent who sold the Policy to the Policyholder was terminated,
was placed on probation, was otherwise internally disciplined orally
or in writing on more than one occasion, or received a fine or other
sanction from a regulatory body, because of allegedly improper life
insurance sales practices while an Agent for the Company.

d. The Agent, if currently appointed or employed by the Company, failed
to cooperate with the investigation of the Claim.

e. The sale, administration or service of the Policy violated rules
promulgated under the Securities Act of 1933, as amended, the Rules
of Fair Practice issued by the National Association of Securities
Dealers, or state insurance statutes or regulations, in each case
respecting product advertising or insurance sales practices.

f. Respecting a Policy having a face amount of $300,000 or more, the
Policyholder had an independent advisor (an attorney, accountant or
licensed insurance broker other than the Agent) providing assistance
at the time of the sale of the Policy, and such independent advisor
has provided a sworn statement corroborating the Misstatement.

g. It has been affirmatively demonstrated that, in connection with a
particular Policy which is the subject of a Claim, any documents
originally kept by the Company which would affect the evaluation of
the Claim, have been improperly destroyed or removed and copies of
such documents cannot be located. (This evidentiary consideration
will not be applicable to Claims scored a "2" pursuant to Sections
I.D. (Score 2, clause (ii)), I.E. and II.A.5.)

2. CONSIDERATIONS WHICH MAY DECREASE SCORE (NEGATIVE CONSIDERATIONS)

a. The Policyholder's actions were inconsistent with the presentation
upon which the Policy was sold and adversely affected achievement of
the results described in the sales presentation.

b. The Claimant failed to cooperate in the review of his, her or its
Claim in the ADR Process, and such failure materially affected the
review of the Claim.

c. Respecting a Policy having a face amount of $300,000 or more, the
Policyholder had an independent advisor (an attorney, accountant or
licensed insurance broker other than the Agent) providing assistance
at the time of the sale of the Policy. This consideration shall not
apply if the consideration set forth in I.F.1.f. applies.


-11-

G. CUMULATIVE, ALTERNATIVE AND DISCRETIONARY RELIEF

If a Claim contains multiple allegations of Misstatements respecting more
than one Claim Resolution Factor or multiple allegations of improper sales
practices in one or more Claim Categories, each allegation will be scored
individually with respect to that particular Claim Resolution Factor, with
the appropriate "determination of relief" being made for each allegation
as prescribed in Sections II.C., III.C., IV.C. and V.B. The relief offered
to the Claimant will be the aggregate of the reliefs prescribed for the
highest individual score assigned for each of those Claim Resolution
Factors evaluated. There will be no duplication of relief within a Claim
Category. If the multiple allegations made in the Claim fall within more
than one Claim Category, the Claimant will be offered the combination of
the aggregated reliefs presented for each of the Claim Categories (as
described above) to the extent that this combined relief is also not
duplicative.

With respect to any of the relief described in the Claim-Specific
Categories, future cash surrender values and death benefits will never be
less than the amounts, if any, guaranteed by the Policy (less outstanding
loans). The actual amounts payable upon withdrawal, surrender, or death
will depend: (i) for traditional whole-life policies, upon future
experience based on dividends actually credited to the Policy, subject to
applicable provisions of the Policy; and (ii) for VAL/AL policies, upon
actual performance of the selected investment option(s) for VAL policies,
or the actual interest credited for AL policies, and changes in the
Policy's contract fund, subject to applicable provisions of the Policy.

If relief was previously obtained from the Company regarding the Claims
submitted for review in the ADR Process, the Claimant shall obtain relief
in the ADR Process as described herein, or that relief which is reasonably
equivalent under the circumstances, but in no event will such relief
offered by the Claim Evaluation Staff, the Claim Review Staff, or awarded
on appeal pursuant to the Manual of Procedures be duplicative of the prior
relief afforded.

With respect to the remedies herein providing for the rescission of a
Policy, the refunded amount shall be the greater of (i) the amount to be
refunded in accordance with the applicable provisions providing for such
rescission, and (ii) the cash surrender value calculated in accordance
with the provisions of the Policy (in which case the Policy shall be
surrendered), both as determined on the same date; provided, however, with
respect to the rescission remedies set forth in Section II hereof, the
refunded amount shall be the greater of (x) the amount to be refunded in
accordance with the applicable provisions providing for such rescission,
and (y) the sum of the cash surrender value calculated in accordance with
the provisions of the Policy (in which case the Policy shall be
surrendered) and such applicable


-12-

amount specified to be paid in cash in Sections II.C.1.b.i., II.C.2.b.i.,
II.C.3.b.i., II.C.4.b.i., and II.C.5.b.i., respectively.

After a Claim has been scored and a determination has been made that a
Claimant is entitled to a certain type of relief based on the Claim's
score, the Claimant may choose a type of relief available to any lower
score with respect to that particular category of Claim, if the Claimant
so requests in writing.

H. DEFENDANTS' DEFENSES WAIVED

Solely for purposes of resolving Claims that are pursued within this ADR
Process, Defendants will waive their rights with regard to raising the
following defenses against a Claimant which would frequently be available
to defeat such Claims in contested litigations: statute of limitations,
laches, statute of frauds, effect of integration or merger clauses in the
contract, lack of capacity, lack of authority, failure to state a claim
upon which relief may be granted, and the Parol Evidence Rule.

I. DECEASED INSUREDS

1. POLICY LAPSE PRIOR TO INSURED'S DEATH

If the Policy has lapsed and the insured under the Policy died or dies
prior to the expiration of the ADR Process election period (i.e., 75 days
after the mailing of the Post-Settlement Notice), the Claim will be
reviewed and scored in accordance with these ADR Guidelines.

The relief which shall be awarded if the score for the Claim is "2" or "3"
shall be a refund of premiums subject to, and as provided in, the
applicable rescission remedy for such respective score in Sections II,
III, IV and V of these ADR Guidelines.

Additionally, in the case of a Claim alleging a Misstatement respecting
loans taken or charged against the Existing Policy to finance the New
Policy (i.e., a Financed Insurance Claim) which attains a score of "3",
where the Policy has lapsed and the insured has died, the contested loan
amounts will be considered as if restored to the Policy. If, as a result,
the Policy would have then been in-force at the time of death, in
accordance with the Policyholder's selected non-forfeiture or loan option
in effect on the date the Policy lapsed (extended insurance, reduced
paid-up or automatic premium loan), an amount will be paid equal to the
death benefit which would have been provided, had the contested loans not
been taken.


-13-

Further, in the case of a Claim alleging any Misstatement respecting
Abbreviated Payment or "APP" which attains a score of "3," where the
Policy has lapsed and the insured has died, and (i) the Policyholder had
met the Original Payment Commitment, as defined in Section III.C.1.a.,
before the Policy lapsed, or (ii) the Policyholder had not met the
Original Payment Commitment, but the Policy lapsed as a result of the
Policyholder being notified that additional premiums beyond the Original
Payment Commitment would be required, as evidenced by (x) such lapse
occurring after a writing by the Company or an Agent providing such
notification, and within 13 months of the penultimate annual premium due
date under the Original Payment Commitment, or (y) a confirmation in
writing by the Policyholder to the Company or the Agent (made
contemporaneous with such notification) that such lapse resulted from the
notification, an amount will be paid equal to the death benefit which
would have been provided if the remedies applicable for a Claim with a
score of "3" under Sections III.C.1.a. and III.C.5.a. of these ADR
Guidelines, respectively, had been implemented.

In the case of a Claim alleging any Misstatement respecting Abbreviated
Payment or "APP" which obtains a score of "2," where the Policy has lapsed
and the insured has died, and (i) the Policyholder had met the Original
Payment Commitment, as defined in Section III.C.1.a., before the Policy
lapsed, or (ii) the Policyholder had not met the Original Payment
Commitment, but the Policy lapsed as a result of the Policyholder being
notified that additional premiums beyond the Original Payment Commitment
would be required, as evidenced by (x) such lapse occurring after a
writing to the Policyholder by the Company or an Agent providing such
notification, and within 13 months of the penultimate annual premium due
date under the Original Payment Commitment, or (y) a confirmation in
writing by the Policyholder to the Company or the Agent (made
contemporaneous with such notification) that such lapse resulted from the
notification, an amount equal to 50% of the death benefit which would have
been provided if the remedies applicable for a Claim with a score of "3"
under Sections III.C.1.b. and III.C.5.b.,respectively, had been
implemented.

2. INSURED'S DEATH WHILE CLAIM IS PENDING

Where a Claim concerning an in-force Policy is submitted to the ADR
Process and the insured subsequently dies while the Claim is pending, the
Company will process any death claim received in accordance with current
Company practices. In addition, the Company will complete the Claim
evaluation required under these ADR Guidelines. Any relief provided would
be offered only to the extent that such relief, including the amount of
any death benefits payable from a Policy that has been modified,
reinstated, or newly issued as part of a remedy, exceeds the amount of the
death claim already paid. Relief afforded in the ADR Process shall not be


-14-

inconsistent with or duplicative of the payment of the death claim on the
Existing Policy.

3. INSURED'S DEATH AND DEATH BENEFITS PAID

If the insured under the Policy has died and death benefits under the
Policy have been paid to the beneficiary(ies) prior to the expiration of
the ADR election period (i.e. 75 days after the mailing of the
Post-Settlement Notice), the Claim will be reviewed and scored under the
ADR Guidelines, provided, however, relief shall be provided solely in
accordance with the following provisions:

a. if the Claim is scored under Section II hereof, applicable relief
shall be that set forth only in the following Sections:
II.C.1.a.(i); II.C.1.b.(i); II.C.2.a.(i); II.C.2.b.(i);
II.C.3.a.(i); II.C.3.b.(i); II.C.4.a.(i); II.C.4.b.(i);
II.C.5.a.(i); and II.C.5.b.(i); and

b. if the Claim is scored under Section III, the applicable relief
shall be an amount constituting the refund of all amounts, with
interest at the Interest Rate, representing premium payments made by
the Policyholder on the Policy subsequent to the Represented
Abbreviation Date, but only with respect to Claims that would
otherwise (if not for this Section I.I.3.(b)) receive relief in
accordance with the following subsections: III.C.1.a.; III.C.2.a.;
III.C.5.a.; or III.C.6.a.

J. OTHER INSURANCE PRODUCTS

Subject to the review of Lead Counsel and the Regulatory Oversight Staff
(as defined in the Manual of Procedures), the Company will treat Claims on
other portfolio life insurance products of the Company in a substantially
similar manner with regard to scoring and the offer of remedies as claims
on comparable traditional whole-life or VAL/AL policies specifically
provided for herein.


-15-

II. FINANCED INSURANCE

A. ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

1. A Misstatement in respect of loans was made to the Policyholder as
to whether, or to what extent, loans would be taken or charged
against the Existing Policy to finance the New Policy.

2. A Misstatement in respect of dividends or Policy values was made to
the Policyholder as to whether, or to what extent, dividends or
Policy values derived from the Existing Policy would be used to
finance the New Policy.

3. A Misstatement in respect of surrenders, partial surrenders or
withdrawals was made to the Policyholder as to whether, or to what
extent, surrenders, partial surrenders or withdrawals of or against
the Existing Policy would be used to finance the New Policy.

4. A Misstatement in respect of the viability of the financing plan
presented to the Policyholder (i.e. whether the financing plan could
have worked as presented at the time of sale, assuming the dividend
scale then in effect (with respect to traditional whole-life
policies), the presented hypothetical investment return (with
respect to VAL policies), or the presented interest crediting rate
(with respect to AL policies)).

5. A violation of state replacement regulations, applicable to the
Policy at the time of sale, occurred in connection with the
financing of the New Policy. (Only written documentation
contemporaneous with the sale shall establish a violation of
applicable state replacement regulations respecting a plan (if
provided for by such regulations) to pledge as collateral or subject
to borrowing a specified percentage of the values of an Existing
Policy to finance a New Policy.) Where the Available Evidence
gathered by the Claim Evaluation Staff does not contain executed
forms required to be completed and to be retained by the Company by
the applicable state replacement regulations, the Company will be
deemed to have violated the applicable regulation. In the event that
this Claim-Resolution Factor exists, the Claimant shall be offered
no less than the rescission remedy provided for a Claim attaining a
score of "2" as set forth in Section II.C. without any deduction for
Term Insurance Costs.

With respect to each of the foregoing items, the existence of a Claim
Resolution Factor requires that policy transaction records reflect the
applicable Claim Resolution Factor.


-16-

B. SPECIFIC EVIDENTIARY CONSIDERATIONS

1. For purposes of this Section II only, supporting evidence shall include,
but not be limited to:

a. A Pattern of Financing Activity (as defined below) is found to be
present;

b. the Agent stated on the application that the sale did not involve
replacement, when (i) an Existing Policy was surrendered, or (ii) at
least 25% of the accumulated cash value of the Existing Policy was
used, in order to pay the New Policy's initial premium, or (iii)
there is written documentation contemporaneous with the sale
regarding a plan to pledge as collateral or subject to borrowing
25% of the cash value of an Existing Policy to pay one or more
future premiums on the New Policy;

c. the Agent misstated the interest rate on a policy loan;

d. the Policyholder was advised by the Agent, after the issuance of the
New Policy, to disregard or discard notices of the Company
concerning loans, withdrawals/partial surrenders, premiums due or
pending lapse with respect to the Existing Policy and/or with
respect to both the Existing Policy and the New Policy;

e. the Policyholder's annual income at the time of sale was below
$25,000; or

f. the use of blank, signed disbursement forms, absent evidence of the
Policyholder's consent to any such use.

For purposes of this Section II.B.1., a "Pattern of Financing Activity"
shall mean when it is determined, via a review of the Company's files by
the Claim Evaluation Staff or the Claim Review Staff, that 12% or more of
the policies sold by the Agent, during the Applicable Period (so long as
the Agent has sold ten or more policies during such Applicable Period)
involved the use of an Existing Policy's cash value (exclusive of
dividends), by means of a withdrawal or partial surrender or loan, to
purchase or maintain a New Policy. "Applicable Period" shall mean a
one-year period consisting of (i) the calendar quarter in which the sale
of the New Policy occurs, (ii) the one immediately preceding calendar
quarter, and (iii) the two immediately succeeding calendar quarters.

2. For purposes of this Section II only, undermining evidence shall include,
but not be limited to:


-17-

a. The Policyholder had at the time of sale a financial need (based
only upon written documentation of such need prepared at the time of
sale) either (i) to replace lost income for the beneficiary(ies) in
the event of the insured's death, or (ii) to leave the
beneficiary(ies) with cash necessary to meet another obligation or
to complete a cash accumulation goal or need that would not
otherwise be fulfilled in the event of the insured's death; or

b. the Policyholder added a policy rider that increased the
Policyholder's costs with respect to the Policy, and such increase
materially impacted the level of financing required to maintain the
Policy under the plan presented at the time of sale.

