Dated this 23rd day of May 1997

                                   Settlement

                                    between

                              BG SERVICES LIMITED

                                      and

                            A.L.O.T. TRUSTEE LIMITED

                                  establishing

                        AGENT LOYALTY OPPORTUNITY TRUST

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THIS SETTLEMENT is made this 23 day of May One thousand nine hundred and ninety-
seven

BETWEEN

(1)  BG SERVICES LIMITED of a limited liability Company incorporated in Guernsey
     care of Minden House, 6 Minden Place, St. Helier,  Jersey,  Channel Islands
     (hereinafter called "the Settlor"); and

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

WHEREAS

(1)  The Settlor  being  desirous of making such  Settlement  as is  hereinafter
     contained has  transferred or delivered to the Trustee or otherwise  placed
     under its control the  property  specified  in Schedule  One and  described
     therein as the Initial Settled Property.

(2)  It is anticipated that further Property may in the future be transferred to
     the Trustee to be held as an addition to the Trust Fund.

(3)  The Settlement is hereby  established in order to incentivize and encourage
     loyalty of Sales Agents by facilitating  the award of cash bonuses to Sales
     Agents .

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NOW THIS SETTLEMENT WITNESSETH as follows:-

1.   DEFINITIONS

1.1   In this Settlement whenever the context permits the following  expressions
      shall have the following meanings:

      "Award"  An award of Units  made to a  Beneficiary  pursuant  to  Clause 2
      hereof.

      "Award Agreement"  An  agreement   entered  into  by  the  Trustee  and  a
      Beneficiary pursuant to Clause 2 hereof.

      "Beneficiary" a Sales Agent.

      "the Company" That limited liability company known as London Pacific Group
      Limited  established in and under the laws of the Island of Jersey on 23rd
      January 1985 under Company number 30810.

      "the Life Company" London Pacific Life & Annuity Company, a North Carolina
      life assurance company.

      "Person"  Any  individual,  organisation,  institution  or  other  body of
      persons whether corporate or unincorporate.

      "Proper Law" The law of the Island of Jersey.

      "Property"  Any real  property if the same may under the lex loci situs be
      subject to a trust,  any  personal  property,  any chose in action and any
      rights or interest  legal  equitable  or  otherwise  in or over any of the
      foregoing.

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      "the  Rules"  The Plan  Rules as set out in  Schedule  two  hereof and any
      amendments or modifications thereto.

      "Sales  Agent" An  independent  sales  agents in the United  States who is
      party to an agency  agreement  with the Life  Company for the sale of life
      and annuity products.

      "Share"  An  ordinary  share  of 5 US  Cents  each in the  capital  of the
      Company.

      "the Trustee" The Trustee or Trustees for the time being hereof.

      "the Trust Fund"

            (i)   The property specified in Schedule One hereto;

            (ii)  all property paid or  transferred  by any person or persons to
                  or so as to be  under  the  control  of and (in  either  case)
                  accepted by the Trustee as additions to the Trust Fund; and

            (iii) the property from time to time representing  the said property
                  and any additions including any income accumulated pursuant to
                  the provisions hereof.

      "the Trust Period" The period from the date hereof until  whichever of the
      following dates shall first occur namely:

            (i)   the day on which shall expire the period of one hundred  years
                  from the date of this Settlement;


            (ii)  such  earlier  day (if  any)  prior  to the day  specified  in
                  paragraph  (i) of this  sub-clause  as the  Trustee

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                  may at its discretion appoint by deed.

      "Unit" A Unit representing the right granted to a Beneficiary  pursuant to
      an Award  requiring  that the Trustee pay to him a bonus sum calculated in
      accordance  with the  Rules by  reference  to the  value of a Share on the
      basis that one Unit shall be representative of the value of one Share.

1.2   The singular includes the plural and vice versa.

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

2.    TRUSTS UPON WHICH THE TRUSTEE HOLDS THE TRUST FUND

2.1   The Trustee  shall during the Trust  Period  stand  possessed of the Trust
      Fund upon the trusts hereof for the Beneficiaries  subject to and upon the
      terms and conditions hereinafter contained.

2.2   During the Trust Period the Trustee  shall have full power and  discretion
      to:-

(i)   make an award to a  Beneficiary  of a specified  number of Units which may
      entitle the  Beneficiary  to payment  from the Trustee at a future date or
      dates and in such Award Agreement the Trustee shall specify:-

      (a)   the full name and address of the Beneficiary;

      (b)   the  number of Units  (the  "Award  Units")  in respect of which the
            Beneficiary may be entitled to require payment from the Trustee;

      (c)   the date upon which the Trustee  executes the Award  Agreement  (the
            "Award Date"); and

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      (d)   the date or dates  (being  after  the  Award  Date)  upon  which the
            Beneficiary  shall become  entitled to require payment in respect of
            Award Units from the Trustee and the events  which will  trigger his
            entitlement to such payments in respect of Award Units.

(ii)  for the  purpose  of  satisfying  the  right of any and each  Sales  Agent
      receiving an Award as contemplated by the foregoing paragraph:-

      (a)   on or about the Award Date, purchase sufficient Shares to enable the
            Trustee  to  hedge  its  liability  to  make  all  payments  due  to
            Beneficiaries in respect of Awards; and

      (b)   borrow from BG Services  Limited  and/or any other person  EXCEPTING
            ALWAYS the Company  such moneys as may from time to time be required
            by the Trustee to pay for the Shares so purchased,  on such terms as
            may from time to time be agreed  between  the  Trustee  and any such
            lender.


