UNITED STATES DISTRICT COURT
                       FOR THE NORTHERN DISTRICT OF TEXAS
                                 DALLAS DIVISION
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In re GREAT SOUTHERN LIFE INSURANCE               MDL Docket No.  1214
COMPANY SALES PRACTICES LITIGATION
             (All Cases)
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                            STIPULATION OF SETTLEMENT


         IT IS HEREBY STIPULATED AND AGREED, by, between and among Irwin
Ginsberg, Harriet D. Mann, Yvonne H. Massey and Isaac Norman ("Plaintiffs"), in
their individual and representative capacities, and Great Southern Life
Insurance Company (the "Company"), through their duly authorized counsel, that
the lawsuit captioned In re Great Southern Life Insurance Company Sales
Practices Litigation, MDL Docket No. 1214 (the "Action"), and the matters raised
by the Action, are settled, compromised and dismissed on the merits and with
prejudice on the terms and conditions set forth in this Settlement Agreement and
the Release set forth herein, subject to the approval of the Court.

I.       INTRODUCTION

A.       Procedural History

1.  This   settlement   resolves  four  class  actions  that  are  part  of  the
multidistrict  litigation  captioned In re Great Southern Life Insurance Company
Litigation, MDL No. 1214. These four actions as originally filed are:

a. McGraw v. Great Southern Life Ins. Co., No. 19216,  filed on March 3, 1997 in
the District Court of Jaspar County,  Texas (subsequently  removed to the United
States District Court for the Eastern District of Texas);

b.  Mann v.  Great  Southern  Life Ins.  Co.,  No.  97-2301-CIV-T-17E,  filed on
September 22, 1997 in the United States  District Court for the Middle  District
of Florida, Tampa Division;

c.  Ginsberg v. Great  Southern  Life Ins.  Co., No.  97-4316-CA-27176-2SS-6725,
filed on February 25, 1997 in the Circuit Court of the 11th Judicial  Circuit in
and for Dade County, Florida (subsequently removed to the United States District
Court for the Southern District of Florida); and

d. Massey v. Great  Southern Life Ins. Co., No.  CV-97-1078,  filed on September
19,  1997 in the  Circuit  Court of  Tuscaloosa  County,  Alabama  (subsequently
removed  to the  United  States  District  Court for the  Northern  District  of
Alabama).

2. Having removed the state court actions to the federal courts in their
respective districts, the Company thereafter moved the Judicial Panel on
Multidistrict Litigation ("MDL Panel") for an order transferring the Ginsberg,
Massey, McGraw and Mann actions to the Northern District of Texas for
coordinated and consolidated pretrial proceedings pursuant to 28 U.S.C. ss.
1407. On May 5, 1998, the MDL Panel granted the Company's motion.

3. On August 10, 1998, Plaintiffs filed a Consolidated Class Action Complaint,
adding as a defendant the Company's parent corporation, Americo Life, Inc. This
complaint was then amended in March 1999, when Plaintiffs filed their
Consolidated First Amended Class Action Complaint.

4. In May 1999,  defendant  Americo  Life,  Inc.  moved to  dismiss  Plaintiffs'
claims. On September 15, 1999, the Court granted Americo's motion.

5. Briefing on class  certification  began in March 1999 with Plaintiffs' motion
for  class  certification,  and  continued  until  mid-July  with the  Company's
opposition,  Plaintiffs' reply, the Company's  surreply and finally  Plaintiffs'
reply to surreply.  On March 13, 2000, the Court granted  Plaintiffs' motion for
class certification.

6. The Company petitioned the United States Court of Appeals for the Fifth
Circuit for permission to appeal the class certification ruling pursuant to
Federal Rule of Civil Procedure 23(f). By joint motion of the parties, the
Company's petition was stayed pending settlement negotiations.

7. On September 29, 2000,  the Company's  petition for  permission to appeal was
disposed of pursuant to Fifth Circuit Rule 42.4, subject to either party's right
to reinstate the petition  without  prejudice within 180 days. On March 2, 2001,
the  Fifth  Circuit  granted  the  Company  an  additional  180 days in which to
reinstate its petition for permission to appeal.

B.       Plaintiffs' Allegations

1. The Consolidated Second Amended Class Action Complaint (the "Complaint")
asserts claims relating to the Company's life insurance sales, servicing and
administration practices. The Complaint alleges, among other things, that the
Company either knowingly or recklessly misrepresented to Plaintiffs and Class
Members (a) that a single pre-payment, or a limited number of premium payments,
would cover all out-of-pocket premiums due on the Company's Policies; (b) the
Company's anticipated variability of dividend scales, interest crediting rates
and expenses, and the resulting detrimental impact on cash values, death
benefits and/or other benefits under the Policies; (c) the ability to achieve a
competitive rate of return on premiums paid, in excess of guarantees specified
in the Policy form; (d) the financial harm of replacing their existing life
insurance policies with a Company Policy; and (e) the nature and use of the
Policy as an investment, retirement or savings vehicle. C. Discovery 1. Before
commencing this Action and during litigation and settlement negotiations,
Plaintiffs' counsel conducted an examination and evaluation of the relevant law
and facts to assess the merits of their claims and potential claims and to
determine how best to serve the interests of Plaintiffs and the Class.

2.  In  the  course  of  their  examination,  counsel  for  Plaintiffs  reviewed
approximately  280,000  pages  of  documents  produced  by the  Company  and its
actuaries,  conducted  the  deposition  of the Chief  Executive  Officer  of the
Company  pursuant  to a subpoena  of the  Company  under  Federal  Rule of Civil
Procedure 30(b)(6),  deposed other current Company officials,  interviewed other
current or former  Company  officials or  representatives  and  conducted  other
informal discovery of the Company,  its agents and its policyowners  relating to
the issues raised in the Action.

3. After commencement of this Action and during litigation and settlement
negotiations, counsel for the Company conducted a thorough examination and
evaluation of the relevant law, facts and allegations to assess the merits of
Plaintiffs' claims and potential claims and to determine the strength of the
Company's defenses and the extent, if any, of the Company's liability for the
relief sought in the Action.

D. Settlement Considerations

1. Based upon their discovery, investigation and evaluation of the facts and law
relating to the matters alleged in the pleadings,  and analysis of the financial
condition of the Company and its affiliated entities, Plaintiffs and counsel for
Plaintiffs  and the Class  have  agreed to settle  the  Action  pursuant  to the
provisions of this Settlement  Agreement after considering,  among other things,
(a) the  substantial  benefits  available to Plaintiffs  and the Class under the
terms of this Settlement  Agreement,  (b) the attendant risks and uncertainty of
litigation,  especially  in  complex  actions  such  as  this,  as  well  as the
difficulties and delays inherent in such litigation, and (c) the desirability of
consummating this Settlement  Agreement  promptly to provide effective relief to
Plaintiffs and the Class.

2. The proposed settlement has been reviewed by various consultants and experts
retained by Plaintiffs, and by Plaintiffs and their counsel, all of whom agree
that this Settlement Agreement is fair, reasonable and adequate because it
provides substantial benefits to the Class, is in the best interests of the
Class, and fairly resolves the claims alleged.

II.      DEFINITIONS

A. As used in this Settlement Agreement and the annexed exhibits (which are an
integral part of this Settlement Agreement and are incorporated in their
entirety by reference), the following terms have the following meanings, unless
a Section or Subsection of this Settlement Agreement or its exhibits expressly
provides otherwise:

1. "Accountant" means the independent public accountant of national stature,
selected by Lead Counsel upon consultation with the Company, who shall conduct
the review set forth in Exhibit O hereto to review whether the Company's
determination of the Earnings of Class Policies (including the correctness of
the calculated impact of any Reinsurance Treaties) and Profit Participation
during the Profit-Sharing Term is in accordance with this Settlement Agreement,
as set forth in Section IV.G.1.d below.

a. The Company shall pay the Accountant the fees and expenses  normally  charged
by  the  Accountant,  and  in no  event  more  than  (i)  rates  reasonably  and
customarily  charged within the accounting  profession for similar services;  or
(ii) a total of $50,000  for the  Accountant's  examination  for any year of the
Profit-Sharing Term, increased on a cumulative basis at 3% annually. The payment
of fees and  costs  will be made by the  Company  separate  and  apart  from the
Earnings of Class Policies and Profit Participation.

b. The Accountant shall provide to Lead Counsel and the Company annually a
report setting forth its conclusions based upon its conduct of the review set
forth in Exhibit O hereto, together with a copy of all supporting work papers.

c. The Company may request that Lead Counsel remove the Accountant for financial
defalcation or gross misconduct.  Such request shall not be unreasonably denied.
Lead Counsel may also remove the  Accountant  for any reason at any time. If the
Accountant is removed, Lead Counsel shall choose another Accountant.

2. "Account Value" means the account or accumulation value of a Policy, as those
terms are defined in the Policies.

3. "Action" means the lawsuit captioned In re Great Southern Life Insurance
Company Sales Practices Litigation, MDL Docket No. 1214.

4. "Actual Asset Base" means the Account  Value,  unreduced by the amount of any
outstanding loans or any applicable surrender charges and excepting dividends or
policy  credits  left on deposit,  of a Policy as of a date that (a) for Inforce
Policies,  is not  earlier  than 45 days  before  the  date  the  Claim  File is
furnished to the Claim Evaluator or (b) for Terminated Policies,  is the date of
termination.

5.  "Administrator"  means any  third-party  agents or  administrators  whom the
Company shall retain to help implement the terms of this Settlement Agreement.

6. "Aggregate CEP Relief" means the aggregate cost of all relief awarded by the
Claim Evaluator to Claims submitted to and accepted in the Claim Evaluation
Process, pursuant to the terms of the attached Exhibit A, not including (a) any
relief awarded for Part VIII Claims, (b) any reductions in the relief awarded to
Claims pursuant to Section IV.B.2.c below or (c) any relief provided to
Claimants whose Claims are "C" Claims, as that term is utilized in Exhibit A
hereto.

7. "Annual Statement" means, for any given calendar year, the Annual Statement
for that calendar year of the Condition and Affairs of the Great Southern Life
Insurance Company, made to the Insurance Department of the State of Texas.

8. "Attorneys' Fees and Expenses" means such funds as may be awarded to Lead
Counsel to compensate them (and any other attorneys for Plaintiffs or Class
Members who are currently counsel of record in this Action) for their fees and
expenses in connection with the Action, as provided for in Section IX below.

9. "CEP Account" means the individual account that shall be established for each
successful Claimant in the Claim Evaluation Process, in the dollar amount of the
CEP Award made to the  Claimant,  which amount shall be provided to the Claimant
in the manner set forth in Sections IV.B.3.c and IV.D below.

10. "CEP Administration" means, with respect to each Claim, those administrative
tasks to be completed by the Claim Evaluator  following  delivery by the Company
of the relevant  Claim File to Lead Counsel or its designee  (including  without
limitation  the  categorization,  designation,  and  awarding of relief for that
Claim,  and any preparations  therefor),  the costs of which will be paid by the
Company separate and apart from the Earnings of Class Policies.

11. "CEP Award" means the relief awarded to each successful Claimant in the
Claim Evaluation Process, as reduced, if necessary, by the operation of Section
IV.B.2.c below.

12. "Claim" means a claim or controversy that is timely
submitted by a Class Member or his or her representative to the Claim Evaluation
Process, not including Part VIII Claims, as set forth in Exhibit A hereto.

13. "Claim  Categorization" means the assignment of a Claim to one or more Claim
Categories, as defined in Exhibit A hereto.

14. "Claim  Category" means one of the categories of Claims defined in Exhibit A
hereto.

15. "Claim  Designation" means the designation of a Claim by the Claim Evaluator
as an "A" Claim,  a "B" Claim,  a "C" Claim or a "D" Claim pursuant to Exhibit A
hereto.

16. "Claim Evaluation Process" or "CEP" means the procedures for presentation,
evaluation and resolution of Claims, as described in Section IV.A below and in
Exhibit A hereto.

17. "Claim Evaluator" means a person chosen by Lead Counsel
who is responsible for Claim Categorization, Claim Designation, CEP
Administration and, where appropriate, awarding relief for Claims pursuant to
the terms of this Settlement Agreement.

a. The Claim Evaluator may retain as many assistants as are necessary to process
Claims in an efficient and timely  manner.

b. The Company may request  that Lead  Counsel  remove the Claim  Evaluator  for
financial   defalcation  or  gross   misconduct.   Such  request  shall  not  be
unreasonably  denied.  Lead Counsel may also remove the Claim  Evaluator for any
reason at any time. If the Claim Evaluator is removed, Lead Counsel shall choose
another Claim Evaluator.

18. "Claim File" means the file assembled for each Claim for use in the Claim
Evaluation Process. The Claim File shall include (a) the Claim Form and all
other materials submitted by the Claimant, (b) the Policy File, (c) any other
information provided by the Claim Evaluator and (d) any other information agreed
to by the Parties.

19. "Claim Form" means the document attached as an appendix to Exhibit J hereto.
Each Claim Form shall include a signed Claimant Declaration.

20. "Claimant"
means a Class Member, or the legal or authorized representative of a Class
Member, who submits a Claim to the Claim Evaluation Process with respect to a
particular Policy or Policies.

21. "Claimant  Declaration"  means the declaration,  signed by each Claimant and
duly  notarized,  that  appears  at the  conclusion  of  the  Claim  Form.  Each
declaration  shall state:  "I declare,  under  penalty of perjury,  that (a) the
foregoing is true and correct to the best of my knowledge and belief, (b) I have
submitted  copies of all documents in my possession  relating to the policy that
is the subject of my claim,  and (c) all such copies (if any) are  authentic and
unaltered copies of the original documents."

22. "Claimant Level Three Fund" means the portion of the Level Three Payment (if
any) in a given  calendar  year  during  the  Profit-Sharing  Term that shall be
provided in the  aggregate to all  Claimants  eligible to receive a share of the
Level Three Payment, as described in Section IV.B.5 below.

23.  "Claimant  Lump-Sum Fund" means the portion of the Company's  total payment
under the  Rapid-Pay  Option  that shall be  provided  in the  aggregate  to all
Claimants  eligible to receive a share of such total  payment,  as  described in
Sections IV.C.3 and IV.C.4 below.

24.  "Class" or "Class  Members"  means all persons or entities  who had, at any
time during the Class  Period,  an ownership  interest in one or more  Policies;
provided however,  that "Class" or "Class Members" does not include (unless such
persons or entities are Class Members by virtue of their  ownership  interest in
other Policies) (a) any person or entity who (i) while represented by counsel in
the  settlement  of an actual  or  threatened  lawsuit  signed a  document  that
releases the Company from any further claims concerning such Policy or Policies,
(ii) has or had ownership of a policy that is included in the class certified on
April 18,  2000 in  McCulley  v.  Great  Southern  Life Ins.  Co.,  et al.,  No.
3:98:CV-2466-G  (N.D. Tex., Dallas Div.); (iii) has or had ownership of a Policy
that is timely excluded from the Class, or (iv) has or had ownership of a Policy
that  terminated  prior to the  Execution  Date,  where a death benefit was paid
under the Policy due to the death of the insured,  or (b) any insurance  company
that  has or had  ownership  of a  Policy  pursuant  to an  absolute  assignment
effected as part of an exchange under section 1035 of the Internal Revenue Code.

25.  "Class  Notice"  means the notice of the terms of the  proposed  settlement
included in the Class Notice Package.

26. "Class Notice Package" means the notice package, as approved in form and
content by counsel to Plaintiffs and the Company and the Court, and attached as
Exhibit B, to be provided to Class Members pursuant to Section V.A of this
Settlement Agreement. The Class Notice Package will include (a) a cover letter
summarizing the Class Notice, (b) the Class Notice, (c) one or more Election
Forms, (d) the Question and Answer Brochure and/or other documents designed to
aid Class Members in understanding the proposed settlement, (e) one or more
Premium Certificates and (f) a Statement of Eligibility.

27. "Class Period" means the period from January 1, 1982 to December 31, 1999.

28. "Company" means Great Southern Life Insurance Company.

29. "Company Action Level Risk-Based Capital" shall have the same meaning
ascribed to it by the National Association of Insurance Commissioners as of the
time it is determined, shall be determined by reference to the Escrow Assets and
the Policies' liabilities, and, for the purpose of calculating any given
calendar year's Risk-Based Capital Charge, shall be determined as of the end of
that calendar year. 30. "Company Liaison" means a person appointed by the
Company to serve as a liaison between the Claim Evaluator and the Company, as
described in Section IV.A.3.c. The Company Liaison shall also monitor the
progress of the Claim Evaluation Process.

a. The Company Liaison shall not have current or prior responsibility for the
marketing or sale of the Company's products.

b. Lead Counsel may for any reason at any time  request that the Company  remove
the Company Liaison for gross misconduct. Such request shall not be unreasonably
denied.  The Company  may also remove the Company  Liaison for any reason at any
time.  If the Company  Liaison is  removed,  the Company  shall  choose  another
Company Liaison.

31. "Complaint" means the Consolidated Second Amended Class Action Complaint in
this Action, filed by Plaintiffs in conjunction with a motion for leave to amend
their complaint.

32.  "Cumulative  Premium"  means the total  premiums  paid on a Policy from the
Issue Date through the Eligibility Date.

33. "Death Benefit Option" means the option of Claimants with Inforce Policies
whose Claims are "A" Claims or "B" Claims (as those terms are defined in Exhibit
A hereto), and whose Policies' insureds are under the age of 65 as of the Final
Settlement Date, to elect to receive their Profit Participation and Rapid-Pay
Option benefits in the form of death benefits, as described in, and on the terms
and conditions provided in, Section IV.D.2 below.

34. "Defendant's Counsel" means the law firms of Debevoise & Plimpton and Locke
Liddell & Sapp LLP.