C. DETERMINATION OF RELIEF

1. If the Misstatement giving rise to the Claim was in respect of loans
against the Existing Policy(ies) used to pay premiums on the New Policy
and the Existing Policy is other than a VAL/AL, and,

a. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "3", the Claimant may, in his/her discretion,
receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to the aggregate amount of
the contested loan(s), including loan interest, on the
Existing Policy(ies) used to pay premiums on the New Policy
(the "Loan Amounts"); however, any existing loans will remain
outstanding as an obligation on the Existing Policy(ies); or

(ii) the Claimant will retain the New Policy and the Company will
repay, in whole, the Loan Amounts into the Existing
Policy(ies); provided, however, if the Existing Policy(ies)
has lapsed prior to the date of the award, (a) the Company
will reinstate the Existing Policy(ies) in accordance with
applicable reinstatement terms of such Existing Policy(ies)
(except that all underwriting requirements will be waived) and
will repay Loan Amounts thereon so long as the Claimant causes
to be paid all reinstatement costs, or (b) in the event the
Existing Policy(ies) cannot be so reinstated, or if it is
deemed necessary and in the Claimant's best interests for tax
purposes, the Company (waiving all underwriting requirements)
will issue a Designated New Policy (within the Company's
portfolio of individual permanent life insurance policies
available on the date of the award), having a face amount,
together with PUA insurance amounts purchased with Loan


-18-

Amounts repaid by the Company (the "Combined Amount"), equal
to the original face amount(s) of the Existing Policy(ies),
whereby the Combined Amount shall consist of the maximum
possible PUA insurance amounts. The new policy's suicide and
contestability provisions will be considered to commence as of
the Existing Policy's issue date.

The Policyholder shall be obligated to pay all premiums due on
the reinstated or new policy; or

(iii) the Company will rescind the New Policy as of the date of
issue and will refund in cash an amount equal to the premiums
paid on the New Policy, less any cash withdrawals, surrenders,
loans and/or dividends paid in cash or used to reduce premiums
on the New Policy, and plus interest at the Interest Rate.

b. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "2", the Claimant may, in his/her discretion,
receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to 50% of the Loan
Amounts; however, any existing loans will remain outstanding
as an obligation on the Existing Policy(ies); or

(ii) the Company will offer to rescind the New Policy as of the
date of issue and refund in cash an amount equal to the
premiums paid on the New Policy, less any cash withdrawals,
surrenders, loans and/or dividends paid in cash or used to
reduce premiums on the New Policy, and less Term Insurance
Costs, plus 50% of the interest at the Interest Rate.

c. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "1", the Appeals Committee, the Claim
Evaluation Staff or the Claim Review Staff shall make the Claimant
eligible again for the Basic Claim Relief for which the Claimant was
originally eligible.

d. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "0", the Claimant shall not be awarded
relief.

2. If the Misstatement giving rise to the Claim was in respect of dividend
accumulations from the Existing Policy(ies) used to pay premiums on the
New Policy, and the Existing Policy is other than a VAL/AL, and,


-19-

a. the highest score for any Claim Resolution Factor in respect of
dividend accumulations in Section II is "3", the Claimant may, in
his/her discretion, receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to the aggregate amount of
contested dividend accumulations withdrawn from the Existing
Policy(ies) used to pay premiums on the New Policy plus
interest thereon at the rate applicable for dividend
accumulations during the period commencing on the date such
dividend accumulations were withdrawn and ending on the date
of the award (the "Withdrawn Dividend Amounts"); however, the
Withdrawn Dividend Amounts will not be restored to such
Existing Policy(ies); or

(ii) the Claimant will retain the New Policy and the Company will
restore, in whole, the Withdrawn Dividend Amounts to the
Existing Policy(ies); or

(iii) the Company will rescind the New Policy as of the date of
issue and will refund in cash an amount equal to the premiums
paid on the New Policy, less any cash withdrawals, surrenders,
loans and/or dividends paid in cash or used to reduce premiums
on the New Policy, and plus interest at the Interest Rate.

b. the highest score for any Claim Resolution Factor in respect of
dividend accumulations in Section II is "2", the Claimant may, in
his/her discretion, receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to 50% of the Withdrawn
Dividend Amounts; however, such amounts will not be restored
to such Existing Policy(ies); or

(ii) the Company will offer to rescind the New Policy as of the
date of issue and refund in cash an amount equal to the
premiums paid on the New Policy, less any cash withdrawals,
surrenders, loans and/or dividends paid in cash or used to
reduce premiums on the New Policy, and less Term Insurance
Costs, plus 50% of the interest at the Interest Rate.

c. the highest score for any Claim Resolution Factor in respect of
dividend accumulations in Section II is "1", the Appeals Committee,
the Claim Evaluation Staff or the Claim Review Staff shall make the
Claimant eligible


-20-

again for the Basic Claim Relief for which the Claimant was
originally eligible.

d. the highest score for any Claim Resolution Factor in respect of
dividend accumulations in Section II is "0", the Claimant shall not
be awarded relief.

3. If the Misstatement giving rise to the Claim was in respect of PUAs taken
from the Existing Policy(ies) used to pay premiums on the New Policy and
the Existing Policy is other than a VAL/AL, and,

a. the highest score for any Claim Resolution Factor in respect of PUAs
in Section II is "3", the Claimant may, in his/her discretion,
receive either of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to the aggregate surrender
amount of the contested PUAs surrendered from the Existing
Policy(ies) used to pay premiums on the New Policy, plus
interest thereon at the rate applicable for dividend
accumulations for the period commencing on the date such PUAs
were surrendered and ending on the date of the award (the "PUA
Surrender Amounts"); however, such PUA Surrender Amount will
not be restored to the Existing Policy(ies);

(ii) the Claimant will retain the New Policy and the Company will
restore, in whole, the PUA Surrender Amounts as dividend
accumulations in the Existing Policy(ies); or

(iii) the Company will rescind the New Policy as of the date of
issue and will refund in cash an amount equal to the premiums
paid on the New Policy, less any cash withdrawals, surrenders,
loans and/or dividends paid in cash or used to reduce premiums
on the New Policy, and plus interest at the Interest Rate.

b. the highest score for any Claim Resolution Factor in respect of PUAs
in Section II is "2", the Claimant may, in his/her discretion,
receive either of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to 50% of the PUA
Surrender Amounts; however, such amounts will not be restored
to the Existing Policy(ies);


-21-

(ii) the Company will offer to rescind the New Policy and refund
in cash an amount equal to the premiums paid on the New
Policy, less any cash withdrawals, surrenders, loans and/or
dividends paid in cash or used to reduce premiums on the New
Policy, and less Term Insurance Costs, plus 50% of the
interest at the Interest Rate.

c. the highest score for any Claim Resolution Factor in respect of PUAs
in Section II is "1", the Appeals Committee, the Claim Evaluation
Staff or the Claim Review Staff shall make the Claimant eligible
again for the Basic Claim Relief for which the Claimant was
originally eligible.

d. the highest score for any Claim Resolution Factor in respect of
PUA's in Section II is "0", the Claimant shall not be awarded
relief.

4. If the Misstatement giving rise to the Claim was in respect of loans
against the Existing Policy(ies) used to pay premiums on the New Policy
and the Existing Policy is a VAL/AL (the "Existing VAL/AL Policy"), and,

a. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "3", the Claimant may, in his/her discretion,
receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to the Loan Amounts on
the Existing VAL/AL Policy(ies) used to pay premiums on the
New Policy, however, any existing loans will remain
outstanding as an obligation on the Existing VAL/AL
Policy(ies); or

(ii) the Claimant will retain the New Policy and the Company will
repay, in whole, the Loan Amounts into the Existing VAL/AL
Policy(ies); provided, however, if the Existing VAL/AL
Policy(ies) has lapsed prior to the date of the award, (a) the
Company will reinstate the Existing VAL/AL Policy(ies) in
accordance with applicable reinstatement terms of such
Existing VAL/AL Policy(ies) (except that all underwriting
requirements will be waived) and will repay Loan Amounts
thereon so long as the Claimant causes to be paid all
reinstatement costs, or (b) in the event the Existing VAL/AL
Policy cannot be so reinstated, the Company (waiving all
underwriting requirements) will offer to issue a Designated
New Policy (within the Company's current portfolio of
individual permanent life insurance policies available on the
date of the award). A newly issued VAL policy will have a face
amount equal to the original face amount of the Existing
VAL/AL Policy(ies). An amount equal to the Loan


-22-

Amounts will be applied to pay the initial scheduled premium
for the newly issued VAL policy, and any remaining amounts
will be applied as an unscheduled premium payment for the
newly issued VAL policy. A newly issued traditional whole-life
policy will have a Combined Amount equal to the original face
amount of the Existing VAL/AL Policy(ies), whereby the
Combined Amount shall consist of the maximum possible PUA
insurance amounts purchased with Loan Amounts repaid by the
Company. In each case, the new policy's suicide and
contestability provisions will be considered to commence as of
the Existing Policy's issue date.

The Policyholder shall be obligated to pay all premiums due on
the reinstated or new policy; or

(iii) the Company will rescind the New Policy as of the date of
issue and will refund in cash an amount equal to the premiums
paid on the New Policy, less any cash withdrawals, surrenders,
loans and/or dividends paid in cash or used to reduce premiums
on the New Policy, and plus interest at the Interest Rate.

b. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "2", the Claimant may, in his/her discretion,
receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to 50% of the Loan
Amounts; however, any existing loans will remain outstanding
as an obligation on the Existing Policy(ies); or

(ii) the Company will offer to rescind the New Policy as of the
date of issue and refund in cash an amount equal to the
premiums paid on the New Policy, less any cash withdrawals,
surrenders, loans and/or dividends paid in cash or used to
reduce premiums on the New Policy, and less Term Insurance
Costs, plus 50% of the interest at the Interest Rate.

c. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "1", the Appeals Committee, the Claim
Evaluation Staff or the Claim Review Staff shall make the Claimant
eligible again for the Basic Claim Relief for which the Claimant was
originally eligible.

d. the highest score for any Claim Resolution Factor in respect of
loans in Section II is "0", the Claimant shall not be awarded
relief.


-23-

5. If the Misstatement giving rise to the Claim was in respect of cash
surrender values from the Existing Policy(ies) used to pay premiums on the
New Policy, and the Existing Policy is a VAL/AL, and

a. the highest score for any Claim Resolution Factor in respect of cash
surrender values in Section II is "3", the Claimant may, in his/her
discretion, receive any one of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to the aggregate amount of
contested cash value withdrawn (including any withdrawal
charges incurred) from the Existing VAL/AL Policy(ies) used to
pay premiums on the New Policy at the Interest Rate from the
date the cash value was withdrawn and ending on the date of
the award (the "Withdrawn Amounts"), however, the Withdrawn
Amounts will not be restored to the Existing VAL/AL
Policy(ies); or

(ii) the Claimant will retain the New Policy and the Company will
restore the Withdrawn Amounts to the Existing VAL/AL
Policy(ies) as an unscheduled premium payment; or

(iii) the Company will rescind the New Policy as of the date of
issue and will refund in cash an amount equal to the premiums
paid on the New Policy, less any cash withdrawals, surrenders,
loans and/or dividends paid in cash or used to reduce premiums
on the New Policy, and plus interest at the Interest Rate.

b. the highest score for any Claim Resolution Factor in respect of cash
surrender values in Section II is "2", the Claimant may, in his/her
discretion, receive either of the following:

(i) The Claimant will retain the New Policy and will receive from
the Company an amount in cash equal to 50% of the Withdrawn
Amounts; however, such amounts will not be restored to such
Existing Policy(ies); or

(ii) the Company will offer to rescind the New Policy as of the
date of issue and refund in cash an amount equal to the
premiums paid on the New Policy, less any cash withdrawals,
surrenders, loans and/or dividends paid in cash or used to
reduce premiums on the New Policy, and less Term Insurance
Costs, plus 50% of the interest at the Interest Rate.


-24-

c. the highest score for any Claim Resolution Factor in respect of cash
surrender values in Section II is "1", the Appeals Committee, the
Claim Evaluation Staff or the Claim Review Staff shall make the
Claimant eligible again for the Basic Claim Relief for which the
Claimant was originally eligible.

d. the highest score for any Claim Resolution Factor in respect of cash
surrender values in Section II is "0", the Claimant shall not be
awarded relief.


-25-

III. ABBREVIATED PAYMENT ("APP")

A. ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

1. A Misstatement in respect of an Abbreviated Payment ("APP") was made
to the Policyholder as to whether, or to what extent, dividends were
guaranteed or would not be decreased.

2. A Misstatement in respect of premiums or other amounts due was made
to the Policyholder as to whether, or to what extent, the amount,
application, timing or frequency of premiums or other amounts to be
paid on a Policy, either in the aggregate or on a per payment basis,
were adequate to maintain the Policy in force.

3. A Misstatement in respect of the viability of the APP sales
presentation was made to the Policyholder (i.e. whether the APP
could have worked as presented, assuming the dividend scale then in
effect at the time of sale (with respect to traditional whole-life
policies), the presented hypothetical investment return (with
respect to VAL policies), or the presented interest crediting rate
(with respect to AL policies)).

B. SPECIFIC EVIDENTIARY CONSIDERATIONS

1. For purposes of this Section III only, supporting evidence shall
include, but not be limited to:

a. There was a clear relationship between a life event (e.g.,
retirement or specific financial need) and the Abbreviation
Point as originally presented at the time of sale (the
"Represented Abbreviation Date");

b. the Policyholder was advised, after issuance of the Policy, to
disregard or discard notices of the Company concerning loans,
withdrawals/partial surrenders, premiums due or pending lapse
with respect to a Policy;

c. the Policyholder was not informed that the Policy was issued
at a rating class other than as illustrated or quoted, and
this affected the Represented Abbreviation Date;

d. the Policyholder made a significant financial decision and
acted upon that decision in reliance upon an anticipated year
the Policyholder expected out-of-pocket premiums to cease;

e. the Policyholder purchased a Survivorship Special Rider and
did not receive an alternative dividend scale illustration;


-26-

f. the Policyholder received Company-approved illustrations or
sales materials which were altered to delete disclosure
explaining, or did not state clearly, that dividends are not
guaranteed and/or the operation of APP; or

g. in connection with the marketing, sale or illustration of the
Policy to the Claimant, which is the subject of the Claim, the
Company used in writing the phrases "vanishing premium" or
"vanishing point."

h. in the event a claim attains a score of "3" and the following
circumstances are present, the Claimant may receive the relief
set forth in Section III.C.1.c in lieu of that contained in
Section III.C.1.a. with respect to a Policy other than
VAL/AL, or the relief set forth in Section III.C.5.c. in lieu
of that contained in Section III.C.5.a. for a VAL/AL Policy:

(i) Company Documentation on or before the delivery of the
Policy states that the policyholder would be issued a
policy that (x) would be "paid-up" or fully "paid-up"
without further out-of-pocket premium payments required
of the Policyholder, either immediately upon issue or
after a specified number of years or payments, to
maintain the policy in force to maturity; and (y) would
not require the application of policy cash values
(existing and future dividend credits for traditional
policies, or contract fund values for VAL/AL Policies)
to pay future premiums; and

(ii) there was no Company Documentation (other than the
Policy itself) on or before delivery of the Policy
stating that dividends or contract values for Policies
other than VAL/AL, and investment returns or contract
values for VAL Policies, or interest crediting rates or
contract values for AL Policies, as such are applicable,
are not guaranteed (determined without regard to the
provision in Section III.B.2.c.).