2.3   In the event that:-

(i)   a  Beneficiary  assigns  or charges  or  attempts  to assign or charge his
      interest hereunder;

(ii)  a  Beneficiary  is  adjudicated  bankrupt  or  makes  any  arrangement  or
      composition with his creditors; or

(iii) a Beneficiary is subject to any agency or other  agreement  which shall be
      terminated by reason of serious or persistent  breach of the provisions of
      such agency or other  agreement or for any wilful default or negligence in
      the discharge of the liabilities  arising under such agreement or shall be
      terminated for any other reason by the Life Company.

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THEN and in any such event (as to the occurrence of which the Trustee's decision
shall be final) unless the Award  otherwise  expressly  provides,  all right and
interest to which such Beneficiary has not yet become absolutely  entitled under
the terms of an Award shall be forfeited and the Beneficiary shall have no claim
whatsoever against the Trustee in respect of his Award Units.

2.4   At any time when  there are no  Beneficiaries  but  subject  always to the
      right of the Trustee to nominate  Beneficiaries  and at the  expiration of
      the Trust  Period the  Trustee  shall stand  possessed  of any part of the
      Trust Fund  remaining  after  exercise by all the  Beneficiaries  of their
      rights set out in the foregoing  sections of this Clause 2, upon Trust for
      such Sales Agents as the Trustee  shall in its absolute  discretion  think
      fit and if more than one in such  proportions  as the Trustee shall in its
      absolute discretion determine and in default thereof for any subsidiary of
      the Company.

3.    POWER TO IGNORE INTERESTS

Notwithstanding any rule of law, equity or otherwise to the contrary the Trustee
in  exercising  any of the powers hereby  conferred in favour of any  particular
person is hereby  expressly  authorised  to ignore  entirely the interest of any
other person interested or who may become interested under these presents and in
particular  (but  without  prejudice  to the  generality  of the  foregoing)  no
appointment or advancement made in exercise of any power hereinbefore  contained
shall be invalid on the grounds that:-

(a)   an insubstantial illusory or nominal share is appointed to any one or more
      objects of such power or left unappointed; or

(b)   any object of such power is thereby altogether excluded;

but every such appointment or advancement  shall be valid  notwithstanding  that
any one or more  objects  of the power is or are not  thereby  or in  default of
appointment to take any share in the Trust Fund.

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4.    VOTING

The Trustee shall be entitled to exercise all and any voting rights attaching to
any of the Shares for so long as such  Shares are held by the  Trustee and shall
vote or cause voting  rights to be  exercised  as it in its absolute  discretion
think fit.

5.    LIQUIDATION

In the event  that the  Company  goes into  liquidation  otherwise  than for the
purpose  of  a  reorganisation  or  amalgamation  and  the  Trustee  receives  a
distribution  of the  assets of the  Company  in  respect of the Shares it shall
immediately  transfer  to each  Beneficiary  his due  proportion  of such assets
notwithstanding such Beneficiary would not have been entitled to his Award Units
or any part thereof in full and final  settlement of all or any  entitlement  of
the Beneficiary in connection therewith.

6.    APPOINTMENT AND RETIREMENT OF TRUSTEES

6.1   If any Trustee hereof whether original additional or substituted shall die
      or being a company  shall enter into  liquidation  or shall give notice of
      desire to  resign  or shall  become  unfit to act in  accordance  with the
      provisions  of this clause 6 then the  Trustees  for the time being may by
      instrument in writing appoint a new Trustee or Trustees.

6.2   Any Trustee may at any time resign the Trusteeship on giving not less than
      14 days notice in writing  addressed  to his  co-trustees  (if any) and if
      there are then no other  Trustees such  resignation  shall not take effect
      until the  appointment  of a new  Trustee or new  Trustees in place of the
      retiring Trustee.

6.3   The office of a Trustee shall be  automatically  determined and vacated if
      such  Trustee  being an  individual  shall  become unfit to act or if such
      Trustee being a company shall enter into liquidation  whether voluntary or
      compulsory  (not being merely a voluntary  liquidation for the purposes of
      the amalgamation or reconstruction).

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6.4   There  shall  be no  obligation  to have  more  than one  trustee  of this
      Settlement and the maximum number of Trustees shall be three.

7.    ADMINISTRATION

7.1   The  Trustee  shall make  arrangements  whereby  all  necessary  accounts,
      records,  transfers and other  documents in connection  with the trusts of
      this  Settlement are prepared and kept and generally carry out any and all
      administrative work in connection therewith.

7.2   Any Trustee for the time being  hereof  shall be entitled to charge and be
      paid for its services as Trustees reasonable annual fees and reimbursement
      of its property  expenses of an amount to be agreed from time to time with
      the Settlor.

7.3   Any Trustee being a person  engaged in any profession or business shall be
      entitled:-

     (a)  to charge and be paid all usual  professional  and other  charges  for
          business  transacted,  time spent and services  rendered by him or his
          firm in  connection  with  the  execution  of the  trusts  powers  and
          provisions, including acts which a Trustee not being in any profession
          or business could have done personally; and

     (b)  to retain any brokerage or  commission in respect of any  stockbroking
          or  insurance  transaction  for which such a person is  normally  paid
          brokerage or commission.

8.    GENERAL POWER OF INVESTMENT

Subject always to any  restrictions  expressly  contained in this Settlement the
Trustee shall have all the same powers of investment as a natural  person acting
as the beneficial owner of the Trust Fund and its powers shall not be restricted
by any principle of  construction  (or rule or  requirement of the Proper Law of
this  Settlement  save to the extent that such is obligatory)  but shall operate
according  to the widest  generality  of which the  foregoing  words are capable
notwithstanding that certain powers are herein more particularly set

<PAGE>
forth.