35. "Earnings of Class Policies" means the earnings attributable to the Policies
in  a  given  calendar  year  during  the  Profit-Sharing  Term,  calculated  in
accordance with Exhibit N hereto and the following:

a. Unless indicated otherwise,  and notwithstanding Section II.A.35.d below, all
of the line items in Exhibit N shall be calculated in accordance  with statutory
accounting  principles and in a manner consistent with the Summary of Operations
page of the Annual Statement, and shall be net of ceded reinsurance attributable
to any Reinsurance Treaties.

b. The Earnings of Class Policies shall be exclusive of charges for the payment
of punitive damages, litigation expenses, attorneys' fees, or any compensatory
or settlement relief provided, where any such payments are associated with
Policies excluded from the Class or any other policies; provided however, that
if the number of Policies for which timely requests for exclusion are submitted
exceeds 0.2% of the Policies in the Class, then a share of any such payments
shall be charged against the Earnings of Class Policies, in the proportion that
(i) the number of Policies timely excluded in excess of 0.2% of the number of
Class Policies bears to (ii) the total number of Policies timely excluded.

c. In no event shall any payments provided by the Company to resolve Part VIII
Claims under the attached Exhibit A be included as expense items in determining
the Earnings of Class Policies.

d. If a block of the Policies is sold or reinsured  via  assumption or indemnity
reinsurance, by stock purchase, or by other means, any statutory gain or surplus
realized as a result of such transaction  shall  specifically be included in the
Earnings  of Class  Policies,  regardless  of  whether  the  proceeds  from such
transaction are booked directly to surplus or through the Summary of Operations.

36.  "Election Form" means the form attached as an appendix to Exhibit B, one or
more copies of which will be included  in the Class  Notice  Package and used by
Class  Members in  electing  the Claim  Evaluation  Process  pursuant to Section
IV.A.2.a below.

37. "Eligibility Date" means a date, specified by the Company, that is not more
than 40 days before the date on which the Class Notice Package is first mailed
to Class Members.

38. "Escrow Assets" means a separate segmented portfolio of cash and bonds with:

a. A statutory  book value not less than (i) the Net Reserves on the Policies at
the end of each calendar quarter, plus (ii) the lesser of (a) actual capital and
surplus,  including the Asset Valuation  Reserve,  for the Company at the end of
the calendar quarter and

(b) 300% of Company Action Level Risk-Based Capital calculated at the end of the
calendar  quarter;  and b. An asset mix consisting of at least 40 percent "Level
1" or higher quality assets (but no more than 45 percent) with the balance being
"Level 2" assets,  as those terms are  defined by the  National  Association  of
Insurance Commissioners at the end of the given calendar year for which Earnings
of Class  Policies is being  calculated.  Further,  the Escrow  Assets will have
expected rates of return  consistent  with or better than the Company's  broader
investment  portfolios  for "Level 1" assets (for  "Level 1" Escrow  Assets) and
"Level 2" assets (for "Level 2" Escrow Assets).

c. The initial portfolio of Escrow Assets shall consist of assets having a
relationship of total market value to total book value consistent with that of
the Company's general portfolio of assets of similar quality. As additional
assets are introduced into the Escrow Assets portfolio after its initial
establishment, their market values shall not be less than their book values.

39. "Execution Date" means the first date on which the Settlement  Agreement has
been executed by all of the undersigned.

40. "Fairness Hearing" means the hearing at or after which the Court will make a
final decision whether to approve this Settlement Agreement as fair,  reasonable
and adequate.

41. "Final Judgment" means the judgment entered pursuant to the Order Approving
Settlement, as contemplated in Section XI of this Settlement Agreement, a copy
of the proposed form of which is attached as Exhibit H.

42. "Final Settlement Date" means the date on which the Final Judgment and Order
Approving Settlement become final. For purposes of this definition, the Final
Judgment and Order Approving Settlement shall become final:

a. if no appeal is taken therefrom, on the date on which the time to appeal
therefrom has expired;

b. if any appeal is taken therefrom, on the date on which all appeals therefrom,
including petitions for rehearing or reargument, petitions for rehearing en banc
and  petitions  for  certiorari  or any other form of review,  have been finally
disposed of in a manner  resulting in an  affirmance  of the Final  Judgment and
Order Approving Settlement; or

c. on a date after entry of the Final Judgment and Order  Approving  Settlement,
which date counsel for the Parties agree to in writing.

43. "Group Annuity" means the group annuity (which shall have no surrender
charge) to be issued by the Company, into which settlement benefits provided to
Class Members with Terminated Policies shall be contributed, as described in
Section IV.D.1.b below.

44. "Hearing Order" means the order to be entered by the Court concerning
notice, administration and the Fairness Hearing, as contemplated in Section X of
this Settlement Agreement, a copy of the proposed form of which is attached as
Exhibit G.

45. "Implementation Date" means the date on which the Company first mails the
Post-Settlement Mailing, which date shall be (a) selected by the Company, (b)
communicated in writing to Lead Counsel and (c) no more than 60 days after the
Final Settlement Date.

46. "Inforce" or "In Force," when used in connection with a Policy, means a
Policy that has not lapsed, been surrendered or otherwise terminated and has not
ceased to provide coverage due to the death of the insured, including any Policy
providing coverage under statutory nonforfeiture provisions.

47. "Investment Plan" means a pension or retirement plan,  investment or savings
account,   tuition-funding  or   mortgage-protection   plan  or  other  type  of
investment, savings or thrift vehicle.

48. "Issue Date" means, with respect to any life insurance  policy,  the nominal
date from which policy anniversaries are measured for purposes of determining or
assessing dividends,  Account Values, crediting rates or administrative or other
charges.

49. "Issue Date Policy Credits and/or Charges" means the schedules of
non-guaranteed interest crediting rates, mortality and expense credits, and/or
cost of insurance, administrative or other charges that were in effect at the
time the Policy was issued (the occasional appearance of the term "policy
credits and/or charges" without capitalization in the attached Exhibit A is
intentional).

50. "Lead  Counsel"  means the law firm of Milberg Weiss Bershad Hynes & Lerach,
LLP.

51. "Level One Payment" means the Profit Participation payment by the Company to
Claimants described in Section IV.B.3.b below.

52. "Level Two Payment" means the Profit Participation payment by the Company to
Claimants described in Section IV.B.3.c below.

53. "Level Three Payment" means the Profit Participation  payment by the Company
to  Claimants  (and,  potentially,   to  Non-Claimants)  described  in  Sections
IV.B.3.d, IV.B.4 and IV.B.5 below.

54. "Maintenance  Expenses" means the annual Policy maintenance expenses used to
calculate  the  Earnings  of Class  Policies  for a given  calendar  year in the
Profit-Sharing Term.

a. Maintenance expenses shall equal the sum of (i) an annual charge per Policy
that is In Force at the beginning of the applicable calendar year of the
Profit-Sharing Term, fixed initially for the calendar year 2000 and increased
thereafter on a cumulative basis by 3% annually, (ii) a fixed charge of 2.1% of
premium received by the Company under the Policies for premium tax and (iii) a
fixed charge of 1.5% of premium received by the Company under the Policies for
DAC taxes.

b. The initial fixed annual charge per Policy referred to in clause (i) of
Section II.A.54.a above shall be $47.61 for interest sensitive whole life
Policies, $8.79 for payroll-deduction universal life Policies and $73.26 for all
other universal life Policies; provided however, that if the Company is unable
to provide information reasonably demonstrating that any payroll deduction
universal life Policy was In Force at the beginning of a given year of the
Profit-Sharing Term, or to provide the information reasonably necessary to make
the determination pursuant to Section II.A.54.d below for such Policies, then
the fixed annual charge in that year for such Policy shall be zero.

c. Maintenance Expenses shall not include any expenses incurred by the Company
in connection with this Settlement Agreement.

d. The Accountant shall review
each year's calculation of Maintenance Expenses to determine whether the
Maintenance Expenses continue to reasonably reflect actual costs allocable to
the Policies. If the Accountant determines that the Maintenance Expenses exceed
actual costs allocable to the Policies, then Maintenance Expenses shall be
decreased so that they reasonably reflect actual costs allocable to the
Policies. Disagreements between the Company and the Accountant with respect to
allocable costs shall be resolved in accordance with Section IV.G.1.e below.

55. "Net Cash Flow" means the sum of all premiums paid for a Policy, less the
sum of (a) any dividends or policy credits that (i) are paid in cash, (ii) are
used to reduce premiums and/or (iii) are used to buy one-year term insurance;
and (b) any cash withdrawals (including surrender proceeds).

56. "Net Investment Income" shall be calculated as the sum of:

a. the  product  of (i) the Yield and (ii) the  Average  Escrow  Assets  for the
calendar year, plus

b. investment income on policy loans attributable to the Policies  calculated in
a manner consistent with Exhibit 2 of the Annual Statement, plus or minus

c.  realized  capital gains or losses on the Escrow  Assets  (excluding  capital
gains  or  losses  captured  in the  amortization  of the  Interest  Maintenance
Reserve, as set forth in the Company's Annual Statement), minus

d. investment expenses equal to 15 basis points on the Escrow Assets.

57. "Net Reserves"  means the sum of the following  amounts  attributable to the
Policies, calculated in a manner consistent with the Annual Statement:

a.       Aggregate reserves for life policies and contracts, plus
b.       Policy and contract claims, minus
c.       Policy loans.

58. "Non-Claimant" means a Class Member who does not submit a Claim to the Claim
Evaluation Process with respect to a particular Policy or Policies.

59. "Non-Claimant Level Three Fund" means the portion of the Level Three Payment
(if  any)  in  a  given  calendar  year  during  the  first  ten  years  of  the
Profit-Sharing   Term  that  shall  be   provided  in  the   aggregate   to  all
Non-Claimants, as described in Section IV.B.5 below.

60. "Non-Claimant Lump-Sum Fund" means the portion of the Company's total
payment under the Rapid-Pay Option that shall be provided in the aggregate to
all Non-Claimants, as described in Sections IV.C.3 and IV.C.5 below.

61. "Order Approving Settlement" means the order approving the settlement and
this Settlement Agreement, a copy of the proposed form of which is attached as
Exhibit I.

62. "Original Asset Base" means the Account Value of a Policy,
reduced by the amount of any outstanding loans but unreduced by the amount of
any applicable surrender charges, that, if Issue Date Policy Credits and Charges
had been applied to the Net Cash Flow, would have existed as of a date that (a)
for Inforce Policies, is not earlier than 45 days before the date the Claim File
is furnished to the Claim Evaluator or (b) for Terminated Policies, is the date
of termination.

63.  "Part VIII ADR  Process"  means the  process by which Part VIII  Claims are
resolved pursuant to Part VIII of the attached Exhibit A.

64. "Part VIII Claim" means any claim pursuant to Part VIII of Exhibit A hereto.

65.   "Parties"  or  "Party"  means   Plaintiffs   (in  their   individual   and
representative   capacities)   and/or  the  Company   collectively   and,  where
applicable, their respective counsel.

66. "Plaintiffs" means Irwin Ginsberg,  Harriet D. Mann, Yvonne H. Massey, Isaac
Norman and any other Class  Members  added to the  Complaint  or any  subsequent
pleading as named plaintiffs, in their individual and representative capacities.

67. "Plan Code" means the code on the Company's administrative systems for a
given Policy's plan of insurance.

68. "Policy" or "Policies" means any universal life insurance policies or excess
interest  whole  life  insurance  policies,  together  with any rider  issued in
conjunction therewith and/or endorsement attached thereto,  either (a) issued by
the Company in the United States  (including its territories and  commonwealths)
with an Issue  Date  during  the Class  Period or (b)  issued  by  another  life
insurance   company  in  the  United  States   (including  its  territories  and
commonwealths)  with an Issue Date  during  the Class  Period  and  acquired  or
assumed by the Company  pursuant to the Company's (i)  acquisition of such other
company  or (ii)  purchase,  through  reinsurance  or  otherwise,  of a block of
business from such other company;  provided however,  that any Terminated policy
shall be deemed a Policy only if it Terminated on or after January 1, 1993;  and
provided further,  that solely for purposes of determining the Earnings of Class
Policies,  insurance  policies  issued  pursuant  to the  terms  of the  Product
Substitution  Option  defined in Section  II.A.76  below,  as well as  insurance
policies timely  excluded from the Class pursuant to Section VI below,  shall be
deemed Policies.

69.  "Policy  Face  Amount"  means the face  amount of the base Policy as of the
Issue Date,  excluding the face amount of any riders sold at the time the Policy
was issued.

70. "Policy File" means a file of information that, to the extent available,
shall include (a) the policyowner's name, last-known mailing address and social
security number or tax identification number, (b) the Policy number, (c) the
Policy's plan code, (d) the Policy Face Amount, (e) the Policy's Actual Asset
Base, including the date used to determine the Policy's Actual Asset Base, (f)
the Policy's Target Premium, (g) the Policy's Issue Date, (h) the insured's
issue age and gender, (i) the Policy's termination date, (j) the Policy's
surrender charge and (k) any correspondence or other materials, or copies
thereof, related to the Policy and/or the policyowner and contained in the
Company's files on the Policy (which files the Company believes include the
information on the Policy and/or the policyowner relevant to the issues raised
in the Action).

71. "Postal Service" means the United States Postal Service.

72.  "Post-Settlement  Mailing"  means the  letter,  attached  as an appendix to
Exhibit J hereto,  that will  accompany  the mailing of Claim Forms to all Class
Members who have timely elected the Claim Evaluation Process.

73. "Preliminary Approval Hearing" means the hearing at or after which the Court
will make a decision  whether  notice of the Action and the proposed  Settlement
Agreement may be given to the Class Members.

74.  "Premium  Certificate"  means the  certificate to be provided to each Class
Member  that will allow the Class  Member or a third  party to receive a premium
discount  upon the  purchase of any policy or annuity from the Company set forth
in Exhibit P, as described and on the conditions stated in Section IV.H below.

75. "Producer" means any of the Company's current or former
producers, sales representatives, agents, general agents, branch managers,
brokers or solicitors, and any other person who engages or has engaged in the
sale or distribution of the Company's products.

 76. "Product Substitution
Option" means the option that, pursuant to Section IV.G.1.b(i) below, will be
provided to Class Members who own Inforce Policies issued on policy forms
identified in Exhibit M hereto, to terminate such Policies without a surrender
charge, subject to the following terms and conditions:

a. The Class  Member must  transfer  the entire  surrender  value  (without  any
deduction  for any  applicable  surrender  charges)  into a new  Company  policy
(written on policy form GA0119).

b. To elect the Product  Substitution  Option,  the Class Member must inform the
Company in writing of such election.

c. For issuance of the new policy's coverage up to and including the face amount
of the original Policy, no additional  underwriting shall apply. For issuance of
any  coverage  under the new policy in excess of the face amount of the Original
Policy,  standard  underwriting  requirements and procedures shall apply to such
excess coverage.

77. "Profit Participation" means, for any given calendar year during the
Profit-Sharing Term, fifty percent of the Earnings of Class Policies for that
calendar year, which amount shall be provided to successful Claimants in the
Claim Evaluation Process (and, as described in Section IV.B.4 below, potentially
to Non-Claimants) through a Level One Payment, a Level Two Payment and/or a
Level Three Payment, each as described in Section IV.B below; provided however,
that if the Aggregate CEP Relief exceeds $21 million, the percentage of Earnings
of Class Policies constituting Profit Participation shall be increased by one
percent (or a fraction thereof) for each $500,000 (or fraction thereof) in
excess, up to a maximum of 60 percent, until such time as all CEP Awards have
been fully paid, after which the percentage shall return to 50 percent.

78. "Profit  Participation  Commitment" means the greater of (a) $21 million and
(b) the Aggregate CEP Relief not to exceed $26 million, which greater amount the
Company  commits  to provide to Class  Members in Level Two  Payments  and Level
Three Payments (and, to the extent described in Section IV.B.2.b(i) below, Level
One Payments)  pursuant to this  Settlement  Agreement,  as described in Section
IV.B.2  below,  subject  to  the  limitations  contained  in the  definition  of
Profit-Sharing Term in Section II.A.79 below.

79.  "Profit-Sharing  Term" means the period from (a) the first  January 1 after
the Final Settlement Date through (b) the date that is the later of (i) the date
on which the sum of all Level Two Payments and Level Three Payments (and, to the
extent described in Section  IV.B.2.b(i)  below,  Level One Payments) equals the
Profit Participation  Commitment and (ii) 10 years from the first January 1 that
occurs  after  the  Final   Settlement   Date;   provided   however,   that  the
Profit-Sharing  Term shall  terminate if all Policies are  Terminated  or if the
Company exercises the Rapid-Pay Option pursuant to Section IV.C below.

80.  "Prospective  Commitments"  means the  commitments  made by the  Company in
Section  IV.G  below,  which  commitments  shall be  effective  from  the  Final
Settlement Date through the end of the Profit-Sharing Term.

81. "Publication  Notice" means the published notice of the proposed settlement,
which is described in Section V.B and attached as Exhibit C hereto.

82. "Question and Answer Brochure" means a brochure included in the Class Notice
Package that responds in  question-and-answer  format to  anticipated  questions
about the terms of the proposed settlement.

83.  "Rapid-Pay  Option" means the Company's option to extinguish its obligation
to provide any further benefits or commitments to the Class or its counsel (with
the single  exception  of the benefit of the Premium  Certificates  described in
Section IV.H below) by making a lump-sum  payment,  as described in Section IV.C
below.

84. "Reinsurance  Treaties" means any reinsurance treaty to which the Company is
or becomes a party.

85.  "Release"  means the release  and waiver set forth in Section  VIII of this
Settlement Agreement.

86.  "Released  Transactions"  means the marketing,  solicitation,  application,
underwriting,   pricing,  acceptance,  sale,  purchase,  operation,   retention,
administration,  servicing  or  replacement  (by  means  of  surrender,  partial
surrender, loans respecting,  withdrawal of value from and/or termination of any
life insurance policy) involving the Policies.


87. "Releasees" means the Company and each of its past, present and future
parents (including intermediate and ultimate parents), shareholders,
subsidiaries, affiliates, predecessors, successors and assigns, and each of
their respective past, present and future officers, directors, shareholders,
employees, general agents, agents, branch managers, producers, brokers,
solicitors, representatives, attorneys, heirs, administrators, executors,
insurers, predecessors, successors and assigns, or any of them, including any
person or entity acting on behalf or at the direction of any of them.