2. For purposes of this Section III only, undermining evidence shall include,
but not be limited to:

a. The Policyholder took Policy loans in excess of the guaranteed cash
value of the Policy, or engaged in withdrawal/partial surrender
activity other than to pay premiums after either the Original
Payment Commitment or to pay premiums before the Original Payment
Commitment as a result of being notified that premiums beyond the
Original Payment Commitment would be required, as evidenced by a
writing to that effect by the Company or an Agent or a confirmation
in writing by the Policyholder to the Company or the Agent to that
effect made contemporaneous with such notification;


-27-

b. the Policyholder changed his/her dividend option to other than PUA
or dividend accumulations;

c. the Policyholder received Company-approved illustrations or sales
materials which contained disclosure stating clearly that dividends
(for traditional Policies), investment returns (for VAL Policies),
or interest crediting rates (for AL Policies), as the case may be,
are not guaranteed and may change over time and/or describing the
operation of APP, so long as the statements in those materials were
not solely limited to expressions that dividends were "not
guaranteed" or "non-guaranteed";

d. the Policyholder signed an APP Election/Authorization form in
conjunction with or prior to the alleged Misstatement;

e. the Policyholder changed the Policy in a way that materially
increased premiums; or

f. the Policy lapsed prior to the Represented Abbreviation Date, unless
the Policy lapsed as a result of the Policyholder being notified
that additional premiums beyond the Original Payment Commitment
would be required, as evidenced by (x) such lapse occurring after a
writing to the Policyholder by the Company or an Agent providing
such notification, and within 13 months of the penultimate annual
premium due date under the Original Payment Commitment, or (y) a
confirmation in writing by the Policyholder to the Company or the
Agent made contemporaneous with such notification.

C. DETERMINATION OF RELIEF

1. If the highest score for any Claim Resolution Factor in Section III is "3"
and the Policy is other than a VAL/AL, the Claimant may, in his/her
discretion, receive either of the following:

a. The Claimant shall cause to be made payments remaining under the
original payment commitment at the time of sale (the "Original
Payment Commitment"), if any, until the Represented Abbreviation
Date. In the event premium payments have been made subsequent to the
Represented Abbreviation Date, the Company will refund all such
amounts to the Claimant, with interest at the Interest Rate.
Thereafter, the Policy's dividend values and PUAs will be used first
to pay all future premiums. In any year when such dividends and PUAs
are insufficient to pay the premium, the Company will adjust the
price of the Policy accordingly. If (x) any withdrawals of dividend
values or loans in excess of guaranteed cash value (or any loans on
direct recognition policies) are taken against the


-28-

Policy or (y) the dividend option is not purchase of PUAs, or (z)
there is a failure to make any required payments under the Original
Payment Commitment, then the Company's obligation to adjust the
price of the Policy shall cease, the Policy shall revert to normal
operation, and the Policyholder will be responsible for any and all
amounts necessary to keep the Policy in force.

If the Policy has lapsed prior to the date of the award, the Company
will reinstate the Policy and bear as a price adjustment all
reinstatement costs pursuant to the reinstatement terms of such
Policy (but not including payments remaining under the Original
Payment Commitment) (except that all underwriting requirements will
be waived) and the Company will then provide the relief as set forth
above. In the event (i) the Policy cannot be so reinstated, or (ii)
it is deemed necessary and in the Claimant's best interest for tax
purposes (whether or not the Policy is in force), the Company
(waiving all underwriting requirements) will issue a Designated New
Policy, within the Company's portfolio of individual permanent life
insurance policies available on the date of the award for the same
amount of initial death benefit. The new policy's suicide and
contestability provisions will be considered to commence as of the
Existing Policy's issue date. The Company will then provide the
relief as set forth above; or

b. the Company will rescind the Policy as of the date of issue and will
refund in cash an amount equal to the premiums paid on the Policy,
less cash withdrawals, surrenders, loans and/or dividends paid in
cash or used to reduce premiums on the Policy, and plus interest at
the Interest Rate.

c. If Section III.B.1.h applies, the relief in Section III.C.1.a will
be made available; provided, however, that after the Represented
Abbreviation Date, the Policy's dividend values and PUAs will be
accrued to the Policy as dividend credits without application to
premiums, all without giving effect to clauses III.C.1.a.(x) and
III.C.1.a.(y).

2. If the highest score for any Claim Resolution Factor in Section III is
"2" and the Policy is other than a VAL/AL, the Claimant may, in his/her
discretion, receive either of the following:

a. The Claimant shall cause to be made payments remaining under the
Original Payment Commitment at the time of sale, if any, until the
Represented Abbreviation Date. In the event premium payments have
been made subsequent to the Represented Abbreviation Date, the
Company will refund all such amounts to the Claimant, with interest
at the Interest Rate. Thereafter, the Policy's dividend values and
PUAs will be used to pay all


-29-

future premiums that are necessary to maintain the Policy in force.
Assuming the continuance of the current dividend scale in effect at
the time of the award, the Company will adjust the price of the
Policy each year until the New Abbreviation Point (as defined below)
to the extent the Policy's dividends and PUAs would otherwise be
insufficient to pay premiums as they become due; provided, however,
the Policyholder will be responsible until, on and after the New
Abbreviation Point for paying any premium, or portion thereof, which
is required to keep the Policy in force as a result of reduction(s)
in the Company's actual dividend scale from the Company's dividend
scale in effect on the date of the award. "New Abbreviation Point"
shall mean the Abbreviation Point based upon the current dividend
scale of the Company in effect on the date of the award. If any
withdrawals of dividend values or loans in excess of guaranteed cash
value (or any loans on direct recognition policies) are taken
against the Policy or if the dividend option is not purchase of
PUAs, or there is failure to make any required payments under the
Original Payment Commitment, then the Company's obligation to adjust
the price of the Policy shall cease, the Policy shall revert to
normal operation, and the Policyholder will be responsible for any
and all amounts necessary to keep the Policy in force.

To qualify for the relief set forth in this Section III.C.2.a., the
Claimant must sign a collateral assignment, in the form of
collateral assignment used by the Company on the date of the award,
providing, among other things, for the assignment of the right to
the Policy's cash value, the right to make Policy loans, the right
to change the Policy's dividend option, and the right to receive
specified death benefits. The collateral assignment shall further
provide that: (i) if a surrender or a loan or a withdrawal is taken
from the Policy, the Company will receive the cash value up to the
amount of price adjustment of the Policy the Company has provided in
accordance herewith prior to the payment to the Claimant of the
surrender, loan or withdrawal amounts, and (ii) when the insured
dies, the Company will receive, up to the amount of price adjustment
on the Policy it has provided in accordance herewith, any value in
the Policy above and beyond the face amount after first subtracting
any Policy debt.

If the Policy has lapsed prior to the date of the award, the Company
will reinstate the Policy and bear as a price adjustment all
reinstatement costs pursuant to the reinstatement terms of such
Policy (but not including payments remaining under the Original
Payment Commitment) (except that all underwriting requirements will
be waived) and the Company will then provide the relief as set forth
above. In the event (i) the Policy cannot be so reinstated, or (ii)
it is deemed necessary and in the Claimant's best interest for tax
purposes (whether or not the Policy is in force), the Company


-30-

(waiving all underwriting requirements) will issue a Designated New
Policy, within the Company's portfolio of individual permanent life
insurance policies available on the date of the award for the same
amount of initial death benefit. The new policy's suicide and
contestability provisions will be considered to commence as of the
Existing Policy's issue date. The Company will then provide the
relief as set forth above; or

b. the Company will rescind the Policy as of the date of issue and will
refund in cash an amount equal to the premiums paid on the Policy,
less cash withdrawals, surrenders, loans and/or dividends paid in
cash or used to reduce premiums on the Policy, and less Term
Insurance Costs, plus 50% of the interest at the Interest Rate.

3. If the highest score for any Claim Resolution Factor in Section III is "1"
and the Policy is other than a VAL/AL, the Appeals Committee, the Claim
Evaluation Staff or the Claim Review Staff shall make the Claimant
eligible for the Basic Claim Relief for which the Claimant was originally
eligible.

4. If the highest score for any Claim Resolution Factor in Section III is
"0" and the Policy is other than a VAL/AL, the Claimant shall not be
awarded relief.

5. If the highest score for any Claim Resolution Factor in Section III is
"3" and the Policy is a VAL/AL, the Claimant may, in his/her discretion,
receive either of the following:

a. The Claimant shall cause to be made payments remaining under the
Original Payment Commitment, if any, until the Represented
Abbreviation Date. In the event premium payments have been made
subsequent to the Represented Abbreviation Date, the Company will
refund all such amounts to the Claimant, with interest at the
Interest Rate. Thereafter, the Company shall adjust the price of the
Policy in such amounts to the extent necessary to keep the Policy in
force. If (x) any withdrawals or loans on the Policy are made, or
(y) there is a failure to make any required payment under the
Original Payment Commitment, the Company's obligation under this
section shall cease, the Policy will revert to normal operation and
the Policyholder will be responsible for any and all amounts
necessary to keep the Policy in force.

If the Policy has lapsed prior to the date of the award, the Company
will reinstate the Policy and bear as a price adjustment all
reinstatement costs pursuant to the reinstatement terms of such
Policy (but not including payments remaining under the Original
Payment Commitment) (except that all underwriting requirements will
be waived) and the Company will then


-31-

provide the relief as set forth above. In the event the Policy
cannot be so reinstated, the Company (waiving all underwriting
requirements) will issue a Designated New Policy, within the
Company's portfolio of individual permanent life insurance policies
available on the date of the award for the same amount of initial
death benefit. The new policy's suicide and contestability
provisions will be considered to commence as of the Existing
Policy's issue date. The Company will then provide the relief as set
forth above; or

b. the Company will rescind the Policy as of the date of issue and will
refund in cash an amount equal to the premiums paid on the Policy,
less cash withdrawals, surrenders and/or loans on the Policy, and
plus interest at the Interest Rate.

c. If Section III.B.1.h applies, the relief in Section III.C.5.a will
be made available; provided, however, that after the Represented
Abbreviation Date, the Company will further adjust the price of the
Policy annually in the amount of the first scheduled premium, and
the condition in clause III.C.5.a.(x) shall apply only with respect
to the withdrawal or loan of amounts resulting from any adjustments
made by the Company.

6. If the highest score for any Claim Resolution Factor in Section III is
"2" and the Policy is a VAL/AL. the Claimant may, in his/her discretion,
receive either of the following:

a. The Claimant shall cause to be made payments remaining under the
Original Payment Commitment, if any, until the Represented
Abbreviation Date. In the event premium payments have been made
subsequent to the Represented Abbreviation Date, the Company will
refund all such amounts to the Claimant, with interest at the
Interest Rate. Thereafter, the Company shall adjust the price of the
Policy in such amounts to the extent necessary to keep the Policy in
force. If any withdrawals or loans on the Policy are made, or, if
there is a failure to make any required payment under the Original
Payment Commitment, the Company's obligation under this section
shall cease, the Policy will revert to normal operation and the
Policyholder will be responsible for any and all amounts necessary
to keep the Policy in force.

To qualify for the relief set forth in this Section III.C.6.a., the
Claimant must sign a collateral assignment, in the form of
collateral assignment used by the Company on the date of the award,
providing, among other things, for the assignment of the right to
the Policy's cash value, the right to make Policy loans, and the
right to receive specified death benefits. The


-32-

collateral assignment shall further provide that: (i) if a surrender
or a loan or a withdrawal is taken from the Policy, the Company will
receive the cash value up to the amount of price adjustment of the
Policy the Company has provided in accordance herewith prior to the
payment to the Claimant of the surrender, loan or withdrawal
amounts, and (ii) when the insured dies, the Company will receive,
up to the amount of price adjustment of the Policy it has provided
in accordance herewith, any value in the Policy above and beyond the
face amount after first subtracting any Policy debt.

If the Policy has lapsed prior to the date of the award, the Company
will reinstate the Policy and bear as a price adjustment all
reinstatement costs pursuant to the reinstatement terms of such
Policy (but not including payments remaining under the Original
Payment Commitment) (except that all underwriting requirements will
be waived) and the Company will then provide the relief as set forth
above. In the event the Policy cannot be so reinstated, the Company
(waiving all underwriting requirements) will issue a Designated New
Policy, within the Company's portfolio of individual permanent life
insurance policies available on the date of the award for the same
amount of initial death benefit. The new policy's suicide and
contestabitity provisions will be considered to commence as of the
Existing Policy's issue date. The Company will then provide the
relief as set forth above; or

b. the Company will rescind the Policy as of the date of issue and will
refund in cash an amount equal to the premiums paid on the Policy,
less cash withdrawals, surrenders and/or loans on the Policy, and
less Term Insurance Costs, plus 50% of the interest at the Interest
Rate.

7. If the highest score for any Claim Resolution Factor in Section III is "1"
and the Policy is a VAL/AL, the Appeals Committee, the Claim Evaluation
Staff or the Claim Review Staff shall make the Claimant eligible for the
Basic Claim Relief for which the Claimant was originally eligible.

8. If the highest score for any Claim Resolution Factor in Section III is "0"
and the Policy is a VAL/AL, the Claimant shall not be awarded relief.


-33-

IV. LIFE INSURANCE SOLD AS AN INVESTMENT, SAVINGS OR RETIREMENT VEHICLE

A. ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

1. A Misstatement was made to the Policyholder as to whether, or to
what extent, (i) the sale did or did not primarily involve life
insurance, or (ii) that an investment, savings account, mortgage
protection, college/tuition funding, retirement plan, or other
investment, savings or thrift vehicle was sold in such a manner that
the Policyholder had no reasonable basis to understand that the
underlying funding vehicle was a life insurance policy.

B. SPECIFIC EVIDENTIARY CONSIDERATIONS

1. For purposes of this Section IV only, supporting evidence shall
include, but not be limited to:

a. The Policyholder did not have at the time of sale a financial
need (based only upon written documentation of such need
prepared at the time of sale) either (i) to replace lost
income for the beneficiary(ies) in the event of the insured's
death, or (ii) to leave the beneficiary(ies) with cash
necessary to meet another obligation or to complete a cash
accumulation goal or need that would not otherwise be
fulfilled in the event of the insured's death;

b. premiums and other payments to fund the Policy were
predominantly referred to as "deposits" or "contributions";

c. the cash value of the Policy was predominantly referred to as
"account" value;

d. loans, surrenders, or withdrawals were referred to as
"investment," "savings," "capital," "retirement," "pension,"
or other non-insurance funds; or

e. the Policyholder did not receive the Policy.