9.    ADDITIONAL POWERS OF INVESTMENT

Without  limiting the power  contained  in clause 8 or any general  power herein
contained the Trustee shall have power:-

9.1   to invest or lay out moneys comprised in the Trust Fund in the purchase of
      or interest  upon the security of such stocks funds shares  securities  or
      other investments or property of whatsoever nature and wheresoever situate
      and whether involving liability or not and whether producing income or not
      or upon such  personal  or other  credit  with or without  security as the
      Trustee shall in its absolute  discretion think fit to the intent that the
      Trustee shall have the same full and unrestricted  powers of investing and
      transposing investments and laying out moneys in all respects as if it was
      absolutely  entitled  thereto  beneficially  and  without  regard  to  the
      requirements  of the  Proper  Law  (save  to the  extent  that  these  are
      obligatory);

9.2   to leave any assets the subject of any of the trusts of this Settlement in
      their  original  state or in the state of  investment in which they may be
      from time to time;

9.3   at any time or times to sell or call in any investment or property for the
      time being  comprised  in the Trust Fund or  transpose or convert the same
      into any other  investments  or  property  the  acquisition  of which with
      moneys subject hereto is hereby authorised;

9.4   to apply any  moneys  forming  part of the  capital or income of the Trust
      Fund in the purchase or  subscription of partly paid shares and shall have
      power to pay up such  shares at such times and in such  manner as it shall
      in their absolute discretion determine;

<PAGE>
9.5   pending the investment  thereof for any period to place any moneys forming
      part of the Trust  Fund on current  or  deposit  account  with any bank or
      banks or any other company conducting the business of banking or accepting
      moneys  on  deposit  in any part of the  world  and may open and  maintain
      banking  accounts  in the name of the Trustee or in the name of any one of
      them if more  than one or in the name of this  Settlement  and so that the
      Trustee may if in its  absolute  discretion  it thinks fit so place moneys
      with any  company  which may for the time  being be a direct  or  indirect
      holding  company or  subsidiary  of the  Trustee or any one or more of the
      Trustees if more than one or in any way associated with the Trustee or any
      one or more of the Trustees if more than one;

9.6   (i) to  consent to any  re-organisation  re-construction  amalgamation  or
      other  arrangement  or scheme  concerning  any company the shares in which
      comprise or form part of the Trust Fund;

      (ii) to accept  in  addition  to or in lieu of those  already  held  other
      shares in any company whose shares comprise or form part of the Trust Fund
      in connection with or as part of any such re-organisation  re-construction
      amalgamation arrangement or scheme as aforesaid;

      (iii) to consent to any  reduction  of capital or other  dealing with such
      shares as the Trustee may consider advantageous or desirable;

      (iv) to surrender and deliver up any shares forming part of the Trust Fund
      for such  consideration  and upon such terms and conditions as the Trustee
      may  approve to any  company  reducing  its  capital  and the  Trustee may
      receive such  consideration  in the form of cash shares or other assets as
      may be agreed between the Trustee and such company; and

      (v) to agree to the  winding-up  of any company  whose shares  comprise or
      form  part of the  Trust  Fund  and for the  purposes  of this  sub-clause
      "company" shall include any trust association or concern and "shares"

<PAGE>
      shall include stock  securities  bonds  debentures  debenture  stock funds
      mortgage or any other interest;

9.7   to acquire any investment of a speculative  nature and any such investment
      shall be deemed to be an authorised investment of the whole or any part of
      the  Trust  Fund and the  Trustee  shall  be  under  no duty to  diversify
      investments;

9.8   to  borrow  money or other  property  and/or  to give  guarantees  for any
      purpose connected with the trusts of this Settlement (including the making
      of investments to be held as part of the Trust Fund) and if thought fit to
      assign pledge or mortgage the whole or any part of the capital  (including
      future  income) of the Trust Fund or any property  which forms part of the
      Trust  Fund by way of  security  for such  loan  and/or  guarantee  and no
      purchaser  lender  or other  person  paying  or  advancing  money or other
      property on a sale mortgage charge or other  transaction  purporting to be
      made by the Trustee  under or for any of the  purposes of this  Settlement
      shall be  concerned  to see that the money or other  property is wanted or
      that no more than is wanted is raised or otherwise as to the  propriety of
      transaction or the application of the money or other property.

10.   FURTHER PROVISIONS CONCERNING INVESTMENT

Notwithstanding  any rule of law, equity or otherwise to the contrary nothing in
this Settlement  shall oblige or impose upon the Trustee any duty to preserve or
enhance the value of the Trust Fund and  accordingly,  the Trustee  shall not be
liable to anyone actually or prospectively  interested hereunder for any failure
to preserve or enhance the value of the Trust Fund or any part of it.

11.   MANAGEMENT OF THE TRUST FUND

The Trustee shall have the following powers in relation to the management of the
Trust Fund:-

<PAGE>
11.1  To cause or permit any person to have and remain in  possession or control
      of the Trust Fund or any part thereof and  notwithstanding  the generality
      of  the   foregoing   the  Trustee  may  permit  any  moneys  bonds  share
      certificates  or other  securities for money or documents of or evidencing
      title to  property  real or  personal  for the time  being  subject to the
      trusts  hereof  to be and  remain  deposited  with  one or one only of the
      Trustees if more than one or with any persons in any part of the world and
      permit any investment  securities or other real or personal property which
      or any share or interest  wherein  shall be for the time being  subject to
      the trusts  hereof to be and remain  invested  in the names of nominees or
      trustees  in any part of the world  instead of in the names of the Trustee
      with  power to  delegate  to such  persons  such of the trust  powers  and
      discretions  hereby or by law vested in the Trustee with  reference to the
      premises  so  deposited  or the  property so invested in the names of such
      nominees or trustees as the Trustee may consider  expedient so to delegate
      and so that no persons  with whom such  property is  deposited or in whose
      names such property is vested shall (unless a Trustee hereof) be concerned
      with the trusts hereof or be responsible for any loss whatsoever resulting
      either  directly  or  indirectly  from the  exercise of the powers in this
      clause hereinbefore  contained unless such loss be caused by his own fraud
      and the Trustee may pay out of the income or capital of the Trust Fund any
      charges  or other  expenses  incurred  on or in  connection  with any such
      account or deposit.

11.2  To accept  any  receipt  of a  treasurer  or other  officer of any body of
      persons as being a good receipt for any payment hereunder  notwithstanding
      that such person may not be authorised to give receipts.

11.3  To keep the whole or any part of the trust property  within or without the
      jurisdiction of the Proper Law of this Settlement.

11.4  From time to time and at such intervals as it shall in its sole discretion
      think fit to cause the  accounts  kept by it  hereunder  to be examined or
      audited by such  person or persons  as it shall  designate  and to pay the
      costs of such examination

<PAGE>
      or audit out of the capital or income of the Trust Fund.

12.   ADMINISTRATION OF THE TRUST FUND

The Trustee shall have the following powers in relation to the administration of
the Trust Fund:-

12.1  To  exercise  any power or  discretion  hereunder  without  being bound to
      ascertain  all  persons   capable  of  benefiting   thereby  or  otherwise
      hereunder.

12.2  To  delegate  at any  time  (notwithstanding  any  rule of law  equity  or
      otherwise  to the  contrary)  by deed or deeds or  instrument  in  writing
      revocable  during the Trust Period the execution or exercise of any or all
      of the trusts  powers or  discretions  hereby or by law  conferred  to any
      person (including in cases where there is more than one Trustee to any one
      of the  Trustees)  and if such person shall be acting in the course of his
      trade,  profession or vocation he shall be entitled to proper remuneration
      out of the  moneys  in the  Trust  Fund  and  in  particular  and  without
      prejudice to the generality of the foregoing  provisions to appoint one or
      more  attorneys  under a power or powers of  attorney  to act  jointly  or
      severally  and with or without  power for any such attorney to delegate in
      specific  transactions  or class of  transactions  or  generally  and in a
      particular  place or in any place in relation to executing any document or
      doing any act or receiving  notice  money or other  property in respect of
      the Trust Fund or any of the assets for the time being included therein or
      to be acquired by the Trustee or in respect of any business  carried on or
      proposed to be carried on by the Trustee or in respect of the  exercise of
      any power conferred on the Trustee by this Settlement or by law whether or
      not the Trustee has disclosed to any such  attorney or any person  dealing
      with such  attorney  that in respect of the power to be so delegated  they
      are acting as Trustee.

12.3  To appropriate any part of the Trust Fund in the actual condition or state
      of  investment  thereof  at  the  time  of  appropriation  in  or  towards
      satisfaction of any

<PAGE>
      interest or share in the Trust Fund as may in all the circumstances appear
      to the Trustee to be just and  reasonable  and upon and for the purpose of
      any distribution or appropriation of the Trust Fund to place such value on
      any assets from time to time forming part of the Trust Fund as the Trustee
      in its discretion  shall deem just and proper and any such valuation shall
      be absolutely  final and binding and conclusive on all persons  interested
      and further upon any such  distribution to decide to whom specified assets
      shall be given and to  distribute  assets  subject to the  payment of such
      amounts (if any) as may be necessary to adjust any shares.

12.4  To decide what part of the expenses of the Settlement  shall be charged to
      capital  and what part to income and to decide as between  separate  funds
      and separate  parts of shares the  allocation  of income gains profits and
      losses.  Any decision of the Trustee under this sub-clause whether made in
      writing  or  implied  from its acts  shall so far as the law may permit be
      conclusive and binding on the  Beneficiaries  and all persons  actually or
      prospectively interested under this Settlement.

12.5  To treat as income or as capital  any  dividends  stock  dividends  rights
      interests  rents issues and profits  derived from any property at any time
      constituting  the whole or any part of the  Trust  Fund and  generally  to
      determine  what part of the receipts of the  Settlement is income and what
      is  capital  whether  or  not  such  property  is  wasting   hazardous  or
      unproductive or was purchased at a premium or discount and notwithstanding
      the time when such dividends stock dividends  rights interest rents issues
      or profits were earned accrued  declared or paid to make such reserves out
      of income or capital as the Trustee  deems proper for  expenses  taxes and
      other liabilities of the Settlement to pay for income or for capital or to
      apportion  between  income or capital  any  expenses of making or changing
      investments  and of  selling  exchanging  or  leasing  including  brokers'
      commissions  and  charges  and  generally  to  determine  what part of the
      expenses  of the Trust Fund  shall be charged to capital  and what part to
      income and to determine as between  separate  funds and separate  parts or
      shares the  allocation of income gains profits  losses and  distributions.
      Any decision of the Trustee

<PAGE>
      under this  sub-clause  whether  made in writing or implied  from its acts
      shall  so far as the law may  permit  be  conclusive  and  binding  on the
      Beneficiaries  and all persons actually or prospectively  interested under
      this Settlement.