88.  "Risk-Based  Capital Charge" means,  for any given calendar year during the
Profit-Sharing  Term, an annual charge based on (a) the lesser of (i) the actual
capital and surplus,  including the Asset Valuation Reserve,  for the Company at
the end of the calendar  year and (ii) 300% of Company  Action Level  Risk-Based
Capital;  and (b) a cost of capital  equal to 11%, net after tax, of the capital
level set forth in clause (a) of this paragraph.

89.  "Settlement  Agreement" or "Agreement" means this Stipulation of Settlement
and the attached exhibits,  including any subsequent  amendments thereto and any
exhibits to such amendments.


90. "Simplified Underwriting" means the underwriting requirements set forth in
Exhibit F hereto.

91.  "Statement of Eligibility"  means the statement to be included in the Class
Notice Package that will provide the status of the Class  Member's  Policy as of
the Eligibility Date and, to the extent practicable,  information concerning the
specific forms of relief for which the Class Member is eligible.

92.  "Target  Premium" means the amount of premium paid on a Policy on the basis
of which a Producer  is  eligible  for a  first-year  commission  at the highest
first-year commission rate applicable to the Policy.

93. "Terminated," when used in connection with a Policy, means a Policy that has
lapsed,  been  surrendered,   matured  by  death  or  otherwise,   or  otherwise
terminated, and that has not been reinstated.

94.  "Vanishing  Premium" means (a) a concept under which an insurance  policy's
required premiums or charges may be paid out of its then-current and accumulated
values,  as those  premiums or charges  become due, (b) a concept  under which a
single out-of-pocket  premium payment or a fixed number of out-of-pocket premium
payments  - based  on  then-current,  non-guaranteed  assumptions  about  policy
credits  and policy  charges - may  suffice to cover all  required  premiums  or
policy  charges in excess of policy  credits  credited and may keep  coverage in
force throughout the insured's life, or for a specified period, without reducing
the policy's death benefits, or (c) use of this term in connection with the sale
of a Policy.

95. "Yield" means (a) gross investment income on the Escrow Assets calculated in
a manner  consistent  with  Exhibit 2 of the  Annual  Statement,  divided by (b)
one-half the sum of (i) the  beginning  of the year Escrow  Assets plus (ii) the
end of the year Escrow  Assets  minus (iii) the gross  investment  income on the
Escrow Assets for such year (with the amount  determined  pursuant to clause (b)
of this  paragraph  being defined  herein as the "Average  Escrow  Assets").  B.
Capitalized terms used in this Settlement  Agreement but not defined above shall
have the meaning ascribed to them in this Settlement  Agreement and the attached
exhibits.

III. SETTLEMENT AGREEMENT TERMS

A.  Pursuant  to this  Settlement  Agreement,  Class  Members  who do not timely
request exclusion from the Class under Section VI below will have an opportunity
to (i) submit a Claim to the Claim Evaluation Process (Section IV.A below), (ii)
potentially  receive a share of Profit  Participation  (Section  IV.B)  and/or a
Rapid-Pay Option payment  (Section IV.C),  (iii) submit a Part VIII Claim to the
Part VIII ADR Process  (Section  IV.F),  (iv) receive the benefit of one or more
Prospective  Commitments  (Section IV.G) and/or (iv) receive a premium  discount
upon the purchase of a new life insurance policy or annuity (Section IV.H). With
respect to each  Policy  making a Class  Member or Class  Members  eligible  for
benefits,  the Class Member or Class Members will receive the benefits for which
that Policy is eligible.

B. Notwithstanding any other provision of this Settlement Agreement,  where more
than one person has a current or prior  ownership  interest or right in a Policy
(co-owners),  any Class Member having an interest in such Policy who acts singly
may be considered  to be acting on behalf of all other Class  Members  having an
interest  in such  Policy in  exercising  any right and  receiving  any  benefit
created under this  Settlement  Agreement  (including  all  exhibits);  provided
however, that, if any one such person excludes himself or herself from the Class
with respect to a Policy,  all Class Members having a current or prior ownership
interest in that Policy  (co-owners)  will be deemed to be excluded with respect
to that Policy.

C. In the event that provision of a particular  form of relief  hereunder  could
cause adverse tax and/or other regulatory  consequences to a Class Member, or to
his or her Policy, the Company shall not be obligated to provide such relief but
may, as an alternative, make an economically comparable form of relief available
to the Class Member.

D. The Company  and Lead  Counsel  agree and warrant  that they will act in good
faith in overseeing and  implementing  this  Settlement  Agreement.  The Company
agrees  and  warrants  that it will not  utilize  any  accounting  or  actuarial
principles  that  are  extraordinary,  exceptional  or not  envisioned  by  this
Settlement Agreement to recapture from Class Members the costs of the settlement
or  otherwise  to deprive  Class  Members of the  benefits  provided for in this
Settlement Agreement.

 IV. SETTLEMENT RELIEF

A. Claim Evaluation Process

1. General Procedures

a. Each Class Member shall, with respect to each Policy he or she owns or owned,
be eligible to submit a Claim to the Claim Evaluation  Process.  Submission of a
Claim to the Claim Evaluation  Process with respect to a Policy shall invalidate
the Premium  Certificate  received by that Class Member for that Policy,  unless
validation  of  the  Premium  Certificate  is  awarded  pursuant  to  the  Claim
Evaluation Process (as described in the attached Exhibit A).

b. Claims  submitted  to the Claim  Evaluation  Process  shall be  evaluated  in
accordance with this Section IV.A and the attached Exhibit A. c. Relief shall be
awarded for all Claims submitted to the Claim  Evaluation  Process in accordance
with Exhibit A.

 2. Submission of a Claim

a. To submit a Claim to the Claim Evaluation  Process, a Class Member must first
select the Claim Evaluation  Process by completing the Election Form included in
the Class Notice  Package and returning it postmarked by the date stated on such
Election Form, which date shall be at least 35 days before the Fairness Hearing.

b.   Beginning  on  the   Implementation   Date,   the  Company   shall  mail  a
Post-Settlement  Mailing,  together  with a Claim Form, to each Class Member who
selected the Claim Evaluation Process in a timely returned Election Form.


(i) The Claim Form sent to each such Class Member shall advise the Class Member
that he or she shall have 60 days from the Company's mailing of the Claim Form
to submit a Claim by completing and returning the Claim Form. The Claim Form
shall also advise the Class Member that if he or she determines not to submit a
Claim Form within the 60-day time period, he or she will no longer be eligible
to have a Claim submitted to, and evaluated in, the Claim Evaluation Process,
but will still be eligible for the relief for which Non-Claimants are eligible
under this Settlement Agreement. Finally, the Claim Form shall advise the Class
Member that if he or she submits a Claim, has an Inforce Policy on which the
insured is under age 65, and wants to receive relief (if any) for the Claim in
the form of the Death Benefit Option rather than contributions to the Policy's
Account Value, then the Class Member must elect the Death Benefit Option in a
written communication to an address specified in the Claim Form within 90 days
of the Company's mailing of the Claim Form.

(ii) Each Claim submitted to the Claim  Evaluation  Process must include a Claim
Form legibly  completed  to the best of the  Claimant's  ability,  copies of all
documents  in the  Claimant's  possession  relating  to the  Policy  that is the
subject of the Claim and any  statements  or materials  the  Claimant  wishes to
submit.  Claimants  shall have the right to supplement  their Claim Forms at any
time before final resolution of their Claims.

(iii) Failure on the part of the Claimant, without reasonable justification,  to
provide  a  completed  Claim  Form  and  all  relevant  documents  in his or her
possession  may,  within  the  discretion  of the Claim  Evaluator,  result in a
default or adverse relief determination under the Claim Evaluation Process.

c. A Class Member who for good cause is unable to return on a timely basis an
Election Form or a Claim Form may present the reason for the delay to the
Company and request additional time to make the election or file the Claim Form.
As soon as is practicable following receipt of a Class Member's request for
extension of time to file an Election Form or a Claim Form, the Company shall
provide all relevant information regarding the request to Lead Counsel. If Lead
Counsel or its designee determines that an extension should be granted based on
hardship or other reason, the Company shall grant the request absent compelling
circumstances. If the Parties are unable to agree, they shall attempt to resolve
their differences in good faith.

d. Upon receipt of a Claim Form from a Class  Member,  the  Administrator  shall
provide  a copy  of it to the  Company.  Copies  of  Claim  Forms  will  be made
available to the Claim Evaluator by the  Administrator at the Claim  Evaluator's
request.

e. The  Company  shall use best  efforts to  assemble  and  provide to the Claim
Evaluator  a Claim  File  within  60 days - but in no event  more than 90 days -
following the Administrator's receipt of the Claim Form.

3. Claim Evaluation

a. Based solely upon his or her review of the Claim File, and in accordance with
Exhibit  A, the  Claim  Evaluator  shall  determine  (i) the Claim  Category  or
Categories  applicable to the Claim,  (ii) the Claim Designation or Designations
applicable to the Claim in each applicable  Claim Category and (iii) relief,  if
any,  for the Claim  that  takes  into  account,  among  things,  the nature and
strength  of  the  Claim  and  the  damages  incurred  because  of  the  alleged
misrepresentation(s) or other alleged wrongdoing.

(i) In no event shall duplicative relief for a single Claim be awarded.

(ii) The Claim  Evaluator  shall use his or her  reasonable  best efforts (a) to
complete  evaluation  of each Claim within 150 days of receipt of the Claim File
and (b) to complete the Claim  Evaluation  Process within 180 days of receipt of
the last Claim File.

b. Any decision by the Claim  Evaluator  shall be final and binding,  subject to
the arbitration provision in Part VIII.A.3 of Exhibit A hereto. The Company, the
Claimant,   Class  Members,   Plaintiffs'  Counsel,   Defendant's  Counsel,  the
successors or assigns of any of the  foregoing,  and any other party in interest
are prohibited  from seeking review or in any other way challenging in any forum
whatsoever,  including in a judicial proceeding or an arbitration, a decision or
award of relief pursuant to the foregoing provisions and the attached Exhibit A.


c. The Company shall designate a Company Liaison to serve at the Company's
expense to respond to requests by the Claim Evaluator for information and other
assistance reasonably necessary or appropriate to the evaluation, determination
and resolution of Claims submitted to the Claim Evaluation Process.

d.  Nothing  contained  in this  Settlement  Agreement  or in Exhibit A shall be
construed to require the Claim Evaluator to obtain any  information  that is not
contained  in the Policy  File or to  undertake  any  analysis  or  perform  any
services beyond those which the Claim Evaluator deems  necessary,  in his or her
discretion, to implement the provisions of this Settlement Agreement and Exhibit
A hereto.

e. The relief awarded by the Claim Evaluator for the Claim, reduced as necessary
pursuant to the terms of Section IV.B.2.c below,  shall constitute the CEP Award
for the Claim.

f. The form and content of the letter  notifying  Claimants of their CEP Awards,
if any, shall be as appears in Exhibit K.

g. Once all CEP Awards have been calculated  pursuant to this Section IV.A.3 and
Section  IV.B.2.c  below,  the  Company  shall  create  a CEP  Account  for each
successful Claimant in the dollar amount of the Claimant's CEP Award.

B. Profit Participation

1. Profit Participation Generally

a. The  Company  shall  provide  the Class with  Profit  Participation  for each
calendar year during the Profit-Sharing  Term. Profit Participation may take the
form of a Level One Payment,  a Level Two Payment  and/or a Level Three Payment,
as set forth in this Section IV.B.

b. For each calendar year of the  Profit-Sharing  Term,  each Level One Payment,
Level Two Payment and Level Three Payment of Profit  Participation shall be made
by the  Company on the first  business  day in April in the  following  calendar
year.

2. Profit Participation Commitment

a. Subject to Section IV.C below and the  definition of  Profit-Sharing  Term in
Section  II.A.79 above,  the Company commits to provide the amount of the Profit
Participation Commitment in Level Two Payments and Level Three Payments (and, to
the extent described in Section IV.B.2.b(i) below, Level One Payments) of Profit
Participation  to  Class  Members  pursuant  to the  terms  of  this  Settlement
Agreement.

b. If the Aggregate CEP Relief is less than $21 million,  then the Company shall
provide the excess of $21 million over the Aggregate CEP Relief to Class Members
in the following manner:

(i) First, by applying such excess to the payment of one-half of each
year's Level One Payment described in Section IV.B.3.b below, if any, to the
extent the excess of $21 million over the Aggregate CEP Relief is sufficient to
make such payment; and

(ii) Second,  if any excess  remains,  by applying the balance to the payment of
Level Three  Payments,  as  described  in Sections  IV.B.3.d,  IV.B.4 and IV.B.5
below.

c. If the Aggregate CEP Relief is greater than $26 million, then each Claimant's
CEP Award shall be reduced by the Claimant's  proportionate  share of the amount
by which the Aggregate CEP Relief  exceeds $26 million,  based on the proportion
that the Claimant's CEP Award (unreduced by this Section) bears to the Aggregate
CEP Relief awarded.

3. Profit Participation for Claimants

a. Subject to Section IV.C below, each Claimant whose Claim is Designated an "A"
Claim or a "B" Claim (as those  terms are  utilized  in Exhibit A hereto)  shall
receive the following relief:

b. Level One
Payment. For each calendar year occurring during the Profit-Sharing Term, each
Claimant shall be entitled to receive, in the manner specified in Section IV.D
below, 6% interest on the remaining value, if any, in his or her CEP Account at
the end of that calendar year. The aggregate of all such interest entitlements
for all Claimants in a given calendar year during the Profit-Sharing Term shall
be the Company's Level One Payment for that year.

(i) No interest  payment  provided to a Claimant  pursuant to this Section shall
operate to reduce the outstanding balance of the Claimant's CEP Account.

(ii) If, for any calendar year ending during the Profit-Sharing Term, the Profit
Participation  is insufficient  to provide the full Level One Payment,  then (a)
all  Claimants  shall be provided the same  percentage  of interest on their CEP
Accounts,  reduced as necessary so that the sum of all interest  credited equals
the Profit Participation available for payment in the current year; and (b) each
Claimant's portion of the amount of the Level One Payment that cannot be made in
the  current  year  shall  be  provided  to  the  Claimant  out  of  the  Profit
Participation  for the  following  year,  at the time for payment of such Profit
Participation  and in the  manner set forth in Section  IV.D  below,  before any
Level One  Payment,  Level Two  Payment or Level  Three  Payment is made for the
following year.

(iii)  The  Company  shall  make the  Level  One  Payment  for each  year of the
Profit-Sharing Term until each Claimant is provided the full value of his or her
CEP Award and all CEP Accounts have a zero balance, at which point the Company's
obligation to make any further Level One Payments shall be extinguished.

(iv) If as of the first business day in April  following the seventh year of the
Profit-Sharing  Term, any CEP Account has an outstanding balance and the Company
has paid the  claimants  50% or less of the sum of all CEP  Awards,  then Profit
Participation  shall be redefined in the eighth and each  subsequent year of the
Profit-Sharing Term (unless Section IV.B.3.b(v) below applies) as being equal to
the sum of:


1. seventy (70) percent of the Earnings of Class Policies; and

2. if the sum of all CEP Awards  exceeds $21 million,  an additional one percent
of the Earnings of Class  Policies for each $1 million or fraction  thereof that
the sum of all CEP Awards exceeds $21 million.

(v) If as of the first business day in April following the tenth year of the
Profit-Sharing Term, any CEP Account has an outstanding balance and the Company
has paid the claimants 70% or less of the sum of all CEP Awards, then Profit
Participation shall be redefined in the eleventh and each subsequent year of the
Profit-Sharing Term as being equal to eighty five (85) percent of the Earnings
of Class Policies.

(vi) If as of the first business day in April  following the twelfth year of the
Profit-Sharing  Term,  any CEP  Account  has an  outstanding  balance,  then the
parties  shall  make such  modifications  to this  Settlement  Agreement  as are
necessary to fulfill the intent of this Settlement Agreement.


c. Level Two Payment. After the Level One Payment is made for a given calendar
year during the Profit-Sharing Term, each Claimant who has not yet received the
full value of his or her CEP Award shall receive, in the manner set forth in
Section IV.D below, a proportionate share of the remaining Profit Participation
for that year, if any, which share shall reduce the outstanding value of the
Claimant's CEP Account. The aggregate of all reductions in Claimant CEP Accounts
for a given calendar year during the Profit-Sharing Term shall be the Company's
Level Two Payment for that year.

(i) Each Claimant's share of the Level Two Payment shall be based on the
proportion that the Claimant's relief calculated pursuant to Exhibit A hereto
(before any reduction pursuant to Section IV.B.2.c above) bears to the Aggregate
CEP Relief for all Claimants eligible to share in the Level Two Payment.

(ii) The  Company  shall  make  the  Level  Two  Payment  for  each  year of the
Profit-Sharing Term until each Claimant is provided the full value of his or her
CEP Award and all CEP Accounts have a zero balance, at which point the Company's
obligation to make any further Level Two Payments shall be extinguished.

d. Claimant's  Share of Any Level Three Payment.  If, prior to the expiration of
the Profit-Sharing  Term, each Claimant is provided the full value of his or her
CEP  Award and all CEP  Accounts  have a zero  balance  (and,  accordingly,  the
Company's  obligation  to make any  further  Level  One  Payments  or Level  Two
Payments has been extinguished), then each Claimant shall receive, in the manner
set forth in Section IV.D below,  his or her share of the remainder,  if any, of
the Profit  Participation  (which remainder shall constitute the Company's Level
Three  Payment)  for each  calendar  year  during the  Profit-Sharing  Term,  as
described in Section IV.B.5 below.

4.       Profit Participation for Non-Claimants

a. Subject to Section IV.C below, if, prior to the expiration of the
Profit-Sharing Term, each Claimant is provided the full value of his or her CEP
Award and all CEP Accounts have a zero balance (and, accordingly, the Company's
obligation to make any further Level One Payments or Level Two Payments has been
extinguished), then each Non-Claimant shall receive, in the manner set forth in
Section IV.D below, his or her share of the Level Three Payment each year until
the expiration of the tenth year of the Profit-Sharing Term, as described in
Section IV.B.5 below.