2. For purposes of this Section IV only, undermining evidence shall
include, but not be limited to:

a. The Policyholder had at the time of sale a financial need
(based only upon written documentation of such need prepared
at the time of sale) either (i) to replace lost income for the
beneficiary(ies) in the event of the insured's death, or (ii)
to leave the beneficiary(ies) with cash necessary to meet


-34-

another obligation or to complete a cash accumulation goal or
need that would not otherwise be fulfilled in the event of the
insured's death;

b. the Policyholder received illustrations, sales materials, or a
current prospectus filed with the Securities and Exchange
Commission clearly setting forth that the product sold was
life insurance; or

c. the Policyholder, as the insured, underwent blood tests or
medical examination.

C. DETERMINATION OF RELIEF

1. If the highest score for any Claim Resolution Factor in Section IV
is "3", the Claimant may, in his/her discretion, receive from the
Company either of the following:

a. a rescission of the Policy as of the date of issue and a
refund in cash in an amount equal to the premiums paid on the
Policy, less any Cash withdrawals, surrenders, loans and/or
dividends paid in cash or used to reduce premiums on the
Policy, and plus interest at the Interest Rate; or

b. an exchange of the Policy for a flexible premium deferred
annuity designated by the Company and set forth on Schedule A
hereto (the "Flexible Premium Deferred Annuity"), with
standard surrender charges (the applicable period for
surrender charges shall be considered to commence as of the
Policy's issue date), purchased with the applicable funds
described in clause C.1.a. above.

2. If the highest score for any Claim Resolution Factor in Section IV
is "2", the Claimant may, in his/her discretion, receive from the
Company either of the following:

a. a rescission of the Policy as of the date of issue and a
refund in cash in an amount equal to the premiums paid on the
Policy, less any cash withdrawals, surrenders, loans and/or
dividends paid in cash or used to reduce premiums on the
Policy, and less Term Insurance Costs, plus 50% of the
interest at the Interest Rate. No Term Insurance Costs will be
deducted in the event the Claim attains a score of "2" as a
result of the Agent having a Complaint History; or

b. an exchange of the Policy for a Flexible Premium Deferred
Annuity, with standard surrender charges (the applicable
period for surrender charges shall be considered to commence
as of the Policy's issue date), purchased with


-35-

the applicable funds described in clause C.2.a. above and
without interest being paid thereon.

3. If the highest score for any Claim Resolution Factor in Section IV
is "1", the Appeals Committee, the Claim Evaluation Staff or the
Claim Review Staff shall make the Claimant eligible again for the
Basic Claim Relief for which the Claimant was originally eligible.

4. If the highest score for any Claim Resolution Factor in Section IV
is "0", the Claimant shall not be awarded relief.


-36-

V. OTHER CLAIMS

A. ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

1. A Misstatement in respect of information which forms the basis of
any Claim and not particularly provided for in Sections II through
IV hereof, was made to the Policyholder.

2. The sale, administration or service of the Policy violated
applicable state insurance statutes or regulations respecting
product advertising or retail sales practices; provided however,
that this Claim Resolution Factor may not be assigned a score of
greater than "1" in the absence of a related fraud or deceit.

3. The Policyholder was the victim of forgery or theft or other form of
misappropriation of funds, cash values or Policy benefits.

B. DETERMINATION OF RELIEF

1. If the highest score for any Claim Resolution Factor in Section V is
"3", the Claimant shall be awarded remedial relief chosen from the
forms of relief described in paragraph 2 below, except that interest
at the Interest Rate on funds paid into the Policy, less any cash
withdrawals, surrenders, loans and/or dividends paid in cash or used
to reduce premiums, shall also be awarded, and no Term Insurance
Costs will be deducted.

2. If the highest score for any Claim Resolution Factor in Section V is
"2", the Claimant shall be awarded the following remedial relief as
chosen by the Company:

a. a rescission of the Policy as of the date of issue and a
refund in cash in an amount equal to the premiums paid on the
Policy, less cash withdrawals, surrenders, loans and/or
dividends paid in cash or used to reduce premiums on the
Policy, and less Term Insurance Costs, plus 50% of the
interest at the Interest Rate; or

b. the issuance (with regular underwriting) of a substitute
product within the Company's portfolio of products available
on the date of the award, purchased with the applicable funds
described in clause B.2.a. above. If the substitute product is
a life insurance policy, such policy's suicide and
contestability provisions will be considered to commence as of
the Policy's issue date with respect to insurance provided by
the substitute product in an amount not exceeding the face
amount of the Policy. If the substitute product is an annuity,
the applicable period for surrender charges shall be
considered to commence as of the Policy's issue date.


-37-

3. If the highest score for any Claim Resolution Factor in Section V is
"1", the Claimant shall be awarded remedial relief which
appropriately responds to the nature of the asserted Claim. Such
relief shall not be at a cost in excess of the cost to the Company
of Basic Claim Relief.

4. If the highest score for any Claim Resolution Factor in Section V is
"0", the Claimant shall not be awarded relief.


-38-

VI. ALLOCATION OF ADDITIONAL REMEDIATION AMOUNT

A. The additional amounts for distribution made available through the
Settlement pursuant to the Stipulation ("Additional Remediation Amount") will be
distributed subsequent to all Claimants' final notification to the Company of
their acceptance and selection of relief, which shall be after any and all
Hearings or Rehearings pursuant to APCOM Review (the "ADR Process Completion").
After the ADR Process Completion, the Court shall determine, at a hearing upon
notice, the method and allocation of the distribution of the Additional
Remediation Amount among Claimants receiving relief in the ADR Process. The
Regulatory Oversight Staff shall have the opportunity to make a presentation
through its representative at such hearing. Such hearing will be subject to
published notice as shall be approved by the Court. In making such
determination, the Court in its sole discretion shall distribute the Additional
Remediation Amount among the Claimants attaining scores of "3" and "2", with
appropriate weighting concerning Claims receiving such scores, unless, after
consideration of the following factors, the Court determines that a different
distribution is warranted to achieve equity among all remediated Claimants:

(i) the aggregate number of Claims submitted to the ADR Process;

(ii) the distribution of Claims among Claim Categories;

(iii) the aggregate number of Claims receiving relief under the ADR
Process;

(ix) the distribution of Claims among all the scores set forth in
Section I.D. hereof; and

(v) within each Claim Category, the average cost per Claim
receiving relief, for each of the scores set forth in Section
I.D. hereof.


-39-

SCHEDULE A

DESIGNATED NEW POLICIES

A. The Designated Policy if a Policyholder's Policy was a Traditional
Whole-Life Policy will be the following:

================================================================================
FACE AMOUNT ISSUE AGE (0-75) ISSUE AGE (76-85)
- --------------------------------------------------------------------------------
Below $25,000 Life at 85 Life at 90
- --------------------------------------------------------------------------------
$25,000 and above Life at 85 Estate 25 Whole Life
================================================================================

B. The Designated Policy if a Policyholder's Policy was a VAL/AL Policy will
be the Policyholder's choice of the applicable Policy listed in Section A.
above, or the following:

================================================================================
FACE AMOUNT ALL ISSUE AGES
- --------------------------------------------------------------------------------
All Amounts VAL(1)
================================================================================

DESIGNATED ANNUITY

Flexible Premium Deferred Annuity: Prudential's Fixed Interest Plan

- ----------
(1) In the event the Policyholder's Policy was an AL Policy, and the Company
is unable as a result of differences in Policy type between AL and VAL to
issue a VAL as the Designated Policy under applicable federal or state
suitability requirements, the Designated Policy shall be an AL.


-40-

EXHIBIT 1

STATE INSURANCE DEPARTMENTS

Alabama Montana
Alaska Nebraska
Arizona Nevada
Arkansas New Hampshire
Colorado New Jersey
Connecticut New Mexico
Delaware New York
District of Columbia North Carolina
Georgia North Dakota
Hawaii Ohio
Idaho Oklahoma
Illinois Oregon
Indiana Pennsylvania
Iowa Rhode Island
Kansas South Carolina
Kentucky South Dakota
Maine Tennessee
Maryland Utah
Michigan Vermont
Minnesota West Virginia
Mississippi Wisconsin
Missouri Wyoming


EXHIBIT C

MANUAL OF PROCEDURES FOR
RESOLVING CLAIMS UNDER PRUDENTIAL
ALTERNATIVE DISPUTE RESOLUTION GUIDELINES



TABLE OF CONTENTS


Page
----

I. INTRODUCTION ..................................................... 1
A. General ...................................................... 1
B. Overview of Process .......................................... 1
C. Promulgation ................................................. 2
D. Definitions .................................................. 2
E. Grace Period ................................................. 3

II. CLAIM PROCESSING AND REVIEW ...................................... 4
A. Post-Settlement Notice ....................................... 4
B. Election Form Receipt ........................................ 4
C. Election Form Processing ..................................... 4
D. Claimant Support Team ........................................ 4
E. Claim Form Receipt ........................................... 5
F. Claim File Assembly .......................................... 5
G. Factual Investigation ........................................ 6
1. Policy Information .................................... 6
2. Agent-Related Information ............................. 6
3. Communication with Claimant ........................... 7
H. Claim File Retention ......................................... 8
I. Claim Evaluation ............................................. 8
1. Preliminary Review .................................... 8
2. Preliminary Notification .............................. 8
a. Acknowledgement ................................ 8
b. Return or Rejection ............................ 9
(i) Timeliness .............................. 9
(ii) Completeness ............................ 9
(iii) Excluded Or Ineligible Claimants ........ 9
(iv) Company Discretion ...................... 10
(v) Review of Claim Evaluation Staff
Preliminary Determinations .............. 10
3. Review ................................................ 10
4. Scoring ............................................... 10
5. Determination as to Relief ............................ 10
6. Other Actions ......................................... 11
7. Prompt Resolution/Time Frame .......................... 11
8. Report of Claim Determination ......................... 11

J. Independent Claim Evaluation ................................. 11


-i-


TABLE OF CONTENTS
(CONTINUED)

Page
----

K. Claim Review and Analysis .................................. 12

III. COMMUNICATIONS, NOTIFICATION AND IMPLEMENTATION OF RELIEF .......... 12
A. Claimant Assistance ................................ 12
B. Notification ....................................... 13
C. Acceptance of Relief/Demand for APCOM Review ....... 13

IV. CLAIMANT REPRESENTATIVE, REGULATORY OVERSIGHT STAFF AND
COMPANY STEERING COMMITTEE ......................................... 13
A Claimant Representative .................................... 13
B. Regulatory Oversight Staff ................................. 14
C. Company Steering Committee ................................. 17
D. Independent Audit .......................................... 17

V. APPEALS PROCEDURES ................................................. 18
A. Selection of Appeals Committee ............................. 18
1. Appointment ........................................ 18
2. Termination ........................................ 18
3. Operation of the APCOM ............................. 19
B. Commencement of APCOM Review ............................... 19
1. Notification and Appointment of APCOM Reviewer ..... 19
2. Representation of Claimant ......................... 19
3. Access to File ..................................... 20
4. Authority of the APCOM Reviewer .................... 20
C. APCOM Review Procedures .................................... 21
1. Mediation Prior to Hearing ......................... 21
2. Hearing ............................................ 21
3. Scoring and Relief ................................. 21
4. Notification ....................................... 21
5. Rehearing Procedures ............................... 22
6. Binding Nature of Decisions ........................ 22


-ii-

MANUAL OF PROCEDURES FOR
RESOLVING CLAIMS UNDER PRUDENTIAL
ALTERNATIVE DISPUTE RESOLUTION GUIDELINES

I. INTRODUCTION

A. GENERAL. The procedures set forth in this Manual of Procedures for
Resolving Claims under the Prudential Alternative Dispute Resolution Guidelines
(as amended or modified from time to time, this "Manual") generally will provide
guidance for the prompt and fair processing and resolution of all Claims
submitted by eligible Policyholders pursuant to the Stipulation of Settlement to
be entered into between Plaintiffs and the Defendants (the "Stipulation") and
pursuant to consent orders and agreements, and all amendments thereto, issued by
the State Insurance Departments identified in Exhibit 1 to the ADR Guidelines
("Consent Orders"). Claims pursued through the ADR Process will be administered
in accordance with the provisions set forth in this Manual.

B. OVERVIEW OF PROCESS. The procedures described in this Manual provide a
comprehensive plan for the efficient and effective processing,
administration and resolution of Claims. Section II describes the process for
the preparation and submission of Claims by Claimants, with the assistance of
independent claim advisors, and the processing, administering, evaluating,
scoring and remedying of Claims by the Company's Claim Evaluation Staff.
Sections II and III specifically provide for the establishment of (A) the
Independent Claim Evaluation Team, which will re-evaluate all Claims initially
receiving less than the highest score from the Claim Evaluation Staff and (B)
the Claim Review Staff, which will perform an oversight function by (i)
handling communications from Claimants, including inquiries concerning the ADR
Process generally and awards received, via the establishment of a toll-free
telephone hot-line (subject to monitoring from time to time by Lead Counsel and
the Regulatory Oversight Staff of the training and telephone calls of those
persons responding to Claimants' inquiries), (ii) randomly selecting for
additional review and re-evaluation a percentage of Claims previously evaluated
and scored by the Claim Evaluation Staff, prior to any Claimant notification of
the decision with respect to those randomly selected Claims, (iii) processing
Claimant requests for review by an appeals committee, (iv) administering award
determinations, and (v) collating and synthesizing the data derived from the
Claims re-evaluated, and recommending to the Steering Committee modifications
and enhancements in the procedures set forth in this Manual. To ensure the
integrity of the ADR Process, Section IV provides for (a) the appointment by
Lead Counsel of the Claimant Representative, and the designation of the
Regulatory Oversight Staff by the Department, both of which are to be
responsible for monitoring and oversight of the ADR Process, (b) the appointment
of a Company multi-disciplinary Steering Committee to aid in implementing
improvements in the procedures set forth herein based on the recommendations of
the Claim Review Staff, Lead Counsel and the Regulatory Oversight Staff, and to
communicate with each of the Claim Evaluation Staff, the Claim Review Staff, the
Independent Claim Evaluation Team, the Department, the Regulatory Oversight
Staff, Lead Counsel and the Claimant Representative, and (c) the retention of
independent auditors to

assess the consistent application of the ADR Guidelines (as defined below).
Section V provides for an appeals process in establishing an appeals committee
to resolve Claimants' objections to the determinations of their Claims by the
Claim Evaluation Staff and/or the Claim Review Staff.