12.6  Instead  of acting  personally  to employ  and pay at the  expense  of the
      income or  capital  of the  Trust  Fund any agent in any part of the world
      whether advocates solicitors attorneys accountants brokers banks companies
      or other  agents and  whether  or not being the  Trustee or one or more of
      them if more than one  without  being  responsible  for the default of any
      agent if employed in good faith to transact  any business or to do any act
      required to be transacted or done in the execution of the Trustee's powers
      or discretions hereof including the receipt (whether on current or deposit
      account) or payment of money or the  execution of documents and to pay for
      such  services  out of the  capital  or income  of the  Trust  Fund as the
      Trustee  thinks fit and no Trustee  hereof  being an  individual  shall be
      accountable for payment received by him or his firm for such services.

12.7  To take and act in accordance with the opinion of legal counsel concerning
      any difference arising under this Settlement under or problems  concerning
      this settlement or any matter in any way relating to the Trust Fund or the
      Trustee's  duties in connection with this Settlement and to pay such legal
      counsel's  fees out of the  capital  or income  of the  Trust  Fund as the
      Trustee  thinks fit and to the extent that the Trustee acts in  accordance
      with the opinion of such  counsel the Trustee  shall not be liable for any
      loss to the Trust Fund which may arise by or from so acting.

12.8  To give receipts for any money securities or other property or effects and
      so that any  receipts  so given  shall be a  sufficient  discharge  to the
      person paying  transferring  or delivering the same and shall  effectively
      exonerate him from seeing to the application  thereof or being  answerable
      for any loss or misapplication thereof.

12.9  To enter into any transaction or venture or exercise any power  authorised
      hereby

<PAGE>
      notwithstanding that one or more of the Trustees if more than one (or if a
      company  any  of the  officers  of  such  company)  is or  are  personally
      interested in such transaction or venture or in the exercise of such power
      and so that none of the Trustees or officers  aforesaid shall be under any
      liability  to  account  for any  remuneration  profits  or other  benefits
      received or derived by it or him thereby.

12.10 In the execution of any of the trusts  hereof or in exercise of any of the
      powers hereby or by law given to them to sell property or lend money to or
      buy property or borrow money from or carry out any other  transaction with
      the trustees of any other trust or the executors or  administrators of any
      estate  notwithstanding  that a Trustee or if more than one any of them is
      or are  the  same  persons  or  person  as  those  trustees  executors  or
      administrators  or any of them and where a Trustee or  Trustees  is or are
      the same  persons  as  those  trustees  executors  or  administrators  the
      transaction shall be binding on all persons then or thereafter  interested
      hereunder  though  effected and evidenced only by an entry in the accounts
      of the Trustee.

13.   OVERSEEING MANAGEMENT OF COMPANIES

13.1  The Trustee shall not be under any duty nor shall it be bound to interfere
      in the  business  of any company  entity or  association  incorporated  or
      unincorporated  in any  part of the  world  in which  this  Settlement  is
      interested and in particular:

      (i)   the Trustee  shall not be under any duty to exercise any control the
            Trustee may have over or to interfere  in or become  involved in the
            administration  management  or conduct of the business or affairs of
            any  company  in  which  this  Settlement  is or may  be  interested
            although this Settlement holds the whole or a majority of the shares
            carrying  the control of the company  and without  prejudice  to the
            generality  of the foregoing the Trustee shall not be under any duty
            to  exercise  any  voting  powers  or rights  of  representation  or
            intervention  conferred  on the  Trustee  by any  of the  shares  in
            respect of such company;

<PAGE>
      (ii)  the Trustee shall leave the administration management and conduct of
            the business and affairs of such company to the  directors  officers
            and other  persons  authorised  to take  part in the  administration
            management or conduct thereof and the Trustee shall not be under any
            duty to supervise such  directors  officers or other persons so long
            as the Trustee  does not have  actual  knowledge  of any  dishonesty
            relating to such business and affairs on the part of any of them;

      (iii) the  Trustee  shall  assume  at all  times  that  the administration
            management  and conduct of the  business and affairs of such company
            are being carried on competently honestly diligently and in the best
            interests  of  the  Trustee  in  its  capacity  as  shareholders  or
            howsoever they are  interested  therein and the Trustee shall assume
            until  such time as it has actual  knowledge  to the  contrary  that
            persons  appearing  to be or who act as the  directors  officers and
            other   persons   authorised   to  take   part   in  the   aforesaid
            administration   management  and  conduct  are  duly  appointed  and
            authorised  and so that the  Trustee  shall not be under any duty at
            any time to take any steps at all to  ascertain  whether  or not the
            assumptions contained in this sub-clause are correct.

13.2  Without  prejudice to the generality of the  foregoing,  the Trustee shall
      not be under any duty:

      (i)   to  exercise  any  rights or powers  (whether  available  to them as
            shareholders  debenture holders or otherwise) enabling it to appoint
            or elect or to remove a director officer or other person  authorised
            to take part in the  administration  management  or  conduct  of the
            business or affairs of such company and in  particular  shall not be
            under  any duty to take any  steps  to see that any  trustee  or any
            officer  or  nominee  of the  Trustee  becomes a  director  or other
            officer of such company;

      (ii)  to exercise any power to require the payment of a dividend or other

<PAGE>
            distribution of profit and whether of an income or capital nature.

13.3  No  Beneficiary  shall be entitled in any way whatsoever to compel control
      or forbid the exercise in any particular manner of any powers  discretions
      or privileges  (including any voting  rights)  conferred on the Trustee by
      reason of any shares or other rights of whatsoever  nature in or over such
      company.

13.4  The Trustee shall not be liable in any way whatsoever for any loss to such
      company or the Trust Fund or the income  thereof  arising  from any act or
      omission of the directors  officers or other persons  taking part (whether
      or not  authorised)  in the  administration  management and conduct of the
      business  or  affairs  of such  company  (whether  or not any  such act or
      omission  by any such  foregoing  persons  shall be  dishonest  fraudulent
      negligent or otherwise).

13.5  Without prejudice to the generality of the foregoing the Trustee shall not
      be rendered responsible in any way whatsoever for any default or other act
      or omission by the  directors  officers  or other  persons  referred to in
      paragraph  (4) hereof by any express  notice or intimation of such default
      or other act or omission and the Trustee  shall not be obliged or required
      to make and enforce any claim in respect of such a default or other act or
      omission and no person who is or may become  entitled  hereunder  shall be
      entitled  to compel  the  making of such a claim  but the  Trustee  may be
      required to lend their names for the purpose of  proceedings  brought by a
      Beneficiary  in respect of any such  default  act or  omission  upon being
      given a full and  sufficient  indemnity  against all costs and expenses of
      such proceedings.

14.   EXERCISE OF TRUSTEE'S POWERS AND DISCRETIONS

14.1  The Trustee shall exercise the powers and  discretions  vested in it as it
      shall  think most  expedient  for the benefit of all or any of the persons
      actually  or  prospectively  interested  under  this  Settlement  and  may
      exercise  (or refrain from  exercising)  any power or  discretion  for the
      benefit of any one or more of them

<PAGE>
      without being obliged to consider the interests of others or other.

14.2  Subject to the previous  sub-clause every discretion vested in the Trustee
      shall be absolute and  uncontrolled  and every power vested in it shall be
      exercisable  at its absolute and  uncontrolled  discretion and the Trustee
      shall have the same discretion in deciding  whether or not to exercise any
      such power.

15.   POWER TO PAY TAXES AND DUTIES

In the event of any tax duty or fiscal imposition whatsoever becoming payable in
the  Island of Jersey or  elsewhere  in  respect  of the Trust  Fund or any part
thereof in any circumstances  whatsoever the Trustee shall have power to pay all
such  taxes  duties or fiscal  imposition  out of the Trust  Fund or the  income
thereof  notwithstanding that such liability as aforesaid may not be enforceable
through the Courts of the Island of Jersey or of such other  jurisdiction as may
become the forum for the administration  hereof by virtue of the exercise by the
Trustee of its powers in that behalf under this Settlement and shall have entire
discretion  as to the time and manner in which the said  taxes  duties or fiscal
impositions  shall be paid and the Trustee  may pay such taxes  duties or fiscal
impositions  notwithstanding  that the same  shall not be  recoverable  from the
Trustee or the  Beneficiaries  or other persons  entitled  hereunder or that the
payment  shall  not be to the  advantage  of any  Beneficiary  or  other  person
entitled hereunder.

16.   POWER TO INDEMNIFY

The Trustee shall have power to enter into any indemnity in favour of any former
trustee or any other person in respect of any tax duty or fiscal  imposition  or
other liability of any nature prospectively payable in respect of the Trust Fund
or  otherwise  in  connection  with this  Settlement  and  (provided  the amount
intended  to be  charged  or  deposited  is  reasonably  commensurate  with such
prospective  imposition or liability) to charge or deposit the whole or any part
of the Trust Fund as security for such  indemnity in such manner in all respects
as they shall think fit.

<PAGE>
17.   LIABILITY OF RETIRING TRUSTEE

If any Trustee ceases to be a trustee hereof such Trustee shall be released from
all claims demands  actions  proceedings and accounts of any kind on the part of
any person  (whether in existence or not) actually or  prospectively  interested
under this  Settlement  for or in respect of the Trust Fund or the income of the
Trust Fund or the trusts of this  Settlement or any act or thing done or omitted
in execution  or  purported  execution of such trusts other than and except only
actions:-

      (i)   for breach of trust  arising from any fraud,  wilful  misconduct  or
            gross negligence on the part of such Trustee; or


      (ii)  to recover from such Trustee trust property or the proceeds of trust
            property in the possession of such Trustee or previously received by
            such Trustee.

18.   TRUSTEE INDEMNITY

In the purported execution of the trusts powers and provisions hereof no Trustee
shall be liable for any loss to the Trust Fund  arising  in  consequence  of the
failure  depreciation or loss of any investments  made or retained in good faith
or by reason of any mistake or  omission  made in good faith or of any other act
omission  matter or thing  whatsoever  except for breach of trust  arising  from
fraud,  wilful  misconduct or gross negligence on the part of the Trustee who is
sought to be made liable.

19.   POWER OF TRUSTEE TO ACT NOTWITHSTANDING PERSONAL INTEREST

The Trustee shall have power to exercise any power or  discretion  vested in the
Trustees notwithstanding that the Trustee or one or more of the Trustees if more
than one may be personally interested in the exercise thereof.

<PAGE>
20.   RIGHTS OF BENEFICIARIES DURING THE TRUST PERIOD

Subject to the Trustee's  obligations  by virtue of exercise of its  discretions
subject to clause 2.2 hereof:-

20.1  the Trustee shall not be obliged to make known to any  Beneficiaries  that
      this Settlement exists or any matters in relation thereto or that they are
      named as such or that they are now or at any time  hereafter  included  in
      such expression and the Trustee shall not in any way be obliged to contact
      them or any of them until any of them becomes  absolutely and indefeasibly
      entitled to any moneys or  investments  held by the Trustee  hereunder and
      the  Trustee  shall then only be  obliged to inform the person  then being
      entitled  of his or its  actual  entitlement  and  the  existence  of this
      Settlement; and

20.2  the Trustee shall not be under any obligation to disclose to Beneficiaries
      the rights and interests of any other  Beneficiaries  and no Beneficiaries
      shall be entitled to  information  concerning the exercise of any power or
      discretion by the Trustee.

21.   TRUSTEE MAY REFUSE TO MAKE DISCLOSURE

Without  prejudice to any right of the Trustees  under the general law to refuse
disclosure  of any  document it is hereby  declared  that the Trustee  shall not
(subject  to the  Order of any  Court  of  competent  jurisdiction)  be bound to
disclose to any person any of the following documents that is to say:-

21.1  Any document  setting forth or recording any  deliberations of the Trustee
      as to the  manner in which it  should  exercise  any  power or  discretion
      conferred  upon it by this  Settlement  or the reasons for any  particular
      exercise of any such power or discretion; or

21.2  Any other  document  relating to the exercise or proposed  exercise of any
      such

<PAGE>
      power or  discretion  (not being a deed or other  writing  which  actually
      exercises or merely  records the exercise of any such power or  discretion
      and not being  legal  advice  obtained  by the  Trustee at the cost of the
      capital or income of the Trust Fund).

22.   VARIATION OF THIS TRUST AND THE RULES

22.1  The Settlor may from time to time with the written  consent of the Trustee
      and by instrument or  instruments  in writing revoke alter or amend all or
      any of the trust powers or provisions of the Settlement.

22.2  The Trustee may from time to time by instrument in writing revoke alter or
      amend all or any of the provisions of the Rules.

22.3  Notwithstanding  anything in  sub-clauses  22.1 and 22.2 hereof nothing in
      this clause shall authorise any revocation  alteration or amendment to the
      Trust powers or  provisions  of this  Settlement  or the Rules which would
      either  affect  the  beneficial  entitlement  of any  person  who has been
      appointed a Beneficiary under the terms of this Settlement or would permit
      the Trust to be utilised  other than for the benefit of Sales  Agents or a
      subsidiary of the Company.

23.   IRREVOCABILITY

This Settlement shall be irrevocable.

24.   EXPENSES ON CREATION OF DECLARATION

The  Trustee  shall  have  power to pay out of the Trust  Fund all  expenses  of
whatever nature incidental to the creation of this Settlement,

<PAGE>
25.   NAME

This Settlement shall be known as the Agent Loyalty Opportunity Trust or by such
other title as the Trustee shall from time to time appoint by deed.

26.   GENERAL

26.1  The Trustees if more than one shall meet  together as may be necessary for
      the purpose of the trusts of this deed and all decisions  relating thereto
      taken by a majority of the Trustees present at any meeting of the Trustees
      of which  due  notice  has  been  given  to all the  Trustees  shall be as
      effective for all purposes as if such  decisions were the decisions of all
      the Trustees.

26.2  A  written  minute  of a  decision  of all the  Trustees  if more than one
      reached  without  any  meeting  shall if signed by all the  Trustees be as
      effective  for all purposes as if such decision had been reached in a duly
      convened meeting of all the Trustees.

26.3  The Trustees if more than one may appoint such  committee or committees of
      the  Trustees  consisting  of not less than two of the  Trustees  for such
      purpose or purposes and with such powers and authorities always within the
      powers and authorities of the Trustees  themselves and upon such terms and
      conditions  including  in  particular  the  removal of members of any such
      committee or  committees  and the  appointment  of other  members in their
      place as the Trustees shall from time to time decide.

26.4  The  Trustees  if more  than  one and if any  one or  more  Trustee  is an
      individual shall appoint a secretary who may be one of themselves.

26.5  The  Trustee  or any of them if more than one shall not be liable  for any
      loss or damage  arising to the Trust Fund, the Shares or the assets of the
      Trust  otherwise than by reason of the gross  negligence or wilful default
      of themselves their

<PAGE>
      servants or agents and shall be entitled to an  indemnity  from the assets
      of the Trust for all and any liability  rising to the Trustee by reason of
      its exercise or  purported  exercise of all or any of its powers or duties
      hereunder or performance  other than liability  arising by reason of their
      gross negligence or wilful default.

26.6  All  nominations  specifications  directives and notices by the Company or
      any  Subsidiary  shall be in writing signed by a Director or the Secretary
      of the Company or Subsidiary (as the case may be).

26.7  (i)  Notwithstanding the provisions of Clause 27 hereof the Trustee may at
      any time or times  during the Trust  Period by deed declare that this Deed
      shall from the date of such declaration take effect in accordance with the
      law of some  other  place in any part of the  world  (not  being a country
      under the law of which this Deed would not be irrevocable) and as from the
      date of such declaration the law of the country named therein shall be the
      law  applicable  to the Deed but  subject to the power  conferred  by this
      sub-clause and until further declaration is made hereunder.

      (ii) So often  as any  such  declaration  as  aforesaid  shall be made the
      Trustee  may  at  any  time  or  times   thereafter   by  deed  make  such
      consequential alterations or additions in the trusts powers and provisions
      of the Deed as the Trustee may  consider  necessary or desirable to ensure
      that so far as may be possible  the trusts  power and  provisions  of this
      Deed shall (mutatis  mutandis) be as valid and effective as they are under
      the Laws of Jersey.

27.   PROPER LAW

This  Settlement is established  under the laws of the said Island of Jersey and
subject  to the powers  conferred  on the  Trustee  herein and to each and every
exercise  thereof the rights of all parties and the  construction  and effect of
the  provisions  hereof shall be subject to the  exclusive  jurisdiction  of and
construed  and  regulated  only  according  to the

<PAGE>
laws of the said Island which subject to and as  hereinafter  provided  shall be
the forum for the administration thereof notwithstanding that the Trustee or one
or more of them if more than one may from time to time be resident or  domiciled
elsewhere than in the Island of Jersey.

28.   SIGNIFICANCE OF HEADINGS

The headings in this document are inserted for convenience of reference only and
shall have no legal effect nor shall they affect in any way the  construction of
any clause or Schedule contained herein.


IN WITNESS  WHEREOF the parties hereto have executed this Settlement the day and
year first above written.

THE COMMON SEAL of
BG SERVICES LIMITED
was hereunto affixed
in the presence of:-

/s/ R W GREEN
Director

/s/ J H THWAITES
Authorised Signatory


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

/s/ R J PIROUET
Director

/s/ R W GREEN
Director


<PAGE>

                                  SCHEDULE ONE

                                   Settled Sum

                             One hundred US Dollars


<PAGE>

                                  SCHEDULE TWO

                        AGENT LOYALTY OPPORTUNITY TRUST

                                     RULES

These  rules have been  established  pursuant to the Agent  Loyalty  Opportunity
Trust established by Settlement dated 23 May 1997.

1.    Definitions

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

      "Account Value" shall mean the accumulated value as determined by the Life
      Company  of all in force  fixed and  variable  deferred  annuity  and life
      insurance policies issued by the Life Company and sold by an Award Holder.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>
      "Specified  Anniversary" shall mean the date set out in an Award Agreement
      on which an Award  Holder's  Award shall be forfeited in  accordance  with
      Rule 6.4.

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

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

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

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

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

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

      "Year" shall mean calendar year

1.2   The single includes the plural and vice versa.

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

<PAGE>
2.    Administration

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

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

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

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

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

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

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

<PAGE>
      or any Award.

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

3.    Eligibility

Awards may be granted to any Sales Agents.

4.    Awards subject to Rules

4.1   Restrictions

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

4.2   No Rights as a Shareholder

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

<PAGE>
5.    Grant of Awards

5.1   General

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

5.2   Award Agreement

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

5.3   Award Term

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

6.    Vesting Conditions

6.1   No Award  Holder  shall be entitled to exercise  his rights under an Award
      Agreement unless and until the Vesting  Conditions  applicable to an Award
      have been satisfied.  In order to determine whether the Vesting Conditions
      have been  satisfied  in  respect of any year the  following  calculations
      shall be made:-

<PAGE>
      (i)   As soon as practicable after 1 January of each year the Life Company
            shall notify the Trustee in writing of:-

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

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


6.2   Vesting Hurdle

      An Award  Holder's  Award shall vest and his right under the Award  become
      exercisable from the next following  Vesting Date otherwise on and subject
      to the  terms of the Award  Agreement  if his  Ending  Value  exceeds  the
      Specified Percentage of his Beginning Value in respect of the same year.

6.3   Vesting Date

      The Award  Holders'  Award for shall  vest  subject to  fulfilment  of the
      provisions of this Rule 6 on 1 March in the year following the Calculation
      Date, and such date shall be known as the Vesting Date.

6.4   Failure to Vest

      In the event that an Award  Holder  does not meet the  Vesting  Conditions
      contained  in this Rule in respect  of any year then that  Award  Holders'
      Award shall not vest and become  exercisable  in that year.  If that Award
      Holder's  Award does not meet the  conditions of Rule 6.3 by the Specified
      Anniversary  of the Award Date then that  Award  Holder's  Award  shall be
      forfeited and shall be of no further effect.

<PAGE>
6.5   Notification of Vesting

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


7.    Exercise of an Award following Vesting

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

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

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

<PAGE>
8.    Payment of Bonus following Exercise

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

      B     =    (EP-AP) x U

      Where B     = the Bonus payable;

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

            AP    = the Award Price; and

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

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

8.2   Any payment of any Bonus to an Award  Holder shall be made net of any tax,
      duty or other amounts  which the Trustee,  the Life Company or the Company
      shall be obliged or entitled to deduct  therefrom.  The Trustee shall have
      power

<PAGE>
      to  withhold  all or any  part of an  Award  Holder's  Bonus  to meet  any
      obligations of the Award Holder due to the Trustee,  the Life Company, the
      Company or otherwise.

9.    Termination of an Award Holder's Agency Agreement

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

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

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

10    Modification, Extension and Renewal of Awards

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

11.   No Rights in respect of Agency Agreement

Neither  these Rules nor any Award made  hereunder  shall  confer upon any Award
Holder any right as against the Life Company other than the rights determined by
the

<PAGE>
terms of the Agency  Agreement nor shall the existence of an Award  interfere in
any way with the Life Company's  rights to terminate the Agency Agreement of any
Award Holder in accordance with its terms.

12.   Duration and Amendments

12.1  Duration

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

12.2  Amendment; Termination

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

12.3  Effect of Amendment or Termination

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

13.   Proper Law

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

<PAGE>
                        AGENT LOYALTY OPPORTUNITY TRUST

                                AWARD AGREEMENT

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

BETWEEN

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

(2)   The Sales Agent whose name appears below.

WHEREAS

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

NOW IT IS HEREBY AGREED as follows:-

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

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

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

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

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


IN WITNESS WHEREOF

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

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



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



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



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



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

<PAGE>
AGENT LOYALTY OPPORTUNITY TRUST

AWARD AGREEMENT FIRST SCHEDULE

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


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


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


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


Specified Anniversary       ....................................................


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