5.       Level Three Payments

a. The aggregate of all payments of Profit Participation (if any) to Claimants
and Non-Claimants in a given year during the Profit-Sharing Term after the
Company's obligation to make further Level One Payments and Level Two Payments
has been extinguished shall be the Company's Level Three Payment for that year.

b. In calendar years one through ten of the Profit-Sharing Term, the Level Three
Payment (if any) shall be divided into a Claimant Level Three Fund and a
Non-Claimant Level Three Fund, in the proportion that the total of all eligible
Claimants' Cumulative Premiums bears to the total of all Non-Claimants'
Cumulative Premiums.

c. In any calendar years of the Profit-Sharing Term after year ten, the entire
Level Three Payment (if any) shall be allocated to the Claimant Level Three
Fund, and Non-Claimants shall no longer be eligible for any portion of the Level
Three Payment.

d. Each Claimant shall be provided with his or her proportionate share of the
Claimant Level Three Fund, based on the proportion that the Claimant's relief
pursuant to the terms of Exhibit A hereto (unreduced by the proration of Section
IV.B.2.c) bears to the Aggregate CEP Relief for all Claimants eligible to share
in the Level Three Payment.

e. Each Non-Claimant shall be provided with his or her proportionate share of
the Non-Claimant Level Three Fund, based on the proportion that the
Non-Claimant's Cumulative Premium bears to the total of all Non-Claimants'
Cumulative Premiums.

6. Accelerated  Payment.  Notwithstanding  any provision of this Section IV.B to
the  contrary,  in  lieu of the  first  dollars  of  Profit  Participation  that
otherwise  would be payable to the Class,  the Company shall make an accelerated
payment to the Class on July 1, 2002.

a. The amount of such accelerated payment shall be the Company's good faith
estimate, at the time for such accelerated payment, of the Profit Participation
to become payable to the Class from the Earnings of Class Policies for the first
year of the Profit-Sharing Term.

b. If, by July 1, 2002, 45 days have not yet elapsed from the final
determination of the amount of the Aggregate CEP Relief, then the Company's
accelerated payment under this Section IV.B.6 shall be placed into an
interest-bearing escrow approved by the Company and Lead Counsel.

(i) Upon the date 45 days after the final determination of the amount of the
Aggregate CEP Relief, the full amount of the escrowed accelerated payment,
together with accumulated interest, shall be provided to the Class as set forth
in Section IV.B.6.c below. No interest accumulated in escrow on the accelerated
payment shall be credited toward the Company's satisfaction of the Profit
Participation Commitment.

(ii)  Alternatively,  if  after  July  1,  2002,  the  Settlement  Agreement  is
terminated by either party pursuant to Section XII.C,  XII.D or XII.E,  then the
full amount of the  escrowed  accelerated  payment,  together  with  accumulated
interest, shall be returned to the Company.


c. The accelerated payment shall take the form of Level Two Payments and/or
Level Three Payments, as set forth in this Section IV.B. d. Payments of Profit
Participation pursuant to Sections IV.B.1 through IV.B.5 shall commence only
after the full amount of the Company's accelerated payment under this Section
IV.B.6 has been recouped from Profit Participation that otherwise would have
been payable to the Class.

C.       Rapid-Pay Option

1. At any time during the Profit-Sharing Term, the Company may, at its option,
elect to extinguish (or, under the circumstances described in this Section
IV.C.1, Lead Counsel may, at its option, elect to require the Company to
extinguish) the Company's obligation to provide any further benefits or
commitments (with the single exception of the benefit of the Premium
Certificates described in Section IV.H below) to Class Members or their counsel
under this Settlement Agreement by making a lump-sum payment. Lead Counsel may
exercise its option under this Section IV.C.1 only in the event the Company is
sold to an unaffiliated third party.

2. The total lump-sum payment to the Class
shall equal: (a) either (i) if the Rapid-Pay Option is exercised in year one of
the Profit-Sharing Term, the amount of the Profit Sharing Commitment or (ii) if
the Rapid-Pay Option is exercised in years two through ten of the Profit-Sharing
Term, the current accumulated outstanding excess of the amount of the Profit
Sharing Commitment over the total of Level One Payments, Level Two Payments and
Level Three Payments previously credited to Class Members, where the
accumulation is calculated by adding to the accumulated outstanding excess 7%
interest on that outstanding excess, compounded annually; and (b) if the
Rapid-Pay Option is exercised in years one through ten of the Profit-Sharing
Term, the additional sum of $2 million; provided however, that if the Company
exercises the Rapid-Pay Option within 60 days of the final determination of all
CEP Awards, then it shall not be obligated to provide the additional $2 million
payment set forth in clause (b) above of this Section IV.C.2; and provided
however, that if at the time the Company exercises the Rapid-Pay Option, the
remaining aggregate of CEP Account balances exceeds the amount of the lump-sum
payment that otherwise would be made under the terms of this Section IV.C.2,
then the Company shall increase the amount of the lump-sum payment to the amount
equal to the remaining aggregate of the CEP Account balances.

3. The total lump-sum payment to the Class calculated pursuant to this Section
IV.C shall be allocated between a Claimant Lump-Sum Fund and a Non-Claimant
Lump-Sum Fund, as follows:

a. The lump-sum  payment shall be allocated first to the Claimant  Lump-Sum Fund
in the  amount,  if any,  equal to the  remaining  value of the total of all CEP
Accounts remaining to be paid to eligible Claimants.

b. The  remainder,  if any, of the  lump-sum  payment  shall be allocated to the
Claimant Lump-Sum Fund and the Non-Claimant Lump-Sum Fund in the proportion that
the total of all eligible  Claimants'  Cumulative Premiums bears to the total of
all Non-Claimants' Cumulative Premiums.

4. Each Claimant shall be provided with a proportionate share of the Claimant
Lump-Sum Fund, based on the proportion that the Claimant's relief pursuant to
the terms of Exhibit A hereto (unreduced by the proration of Section IV.B.2.c)
bears to the Aggregate CEP Relief for all Claimants eligible to share in the
Claimant Lump-Sum Fund.

5. Each Non-Claimant shall be provided with his or her proportionate share of
the Non-Claimant Lump-Sum Fund, based on the proportion that the Non-Claimant's
Cumulative Premium bears to the total of all Non-Claimants' Cumulative Premiums.


D. Manner of Payment of Profit Participation and Rapid-Pay Option Benefits

1.  Unless  Section   IV.D.2  or  Section  IV.D.3  below  applies,   all  Profit
Participation   benefits  and  Rapid-Pay  Option  benefits  set  forth  in  this
Settlement Agreement shall be provided to Class Members as follows:

a. With respect to any Policy that is In Force,  the Class Member's share of any
Level One  Payment,  Level Two Payment  and/or  Level Three  Payment,  or of the
Company's Rapid-Pay Option payment, shall be provided by making contributions to
the Account Value of the Class Member's Policy.

b.  With  respect  to  any  Policy  that  is  Terminated  -  including,  without
limitation,  any Policy that is  currently  Inforce and  Terminates  at any time
during  the  Profit-Sharing  Term - the  Class  Member's  share of any Level One
Payment,  Level Two Payment  and/or  Level Three  Payment,  or of the  Company's
Rapid-Pay Option payment,  made after the Policy is Terminated shall be provided
by making contributions to an account for the Class Member in the Group Annuity.

(i) Each Class Member may withdraw without surrender charge penalties the full
balance, and only the full balance, in his or her account in the Group Annuity
(a) during the 60-day period following the end of the third, sixth and tenth
years after the Company's first payment of Profit Participation to the Class;
(b) when the outstanding balance of the Class Member's CEP Account, if any, has
been reduced to zero; (c) at any time so long as the Class Member's balance in
the Group Annuity is at least $250; or (d) at any time after the expiration of
the Profit-Sharing Term. Interest shall be credited to the Group Annuity at a
rate no lower than 100 basis points less than the Yield.

(ii) The Company may at any time, and in its sole discretion, provide any Class
Member a payment of cash or its equivalent in the amount of his or her account
balance in the Group Annuity; his or her share of any Level One Payment, Level
Two Payment and/or Level Three Payment; or his or her share of the Company's
Rapid-Pay Option payment.

2. Claimants with Inforce Policies on which the insured is under the age of 65
as of the Final Settlement Date shall be eligible to elect the Death Benefit
Option.

a. The Death Benefit Option shall entitle the Claimant or Claimants
associated with a Policy (or, if all associated Claimants are deceased, the
Policy's beneficiary) to receive Profit Participation or Rapid-Pay Option
benefits for an "A" Claim or "B" Claim (as those terms are defined in Exhibit A
hereto) in the form of a benefit payable upon the death of the insured under the
Policy, in lieu of contributions to the Account Value of the Policy.


b. For those Claimants who elect the Death Benefit Option, each dollar of Profit
Participation or Rapid-Pay Option payment credited shall provide the Claimant or
Claimants with a death benefit amount that is a function of the age of the
insured under the Policy as of the Final Settlement Date, as follows:
<TABLE>

-----------------------------------   ----------------------------------
    Age of Insured under Policy              Death Benefit Amount
  as of the Final Settlement Date            Per Dollar Credited

-----------------------------------   -----------------------------------
-----------------------------------   ----------------------------------
               <S>                                 <C>
               00-34                               $11.89
-----------------------------------   ----------------------------------
-----------------------------------   ----------------------------------
               35-44                                $7.31
-----------------------------------   ----------------------------------
-----------------------------------   ----------------------------------
               45-54                                $4.53
-----------------------------------   ----------------------------------
-----------------------------------   ----------------------------------
               55-64                                $2.93
-----------------------------------   ----------------------------------
</TABLE>


c. The death benefit provided by the Death Benefit Option shall be payable to
the Claimant or Claimants associated with the Policy (or, if all associated
Claimants are deceased, the Policy's beneficiary) if the insured dies at any
time while the Policy is In Force.

d. In order for the Claimant or Claimants associated with a Policy (or, if all
associated Claimants are deceased, the Policy's beneficiary) to receive the
death benefit provided by the Death Benefit Option, the Policy must be In Force
at the time the insured under the Policy dies; provided however, that if a
Policy for which the Death Benefit Option has been elected terminates during the
Profit-Sharing Term (other than by reason of the death of the insured), and
additional Profit Participation becomes payable to the Claimant or Claimants
subsequent to the termination, said Profit Participation shall be provided in
the form of contributions to a balance for the Claimant or Claimants in the
Group Annuity, as described in Section IV.D.1.b above.

e. Claimants must elect the Death Benefit Option within 90 days of the Company's
mailing of the Claim Form by writing to the address specified in the Claim Form.

f. Unless Section IV.D.3 below applies, the death benefit protection provided by
the Death Benefit Option shall become effective on the date on which the Company
makes its payment of Profit Participation (pursuant to Section IV.B.1.b above)
or Rapid-Pay Option benefits (pursuant to Section IV.C above); provided however,
that if any necessary regulatory authorization for the Death Benefit Option has
not been obtained, the Death Benefit Option shall become effective upon receipt
of final regulatory authorization by the Company.

3. If the Company  exercises the Rapid-Pay Option pursuant to Section IV.C above
within 60 days of the final  determination of all CEP Awards, then the following
provisions shall apply:

a. The Company shall provide its total Rapid-Pay Option payment to Lead Counsel,
who shall place the total Rapid-Pay Option payment in an interest-bearing escrow
approved by the  Company  pending  the final  distribution  of CEP Awards to the
Class.

b. All interest earned on the amount in escrow pending distribution of said
amount to the Class shall increase the amount of the lump-sum payment provided
to the Class pursuant to Section IV.C above.

c. As soon as is  practicable  following  its  receipt of the  Rapid-Pay  Option
payment,  Lead Counsel  shall (i) provide  eligible  Class  Members who have not
elected  the Death  Benefit  Option  with their  share of the  Rapid-Pay  Option
payment  pursuant to Section  IV.C above,  in cash or its  equivalent;  and (ii)
return to the  Company  the  portion of its  Rapid-Pay  Option  payment  that is
attributable to eligible Claimants who have elected the Death Benefit Option, as
set forth in Section IV.D.2 above, upon the Company's receipt of which the Death
Benefit Options for said Claimants  shall become  effective;  provided  however,
that if any necessary regulatory  authorization for the Death Benefit Option has
not been obtained,  the Death Benefit Option shall become effective upon receipt
of final  regulatory  authorization  by the Company.  The Company  shall pay all
expenses associated with the allocations described in this Section IV.D.3.c.

E.       Payment of CEP Account Balance on Death

1. With respect to any Policy on which a death benefit becomes payable after a
CEP Account has been established for a Claim made on the basis of the Policy,
the Company shall make a payment of cash or its equivalent to the Claimant or
Claimants associated with the Policy (or, if all associated Claimants are
deceased, the Policy's beneficiary) in the full amount of the outstanding
balance (if any) of the Claimant's CEP Account at the time of the insured's
death.

2. The Company's payment under this Section IV.E shall reduce the Claimant's CEP
Account balance to zero and terminate the eligibility of the Claimant to receive
any further Profit Participation benefits (including any share of any Level
Three Payments, or any share of any Rapid-Pay Option payment by the Company)
under the terms of this Settlement Agreement.

F.       Part VIII Claims

1. As described in Part VIII of Exhibit A to this Settlement Agreement, Class
Members' Part VIII Claims shall be reviewed and awarded relief pursuant to the
provisions of Part VIII of the attached Exhibit A. G. Prospective Commitments 1.
From the Final Settlement Date through the end of the Profit-Sharing Term, the
Company shall abide by the following Prospective Commitments to all Class
Members, both Claimants and Non-Claimants:

a. With respect to Policies issued with the Plan Codes  identified in Exhibit L,
the Company will not  increase in the  aggregate  the cost of insurance  charges
expected  to be  charged in any given  year on all such  Policies  then In Force
above  those  that would  have been  charged  in that year on all such  Policies
pursuant to the schedules and formulas of cost of insurance charges in effect on
the  Execution  Date,  unless,  and only to the  extent,  any such  increase  is
consistent with an increase in the Company's expected  aggregate  mortality cost
(i.e.,  death  claims  net of  account  values  released  on  death) on all such
Policies in such year over the aggregate  mortality cost for that year using the
mortality  rate tables in effect on the Execution  Date.  Future  projections of
aggregate cost of insurance charges and aggregate mortality costs shall be based
upon the then  current net amounts at risk  (i.e.,  face  amounts net of account
values) and cost of insurance  charges.  The  projections  shall use assumptions
which,  aside from revised  mortality rates, are consistent with those in effect
on the Execution Date.

b. With respect to Policies issued with the Plan Codes identified in Exhibit M,
the Company may increase its cost of insurance charges on such Policies above
those that would be charged pursuant to the schedules and formulas of cost of
insurance charges in effect on the Execution Date, consistent with the written
terms of the Policy forms for such policies; provided however, that any revised
cost of insurance charge schedule or formula for any such Policy will not (i)
take effect prior to July 1, 2002 or (ii) increase the Policy's cost of
insurance charge expected to be charged in a given year above the Policy's
expected mortality cost (i.e., death claim net of account value released on
death) in that year.

(i) Class Members who own Inforce Policies issued with the Plan Codes identified
in Exhibit M shall be eligible for the Product Substitution Option defined in
Section II.A.76 above.

c. For  purposes of  calculating  the  Earnings  of Class  Policies in any given
calendar year during the  Profit-Sharing  Term, any changes in scales, in effect
on the Execution  Date, of cost of insurance  charges,  expense  charges  and/or
interest  crediting  rates on the Policies shall not operate in the aggregate to
decrease the Profit  Participation  that would have been  provided to the Class,
had such changes not been made.

d. The Company  commits that,  for each calendar year during the  Profit-Sharing
Term, and by the first business day in April  following the end of such year, it
shall cooperate with the Accountant to provide to Lead Counsel (and to the Court
upon its request) a written report from the Accountant, which report shall state
whether,  in the  opinion of the  Accountant,  and based  upon the  Accountant's
performance  of an  examination  set forth in Exhibit O hereto,  the Company has
determined the Earnings of Class Policies and Profit Participation for that year
in accordance with this Settlement  Agreement.  If the Accountant  expresses the
opinion that the Company has failed to determine the Earnings of Class  Policies
or Profit  Participation  in  accordance  with  this  Settlement  Agreement,  or
otherwise  qualifies  its  opinion,  the  Company  shall act to do so as soon as
practicable,  and shall  continue  to do so until the  Accountant  expresses  an
unqualified opinion that the Earnings of Class Policies and Profit Participation
have been so determined.  Lead Counsel shall secure an Accountant to conduct the
examination,  and render an examination  report,  as  contemplated  by Exhibit O
hereto.

e. In the event of a disagreement between the Accountant and the Company
as to whether the Company has calculated the Earnings of Class Policies or
Profit Participation for any calendar year in accordance with this Settlement
Agreement, the Company and Lead Counsel shall attempt in good faith to resolve
the disagreement. In the event the Company and Lead Counsel cannot resolve the
disagreement in good faith, the disagreement shall be resolved through
arbitration before a mutually agreeable arbitrator. The losing party shall
reimburse the prevailing party for its attorneys' fees and expenses incurred in
connection with any such arbitration.

H. Premium Certificates

1. Each Policy shall entitle its  associated  Class Member or Members (or, where
the Class  Member has died,  the Class  Member's  estate) to receive one Premium
Certificate, which shall be included in the Class Notice Package.


2. Each Premium Certificate shall be applicable toward the purchase of any one
of the policies or annuities listed in Exhibit P directly from the Company as
follows:

a. The Premium Certificate shall be applicable toward the purchase of
any policy or annuity listed in Exhibit P directly from the Company and
consistent with the terms and conditions of that policy or annuity form;
provided however, that if the Company believes it would be impracticable to
provide a Class Member (or any other holder of a Premium Certificate) with a new
policy or annuity on that form, then the Company may instead provide the Class
Member (or other holder) with an opportunity to purchase a comparable policy or
annuity.

(i) A Premium Certificate may be transferred to any person or entity; provided
however, that, subject to Section IV.H.2.b(i)(e) below, the Company reserves the
right to determine, based solely on its applicable standard underwriting
guidelines for the particular policy or annuity form, whether to issue a new
policy to any person or entity who seeks to use the transferred Premium
Certificate toward the purchase of a new policy or annuity.


b. Purchasers who elect to use the Premium Certificate toward the purchase of a
policy or annuity on any of the forms listed in Exhibit P shall receive a
contribution to the premiums or deposits of the policy or annuity respectively
on the following terms and conditions:

(i) If for a life insurance policy:

(1) The  contributions  shall be made to the  policy's  first  and  second  year
premiums.

(2) The amount of each contribution shall equal fifty percent (50%) of each such
premium, exclusive of any riders, provided that such contributions shall not in
the aggregate exceed 50% of two Target Premiums for the policy.

(3) The newly issued policy purchased with a Premium Certificate shall have a
minimum face amount of $100,000. (4) The newly issued policy purchased with a
Premium Certificate shall have a maximum face amount of (a) $1,000,000 if issued
to a Class Member or (b) $350,000 if issued to a non-Class Member. (5) If (a)
the proposed insured on the new policy is or was the insured under the Policy
making the Class Member eligible for relief and (b) the face amount of the new
policy does not exceed $350,000, issuance of the policy shall be subject to
Simplified Underwriting; in all other cases, issuance of the policy shall be
subject to standard underwriting.

(ii)     If for an annuity:

(1)  Contributions  in the amount of 7.5% of the premium  deposit in each of the
first two years shall be credited to the amount of the annuity.

(2) The newly issued annuity  purchased with a Premium  Certificate shall have a
minimum initial deposit of $10,000.

(3) The newly issued annuity  purchased with a Premium  Certificate shall have a
maximum initial deposit of $1,000,000.

3. Prominently displayed on the face of the Premium Certificate shall be a
toll-free number that the holder of a Premium Certificate may call during normal
business hours for instructions on application of the Premium Certificate toward
the purchase of a new policy or annuity directly from the Company without
involving a Producer; provided however, that any person who intends to apply a
Premium Certificate toward the purchase of a new policy or annuity and who, in
connection with such a purchase, seeks the advice or services of a Producer must
state an intention to use the Premium Certificate during his or her first
contact with the Producer.

4. The right of a holder to apply the Premium
Certificate toward the purchase of a policy or annuity shall expire three years
following the Final Settlement Date.


5. The Premium Certificate for any Policy for which a Claim is submitted to the
Claim Evaluation Process shall be rendered invalid by the submission of the
Claim and remain invalid, unless validation of the Premium Certificate is
awarded as part of the relief for the Claim in the Claim Evaluation Process, in
which case the expiration date set forth in Section IV.H.4 above shall apply.


V.  NOTICE  TO  CLASS  MEMBERS  AND   COMMUNICATIONS   WITH  CLASS  MEMBERS  AND
POLICYOWNERS

A. Class Notice Package

1. Subject to the requirements of the Hearing Order and no later than 90 days
before the Fairness Hearing, the Company shall send a Class Notice Package by
first-class mail, postage prepaid, to the last known address of each Class
Member listed on the Company's electronically retrievable records and, in cases
of pending litigation against the Company involving the matters Released
hereunder, also to any legal counsel known to represent the Class Member in such
litigation. The Company will pay for the costs associated with producing and
mailing the Class Notice Package.

2.       The Class Notice

a.       The Class Notice shall

(i) inform Class Members that, 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 relief under the proposed settlement;

(ii) contain a short,  plain  description of the  background of the Action,  the
Class certification and the proposed settlement;

(iii) describe the proposed relief outlined above in Section IV above, including
a description of the Claim Evaluation  Process and a general  description of the
relief available under Exhibit A hereto;

(iv) explain the procedures for participating in the Claim Evaluation Process;

(v) state that Class  Members  who do nothing in  response  to the Class  Notice
Package will still be entitled to the  Prospective  Commitments,  to receive the
benefits  of  the  Premium  Certificate,   and  potentially  to  receive  Profit
Participation and Rapid-Pay Option benefits;

(vi) explain that one co-owner may request exclusion on behalf of all co-owners;

(vii) explain the impact of the Settlement Agreement on any existing litigation,
claim, arbitration or other proceeding;

(viii) explain the disposition of unknown claims; and

(ix) state that any relief to Class  Members is  contingent on the Court's final
approval of the proposed settlement.

The Class Notice shall conform to all applicable requirements of the Federal
Rules of Civil Procedure, the United States Constitution (including the Due
Process Clause), the Rules of the Court and any other applicable law, and shall
otherwise be in the manner and form agreed upon by the Parties and approved by
the Court.

b. The Class Notice shall also inform Class Members:

(i) that they may  exclude  themselves  from the Class by  submitting  a written
exclusion request  postmarked no later than 35 days before,  and received by the
Clerk of the Court in care of the  Administrator  no later than 10 days  before,
the date of the Fairness Hearing;

(ii) that any Class Member who has not submitted a written request for exclusion
may,  if he or she  desires,  object to the  proposed  settlement  by filing and
serving a written  statement  of  objection  no later  than 35 days  before  the
Fairness Hearing;

(iii) that any Class Member who has timely filed and served  written  objections
to the proposed settlement may, if he or she so requests, enter an appearance at
the Fairness Hearing either personally or through counsel;

(iv) that any judgment entered with respect to the Settlement Agreement, whether
favorable or  unfavorable to the Class,  shall  include,  and be binding on, all
Class  Members  who have not been  excluded  from the  Class,  even if they have
objected to the proposed  Settlement  Agreement  and even if they have any other
claim, lawsuit or proceeding pending against the Company; and

(v)      of the terms of the Release.

3.       The Statement of Eligibility

a. Each Class Notice  Package shall include a Statement of  Eligibility  setting
forth, to the extent feasible:

(i) the Class Member's name and address;

(ii) the policy  number of each  Policy  making the Class  Member  eligible  for
relief;

(iii)  the  status  of each  Policy  as of the  Eligibility  Date,  as well as a
statement that such status is subject to change;

(iv) a  notation  as to the forms of relief  for which the Class  Member  may be
eligible; and

(v) the identity of any current and past co-owners of each Policy,  as reflected
in the Company's electronically  retrievable records, as well as the requirement
that co-owners act in concert in determining whether to elect relief.

4.       The Election Form

a. Each Class Notice  Package  shall include an Election Form for each Policy in
which the Class  Member has or had an ownership  interest.  Each  Election  Form
shall include, to the extent feasible:

(i) the Class Member's name and address;

(ii) the  policy  number of the  Policy  making the Class  Member  eligible  for
relief;

(iii) a  statement  that the Class  Member is  eligible to submit a Claim to the
Claim  Evaluation  Process if he or she believes that he or she has been wronged
in connection with his or her Policy;

(iv) the identity of any current and past co-owners of each Policy, as reflected
in the Company's electronically  retrievable records, as well as the requirement
that  co-owners  act in  concert  in  determining  whether  to elect  the  Claim
Evaluation Process;

(v) a statement  that any Class  Member who wishes to  participate  in the Claim
Evaluation  Process must return his or her Election Form  postmarked by the date
specified in the Election Form,  which date shall be at least 35 days before the
Fairness Hearing;

(vi) a statement  that if the Class  Member  wants to  participate  in the Claim
Evaluation  Process,  the Class Member will need to submit,  following the Final
Settlement Date, a Claim Form containing an executed  Claimant  Declaration,  as
well as all documents in his or her possession relating to the Claim;

(vii) a statement that submitting a Claim to the Claim  Evaluation  Process will
invalidate the Premium Certificate;

(viii) a general  description  of the relief  available in the Claim  Evaluation
Process and the standards  for awarding  such relief,  together with a statement
that  returning an Election Form and filing a Claim will not guarantee the Class
Member relief in the Claim Evaluation Process; and

(ix) a statement  that failure to submit a timely  Election Form shall  preclude
the Class Member from receiving any relief in the Claim Evaluation Process,  but
entitle the Class Member to be eligible  for the relief for which  Non-Claimants
are eligible.

B.       Publication Notice

1. No later than 80 days before the Fairness Hearing, the Company will publish
the Publication Notice, a copy of which is attached as Exhibit C, in USA Today,
in the Dallas Morning News, in the Houston Chronicle, in each of the newspapers
identified in Appendix 1 to Exhibit C, and on the Company's Internet Web site
and Lead Counsel's Internet Web site. The Company shall pay the costs associated
with the Publication Notice.

C. Remailing and Additional Notice

1. The Company shall at its cost (a) remail any Class Notice Package returned by
the Postal Service with a forwarding  address that is received by the Company or
the Administrator at least 40 days before the Fairness  Hearing,  (b) attempt to
find an address for any returned  Class  Notice  Package that does not include a
forwarding address, or retain an address research firm for this purpose, and (c)
if an address  research firm is retained,  provide a copy of any returned  Class
Notice  Package to the address  research firm as soon as  practicable  following
receipt.  In  addition,  the Hearing  Order shall  provide that (a) any retained
address  research  firm shall  provide to the  Company in  connection  with each
returned  Class Notice  Package,  as soon as is  practicable,  either an updated
address or a  statement  that,  following  due  research,  it has been unable to
obtain an updated  address,  and (b) the Company  shall  remail the Class Notice
Package to any Class  Member for whom the  address  research  firm  provides  an
updated  address,  so long as the updated  address is provided to the Company at
least 40 days before the Fairness Hearing.


D.       Post-Settlement Mailing

1.  On  the  Implementation   Date,  the  Company  shall  at  its  cost  send  a
Post-Settlement  Mailing  to  each  Class  Member  who  has  elected  the  Claim
Evaluation Process in a timely returned Election Form.

a. The  Post-Settlement  Mailing shall  instruct such Class Members that if they
wish to submit a Claim, they must complete the enclosed Claim Form and return it
postmarked  no later  than 60 days  after the date on which  the Claim  Form was
mailed to the Class Member.


b. The Post-Settlement  Mailing shall inform Class Members that, for each Claim,
the Class Member must submit (i) copies of all documents  related to the sale of
the Policy and all  documents  that he or she believes  support or relate to the
alleged  Claim,  (ii)  copies  of all  other  documents  in the  Class  Member's
possession relating to his or her Policy or Claim, (iii) the Claim Form and (iv)
any other affidavits or materials the Claimant wishes to submit.

c. The Post-Settlement  Mailing shall further inform Class Members that failure,
absent  justification,  to provide a completed,  signed and sworn Claim Form and
all relevant  documents may result in default or an adverse  result in the Claim
Evaluation Process.

d. In addition, the Post-Settlement Mailing shall inform Class Members that they
may choose not to submit a Claim Form and that, if they do not timely submit a
Claim Form, they will no longer be eligible for the Claim Evaluation Process,
but shall be eligible for the relief for which Non-Claimants are eligible under
this Settlement Agreement.

E. Retention of Administrator

1. The Company shall at its cost retain one or more Administrators of whom Lead
Counsel approves to help implement the terms of the proposed Settlement
Agreement.

a. The Administrator(s) may assist with various administrative tasks,
including, without limitation, (i) mailing or arranging for the mailing of the
Class Notice Package to Class Members, (ii) arranging for publication of the
Publication Notice, (iii) handling returned mail not delivered to Class Members,
(iv) attempting to obtain updated address information for any Class Notice
Packages returned without a forwarding address, (v) making any additional
mailings required under the terms of this Settlement Agreement, (vi) arranging
for and staffing a toll-free telephone number to assist the Parties in
responding to inquiries from Class Members and others, (vii) answering written
inquiries from Class Members and/or forwarding such inquiries to Lead Counsel or
its designee, (viii) receiving and maintaining on behalf of the Court any Class
Member correspondence regarding requests for exclusion, (ix) handling Election
Forms and Claim Forms returned by Class Members, (x) mailing or arranging for
the mailing of the Post-Settlement Mailing to Class Members who have timely
elected the Claim Evaluation Process; (xi) mailing or arranging for the mailing
of correspondence concerning the Claim Evaluation Process, including letters
addressing the results of the Claim Evaluation Process; (xii) mailing or
arranging for the mailing of letters or notices as necessary to further inform
Class Members about the Settlement, or to notify Class Members of corrections,
errors or miscalculations; and (xiii) otherwise assisting the Company with
administration of the Settlement Agreement. The Company will pay the reasonable
fees and expenses of the Administrator(s), as well as any other fees and
expenses incurred in performing all of the tasks described in this Section
V.E.1.a.

b. Lead Counsel and/or its designee shall be entitled to observe and monitor the
performance  of the  Administrator  to  assure  compliance  with the  Settlement
Agreement.

c. The contract  between the Company and the  Administrator  shall  obligate the
Administrator to abide by the following performance standards:

(i) The Administrator shall accurately and objectively describe, and shall train
and instruct its employees and agents accurately and objectively to describe,
the provisions of this Settlement Agreement in communications with Class
Members.

(ii) The Administrator shall provide prompt, accurate and objective responses to
inquiries from Lead Counsel or its designee, the Company and/or Defendant's
Counsel.

(iii) If, in the course of any communication with a Class Member, the
Class Member requests that the Administrator and/or its agent or employee refer
the communication to Plaintiffs' Counsel or the Company, then the Administrator
and/or its agent or employee shall promptly fulfill such request.

(iv) If, in
the course of any communication with a Class Member, an agent or employee of the
Administrator reasonably concludes that the Class Member is not satisfied with
the information and/or assistance provided, then the agent or employee shall
promptly refer the Class Member's communication to a supervisor on duty, a
representative of the Company, and Lead Counsel or its designee.


d. If the Administrator makes a material or fraudulent misrepresentation to, or
wrongfully conceals requested material information from, Lead Counsel or
Defendant's Counsel, then the Party to whom the misrepresentation is made (or,
in the case of a concealment, the requestor of the information) shall have the
right to demand that the Administrator immediately be replaced. If the
Administrator fails to perform adequately on behalf of the Company and the
Class, the Parties may agree to remove the Administrator.

F. Lead Counsel's Administrative Responsibilities

1. Lead Counsel shall be  responsible  for (a) retention of the Claim  Evaluator
and (b) upon  receipt of the Claim Files by the Claim  Evaluator,  ensuring  the
implementation and conduct of the CEP Administration by the Claim Evaluator. The
costs of the foregoing shall be paid to the Claim Evaluator by the Company.

2. If the Company  requests access to files and/or other  materials  utilized by
the Claim Evaluator in the Claim Evaluation  Process,  not including  privileged
files or work product, Lead Counsel shall consider the request in good faith. If
in connection with its dealings with regulators,  the Company requests any files
or  materials  gathered  by the Claim  Evaluator  in  connection  with the Claim
Evaluation Process, not including privileged files or work product, Lead Counsel
shall not unreasonably  withhold its consent to provide such files or materials;
provided however,  that any such request (a) shall be fulfilled at the Company's
expense and (b) shall not unduly  disrupt Lead Counsel's  administration  of the
Claim Evaluation Process.


3. The Parties agree that the Claim Evaluation Process shall be used as a forum
for the fair resolution of Claims and not the slander or defamation of the
character or reputation of the Company, its officials or representatives,
Plaintiffs' Counsel or the Parties.

4. As soon as is practicable after the Claim Evaluator has determined the relief
to be awarded under Exhibit A hereto for all Claims, Lead Counsel and/or the
Claim Evaluator shall provide the Company with information indicating the Claim
Categorization, Claim Designation and the amount of relief, if any, awarded to
each Claim by policy number.

G.       Communication with Class Members and Policyowners

1. The Company expressly reserves the right to communicate with and respond to
inquiries from policyowners and Class Members orally and/or in writing,
consistent with the provisions of the Settlement Agreement, and it may do so
through any appropriate Producers or agencies, as described in this Section V.G.

2. The Company shall establish a telephone bank with a toll-free telephone
number for responding to inquiries from Class Members and policyowners about the
proposed settlement and any issues related to the Action.

a. The Company will be responsible for (i) staffing the telephone bank with
telephone representatives, (ii) educating the telephone representatives about
the background of the Action, the product concepts relevant to the proposed
settlement, and the notice, terms and chronology of the proposed settlement,
(iii) training the telephone representatives to answer inquiries from Class
Members, Claimants and other policyowners, (iv) providing scripts and model
questions and answers for the telephone representatives to use in answering
inquiries from Class Members, Claimants and other policyowners, (v) training the
telephone representatives to refer Class Member inquiries to Lead Counsel or its
designee if the Class Member so requests or where otherwise appropriate,
including under the circumstances described in Section V.E.1.c(iii), (vi)
providing for a translation service for non-English speaking Class Members who
call the toll-free number, (vii) providing callers access to a terminal for the
hearing-impaired, and (viii) taking any other steps to promote accurate and
efficient communications with Class Members, Claimants and other policyowners.

b. Lead Counsel or its designees may monitor and participate in the education
and training process for telephone representatives.

(i) Lead Counsel or its designee may observe any communications between the
Company or its designee and the telephone representatives and supervisors of
telephone representatives, including any training and instruction. Lead Counsel
or its designee may participate in all training sessions, speak with telephone
representatives and supervisors, and provide additional comment and/or
instruction to telephone representatives and/or supervisors as they deem
necessary. The Company may observe any communications between Lead Counsel or
its designee and the telephone representatives and supervisors. Either Party may
request and obtain a pause in any training session or other communication with a
telephone representative or supervisor to confer regarding the content of the
communication or training. All training and other communications between the
Parties and telephone representatives and/or supervisors must be agreed upon by
the Parties.

(ii) The Company and Lead Counsel or its  designees  shall  consult and agree on
the  preparation  of  all  telephone   scripts  to  be  used  by  the  telephone
representatives,  and all training materials and presentations,  whether written
or oral, provided to telephone  representatives.  Lead Counsel shall be provided
with complete  drafts of all  telephone  scripts,  written  materials or written
presentation at least 14 days prior to their use in training. Lead Counsel shall
respond with any comments  within 7 days of the intended use of such  documents.
Any proposed  changes,  modifications  or additions to the telephone  scripts or
written  training  materials by either party must be provided to the other party
with  sufficient  time to permit  meaningful  comment  prior to use. The Parties
shall  negotiate in good faith  concerning  any such changes,  modifications  or
additions to facilitate providing clear,  understandable and reasonably complete
information to Class Members.

(iii) In addition, Lead Counsel may provide an on-site presence at the telephone
bank to monitor telephone  representatives' handling of Class Members' telephone
inquiries and also to speak directly with any Class Member who requests to speak
to Plaintiffs' Counsel.

(iv) If during monitoring of a telephone call to the toll-free number Lead
Counsel or its designee believes that an inaccurate statement has been made to a
Class Member, or that the information provided to the Class Member was confusing
or misleading, Lead Counsel or its designee may contact the Class Member to
address the inaccuracy.

3.  The  Company's   Producers  may  also  respond  to  inquiries  from,  and/or
communicate  with,  present or former  Company  policyowners  about the proposed
settlement only by referring Class Members to the toll-free  number  established
to respond  to such  inquiries.  The  Company  shall (a)  instruct  its  current
Producers  that they must refer Class Member  inquiries to the toll-free  number
established to respond to such inquiries and (b) instruct its current  Producers
that,  during the period from the Execution  Date through the  conclusion of the
Claim Evaluation Process, they may not receive original documents and/or records
from Class  Members  but that  copies of such  documents  and/or  records may be
received.  Lead Counsel may monitor this training by reviewing advance copies of
written  communications with current Producers about the proposed settlement and
by  observing  live,  taped  or  broadcast  presentations  or  special  training
programs, if any, on the proposed settlement.

4. During the period following the Execution Date and prior to the time by which
Class Members must elect the Claim Evaluation Process, the Company will continue
to process and respond to policyowner complaints,  notwithstanding the fact that
certain  complaints may originate with Class Members and may concern claims that
otherwise  could be  eligible  for relief  under the Claim  Evaluation  Process;
provided however, that, after the date on which the Class Notice is first mailed
to Class  Members,  any Company  offer of relief in  response  to a  policyowner
complaint  shall be  accompanied  by notice  of the  proposed  settlement  and a
statement, in the form of attached Exhibit D, explaining to the policyowner that
acceptance of the Company's  offer could affect the  policyowner's  rights under
the  proposed  settlement.  Any relief  received by a Class  Member prior to any
election of the Claim  Evaluation  Process (a) pursuant to any resolution of any
Class  Member  complaint  received  by  the  Company  or  (b)  pursuant  to  any
governmental,  administrative or regulatory proceeding may be offset against any
award of relief granted under the Claim Evaluation Process. Participation in any
governmental,  administrative  or  regulatory  enforcement  proceeding  will not
affect a person's eligibility to be a Class Member.


5. Mass and/or generalized communications with Class Members regarding the
proposed settlement, whether by Plaintiffs' Counsel, the Company or its current
Producers, and whether by mail, the establishment or encouragement of Internet
Web sites or other Internet communications, telephone scripts, or any other
means, shall be made jointly with, or with the approval of, the other Party.

H.       Media Communications

1. Lead Counsel and counsel for the Company agree to cooperate in good faith to
ensure that (a) any comments about or descriptions of the proposed settlement or
its value or cost in the media or in any other public forum are balanced, fair
and accurate and (b) any press releases are reviewed by Lead Counsel and
Defendant's Counsel before dissemination or publication.

2. On or after the Execution Date, Lead Counsel and the Company may, after
mutual consultation, make press communications announcing the proposed
settlement of this Action.

I. Dealings with Producers

1. The  Company is  committed  to  treating  its  Producers  fairly and will not
retaliate or otherwise take adverse  action against any Producer  solely because
of the Producer's  cooperation or participation in the Claim Evaluation  Process
or the  disposition  of  Claims  submitted  in  the  Claim  Evaluation  Process.
Plaintiffs recognize, however, that the Company has the right and the regulatory
obligation to train,  monitor,  supervise and, where  necessary,  discipline its
Producers  and to take any  remedial  or other  steps  it deems  appropriate  to
protect past, present and future  policyowners and the Company itself. In taking
such steps, the Company may take account of all relevant facts and circumstances
of an individual case,  including any facts and circumstances  discovered during
the Claim  Evaluation  Process.  This  Section  V.I does not  create  any rights
enforceable by Class Members or third parties,  including Producers,  under this
Agreement.

J. Lead Counsel's Communications with Producers

1. Where  necessary,  Lead Counsel may contact a Producer who is currently under
contract  with the Company and who sold or serviced a Policy that is the subject
of a Claim, and the Company shall cooperate in providing the Producer's  current
address and telephone number; provided however, that any contact by Lead Counsel
with any such Producer shall be made jointly with the Company.

2. Where necessary, Lead Counsel may contact a Producer who is no longer under
contract with the Company but who sold or serviced a Policy that is the subject
of a Claim. Where available, the Company will provide Lead Counsel with the
Producer's last known address and telephone number.


VI.      REQUESTS FOR EXCLUSION

A. Any potential Class Member who wishes to be excluded from the Class must mail
a written request for exclusion to the Clerk of the Court, care of the address
provided in the Class Notice, postmarked no later than 35 days before the
Fairness Hearing and received no later than 10 days prior to the Fairness
Hearing, or as the Court otherwise may direct, and identifying the Policy or
Policies that he or she wants to exclude. The written request for exclusion must
be signed by the Class Member or a representative who has, and upon request of
the parties presents, evidence of legal authority to sign on behalf of the Class
Member. A list reflecting all requests for exclusion shall be filed with the
Court by the Company at or before the Fairness Hearing.

B. Any  potential  Class Member who does not file a timely  written  request for
exclusion  with  respect to a Policy as provided in the  preceding  Section VI.A
shall be bound with respect to that Policy by all subsequent proceedings, orders
and judgments in this Action relating to the Settlement Agreement, even if he or
she has pending, or subsequently initiates, litigation, arbitration or any other
proceeding  against the Company  relating to that Policy and the claims released
in this Action.

VII.     OBJECTIONS TO THE SETTLEMENT

A. Any Class Member who has not filed a timely written request for exclusion for
all of his or her Policies and who wishes to object to the fairness,
reasonableness or adequacy of this Settlement Agreement or the proposed
settlement, or to the award of Attorneys' Fees and Expenses, must deliver to
Lead Counsel and Defendant's Counsel and file with the Court, no later than 35
days before the Fairness Hearing or as the Court otherwise may direct, a
statement of his or her objection, as well as the specific reason(s), if any,
for each objection, including any legal support the Class Member wishes to bring
to the Court's attention and any evidence the Class Member wishes to introduce
in support of the objection. Class Members may so object either on their own or
through an attorney hired at their own expense.


B. Class Members and their personal attorneys may obtain access at their own
expense to the documents disclosed through discovery to Plaintiffs' counsel by
the Company in this Action, and also to deposition transcripts and exhibits
thereto generated in this Action, but must first agree in writing to be bound by
the Stipulation and Order of Confidentiality entered in this Action and attached
as Exhibit E. These discovery documents shall be made available by appointment
during regular business hours at the offices of Lead Counsel at Milberg Weiss
Bershad Hynes & Lerach, LLP, 600 West Broadway, Suite 1800, San Diego,
California 92101. Lead Counsel shall inform Defendant's Counsel promptly of any
requests by Class Members or their attorneys or other persons or entities for
access to such documents.


C. If a Class Member 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 35
days before the Fairness Hearing, or as the Court otherwise may direct, and (ii)
deliver to Lead Counsel and Defendant's Counsel no later than 35 days before the
Fairness Hearing a copy of the same.

D. Any Class Member who files and serves a written objection, as described in
Section VII.A, may appear at the Fairness Hearing, either in person or through
personal counsel hired at the Class Member's expense, to object to the fairness,
reasonableness or adequacy of this Settlement Agreement or the proposed
settlement, or to the award of Attorneys' Fees and Expenses. Class Members or
their attorneys intending to make an appearance at the Fairness Hearing must
deliver to Lead Counsel and Defendant's Counsel and file with the Court no later
than 35 days before the Fairness Hearing, or as the Court otherwise may direct,
a notice of intention to appear.

E. Any Class Member who fails to comply with
the provisions of this Section VII 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 Settlement Agreement and by all proceedings, orders and
judgments in this Action.

VIII.    RELEASE AND WAIVER, AND ORDER OF DISMISSAL

A.       Release and Waiver

1.  Plaintiffs  and the Class agree to the following  release and waiver,  which
shall  take  effect  upon  entry  of the  Final  Judgment  and  Order  Approving
Settlement:
I.  Plaintiffs  and all Class  Members  hereby  expressly  agree that they shall
release  and  discharge  the  Releasees  from,  and shall  not now or  hereafter
institute,  participate in, maintain,  maintain a right to or assert against the
Releasees,  either directly or indirectly,  on their own behalf, or on behalf of
the Class or any other person or entity,  any and all causes of action,  claims,
damages, awards, equitable,  legal and administrative relief, interest,  demands
or rights, including, without limitation, claims for rescission,  restitution or
all damages of any kind, including those in excess of actual damages, claims for
mental  anguish,  and  claims  for  fraud,  misrepresentation,   breach  of  any
contractual  duty,  unfair  competition and unfair or deceptive trade practices,
whether based on federal,  state or local law, statute,  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 or any of them in this Action or in any other
court action or before any  administrative  body (including any brought by or on
behalf of any  state  attorney  general  or  Department  of  Insurance  or other
regulatory  entity  or state  prosecutorial  or other  organization),  tribunal,
arbitration  panel, or other  adjudicatory body on the basis of, connected with,
arising  out of, or related  to, in whole or in part,  the  Policies  and/or the
Released Transactions, including without limitation:

A.  any  or  all  of  the  acts,  omissions,  nondisclosures,   facts,  matters,
transactions, occurrences, or oral or written statements or representations that
have been,  could have been, may be or could be directly or indirectly  alleged,
asserted, described, set forth or referred to in the Action;

B.  any  or  all  of  the  acts,  omissions,  nondisclosures,   facts,  matters,
transactions,  occurrences,  or 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,
nondisclosures,  facts, matters,  transactions,  occurrences, or oral or written
statements or representations relating to:

1. the Vanishing Premium concept;


2. the number of out-of-pocket  payments that were paid or would need to be paid
for a life insurance policy, Policy or Policies;

3. the  ability to keep or not to keep a Policy or  Policies 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 the  Policies),  and/or the amount
that would be realized or paid under the Policies 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 the Policies),  whether in the form of (a) cash value and/or (b)
death,  retirement or periodic payment benefits and/or (c) Investment  Plan-type
benefits;

4. the  dividends,  interest  rate or other  policy  credits  credited  or to be
credited to premiums paid on a Policy or Policies, or to amounts within a Policy
or Policies,  and the  deductions or charges  (including  all cost of insurance,
expense and other  deductions or charges)  charged or to be charged  against the
Policy or Policies,  so long as any such  deductions  or charges are  consistent
with the terms of the Settlement Agreement;

5.   the   nature,   characteristics,   terms,   appropriateness,   suitability,
descriptions and operation of a Policy or Policies, including without limitation
(a)  the  amount  or  method  of  calculation  of  fees,  charges,  commissions,
distribution costs,  administrative expenses and/or taxes in connection with the
sale of, as part of the premiums  for, or in  connection  with a full or partial
surrender or termination  of, a Policy or (b) provision of coverage  pursuant to
any conditional or binding receipt;

6. the fact that a Policy or Policies  were or were not life  insurance  or that
Plaintiffs' or Class Members' objectives (and/or the purchaser's goals) would be
funded by the cash values and/or benefits derived from a life insurance  policy,
or that the product being sold was life insurance was minimized or disguised;

7.  whether a Policy or Policies  were,  would  operate or could  function as an
Investment Plan;

8. the relationship between a Policy's or Policies' cash surrender value and the
cumulative amount of premiums paid;

9. the fact that a part of the  premiums  paid would not be  credited  toward an
investment  or savings  account or the Policy's or Policies'  cash  accumulation
value,   but  would  be  used  to  offset  the  Company's   commission,   sales,
administration, tax and/or mortality expenses;

10. the fact that a loan or  withdrawal  of funds from a Policy  could result in
interest or other charges;

11. the rate of return on premiums paid in terms of cash value or cash surrender
value;

12. the relative suitability or appropriateness of a Policy or Policies;

13. 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 new Policy or Policies;

14. the  replacement or rollover of an existing life insurance  policy or Policy
with or into a new Policy or Policies;

15.  the  Company's  account  value,  policy  loan,  interest  and other  policy
crediting  and cost of insurance  and  administrative  policies  and  practices;
policy or premium charges and monthly deductions, including, without limitation,
any  elimination  of or past use by the  Company of the  so-called  "R  Factor";
illustrations of interest and other policy  crediting  rates,  interest or other
policy bonuses, account equity rates, account value calculations,  policy loans,
policy  charges,  premium  charges,  monthly  deductions,  cost of insurance and
administrative  charges,  cash values or death  benefits;  or any other  matters
relating to interest or other policy crediting  rates,  interest or other policy
bonuses, account equity rates, account value calculations,  policy loans, policy
charges,   premium  charges,   monthly  deductions  or  cost  of  insurance  and
administrative charges;

16. the so-called Deferred  Acquisition ("DAC") tax, including any reductions in
policy benefits or increases in policy costs  attributed to the costs of the DAC
tax;

17. the use of direct  recognition of policy loans in the  calculation of policy
benefits and/or costs;

18. the manner in which the Company  trained and supervised any of the Releasees
with  respect to the  Released  Transactions,  including  but not limited to the
Company's  general  agents,   agents,  branch  managers,   producers,   brokers,
solicitors and representatives, or any of them;

19.  disclosures in any local, state or federal regulatory filing by the Company
relating to the Released Transactions;

C. any or all acts, omissions,  nondisclosures,  facts,  matters,  transactions,
occurrences or oral or written  statements or representations in connection with
or directly or indirectly relating to the Settlement Agreement or the settlement
of the Action, and/or

D. any and all claims for attorneys' fees,  costs or  disbursements  incurred by
Lead Counsel or any other  counsel  representing  Plaintiffs or Class Members in
this Action,  or by Plaintiffs  or the Class  Members in this Action,  or any of
them, in connection with or related in any manner to the Action,  the settlement
of the  Action,  the  administration  of such  settlement  and/or  the  Released
Transactions  except  to  the  extent  otherwise  specified  in  the  Settlement
Agreement.

II.  Nothing  in this  Release  shall be deemed  to alter  (i) a Class  Member's
contractual  rights  (except  to the  extent  that such  rights  are  altered or
affected by the election and award of benefits under this Settlement  Agreement)
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 the Company or (ii) a
Class  Member's right to assert any claim that  independently  arises from acts,
facts or  circumstances  arising  after  the end of the Class  Period;  provided
however,  that this provision  shall not entitle a Class Member to assert claims
that  relate  to the  allegations  contained  in the  Action  or to the  matters
described in paragraphs I.A, I.B or I.C above.

III. The Company hereby expressly agrees that it shall release and discharge the
Plaintiffs and Plaintiffs' Counsel,  including Lead Counsel, from, and shall not
now or hereafter  institute,  participate in,  maintain,  maintain a right to or
assert against the Plaintiffs and Plaintiffs'  Counsel,  including Lead Counsel,
either  directly or  indirectly,  on its own  behalf,  or on behalf of any other
person  or  entity,  any and all  causes of  action,  claims,  damages,  awards,
equitable,  legal  and  administrative  relief,  interest,  demands  or  rights,
including, without limitation, claims for all damages of any kind, whether based
on federal, state or local law, statute, 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 the Company  against the  Plaintiffs
or Plaintiffs' Counsel, including Lead Counsel, or any of them in this Action or
in  any  other  court  action  or  before  any  administrative  body,  tribunal,
arbitration  panel, or other  adjudicatory body on the basis of, connected with,
arising out of, or related to, in whole or in part,  the  matters  described  in
paragraph I.C of this Release.

IV.  Plaintiffs,  the Class Members and the Company  expressly  acknowledge that
principles  of law  such as  Section  1542 of the  Civil  Code of the  State  of
California  provide  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.  To the extent  that,  as a result of or  notwithstanding  the
choice of law  provisions in the Settlement  Agreement,  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  which may be applicable  herein,
are hereby  knowingly and voluntarily  waived and relinquished by Plaintiffs and
the Class  Members,  and  Plaintiffs  and the  Class  Members  hereby  agree and
acknowledge that this is an essential term of this Release.

V. In  connection  with this  Release,  Plaintiffs,  the Class  Members  and the
Company  acknowledge that they are aware that they may hereafter discover claims
presently  unknown or  unsuspected,  or facts in addition to or  different  from
those  that they now know or  believe  to be true with  respect  to the  matters
released herein or with respect to their Policies for acts, facts, circumstances
or transactions occurring or arising during the Class Period.  Nevertheless,  it
is the intention of  Plaintiffs,  the Class Members and the Company in executing
this Release fully,  finally and forever to settle and release all such matters,
and all claims relating thereto, which exist, hereafter may exist, or might have
existed  (whether  or not  previously  or  currently  asserted  in any action or
proceeding)  with  respect  to their  Policies  as set  forth  in this  Release,
provided however, that nothing in this Release,  including paragraphs II and IV,
shall  prevent a Class Member who  discovers,  after the date by which  Election
Forms  must  be   postmarked,   facts  that  arise  out  of  or  relate  to  the
administration  or servicing of a Policy after its purchase  (not  including the
matters described in (i) paragraph I.B respecting  limited premium  payment-type
claims or economic  performance  claims,  or (ii)  paragraph I.C  respecting the
Settlement  Agreement) - and that could not have been known with the exercise of
reasonable care as of the date by which Election Forms must be postmarked - from
submitting a claim based on such facts to the Company for resolution  under Part
VIII of Exhibit A to the Settlement Agreement.

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

VII.  Plaintiffs  and the Class Members  hereby agree and  acknowledge  that the
provisions  of  this  Release  together  constitute  an  essential  term  of the
Settlement Agreement.

B.       Order of Dismissal

1. The Parties will seek and obtain from the Court a Final Judgment and Order
Approving Settlement (for which, as a condition of settlement, the time for
appeal has expired without any modifications in the Final Judgment or Order
Approving Settlement) as further described below in Section XI. The Final
Judgment and Order Approving Settlement shall, among other things, (a) approve
this Settlement Agreement as fair, reasonable and adequate, (b) dismiss the
Action with prejudice and on the merits, and (c) incorporate the terms of the
Release.
IX. ATTORNEYS' FEES AND EXPENSES.

A. Lead Counsel agrees to make, and the Company agrees not to oppose, an
application to the Court for the award of Attorneys' Fees and Expenses in the
Action not to exceed (i) a payment of actual expenses incurred up to and
including the date of the Fairness hearing, not to exceed $750,000; and (ii)
additional payments to Lead Counsel in amounts equal to 22.38% of each Profit
Participation or Rapid-Pay Option payment made to the Class. Subject to the
conditions in this Section, such fees and expenses shall be paid by the Company
on the following dates: (i) as to the payment of actual expenses incurred up to
and including the date of the Fairness Hearing (not to exceed $750,000), within
10 days after the entry of the Final Judgment and Order Approving Settlement;
and (ii) as to payments to Lead Counsel to be calculated based on Profit
Participation or Rapid-Pay Option payments to the Class, on the same date as
such payments. If the Final Judgment and/or Order Approving Settlement is
reversed, vacated, modified, and/or remanded for further proceedings or
otherwise disposed of in any manner other than one resulting in an affirmance of
the Final Judgment and Order Approving Settlement as to any matter other than a
reduction of the award of Attorneys' Fees and Expenses, and if the Company or
Lead Counsel properly and timely terminates the Settlement Agreement in
accordance with Section XII.C., XII.D or XII.E of this Settlement Agreement,
then Lead Counsel shall within 10 days return to the Company the amount of
Attorneys' Fees and Expenses paid by the Company. If the award of Attorneys'
Fees and Expenses is reduced after entry of the Final Judgment and Order
Approving Settlement, then Lead Counsel shall within 10 days return to the
Company the amount by which the Attorneys' Fees and Expenses have been reduced.
Any return of Attorneys' Fees and Expenses under this Section shall be increased
by interest accrued at the six-month T-Bill rate prevailing at the date of the
entry of the Final and Order Approving Settlement. Lead Counsel's obligation to
return any of the Attorneys' Fees and Expenses, as described above, shall be
evidenced by a promissory note, which note shall be executed by Melvyn I. Weiss,
Esq. on behalf of himself, the firm of Milberg Weiss Bershad Hynes & Lerach, LLP
and that firm's Executive Committee.

B. Lead Counsel, in its sole discretion,
shall allocate and distribute this award of Attorneys' Fees and Expenses among
counsel for the Class herein.

C. As set forth in this Settlement Agreement, the Company will bear
administrative expenses and costs reasonably incurred after the execution of
this Settlement Agreement, including the costs of publishing, printing and
mailing the Class Notice Packages; publishing the Publication Notice;
post-office rental box costs; any processing costs for requests for exclusion
and Election Forms; fees and disbursements to the Administrator and any other
third-party contractors or administrators; administration and relief costs of
Profit Participation, the Claim Evaluation Process, the Part VIII ADR Process,
the Premium Certificates and the Prospective Commitments; the cost of compiling
the Claim Files; the fees and expenses of the Claim Evaluator, Accountant and
arbitrators (including, where applicable, assistants); and Attorneys' Fees and
Expenses.

D.  Neither the Company nor their past,  present and future  parents  (including
intermediate  and ultimate  parents),  shareholders,  subsidiaries,  affiliates,
predecessors,  successors and assigns, nor any of their respective past, present
and future officers, directors, shareholders, employees, general agents, agents,
branch managers,  producers,  brokers, solicitors,  representatives,  attorneys,
heirs,  administrators,   executors,  insurers,  predecessors,   successors  and
assigns,  or any of them,  shall be  liable  for 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 this Action,  this
Settlement  Agreement,  or the  proposed  settlement,  other  than the amount or
amounts expressly provided for in this Settlement Agreement.

X.       ORDER OF NOTICE, FAIRNESS HEARING AND ADMINISTRATION

A. The Parties have negotiated, drafted and agreed to the form of the following
documents, copies of which are attached hereto and are incorporated herein by
this reference: the CEP Relief Guidelines (Exhibit A), the Class Notice Package
(Exhibit B), the Publication Notice (Exhibit C), the statement to accompany
offers of relief pursuant to Section V.G.4 above (Exhibit D), the Stipulation
and Order of Confidentiality (Exhibit E), the Simplified Underwriting guidelines
(Exhibit F), the proposed Hearing Order (Exhibit G), the proposed Final Judgment
(Exhibit H), the proposed Order Approving Settlement (Exhibit I), the
Post-Settlement Mailing and Claim Form (Exhibit J), the CEP Administrative Forms
(Exhibit K), the Plan Codes to which the Prospective Commitment set forth in
Section IV.G.1.a above shall apply (Exhibit L), the Plan Codes to which the
Prospective Commitment set forth in Section IV.G.1.b above shall apply (Exhibit
M), the Earnings of Class Policies schedule (Exhibit N), the Independent
Auditor's Procedures (Exhibit O) and the list of policies and annuities toward
which the Premium Certificates may be applied (Exhibit P). These documents shall
each be an integral part of this Settlement Agreement.

B. No later than April 11, 2001, the Parties will submit this Settlement
Agreement, including all attached exhibits, to the Court and seek and obtain
from the Court a proposed Hearing Order, unless otherwise agreed to by the
Parties:

1.  amending  the  pending  class  certification  in the Action to  provide  for
certification   of  the  Class  for  settlement   purposes  only,   which  class
certification  shall  be  vacated  in the  event  the  Settlement  Agreement  is
terminated by either party pursuant to Section XII.C, XII.D or XII.E, upon which
termination  the Court's March 13, 2000 order  certifying a class for litigation
purposes  shall be  automatically  re-entered  as of the date of re-entry by the
Court;

2. finding that the proposed  settlement is sufficient to warrant sending notice
to the Class;

3.  scheduling  the  Fairness  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;

4. approving the proposed Class Notice  Package,  Publication  Notice and notice
methodology described in this Settlement Agreement;

5. directing the Company or its designee(s) to cause the Class Notice Package to
be mailed to each Class Member (and, in cases of pending  litigation against the
Company,  also to any legal  counsel  known to  represent  the Class  Member) by
first-class  mail,  postage  prepaid,  to his  or her  last  known  address  (if
available from the Company's  electronically  retrievable records) no later than
90 days before the Fairness Hearing;

6. directing the Company or its designee(s) to publish the Publication Notice as
provided in this Settlement  Agreement no later than 80 days before the Fairness
Hearing;

7.  determining  that the Class Notice  Package,  together with the  Publication
Notice, (a) is the best practicable notice, (b) is reasonably calculated,  under
the circumstances, to apprise Class Members of the pendency of the Action and of
their right to object to or exclude themselves from the proposed settlement, (c)
is reasonable and constitutes due, adequate and sufficient notice to all persons
entitled to receive  notice,  and (d) meets all applicable  requirements  of the
Federal Rules of Civil Procedure,  the United States Constitution (including the
Due Process Clause), the Rules of the Court and any other applicable law;

8. ruling that the Company, or the Administrator(s),  shall (a) remail any Class
Notice Packages  returned by the Postal Service with  forwarding  addresses that
are received by the Company or the  Administrator(s) at least 40 days before the
Fairness  Hearing and (b) research any such returned Class Notice  Packages that
do not include a  forwarding  address,  or retain one or more  address  research
firms to conduct  such  research,  and (c) provide  copies of any such  returned
Class Notice  Packages  that do not include a forwarding  address to the address
research firm retained by the Company as soon as practicable  following receipt.
In addition,  the Hearing Order shall  provide that (a) in connection  with each
returned  Class Notice  Package  provided to it, the address  research firm will
return to the Company or the Administrator, as soon as is practicable, either an
updated  address or a statement  that,  following due research,  it has not been
able to update that  address,  and (b) the Company  will remail the Class Notice
Package to any Class  Member for whom the  address  research  firm  provides  an
updated  address,  so long as the updated  address is provided to the Company at
least 40 days before the Fairness Hearing;

9.  requiring  the  Company  to file proof of the  mailing  of the Class  Notice
Package and  publication  of the  Publication  Notice at or before the  Fairness
Hearing;

10.   authorizing  the  Company,   including  its  current  Producers  or  other
representatives and any other retained personnel,  to communicate with potential
Class Members,  Class Members and other present or former policyowners about the
Action and the terms of the proposed settlement, subject to the terms of Section
V.G, and to engage in any other  communications  within the normal course of the
Company's business;

11.  requiring  each Class Member who wishes to exclude  himself or herself from
the  Class to submit an  appropriate,  timely  written  request  for  exclusion,
postmarked  no later than 35 days  before,  and  received  no later than 10 days
before, the date of the Fairness Hearing, to the Clerk of the Court, care of the
address provided in the Class Notice;

12.  preliminarily  enjoining  all Class  Members  who have not timely  excluded
themselves from the Class as to a Policy from filing,  commencing,  prosecuting,
intervening in, participating in as class members or otherwise, or receiving any
benefits or other relief from, any other lawsuit, arbitration or administrative,
regulatory  or  other  proceeding  or  order  in any  jurisdiction,  based on or
relating  to the claims and  causes of  action,  or the facts and  circumstances
relating  thereto,  in this Action and/or the Released  Transactions  as to that
Policy;

13. preliminarily  enjoining all persons from filing,  commencing or prosecuting
any other  lawsuit as a class  action  (including  by seeking to amend a pending
complaint to include class  allegations or by seeking class  certification  in a
pending  action in any  jurisdiction)  on behalf of Class  Members  who have not
timely excluded  themselves from the Class, if such other lawsuit is based on or
relates  to the claims  and  causes of  action,  or the facts and  circumstances
relating thereto, in this Action and/or the Released Transactions;

14. ruling that any Class Member who does not submit a timely,  written  request
for  exclusion  from the  Class  will be bound by all  proceedings,  orders  and
judgments in this Action, even if such Class Member has previously  initiated or
subsequently  initiates  individual  litigation  against  the  Company  or other
proceedings encompassed by the Release and relating to a Policy or Policies;

15.  requiring  each  Class  Member  who  wishes  to  object  to  the  fairness,
reasonableness  or  adequacy  of  this  Settlement  Agreement  or  the  proposed
settlement,  or to the award of Attorneys' Fees and Expenses, to deliver to Lead
Counsel and  Defendant's  Counsel  and to file with the Court,  no later than 35
days before the Fairness Hearing, or at such other time as the Court may direct,
a statement of his or her objection,  as well as the specific  reasons,  if any,
for each objection, including any legal support the Class Member wishes to bring
to the Court's  attention  and any evidence the Class Member wishes to introduce
in  support  of his or her  objection,  or be  forever  barred  from  separately
objecting;

16. requiring any attorney hired by a Class Member at the Class Member's expense
for  the  purpose  of  objecting  to this  Settlement  Agreement,  the  proposed
settlement, or the award of Attorneys' Fees and Expenses, to file with the Clerk
of Court  and  deliver  to Lead  Counsel  and  Defendant's  Counsel  a notice of
appearance  no later than 35 days before the Fairness  Hearing,  or as the Court
otherwise may direct;

17. requiring any Class Member who files and serves a written  objection and who
intends  to make an  appearance  at the  Fairness  Hearing,  either in person or
through personal counsel hired at the Class Member's expense, to deliver to Lead
Counsel  and  Defendant's  Counsel and file with the Court no later than 35 days
before the Fairness  Hearing,  or as the Court otherwise may direct, a notice of
intention to appear;

18.  directing  the  Company  or its  designated  agents  to  rent  one or  more
post-office  boxes  in the  name of the  Clerk  of the  Court,  to be  used  for
receiving requests for exclusion and any other communications including Election
Forms, and providing that, other than the Court or the Clerk of Court,  only the
Company,  Lead  Counsel and their  designated  agents  shall have access to such
post-office boxes;

19. directing  Defendant's  Counsel and Lead Counsel,  and any other counsel for
Plaintiffs  or the Class,  promptly to furnish each other with copies of any and
all  objections  or written  requests for  exclusion  that might come into their
possession;

20. providing a means for those filing  objections to obtain access at their own
expense,  at Lead Counsel's  office,  to the documents  disclosed by the Company
through discovery to Plaintiffs'  counsel in this Action, and also to deposition
transcripts and exhibits thereto in this Action,  provided that such individuals
shall not be given  access to these  materials  unless and until they enter into
the Stipulation of Confidentiality, as described above in Section VII.B; and

21.  containing any additional  provisions  that might be necessary to implement
and  administer  the  terms  of  this  Settlement  Agreement  and  the  proposed
settlement.

C. Neither Irwin Ginsberg, Harriet D. Mann, Yvonne H. Massey, Isaac Norman nor
any other named Plaintiff will request exclusion from the Class, object to the
proposed settlement, or otherwise challenge the unconditional approval of the
proposed settlement.

XI. FINAL APPROVAL, AND FINAL JUDGMENT AND ORDER APPROVING SETTLEMENT

A. After the Fairness Hearing, and upon the Court's approval of this Settlement
Agreement, the Parties shall seek and obtain from the Court a Final Judgment and
Order Approving Settlement, which shall, among other things:

1. find that the Court has personal jurisdiction over all Class Members and that
the Court has subject matter jurisdiction to approve this Settlement Agreement
and all exhibits thereto;

2. approve  this  Settlement  Agreement  and the  proposed  settlement  as fair,
reasonable  and  adequate,  consistent  and in  compliance  with all  applicable
requirements  of the  Federal  Rules  of  Civil  Procedure,  the  United  States
Constitution  (including the Due Process Clause), the Rules of the Court and any
other  applicable  law, and in the best interests of each of the Parties and the
Class Members;  direct the Parties and their counsel to implement and consummate
this Settlement  Agreement  according to its terms and  provisions;  and declare
this  Settlement  Agreement  to be binding on - and, as to all claims and issues
that have or could have been raised in this  Action,  to have res  judicata  and
other preclusive  effect in all pending and future lawsuits or other proceedings
encompassed  by the Release  maintained by or on behalf of - Plaintiffs  and all
other Class  Members,  as well as their  heirs,  executors  and  administrators,
successors and assigns;

3. finally certify the Class for settlement purposes,  which class certification
shall be vacated in the event the Court's  approval of the Settlement  Agreement
is modified or vacated and this  Settlement  Agreement is  terminated  by either
party pursuant to Section XII.C,  XII.D or XII.E below,  upon which  termination
the Court's  March 13, 2000 order  certifying  a class for  litigation  purposes
shall be automatically re-entered as of the date of re-entry by the Court;

4. find that the Class Notice  Package,  the  Publication  Notice and the notice
methodology  implemented  pursuant to this Settlement  Agreement (a) constituted
the  best  practicable  notice,  (b)  constituted  notice  that  was  reasonably
calculated, under the circumstances, to apprise Class Members of the pendency of
the Action,  their right to object to or exclude  themselves  from the  proposed
settlement  and  their  right  to  appear  at the  Fairness  Hearing,  (c)  were
reasonable and constituted  due,  adequate and sufficient  notice to all persons
entitled to be provided with notice, and (d) met all applicable  requirements of
the Federal Rules of Civil Procedure,  the United States Constitution (including
the Due Process Clause), the Rules of the Court and any other applicable law;

5. find that Lead Counsel and the Class representatives  adequately  represented
the Class for purposes of entering into and implementing the settlement;

6.  confirm  that,  to the  extent  that a Premium  Certificate  or the right to
transfer it to another  person may be deemed to be a security,  registration  of
the  Premium  Certificate  or of such  transfer  right  would not be required by
virtue of the Court's  approval of the settlement,  pursuant to Section 3(a)(10)
of the Securities Act of 1933, as amended;

7.  dismiss  the  Action  (including  all  individual  claims  and Class  claims
presented  thereby) on the merits and with  prejudice,  without fees or costs to
any Party except as provided in this Settlement Agreement;

8.  incorporate  the Release set forth above in Section  VIII,  make the Release
effective as of the date of the Final Judgment and Order  Approving  Settlement,
and forever discharge the Releasees from any claims or liabilities  arising from
or related to the Released Transactions;

9.  permanently  bar and  enjoin  all  Class  Members  who have not been  timely
excluded  from the Class with  respect to a Policy from (a) filing,  commencing,
prosecuting,  intervening in,  participating in (as class members or otherwise),
or receiving any benefits or other relief from, any other lawsuit,  arbitration,
or  administrative,  regulatory or other proceeding or order in any jurisdiction
based on or  relating  to the  claims  and  causes of  action,  or the facts and
circumstances  relating thereto, in this Action and/or the Released Transactions
as to that Policy,  and (b)  organizing  such  nonexcluded  Class Members into a
separate class for purposes of pursuing as a purported  class action  (including
by seeking to amend a pending  complaint  to include  class  allegations,  or by
seeking  class  certification  in a  pending  action)  any  lawsuit  based on or
relating  to the claims and  causes of  action,  or the facts and  circumstances
relating  thereto,  in this Action and/or the Released  Transactions  as to that
Policy;

10. authorize the Parties,  without further approval from the Court, to agree to
and adopt such  amendments,  modifications  and  expansions  of this  Settlement
Agreement and all exhibits  attached to the Settlement  Agreement as (a) are not
materially  inconsistent with the Final Judgment and Order Approving  Settlement
and (b) do not limit the rights of Class Members under the Settlement Agreement;

11.  authorize  the  Company,  in  consultation  with Lead  Counsel  and without
approval from the Court, to implement the settlement before the Final Settlement
Date, in which case all  provisions in this  Settlement  Agreement  that specify
actions to be taken on or after the Final  Settlement  Date shall, to the extent
necessary,  be deemed to provide that those  actions  shall be taken on or after
the date on which the Company elects to implement the Settlement Agreement;

12.  require  that,  in the event that the Company  determines  to implement the
settlement  before the Final Settlement Date,  anyone seeking to appeal from the
Court's  rulings must first (a) request to intervene  upon a  representation  of
inadequacy of counsel,  (b) request a stay of  implementation  of the settlement
and (c) post an appropriate  bond,  and,  absent  satisfaction  of each of these
three requirements,  authorize the Company to proceed with implementation of the
settlement, even if such implementation would moot the appeal;

13.  authorize  Lead  Counsel  to  select  the  Claim  Evaluator,  who  shall be
authorized (a) to conduct the CEP Administration in accordance with the terms of
the Agreement and (b) to retain one or more administrators, in consultation with
the Company, to help conduct the CEP Administration;

14.  without  affecting the finality of the Final  Judgment and Order  Approving
Settlement  for  purposes  of  appeal,  retain  jurisdiction  as to all  matters
relating to the administration,  consummation, enforcement and interpretation of
this Settlement Agreement and the Final Judgment and Order Approving Settlement,
and for any other  necessary  purpose;  provided  however,  that nothing in this
Section shall restrict the ability of the Parties to exercise their rights under
Sections XI.A.10, XI.A.11 and XI.A.13 above; and

15. incorporate any other provisions that the Court deems necessary and just.

XII. MODIFICATION OR TERMINATION OF THIS AGREEMENT

A. The  terms  and  provisions  of this  Settlement  Agreement  may be  amended,
modified  or  expanded by  agreement  of the Parties and  approval of the Court;
provided  however,  that after entry of the Final  Judgment and Order  Approving
Settlement the Parties may by agreement effect such amendments, modifications or
expansions  of  this  Settlement   Agreement  and  its  implementing   documents
(including  all  exhibits  to the  Settlement  Agreement)  without  notice to or
approval by the Court if such changes are not materially  inconsistent  with the
Court's  Final  Judgment  and Order  Approving  Settlement  and do not limit the
rights of Class Members under the Settlement Agreement.

B. The Company, in consultation with Lead
Counsel and without approval of the Court, may implement the terms of the
settlement after entry of the Final Judgment and Order Approving Settlement but
before the Final Settlement Date, in which case all provisions in this
Settlement Agreement that specify actions to be taken on or after the Final
Settlement Date shall, to the extent necessary, be deemed to provide that those
actions shall be taken on or after the date on which the Company elects to
implement the Settlement Agreement.

C. This Settlement Agreement will terminate at the sole option and discretion of
the Company or Plaintiffs if (i) the Court, or any appellate court(s),  rejects,
modifies or denies approval of any portion of this  Settlement  Agreement or the
proposed  settlement that the terminating  Party in its (or their) sole judgment
and  discretion  reasonably   determine(s)  is  material,   including,   without
limitation,  the terms of relief,  the  findings  of the Court,  the  provisions
relating to notice, the definition of the Class and/or the terms of the Release,
or (ii) the  Court,  or any  appellate  court(s),  does not enter or  completely
affirm,  or alters or  expands,  any  portion  of the  Final  Judgment  or Order
Approving  Settlement,  or any of the Court's findings of fact or conclusions of
law as proposed by Defendant's  Counsel and Lead Counsel,  that the  terminating
Party in its (or their) sole judgment and discretion believe(s) is material. The
terminating  Party must exercise the option to withdraw from and terminate  this
Settlement  Agreement,  as provided in this Section, no later than 20 days after
receiving notice of the event prompting the termination.

D.  Notwithstanding  the preceding  Section XII.C,  Plaintiffs may not terminate
this  Settlement  Agreement  solely because of the amount of Attorneys' Fees and
Expenses awarded by the Court or any appellate court(s).  The Company,  however,
may elect to terminate  this  Settlement  Agreement if the amount of  Attorneys'
Fees  and  Expenses  awarded  exceeds  the  amount  that it has  agreed  in this
Settlement Agreement not to oppose before the Court.

E. No later  than 20 days  after  receiving  notice of the event  prompting  the
termination,  the Company also may unilaterally withdraw from and terminate this
Settlement  Agreement  if: 1.  those  persons or  entities  who elect to exclude
themselves  from the Class with  respect to any Policy or Policies  together own
more than two percent (2%) of all Policies owned by Class Members; and/or 2. any
state attorney general or regulatory or  administrative  authority  institutes a
proceeding  or  investigation  against the Company  arising out of or  otherwise
related to the Released Transactions.

F. If timely and properly  completed  Election Forms are submitted for more than
five  percent  (5%) of the base face  amount of all  Policies,  then either Lead
Counsel in its  discretion or the Company in its discretion may argue or present
evidence at the Fairness  Hearing that,  due to the estimated  volume of Claims,
the proposed settlement is not fair, reasonable and adequate;  provided however,
that:

1. in the event that a Party intends to present evidence under the terms of this
Section  XII.F,  it shall provide the opposing  Party with written notice of its
intent at least 20 days before the Fairness Hearing;

2. at least five days  before  the  Fairness  Hearing,  the Party  intending  to
present  evidence  shall  provide  the  opposing  Party  with  (a)  any  and all
submissions it intends to make to the Court and (b) a witness list, if any; and

3.  presentation  of evidence under the terms of this Section XII.F shall not be
deemed to constitute a breach of this Settlement Agreement.

G. If an option to withdraw from and terminate this Settlement  Agreement arises
under Sections XII.C, XII.D and/or XII.E, (i) neither the Company nor Plaintiffs
will be  required  for any reason or under any  circumstance  to  exercise  that
option, and (ii) any exercise of that option shall be made in good faith.

H. If this Settlement  Agreement is terminated pursuant to Sections XII.C, XII.D
and/or XII.E, then:

1. this  Settlement  Agreement shall be null and void and shall have no force or
effect,  and no Party to this Settlement  Agreement shall be bound by any of its
terms,  except  for the terms of this  Section  XII.H and  Sections  XIII.C  and
XIII.D, below;

2. this  Settlement  Agreement,  all of its  provisions,  and all  negotiations,
statements  and  proceedings  relating to it shall be without  prejudice  to the
rights of the Company,  Plaintiffs or any other Class Member,  all of whom shall
be  restored  to their  respective  positions  existing  immediately  before the
execution of this Settlement Agreement;

3. The  Company  and its  current  and former  directors,  officers,  Producers,
employees, agents, and each of their respective predecessors, successors, heirs,
agents,  attorneys,  representatives  and assigns,  expressly and  affirmatively
reserve all  defenses,  arguments and motions as to all claims that have been or
might  later be  asserted  in the Action,  including  (without  limitation)  any
applicable  statutes of  limitation  and the argument that the Action may not be
litigated as a class action;

4.  Plaintiffs  and their current and former  predecessors,  successors,  heirs,
agents,  attorneys,  representatives  and assigns  expressly  and  affirmatively
reserve  all  motions as to, and  arguments  in support of, all claims that have
been or might later be asserted in the Action,  including  (without  limitation)
any argument concerning class certification and/or punitive damages;

5. neither this Settlement Agreement, nor the fact of its having been made,
shall be admissible or entered into evidence for any purpose whatsoever; and 6.
any order or judgment entered after the date of this Settlement Agreement will
be deemed vacated and will be without any force or effect.

XIII. GENERAL MATTERS AND RESERVATIONS

A. The obligation, although not the ability, of the Parties to
conclude the proposed settlement is and will be contingent upon each of the
following:

1.  acceptance of this  Settlement  Agreement by Great  Southern Life  Insurance
Company's Board of Directors;

2. the absence of any other policyowner  demands or actions that arise out of or
relate to the matters  described in the Release and that would materially impair
the benefits to the  Releasees,  or any of them,  otherwise  provided for by the
Release  but  that  would  not be  terminated  or  otherwise  resolved  by  this
Settlement Agreement;

3. the resolution,  acceptable to the Company, of any regulatory  proceedings or
investigations  arising out of, or relating to the relief to be provided  under,
the proposed settlement, as described above in Section XII.E.2 (to this end, the
Company agrees to seek any necessary  regulatory approval relating to the relief
not later than 30 days after the Fairness Hearing);

4. entry by the Court of the Final Judgment and Order Approving Settlement, from
which the time to appeal has expired or which have remained unmodified after any
appeal(s); and

5. any other conditions stated in this Settlement Agreement.

B. The Parties and their  counsel  agree to keep the  existence  and contents of
this Settlement  Agreement and all related  negotiations  confidential until the
date of the first public  announcement by the Company;  provided  however,  that
this  Section  shall not  prevent  earlier  disclosure  of such  information  to
regulators,  rating agencies, financial analysts, Producers, or any other person
or entity (such as experts,  courts, and/or  Administrators) to whom the Parties
agree  disclosure  must be made to effectuate  the terms and  conditions of this
Settlement Agreement.

C.  Plaintiffs  and their counsel agree that the  information  made available to
them in connection with the parties' settlement  negotiations was made available
on the conditions  that neither  Plaintiffs nor their counsel may disclose it to
third  parties  (other than experts or  consultants  retained by  Plaintiffs  in
connection with this case),  that it not be the subject of public  comment,  and
that it not be used by Plaintiffs or their counsel in connection with any motion
for or  argument  in favor of class  certification  or in any  other way in this
litigation should this Action not settle, or in any other litigated  proceeding;
provided however,  that nothing contained herein shall prohibit  Plaintiffs from
seeking such  information  through  formal  discovery  or from  referring to the
existence of such information in connection with the Action or the settlement of
this litigation.

D. Two years after the Final  Settlement  Date or promptly after  termination of
this Settlement Agreement, whichever comes first (unless the time is extended by
agreement  of  the  Parties),  Plaintiffs  and  their  counsel  will  return  to
Defendant's  Counsel all documents (and all copies of such documents in whatever
form made or maintained)  produced by the Company in this Action, as well as all
transcripts of and exhibits to any deposition  testimony provided by the Company
or its current or former  officers,  employees or  Producers  (and all copies of
such documents in whatever form made or maintained); provided however, that this
Section  XIII.D shall not apply to any  documents  made part of of the record in
connection  with a Claim  made  under the Claim  Evaluation  Process,  or to any
documents made part of a Court filing, or to Plaintiffs' counsel's work product.
The Company  agrees to store and preserve all  materials  returned by Plaintiffs
and their  counsel  pursuant to this Section  XIII.D for at least one year after
the awarding of relief in the Claim Evaluation Process is finally concluded, not
including the awarding of relief for any Part VIII Claims.

E. By execution  of this  Settlement  Agreement,  the Company does not intend to
release  any  claim  against  any  insurer  for any cost or  expense  hereunder,
including attorneys' fees and costs.

F.  Lead  Counsel  represents  that  (i) it is  authorized  to enter  into  this
Settlement  Agreement on behalf of Plaintiffs  and any other  attorneys who have
represented  or who now represent  Plaintiffs in this Action with respect to the
claims in this  Action and (ii) it is seeking to protect  the  interests  of the
entire Class.

G.  Plaintiffs  represent  and  certify  that (i) they  have  agreed to serve as
representatives  of the Class  proposed to be  certified  herein;  (ii) they are
willing,  able  and  ready to  perform  all of the  duties  and  obligations  of
representatives of the Class; (iii) they have read the pleadings in this Action,
including the Complaint, or have had the contents of such pleadings described to
them;  (iv) they have been kept  apprised of the  progress of the Action and the
settlement  negotiations among the Parties, and have either read this Settlement
Agreement,  including the exhibits attached to the Settlement Agreement, or have
received a description of it from Plaintiffs'  Counsel,  and they have agreed to
its terms; (v) they have consulted with Lead Counsel - and/or other  Plaintiffs'
counsel  of  record  - about  the  Action,  this  Settlement  Agreement  and the
obligations of a  representative  of the Class;  (vi) they have  authorized Lead
Counsel to execute this  Settlement  Agreement on their  behalf;  and (vii) they
will  remain and serve as  representatives  of the Class until the terms of this
Settlement Agreement are effectuated, this Settlement Agreement is terminated in
accordance  with  its  terms,  or the  Court at any time  determines  that  said
Plaintiffs cannot represent the Class.

H. Gary L. Muller represents that he is authorized to enter into this Settlement
Agreement on behalf of the Company and any attorneys who have represented or who
now represent the Company in the Action.

I. This Settlement  Agreement sets forth the entire  agreement among the Parties
with respect to its subject matter, and it may not be altered or modified except
by written  instrument  executed by Lead Counsel and  Defendant's  Counsel.  The
Parties  expressly  acknowledge  that  no  other  agreements,   arrangements  or
understandings not expressed in this Settlement Agreement exist among or between
them.

J. This Settlement  Agreement and any ancillary  agreements shall be governed by
and  interpreted  according  to the law of the  State of  Texas,  excluding  its
conflict of laws provisions.

K. Any  action to enforce  this  Settlement  Agreement  shall be  commenced  and
maintained only in this Court.

L. Whenever this Settlement  Agreement  requires or contemplates  that one Party
shall or may give notice to the other,  notice  shall be  provided by  facsimile
and/or next-day (excluding Sunday) express delivery service as follows:

1. If to the Company, then to
                                    Ralph C. Ferrara, Esq.
                                    Debevoise & Plimpton
                                    555 13th Street, N.W.
                                    Washington, D.C.  20004
                                    Telephone:  (202) 383-8000
                                    Facsimile:  (202) 383-8118

                                            and


                                    Edwin R. DeYoung, Esq.
                                    Locke Liddell & Sapp LLP
                                    2200 Ross Avenue
                                    Suite 2200
                                    Dallas, Texas   75201-6776
                                    Telephone:  (214) 740-8000
                                    Fax:  (214) 740-8800


2.       If to Plaintiffs, then to
                                    Melvyn I. Weiss, Esq.
                                    Milberg Weiss Bershad Hynes & Lerach, LLP
                                    One Pennsylvania Plaza
                                    New York, New York  10119
                                    Telephone:  (212) 594-5300
                                    Facsimile:   (212) 868-1229

                                            and

                                    Timothy G. Blood, Esq.
                                    Milberg Weiss Bershad Hynes & Lerach, LLP
                                    600 West Broadway
                                    Suite 1800
                                    San Diego, California  92101
                                    Telephone:  (619) 231-1058
                                    Facsimile:  (619) 231-7423

M. 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 Settlement Agreement 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 Section, "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 Texas.

N. The 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 this Settlement Agreement.

O. All Parties agree that this  Settlement  Agreement was drafted by counsel for
the Parties at arm's length,  and that no parol or other evidence may be offered
to explain, construe, contradict or clarify its terms, the intent of the Parties
or their counsel, or the circumstances under which the Settlement  Agreement was
made or executed.

P. In no event shall the Settlement Agreement, any of its provisions or any
negotiations, statements or court proceedings relating to its provisions in any
way be construed as, offered as, received as, used as or deemed to be evidence
of any kind in this Action, any other action, or any judicial, administrative,
regulatory or other proceeding, except a proceeding to enforce this Settlement
Agreement. Without limiting the foregoing, neither this Settlement Agreement nor
any related negotiations, statements or court proceedings shall be construed as,
offered as, received as, used as or deemed to be evidence or an admission or
concession of any liability or wrongdoing whatsoever on the part of any person
or entity, including but not limited to the Company, or as a waiver by the
Company of any applicable defense, including without limitation any applicable
statute of limitations or statute of frauds, or as a waiver by Plaintiffs or the
Class of any claims, causes of action or remedies, including punitive damages.


Q. The Company expressly denies any wrongdoing alleged in the pleadings and does
not admit or concede any actual or potential fault, wrongdoing or liability in
connection with any facts or claims that have been or could have been alleged
against it in the Action, but considers it desirable for the Action to be
settled and dismissed because this settlement will (i) provide substantial
benefits to the Company's present and former policyowners, (ii) avoid the
substantial expense and the further disruption of the management and operation
of the Company's business due to the pendency and defense of the Action and
(iii) finally put Plaintiffs' claims and the underlying matters to rest.


R. Plaintiffs expressly affirm that the allegations contained in the Complaint
were made in good faith and have a substantial basis in fact, but consider it
desirable for the Action to be settled and dismissed because of the substantial
benefits that the proposed settlement will provide to the Company's present and
former policyowners.


S. Neither this  Settlement  Agreement nor any of the relief to be offered under
the proposed settlement shall be interpreted to alter in any way the contractual
terms of any Policy, or to constitute a novation of any Policy.


T. No opinion  concerning  the tax  consequences  of the proposed  settlement to
individual  Class  Members  is being  given  or will be  given  by the  Company,
Defendant's  Counsel  or  Plaintiffs'  Counsel;  nor  is any  representation  or
warranty in this regard made by virtue of this Settlement  Agreement.  The Class
Notice will direct Class Members to consult their own tax advisors regarding the
tax   consequences   of  the  proposed   settlement,   including  any  payments,
contributions or credits provided hereunder,  and any tax reporting  obligations
they may have with respect thereto. Each Class Member's tax obligations, and the
determination  thereof,  are the sole responsibility of the Class Member, and it
is understood  that the tax  consequences  may vary  depending on the particular
circumstances of each individual Class Member.

U. The Parties,  their successors and assigns,  and their attorneys undertake to
implement the terms of this Settlement  Agreement in good faith, and to use good
faith in resolving  any  disputes  that may arise in the  implementation  of the
terms of this Settlement Agreement.

V. The Parties,  their  successors  and assigns,  and their  attorneys  agree to
cooperate  fully with one another in seeking court  approval of this  Settlement
Agreement  and to use their best  efforts to effect the prompt  consummation  of
this  Settlement  Agreement  and the  proposed  settlement.  W. This  Settlement
Agreement  may be signed  in  counterparts,  each of which  shall  constitute  a
duplicate original.

                  Agreed to this 6th day of April, 2001.

APPROVED  AND  AGREED TO BY AND ON BEHALF OF Irwin  Ginsberg,  Harriet  D. Mann,
Yvonne H.  Massey  and ISAAC  NORMAN,  IN THEIR  INDIVIDUAL  AND  REPRESENTATIVE
CAPACITIES


                        By:  _______________________________________________

                                        MELVYN I. WEISS, ESQ.
                             Milberg Weiss Bershad Hynes & Lerach LLP
                                    LEAD COUNSEL FOR PLAINTIFFS

                           APPROVED AND AGREED TO BY AND ON BEHALF OF
                           GREAT SOUTHERN LIFE INSURANCE COMPANY


                       By:  _______________________________________________
                                        GARY L. MULLER
                                    CHIEF EXECUTIVE OFFICER
                              GREAT SOUTHERN LIFE INSURANCE COMPANY