C. PROMULGATION. In order to comply with the terms of the Stipulation, the
Consent Orders and the ADR Guidelines, the Company shall resolve all Claims
submitted in the ADR Process in conformance with the provisions set forth in
this Manual. The Company, Lead Counsel or the Department may propose
modifications or revisions of the procedures set forth in this Manual in order
to continue to effectuate the common objectives of the Department. Lead Counsel
and the Company as circumstances arise and situations change through the normal
course of the Company's business; provided, however, that (i) all such
modifications or revisions of these procedures shall continue to be consistent
with the terms of the Stipulation, the Consent Orders and the objectives and
policies put forth by this Manual on this date, and (ii) the Claimant's relief
is not diminished by such modification or revision. Any such proposed
modifications or revisions proposed by one party shall be forwarded to the other
parties for their approval. Additionally, the Company is authorized to adopt all
necessary and/or additional internal Company operating policies, processes or
documents not in violation of the terms or provisions of either of the
Stipulation, the Consent Orders or the ADR Guidelines, in order to carry out
the objectives described by the Stipulation, the Consent Orders, the ADR
Guidelines and this Manual.

D. DEFINITIONS. Capitalized terms used in this Manual and not otherwise
defined herein shall have the same meanings ascribed thereto in the Prudential
Alternative Dispute Resolution Guidelines (the "ADR Guidelines").

For purposes of this Manual, the following terms shall have the following
respective meanings:

1. "Agent Statement" shall mean the written statement of the
Agent(s) who sold and/or serviced the Policy, validly executed and made with a
Declaration.

2. "Claim Evaluation Staff" shall mean the qualified professional
and administrative staffs established by the Company, wholly independent from
the Company's marketing or sales functions, composed solely to perform the
evaluation of Claims, and to score and determine the level of relief of all
Claims. The administrative staff shall consist of persons adequately trained or
experienced to perform the functions required herein and to assist the
professional staff. The professional staff shall consist of persons from the
Company's Policyowner Relations, Compliance, Individual Insurance and/or Law
Departments, none of whom shall have acted as a licensed agent for the Company
or shall have directly supported, or acted in the field supervision of the
Company's licensed agents.


-2-

3. "Claim Review Staff" shall mean the qualified professional and
administrative staffs established by the Company, wholly independent from the
Company's marketing or sales functions, composed to perform the functions more
specifically described in Sections II and III hereof. The administrative staff
shall consist of persons adequately trained or experienced to perform the
functions required herein and to assist the professional staff. The professional
staff shall consist of certain of the Company's senior complaint handlers from
the Policyowner Relations Department, attorneys from the Company's Law
Department and/or experienced members of the Company's Compliance Department,
none of whom shall have acted as a licensed agent for the Company or shall have
directly supported, or acted in the field supervision of the Company's licensed
agents.

4. "Claimant Group" shall mean all Policyholders, taken as a whole.

5. "Claimant Group Administrator" shall mean any third party, agent
or administrator, including Boston Financial Data Services, Inc., which may be
retained by the Company and must be approved by Lead Counsel and the Regulatory
Oversight Staff, to help implement the ADR Process and Basic Claim Relief.

6. "Claimant Representative" shall mean that person, and his or her
two assistants, selected by Lead Counsel to act as a monitor on behalf of the
Claimants as described herein.

7. "Claimant Support Team" shall mean that wholly independent
entity designated and retained by the Company, and approved by Lead Counsel and
the Regulatory Oversight Staff, to provide administrative assistance to
Claimants in the preparation of their respective Claims, including providing aid
in completing Claim Forms and responding to inquiries respecting the ADR Process
during the time prior to the submission of the Claim Form. Lead Counsel and the
Regulatory Oversight Staff shall monitor from time to time the Claimant Support
Team's training and telephone calls.

8. "Declaration" shall mean a written declaration, subject to the
penalties of perjury, in accordance with 28 U.S.C. Section 1746, using the
language in Section 1746(1) thereof.

9. "Defendants' Counsel" shall mean the law firm of Sonnenschein
Nath & Rosenthal.

10. "Regulatory Oversight Staff" shall mean those persons,
appointed or designated by the Department assembled to provide oversight of
these programs.

E. GRACE PERIOD. With respect to any submissions by a Policyholder which
are required to be provided within an express period of time hereunder, the
Company will


-3-

automatically grant a 1O-day "grace period" from the expiration of the
applicable period of time in order to accept an otherwise untimely submission as
timely.

II. CLAIM PROCESSING AND REVIEW

A. POST-SETTLEMENT NOTICE. Within 30 days of the date of the entry of the
Final Order and Judgment, the Company, through the Claimant Group Administrator,
will distribute to all Policyholders the Post-Settlement Notice which will (i)
inform Policyholders about the Settlement in the Action, and that the Consent
Orders have been signed and are effective, and (ii) advise Policyholders of the
existence of a toll-free telephone hot-line for any inquiries concerning the
Post-Settlement Notice, the Election Form and their Claims. Enclosed with the
Post-Settlement Notice will be one or more Election Forms (one for each Policy
owned by the Policyholder) to be completed by the Policyholder. The Election
Form enables a Policyholder to choose to either submit his, her, or its Claim
for evaluation in the ADR Process or to receive Basic Claim Relief.

B. ELECTION FORM RECEIPT. All Election Forms which allow a Claimant to
select either Basic Claim Relief or participation in the ADR Process will be
addressed to and received by the Claimant Group Administrator. Within 75 days of
receiving an Election Form from a Policyholder, the Claimant Group Administrator
will transmit either (i) an acknowledgement of receipt of the Election Form and
information regarding the implementation of Basic Claim Relief, or (ii) a Claim
Form and covering letter to the Claimant if the ADR Process is selected. A copy
of the Election Form will also be forwarded to the Claim Evaluation Staff.

C. ELECTION FORM PROCESSING. The Claim Evaluation Staff will receive and
record all Election Forms received from the Claimant Group Administrator and
will assign a separate Claim number to each Claim.

D. CLAIMANT SUPPORT TEAM. The Claimant Support Team will provide
administrative assistance to Claimants in making their election on the Election
Form and in the preparation of their respective Claims. The Claimant Support
Team will perform the following functions:

1. Respond to any Claimant inquiries, via a toll-free telephone
hot-line, respecting their election on the Election Form,
their preparation of the Claim Form, the ADR Process and the
review by the APCOM;

2. Assist Claimants in the completing of the Claim Form; and

3. Advise Claimants with respect to the collection of documents
for submission to the Claim Evaluation Staff for inclusion in
the File.


-4-

The Claimant Support Team will not participate in the evaluation of any Claims.

E. CLAIM FORM RECEIPT. The Claim Evaluation Staff will receive and record
all Claim Forms received by the Company from Claimants, and, to the extent the
Claim has not previously been assigned a Claim number, will assign a separate
Claim number to each such Claim. The Claim Evaluation Staff will also fill out
the Claim Summary Form by recording the information, as received, on a
computerized storage and retrieval system that is designed to permit efficient
recovery of the information, in written form, by appropriate topic.

F. CLAIM FILE ASSEMBLY. As soon as reasonably practicable after receipt
and recording of a Claim Form, the Claim Evaluation Staff will establish a
separate File for each Claim. The Claim Evaluation Staff will assemble the File
from Company sources and those documents submitted by the Claimant with the
Claim Form. The File for a particular Claim will contain copies of all documents
transmitted to, or prepared or obtained by, the Claim Evaluation Staff with
respect to the Claim, including, without limitation, to the extent available in
the Company's records (including the non-privileged Company documents such as
agent complaint histories held by Defendants' Counsel), the following materials:

1. documents that were furnished to the Claimant in connection
with the sale of the Policy(ies) including, the Policy(ies),
illustrations and sales materials;

2. documents contained in the files of the Agent(s);

3. documentation and data concerning the Policy(ies) from the
Agent's sales office(s);

4. correspondence concerning the Policy(ies);

5. records maintained by the Company including the Claimant's
application file (including the application and change and
disbursement requests);

6. relevant portions of the electronic records relating to the
Policy, including, without limitation, the master record and
the policy history;

7. prior complaint correspondence from or at the direction of the
Claimant concerning the Policy(ies) and related data received
from or concerning the Agent(s);

8. data or documents relating to the Complaint History, internal
discipline, or regulatory sanction of the Agent(s) who sold
and/or serviced the Policy(ies) (in summary form only, the
foregoing notwithstanding);


-5-

9. any other information or document relevant to the Claim which
pertains to the Claim Resolution Factors or evidentiary
considerations under the ADR Guidelines;

10. the Claim Form and all documents furnished with or attached to
the Claim Form (including any third-party affidavits);

11. the Claim Summary Form;

12. correspondence concerning the Claim;

13. the written statement of the Agent(s), validly executed and
notarized, who sold and/or serviced the Policy (the "Agent
Statement"); and

14. the written statement of supervising manager(s) of the
Agent(s) in respect of the Claim.

G. FACTUAL INVESTIGATION. Concurrent with the assembly of the File as
described in Section II.F. hereof, the Claim Evaluation Staff will, to the
extent practicable, conduct a reasonable investigation of relevant facts,
including (but not necessarily limited to) the following:

1. Policy Information. The Claim Evaluation Staff will retrieve and
review the relevant files relating to the Claimant's Policy or Policies,
including, to the extent pertinent, any application files, premium- and
loan-history records, disbursement and withdrawal records, master record,
replacement forms and complaint files.

2. Agent-Related Information. The Claim Evaluation Staff will
identify the Agent or Agents who sold the Policy or Policies, and
generally will:

a. determine the status of the Agent (e.g., active, retired,
deceased, terminated, etc.) and, if known, the Agent's current address or
business unit and office affiliation;

b. contact the Agent concerning the Claim and request the
Agent to furnish an Agent Statement concerning the Claim and to provide
any other facts or documents, including sales materials, illustrations and
correspondence, that might be relevant in assessing the Claim, including
whether the Agent knows, based on personal knowledge, whether any
documents originally created or kept by the Agent or in the agency office
specifically pertaining to the Claim have been destroyed, and the
circumstances of such destruction, and whether copies of such documents
cannot be located. In the event (i) the Claim involves a complaint
previously received and


-6-

processed by the Company and (ii) the Company, in processing the
complaint, obtained from the Agent any statements and/or relevant
documents from the Agent's file, the Claim Evaluation Staff may rely on
the previously submitted statements and/or documents without contacting
the Agent again, (however, any such earlier statement will be returned to
the Agent with a request that the Agent have the statement converted to an
Agent Statement, which process includes the provision of a Declaration).
Where an Agent, without cause, unreasonably fails or refuses to furnish
the Claim Evaluation Staff with information or a statement which such
staff believes is important, the Claim Evaluation Staff will document such
failure or refusal. Additionally, any statement of the Agent prepared on
or after the Final Settlement Date which is not executed and does not
contain a Declaration will be deemed not to be Available Evidence;

c. advise the Agent in writing in connection with the above
contacts that the Company will not take disciplinary action against any
Agent solely based on any truthful representations he or she might make in
the Agent Statement in connection with the ADR Process; provided, however,
that disciplinary action may be taken based on any other evidence
regardless of source;

d. retrieve and review any relevant files in respect of the
Claim, including complaint and replacement history;

e. to facilitate the ADR Process and to minimize inconvenience
to Agents and office personnel, the Company may appoint one or more
persons to be available, at the request of an Agent, to assist Agents in
fully responding to Company requested information. Where the Claim
Evaluation Staff is unable after reasonable efforts to contact the Agent,
or where the Agent is not available and the Agent's office may be able to
provide the necessary information, the Claim Evaluation Staff, in lieu of
contacting the Agent, may contact the appropriate sales management and may
consider as Available Evidence the information provided by such sales
management to the extent sales management personnel were present at the
time of the sale; and

f. contact the office with which the Agent was affiliated at
the time of the sale(s) of the Policy or Policies to request that the
office assist in furnishing any documents that may be relevant in
assessing the Claim.

3. Communication with Claimant. The Claim Evaluation Staff may
communicate with the Claimant concerning the Claim and may seek additional
information or documents from the Claimant in order to assist the Claim
Evaluation Staff in assessing, scoring and determining the Claim. All
communications with the Claimant will be appropriately documented. Where a
Claimant unreasonably fails or refuses to furnish the Claim


-7-

Evaluation Staff with information or a statement which could materially affect
the review of the Claim, the Claim Evaluation Staff will document such failure
or refusal.

H. CLAIM FILE RETENTION. The Company will retain the Claim File for no
less than five (5) years from the mailing of the Post-Settlement Notice in
paper, electronic or other media to permit the use, copying and retention of the
Claim File for the purposes of the ADR Process.

I. CLAIM EVALUATION.

1. Preliminary Review. Promptly upon receipt of a Claim Form, the
Claim Evaluation Staff will perform a preliminary review of the Claim to ensure
that, as to the Policy in question:

a. the Claim Form has been submitted in a timely manner;

b. the Claim Form is complete, has been signed by each owner
of the Policy, and has been made with a Declaration;

c. the representations and agreements in the Claim Form have
not been deleted or modified;

d. the Claimant has not previously signed an agreement, while
represented by counsel, pursuant to a settlement of a claim, action,
lawsuit or proceeding, pending or threatened, that released the Company
from any further claims concerning the Policy; and

e. the Claimant has not been excluded from the Claimant Group
with respect to the Policy in question. Although the Claimant Group
Administrator will not transmit Claim Forms to persons or entities who
have been excluded from the Claimant Group. it is possible that such
persons or entities may obtain Claim Forms and submit them to the Company.
As a result, in conducting its preliminary review of each Claim, the Claim
Evaluation Staff also needs to determine whether the person or entity has
previously been excluded from the Claimant Group.

2. Preliminary Notification. Upon completing its preliminary review
of a Claim, the Claim Evaluation Staff will transmit one of the following
letters to the Claimant:

a. Acknowledgement. When the Claim Evaluation Staff determines
that the Claim Form is complete and has been submitted in a timely manner
by a Claimant who is eligible to submit a Claim, the Claim Evaluation
Staff will send the Claimant a letter (i) acknowledging receipt of the
Claim Form, (ii) informing the Claimant of the Claim number assigned to
the Claim, (iii) advising the


-8-

Claimant that the Claim is being processed, and (iv) advising the Claimant
of the availability of the toll-free telephone hot-line for inquiries
regarding the ADR Process.

b. Return or Rejection. When the Claim Evaluation Staff
determines that the Claim Form has not been submitted in a timely manner,
is not complete, signed or made with a Declaration, or has been submitted
by an ineligible Claimant or a Claimant who has been excluded from the
Claimant Group, the Claim Evaluation Staff will make reasonable efforts
(i) to contact the Claimant in order to resolve any defects in the Claim
Form, or (ii) return the Claim Form to the Claimant for correction with a
letter of explanation, retaining a copy of the Claim Form in the Claim
Evaluation Staff's files. The letter from the Claim Evaluation Staff will
identify the Claim by Claim number and, in the event the Claim Form is
deemed not to be complete, will advise the Claimant of the availability of
the Claimant Support Team to assist him or her.

(i) Timeliness. A Claim will be deemed to be submitted
in a timely manner only if the Company has (a) received from the Claimant
the appropriate Election Form within 75 days after transmittal of the
Post-Settlement Notice to each such Claimant, and, in addition, (b)
received the appropriate Claim Form within 90 days after transmittal of
the Claim Form by the Claimant Group Administrator. If the Claim
Evaluation Staff determines that a Claim has not been submitted in a
timely manner, the Claim Evaluation Staff will inform the Claimant that
the Claim was not submitted in a timely manner.

(ii) Completeness. If the Claim Evaluation Staff
determines that the Claim Form is not complete, has not been executed with
a Declaration, or has been modified as to representations and agreements,
it will return the Claim Form to the Claimant and will request that the
defect be corrected and be received by the Company within 30 days of its
transmittal. If not corrected in a timely manner, the Claim Evaluation
Staff may reject the Claim. The Claim Evaluation Staff may return a Claim
Form as incomplete only in the following instances: (a) the Claimant has
failed to sign the Claim Form, (b) the Claimant has failed to have the
Claim Form made with a Declaration, or (c) the Claimant has deleted,
modified or otherwise refused to agree to make the representations
contained in the Claim Form.

(iii) Excluded Or Ineligible Claimants. If the Claim
Evaluation Staff determines that the Claimant submitting the Claim has
been excluded from the Claimant Group or is otherwise not eligible to
submit a Claim, the Claim Evaluation Staff will return the Claim Form to
the Claimant advising the Claimant that he or she is not entitled to
participate in the ADR Process.


-9-

(iv) Company Discretion. The Company will have the right
(after giving effect to the grace period described in Section I.E.) to (a)
process an untimely or incomplete Claim Form as if the Claim Form was
timely or complete, (b) permit a Claimant to withdraw a prior election for
Basic Claim Relief and to participate in the ADR Process, or a prior
election for the ADR Process and to participate in Basic Claim Relief, as
if the respective prior election had not been made, or (c) reject the
Claim as untimely.

(v) Review of Claim Evaluation Staff Preliminary
Determinations. In the event that a Claimant objects to a determination
made by the Claim Evaluation Staff during its preliminary review, as set
forth in a transmittal letter contemplated by Section II.I.2, the
objection will be referred to the Independent Claim Evaluation Team (as
defined in Section II.J.) to review the objection and make a
recommendation to the Claim Review Staff. Irrespective of whether the
Independent Claim Evaluation Team chooses to make any such
recommendation, the Claim Review Staff will have the authority to affirm,
modify or reverse the Claim Evaluation Staff's determination. The Company
will notify the Claimant of any decision made under Section II.I.2. A
Claimant will not have the right to appeal a Claim rejected or returned
because the Claim was incomplete or untimely or because the Claim was
submitted by a Claimant who had been excluded from the Claimant Group or
was not a member of the Claimant Group.

3. Review. After assembling the File and completing the factual
investigation described in Section II.G., the Claim Evaluation Staff will review
the File in connection with a particular Claim in light of the Claim Resolution
Factors and evidentiary considerations set forth in the ADR Guidelines.

4. Scoring. The Claim Evaluation Staff will score each Claim using
the Claim-Resolution Factors, evidentiary considerations (specific and
non-specific), and guidelines established in the ADR Guidelines. After
determining which Claim-Resolution Factors apply to the Claim, the Claim
Evaluation Staff will score those factors as required by the relevant subpart of
the ADR Guidelines.

5. Determination as to Relief. Based on its scoring of a Claim, the
Claim Evaluation Staff, using the criteria, guidelines and remedies established
in the ADR Guidelines, will determine what relief or choice of relief, if any,
will be awarded to the Claimant by way of resolution of the Claim, including the
provision of a type of relief available to any lower score with respect to the
particular Claim Category of the Claim if requested by the Claimant in writing.
In scoring or determining a Claim, the Claim Evaluation Staff may take into
consideration the failure or refusal of the Claimant, the Agent or the sales
management to provide the Claim Evaluation Staff with information or a statement
requested by the Claim Evaluation Staff as provided in Sections I.F.1.d. and
I.F.2.b., respectively, of the ADR Guidelines.


-10-

6. Other Actions. The Claim Evaluation Staff will take whatever
additional actions are reasonably necessary to carry out its responsibilities as
described herein.

7. Prompt Resolution/Time Frame. Where it is not reasonably
practicable for the Claim Evaluation Staff to complete its investigation,
evaluation and scoring of the Claim within 180 days of the date of
acknowledgement of a Claim Form under Section II.I.2.a. because of the volume of
Claims received or because of delays in obtaining information requested from
other persons, the Claim Evaluation Staff will notify the Claimant concerning
the status of the Claim, and use its reasonable best efforts to complete its
investigation of such a Claim as soon as practicable, including, where
appropriate, expanding the size of the Claim Evaluation Staff.

8. Report of Claim Determination. The Claim Evaluation Staff shall
promptly issue a report, in writing, to the Claim Review Staff upon completion
concerning the scoring, relief awarded, if any, and other pertinent conclusions
concerning the determination of the Claim.

J. INDEPENDENT CLAIM EVALUATION. In the event that a Claim receives a
score less than "3", the Claim will be reviewed by a member of the Independent
Claim Evaluation Team. The "Independent Claim Evaluation Team" or the "ICET"
shall be comprised of qualified individuals wholly independent of the Company.
The Company will identify and submit one or more candidates to serve the ICET
function to the Regulatory Oversight Staff and Lead Counsel for their approval.
The Independent Claim Evaluation Team will be paid at the Company's expense, in
an aggregate amount not to exceed ten million dollars, for all such activities
performed and expenses incurred in connection with the Settlement and all other
similar settlements with other states or jurisdictions; provided, however, such
aggregate fee shall be an amount greater than ten million dollars in the event
that Lead Counsel, the Regulatory Oversight Staff and the Company mutually agree
that such larger amount shall be necessary in order to retain an appropriate
Independent Claim Evaluation Team or to address the volume of Claims. The ICET
will be provided the workspace and the facilities necessary to perform this
function.

The Independent Claim Evaluation Team shall follow the criteria,
guidelines and remedies established in the ADR Guidelines and in this Manual of
Procedures in reviewing Claims. In the event the Independent Claim Evaluation
Team concurs with the determination of the Claim Evaluation Staff, the Claim
will be forwarded to the Claim Review Staff for notification, processing or
sampling in accordance with Sections III.B. and II.K., respectively. In the
event the Independent Claim Evaluation Team concludes the score should be
different from the score assigned by the Claim Evaluation Staff, the Claim will
be forwarded to the Claim Review Staff for re-evaluation, re-scoring and
assessment on a de novo basis, and pursuant to the procedures for Claim review
by the Claim Evaluation Staff. In the event the Claim Review Staff assigns a
preliminary score different from the score


-11-

recommended by the Independent Claim Evaluation Team, the independent claim
evaluator from the Independent Claim Evaluation Team who reviewed the Claim
shall be afforded an opportunity to explain the basis of his/her recommendation
and advocate the application of that recommendation to the member of the Claim
Review Staff handling the Claim. This presentation shall not exceed 15 minutes.
Thereafter, the Claim Review Staff will decide, using the criteria, guidelines
and remedies established in the ADR Guidelines and in this Manual of Procedures
which relief or choice of relief, if any, to offer to the Claimant submitting
the Claim. Such determination shall supersede any determination of the Claim
Evaluation Staff or recommendation of the Independent Claim Evaluation Team, and
shall be binding on the Company.

K. CLAIM REVIEW AND ANALYSIS. The Claim Review Staff will re-evaluate,
rescore and assess, on a de novo basis, and pursuant to the procedures for Claim
review by the Claim Evaluation Staff, as described in Section II herein, a
statistically significant sample of all Claims submitted in each Claim-Specific
Category for consideration pursuant to the ADR Process, and evaluated by the
Claim Evaluation Staff. Where the Claim Review Staff discerns any pattern of
inconsistencies in scoring or award determinations among those Claims reviewed
by the Claim Evaluation Staff, the Claim Review Staff shall recommend changes
in instruction or administration of the Claim Evaluation Staff as may be
warranted to better ensure consistent handling and results. The Claim Review
Staff will decide, using the criteria, guidelines and remedies established in
the ADR Guidelines and in this Manual of Procedures what relief or choice of
relief, if any, to offer to the Claimants submitting these Claims (such
determination to supersede any determination of the Claim Evaluation Staff). The
Claim Review Staff will also synthesize the results of its re-evaluations and
make recommendations to the Steering Committee (as described in Section IV),
which in turn shall forward such recommendations to Lead Counsel and the
Regulatory Oversight Staff, with the objectives of maintaining consistent
application of the procedures described herein, and efficient and effective
implementation thereof based on its analysis of such results. The Claim Review
Staff shall develop information concerning the ADR Process as a whole sufficient
to prepare a final report. Determinations of Claims by the Claim Evaluation
Staff, or of the Claim Review Staff in the event it has re-evaluated a Claim,
are binding on the Company.

III. COMMUNICATIONS, NOTIFICATION AND IMPLEMENTATION OF RELIEF

A. CLAIMANT ASSISTANCE. Inquiries from Claimants subsequent to the
submission of their Claims will be answered by the Claim Review Staff. The Claim
Review Staff will respond to inquiries from Claimants about the ADR Process and
advise Claimants on the processing and administering of their Claims. To this
end, the Company will establish a toll-free telephone hot-line which Claimants
may call for information, advice and assistance. This toll-free telephone
hot-line will be separate from and in addition to any other toll-free


-12-

numbers the Company may establish for purposes of responding to inquiries, and
is subject to monitoring from time to time by Lead Counsel.

B. NOTIFICATION. Once a Claim has been completely reviewed, and a
determination as to relief has been made, the Claim Review Staff will promptly
notify, in writing, the Claimant concerning the determination. The notification
sent to the Claimant will (i) provide a written basis for the determination of
the Claim being made, (ii) describe the relief being offered to the Claimant,
(iii) indicate whether the relief awarded is the greatest relief for such a
Claim under the ADR Guidelines, and (iv) notify the Claimant that he or she has
the right to either (a) accept and select the determined relief, or (b) obtain
review by the APCOM of either a denial of relief or the nature of the relief
awarded, and will describe the procedures for seeking this review by the APCOM
(as described in Section V.A.). Additionally, the Company's Individual Insurance
Group's Compliance Department will be notified concerning any Claim
determinations involving any Claim alleging a Misstatement by an Agent which
scores a "2" or "3" in the ADR Process.

C. ACCEPTANCE OF RELIEF/DEMAND FOR APCOM REVIEW. The Company must receive
the notification submitted by a Claimant of his or her acceptance and selection
of relief determined pursuant to the ADR Process within 45 days of the
transmittal of notice of the Claim determination by the Claim Review Staff. Upon
receipt of the Claimant's acceptance and selection of relief, the Claim Review
Staff will notify the appropriate Company representatives necessary to implement
the appropriate relief. A Claimant who wishes to obtain de novo review by the
APCOM of the final determination of his or her Claim must notify the Claim
Review Staff in writing (the "APCOM Review Demand") of his or her desire to
obtain such review (the "APCOM Review"). The APCOM Review Demand must be
submitted by the Claimant and received by the Company within 45 days of the
transmittal of such notice from the Claim Review Staff. In the event that a
Claim (i) receives a score of "0" as set forth in the notification to the
Claimant contemplated by Section III.B. hereof, (ii) is not re-scored higher
than "0" by the APCOM Reviewer (as hereinafter defined), and (iii) is determined
by the APCOM Reviewer to be frivolous, an administrative fee of $50 may be
assessed by the Company upon the decision of the APCOM Reviewer as contemplated
in Section V.C. hereof. The Company may waive the fee in the event that the
Claimant reasonably demonstrates a "financial hardship" which makes such payment
impractical.

IV. CLAIMANT REPRESENTATIVE, REGULATORY OVERSIGHT STAFF AND COMPANY STEERING
COMMITTEE

A. CLAIMANT REPRESENTATIVE.

Lead Counsel will appoint an individual, experienced in commercial dispute
resolution and/or the life insurance industry to act as a monitor on behalf of
Claimants during the ADR Process (the "Claimant Representative") as described
herein. The Claimant Representative


-13-

shall be entitled to retain two assistants in order to adequately perform the
functions specified herein. The Claimant Representative, and his or her
assistants, will be compensated on an hourly basis at a rate of $300 and $150
per hour respectively, or on a fixed fee basis as agreed to by Lead Counsel, the
Regulatory Oversight Staff and the Company. The Company will provide the
Claimant Representative with office space and support for any centralized
functions and reasonable travel expense reimbursement where travel is associated
with the APCOM review process. The Claimant Representative will be provided
copies of all the materials in the File used to evaluate a Claim and will
perform the following functions:

1. in accordance with the standards, guidelines and rules set
forth in the ADR Guidelines and this Manual, discuss
individual Claims with, and make recommendations to, the ICET,
the Claim Review Staff and/or the Representatives (as
described herein);

2. monitor the results of Claim sampling and ongoing ADR Process
operations, including the APCOM review process; and

3. consider and provide comment on the ongoing administration of
the ADR Process to Lead Counsel and the Steering Committee.

The Claimant Representative may consult with Lead Counsel concerning
individual Claims at any time during the ADR Process; provided, however, that
Lead Counsel shall not enter an appearance for or act on behalf of the Claimant,
the Claimant Representative or otherwise, in connection with the processing,
investigation, scoring, determination or review of a Claim.

In the event that the Company concludes the Claimant Representative has
failed materially and repeatedly to comply with the standards, guidelines and
rules in the ADR Guidelines and this Manual, or to appropriately perform the
duties of the Claimant Representative as set forth in this Manual, the Company
shall have the right to request Lead Counsel to replace the Claimant
Representative. If Lead Counsel elects not to replace the Claimant
Representative, the Company shall have the right to apply to the Court for an
order directing that the Claimant Representative be replaced. The same procedure
may be invoked with regard to the assistants and representatives who are
retained by the Claimant Representative.

B. REGULATORY OVERSIGHT STAFF.

The Department and other state insurance departments participating in
policyholder remediation programs of the type set forth in the ADR Guidelines
will appoint a staff or a designated group independent of the Company designated
as the Regulatory Oversight Staff. The costs of the Regulatory Oversight Staff
will be reimbursed by the Company, including the retention of such personnel to
adequately perform the function specified herein. In so


-14-

doing, the Company will apply the requirements and regulations of the respective
participating state insurance departments used in connection with the
examination of life insurers regarding the reimbursement of the reasonable
expense of employees and those retained as independent contractors. The
Regulatory Oversight Staff will perform the following functions:

1. monitor and provide oversight concerning the satisfactory
performance of the Claimant Support Team in providing
appropriate administrative assistance to Claimants in the
preparation of their Election and Claims Forms;

2. monitor and provide oversight concerning the quality of the
composition and the performance of the Claim Evaluation Staff
and the Claim Review Staff;

3. monitor and provide oversight concerning the satisfactory
performance of the ICET;

4. monitor and provide oversight concerning the Company's
performance in providing documents and further information
requested by the Claim Evaluation Staff to assemble the Files
(in part, through feedback provided by the APCOM as to the
quality and adequacy of those documents contained in the
Files);

5. monitor and provide oversight concerning (i) the preliminary
determination of Claims and review thereof, and (ii) the
results of Claim sampling and ongoing ADR Process operations;

6. provide for the assignment of appeals to APCOM Reviewers;

7. monitor and provide oversight of the Claim review appeals
process;

8. based on the performance of each of the functions described
immediately above, the Regulatory Oversight Staff, or its
appropriate designees, will timely report to the Steering
Committee any material deficiencies in the implementation or
execution of the ADR Process and, accordingly, any Claims
adversely determined as a result of such deficiencies will be
remanded to the Claim Evaluation Staff or the Claim Review
Staff for de novo evaluation;


-15-

9. receive and respond to the questions, comments or concerns of
the Department and/or other state insurance departments
participating in policyholder remediation programs of the type
set forth in the ADR Guidelines;

10. consider and comment on the ongoing administration of the ADR
Process in light of the information provided and the documents
furnished pursuant to this Section IV.A.; and

11. perform any and all other functions which the Regulatory
Oversight Staff or its designee deems to be appropriate.

In connection with performing the above enumerated functions:

1. Any and all information reasonably necessary to carry out its
functions from the inception to the close of the ADR Process
will be made available to the Regulatory Oversight Staff in a
manner satisfactory to the Regulatory Oversight Staff to
fulfill the specific purpose of its request.

2. The Regulatory Oversight Staff shall be furnished the
following documents:

a. reports setting forth results of the claim-sampling
performed by the Claim Review Staff;

b. reports of the Company setting forth results concerning
the ADR Process, including aggregate results (scores)
from the Claim Evaluation Staff, the ICET and the Claim
Review Staff, and Basic Claim Relief for Policyholders;

c. recommendations for the improvement of the procedures
set forth in this Manual;

d. final report of the Claim Review Staff contemplated in
Section II.K. hereof;

e. audit result findings and recommendations and regular
reports from the independent auditor as contemplated in
Section IV.C. hereof and written responses thereto from
the Company; and


-16-

f. upon the request of the Regulatory Oversight Staff,
individual Claim Files and other documents as necessary
for the Regulatory Oversight Staff to review specific
Claims filed under the ADR Process.

The Claimant Representative shall be furnished with the
documents set forth in subsections (a) through (f) above.

3. The Regulatory Oversight Staff shall operate in a manner
consistent with the standard procedures and methods generally
employed in the examination of life insurance companies by
state insurance departments.

4. The Department may conduct such other investigations and
examinations as are necessary, among other things, to ensure
the integrity of the ADR Process and the accuracy of the
scoring of the Claims.

C. COMPANY STEERING COMMITTEE.

The Company will appoint a multi-disciplinary Steering Committee, the
members of which will be composed of senior-level management of the Company (the
"Steering Committee"). The Company will be responsible for the satisfactory
performance of the ADR Process as well as persons and entities retained by the
Company in discharging its obligations hereunder. The Steering Committee will
(i) evaluate the recommendations of the Claim Review Staff, the Regulatory
Oversight Staff, the ICET, the Claimant Representative, and Lead Counsel; (ii)
make proposals for the improvement of the procedures set forth herein to the
Senior Vice President of the Company's Policyowner Relations Department, who has
responsibility for the overall administration of the ADR Process, and (iii)
communicate with each of the Claim Evaluation Staff, the Claim Review Staff, the
ICET, the Department, the Regulatory Oversight Staff and the Claimant
Representative. In this light, the Steering Committee will be the principal
organization within the Company which will interface with, and be responsible
for all communications with, Lead Counsel, the Department and the Regulatory
Oversight Staff with regard to the ADR Process and will receive the questions,
comments or concerns, regulatory or otherwise, of Lead Counsel, the Regulatory
Oversight Staff and the Department concerning the ADR Process.

D. INDEPENDENT AUDIT.

Subject to the approval of the Regulatory Oversight Staff and Lead
Counsel, the Company will select and retain either (i) one of the "Big Six"
firms of independent public accountants or (ii) such other firm of independent
public accountants of recognized national standing selected by the Company and
approved by the Regulatory Oversight Staff, as independent auditors to assess
the consistent application of the ADR Guidelines. These


-17-

independent auditors will perform audit assessments of the ADR Process on, at a
minimum, a quarterly basis and would address, among other items, whether:

1. the ADR Guidelines are being given appropriate effect in the
evaluation of Claims;

2. Files are being assembled as provided for in the ADR
Procedures;

3. the ADR Process is yielding consistent results in scoring for
like Claims; and

4. Claims are being resolved in a timely manner.

To achieve this, the audit process would employ appropriate criteria,
sampling and other audit techniques. Audit result findings and recommendations
will be addressed promptly by the Company and a written response outlining
actions proposed and taken, as well as regular reports, will be provided to the
Regulatory Oversight Staff, the Steering Committee and the Policyowner Relations
Department.

V. APPEALS PROCEDURES

A. SELECTION OF APPEALS COMMITTEE.

1. Appointment. As soon as reasonably practicable after the Final
Settlement Date, the Department, Lead Counsel and the Company will select either
the American Arbitration Association, the CPR Institute for Dispute Resolution
or such other dispute resolution entity as may be mutually agreed upon. Such
entity shall prepare one or more lists composed of individuals with experience
either (i) with the life insurance industry or life insurance products, (ii)
with the resolution of insurance-related complaints, or (iii) as arbitrators or
other adjudicators so as to have the appropriate expertise to serve as members
of the Appeals Committee (as described herein). The persons on such list(s) must
be satisfactory to each of the Regulatory Oversight Staff, Lead Counsel, and the
Company. Lead Counsel and the Regulatory Oversight Staff will select 50 persons
(or such greater number as mutually agreed upon the by Regulatory Oversight
Staff, Lead Counsel and the Company) from the approved list(s) described
immediately above to review Claimants, objections to ADR Process determinations.
These persons selected shall constitute the Appeals Committee (the "APCOM").
Upon the appointment of any APCOM member, such member will agree, in writing, to
be bound by the terms of the ADR Guidelines and this Manual of Procedures, and
will agree to confidentiality provisions acceptable to the Department, Lead
Counsel and the Company.

2. Termination. Any APCOM member may be terminated, with or without
cause, upon the concurrence of any two of the following parties: (i) the
Regulatory


-18-

Oversight Staff or the Department, (ii) Lead Counsel, and (iii) the Company.
Termination may be based upon, but is not limited to: the breach or violation of
any of the ADR Guidelines, ADR Procedures, the APCOM Procedures (as described
below) or the confidentiality provisions described above; the failure to
maintain appropriate conduct during the APCOM review process; the rendering of
awards scored disproportionately higher or lower than that being experienced in
appeals in the ADR Process; or any other reason to be mutually agreed upon by
the Department, Lead Counsel and the Company. Notwithstanding the foregoing, in
the event that any of (i) the Regulatory Oversight Staff or the Department, (ii)
Lead Counsel, and (iii) the Company disagrees with the decision to terminate a
given APCOM member made by the concurrence of two of the above parties, that
party will have the right to seek judicial review. If an APCOM member resigns,
is terminated or is unable to continue serving on the APCOM, a new member shall
be selected by the same method used to select such members generally.

3. Operation of the APCOM. Each of the 50 APCOM members will be
assigned to a state. All expenses directly incurred in connection with the APCOM
will be paid by the Company. The procedural guidelines pertaining to the APCOM
(the "APCOM Procedures") shall be in such form satisfactory to the Regulatory
Oversight Staff, Lead Counsel and the Company. The assignment of individual
appeals to APCOM Reviewers (as described below) will be determined by the
Regulatory Oversight Staff.

B. COMMENCEMENT OF APCOM REVIEW.

1. Notification and Appointment of APCOM Reviewer. Promptly upon
receipt of the APCOM Review Demand (as described in Section III.C above), the
Claim Review Staff will send copies of the APCOM Review Demand and the File to
the APCOM. Upon receipt of its copy of the APCOM Review Demand, the APCOM will
assign the case to an APCOM member in accordance with the APCOM Procedures (the
"APCOM Reviewer"). Promptly after assigning a case to the APCOM Reviewer, the
APCOM will notify the Claimant and the Company as to the name, address and
telephone number of the APCOM Reviewer.

2. Representation of Claimant. Lead Counsel shall select one or more
qualified professionals familiar with the life insurance industry and/or
alternative dispute resolution procedures to serve as representatives on behalf
of the Claimants in the APCOM review process, at no cost to the Claimant (each
such professional, a "Representative"), subject to approval by the Regulatory
Oversight Staff. The Representative will (i) assist the Claimant in preparing
for the APCOM Review, and (ii) if requested by the Claimant, appear in person or
by telephone at the Hearing contemplated in Section V.C.2. below to represent
the Claimant. The amount to be paid for all such Representatives, at the
Company's expense, shall be as follows: (i) for each of the first 1,000 Claims,
an average of $500 per Claim (including any training or other activities related
to serving as a Representative); (i) for each of the Claims after the first
1,000 and up to and including Claim number


-19-

10,000, a fixed $250 amount; and (iii) for each of the Claims after Claim number
10,000, a fixed $200 amount, for all activities performed and expenses incurred
by the Representatives in connection with this Settlement and all other similar
settlements with other states or jurisdictions. In lieu of having a
Representative, the Claimant may, at his or her own expense, retain legal
counsel of his or her own choosing to appear with and/or represent him or her at
the Hearing (as described in Section V.C. below) in the APCOM Review.

3. Access to File. To assist in preparing for the APCOM Review, the
Claimant and the Representative will be provided copies of all of the materials
in the File used to evaluate the Claim.

4. Authority of the APCOM Reviewer. Subject to the terms of the
Settlement and the provisions of this Manual, the APCOM Reviewer will have the
following authority:

a. Upon consultation with the Claimant and the Company, the
APCOM Reviewer will select the time and place for the Hearing, and may
determine that the Hearing be conducted by telephone or by personal
attendance of the parties; provided, however, that if the Claimant
requests to appear in person at the Hearing (at the Claimant's own
expense) or that the Hearing be concluded by telephone, such request will
be accommodated.

b. The APCOM Reviewer will be the judge of the relevance and
materiality of the evidence contained in the File, and conformity to legal
rules of evidence will not be necessary; provided, however, that the APCOM
Reviewer will be required to follow and apply the standards, guidelines
and rules set forth in the ADR Guidelines and this Manual and does not
have authority, and is not empowered, to award or grant any relief to any
Claimant that is not specifically provided for and permitted by the ADR
Guidelines.

c. The APCOM Reviewer may maintain the privacy of the Hearing
by excluding from such Hearing any person not having a direct interest in
the outcome of the APCOM Review.

d. The APCOM Reviewer for good cause shown may postpone the
Hearing upon the request of a party or upon the APCOM Reviewer's own
initiative; provided, however, that no such postponement will ordinarily
exceed 10 days unless the parties agree to a longer postponement.

e. In deciding a Claim, the APCOM Reviewer may take into
consideration the failure or refusal of the Claimant, the Agent or Company
sales management to provide the Claim Evaluation Staff with information or
a statement


-20-

requested by the Claim Evaluation Staff as provided in Sections I.F.1.d.
and I.F.2.b., respectively, of the ADR Guidelines.

C. APCOM REVIEW PROCEDURES.

1. Mediation Prior to Hearing. Following assignment of a Claim to a
APCOM Reviewer, the APCOM Reviewer will meet or otherwise communicate with the
Claimant, the Representative (if any) and the Company to try to resolve the
differences between the parties. The only materials before the APCOM Reviewer at
this time will be those contained in the File. Additional materials will not be
accepted or considered.

2. Hearing. If the APCOM Reviewer determines that a Claim cannot be
resolved by mediation and agreement, the APCOM Reviewer will convene a hearing
(the "Hearing") to be held within 60 days after the receipt of the APCOM Review
Demand. Not later than 15 days before the Hearing, the Claimant must notify the
APCOM Reviewer if the Claimant intends to appear at the proceedings, wishes to
participate by telephone, or if his or her legal counsel or Representative will
be appearing on behalf of the Claimant or participating by telephone in the
proceedings (at the Claimant's expense). The same rules will apply to the
Company; provided, however, that the Company, by written notice to the APCOM
Reviewer, may appoint one or more designees who will represent the Company. Not
later than 15 days before the Hearing, a Claimant may submit a written statement
not exceeding five pages in support of the Claim. The Company may submit a
response not exceeding five pages no later than five days before the Hearing. No
further written statements will be accepted or considered unless requested by
the APCOM Reviewer. At the Hearing, oral presentations will be limited to 10
minutes for each party.

3. Scoring and Relief. In determining the Claim, and subject to the
provisions of Section V.B.4.c. above, the APCOM Reviewer will review and decide
the Claim de novo, re-scoring the Claim and deciding what relief or choice of
relief, if any, should be awarded in accordance with the scoring/relief system
established in the ADR Guidelines. The Claim may receive a score higher or lower
than that obtained upon evaluation by the Claim Evaluation Staff or Claim Review
Staff. The APCOM Reviewer does not have jurisdiction or authority to make
findings or award relief except as provided in the ADR Guidelines. Once the
APCOM Reviewer has assessed and scored the Claim in accordance with the ADR
Guidelines, the APCOM Reviewer may award only the relief prescribed for that
particular score in the ADR Guidelines. No other relief will be available;
provided, however, that the Claimant may choose a type of relief available to
any lower score with respect to that particular category.

4. Notification. The APCOM Reviewer will render his or her decision
within 30 days of the end of mediation and/or the Hearing (or the Rehearing, as
the case may be (as defined below)), unless cause for a longer time period is
shown to the APCOM and granted by it. Once the APCOM Reviewer has rendered a
decision, the APCOM


-21-

Reviewer will send written notice of the decision to the Claimant, the
Policyholder and the Representative, and to the Company. The APCOM Reviewer's
decision will be in writing, will set forth the bases for the decision in not
more than two pages, and will be signed by the APCOM Reviewer.

5. Rehearing Procedures. If within 30 days of the transmittal of the
notice of the APCOM Reviewer's decision with respect to the Claim, the APCOM
receives written notice that (i) the Claimant has asked the Claimant
Representative to determine whether the APCOM Reviewer's decision operates as a
manifest injustice on the Claimant and the Claimant Representative has
determined that the Claimant should be entitled to a Rehearing due to such
manifest injustice, or (ii) the Company believes that the relief awarded by the
APCOM Reviewer is not provided for in the ADR Guidelines, the APCOM will grant
the Claimant an opportunity to appear before another APCOM Reviewer, with the
assistance of another Representative, for the purpose of another hearing (a
"Rehearing"). Upon receipt of such request for a Rehearing, the APCOM will
convene a Rehearing to be held no more than 30 days later, unless the parties
agree to a longer time period. At the Rehearing, the Claimant and his or her
Representative or legal counsel and the Company will each have an opportunity
to make an oral presentation not to exceed 10 minutes. The record before the
APCOM Reviewer at the Rehearing will consist solely of those materials that
were before the APCOM Reviewer at the Hearing which preceded the original
decision.

6. Binding Nature of Decisions. The decision of the APCOM Reviewer
shall be final and conclusive. Neither party shall institute any action or
proceeding against the other in any court with respect to any claim,
controversy, or dispute which is or could be subject to the Settlement nor will
either party interpose any objection to the procedures set forth herein or
contest or otherwise seek directly or indirectly to challenge either the
application thereof to any such claim, controversy or dispute, or any decision
thereunder, in any court.


-22-

EXHIBIT D

GUIDELINES FOR PRUDENTIAL
BASIC CLAIM RELIEF

TABLE OF CONTENTS

Page
----

I. INTRODUCTION ...................................................... 1
A. Overview .................................................. 1
B. Definitions ............................................... 1

II. OPTIONAL PREMIUM LOAN ............................................. 3
A. Description ............................................... 3
B. Eligibility ............................................... 3

III. ENHANCED VALUE POLICIES ........................................... 5
A. Description ............................................... 5
B. Eligibility ............................................... 5
C. Obtaining Enhanced Value Policies ......................... 6

IV. ENHANCED VALUE ANNUITIES .......................................... 6
A. Description ............................................... 6
B. Eligibility ............................................... 7
C. Obtaining Enhanced Value Annuities ........................ 8

V. MUTUAL FUND ENHANCEMENT ........................................... 8
A. Description ............................................... 8
B. Eligibility ............................................... 9
C. Obtaining a Mutual Fund Enhancement ...................... 1O

GUIDELINES FOR PRUDENTIAL
BASIC CLAIM RELIEF

I. INTRODUCTION

A. OVERVIEW

Pursuant to the Stipulation of Settlement entered into between
Plaintiffs and the Defendants (the "Stipulation") and pursuant to the consent
orders and agreements, and all amendments thereto, issued by the State Insurance
Departments identified in Schedule 1 to the ADR Guidelines ("Consent Orders"),
the Company will make available to eligible Policyholders two alternative types
of relief. Policyholders may elect to automatically receive Basic Claim Relief,
as set forth in these Guidelines for Prudential Basic Claim Relief (these
"Guidelines"). Alternatively, Policyholders who do not wish to automatically
receive Basic Claim Relief may, in their discretion, elect the individual relief
that may be provided via the Alternative Dispute Resolution ("ADR") Process, as
more fully described in the Prudential Alternative Dispute Resolution Guidelines
(the "ADR Guidelines").

Basic Claim Relief may take the form of (i) an Optional Premium
Loan, (ii) an Enhanced Value Policy, (iii) an Enhanced Value Annuity and/or (iv)
a Mutual Fund Enhancement. The economic benefits made available through the
provision of Basic Claim Relief reflect the willingness and resolve to address
and overcome Policyholder difficulties associated with any increasing cost of
maintaining life insurance coverage and to provide enhanced benefits. In short,
this Basic Claim Relief is provided in order to mitigate the disappointments of
Policyholders with the performance of products which they previously purchased
from the Company.

B. DEFINITIONS

Capitalized terms used in these Guidelines and not otherwise defined
herein shall have the same meanings ascribed thereto in the ADR Guidelines. The
following capitalized terms shall have the following meanings:

1. "Access Period" means the period after the Final Settlement Date
through December 31, 2010, inclusive of those dates.

2. "Annual Premium Loan" means a loan in an amount less than or
equal to the Annual Policy Premium due on the next Policy anniversary, or
the last Policy anniversary if the Company receives the loan request
within 31 days after the last Policy anniversary, at the Loan-Interest
Rate at the applicable annual premium due date, subject to the terms and
conditions of these Guidelines. Annual Premium Loans can be used only to
pay all or part of one or more of the specified number of Annual Policy
Premiums that come due during the Access Period. (See definition of
Optional Premium Loan below.)

3. "Annual Policy Premium" means (i) for a traditional whole-life
Policy, the amount equal to the annualized base policy premium for a
Policy plus the premiums for all riders other than PUA Riders and any
other riders that do not have required premiums; and (ii) for a VAL/AL
Policy, the amount equal to the annualized initial scheduled premium plus
the premiums for all riders other than riders that do not have required
premiums.

4. "Eligibility Date" means the last day of the calendar quarter
next preceding the month in which the Notice Date occurred, but in any
event not less than 30 days before the Notice Date, as specified by the
Company.

5. "Enhanced Value Annuity" or "EVA" means those designated annuity
products within the Company's portfolio of annuity products available on
the date of the award as set forth on Schedule A hereto and as further
described in Section IV hereof; provided that such Schedule may be
modified and supplemented by notice to and approval by the Regulatory
Oversight Staff (as defined in the Manual of Procedures).

6. "Enhanced Value Policy" or "EVP" means those designated
whole-life insurance policies within the Company's portfolio of individual
permanent life insurance policies available on the date of the award as
set forth on Schedule A hereto and as further described in Section III
hereof; provided that such Schedule may be modified and supplemented by
notice to and approval by the Regulatory Oversight Staff.

7. "Loan-Interest Rate" means the interest rate for the Annual
Premium Loans. The Loan-Interest Rate will be a short-term, variable rate
set by the Company on a calendar quarterly basis from the Final
Settlement Date and will be equal to a rate representative of the
Company's unsecured short-term cost of borrowing.

8. "Mutual Fund Enhancement" means the financial contribution by the
Company with respect to the additional shares purchased in those mutual
funds set forth on Schedule B hereto and made available pursuant to the
terms and conditions set forth in Section V hereof; provided that such
Schedule may be modified and supplemented by notice to and approval by the
Regulatory Oversight Staff and Lead Counsel.

9. "Mutual Fund Shares" or "MFS" means those shares, available
pursuant to these Guidelines, in any of the mutual funds set forth on
Schedule B hereto.

10. "Notice Date" means the date when the Post-Settlement Notice is
first mailed to Policyholders.


2

11. "Optional Premium Loan" means all of the Annual Premium Loans
offered to Policyholders. A Policyholder's maximum Optional Premium Loan
for each Policy making the Policyholder eligible for such relief will be
the sum of the maximum Annual Premium Loans which the Policyholder is
permitted to request in accordance with the following:

Issue Year of Policy Number of Annual Premium Loans
-------------------- ------------------------------

1982 through 1984 2

1985 through 1988 6

1989 through 1991 5

1992 through 1995 2

12. "PUA Rider" means a Paid-Up Additional Insurance rider.

II. OPTIONAL PREMIUM LOAN

A. DESCRIPTION

The Company will offer an eligible Policyholder the right to obtain
an Optional Premium Loan at the Loan-Interest Rate during the Access Period,
subject to the conditions of eligibility set forth below. The purpose of an
Optional Premium Loan is to assist an eligible Policyholder in making additional
out-of-pocket premium payments.

B. ELIGIBILITY

A Policyholder will be eligible for one or more Annual Premium Loans
with respect to any Policy in force as of the Eligibility Date, provided that
(i) the Policyholder does not elect to participate in the ADR Process with
respect to that Policy, and (ii) the Policyholder satisfies the conditions
described in this subsection.

1. A Policyholder may receive an Annual Premium Loan only on a
Policy anniversary occurring during the Access Period. The maximum number
of Annual Premium Loans an eligible Policyholder may request is specified
in Section I.B.11. hereto, which prescribes the number of Annual Premium
Loans available to Policyholders. The Company reserves the right, upon
advance written notice to those persons affected, to reduce the numbers
set forth in Section I.B.11. for some or all issue years of Policies
solely to reflect any actual future increases in dividend scales. A
Policyholder may elect to take fewer than the maximum number or amount of
Annual Premium Loans specified in Section I.B.11.


3

2. The Policy to which the Annual Premium Loan is to be applied must
have, as of the Policy anniversary, on which the Annual Premium Loan is
made, a cash surrender value sufficient to secure the full amount of (i)
any Annual Premium Loans outstanding. (ii) the amount of the Annual
Premium Loan being requested, (iii) existing Policy loans and other
instruments outstanding, and (iv) one year's interest on the aggregate of
the respective obligations described in the foregoing clauses.

3. The Policy's cash value or death benefit may not be otherwise
pledged, assigned or encumbered, unless all parties to any such pledge,
assignment or encumbrance expressly agree in writing that their interests
in the Policy shall be subordinated, in all respects, to the Company's
interests.

4. Each Annual Premium Loan can be used only to pay all or a portion
of the Annual Policy Premium due under the Policy making the Policyholder
eligible for the Optional Premium Loan.

5. Any portion of Policy cash value pledged as security for an
Annual Premium Loan will be unavailable for future Policy loans.

6. Any eligible Policyholder who wishes to take an Optional Premium
Loan must enter into an agreement in which the Policyholder agrees to,
among other things:

a. not reduce the Policy's cash surrender value below the
full amount of all of the outstanding Annual Premium
Loan(s);

b. not withdraw any cash surrender values if the Policy's
cash surrender value (with respect to a traditional
whole-life Policy) or loan value (with respect to a
VAL/AL Policy) is insufficient to secure the amounts set
forth in Section II.B.2.;

c. use the Policy's dividends to purchase paid-up
additional insurance for the entire period in which any
Annual Premium Loans are outstanding;

d. grant the Company a perfected first-priority security
interest in the Policy to secure any outstanding Annual
Premium Loans, plus accrued interest, by means of a
collateral assignment of the cash surrender value and
the death benefit of the Policy; and

e. repay each Annual Premium Loan in five annual payments
commencing on the next Policy anniversary following the
date on which the Annual Premium Loan is made. Each
payment will consist of accrued interest due plus
one-fifth of the Annual Premium Loan. Policyholders must
agree that, unless such


4

payments are made, the Company will charge any amount
not paid when due as a regular Policy loan against the
Policy, at the rate of interest specified by the Policy.

7. Any outstanding Annual Premium Loans, including any accrued loan
interest, will be deducted from any cash surrender value or death benefit
payable on or after the date of any loan.

III. ENHANCED VALUE POLICIES

A. DESCRIPTION

The Company will offer eligible Policyholders the right to apply for
Enhanced Value Policies, subject to the conditions of eligibility set forth
below. An Enhanced Value Policy shall (i) have a face amount not exceeding the
face amount on the date of issue of the Policy making the Policyholder eligible
for relief nor less than $5,000 and in no event shall the Enhanced Value Policy
have a face amount in excess of $1,000,000 nor shall such face amount exceed the
Company's standard retention limit, (ii) have the same insured and
Policyholder(s) as the Policy with respect to which the election is made, (iii)
include payments by the Company into a paid-up additional insurance rider, to
purchase additional insurance coverage, of an amount equal to 50%, 25%, 25%, and
15% respectively, of the Enhanced Value Policy's first-year Annual Policy
Premium as of the date of issue after each of the first, third, fifth, and
seventh annual premiums, respectively, have been paid in such years, and (iv) be
subject to liberalized underwriting requirements.

B. ELIGIBILITY

A Policyholder is eligible for an Enhanced Value Policy only with
respect to each of the Policies described in this subsection, provided that the
Policyholder does not elect to participate in the ADR Process with respect to
such Policy.

1. A Policyholder who has an in-force Policy as of the Eligibility
Date will be eligible for an Enhanced Value Policy if, as of the
Eligibility Date, any outstanding policy loans for such Policy equal or
exceed both (a) three Annual Policy Premiums and (b) 75% of the Policy's
total cash surrender value and, provided that the Policyholder does not
elect to apply for an Enhanced Value Annuity or a Mutual Fund Enhancement
with respect to such Policy. In addition to an Enhanced Value Policy, a
Policyholder who meets the foregoing criteria may also request an Optional
Premium Loan as to such in-force traditional whole-life Policy, subject to
the conditions set forth in Section II.B. above.

2. A Policyholder whose Policy has terminated without payment of
death benefit or lapsed may elect to apply for an Enhanced Value Policy
provided that such


5

Policyholder does not elect to apply for an Enhanced Value Annuity or a
Mutual Fund Enhancement with respect to such Policy.

C. OBTAINING ENHANCED VALUE POLICIES

To obtain an Enhanced Value Policy:

I. the insured must be under (i) age 85 for Enhanced Value Policies
having a face amount of $25,000 or more, and (ii) age 85 for Enhanced
Value Policies having a face amount of less than $25,000, and provide
evidence of insurability satisfactory to the Company;

2. the Policyholder must pay the first Annual Policy Premium for the
Enhanced Value Policy in cash or, alternatively, the Policyholder may
select a semiannual, quarterly or monthly mode of payment, provided that
the Annual Policy Premium is paid during the first policy year. If a
Policyholder selects an alternate mode of premium payment, the
contribution of the Company to the policy will be equal to 50% of the
Annual Policy Premium and will be made once the premium paid by the
Policyholder first equals or exceeds the Annual Policy Premium, provided
that this amount is paid during the first policy year; and

3. a Policyholder must make the initial payment with money from a
source other than a surrender of, or a policy loan against, or withdrawal
of the values of, any existing life insurance or annuity product issued by
the Company. The owner and insured must be the same as the owner and
insured on the Policy for which the Policyholder is eligible to
participate in Basic Claim Relief under these Guidelines. No money from a
tax-qualified plan or product will be accepted as payment for an Enhanced
Value Policy and the Enhanced Value Policy will not be issued on a
tax-qualified basis. If a Policyholder obtains an Enhanced Value Policy
but surrenders or assigns the policy during the first year. his or her
policy will not be credited with an enhancement by the Company.

IV. ENHANCED VALUE ANNUITIES

A. DESCRIPTION

The Company will offer eligible Policyholders the right to obtain
Enhanced Value Annuities, subject to the conditions of eligibility set forth
below. Enhanced Value Annuities will be currently issued, designated,
non-qualified deferred annuities:


6

1. that have an initial premium equal to at least $1,000, but no
greater than the applicable maximum amount specified as follows:

POLICYHOLDERS' POLICY MAXIMUM POLICYHOLDER
FACE AMOUNT EVA PAYMENT
----------- -----------

Less than $100,000 $10,000
From $100,000 to $249,999 $20,000
From $250,000 to $999,999 $30,000
$1 million or over $50,000

For any Policy making the Policyholder eligible for the Enhanced
Value Annuity, the Policyholder may not pay an aggregate amount for any
Enhanced Value Annuity and/or Mutual Fund Enhancement in excess of the
applicable Maximum Policyholder EVA Payment set forth above.

2. for which the Company, as part of this agreement, credits a
payment at the end of the first, second, and third policy years equal to: