Document:

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                                                                    EXHIBIT 10.1
                                SUPPORT AGREEMENT

      AGREEMENT, dated as of March 18, 1982, between THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation ("Prudential") and PRUDENTIAL
FUNDING CORPORATION, a New Jersey corporation ("Funding").

                              W I T N E S S E T H:

      WHEREAS, Prudential owns all of the issued and outstanding capital stock
of PRUCO, INC. a New Jersey corporation, which in turn owns all of the issued
and outstanding capital stock of Funding; and

      WHEREAS, Funding plans to incur indebtedness for money borrowed from time
to time from parties other than PRUCO or Prudential ("Debt") in order to enable
Funding to carry on its business; and

      WHEREAS, Prudential and Funding desire to provide certain assurances to
holders of Debt with respect to the stock ownership and financial condition of
Funding; and

      WHEREAS, Prudential plans to finance the borrowing requirements of
PruCapital, Inc., a Delaware corporation, PruLease, Inc., a Delaware
corporation, and, if so requested, other companies within the Prudential group;
and

      WHEREAS, the corporate interests of Prudential will be furthered and the
value of its investments in its subsidiaries preserved and potentially enhanced
by its entering into this Support Agreement:

      NOW THEREFORE, the parties agree as follows:

1. Stock Ownership of Funding. Prudential will directly (or indirectly through a
wholly-owned subsidiary of Prudential own and hold the entire legal title to and
beneficial interest in all outstanding shares of stock of Funding having the
power under ordinary circumstances to vote for the election of members of the
Board of Directors of Funding, and will not directly or indirectly pledge or in
any way encumber or otherwise dispose of any such shares of stock.

2. Maintenance of Consolidated Tangible Net Worth. Prudential will cause Funding
and its subsidiaries, if any, at all times to have a Consolidated Tangible Net
Worth of at least $1.00. "Consolidated Tangible Net Worth" shall mean, as of the
time of any determination thereof, the excess of (1) the sum of (i) the par
value (or value stated on the books of Funding) of the capital stock of all
classes of Funding, plus (or minus in the case of a surplus deficiency) (ii) the
amount of the consolidated surplus, whether capital or earned of Funding and its
subsidiaries, if any, plus (iii) the amount of outstanding Subordinated Debt,
over (2) all intangible assets of Funding and its subsidiaries, if any; all
determined in accordance with generally accepted accounting principles as in
effect on the date hereof. "Subordinated Debt" shall mean indebtedness of
Funding which is held by Prudential or one of its wholly-owned subsidiaries and
which is expressly and validly subordinated to all Debt of Funding from time to
time outstanding.

3. No Guaranty. This Agreement is not, and nothing herein contained and nothing
done pursuant hereto by Prudential shall be deemed to constitute, a direct or
indirect guaranty by Prudential of the payment of any debt or other obligation,
indebtedness or liability, of any kind or character whatsoever, of Funding or
its subsidiaries, if any.

4. Waiver. Prudential hereby waives any failure or delay on the part of Funding
in asserting or enforcing any of its rights or in making any claims or demands
hereunder.

5. Modification, Amendment and Termination. This Agreement may be modified or
amended in any way not less favorable to Funding (as determined by Prudential in
its sole and exclusive judgment exercised in good faith), and may be terminated
at any time by notice from one party to the other on not less than 90 days
written notice, except that if termination of this Agreement is necessary to
meet any legal or regulatory requirements applicable to Prudential, this
Agreement may be terminated immediately by Prudential upon written notice to
Funding. Notwithstanding any such termination, the obligations of Prudential
under paragraph 2 hereof shall remain in full force and effect until the
retirement of all Debt and of all indebtedness guaranteed by Funding outstanding
on the termination date unless the holders of all such Debt and indebtedness
shall have consented thereto in writing.
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6. Successors. The agreements herein set forth shall be mutually binding upon,
and inure to the mutual benefit of, Prudential and Funding and their respective
successor.

7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.

      IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.

                                     THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                     By /s/ Garnett L. Keith, Jr.
                                       -----------------------------------------
                                                    Vice President

                                     PRUDENTIAL FUNDING CORPORATION

                                     By /s/ L.S. Fried
                                       -----------------------------------------
                                                    President<PAGE>

                                                                    EXHIBIT 10.2

                          UNITED STATES DISTRICT COURT
                             DISTRICT OF NEW JERSEY

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

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

      2. WHEREAS, the named plaintiffs in several of the constituent putative
class actions to the Centralized Proceeding filed a Consolidated Amended Class
Action Complaint on October 24, 1995, integrating the claims raised in several
of the original complaints which were filed in the actions beginning in
February, 1995;
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      3. WHEREAS, the Defendants moved to dismiss the Consolidated Amended
Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), and the Court,
by Order dated May 10, 1996 (as amended June 10, 1996), dismissed portions of
the aforesaid complaint without prejudice and allowed the Plaintiffs to proceed
with certain of their claims;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A. DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                  (a) An untrue statement of material fact; or

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

                                      -14-
<PAGE>

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

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

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

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

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

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

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

B. SETTLEMENT RELIEF

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

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

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

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

C. ALTERNATIVE DISPUTE RESOLUTION PROCESS

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

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

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

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

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

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

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

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

                                      -17-
<PAGE>

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

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

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

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

                                      -18-
<PAGE>

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

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

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

                 110,000                                $150

                 220,000                                $250

                 330,000                                $300

                 440,000                                $250

                 550,000                                $150

            660,000 and above                           $ 50

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

                                      -19-
<PAGE>

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

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

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

D. BASIC CLAIM RELIEF

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

                                      -20-
<PAGE>

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

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

E. BINDING EFFECT OF THIS STIPULATION

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

                                      -21-
<PAGE>

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

F. CONDITIONS SUBSEQUENT

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

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

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

                                      -22-
<PAGE>

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

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

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

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

                                      -23-
<PAGE>

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

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

                                      -24-
<PAGE>

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

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

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

                                      -25-
<PAGE>

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

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

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

                                      -26-
<PAGE>

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

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

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

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

                                      -27-
<PAGE>

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

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

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

                                      -28-
<PAGE>

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

      5. PUBLICATION OF POST-SETTLEMENT NOTICE AND PUBLICITY.

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

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

                                      -29-
<PAGE>

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

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

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

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

                                      -30-
<PAGE>

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

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

      8. FINAL SETTLEMENT NOTICE.

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

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

                                      -31-
<PAGE>

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

H. REQUESTS FOR EXCLUSION

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

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

I. OBJECTIONS TO SETTLEMENT

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

                                      -32-
<PAGE>

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

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

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

                                      -33-
<PAGE>

J. RELEASE AND WAIVER, ORDER OF DISMISSAL

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

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

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

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

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

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

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

                                      -34-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                      -35-
<PAGE>

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

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

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

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

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

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

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

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

                                      -36-
<PAGE>

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

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

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

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

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

                                      -37-
<PAGE>

K. ATTORNEYS' FEES, COSTS AND EXPENSES

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

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

                                      -38-
<PAGE>

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

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

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

                                      -39-
<PAGE>

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

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

L. ORDER OF NOTICE, SETTLEMENT HEARING AND ADMINISTRATION

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

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

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

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

                                      -40-
<PAGE>

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

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

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

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

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

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

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

                                      -41-
<PAGE>

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

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

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

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

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

                                      -42-
<PAGE>

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

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

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

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

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

                                      -43-
<PAGE>

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

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

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

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

M. FINAL APPROVAL AND FINAL ORDER AND JUDGMENT

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

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

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

                                      -44-
<PAGE>

            (c) certify the Class for settlement purposes only;

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

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

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

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

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

                                      -45-
<PAGE>

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

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

N. MODIFICATION OR TERMINATION OF THE STIPULATION

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

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

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

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

                                      -46-
<PAGE>

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

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

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

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

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

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

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

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

                                      -47-
<PAGE>

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

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

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

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

O. REPRESENTATIONS AND WARRANTIES

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

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

                                      -48-
<PAGE>

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

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

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

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

                                      -49-
<PAGE>

P. GENERAL MATTERS AND RESERVATIONS

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

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

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

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

                                      -50-
<PAGE>

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

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

            (a) If to Plaintiffs, then to:

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

                                    and

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

            (b) If to Defendants, then to:

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

                                    and

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

                                   and

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

                                      -51-
<PAGE>

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

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

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

                                      -52-
<PAGE>

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

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

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

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

                                      -53-
<PAGE>

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

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

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

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

                                         APPROVED AND AGREED TO BY
                                         THE PRUDENTIAL INSURANCE
                                         COMPANY OF AMERICA

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

                                         COUNSEL TO THE PRUDENTIAL
                                         INSURANCE COMPANY OF AMERICA

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

                                      -54-
<PAGE>

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

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

                                      -55-
<PAGE>

                                         APPROVED AND AGREED TO BY

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

                                      -56-
<PAGE>

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

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

                                      -57-
<PAGE>

                                   EXHIBIT A

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

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

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

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

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

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

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

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

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

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

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

                                   EXHIBIT B

                             PRUDENTIAL ALTERNATIVE
                         DISPUTE RESOLUTION GUIDELINES
<PAGE>

                            TABLE OF CONTENTS

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

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

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

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

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

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

                                       i
<PAGE>

PRUDENTIAL ALTERNATIVE DISPUTE RESOLUTION GUIDELINES

I.    INTRODUCTION

      A.    GENERAL

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

      B.    OVERVIEW OF PROCESS

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

      C.    DEFINITIONS

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

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

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

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

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

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

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

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

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

                                      -2-
<PAGE>

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

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

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

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

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

                                      -3-
<PAGE>

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

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

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

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

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

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

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

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

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

                                      -4-
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                      -5-
<PAGE>

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

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

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

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

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

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

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

                        (a) An untrue statement of material fact; or

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

                                      -6-
<PAGE>

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

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

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

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

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

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

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

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

            "PUA" shall mean paid-up additional insurance.

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

                                      -7-
<PAGE>

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

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

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

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

                                      -8-
<PAGE>

      D.    GENERAL SCORING OF CLAIM RESOLUTION FACTORS

                                     POINTS

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

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

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

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

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

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

      E.    COMPLAINT HISTORY SCORING ADJUSTMENTS

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

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

                                      -9-
<PAGE>

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

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

F.    NON-SPECIFIC EVIDENTIARY CONSIDERATIONS

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

1.    CONSIDERATIONS WHICH MAY INCREASE SCORE (POSITIVE CONSIDERATIONS)

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

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

                                      -10-
<PAGE>

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

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

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

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

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

2.    CONSIDERATIONS WHICH MAY DECREASE SCORE (NEGATIVE CONSIDERATIONS)

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

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

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

                                      -11-
<PAGE>

G.    CUMULATIVE, ALTERNATIVE AND DISCRETIONARY RELIEF

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

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

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

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

                                      -12-
<PAGE>

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

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

H.    DEFENDANTS' DEFENSES WAIVED

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

I.    DECEASED INSUREDS

1.    POLICY LAPSE PRIOR TO INSURED'S DEATH

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

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

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

                                      -13-
<PAGE>

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

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

2.    INSURED'S DEATH WHILE CLAIM IS PENDING

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

                                      -14-
<PAGE>

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

3.    INSURED'S DEATH AND DEATH BENEFITS PAID

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

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

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

J.    OTHER INSURANCE PRODUCTS

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

                                      -15-
<PAGE>

II.   FINANCED INSURANCE

      A.    ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

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

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

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

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

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

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

                                      -16-
<PAGE>

B.    SPECIFIC EVIDENTIARY CONSIDERATIONS

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

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

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

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

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

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

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

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

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

                                      -17-
<PAGE>

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

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

C.    DETERMINATION OF RELIEF

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

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

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

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

                                      -18-
<PAGE>

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

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

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

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

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

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

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

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

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

                                      -19-
<PAGE>

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

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

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

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

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

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

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

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

                                      -20-
<PAGE>

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

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

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

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

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

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

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

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

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

                                      -21-
<PAGE>

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

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

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

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

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

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

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

                                      -22-
<PAGE>

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

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

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

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

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

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

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

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

                                      -23-
<PAGE>

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

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

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

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

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

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

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

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

                                      -24-
<PAGE>

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

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

                                      -25-
<PAGE>

III.  ABBREVIATED PAYMENT ("APP")

      A.    ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

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

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

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

      B.    SPECIFIC EVIDENTIARY CONSIDERATIONS

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

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

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

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

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

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

                                      -26-
<PAGE>

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

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

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

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

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

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

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

                                      -27-
<PAGE>

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

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

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

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

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

C.    DETERMINATION OF RELIEF

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

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

                                      -28-
<PAGE>

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

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

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

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

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

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

                                      -29-
<PAGE>

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

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

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

                                      -30-
<PAGE>

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

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

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

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

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

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

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

                                      -31-
<PAGE>

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

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

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

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

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

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

                                      -32-
<PAGE>

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

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

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

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

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

                                      -33-
<PAGE>

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

      A.    ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

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

      B.    SPECIFIC EVIDENTIARY CONSIDERATIONS

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

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

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

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

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

            e.    the Policyholder did not receive the Policy.

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

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

                                      -34-
<PAGE>

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

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

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

      C.    DETERMINATION OF RELIEF

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

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

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

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

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

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

                                      -35-
<PAGE>

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

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

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

                                      -36-
<PAGE>

V.    OTHER CLAIMS

      A.    ASSESSMENT OF CLAIM/CLAIM RESOLUTION FACTORS

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

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

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

      B.    DETERMINATION OF RELIEF

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

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

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

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

                                      -37-
<PAGE>

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

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

                                      -38-
<PAGE>

VI.   ALLOCATION OF ADDITIONAL REMEDIATION AMOUNT

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

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

            (ii)  the distribution of Claims among Claim Categories;

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

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

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

                                      -39-
<PAGE>

                                   SCHEDULE A

                             DESIGNATED NEW POLICIES

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

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

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

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

                               DESIGNATED ANNUITY

       Flexible Premium Deferred Annuity: Prudential's Fixed Interest Plan

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

                                      -40-
<PAGE>

                                    EXHIBIT 1

                           STATE INSURANCE DEPARTMENTS

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

                                   EXHIBIT C

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

<PAGE>

                               TABLE OF CONTENTS

                                                                         Page
                                                                         ----

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

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

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

                                      -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            Page
                                                                            ----

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

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

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

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

                                      -ii-
<PAGE>

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

I.    INTRODUCTION

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

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

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

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

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

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

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

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

                                      -2-
<PAGE>

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

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

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

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

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

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

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

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

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

                                      -3-
<PAGE>

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

II.   CLAIM PROCESSING AND REVIEW

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

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

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

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

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

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

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

                                      -4-
<PAGE>

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

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

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

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

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

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

            4.    correspondence concerning the Policy(ies);

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

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

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

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

                                      -5-
<PAGE>

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

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

            11.   the Claim Summary Form;

            12.   correspondence concerning the Claim;

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

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

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

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

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

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

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

                                      -6-
<PAGE>

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

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

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

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

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

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

                                      -7-
<PAGE>

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

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

      I. CLAIM EVALUATION.

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

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

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

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

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

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

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

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

                                      -8-
<PAGE>

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

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

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

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

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

                                      -9-
<PAGE>

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

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

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

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

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

                                      -10-
<PAGE>

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

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

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

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

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

                                      -11-
<PAGE>

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

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

III.  COMMUNICATIONS, NOTIFICATION AND IMPLEMENTATION OF RELIEF

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

                                      -12-
<PAGE>

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

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

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

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

      A.    CLAIMANT REPRESENTATIVE.

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

                                      -13-
<PAGE>

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

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

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

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

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

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

      B. REGULATORY OVERSIGHT STAFF.

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

                                      -14-
<PAGE>

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

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

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

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

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

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

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

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

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

                                      -15-
<PAGE>

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

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

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

      In connection with performing the above enumerated functions:

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

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

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

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

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

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

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

                                      -16-
<PAGE>

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

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

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

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

      C. COMPANY STEERING COMMITTEE.

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

      D. INDEPENDENT AUDIT.

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

                                      -17-
<PAGE>

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

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

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

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

            4.    Claims are being resolved in a timely manner.

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

V.    APPEALS PROCEDURES

      A.    SELECTION OF APPEALS COMMITTEE.

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

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

                                      -18-
<PAGE>

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

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

      B. COMMENCEMENT OF APCOM REVIEW.

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

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

                                      -19-
<PAGE>

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

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

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

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

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

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

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

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

                                      -20-
<PAGE>

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

      C. APCOM REVIEW PROCEDURES.

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

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

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

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

                                      -21-
<PAGE>

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

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

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

                                      -22-
<PAGE>

                                    EXHIBIT D

                            GUIDELINES FOR PRUDENTIAL
                               BASIC CLAIM RELIEF
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

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

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

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

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

                            GUIDELINES FOR PRUDENTIAL
                               BASIC CLAIM RELIEF

I.    INTRODUCTION

      A.    OVERVIEW

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

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

      B.    DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

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

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

            1982 through 1984                                  2

            1985 through 1988                                  6

            1989 through 1991                                  5

            1992 through 1995                                  2

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

II.   OPTIONAL PREMIUM LOAN

      A.    DESCRIPTION

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

      B.    ELIGIBILITY

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

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

                                       3
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       4
<PAGE>

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

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

III.  ENHANCED VALUE POLICIES

      A.    DESCRIPTION

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

      B.    ELIGIBILITY

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

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

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

                                       5
<PAGE>

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

      C.    OBTAINING ENHANCED VALUE POLICIES

            To obtain an Enhanced Value Policy:

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

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

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

IV.   ENHANCED VALUE ANNUITIES

      A.    DESCRIPTION

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

                                       6
<PAGE>

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

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

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

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

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

<TABLE>
<CAPTION>
                                   FIRST POLICY YEAR                SECOND POLICY YEAR                THIRD POLICY YEAR
  INITIAL PREMIUM                  PAYMENT CREDITED                 PAYMENT CREDITED                  PAYMENT CREDITED
  ---------------                  ----------------                 ----------------                  ----------------
<S>                                <C>                              <C>                               <C>
  Less than $25,000                2% of the Initial Premium        2% of the Initial Premium         1% of the Initial Premium
  $25,000 to $50,000               3% of the Initial Premium        2% of the Initial Premium         1% of the Initial Premium
</TABLE>

            3. for which any applicable surrender charges are waived
      beginning on the later of (a) the date the Policyholder reaches age 59 1/2
      and (b) the date the Enhanced Value Annuity has been in force four years.

      B.    ELIGIBILITY

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

            1. Policyholders with in-force traditional whole-life Policies,
      other than those described in Section IV.B.2. below, may apply for an
      Enhanced Value Annuity with respect to each such Policy, provided that
      they have not applied for an Enhanced Value Policy as to such Policy. In
      addition, such Policyholders may also apply for an Optional Premium Loan
      or a Mutual Fund Enhancement with respect to such Policy.

                                       7
<PAGE>

            2. Policyholders with Policies, as described in Section III.B.1.
      above, may apply for an Enhanced Value Annuity as to such Policy, provided
      that they have not applied for an Enhanced Value Policy as to such Policy.
      In addition, such Policyholders may also apply for an Optional Premium
      Loan or a Mutual Fund Enhancement with respect to such Policy.

            3. Policyholders with in-force VAL/AL Policies may apply for an
      Enhanced Value Annuity with respect to each such Policy, provided that
      they have not applied for an Enhanced Value Policy as to such Policy. In
      addition, such Policyholders may also apply for an Optional Premium Loan
      or a Mutual Fund Enhancement with respect to such Policy.

            4. Policyholders with terminated, lapsed or surrendered Policies may
      apply for an Enhanced Value Annuity with respect to each such Policy,
      provided that they have not applied for an Enhanced Value Policy as to
      such terminated, lapsed or surrendered Policy.

      C.    OBTAINING ENHANCED VALUE ANNUITIES

            To obtain an Enhanced Value Annuity, a Policyholder must make the
initial payment with money from a source other than a surrender of, or a policy
loan against or withdrawal of the values of, any existing life insurance or
annuity product issued by the Company. The owner of an Enhanced Value Annuity
must be the same as the owner of the Policy for which the Policyholder is
eligible to participate in Basic Claim Relief under these guidelines. The
annuitant must be the owner, or one of the owners, of the Policy with respect to
which the election is made. If the Policy is solely owned by a non natural
entity, then the annuitant will be the Insured under the Policy. The annuitant
for the Enhanced Value Annuity must be under such maximum age for issuance of
annuities as required by applicable state law or regulation, and in no event
older than age 85. No money from a tax-qualified plan or product will be
accepted as payment for an Enhanced Value Annuity, and the Enhanced Value
Annuity will not be issued on a tax-qualified basis. If a Policyholder obtains
an Enhanced Value Annuity but surrenders or assigns the annuity during the first
three years, his or her annuity will not be credited with any subsequent
payment by the Company.

V.    MUTUAL FUND ENHANCEMENT

      A.    DESCRIPTION

            The Company will offer eligible Policyholders the right to obtain a
Mutual Fund Enhancement, subject to the conditions of eligibility set forth
below. The Mutual Fund Enhancement will be a financial contribution by the
Company for purchase of certain Mutual Fund Shares in addition to the initial
purchase amount for such Mutual Fund Shares made by the Policyholder. The Mutual
Fund Shares will be those shares in certain mutual funds set

                                       8
<PAGE>

forth on Schedule B hereto and currently distributed by Prudential Securities,
Inc., a subsidiary of Prudential (the "Designated Mutual Funds"). This document
does not constitute an offer to purchase any Mutual Fund Shares. Prior to
receiving any Mutual Fund Shares, the Policyholder will be provided a prospectus
(or prospectuses) that describes in detail the expenses, charges, and risks
associated with such Mutual Fund Shares.

            The shares (the "Class B Shares") in the Designated Mutual Funds
available to Policyholders for the Mutual Fund Enhancement are described in
greater detail in the prospectus for each Designated Mutual Fund. The Class B
Shares will be offered subject to a contingent deferred sales charge, as
described in the relevant prospectus, that generally begins at 5% and decreases
to zero over a period of approximately six years. An initial purchase of Class B
Shares in any such Designated Mutual Fund must be no less than $1,000, or such
other amount as set forth in the applicable prospectus and the amount entitled
to receive the enhancement described below is subject to the following limits:

                                                      MAXIMUM POLICYHOLDER
      POLICYHOLDER'S                                INITIAL PURCHASE AMOUNT
      POLICY FACE AMOUNT                            ENTITLED TO ENHANCEMENT
      ------------------                            -----------------------

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

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

Concurrent with the initial purchase of Class B Shares, the Company will
purchase additional Class B Shares for the purchaser's account in an amount
equal to 4% of the amount of the initial purchase amount.

      B.    ELIGIBILITY

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

            1. Policyholders with in-force traditional whole-life Policies,
      other than those described in Section V.B.2. below, may apply for Mutual
      Fund Enhancements with respect to each such Policy, provided that they
      have not applied for an Enhanced

                                       9
<PAGE>

      Value Policy as to such Policy. In addition, such Policyholders may also
      apply for an Optional Premium Loan or Enhanced Value Annuity with respect
      to such Policy.

            2. Policyholders with Policies, as described in Section III.B.1.
      above, may apply for Mutual Fund Enhancements as to such Policy, provided
      that they have not applied for an Enhanced Value Policy as to such Policy.
      In addition, such Policyholders may also apply for an Optional Premium
      Loan or Enhanced Value Annuity with respect to such Policy.

            3. Policyholders with in-force VAL/AL Policies may apply for Mutual
      Fund Enhancements with respect to each such Policy, provided that they
      have not applied for an Enhanced Value Policy as to such Policy. In
      addition, such Policyholders may also apply for an Optional Premium Loan
      or Enhanced Value Annuity with respect to such Policy.

            4. Policyholders with terminated, lapsed or surrendered Policies may
      apply for Mutual Fund Enhancements with respect to each such Policy,
      provided that they have not applied for an Enhanced Value Policy as to
      such terminated, lapsed or surrendered Policy.

C.    OBTAINING A MUTUAL FUND ENHANCEMENT

            To obtain a Mutual Fund Enhancement, a Policyholder must make the
initial payment with money from a source other than a surrender of, or a policy
loan against or withdrawal of the values of any existing life insurance or
annuity product issued by the Company. The purchaser must be the owner of the
Policy with respect to which the election is made. No money from a tax-qualified
plan or product will be accepted as payment for Mutual Fund Shares, and the MFS
will not be issued and sold to individual retirement accounts or to qualified
employee benefit plans on a tax-qualified basis.

                                       10
<PAGE>

                                   SCHEDULE A

                        DESIGNATED ENHANCED VALUE ANNUITY

PRUDENTIAL'S FIXED INTEREST PLAN; PRUDENTIAL'S VARIABLE INVESTMENT PLAN

                        DESIGNATED ENHANCED VALUE POLICY

================================================================================
        FACE AMOUNT          ISSUE AGES (0-75)             ISSUE AGES (76-85)
        -----------          -----------------             ------------------
--------------------------------------------------------------------------------
     $5,000 - $24,999           Life at 85                     Life at 90
--------------------------------------------------------------------------------
     $25,000 and above          Life at 85                 Estate 25 Whole Life
================================================================================

      Where the Policy making the Policyholder eligible for relief is a
Survivorship Policy and both insureds are alive, the Designated Enhanced Value
Policy shall be a Survivorship policy with a face amount not exceeding
$2,000,000. Where an insured under a Survivorship Policy is deceased, the above
table shall apply with respect to the Designated Enhanced Value Policy on the
life of the remaining surviving insured, which Enhanced Value Policy shall have
a face amount not exceeding $1,000,000.

      Where the Policy making the Policyholder eligible for relief is a Joint
Whole Life Policy, a separate Designated Enhanced Value Policy as set forth on
the above table shall apply with respect to the life of each insured; each such
Designated Enhanced Value Policy shall have a face amount not to exceed one-half
of the face amount of the Joint Whole Life Policy making the Policyholder
eligible for relief; and both Designated Enhanced Value Policies together shall
have an aggregate face amount not exceeding $1,000,000.
<PAGE>

                                   SCHEDULE B

                                  MUTUAL FUNDS

The Prudential Equity Fund
The Prudential Equity Income Fund
The Prudential Allocation Fund/Balanced Portfolio
The Prudential World Fund/Global Series
The Prudential Diversified Bond Fund
The Prudential Municipal Bond Fund/Intermediate Term Series
The Prudential National Municipal Fund
<PAGE>

                           EXHIBIT E -- HEARING ORDER
<PAGE>

                          UNITED STATES DISTRICT COURT
                             DISTRICT OF NEW JERSEY

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

            ORDER CONDITIONALLY CERTIFYING CLASS FOR SETTLEMENT PURPOSES,
            DESIGNATING CLASS COUNSEL AND CLASS REPRESENTATIVES, STAYING PENDING
            MOTIONS, DIRECTING ISSUANCE OF NOTICE, ISSUING INJUNCTION AND
            SCHEDULING SETTLEMENT HEARING

      Numerous actions that have been filed against defendant The Prudential
Insurance Company of America ("Prudential") and certain employees, officers and
directors of the foregoing (the "Individual Defendants," collectively, the
"Defendants") have been centralized by the Judicial Panel on Multidistrict
Litigation in this Court (the "Actions," as identified in Exhibit A hereto). The
Consolidated Complaint, as amended on September 20, 1996 (the "Consolidated
Complaint"), asserts claims relating to the Defendants' sales practices and
contains allegations, among other things, involving misrepresentations
concerning: (i) the use of an existing policy's cash value or dividend or
interest stream to purchase or maintain a new
<PAGE>

policy or other policy by means of a surrender, withdrawal or loan; (ii) the
number of out-of-pocket cash premium payments required to be paid for a policy
and/or the benefits to be realized or paid based on a particular number of cash
premium payments; and (iii) that the product being sold was solely or
predominantly an investment or savings vehicle rather than a life insurance
policy.

      Shortly after this litigation was initiated, the New Jersey Commissioner
of Insurance headed a Multi-State Life Insurance Task Force (the "Task Force")
to examine sales and marketing practices in the life insurance industry,
beginning with a market conduct examination of Prudential, the largest life
insurer in the United States. After the Task Force had concluded an extensive
review, the Task Force and Prudential each announced a remediation plan which
the Task Force and Prudential agreed provided fair and appropriate relief to
policyholders who may have been harmed by misrepresentations made in the sale of
their policies (the "Task Force Plan"). Forty-three states and the District of
Columbia have executed agreements directing Prudential to implement the Task
Force Plan.

      Before Prudential had begun to implement the Task Force Plan, the parties
and their attorneys in the Actions entered into a Stipulation of Settlement
(including the exhibits annexed thereto), dated October 28, 1996 (the
"Stipulation"), in which the parties agreed upon a plan for settling the Actions
subject to the approval and determination of the Court as to the fairness,
reasonableness and adequacy of the settlement, which, if approved, is to be in
full and final discharge of all claims and matters that have been alleged or
might be raised in connection with the allegations raised in the Actions. The
parties' proposed settlement expands upon the Task Force Plan.

                                      -2-
<PAGE>

      Upon reviewing the Stipulation, the Consolidated Complaint, the pleadings
and other papers submitted in the Actions and all prior proceedings held herein,
and the parties having requested that the Court enter an Order: (i)
conditionally certifying the Class solely for the purpose of seeking a
settlement of the Actions and for no other purpose and without an adjudication
of the merits, the parties having preserved all of their legal rights, defenses
and remedies; (ii) designating class counsel and class representatives for
settlement purposes; (iii) staying all pending motions in the Actions; (iv)
directing the issuance of a Class notice; (v) issuing an injunction: and (vi)
scheduling a hearing on the fairness, reasonableness and adequacy of the
proposed settlement, and after due deliberation having been had thereon:

      It is on this ___ day of October, 1996

      ORDERED, ADJUDGED AND DECREED as follows:

      1. Class Certification for Settlement Purposes Only. Pursuant to the
procedures set forth in Rule 23 of the Federal Rules of Civil Procedure, based
on the record, including the class action allegations in the Consolidated
Complaint, the Court conditionally, certifies, for settlement purposes only,
the parties having preserved all of their legal rights, defenses and remedies, a
class that consists of all persons who own or owned at termination an individual
permanent whole life insurance policy issued by Prudential or any of its United
States Life insurance subsidiaries during the Class Period of January 1, 1982
through December 31, 1995 (the "Policy" or "Policies"), except as specifically
described below ("Policyholders"), and do not timely exclude themselves from
participating in the settlement ("Class Members" or the "Class").

      The Policyholders do not include the following persons or entities (unless
such persons or entities are Policyholders by virtue of their ownership
interest in other Policies):

                                      -3-
<PAGE>

(i) policyowners who were represented by counsel at the time they executed a
document in connection with a settlement of a claim, action, lawsuit or
proceeding, pending or threatened, that released Prudential with respect to such
Policies; (ii) policyowners that are corporations, banks, trusts or non-natural
entities, which purchased Policies as corporate- or trust-owned life insurance
under which either (a) there are 50 or more separate insured individuals or (b)
the aggregate premium paid over an eight (8) year period, ending with the close
of 1996, exceeds one million dollars; or (iii) policyowners who were issued
Policies in 1995 by Prudential Select Life Insurance Company of America.

      2. Lead Counsel Designated. The law firms of Milberg Weiss Bershad Hynes &
Lerach LLP and Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C.
("Lead Counsel") shall continue as lead counsel for the Class, solely for the
purpose of settling the Actions.

      3. Additional Counsel Designated. The following firms are designated as
additional counsel for the Class ("Additional Counsel"), solely for the purpose
of settling the Actions: Arnzen, Parry & Wentz, P.S.C.; Hopkins Goldenberg,
P.C.; and Perry & Windels (who are Executive Committee Members); and Goldstein,
Till & Lite; Bonnet, Fairbourn, Friedman, Hienton, Miner & Fry, P.C.; Cantilo,
Maisel & Hubbard, LLP.; DeFalice & Coleman, P.C.; Law Offices of Douglas B.
Thayer; Drubner, Hartley, O'Connor and Mengacci; Law Office of Jay R. Tomerlin;
Specter Law Offices; Ziegler, Ziegler & Altman; Heins, Mills & Olson, P.L.C.;
Giebel, Gilbert & Mandel; Levin, Fishbein, Sedran & Berman; Allen, Lippes &
Shonn; Zwerling, Schachter, Zwerling & Koppell, L.L.P.; Goodkind, Labaton,
Rudoff & Sucharow, L.L.P.; The Law Offices of Eric D. Freed and Hagens and
Berman.

                                      -4-
<PAGE>

      4. Class Representatives Designated. The named plaintiffs in the
Consolidated Complaint are designated as Class Representatives, solely for the
purpose of seeking a settlement of the Actions.

      5. Motions Stayed. All pending motions in the Actions are stayed.

      6. Findings Regarding Proposed Settlement. The Court finds that (a) the
proposed settlement resulted from extensive arm's-length negotiations and was
concluded only after counsel for plaintiffs had conducted extensive discovery
(including the review of hundreds of thousands of pages of documents and the
taking of numerous depositions of present and former agents, officers, and
employees of Prudential) and had consulted independent experts about the
fairness, reasonableness and adequacy of the proposed settlement; and (b) the
proposed settlement evidenced by the Stipulation is sufficient to warrant (i)
notice thereof to Policyholders and (ii) a full hearing on the settlement.

      7. Settlement Hearing. A hearing (the "Settlement Hearing") will be held
before this Court at 10:00 a.m. on January 21, 1997, at the Martin Luther King,
Jr. Federal Courthouse, 50 Walnut Street, Newark, New Jersey, to consider the
fairness, reasonableness and adequacy of the proposed settlement and the terms
and provisions of the Stipulation, including the award of attorneys' fees and
expenses to plaintiffs' counsel, and to determine whether the proposed
settlement and the Stipulation should be finally approved by the Court.

      8. Pre-Hearing Notices.

      (a) Notice by Mail. Notice substantially in the form annexed to the
Stipulation as Exhibit F-2 (the "Class Notice") shall be mailed, at Prudential's
expense, by first class mail, postage prepaid, no later than 60 days before the
Settlement Hearing, to the last known addresses of all Policyholders. The Class
Notice will (i) contain a short, plain

                                      -5-
<PAGE>

statement of the background of the Actions, the conditional Class certification
and the proposed settlement, (ii) describe the proposed forms of relief, (iii)
explain the procedures for receiving or participating in the proposed forms of
relief, (iv) explain Class Members' rights of exclusion, objection and appeal
and (v) state that any relief to Class Members is contingent on the Court's
final approval of the proposed settlement.

            The Class Notice will include, to the extent practicable, (i) each
Policyholder's name and the mailing address with respect to each Policy, as
reflected in Prudential's records, (ii) the policy number of each Policy in
which the Policyholder has or had an ownership interest, (iii) a notation as to
the form(s) of relief for which the Policyholder may be eligible and (iv) the
identity of any co-owners of the Policies, as reflected in Prudential's records.

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

            (c) Remailing and Additional Notice. Prudential, or the Claimant
Group Administrator, as defined in the Stipulation, (whose job it is, inter
alia, to help implement the terms of the proposed settlement) shall (i) remail
any notices returned by the United States Postal Service (the "Postal Service")
with a forwarding address that are received by

                                      -6-
<PAGE>

Prudential or the Claimant Group Administrator at least 30 days, if practicable,
before the Settlement Hearing, (ii) retain an address research firm to research
any returned notices that do not include a forwarding address and (iii) provide
copies of and returned notices to the address research firm as soon as
practicable following receipt. The address research firm will return to
Prudential or the Claimant Group Administrator, promptly after receipt of a
returned notice, either an updated address or a statement that, following due
research, it has not been possible to update the address. Prudential or the
Claimant Group Administrator will remail notice to any Policyholder for whom the
address research firm provides an updated address, so long as the updated
address is provided to Prudential or the Claimant Group Administrator at least
30 days before the Settlement Hearing.

            (d) Proof of Mailing. At or before the Settlement Hearing,
Prudential shall file a proof of mailing of the Class Notice and proof of
publication of the Publication Notice.

      9. Findings Concerning Notice. Having considered, among other factors, (i)
the cost of giving notice by various methods. (ii) the resources of the parties,
(iii) the stake of each Policyholder, and (iv) the likelihood that significant
numbers of Policyholders might desire to exclude themselves from the Class or
appear individually, the Court finds that notice given in the form and manner
provided in paragraph 8 of this Order is the best practicable notice and is
reasonably calculated, under all the circumstances, to apprise Policyholders
of the pendency of this class action and of their right to object to or exclude
themselves from the proposed settlement. The Court further finds that such
notice is reasonable, that it constitutes due, adequate and sufficient notice to
all persons entitled to receive notice, and that it meets the requirements of
due process.

                                      -7-
<PAGE>

      10. Communications with Policyholders. Defendants, including their agents,
sales representatives and any other retained personnel, are authorized to
communicate with Class Members and other present or former Policyholders about
the class action and the terms of the proposed settlement, subject to monitoring
by Lead Counsel and the Regulatory Oversight Staff (consisting of state
regulators), and to engage in any other communications within the normal course
of Prudential's business.

      11. Administration. The Court authorizes Prudential to retain the Claimant
Group Administrator to help administer the terms of the settlement and
authorizes Prudential to establish the means necessary to administer the
settlement relief, process election forms and implement the ADR process, subject
to monitoring from time to time by Lead Counsel and the Regulatory Oversight
Staff. Defendants or the Claimant Group Administrator shall rent a post-office
box in the name of the Clerk of the Court, to be used for receiving requests for
exclusion, objections and any other communications, providing that, other than
the Court or the Clerk of the Court, only Prudential, Lead Counsel and their
designated agents shall have access to this post-office box.

      12. Exclusion from Class. Each Policyholder who wishes to exclude himself
or herself from the Class must do so by sending a written request for exclusion
in care of the post-office box rented for that purpose, by first-class mail,
postage prepaid. Exclusion requests must be postmarked no later than December
19, 1996. The original requests for exclusion shall be filed with the Court by
Lead Counsel at or before the Settlement Hearing. If the proposed settlement is
approved, any and all Policyholders who have not submitted a timely, written
request for exclusion from the Class shall be bound by all proceedings, orders
and judgments in the Actions, even if those persons have previously initiated or
subsequently

                                      -8-
<PAGE>

initiate individual litigation or other proceedings against the Defendants (or
any of them) relating to the policies and claims released in the Actions.

      13. Objections and Appearances.

            (a) Written Objections. Any Policyholder who has not filed a written
request for exclusion with respect to all of his or her Policies, and is thus a
Class Member, may object to the fairness, reasonableness or adequacy of the
Stipulation or proposed settlement or the award of attorneys' fees and expenses.
Class Members may do so either on their own or through an attorney hired at
their own expense. Any Class Member who wishes to object to the proposed
settlement must file and serve a written statement of objection, along with all
other support, papers or briefs that he or she wishes the Court to consider, on
each of the following:

                       Clerk of the Court
                       United States District Court
                       District of New Jersey
                       P.O. Box [ILLEGIBLE]
                       Newark, New Jersey [ILLEGIBLE]

                       Melvyn I. Weiss, Esq.
                       Milberg Weiss Bershad Hynes & Lerach, LLP
                       One Pennsylvania Plaza
                       New York, New York 10119-0165

                                 and

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

                       Co-Lead Counsel for Plaintiffs and the Class

                                      -9-
<PAGE>

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

                        Counsel for Prudential

Objections must be received by the Court and the above counsel no later than
December 19, 1996. Any objection that is not timely made shall be forever
barred. Any attorney hired by a Class Member, at that Class Member's expense,
for the purpose of objecting to the proposed settlement, must file with the
Clerk of the Court, and serve on Lead Counsel and Prudential's Counsel, a notice
of appearance, no later than December 19, 1996.

            (b) Appearance at Settlement Hearing. Any Class Member who files and
serves a timely written objection may also appear at the Settlement Hearing
either in person or through personal counsel hired at the Class Member's
expense, to object to the fairness, reasonableness or adequacy of the
Stipulation or the proposed settlement. Class Members or their attorneys
intending to appear at the Settlement Hearing must serve on Lead Counsel and
Prudential's Counsel and file with the Court, no later than December 19, 1996,
a notice of intention to appear, setting forth the name, address and telephone
number of the Class Member (and, if applicable, the name, address and telephone
number of the Class Member's attorney) and setting forth the objection,
including all papers in support thereof. Any Class Member who does not timely
file and serve a written objection and a notice of intention to appear by
December 19, 1996 shall not be permitted to object or appear, except for good
cause shown, and shall be deemed to have waived and forfeited, and shall be
foreclosed from raising, any objection to the settlement, and shall be bound by
all the terms of the Stipulation and by all proceedings, orders and judgments in
the Actions.

                                      -10-
<PAGE>

      14. Access to Disclosure Materials. Policyholders may obtain access, at
their own expense, to the deposition transcripts and attached exhibits as well
as to all other documents generated in this lawsuit by entering into the
Stipulation of Confidentiality governing these documents. These documents will
be made available at the offices of Milberg Weiss Bershad Hynes & Lerach, LLP at
One Pennsylvania Plaza, New York, New York 10019-0165 and at 600 West Broadway,
1800 One America Plaza, San Diego, California 92101-5050, and at the offices of
Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., 200 North LaSalle
Street, Suite 2100, Chicago, Illinois 60601.

      15. Preliminary Injunction. Pursuant to the All-Writs Act, 28 U.S.C. ss.
1651(a), and the Anti-Injunction Act, 28 U.S.C. ss. 2283, the Court is empowered
to enter an injunction necessary in aid of its jurisdiction in order to
effectuate the proposed settlement. In connection with seeking approval of the
proposed settlement, the Court's attention has been directed to the potential
for conflicting rulings that may occur if actions related to this lawsuit which
purport to be filed on behalf of a Class Member or Class Members, are allowed to
go forward in other jurisdictions. In addition, such actions could create
confusion among Policyholders who remain in the Class and may interfere with the
operation of notice under the proposed settlement. Prudential has proffered
evidence showing the existence of multiple class actions which could act to
seriously impair this Court's ability to oversee the orderly and efficient
management of the proposed nationwide class action settlement, and have
demonstrated that without preliminary injunctive relief, many similar actions
could proceed. Based on its familiarity with the issues in this lawsuit and the
complexity of the proposed settlement, the Court finds that such actions may
substantially impair the ability of this Court and the parties to implement the
proposed settlement. The Court further finds that

                                      -11-
<PAGE>

judicial economy and the interests of justice will be served by issuing a
preliminary injunction. Therefore, based on the record, including the legal and
factual support for an injunction submitted by Prudential, this Court finds that
an injunction is necessary to protect its jurisdiction, and hereby issues the
following injunction, effective upon the mailing of the Class Notice, with
Policyholders having thus been afforded the opportunity to exclude themselves
from the Class:

      No Policyholder, or any person acting on behalf of or in concert or
participation with that Policyholder, may include any other Policyholder from
the Class. All Policyholders and all persons acting on behalf of or in concert
or participation with any Policyholder, are hereby enjoined from filing,
commencing, prosecuting, continuing, litigating, intervening in or participating
as class members in, any lawsuit in any jurisdiction based on or relating to
the facts and circumstances underlying the claims and causes of action in this
lawsuit, unless and until such Policyholder has timely excluded herself or
himself from the Class. All persons receiving notice of this Order, including
all Policyholders, are hereby enjoined from bringing a class action on behalf of
Class Members, or seeking to certify a class which includes Class Members, in
any lawsuit, in any jurisdiction, based on or relating to the facts and
circumstances underlying the claims and causes of action in this lawsuit.

      16. Service of Papers. Prudential and Lead Counsel shall serve on each
other and on all other parties who have filed notices of appearance, at or
before the Settlement Hearing, any further documents in support of the proposed
settlement, including responses to any papers filed by Class Members. Prudential
and Lead Counsel shall promptly furnish to each other any and all objections or
written requests for exclusion that may come into their

                                      -12-
<PAGE>

possession and shall file such objections or requests for exclusion with the
Court on or before January 21, 1997.

      17. Termination of Settlement. This Order shall become null and void, and
shall be without prejudice to the rights of the parties, all of whom shall be
restored to their respective positions existing immediately before the parties
entered into the proposed settlement, as per the terms of the Stipulation, if
(a) the proposed settlement is not finally approved by the Court, or does not
become final, pursuant to the terms of the Stipulation; or (b) the proposed
settlement is terminated or does not become effective pursuant to the terms of
the Stipulation. In such event, the proposed settlement and Stipulation shall
become null and void and of no further force and effect, and neither the
Stipulation nor the Court's prior orders, including this Order, shall be used
or referred to for any purpose whatsoever.

      18. Use of Order. This Order shall not be construed or used as an
admission, concession or declaration by or against Prudential of any fault,
wrongdoing, breach or liability, or by or against plaintiffs or the Class that
their claims lack merit or that the relief requested in the Amended Complaint
is inappropriate, improper or unavailable; nor shall this Order be construed or
used to show that certification of one or more classes would or would not be
appropriate if these Actions were to be litigated rather than settled.

      19. Adjournment of Hearing. The Court reserves the right to adjourn the
Settlement Hearing without further written notice.

                                                 ----------------------------
                                                 ALFRED M. WOLIN, U.S.D.J.

                                      -13-
<PAGE>

                  EXHIBIT F-1 -- COVER LETTER TO CLASS NOTICE
<PAGE>

To Our Valued Policyholders:

      Throughout its history, Prudential has sought -- above all else -- to earn
the trust of its policyholders. To demonstrate to you that Prudential deserves
the trust and confidence you have placed in us, we are creating a comprehensive
program to resolve policyholder concerns about life insurance sales practices.
This program is the result of the efforts of Prudential, many of its regulators,
and lawyers for a large group or class of Prudential policyholders to address
customer concerns and to resolve claims in a fair and efficient manner.

OUTLINE OF THE PROGRAM

      The comprehensive program will allow policyholders who believe they were
misled regarding the sale of their Prudential policies to submit claims for
relief to a no cost, user-friendly dispute resolution process instead of
bringing lawsuits in court. This process provides our policyholders an
opportunity to obtain individual relief tailored to their claims, based on the
evidence available to support those claims. Your possible remedies may include
returning policy values improperly used, cancelling unwanted policies and
receiving a refund of premiums, or reducing the number of out-of-pocket premium
payments. As an alternative, you can obtain Basic Claim Relief, without showing
any wrongdoing by Prudential. Although not as great as the relief above, Basic
Claim Relief includes loans at favorable interest rates, and life insurance,
annuity contracts and mutual funds available for purchase with enhancements at
Prudential's expense. If you do not want to participate, you can choose to
exclude yourself from the class, which will allow you to file your own lawsuit.

CLASS ACTION SETTLEMENT

      The program outlined above is a part of a proposed settlement of a
nationwide class action lawsuit against Prudential. The suit was brought on
behalf of Prudential policyholders who purchased permanent life insurance
policies from January 1, 1982 through December 31, 1995. We believe you are part
of this class. The proposed settlement must be approved by the court.

      The class action settlement expands upon a remediation plan that was
accepted in July by a Multi-State Life Insurance Task Force of state insurance
regulators. That plan has already been accepted by 43 states and the District of
Columbia. The proposed class action settlement provides additional remedies and
procedural safeguards. Some of these remedies may result in additional cash
payments to some policyholders.

      We anticipate that the states that accepted the initial plan will allow
Prudential to defer the offer of a remediation plan to February 1, 1997 in order
to leave time for a court hearing on the class action settlement. If the class
action settlement is approved by that date, one mailing will be sent to you
offering a program that incorporates the terms of the plan accepted by the
states plus additional remedies and procedural safeguards that are contained in
the proposed class action settlement. If there is no Court approval by February
1 and you live in one of the states which has accepted the Task Force Plan, you
will then be notified of your eligibility to participate in a remediation
program, which includes some of the remedies from
<PAGE>

the class action settlement. If you reside in any other state, you will not
receive any notification regarding the settlement unless it receives Court
approval.

HOW DO I LEARN MORE ABOUT THE PROPOSED SETTLEMENT?

      Accompanying this letter is the court-ordered notice to you of the class
action settlement. This notice explains the proposed settlement in more detail.
We believe the settlement is fair and equitable to Prudential policyholders. It
fulfills our pledge to resolve all legitimate policyholder claims, and provides
an objective and efficient means to do so without the costs and delays of
litigation.

      YOU DO NOT NEED TO TAKE ANY ACTION NOW TO RECEIVE RELIEF UNDER THE CLASS
ACTION SETTLEMENT. HOWEVER, YOU MUST ACT NOW IF YOU WISH TO OBJECT TO OR BE
EXCLUDED FROM PARTICIPATING IN THE CLASS ACTION SETTLEMENT. IF YOU EXCLUDE
YOURSELF FROM THE CLASS, YOU WILL RETAIN THE ABILITY TO BRING YOUR OWN LAWSUIT
AGAINST THE COMPANY, BUT YOU WILL NOT BE ELIGIBLE FOR RELIEF PROVIDED BY THE
CLASS ACTION SETTLEMENT. IF YOU REMAIN A MEMBER OF THE CLASS, YOU CANNOT BRING
YOUR OWN LAWSUIT AGAINST PRUDENTIAL FOR MISLEADING SALES PRACTICES.

      PLEASE READ THE ENCLOSED MATERIALS CAREFULLY SO THAT YOU ARE AWARE OF
YOUR RIGHTS. If you have questions after reviewing the enclosed information, you
can reach us at a special toll-free number we have established to answer your
questions, 1-800-736-8913.

WHAT HAPPENS NEXT?

      The court hearing the class action lawsuit has scheduled a final hearing
to approve the settlement for January 21, 1997. If you don't ask to be excluded,
you will receive a further mailing from us providing you the opportunity to
elect the relief to which you may be entitled.

                                      * * *

      Please read the enclosed materials carefully. I hope the program they
describe, together with other measures Prudential has been undertaking to
provide the best possible service for our policyholders, will fully address
policyholder concerns and reinforce to you how much Prudential values its
relationship with you.

Sincerely,

Arthur F. Ryan

                                      -2-
<PAGE>

            SUMMARY OF RELIEF AVAILABLE UNDER THE PROPOSED SETTLEMENT

      Unless you ask to be excluded from the class, you will have a choice
between two categories of settlement relief: an alternative dispute resolution
process ("ADR Process") or Basic Claim Relief. Following is a brief summary of
the relief available. A more complete description is included in the enclosed
Class Notice and the Questions and Answers brochure that follow the Notice.

                                   ADR PROCESS

      Any eligible policyholder who believes that he or she was misled regarding
the sale of his or her policy can submit a claim under a no-cost, efficient
alternative dispute resolution process. This Process includes, among other
measures to protect policyholders, the ability to have the Company's claim
determinations reviewed by an independent, final decision-maker with a
Policyholder Representative who will be available, at no cost, to represent
claimants that appeal, and the involvement in the process of a Claimant
Representative selected by the attorneys for the class. The entire process will
be overseen by a group of state insurance regulators and attorneys for the
class.

Types of Claims Eligible for Relief

      Claims in the ADR Process may be based on instances in which you believe
you were misled about:

      (i)   Financed Insurance, which generally involves the use of loans,
            dividends or other values of existing policies to pay premiums on
            new policies (sometimes referred to as "twisting" or "churning");

      (ii)  Abbreviated Payment, which generally involves the use of a policy's
            dividends or other values to pay premiums on the same policy
            (sometimes referred to as "vanishing premium");

      (iii) Whether you were sold a life insurance policy, rather than an
            investment, savings or retirement product, and you did not know you
            were buying a life insurance policy; and/or

      (ix)  any other improper sales practices.

                                      -3-
<PAGE>

Range of Relief Available

      The range of relief available through the ADR Process depends on the type
of claim and the available evidence concerning it. Remedies can include the
return of policy values improperly used, allowing a policyholder to cancel an
unwanted policy and receive a refund of some or all of the premiums paid, to
Prudential agreeing that the policyholder need not make future out-of-pocket
payments for some or all premiums due. Certain additional remediation amounts
and various financial guarantees and minimum payment obligations will only be
available as part of the ADR Process if and when the class action settlement has
been finally approved after the conclusion of appeals in court.

      THERE IS NO GUARANTEE THAT THE ADR PROCESS WILL RESULT IN A DETERMINATION
IN THE POLICYHOLDER'S FAVOR. A DETERMINATION AGAINST THE POLICYHOLDER WILL NOT
PRODUCE ANY FORM OF RELIEF. FURTHER, IF YOU CHOOSE THIS PROCESS, THE GUARANTEED
RIGHT TO TAKE ADVANTAGE OF BASIC CLAIM RELIEF (AS DESCRIBED BELOW) WILL NOT BE
AVAILABLE.

                               Basic Claim Relief

      If a policyholder does not wish to file a claim under the ADR Process, he
or she may consider the options available under Basic Claim Relief. To obtain
Basic Claim Relief, the policyholder need not claim that he or she was misled or
harmed in any way, or that any improper sales practices occurred. The options
available under Basic Claim Relief, each of which has particular eligibility
requirements, include:

      (i)   Optional Premium Loans - low interest loans to help policyholders
            make required out-of-pocket premium payments;

      (ii)  An Enhanced Value Policy - the purchase by the policyholder of a
            whole life insurance policy subject to liberalized underwriting
            requirements, which is enhanced by Prudential providing a certain
            amount of additional insurance coverage without charge;

      (iii) An Enhanced Value Annuity - the purchase by the policyholder of a
            deferred annuity which is enhanced by contributions from Prudential
            and in which surrender charges may be waived in certain
            circumstances; or

      (iv)  A Mutual Fund Enhancement - the purchase by the policyholder of
            shares in selected mutual funds with Prudential contributing
            additional shares of such funds.

The Mutual Fund Enhancement and certain additional contributions to the Enhanced
Value Policy and the Enhanced Value Annuity will only be available after the
class action settlement is finally approved on appeal.

                                      -4-
<PAGE>

      ADDITIONAL INFORMATION ABOUT THE ADR PROCESS AND BASIC CLAIM RELIEF CAN BE
FOUND IN THE ENCLOSED CLASS ACTION NOTICE AND THE QUESTIONS AND ANSWERS BROCHURE
THAT FOLLOW THE NOTICE.

                          Choices You Need To Make Now

      At this point in the settlement process, you have the following choices
which we urge you to consider carefully:

      o     You may remain in the Class and be eligible to apply for relief
            under the proposed settlement. If this is what you want to do, you
            need not take any action at this time. A second notice offering you
            an opportunity to choose relief will be sent to you later.

      o     You may remain in the Class but file with the Court a written
            objection, postmarked not later than December 19, 1996, to any
            aspect of the proposed settlement. To do so, you must comply with
            the requirements described in Section 9 of the enclosed Notice.

      o     You may exclude yourself from the Class. To do so, you must file a
            written request for exclusion from the Class, postmarked not later
            than December 19, 1996, and comply with the requirements described
            in Section 9 of the enclosed Class Action Notice. If you exclude
            yourself from the class, you will retain the ability to bring your
            own lawsuit against the Company, but you will not be eligible for
            relief provided by the proposed settlement.

As explained in the enclosed Class Action Notice and the Questions and Answers
brochure, regardless of whether the Court approves the class action settlement,
Prudential anticipates that the 43 states and the District of Columbia accepting
the Task Force plan will agree to allow Prudential to defer the offer of the
plan until February 1, 1997, to allow time for the Court to hold a hearing on
the Class action settlement. Even if you exclude yourself from the Class, you
may still be eligible to participate in the Task Force plan, in the event the
proposed Class action settlement does not go forward. You will be required to
provide Prudential with a release to participate in that plan.

      IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE CLAIMANT SUPPORT TEAM AT
800-736-8913 (FOR TELECOMMUNICATION DEVICE FOR THE DEAF, CALL 800-782-1863).

                                      -5-
<PAGE>

                            STATEMENT OF ELIGIBILITY

John Doe
Jane Doe                                                       Additional Owners
P O Box 123                                      [Note: If more than two owners,
Route 34                                                 list other names here.]
Anytown, NJ 01234
USA

Our records indicate that you may be a member of a group or class of
policyholders of the Prudential Insurance Company of America ("Prudential") who
purchased permanent individual whole life insurance and on whose benefit a
lawsuit has been brought against Prudential. The lawsuit, and a proposed
settlement of the lawsuit, are described in detail in the enclosed notice (and
accompanying explanatory materials). PLEASE READ THE ENTIRE NOTICE CAREFULLY.

You may be entitled to one or more forms of relief, depending on eligibility,
for each Policy issued during the period from January 1, 1982 through December
31, 1995, in which you now have, or previously had, ownership rights as
described in the notice. If ownership is shared, all those with ownership rights
must jointly exercise rights provided by the settlement.

If you believe that any of the policy information provided below is incorrect,
or if your address is incorrect, please immediately notify us of any necessary
corrections. Call the Claimant Support Team at 800-736-8913 (for
Telecommunications Device for the Deaf, call 800-782-1863). Telephone
representatives will be available 24 hours a day on weekdays (beginning Monday
at 8 a.m.) and Saturdays from 9 a.m. to 3 p.m, your local time.

The proposed settlement offers you a choice of two forms of relief: Basic Claim
Relief or an Alternative Dispute Resolution Process ("ADR Process"). The Basic
Claim Relief for which you are eligible is subject to certain eligibility
restrictions. Basic Claim Relief and the ADR Process are described in detail in
the notice.

If you believe you were misled in connection with Prudential's sale of your
permanent whole life insurance policy, you may choose to participate in the ADR
Process. As an alternative to participating in the ADR Process, you can elect to
receive Basic Claim Relief. You do not have to choose at this time whether to
participate in the ADR Process or the Basic Claim Relief. A subsequent notice
will be sent to you that will tell you when you need to make that election. If
you decide to obtain Basic Claim Relief, our records indicate that you will be
eligible for the following types:

<TABLE>
<CAPTION>
 Policy Number        Policy Status                  Available Basic Claim Relief (for those not electing the ADR Process)
 -------------        -------------                  ---------------------------------------------------------------------
<S>                   <C>                            <C>
 12 345 678           Active                         Optional Premium Loan, Enhanced Value Annuity

 23 456 789           Not active                     Enhanced Value Policy

 45 678 901           Active                         Optional Premium Loan, Enhanced Value Policy, Enhanced Value Annuity
</TABLE>
<PAGE>

                                   EXHIBIT F-2
                  NOTICE OF CLASS ACTION, PROPOSED SETTLEMENT,
                     SETTLEMENT HEARING AND RIGHT TO APPEAR
<PAGE>

                              IMPORTANT NOTICE TO:

ALL PERSONS WHO PURCHASED CERTAIN LIFE INSURANCE POLICIES FROM PRUDENTIAL FROM
JANUARY 1, 1982 THROUGH DECEMBER 31, 1995

                          UNITED STATES DISTRICT COURT
                             DISTRICT OF NEW JERSEY

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

                  NOTICE OF CLASS ACTION, PROPOSED SETTLEMENT,
                     SETTLEMENT HEARING AND RIGHT TO APPEAR

        THIS IS AN OFFICIAL NOTICE FROM THE UNITED STATES DISTRICT COURT
            FOR THE DISTRICT OF NEW JERSEY TO INFORM ALL PERSONS WHO
        PURCHASED CERTAIN LIFE INSURANCE POLICIES FROM PRUDENTIAL FROM
             JANUARY 1, 1982 THROUGH DECEMBER 31, 1995 OF A PROPOSED
                    SETTLEMENT IN THIS CLASS ACTION LAWSUIT.

      YOU SHOULD READ THIS NOTICE CAREFULLY BECAUSE IF YOU ARE A
MEMBER OF THE CLASS, IT WILL AFFECT YOUR LEGAL RIGHTS AND WILL
         BE LEGALLY BINDING UPON YOU IN THE FUTURE. HOWEVER, YOU DO NOT
           HAVE TO DO ANYTHING AT THIS TIME TO OBTAIN RELIEF UNDER THE
                              PROPOSED SETTLEMENT.
<PAGE>

1.    PURPOSE OF THE NOTICE

            You have been sent this Notice because you may be eligible for
certain relief to be provided as part of the proposed settlement of a
consolidated class action lawsuit. The lawsuit was brought on behalf of a class
of policyholders against The Prudential Insurance Company of America
("Prudential"). The lawsuit alleges a variety of claims relating to the manner
in which Prudential sold life insurance policies. The class generally includes
all persons who purchased individual permanent (whole life) insurance policies
issued by Prudential during the period from January 1, 1982 through December 31,
1995 (the "Class Period").

            A proposed settlement has been reached between Prudential and the
Plaintiffs in the lawsuit. The Court has conditionally certified the Class for
settlement purposes and determined that the settlement was sufficient to justify
sending you this Notice. The Court will hold a hearing regarding the fairness,
reasonableness and adequacy of the proposed settlement before deciding whether
final approval will be granted. Unless you exclude yourself from the class, you
will be bound by the terms of the settlement, if final approval is granted.
That means you could not pursue your own lawsuit against Prudential for claims
covered by this class action.

            This Notice contains the following important information:

      o     A description of those persons who are included in the Class;

      o     A description of the lawsuit;

      o     A description of state insurance department and Multi-State Life
            Insurance Task Force examination of Prudential and the policyholder
            remediation plan that 43 states and the District of Columbia
            accepted. The interaction of the Multi-State Task Force remediation
            plan with the proposed class action settlement is also described;

      o     A detailed discussion of the relief being made available to Class
            Members;

      o     A description of the release of claims which Class Members will give
            Prudential; and

      o     An explanation of how you can request to be excluded from the Class,
            or object to the settlement.

                                      -2-
<PAGE>

2.    SUMMARY OF THE PROPOSED SETTLEMENT RELIEF

            If you are a Class Member, the settlement offers you two alternative
forms of relief in exchange for resolving all of your claims involving the sale,
servicing or operation of your whole life policies (as set forth in the Release
and Waiver Section below). (A detailed description of the relief offered under
the settlement is contained in Section 6.)

            First, you may elect to participate in an Alternative Dispute
Resolution Process (the "ADR Process"). The ADR Process is offered at no cost to
Class Members and provides a simplified means for Class Members who believe that
they may have been misled regarding the sale of their policies to have their
claims resolved without having to go to court. The ADR Process provides Class
Members an opportunity to obtain relief without the delays and expense of
traditional litigation and without being subject to certain legal defenses, such
as statutes of limitation, which Prudential could raise to possibly defeat
claims in a court proceeding. The relief awarded in the ADR Process will depend
on the type of claim and the available evidence. You may also be eligible to
receive a portion of the Additional Remediation Amount (as described below).
There is no guarantee, however, that you will receive any relief in the ADR
Process, and by electing to file an ADR claim you will not be able to seek Basic
Claim Relief. For further explanation see "Description of the Proposed
Settlement -- Alternative Dispute Resolution Process" below.

            Second, as an alternative to the ADR Process, Class Members may
obtain Basic Claim Relief. Basic Claim Relief requires no showing by the Class
Member of any wrongdoing by Prudential. Depending on the circumstances, the
relief can include loans at favorable interest rates to pay premiums and/or the
opportunity for you to purchase life insurance policies or annuities with values
enhanced at Prudential's expense, or to purchase shares of mutual funds with
Prudential contributing additional shares of such funds. Each of these options
is described in detail below.

3.    THE CLASS AND CHOICES YOU NEED TO MAKE NOW

            Judge Alfred M. Wolin of the United States District Court for the
District of New Jersey has issued an Order conditionally certifying only for
settlement purposes a class of all persons who own or owned at termination an
individual permanent (whole life) insurance policy issued by Prudential or any
of its United States life insurance subsidiaries during the Class Period of
January 1, 1982 through December 31, 1995 (the "Policy" or "Policies"), except
as specifically described below ("Policyholders"), and who do not timely exclude
themselves from participating in the settlement ("Class Members" or the
"Class").

            The Policyholders do not include the following persons or entities
(unless such persons or entities are Policyholders by virtue of their ownership
interest in other Policies): (i) policyowners who were represented by counsel at
the time they executed a document in connection with a settlement of a claim,
action, lawsuit or proceeding, pending or threatened, that released Prudential
with respect to such Policies, (ii) policyowners that are corporations, banks,
trusts or non-natural entities, which purchased Policies as corporate- or
trust-owned

                                      -3-
<PAGE>

life insurance and under which either (a) there are 50 or more separate insured
individuals or (b) the aggregate premium paid over an eight (8) year period,
ending with the close of 1996, exceeds one million dollars, or (iii)
policyowners who were issued Policies in 1995 by Prudential Select Life
Insurance Company of America.

            As you will see from reading this Notice, if you are an eligible
Policyholder, you have the following choices with respect to each Policy issued
during the Class Period in which you have an ownership interest:

      o     YOU MAY REMAIN IN THE CLASS AND PARTICIPATE IN THE RELIEF OF THE
            PROPOSED SETTLEMENT. IF THIS IS WHAT YOU CHOOSE TO DO, YOU NEED NOT
            TAKE ANY ACTION AT THIS TIME. YOUR INTERESTS WILL BE REPRESENTED
            WITHOUT COST TO YOU BY LEAD COUNSEL, AS DEFINED HEREIN, FOR THE
            CLASS, AND IF YOU LIVE WITHIN ONE OF THE STATES OR THE DISTRICT OF
            COLUMBIA WHICH HAS ACCEPTED THE TASK FORCE REMEDIATION PLAN, BY A
            REGULATORY OVERSIGHT STAFF COMPOSED OF STATE INSURANCE REGULATORS.
            If the settlement is approved by the Court, you will be contacted
            again and will be asked which of the available relief, if any, you
            wish to elect. You should keep in mind that, if you remain in the
            Class, you will be bound by all orders and judgments entered in this
            case, including the release and waiver of claims which absolves
            Prudential of further liability to you in connection with the sale
            of your Policy. (See Section 8 below).

      o     IF YOU REMAIN IN THE CLASS, YOU MAY FILE WITH THE COURT A WRITTEN
            OBJECTION TO ANY ASPECT OF THE PROPOSED SETTLEMENT. OBJECTIONS MUST
            BE RECEIVED BY THE COURT AND COUNSEL FOR THE PLAINTIFFS AND
            PRUDENTIAL, NO LATER THAN DECEMBER 19, 1996. To do so, you must
            comply with the requirements described below in Section 10. In
            addition, you (or an attorney acting on your behalf at your expense)
            may appear before the Court to voice your objection to the extent
            allowed by the Court. If the Court does not agree with your
            objection, you nevertheless will be bound by the orders and
            judgments in this case.

      o     IF YOU DO NOT WISH TO REMAIN IN THE CLASS, YOU MAY EXCLUDE YOURSELF
            BY SENDING A FORMAL, WRITTEN REQUEST FOR EXCLUSION THAT COMPLIES
            WITH THE REQUIREMENTS DESCRIBED BELOW IN SECTION 9. SUCH REQUEST
            MUST BE SENT TO THE ADDRESS PROVIDED IN SECTION 9 BELOW AND
            POSTMARKED NO LATER THAN DECEMBER 19, 1996. If the proposed
            settlement is approved and you request exclusion, (i) you lose all
            rights to relief under the Class Action Settlement Program, as
            defined below, (ii) you may not file any objection to the proposed
            settlement, and (iii) you will not be bound by any orders or
            judgments in this case.

Please keep these three choices in mind as you read this Notice. Your decision
will be affected by all the information in this Notice, including in particular
the information about the release of Class Members' claims in Section 8, and
about the interaction with the Multi-

                                      -4-
<PAGE>

State Task Force remediation plan in Section 11. YOU MAY MAKE A DIFFERENT CHOICE
FOR EACH POLICY YOU OWN.

4.    DESCRIPTION OF THE LAWSUIT

            The class action proposed to be settled is consolidated from a
number of lawsuits, which were filed beginning in February, 1995, and which were
centralized by the Judicial Panel on Multi-district Litigation (the "Judicial
Panel") in the United States District Court for the District of New Jersey as
part of In re The Prudential Insurance Company of America Sales Practices
Litigation, MDL Docket No. 1061 (the "Centralized Proceeding"). By order
dated August 3, 1995, and in several subsequent transfer orders, the Judicial
Panel consolidated these lawsuits for pretrial purposes. The Honorable Alfred M.
Wolin is presiding over the Centralized Proceeding. The Court has approved the
law firms of Milberg Weiss Bershad Hynes & Lerach LLP and Much Shelist Freed
Denenberg Ament Bell & Rubenstein, P.C. as Lead Counsel to represent the Class,
in settlement of this action.

            On October 24, 1995, plaintiffs in several of the lawsuits joined
together to file a Consolidated Amended Class Action Complaint in the
Centralized Proceeding. Prudential subsequently moved to dismiss all of the
claims in this complaint. By Order dated May 10, 1996 (as amended June 10,
1996), the Court dismissed only portions of that complaint, and plaintiffs were
allowed to proceed with certain of their claims. Defendants' motion to stay the
Centralized Proceeding was denied. Lead Counsel conducted formal and informal
discovery as further described in "Description of Proposed Settlement --
Background to the Settlement," Section 6. On September 20, 1996, plaintiffs in
eleven of the lawsuits in the Centralized Proceeding joined in the filing of a
Consolidated Second Amended Class Action Complaint (the "Consolidated
Complaint") naming Prudential and several of its former officers and directors
as defendants.

            The Consolidated Complaint purports to be brought on behalf of a
nationwide class of persons who purchased individual permanent life insurance
policies from Prudential in the United States between the period January 1, 1982
and the present. The plaintiffs in the Consolidated Complaint make allegations,
among other things, that Prudential engaged in a common course of conduct
through which life insurance was improperly sold through misrepresentations
concerning:

      (i)   the use of an existing policy's cash value or dividend or interest
            stream to purchase or maintain a new policy or other policy by means
            of a surrender, withdrawal or loan (sometimes referred to as
            "twisting" or "churning");

      (ii)  the number of out-of-pocket cash premium payments required to be
            paid for a policy and/or the benefits to be realized or paid based
            on a particular number of cash premium payments (sometimes referred
            to as "vanishing premiums"); and

                                      -5-
<PAGE>

      (iii) an assertion that the product being sold was solely or predominantly
            an investment or savings vehicle rather than a life insurance
            policy.

            Prudential has not admitted liability for any of the allegations
made in the Consolidated Complaint. Prudential contends that the use of policy
cash values or accumulated dividends to finance the purchase of insurance can at
times be beneficial to Policyholders and it was the Company's policy at all
times to conduct such sales only when appropriate, and when disclosed to the
Policyholder. Prudential also takes the position that the Abbreviated Payment
Plan, under which dividends are used to pay premiums on a whole life policy, can
be beneficial to Policyholders by reducing the number of out-of-pocket cash
premiums that have to be paid for life insurance coverage. Prudential also
maintains that it never encouraged sales that failed to disclose that the
product being offered was life insurance, and that Prudential policies and
policy applications all fully disclosed that customers were purchasing life
insurance. Prudential also believes that it has a number of legal defenses,
including statute of limitations defenses, which it could assert in litigation
to possibly defeat claims by Policyholders. Prudential is concerned, however,
that some Policyholders may have been misled in the purchase of their policies
and wants to provide Policyholders who were misled with an opportunity to obtain
relief.

5.    THE MULTI-STATE LIFE INSURANCE TASK FORCE

            The proposed settlement reached in this lawsuit expands upon and
adds to a remediation plan that Prudential and 43 states and the District of
Columbia agreed to in July, 1996 to resolve legitimate Policyholder claims. The
background of that remediation plan is as follows.

            On April 25, 1995, partially in response to allegations made in
several lawsuits, the New Jersey Commissioner of Insurance formed a
Multi-State Life Insurance Task Force (the "Task Force") to examine the sales
and marketing practices in the life insurance industry. The Task Force began
with a market conduct examination of Prudential, the largest life insurer in the
United States. Thirty states joined the Task Force. In conducting its
examination, the Task Force reviewed and analyzed documents and electronic
databases consisting of millions of Prudential records. They also interviewed
hundreds of Prudential agents and executives.

            On July 9, 1996, the Task Force issued a report setting forth the
findings of its market conduct examination. The Task Force found that some
Prudential policyholders had been misled in their life insurance purchases and
that Prudential's efforts to prevent such abuses had been inadequate. In
connection with the issuance of the Task Force report, the Task Force and
Prudential each announced a remediation plan which the Task Force and Prudential
agreed provided fair and appropriate relief to Policyholders who may have been
harmed by misrepresentations made in the sale of their policies (the "Task Force
Plan"). Forty-three states and the District of Columbia executed agreements
adopting the Task Force report and directing Prudential to implement the Task
Force Plan. The Policyholders in

                                      -6-
<PAGE>

those States who are to be eligible to participate in the Task Force Plan are
the same Policyholders who may also be Class Members in the proposed Class
Action Settlement.

            Prior to implementing the Task Force Plan, Prudential reached a
proposed settlement with the Class that includes a remediation plan that expands
upon the Task Force Plan and, if approved by the Court and affirmed on appeal,
would provide additional significant relief to Policyholders. In order to
provide the increased relief to the residents of their jurisdictions and to
avoid the possible confusion from multiple mailings of different proposals, it
is anticipated that the states that accepted the Task Force Plan will agree to
allow Prudential to defer until February 1, 1997, after the scheduled hearing
for approval of this class action settlement, the mailing that will mark the
implementation of the policyholder remediation program. The inter-relation of
the Task Force Plan and this Class Action Settlement is described in detail in
Section 11.

6.    DESCRIPTION OF THE PROPOSED SETTLEMENT

      A.    BACKGROUND TO THE SETTLEMENT

            The proposed settlement resulted from more than one year of
litigation, formal and informal discovery, and an intensive investigation of the
relevant facts and law by Lead Counsel and other lawyers for the plaintiffs in
the lawsuits combined in the Consolidated Complaint (the "Plaintiffs' Lawyers").
The investigation conducted by Plaintiffs' Lawyers included interviews with
present and former policyholders, agents, and Prudential employees, as well as
sworn depositions of numerous Prudential executives, senior management and other
personnel. Plaintiffs' Lawyers were provided with all documentation, including
millions of pieces of electronic data, and other information produced to the
Task Force in connection with its examination and used in the development of its
report. In addition, Plaintiffs' Lawyers reviewed approximately 800,000 pages of
documents, 160 computer diskettes and cartridges, and 45 videotapes and
audiotapes, concerning a wide variety of matters and business functions at
Prudential. Plaintiffs' Lawyers and lawyers for Prudential then entered into
extensive arms-length negotiations that resulted in the proposed settlement.

      B.    DETAILED DESCRIPTION OF THE SETTLEMENT RELIEF

            The proposed settlement would implement a policyholder remediation
program which provides remedies and procedural safeguards in addition to those
in the Task Force Plan (the "Class Action Settlement Program"). See "Interaction
Between the Task Force Plan and the Class Action Settlement Program," Section 11
below. Prudential has pledged to resolve all claims of Policyholders who were
misled in the purchase of their policies. Once the proposed settlement is
approved by District Court Judge Wolin, Prudential and Lead Counsel for the
Class have agreed that many components of the additional relief provided by the
Class Action Settlement Program would be provided to Class Members. The
additional relief is supplemental to that provided under the Task Force Plan.
The Task Force Plan is not subject to the Court's approval. However, the
Financial Guarantee, Additional Remediation Amount and Minimum Payment (each as
described in Section 6.B.1.f. below)

                                      -7-
<PAGE>

and the Basic Claim Relief Enhancements (as described in Section 11 below) in
the Class Action Settlement Program will be made available only if the
settlement is upheld by all appellate courts. If you have any questions as to
the relief for which you may be eligible, please call 1-800-736-8913 (24 hours a
day on weekdays (beginning Monday at 8 a.m.) and Saturdays from 9 a.m. to 3
p.m., your local time).

            The forms of relief which will be made available to Class Members
under the proposed Class Action Settlement Program are as follows:

            1. ALTERNATIVE DISPUTE RESOLUTION PROCESS

            Any Class Member who believes that he or she was misled regarding
the sale of his or her Policy may submit a claim to an alternative dispute
resolution process (the "ADR Process"). The ADR Process is a streamlined and
no-cost means for Class Members to have their claims resolved without having to
go to court. In addition, in claims pursued through the ADR Process, Prudential
will waive its right to raise certain legal defenses, such as statute of
limitations defenses, which could be available to Prudential to possibly defeat
such claims in contested litigation. The ADR Process also provides the
opportunity for a Class Member to obtain individual relief tailored to his or
her claim. However, there is no guarantee that this process will result in a
determination in the Class Member's favor, and by choosing this process, the
Class Member could lose the right to take advantage of an Optional Premium Loan,
an Enhanced Value Policy, an Enhanced Value Annuity and/or a Mutual Fund
Enhancement (when available) that otherwise may have been available if the Class
Member had selected Basic Claim Relief.

            To file a claim under the ADR Process, a Class Member initially must
submit a claim, form, which Prudential will provide by mail, in which the Class
Member describes the misrepresentation made or other improper sales practice.
The insurance regulators, the Plaintiffs' Lawyers and Prudential have agreed on
the forms and procedures to be used, the nature of the evidence necessary and
the type of relief that may be awarded.

                  A. SUBMISSION OF ADR CLAIM

                  Following a Class Member's election to participate in the ADR
Process, a claim form will be forwarded. The claim form is designed to obtain
information necessary for the evaluation of the claim, such as what the agent
told and showed the Policyholder in connection with the sale, and what the
Policyholder told the agent about his or her financial and other needs or
objectives. With the Claim Form, the Class Member is requested to submit all
documents and materials in the Class Member's possession concerning the claim.
It is important that Class Members submit all information that they want to have
considered.

                                      -8-
<PAGE>

                  B. ASSEMBLY OF CLAIM FILE

                  Prudential's Claim Evaluation Staff is required to gather all
information and documentation from Prudential's files and provided by Class
Members concerning a Policy and its sale. The Claim Evaluation Staff will be
monitored by Lead Counsel, insurance regulators from various states accepting
the remediation program (the "Regulatory Oversight Staff") and independent
auditors. This information will include, among other things, sales practices
complaints against the agent and disciplinary actions with respect to life
insurance sales practices against the agent who sold the Policy. Prudential will
also attempt to contact the agent who sold the Policy about the Class Member's
claim.

                  C. EVALUATION OF CLAIMS

                  The ADR Process sets forth a detailed procedure, including
objective criteria, to evaluate the claim presented by the Policyholder in the
claim form, and the information gathered by Prudential to determine whether a
Policyholder was misled in the purchase of his or her Policy. In addition to
considering what the Policyholder was told by the agent and the documents
received by the Policyholder, such as a policy illustration, other evidence,
including sales practices complaints against the agent who sold the policy
and, with respect to Financed Insurance claims, the extent to which the agent
engaged in financed transactions, will be considered.

                  D. ADR CLAIM REVIEW PROCESS

                  First, Prudential's Claim Evaluation Staff will evaluate and
score the claims. This Claim Evaluation Staff will not be comprised of persons
who were involved in the sale of insurance.

                  Second, if the Claim Evaluation Staff does not award the
highest score to a given claim, it will automatically be reviewed by the
Independent Claim Evaluation Team ("ICET"). This team will be comprised of
persons with no affiliation with Prudential. The ICET will not be bound by any
determination made by the Claim Evaluation Staff and will follow the guidelines
established under the settlement.

                  Third, if the ICET concludes that the claim should receive a
higher score than awarded by the Claim Evaluation Staff, then the Prudential
Claim Review Staff will re-evaluate the claim taking into consideration the
recommendation of the ICET. The Claimant will receive a decision from the Claim
Review Staff indicating the award. This Claim Review Staff will not be comprised
of persons who were involved in the sale of insurance and will be monitored by
Lead Counsel, the Regulatory Oversight Staff, and independent auditors.

                  Fourth, if the Claimant is dissatisfied with the award issued
by the Claim Review Staff, then the claim, at no cost to the Claimant, will be
reviewed by an impartial decision-maker. This reviewer will be a person with no
affiliation with Prudential,

                                      -9-
<PAGE>

with expertise in life insurance or insurance claim resolutions, and will be
selected by Lead Counsel and the Regulatory Oversight Staff. Such impartial
decision-makers are not bound by the relief awarded by the Claim Review Staff;
rather, they are instructed to independently review the claim. The Policyholder
is afforded the right to use a Representative, who is selected by Lead Counsel
and approved by the Regulatory Oversight Staff, to assist the Policyholder
during the review by the impartial decision-maker. The decision of the impartial
decision-maker will be binding upon the Policyholder and Prudential unless the
Claimant Representative, appointed by Lead Counsel to act as an advocate on
behalf of all Class Members submitting claims to the ADR Process, determines, at
the request of the Policyholder, that the decision operates as a "manifest
injustice." In that event, there will be a rehearing.

                  E. TYPES OF RELIEF AVAILABLE IN THE ADR PROCESS

                  The type of relief available to Class Members through the ADR
Process depends on the nature of the claim and the strength of the evidence.
Relief may be available, under certain circumstances, even if the insured has
died and death benefits have previously been paid on a Policy for which you are
a successor in interest (i.e., executor, heir, etc.). Examples of available
relief are as follows:

o Financed Insurance -- If evidence shows that you were misled in connection
with a Financed Insurance sale (one that generally involves the use of loans,
dividends or values of existing Policies to pay premiums on a new policy), your
remedies may range from the return of policy values improperly used, to
allowing you to cancel your Policy and receive a refund of some or all of the
premiums you paid, including interest in some cases. Misrepresentations in
connection with financed insurance sales are sometimes referred to as "twisting"
or "churning."

o Abbreviated Payment -- If evidence shows that you were misled in connection
with a sale involving Abbreviated Payment (one that generally involves the use
of a policy's dividends or policy values to reduce the number of out-of-pocket
premium payments on the same policy), you may not need to make out-of-pocket
payments for some or all of the premiums otherwise due. Or, you may be allowed
to cancel your Policy and receive a refund of some or all of the premiums you
paid, including interest in some cases. You may be entitled to receive this
relief even if you have not yet reached the last out-of-pocket premium payment
you expected to make, and even if you have not been told that your Policy will
require the out-of-pocket payment of premiums for longer than originally
expected. These sales are sometimes referred to as "vanishing premium" sales.

o Investment Product -- If evidence shows that you were misled about whether you
were purchasing life insurance rather than an investment, savings or retirement
product, you may be allowed to cancel your unwanted Policy and receive a refund
of some or all of the premiums you paid, including interest in some cases. Or,
you may be able to exchange your Policy for an annuity to be purchased with the
amount otherwise available for refund.

                                      -10-
<PAGE>

o Other Claims -- If evidence shows other improper life insurance sales
practices, you may be remedied through the cancellation of your Policy with a
refund of some or all of the premiums you paid, including interest in some
cases, or the issuance of a substitute product purchased with the amount
otherwise available for refund.

                  F. FINANCIAL GUARANTEE, MINIMUM PAYMENT, AND ADDITIONAL
                     REMEDIATION AMOUNT

                  Prudential has also agreed to make certain additional payments
to eligible Class Members and to guarantee that its pre-tax cost for remedies
will reach certain minimum levels, but only if the proposed settlement is both
approved by Judge Wolin and upheld on any appeal, as follows:

o Financial Guarantee -- In addition to relief specified above, Prudential also
has agreed to guarantee that the pre-tax cost for remedies in the ADR Process
for each 110,000 claims receiving remedies will be approximately $260 million
(the "Financial Guarantee"). If the actual expense is less than this amount,
Prudential guarantees it will add the remaining amount of money (for up to a
maximum number of 330,000 claims remedied) to the Additional Remediation Amount
to be distributed to Class Members who receive remedies in the ADR Process, as
described below.

o Minimum Payment -- Regardless of the number of claims that receive remedies,
Prudential also has agreed to pay at least $410 million (the "Minimum Payment"),
which is the same amount it would pay if 110,000 claims were remedied ($260
million of Financial Guarantee and $150 million of Additional Remediation
Amount).

o Additional Remediation Amount -- In addition, Prudential will pay an
additional remediation amount based on a sliding scale which will depend on the
number of claims remedied in the ADR Process (the "Additional Remediation
Amount"), as follows:

If 110,000 claims are remedied, the Additional Remediation Amount will be $150
million.
If 220,000 claims are remedied, the Additional Remediation Amount will be $250
million.
If 330,000 claims are remedied, the Additional Remediation Amount will be $300
million.
If 440,000 claims are remedied, the Additional Remediation Amount will be $250
million.
If 550,000 claims are remedied, the Additional Remediation Amount will be $150
million.
If 660,000 claims or more are remedied, the Additional Remediation Amount will
be $50 million.

      The exact amount of the Additional Remediation Amount will be determined
at the end of the ADR Process and is dependent on the total number of claims
that are remedied. If the settlement is upheld on appeal, the Court will
determine how the Additional Remediation Amount will be allocated and
distributed after the completion of the ADR Process.

                                      -11-
<PAGE>

            2. BASIC CLAIM RELIEF

            All Class Members will be eligible for Basic Claim Relief. To obtain
Basic Claim Relief, a Class Member does not have to show that he or she was
misled in any way or that any improper sales practices occurred. However, the
option of selecting Basic Claim Relief would not be available to Class Members
who choose to participate in the ADR Process, and whose claims receive no award
of relief.

            There are three forms of Basic Claim Relief which will be available
to Class Members. You will be informed as to which options you are eligible to
select when the remediation program is implemented. The types of Basic Claim
Relief which Prudential will offer are as follows:

            (a)   Optional Premium Loans. Class Members who have Policies in
                  force that were issued during the Class Period have the right
                  to obtain "Optional Premium Loans," which are loans made to
                  you at a reduced interest rate, subject to certain conditions.
                  These loans will be available to eligible Class Members solely
                  to pay all or part of a specified number of annual premiums on
                  the Class Member's Policy. (The specified number of annual
                  premiums, anywhere from two to six, will depend on when the
                  Policy was issued.) Optional Premium Loans will remain
                  available to an eligible Class Member on his or her annual
                  policy anniversary through December 31, 2010. The purpose of
                  an Optional Premium Loan is to assist an eligible Class Member
                  in making additional out-of-pocket premium payments.

                  Each Optional Premium Loan will be repaid by the policyholder
                  over a period of five years commencing on the policy
                  anniversary following the date on which the Optional Premium
                  Loan is made. Each payment will consist of accrued interest
                  due plus one-fifth of the original amount of the Optional
                  Premium Loan outstanding.

                  Optional Premium Loans are not "policy loans" as described in
                  your Policy. They must nevertheless be secured by an
                  assignment of the Policy's cash value and the death benefit as
                  collateral to cover the amount of the Optional Premium Loans
                  (including the Optional Premium Loan being requested),
                  existing policy loans and other instruments outstanding, plus
                  one-year's interest on all such obligations (collectively, the
                  "Outstanding Obligations").

                  The interest rate (reset quarterly) on the Optional Premium
                  Loans offered to Class Members shall be representative of
                  Prudential's unsecured short-term cost of borrowing. This rate
                  may vary up or down depending on when the loan is taken and
                  may also vary during the time the loan is outstanding.

                                      -12-
<PAGE>

                  In order for a Class Member to be eligible for the Optional
                  Premium Loan, the Class Member's Policy must be in force and,
                  following the Optional Premium Loan transaction, have a cash
                  value sufficient to secure the full amount of all Outstanding
                  Obligations.

            (b)   Enhanced Value Policies. Class Members with Policies in force
                  that are heavily loaned, or who owned Policies that have
                  lapsed or terminated without death benefits being paid, will
                  have the right to apply to purchase Enhanced Value Policies,
                  subject to certain conditions summarized below.

                  An Enhanced Value Policy will be a designated whole life
                  insurance policy within Prudential's portfolio of individual
                  permanent life insurance policies available on the date of the
                  award. The insured and the Policyholder(s) will be the same as
                  on the Policy with respect to which the election is made.
                  After the Class Member has paid the first year's annual
                  premium, Prudential will "enhance" the policy by buying
                  additional insurance coverage for the Class Member over the
                  next five years, with Prudential paying an amount equal to 100
                  percent of the Class Member's first-year premium over that
                  five-year period. In addition, in the event the proposed
                  settlement is approved by the Court and upheld on appeal,
                  Prudential will further enhance the policy by buying
                  additional insurance coverage for the Class Member in the
                  seventh year. Prudential will pay an additional amount in the
                  seventh year equal to 15% of the Class Member's first year
                  premium. These enhancements will increase the death benefit
                  protection of the policy at no additional cost to the Class
                  Member.

                  The insured will have to provide satisfactory evidence of
                  insurability and be age 85 or less. However, the underwriting
                  will be less rigorous than typically applies to the purchase
                  of a new policy. The Class Member must make the initial
                  payment for the Enhanced Value Policy with money from a source
                  other than a surrender of, or a policy loan against, or
                  withdrawal of the values of, any existing life insurance or
                  annuity product issued by Prudential.

            (c)   Enhanced Value Annuities. Every Class Member will be eligible
                  to apply to purchase an "Enhanced Value Annuity."

                  An Enhanced Value Annuity is a non-qualified deferred annuity
                  which Prudential, as part of this settlement, will "enhance"
                  by crediting payments credited to the annuity at the end of
                  the first and second contract years. Specifically, at the end
                  of the first year after the Class Member has made his/her
                  initial payment, Prudential will pay into the annuity an
                  additional 2 percent of the Class Member's initial payment if

                                      -13-
<PAGE>

                  the initial payment was under $25,000, or an additional 3
                  percent of the Class Member's initial payment if the initial
                  payment was between $25,000 and $50,000. In either case, at
                  the end of the second year, Prudential will also pay into the
                  annuity an additional 2 percent of the initial payment. In
                  addition, in the event that the proposed settlement is
                  approved by the Court and upheld on appeal, Prudential will
                  further enhance the annuity by paying into the annuity an
                  additional 1 percent of the initial premium at the end of the
                  third year. This enhancement will increase the value of this
                  annuity at no additional cost to the Class Member.

                  Prudential will also waive the surrender charges with respect
                  to the initial payment and the enhancements made by Prudential
                  beginning on the later of (a) the date that the Class Member
                  reaches the age of 59 1/2 or (b) the date on which the
                  Enhanced Value Annuity has been in force for four years. The
                  Enhanced Value Annuity is subject to a $1,000 minimum payment
                  and a maximum payment based on the face amount of the Class
                  Member's original Policy as provided below:

                  Class Member's                  Maximum Amount of Initial
                  Policy Face Amount              Payment Subject to Enhancement
                  ------------------              ------------------------------

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

                  You may not pay an aggregate amount for any Enhanced Value
                  Annuity and/or Mutual Fund Enhancement in excess of the
                  applicable Maximum Amount of Initial Payment Subject to
                  Enhancement set forth above. A Class Member must purchase an
                  Enhanced Value Annuity with money that is not taken from the
                  proceeds of the surrender of or withdrawal from, or a policy
                  loan against, the values of any existing life insurance or
                  annuity product issued by Prudential. No tax-qualified money
                  will be accepted as payment for an Enhanced Value Annuity. The
                  Enhanced Value Annuity will not be issued on a tax-qualified
                  basis.

                  You must be age 85 or less to apply for an Enhanced Value
                  Annuity. The owner and annuitant for the Enhanced Value
                  Annuity will be the owner of the Policy with respect to which
                  the election is made, provided that if the owner of the Policy
                  with respect to which the election is made is a corporation,
                  trust, or other entity, then the owner and annuitant may be
                  the insured on the Policy with respect to which the election
                  is made.

                                      -14-
<PAGE>

            (d)   Mutual Fund Enhancement. Every Class Member will be eligible
                  to purchase shares in certain designated mutual funds with
                  Prudential contributing additional fund shares.

                  Although you will be able to select this form of Basic Claim
                  Relief when you submit your Election form, this Mutual Fund
                  Enhancement will only be available in the event the Class
                  action settlement is approved by the Court and upheld on
                  appeal. If the Class action settlement is rejected by the
                  Court or not upheld on appeal, you will be notified that the
                  Mutual Fund Enhancement will not be made available to you. In
                  that case, if the Mutual Fund Enhancement were your only Basic
                  Claim Relief selection, you may make another selection.

                  For each Class Member's purchase of shares in certain
                  designated mutual funds currently distributed by Prudential
                  Securities, Inc., Prudential will "enhance" the amount of the
                  initial purchase with a financial contribution to purchase
                  additional shares equal to 4% of the amount of such initial
                  purchase. The mutual fund shares will be offered subject to a
                  contingent deferred sales charge, as described in the
                  relevant prospectus, that generally decreases to zero over a
                  period of approximately six years. Your initial purchase of
                  mutual fund shares must be no less than $1,000, or such other
                  amount as set forth in the applicable prospectus, and the
                  amount entitled to receive the enhancement described above is
                  subject to the following limits:

                                                      Maximum Policyholder
                  Class Member's                     Initial Purchase Amount
                  Policy Face Amount                 Subject to Enhancement
                  ------------------                 ----------------------

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

                  You may not pay an aggregate amount for any Mutual Fund
                  Enhancement and/or Enhanced Value Annuity in excess of the
                  applicable Maximum Policyholder Initial Purchase Amount
                  Subject to Enhancement set forth above.

                  In addition to selecting either an Enhanced Value Policy, an
                  Enhanced Value Annuity or a Mutual Fund Enhancement, a Class
                  Member, if eligible, may also choose to obtain an Optional
                  Premium Loan.

                                      -15-
<PAGE>

7.    INCOME TAX CONSEQUENCES

            Your receipt of the relief described above in either the ADR Process
or in Basic Claim Relief could have tax consequences for you. Those tax
consequences may vary, depending upon your individual circumstances. YOU SHOULD
CONSULT YOUR OWN TAX ADVISOR TO DETERMINE ANY FEDERAL, STATE, LOCAL OR FOREIGN
TAX CONSEQUENCES OF THE RECEIPT OF RELIEF IN YOUR PARTICULAR CIRCUMSTANCES.

            The following applies only to the selection of an Optional Premium
Loan if you elect Basic Claim Relief. While unlikely, there is some risk that
the Optional Premium Loan could be considered a below market rate loan for
Federal income tax purposes. In such event, the difference between the Optional
Premium Loan interest rate and a specified Federal short-term interest rate
generally based on the average market yield of United States Treasury
obligations with maturities of three years or less, if any, would reduce your
cost basis for tax purposes in your Policy, or result in taxable income in the
event there is no remaining cost basis in your Policy. Your cost basis in your
Policy is important because it determines what portion of distributions under
the Policy may be taxable. Moreover, as with any policy loan or pledge of your
Policy, an Optional Premium Loan may be wholly or partially taxable to you if
your Policy is a "Modified Endowment Contract" (as defined by the Internal
Revenue Code) at the time you receive an Optional Premium Loan or, in some
circumstances, if your Policy becomes a "Modified Endowment Contract" following
your receipt of an Optional Premium Loan. You may also be subject to a 10%
penalty tax on the taxable amount. You are particularly urged to consult your
tax advisor if your Policy is a "Modified Endowment Contract" at the time you
request any Optional Premium Loan, or if you consider making any material
changes to your Policy after you receive an Optional Premium Loan.

8.    RELEASE OF CLASS MEMBERS' CLAIMS

            A.    CLASS RELEASE AND WAIVER

            IF THE PROPOSED SETTLEMENT IS APPROVED BY THE COURT, AND AFFIRMED ON
APPEAL, THE LAWSUIT WILL BE DISMISSED WITH PREJUDICE, AND PRUDENTIAL WILL BE
RELEASED FROM ALL CLAIMS THAT HAVE BEEN OR COULD HAVE BEEN ASSERTED BY CLASS
MEMBERS. THE RELEASE ENCOMPASSES ANY MATTER RELATING TO THE MARKETING,
SOLICITATION, APPLICATION, UNDERWRITING, ACCEPTANCE, SALE, PURCHASE, OPERATION,
RETENTION, ADMINISTRATION, SERVICING, OR REPLACEMENT, BY MEANS OF SURRENDER,
PARTIAL SURRENDER, LOANS RESPECTING WITHDRAWAL AND/OR TERMINATIONS OF POLICIES
OR ANY INSURANCE POLICY OR ANNUITY SOLD IN CONNECTION WITH OR RELATING IN ANY
WAY DIRECTLY OR INDIRECTLY TO THE SALE OR SOLICITATION OF, THE POLICIES. THE
RELEASE IS INTENDED TO BE VERY BROAD. THE RELEASE IS A CRITICAL ELEMENT OF THE
PROPOSED SETTLEMENT, AND ACCORDINGLY, THE ENTIRE TEXT HAS BEEN INCLUDED IN
APPENDIX A TO THIS NOTICE (EXCEPT FOR CERTAIN DEFINED TERMS THAT APPEAR
ELSEWHERE IN THIS NOTICE). BECAUSE IT WILL AFFECT YOUR RIGHTS IF YOU REMAIN IN
THE CLASS, YOU SHOULD CAREFULLY READ THIS PARAGRAPH AND THE ENTIRE RELEASE.

                                      -16-
<PAGE>

            B.    RELEASE UPON ELECTION OF ADR PROCESS OR BASIC CLAIM RELIEF

            In addition, if you elect to participate in the ADR Process or to
receive Basic Claim Relief, you will be required to sign a form of this release
which will prevent you from bringing any lawsuit or participating in any other
class action relating to the sale, servicing or operation of your Policy which
may be brought against Prudential if the proposed settlement is not approved on
appeal or otherwise.

HOWEVER, IF YOU ELECT TO PARTICIPATE IN THE ADR PROCESS, WITHIN 60 DAYS OF YOUR
RECEIPT FROM PRUDENTIAL OF NOTICE THAT THE SETTLEMENT HAS EITHER NOT BEEN
APPROVED BY THE COURT OR HAS BEEN REJECTED ON APPEAL, YOU WILL BE ALLOWED TO
RESCIND YOUR RELEASE AND THE RELIEF YOU RECEIVED UNDER THE REMEDIATION PROGRAM
AND THEREBY RETURN, TO THE EXTENT PRACTICABLE, TO THE POSITION YOU WERE IN
BEFORE ENTERING THE PROGRAM. IF THE SETTLEMENT IS APPROVED BY THE COURT, AND
AFFIRMED ON APPEAL, PRUDENTIAL WILL BE RELEASED FROM ALL CLAIMS, REGARDLESS OF
WHETHER YOU ELECT TO SEEK RELIEF IN THE ADR PROCESS.

9.    EXCLUSION FROM THE CLASS

      If you wish to exclude yourself from the Class with respect to one or more
Policies, you must comply with the requirements described in this Section. You
must send a formal, written request for exclusion as to each such Policy to the
following address:

                        Prudential Class Action Settlement
                        P.O. Box 9354
                        Boston, Massachusetts 02205-9354

YOUR WRITTEN REQUEST FOR EXCLUSION MUST BE POSTMARKED BY NO LATER THAN DECEMBER
19, 1996, OTHERWISE IT WILL BE UNTIMELY AND YOUR REQUEST FOR EXCLUSION WILL BE
WAIVED AND YOU WILL BE BOUND BY THE SETTLEMENT AND ALL ORDERS AND JUDGMENTS IN
THE ACTIONS.

            Your letter must (i) identify by policy number the Policy or
Policies for which you are requesting exclusion (you can find your policy number
on the materials enclosed with this Notice), (ii) state that you want to be
excluded from the Class with respect to each such Policy or Policies, and (iii)
include your name, your address, your telephone number, the name and caption of
this lawsuit, and your signature. If you have an ownership interest in more than
one Policy, you may choose to remain a Class Member with respect to some
Policies, but to exclude yourself from the Class with respect to other Policies.

      IF TWO OR MORE INDIVIDUALS OR ENTITIES SHARE (OR SHARED AT THE TIME OF
      TERMINATION) OWNERSHIP IN ONE POLICY, ALL SUCH INDIVIDUALS OR ENTITIES
      MUST EXCLUDE THEMSELVES IN ORDER FOR ANY TO BE EXCLUDED WITH RESPECT TO
      THE POLICY.

      PLEASE BE SURE TO WRITE "EXCLUSION NOTICE" ON THE LOWER LEFT-HAND CORNER
      OF THE FRONT OF THE ENVELOPE.

                                      -17-
<PAGE>

            If you exclude yourself from the Class, you will not be permitted to
object to or participate in the proposed settlement or to receive any relief
under the Class Action Settlement Program if it is approved by the Court, but
you may, under certain circumstances, be entitled to receive relief under the
Task Force Plan. See "Interaction Between the Task Force Plan and the Class
Action Settlement Program" below.

10.   HEARING ON PROPOSED SETTLEMENT, RIGHT TO OBJECT TO PROPOSED SETTLEMENT AND
      RIGHT TO APPEAR

            The Court will hold a hearing to consider whether to approve the
proposed settlement and to determine the amount of attorneys' fees and expenses
to award to Plaintiffs' counsel. THE HEARING WILL BE HELD ON JANUARY 21, 1997,
AT 10:00 A.M., IN THE COURTROOM OF JUDGE ALFRED M. WOLIN, LOCATED AT THE MARTIN
LUTHER KING, JR. UNITED STATES COURTHOUSE, 50 WALNUT STREET, NEWARK, NEW JERSEY.

            If you choose to remain in the Class with respect to one or more
Policies, you may file with the Court a written objection to any aspect of the
proposed settlement.

            Any Policyholder who has not filed a written request for exclusion
for all of his or her Policies, and who complies with the procedures described
in this Section, may object to the fairness, reasonableness or adequacy of the
proposed settlement or the award of attorneys' fees. Policyholders may do so
either on their own or through an attorney hired at their own expense. If you
hire an attorney to represent you at your own expense, your attorney must (i)
file a Notice of Appearance with the Clerk of the Court and (ii) send a copy to
counsel for Plaintiffs and Prudential at the addresses provided below.

            If you wish to submit written objections to the proposed settlement,
you or your attorney must prepare and submit at least one document:

o     A statement of the objections, as well as the specific reasons, if any,
      for each objection, including any legal support you wish to bring to the
      Court's attention and any evidence you wish to introduce in support of
      your objections.

Policyholders may obtain access, at their own expense, to the deposition
transcripts and attached exhibits as well as to all other documents generated in
this lawsuit by entering into the Stipulation of Confidentiality governing these
documents. These documents will be made available at the offices of Milberg
Weiss Bershad Hynes & Lerach LLP at One Pennsylvania Plaza, New York, New York
10119-0165 and at 600 West Broadway, 1800 One America Plaza, San Diego,
California 92101-5050, and at the offices of Much Shelist Freed Denenberg Ament
Belt & Rubenstein, P.C., 200 North LaSalle Street, Suite 2100, Chicago, Illinois
60601.

                                      -18-
<PAGE>

      YOU MUST FILE ANY PAPERS AND EVIDENCE WITH THE CLERK OF THE COURT AND
      SERVE THOSE PAPERS AND EVIDENCE ON THE ATTORNEYS FOR PLAINTIFFS AND
      PRUDENTIAL SO THAT THEY ACTUALLY RECEIVE SUCH PAPERS AND EVIDENCE NO LATER
      THAN DECEMBER 19, 1996.

            In addition, any Policyholder who submits written objections, as
described above, may appear at the hearing, either in person or through personal
counsel. Policyholders making an appearance will be heard to the extent allowed
by the Court. The Court may adjourn the hearing on the proposed settlement to a
new date and time without further notice to you or other Policyholders.
Therefore, you (or your personal counsel) should check with the Clerk of the
Court before appearing at the hearing.

            If you intend to request permission to address the Court at the
hearing, you must prepare and submit a notice from you (or your counsel)
requesting permission to address the Court at the hearing.

      IF YOU WISH TO RECEIVE COPIES OF THE PAPERS IN SUPPORT OF THE SETTLEMENT,
      YOU SHOULD FILE A NOTICE OF APPEARANCE ON OR BEFORE NOVEMBER 20, 1996, AND
      REQUEST THAT YOU BE PROVIDED WITH PAPERS IN SUPPORT OF THE SETTLEMENT.

            Objections received after December 19, 1996 will not be considered
by the Court. You will remain a member of the Class and will be bound by the
orders and judgments in this action regardless of how the Court rules on your
objections.

            The papers to be filed with the Clerk of the Court (copies of which
must also be served on counsel for Plaintiffs and Prudential, as set forth
below) must be sent to the following addresses and must be received by the Court
and all three of the undersigned Counsel by December 19, 1996:

                        (1)    Clerk of the Court
                               United States District Court
                               District of New Jersey
                               P.O. Box [ILLEGIBLE]
                               Newark, New Jersey [ILLEGIBLE]

                        (2)    Melvyn I. Weiss, Esq.
                               Milberg Weiss Bershad Hynes & Lerach, LLP
                               One Pennsylvania Plaza
                               New York, New York 10119-0165

                                      -19-
<PAGE>

                                           and

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

                                    Co-Lead Counsel for Plaintiffs and the Class

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

                                    Counsel for Prudential

      YOU ARE NOT REQUIRED TO FILE ANY PAPERS WITH THE COURT OR TO APPEAR AT THE
      HEARING TO BE ENTITLED TO CHOOSE ONE OF THE FORMS OF RELIEF THAT WILL BE
      OFFERED TO CLASS MEMBERS IF THE PROPOSED SETTLEMENT IS APPROVED.

11.   INTERACTION BETWEEN THE TASK FORCE PLAN AND THE CLASS ACTION SETTLEMENT
      PROGRAM

            As mentioned above, the proposed Class Action Settlement Program is
based upon, but provides additional relief not included in, the Task Force Plan.
The Policyholders eligible to participate in the proposed Class Action
Settlement Program are generally the same Policyholders who are included in the
Task Force Plan (except for Policyholders in states that have not accepted the
Task Force Plan). Under the original Task Force Plan, announced in July of 1996,
Prudential was to begin mailing, in October, 1996, notices to Policyholders in
states that have accepted the Task Force Plan which would explain the relief
being offered and providing forms to be used by Policyholders to elect to
participate in the Task Force Plan. However, it is anticipated that the
participating state insurance regulators will agree to delay the mailing until
February 1, 1997, after the scheduled hearing regarding the fairness,
reasonableness and adequacy of the proposed settlement, in order to provide
certain additional relief under the proposed Class Action Settlement Program to
the Policyholders residing in their states and to attempt to avoid the
possibility of confusion from multiple mailings of different proposals.

            The material additions to the Task Force Plan proposed in the Class
Action Settlement Program fall into three categories:

                                      -20-
<PAGE>

            (1)   significant changes in favor of Policyholders to certain
                  provisions governing the scoring of claims under the ADR
                  Process and improved remedies for Policyholders under certain
                  circumstances;

            (2)   the inclusion of Lead Counsel and their designated
                  representatives, including a Claimant Representative, in
                  various monitoring and advocacy roles within the remediation
                  process in addition to ongoing oversight roles to be played by
                  state insurance regulators; and

            (3)   the Financial Guarantee, Additional Remediation Amount and
                  Minimum Payment to be paid by Prudential (as explained in
                  Section 6.B. above), and certain additional contributions to
                  the Enhanced Value Policy and Enhanced Value Annuities and the
                  availability of the Mutual Fund Enhancement (the "Basic Claim
                  Relief Enhancements").

            The Class Action Settlement Program, with all three categories of
additions, will be offered if, and only if, the Court approves the proposed
class action settlement, and in the event the approval is appealed, it is upheld
in all material respects by higher courts on appeal. The Class Action Settlement
Program, with the significant exception of the Financial Guarantee, Additional
Remediation Amount and the Minimum Payment and the Basic Claim Relief
Enhancements, will be offered if District Judge Wolin approves the settlement,
even if an appeal is pending. However, if the proposed settlement is not
approved, the Task Force Plan will be implemented in those states which have
entered into Consent Orders with Prudential, subject to the modifications set
forth in the following paragraph.

            The following explains when and what additional relief will be
offered to Policyholders under the Task Force Plan and the Class Action
Settlement Program:

            (a)   If, by February 1, 1997, the Court approves the proposed class
                  action settlement, Prudential will mail a notice to
                  Policyholders offering the Class Action Settlement Program
                  which will include the features of category 1 and category 2.
                  The notice will also explain that Class Members will only be
                  eligible to receive the relief available in category 3 if and
                  when all appeals have been exhausted and the class action
                  settlement is finally approved without any material
                  modification.

            (b)   If, by February 1, 1997, the Court has not yet approved the
                  proposed class action settlement or if the Court rejects the
                  proposed class action settlement, Prudential will mail a
                  notice to Policyholders residing in states which accepted the
                  Task Force Plan, offering the Task Force Plan, modified to
                  include the additional features in category 1, but not
                  including the category 2 or category 3 additions. However, in
                  the event the Court has not approved the proposed class action
                  settlement by February 1, 1997, the notice mailed pursuant to
                  this paragraph (b)

                                      -21-
<PAGE>

                  will further provide for Lead Counsel's involvement in
                  monitoring the training and telephone calls of the Claimant
                  Support Team.

            (c)   If the Court approves the proposed class action settlement
                  after the initial mailing offering the Task Force Plan set
                  forth in (b) above, then Prudential will mail an additional
                  notice to Class Members explaining that the features of
                  category 2 are being offered, but that Class Members will only
                  be eligible to receive the relief available in category 3 if
                  and when all appeals have been exhausted and the class action
                  settlement is finally approved without any material
                  modification.

If you reside in a state that has entered into an agreement with Prudential, you
will be notified in February, 1997 as to whether the proposed class action
settlement has been approved and what relief is being offered in the remediation
plan being implemented. If you reside in any other state, you will not receive
any notification regarding the settlement unless it receives Court approval.

The principal goal of sending notices by February 1, 1997 permitting you to make
your election to participate in either the ADR Process or Basic Claim Relief is
to expedite your receipt of certain relief. Absent this procedure, if the Court
approves the proposed settlement, and there is an appeal, all the relief could
be postponed until the favorable resolution of the appeals. Under this
procedure, however, certain relief can be received prior to Court approval and
during the pendency of any appeal, and additional relief in the form of the
Additional Remediation Amount, the Financial Guarantee, the Minimum Payment and
the Basic Claim Relief Enhancements could be received upon the resolution of any
appeal with respect to the settlement.

12.   COUNSEL FOR THE SETTLEMENT CLASS

            The Court has designated the law firms of Milberg Weiss Bershad
Hynes & Lerach LLP and Much Shelist Freed Denenberg Ament Bell & Rubenstein,
P.C. as Lead Counsel for the Class for purposes of the settlement of this
lawsuit, and Arnzen, Parry & Wentz, P.S.C.; Hopkins Goldenberg, P.C.; and Perry
& Windels (who are Executive Committee Members), and Goldstein, Till & Lite;
Bonnett, Fairbourn, Friedman, Hienton, Miner & Fry, P.C.; Cantilo, Maisel &
Hubbard, LLP.; DeFalice & Coleman, P.C.; Law Offices of Douglas B. Thayer;
Drubner, Hartley, O'Connor and Mengacci; Law Office of Jay R. Tomerlin; Specter
Law Offices; Ziegler, Ziegler & Altman; Heins, Mills & Olson, P.L.C.; Giebel,
Gilbert & Mandel; Levin, Fishbein, Sedran & Berman; Allen, Lippes & Shonn;
Zwerling, Schachter, Zwerling & Koppell, L.L.P.; Goodkind, Labaton, Rudoff &
Sucharow, L.L.P.; Hagens and Berman and The Law Office of Eric D. Freed, all as
additional counsel for the Class. YOU WILL NOT BE CHARGED FOR THE SERVICES OF
THESE OR ANY OTHER LAW FIRMS REPRESENTING THE CLASS IN THIS ACTION.

                                      -22-
<PAGE>

            You have the right to retain your own attorney to represent you in
this matter. If you do so, however, you will be responsible for paying your own
attorneys' fees and expenses. You also have the right to represent yourself
before the Court without an attorney.

13.   ATTORNEYS' FEES AND EXPENSES

            At the hearing described above, or at such later time as the Court
may direct, Lead Counsel for the Plaintiffs will apply to the Court for an award
of attorneys' fees and expenses not to exceed $90 million, with one-half (50
percent) of the fees plus all reasonable and documented expenses incurred as of
the date of the hearing on the proposed settlement to be paid within five
business days of when the Court enters an order approving the settlement and the
balance to be paid when the settlement is approved, on any and all appeals and
other proceedings, and becomes final. At that time, plaintiffs may request, and
Prudential will not oppose, an incentive award up to $10,000 to be mutually
agreed upon by Lead Counsel and Prudential, for each named, representative
plaintiff in the Actions. Lead Counsel will allocate and distribute this award
of Attorneys' Fees and expenses among counsel for the Class and others providing
services in support of the Actions. Plaintiffs will serve a brief in support of
this fee application on or before the final hearing date. If the Court approves
Lead Counsel's fee application, Prudential will pay the award.

            PAYMENT OF ATTORNEYS' FEES AND EXPENSES TO PLAINTIFFS' LAWYERS WILL
NOT REDUCE ANY FUNDS OR RELIEF BEING MADE AVAILABLE TO CLASS MEMBERS UNDER THE
PROPOSED SETTLEMENT. CLASS MEMBERS WILL NOT BE REQUIRED TO PAY ANY PORTION OF
PLAINTIFFS' ATTORNEYS' FEES.

14.   TERMINATION OF PROPOSED SETTLEMENT

            Plaintiffs and Prudential generally have the right to terminate the
proposed settlement if the Court does not approve it in full, without
modification, or if any appellate court modifies or disapproves the terms of the
Stipulation of Settlement or the Court's orders.

            THE PROPOSED SETTLEMENT ALSO CONTAINS CERTAIN OTHER CONDITIONS UNDER
WHICH THE PARTIES MIGHT HAVE THE RIGHT TO TERMINATE THE PROPOSED SETTLEMENT. IF
THE PROPOSED SETTLEMENT IS TERMINATED, ALL CLASS MEMBERS WHO HAVE ELECTED THE
ADR PROCESS WILL HAVE THE RIGHT TO RESCIND ANY INDIVIDUAL RELEASE THEY HAVE
GIVEN AND, TO THE EXTENT PRACTICABLE, BE RESTORED TO THE POSITIONS THEY OCCUPIED
BEFORE THE PARTIES ENTERED INTO THE PROPOSED SETTLEMENT, AND THEIR RIGHTS WILL
NOT BE AFFECTED IN ANY WAY BY THE PARTIES' ACTIONS IN CONNECTION WITH THE
PROPOSED SETTLEMENT. IF THE PROPOSED SETTLEMENT IS APPROVED BY THE COURT,
PRUDENTIAL WILL BE RELEASED FROM ALL CLAIMS REGARDLESS OF WHETHER YOU ELECT TO
SEEK RELIEF IN THE ADR PROCESS.

                                      -23-
<PAGE>

            If the proposed Class action settlement is terminated, Prudential
will implement (or continue to implement) the Task Force Plan and you will be
notified of your eligibility to participate in that program.

15.   PRELIMINARY INJUNCTION

            Pursuant to the Court's Order: No Policyholder, or any person acting
on behalf of or in concert or participation with that Policyholder, may exclude
any other Policyholder from the Class. All Policyholders and all persons acting
on behalf of or in concert or participation with any Policyholder, are hereby
enjoined from filing, commencing, prosecuting, continuing, litigating,
intervening in or participating as class members in, any lawsuit in any
jurisdiction based on or relating to the facts and circumstances underlying the
claims and causes of action in this lawsuit, unless and until such Policyholder
has timely excluded herself or himself from the Class. All persons receiving
notice of the Court's Order, including all Policyholders, are hereby enjoined
from bringing a class action on behalf of Class Members, or seeking to certify a
class which includes Class Members, in any lawsuit, in any jurisdiction, based
on or relating to the facts and circumstances underlying the claims and causes
of action in this lawsuit.

16.   ADDITIONAL INFORMATION

            This Notice is only a summary of the proposed settlement, which is
set forth in a more detailed legal document. The full proposed Stipulation of
Settlement is on file with the Clerk of the Court, and you may inspect it at the
Clerk's Office at any time during normal business hours. For a more detailed
statement of the matters involved in the Action, Plaintiffs and Prudential also
refer you to the consolidated complaint in this case and to the other papers and
court orders on file in the Clerk's Office, during normal business hours, Monday
- Friday 9:00 a.m. - 4:00 p.m. EST.

            Prudential, the Regulatory Oversight Staff and Lead Counsel have set
up a toll-free telephone number where there are trained personnel available to
answer any questions you may have about the settlement. If you have questions
after you have read this Notice and the written Question and Answer brochure
that is also being sent to you, please call 1-800-736-8913.

            You may also write to the Claimant Support Team:

                       Claimant Support Team
                       P.O. Box 9355
                       Boston, Massachusetts 02205-9355

                                      -24-
<PAGE>

PLEASE DO NOT CALL THE COURT OR THE CLERK OF THE COURT.

Dated: _____________, 1996

                                        -----------------------------------
                                                 Alfred M. Wolin
                                            United States District Judge

                                      -25-
<PAGE>

                                   APPENDIX A

                 IF THE SETTLEMENT IS APPROVED BY THE COURT, AND
              AFFIRMED ON APPEAL, PRUDENTIAL WILL BE RELEASED FROM
                     ALL OF THE MATTERS, AS DESCRIBED BELOW

                               RELEASE AND WAIVER

      1. Definitions. For purposes of the proposed release and waiver:

            A. "Abbreviated Payment" or "APP" shall mean a feature using a
Policy's existing dividend credits for traditional whole life policies and
contract fund amounts for VAL/AL policies to limit the number of cash or
"out-of-pocket" payments required of the Policyholder to keep the Policy in
force (referred to as "vanishing premium" in some circumstances).

            B. "Action(s) shall mean the Consolidated Complaint and the
Consolidated Policyholders Class Actions in In re The Prudential Insurance
Company of America Sales Practices Litigation, Master Docket No. 95-4704(AMW),
MDL No. 1061, pending for pre-trial purposes in the United States District Court
for the District of New Jersey.

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

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

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

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

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

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

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

            J. "Policyholders" shall mean all policyowners of one or more
Policies issued during the Class Period, but do not include (unless such persons
or entities are Policyholders by virtue of other Policies) (i) policyowners
represented by counsel who executed a document in connection with a settlement
of a claim, action, lawsuit or

                                      -1-
<PAGE>

proceeding, pending or threatened, that released Prudential with respect to such
Policies, (ii) policyowners which are corporations, banks, trusts or non-natural
entities, which purchased Policies as corporate or trust-owned life insurance
and under which either (a) there are 50 or more separate insured individuals or
(b) the aggregate premium paid over an eight (8) year period ending with the
close of 1996 exceeds one million dollars, or (iii) policyowners who were issued
Policies in 1995 by Prudential Select Life Insurance Company of America.

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

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

            M. "Released Transactions" shall mean the marketing, solicitation,
application, underwriting, acceptance, sale, purchase, operation, retention,
administration, servicing, or replacement by means of surrender, partial
surrender, loans respecting, withdrawal and/or termination of the Policies or
any insurance policy or annuity sold in connection with, or relating in any way
directly or indirectly to the sale or solicitation of, the Policies, which
include those matters described in Section II below.

            N. "Stipulation of Settlement" shall mean the stipulation of
settlement, dated October 25, 1996, entered into by Plaintiffs and the
Defendants, resolving the disputes in the Actions, and the attached Exhibits.

      II. Release.

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

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

                  (ii)  any or all of the acts, omissions, facts, matters,
                        transactions, occurrences, or any oral or written
                        statements or

                                      -2-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                      -3-
<PAGE>

                              dividends, interest crediting rates or
                              illustrations, or cost of insurance and
                              administrative charges;

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

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

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

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

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

                        (p)   violations of the "replacement" statutes or
                              regulations under applicable state law;

                        (q)   the suitability of particular types of life
                              insurance policies or products for particular
                              types of Policy purchasers;

                        (r)   any actual or alleged violation of any state
                              statute or regulation relating to life insurance
                              sales practices; and

            (iii)       any or all acts, omissions, facts, matters,
                        transactions, occurrences or oral or written statements
                        or representations in connection with or directly or
                        indirectly relating to the Stipulation of Settlement or
                        the settlement of the Actions, except as provided in
                        paragraph G. below.

            B. Plaintiffs and all Class Members expressly agree that this
Release will be, and may be raised as, a complete defense to and will preclude
any action or proceeding encompassed by the release of Defendants herein.

            C. Nothing in this Release shall be deemed to alter a Class
Member's contractual rights (except to the extent that such rights are altered
or affected by the election and award of relief under the Stipulation of
Settlement) to make a claim for benefits that will become payable in the
future pursuant to the express written terms of the policy form issued by
Prudential; provided, however, that this provision shall not entitle a Class
Member to assert claims which relate to the allegations contained in the
Actions or to the matters described in paragraph II.A. above.

                                      -4-
<PAGE>

            D. Without in any way limiting the scope of the Release, this
Release covers, without limitation, any and all claims for attorneys' fees,
costs or disbursements incurred by Lead Counsel or any other counsel
representing Plaintiffs or Class Members (including counsel to Claimants in the
ADR Process), or by Plaintiffs or the Class Members, or any of them, in
connection with or related in any manner to the Actions, the settlement of the
Actions, the administration of such settlements and/or the Released Transactions
except to the extent otherwise specified in the Stipulation of Settlement.

            E. Plaintiffs and Class Members expressly understand that Section
1542 of the Civil Code of the State of California provides that a general
release does not extend to claims which a creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor pertaining to the
Defendants' insurance sales practices. To the extent that, notwithstanding the
choice of law provisions in the Stipulation of Settlement, California or other
law may be applicable, Plaintiffs and the Class Members hereby agree that the
provisions of Section 1542 and all similar federal or state laws, rights, rules,
or legal principles of any other jurisdiction (including, without limitation,
North Dakota and South Dakota) which may be applicable herein, are hereby
knowingly and voluntarily waived and relinquished by Plaintiffs and the Class
Members with respect to the Defendants' insurance sales practices, and
Plaintiffs and the Class Members hereby agree and acknowledge that this is an
essential term of this Release.

            F. It is the intention of Plaintiffs and the Class Members in
executing this Release fully, finally and forever to settle and release all
matters, and all claims relating thereto, which exist, hereafter may exist, or
might have existed pertaining to the Defendants' insurance sales practices
(whether or not previously or currently asserted in any Actions) with regard to
the Policies.

            G. Nothing in this Release shall preclude any action to enforce the
terms of the Stipulation of Settlement, including participation in any of the
processes detailed therein.

                                      -5-
<PAGE>

                      EXHIBIT F-3 -- QUESTIONS AND ANSWERS
<PAGE>

                        ANSWERS TO QUESTIONS YOU MAY HAVE
                        ABOUT THE CLASS ACTION SETTLEMENT

PLEASE REVIEW THE FOLLOWING QUESTIONS AND ANSWERS FOR ADDITIONAL INFORMATION
CONCERNING THE TERMS, RESTRICTIONS AND OPERATION OF, AND YOUR ELIGIBILITY FOR,
THE DIFFERENT OPTIONS UNDER THIS PROGRAM. THE CLAIMANT SUPPORT TEAM IS AVAILABLE
AT 800-736-8913 (FOR TELECOMMUNICATION DEVICE FOR THE DEAF, CALL 800-782-1863)
TO ANSWER ANY QUESTIONS YOU MAY HAVE ABOUT THIS PROGRAM. DO NOT CALL THE CLERK
OF THE COURT, OR THE COURT, WHERE THE CLASS ACTION IS PENDING.

                                TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----

GENERAL FACTS ABOUT THE CLASS ACTION SETTLEMENT ............................   1

      1.    Why did I receive this Notice in the mail? .....................   1

      2.    What is a class action lawsuit? ................................   1

      3.    Does this mean that I have been sued? ..........................   1

      4.    What claims were made against Prudential in this lawsuit? ......   1

      5.    Why is this lawsuit being settled? .............................   1

      6.    What relief is available under the settlement? .................   2

      7.    Am I a policyholder eligible for relief under the
            settlement? ....................................................   2

      8.    Has the Court approved the class action settlement? ............   2

      9.    What other investigations were conducted regarding
            Prudential's life insurance sales practices? ...................   3

      10.   What was the result of the Task Force examination? .............   3

      11.   Will the state insurance departments play a role in the
            settlement? ....................................................   3

      12.   When can I obtain the relief from the settlement? ..............   4

      13.   If the Court rejects the class action settlement at any
            time, may I still obtain the relief provided in the
            settlement? ....................................................   4

      14.   If I have more than one policy, am I required to select
            the same type of relief for each policy? .......................   4
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

      15.   What is the difference between the ADR Process and Basic
            Claim Relief? ..................................................   5

      16.   If I am the insured or the beneficiary of a policy, but
            not the owner, am I eligible for the settlement relief? ........   5

      17.   If an eligible policyholder is deceased, can his or her
            legal representatives still participate in the settlement? .....   5

      18.   Am I required to remain a member of the Class and
            participate in the settlement? .................................   5

      19.   If I choose to participate in the settlement, will I have
            to pay attorneys' fees to the lawyers representing the
            Class? .........................................................   6

      20.   Will any fees and costs awarded to the attorneys
            representing the Class reduce, diminish or affect the
            remedies provided to policyholders under the settlement? .......   6

      21.   If I choose to be excluded from the Class may I still
            participate in the settlement? .................................   6

      22.   Will I still have the right to sue if I participate in the
            settlement? ....................................................   6

      23.   Do I have to choose now between participating in the ADR
            Process or selecting Basic Claim Relief? .......................   6

      24.   Will there be independent reviews of the remediation
            program and policyholder claims? ...............................   7

      25.   Will there be tax consequences if I participate in the
            settlement? ....................................................   7

      26.   Who can I call if I have questions about the settlement? .......   7

ALTERNATIVE DISPUTE RESOLUTION PROCESS .....................................   7

      27.   What is the Alternative Dispute Resolution Process? ............   7

      28.   What is the basis for relief under the ADR Process? ............   7

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

      29.   What is the range of relief available under the ADR
            Process if the evidence supports my claim? .....................   8

      30.   What evidence can I provide to support my claim? ...............   8

      31.   When do I have to file my claim? ...............................   9

      32.   How will claims submitted to the ADR Process be decided? .......   9

      33.   Who will evaluate my claim? ....................................   9

      34.   What can I do if I am not satisfied with Prudential's
            decision and want a new review by an independent reviewer? .....   9

      35.   Will I receive assistance with the review by the
            independent decision-maker? ....................................  10

      36.   Do I need to continue paying premiums on my policy while
            my claim is being evaluated? ...................................  10

BASIC CLAIM RELIEF .........................................................  11

      37.   What is Basic Claim Relief? ....................................  11

OPTIONAL PREMIUM LOANS .....................................................  11

      38.   What is an Optional Premium Loan? ..............................  11

      39.   What are the requirements to receive an Optional Premium
            Loan? ..........................................................  11

      40.   How do I repay my Optional Premium Loan? .......................  12

      41.   What happens if I do not repay my loan? ........................  12

      42.   Are there limits to the use of an Optional Premium Loan? .......  12

      43.   Are there tax consequences regarding an Optional Premium
            Loan? ..........................................................  12

ENHANCED VALUE POLICY ......................................................  13

      44.   What is an Enhanced Value Policy? ..............................  13

                                     -iii-
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

      45.   Am I eligible to apply for an Enhanced Value Policy? ...........  13

      46.   How do I pay the premium on my Enhanced Value Policy? ..........  14

      47.   How much insurance can I buy with an Enhanced Value
            Policy? ........................................................  14

      48.   Will there be any underwriting prior to the issuing of my
            Enhanced Value Policy? .........................................  14

      49.   If I am in poor health will my Enhanced Value Policy be
            affected? ......................................................  14

      50.   What if I am found not to qualify for the Enhanced Value
            Policy or I decide not to accept the Enhanced Value
            Policy? ........................................................  14

ENHANCED VALUE ANNUITIES ...................................................  15

      51.   What is an Enhanced Value Annuity? .............................  15

      52.   Am I eligible to elect an Enhanced Value Annuity ...............  16

MUTUAL FUND ENHANCEMENTS ...................................................  16

      53.   What is the Mutual Fund Enhancement? ...........................  16

      54.   Am I eligible to elect a Mutual Fund Enhancement ...............  17

      55.   If I elect the Mutual Fund Enhancement, when will it
            become available? ..............................................  17

PAYMENT AND ELIGIBILITY FOR BASIC CLAIM RELIEF .............................  17

      56.   Can I use money in my existing policies to buy an Enhanced
            Value Policy, an Enhanced Value Annuity or a Mutual Fund
            Enhancement (when available)? ..................................  17

      57.   What if it is determined that I am not eligible for the
            election that I have made? .....................................  17

                                      -iv-
<PAGE>

           General Facts About the Class Action Settlement

1. WHY DID I RECEIVE THIS NOTICE IN THE MAIL?

Our records indicate that you currently own or have owned in the past a
permanent (whole life) insurance policy or policies issued from January 1, 1982
through December 31, 1995 by Prudential. Policyholders who bought these policies
may be eligible to receive relief under the terms of a settlement of a class
action lawsuit and under agreements reached with 43 states and the District of
Columbia.

2. WHAT IS A CLASS ACTION LAWSUIT?

A class action lawsuit is a suit brought by one or more individuals who are
representative of all others, known as members of the class, who may have
similar claims.

3. DOES THIS MEAN THAT I HAVE BEEN SUED?

No, you are not being sued. Because you own or owned a permanent (whole life)
policy issued during the period January 1, 1982 through December 31, 1995, you
are a member of the class which is bringing the lawsuit against Prudential (the
"Class") in the United States District Court for the District of New Jersey (the
"Court").

4. WHAT CLAIMS WERE MADE AGAINST PRUDENTIAL IN THIS LAWSUIT?

The lawsuit makes several claims about how certain whole life insurance policies
were sold. Generally the lawsuit alleges misrepresentations in the sale of
such life insurance policies concerning, among other things:

      (i)   the use of an existing policy's cash value or dividend or interest
            stream to pay for any other policy (sometimes referred to when
            misrepresented as "twisting" or "churning");

      (ii)  in an abbreviated payment plan sale, the number of out-of-pocket
            cash premium payments required to be paid for a new policy
            (sometimes referred to as "vanishing premium");

      (iii) the benefits that will be available upon payment of a specified
            number of cash premium payments; and

      (iv)  that the product being sold was solely an investment or savings
            vehicle rather than a life insurance policy.

5. WHY IS THIS LAWSUIT BEING SETTLED?

The parties involved -- the plaintiffs and Prudential -- are settling this
lawsuit because they believe that the relief provided under the terms of the
settlement is in the best interest of Prudential's policyholders.
<PAGE>

6. WHAT RELIEF IS AVAILABLE UNDER THE SETTLEMENT?

The settlement offers to eligible policyholders either (a) an Alternative
Dispute Resolution ("ADR") Process or (b) Basic Claim Relief. The ADR Process
allows policyholders who believe the available evidence will show they were
misled about the sale or operation of their policies to pursue a claim for
relief by submitting their evidence to an impartial decision-maker who will
evaluate the claim based upon objective standards, all without cost to the
policyholder. Alternatively, Basic Claim Relief, for eligible policyholders,
consists of loans at reduced interest rates to pay premiums ("Optional Premium
Loans"), Enhanced Value Policies, Enhanced Value Annuity contracts and Mutual
Fund Enhancement (when available), without requiring policyholders to claim or
show they were misled about the sale or operation of their policies. The ADR
Process and each of these Basic Claim Relief options is described in detail in
these Questions and Answers, as well as in the Summary of Relief Available
Under the Proposed Settlement.

7. AM I A POLICYHOLDER ELIGIBLE FOR RELIEF UNDER THE SETTLEMENT?

You are eligible for relief under the settlement provided that you have, or had
at the time of your policy's termination, an ownership interest in a Prudential
individual whole life insurance policy issued in the United States from January
1, 1982 through December 31, 1995. However, the following policyholders will not
be eligible:

      (a)   Those who previously made complaints to Prudential and signed a
            release while represented by an attorney when their claims were
            settled;

      (b)   Those who exclude themselves from the Class pursuant to Section 9 of
            the Class Notice;

      (c)   Those corporations, banks, trusts or non-natural entities that
            purchased multiple policies as part of corporate or trust-owned life
            insurance arrangements and under which either (i) there are 50 or
            more separate insured individuals, or (ii) the aggregate premiums
            paid in the eight years prior to the close of 1996, exceed $1
            million; and

      (d)   Those who were issued policies in 1995 by Prudential Select Life
            Insurance Company of America.

8. HAS THE COURT APPROVED THE CLASS ACTION SETTLEMENT?

No. The class action settlement will be the subject of a Court hearing
tentatively scheduled for January 21, 1997 to determine whether it is fair and
reasonable and should be approved.

                                       -2-
<PAGE>

9. WHAT OTHER INVESTIGATIONS WERE CONDUCTED REGARDING PRUDENTIAL'S LIFE
   INSURANCE SALES PRACTICES?

In April 1995, in part in response to allegations made in the class action
lawsuits, a Multi-State Life Insurance Task Force (the "Task Force"), composed
of insurance regulators from across the country, was formed to conduct a broad
review of past and current sales practices in the life insurance industry,
including those of Prudential.

In July, 1996, the Task Force issued a report of its examination of Prudential
(the "Task Force Report"). The Task Force Report concluded, in part, that some
Prudential life insurance sales had been made using improper sales practices.
Particularly highlighted were possible misleading sales involving the use of
funds from an older policy to pay premiums on a new policy, or possible
misstatements concerning the number of years premiums would be due or would have
to be paid "out of pocket" on a new policy.

10. WHAT WAS THE RESULT OF THE TASK FORCE EXAMINATION?

Along with the Task Force Report, Prudential and the Task Force agreed that
Prudential would offer a remediation plan to provide relief for all Prudential
policyholders with legitimate claims about their life insurance purchases (the
"Task Force Plan"). The Task Force Plan established the foundation for the
remediation plan agreed to by the plaintiffs and Prudential in the settlement of
this class-action lawsuit. The lawyers representing the Class and Prudential
then agreed to provide, among other modifications to the Task Force Plan,
additional provisions governing the scoring of claims and additional remedies
for policyholders under certain circumstances, as part of the class-action
settlement. In order to provide the increased relief to the residents of their
states and to avoid any possible confusion from multiple mailings of different
programs, it is anticipated that the states that accepted the Task Force Plan
will agree to allow Prudential to wait until February 1, 1997 -- after the
scheduled Court hearing on the settlement -- to start to implement a remediation
plan. If the Court rejects or has not approved the settlement by February 1,
1997, Prudential will begin to implement the Task Force Plan in those states
that have accepted it, which includes some but not all of the relief of the
class action settlement. See Answer No. 12.

11. WILL THE STATE INSURANCE DEPARTMENTS PLAY A ROLE IN THE SETTLEMENT?

The Departments of Insurance of 43 states and the District of Columbia that
accepted the Task Force Plan will continue their involvement in the remediation
program, even if it is part of the class action settlement, through
representatives who will monitor and provide oversight to the ADR Process as
members of a Regulatory Oversight Staff.

                                       -3-
<PAGE>

12. WHEN CAN I OBTAIN THE RELIEF FROM THE SETTLEMENT?

Prudential and the plaintiffs have agreed to make most of the provisions of the
settlement available to Policyholders as soon as the settlement receives Court
approval, even if there is an appeal. However, certain additional remediation
amounts and various financial guarantees and minimum payment obligations will
only be available as part of the ADR Process if and when the settlement has been
finally approved on appeal. For example, Prudential guarantees as part of the
class action settlement that it will spend at least $410 million on the remedies
to be provided in the ADR Process. The Mutual Fund Enhancement and certain
additional contributions to the Enhanced Value Policy and the Enhanced Value
Annuity will also not be available until appellate approval.

If the Court has not ruled on the settlement by February 1, 1997, Prudential has
agreed with the states to start to implement the Task Force Plan in those states
that have accepted the Plan. This plan will include the additional provisions
governing claims scoring and remedies from the class action settlement. But
(absent subsequent Court approval), the Plan will not include the provisions
concerning the monitoring role in the remediation process of the lawyers
representing the Class and the claimant representative, the Basic Claim Relief
enhancements (described in preceding paragraph), or the additional remediation
amounts, financial guarantees or the minimum payment obligation contained in the
Class action settlement. This additional relief and these procedural safeguards
depend on Court approval followed by appellate approval.

13. IF THE COURT REJECTS THE CLASS ACTION SETTLEMENT AT ANY TIME, MAY I STILL
    OBTAIN THE RELIEF PROVIDED IN THE SETTLEMENT?

If the Court rejects the settlement, but the department of insurance in the
state or district where you reside has accepted the Task Force Plan (described
in Answer No. 10), you will be able to obtain the benefits of the revised Task
Force Plan described in the previous Answer No. 12, but you will not obtain the
benefit of the monitoring and advocacy by lawyers for the Class and the
claimant representative, and the additional remediation amounts, financial
guarantees, the minimum payment obligation and the Basic Claim Relief
enhancements (described in Answer No. 12) in the class action settlement.

14. IF I HAVE MORE THAN ONE POLICY, AM I REQUIRED TO SELECT THE SAME TYPE OF
    RELIEF FOR EACH POLICY?

No. If you have more than one policy, you are not required to elect the same
type of relief for each policy or to accept relief on one or all of the policies
you own.

                                       -4-
<PAGE>

15. WHAT IS THE DIFFERENCE BETWEEN THE ADR PROCESS AND BASIC CLAIM RELIEF?

The ADR Process requires that you submit a claim that you were misled in
connection with the sale or operation of your policy. In addition, it may
provide greater relief than is provided by Basic Claim Relief if the available
evidence supports the claim. The scope of the relief available through the ADR
Process is more fully described in Answer No. 29. If the available evidence does
not establish that you were misled, there is no guarantee that you will receive
any relief in the ADR Process. On the other hand, if you wish to receive Basic
Claim Relief, i.e., an Optional Premium Loan, an Enhanced Value Policy, an
Enhanced Value Annuity or Mutual Fund Enhancement (when available), you do not
have to claim or show any evidence of wrongdoing.

16. IF I AM THE INSURED OR THE BENEFICIARY OF A POLICY, BUT NOT THE OWNER, AM I
    ELIGIBLE FOR THE SETTLEMENT RELIEF?

No. Only the owner(s) of a policy is eligible for relief under the program.
However, if you have, or had at the time of your policy's termination, an
ownership interest in a policy, you may be eligible for relief, whether or not
you are also the insured or beneficiary of the policy.

17. IF AN ELIGIBLE POLICYHOLDER IS DECEASED, CAN HIS OR HER LEGAL
    REPRESENTATIVES STILL PARTICIPATE IN THE SETTLEMENT?

Yes. If a policyholder is eligible (as described in Answer Nos. 10 and 16) but
is deceased, a claim can be made in the ADR Process by the person or entity
currently representing the legal interest of the deceased
policyholder. Depending on the circumstances, this may be the deceased
policyholder's executor or authorized personal representative in connection with
an estate or other administration of the deceased policyholder's property.

18. AM I REQUIRED TO REMAIN A MEMBER OF THE CLASS AND PARTICIPATE IN THE
    SETTLEMENT?

No. You may exclude yourself from the Class if you do not wish to be a member
of the Class and do not wish to receive the relief provided by the settlement.
If you want to exclude yourself from the Class for one or all of your policies,
you must follow the procedures described in Section 9 of the Class Notice. The
procedures require you to submit your exclusion request to the Court in writing.
It must be postmarked by December 19, 1996. Please be sure to follow all the
procedures carefully or your decision to exclude yourself will not be effective.

                                       -5-
<PAGE>

19. IF I CHOOSE TO PARTICIPATE IN THE SETTLEMENT, WILL I HAVE TO PAY ATTORNEYS'
    FEES TO THE LAWYERS REPRESENTING THE CLASS?

No. As part of the settlement, Prudential has agreed to pay the attorney's fees
to the lawyers representing the Class.

20. WILL ANY FEES AND COSTS AWARDED TO THE ATTORNEYS REPRESENTING THE CLASS
    REDUCE, DIMINISH OR AFFECT THE REMEDIES PROVIDED TO POLICYHOLDERS UNDER THE
    SETTLEMENT?

No. Any attorneys' fees and costs awarded by the Court to the attorneys
representing the Class will be paid by Prudential, and will not reduce,
diminish or affect any remedies provided to such persons under the settlement.

21. IF I CHOOSE TO BE EXCLUDED FROM THE CLASS MAY I STILL PARTICIPATE IN THE
    SETTLEMENT?

No. If you choose to be excluded from the Class you cannot participate in the
settlement described in these materials. However, in the event the class action
settlement is rejected by the Court and you reside in a state in which the Task
Force Plan has been accepted by your state's department of insurance, you may be
eligible to participate in the Task Force Plan.

22. WILL I STILL HAVE THE RIGHT TO SUE IF I PARTICIPATE IN THE SETTLEMENT?

No. Unless you exclude yourself from the Class pursuant to Section 9 of the
Class Notice, you will be automatically prevented from bringing your own
lawsuit or other action against Prudential based upon the sale, servicing
or operation of your policy. If you want to participate in the settlement, you
should not exclude yourself from the Class. If you want to sue Prudential
separately, you should exclude yourself from the Class.

23. DO I HAVE TO CHOOSE NOW BETWEEN PARTICIPATING IN THE ADR PROCESS OR
    SELECTING BASIC CLAIM RELIEF?

No. If you do not exclude yourself from the Class (see Answer No. 18), you
will receive an election form if and when the Court approves the settlement or
pursuant to the state Task Force Plan in those states that have accepted the
Plan. The election form will provide you a choice of either participating in the
ADR Process or electing Basic Claim Relief. Even if you remain a member of the
Class you may decide upon receipt of the election form not to elect either form
of relief (ADR Process or Basic Claim Relief); however, if the Court approves
the settlement you will have given up your right to bring a lawsuit or other
action against Prudential as described in Answer No. 22. Any choice which you
make will be up to you.

                                      -6-
<PAGE>

24. WILL THERE BE INDEPENDENT REVIEWS OF THE REMEDIATION PROGRAM AND
    POLICYHOLDER CLAIMS?

The entire remediation program will be monitored by lawyers representing the
Class, by state insurance regulators and by independent auditors. Any
policyholder who files a claim in the ADR Process and is dissatisfied with the
outcome is entitled to a review by an independent decision-maker selected and
approved by state insurance regulators and lawyers representing the Class, and
not affiliated in any way with Prudential. A Policyholder Representative, from a
group of qualified persons approved by state insurance regulators and the
attorneys representing the Class, will be available to represent the claimant
before the independent decision maker. In addition, if the Court approves the
settlement, the lawyers representing the Class will appoint an individual,
experienced in commercial dispute resolution or the life insurance industry, to
monitor the ADR Process on behalf of policyholders submitting claims (the
"Claimant Representative").

25. WILL THERE BE TAX CONSEQUENCES IF I PARTICIPATE IN THE SETTLEMENT?

There may be tax consequences from your participation in the settlement. They
will depend on your individual circumstances. Prudential cannot provide you with
tax advice about any personal tax issues that participation in this program may
raise for you. You should consult with your tax advisor as to any tax concerns
that you may have.

26. WHO CAN I CALL IF I HAVE QUESTIONS ABOUT THE SETTLEMENT?

A Claimant Support Team, independent of Prudential and approved by state
insurance regulators and lawyers representing the Class, is available to assist
you in understanding the program and may be contacted at 800-736-8913 (for
Telecommunication Device for the Deaf, call 800-782-1863).

                     ALTERNATIVE DISPUTE RESOLUTION PROCESS

27. WHAT IS THE ALTERNATIVE DISPUTE RESOLUTION PROCESS?

The ADR Process offers an opportunity for policyholders who believe they were
misled in connection with the sale, servicing or operation of their policies to
pursue and resolve their claims without the costs, difficulties and delays of
traditional litigation.

28. WHAT IS THE BASIS FOR RELIEF UNDER THE ADR PROCESS?

The strength of the evidence you submit with your claim, records of the company
and the specifics of your claim will determine the relief offered to you under
the ADR Process. The determination will be made pursuant to the remediation
program established under

                                      -7-
<PAGE>

the terms of the settlement. If the evidence is insufficient to establish your
claim, you may receive an offer of Basic Claim Relief or no relief at all.

29. WHAT IS THE RANGE OF RELIEF AVAILABLE UNDER THE ADR PROCESS IF THE EVIDENCE
    SUPPORTS MY CLAIM?

Examples of available relief are as follows:

- Financed Insurance Claims -- If the evidence shows that you were misled in
connection with a Financed Insurance sale (one that generally involves the use
of loans, dividends or values of existing policies to pay premiums on a new
policy), your remedies may range from the return of policy values improperly
used, to the cancellation of the new policy and receipt of a refund of some or
all of the premiums you paid, including some amount of interest.
Misrepresentations in connection with a Financed Insurance sale are sometimes
referred to as "twisting" or "churning".

- Abbreviated Payment Claims -- If the evidence shows that you were misled in
connection with a sale involving Abbreviated Payment (one that generally
involves the use of a policy's dividends or policy values to pay premiums on the
same policy), your remedy may include not making out-of-pocket payments for some
or all of the premiums you paid, or you may be allowed to cancel your policy
and receive a refund of some or all of the premiums you paid, including some
amount of interest. These sales are sometimes referred to as "vanishing premium"
sales.

- Investment Product Claims -- If the evidence shows you were misled about
whether the sale was of a life insurance policy, rather than an investment,
savings or retirement product, and you did not know you were purchasing life
insurance, you may be allowed to cancel your unwanted policy and receive a
refund of some or all of the premiums you paid, including some amount of
interest. Or, you may be able to exchange your policy for an annuity to be
purchased with the amount otherwise available for refund.

- Other Claims -- Claims in which the evidence shows other improper sales may be
remedied through the cancellation of your policy with a refund of some or all of
the premiums you paid, including some amount of interest, or the issuance of a
substitute product purchased with the amount otherwise available for refund.

30. WHAT EVIDENCE CAN I PROVIDE TO SUPPORT MY CLAIM?

You will have the opportunity to answer questions and provide your own statement
about the sale or operation of your policy on the claim form Prudential will
send you. You should submit copies of any documents or records you have
supporting your claim. Your answers and statements on the claim form are
"evidence" which will be considered in evaluating your claim, regardless of
whether you have any documents or records to submit. You should retain the
originals of all documents submitted. It is very important

                                      -8-
<PAGE>

that you submit copies of all documents you think should be considered in
connection with your claim. You should be as thorough and complete as possible.

31. WHEN DO I HAVE TO FILE MY CLAIM?

If you do not elect to be excluded from the settlement, and if the Court has
approved the settlement, you will receive an election form asking you to select
the ADR Process or the Basic Claim Relief options available to you. If you
select the ADR Process, you will be sent a claim form, approved by the Court,
which will contain specific instructions. The information accompanying the claim
form will describe how to contact the "Claimant Support Team" for assistance in
completing the claim form.

If the settlement is rejected by the Court or is not approved by February 1,
1997, and you reside in a state in which the department of insurance has
accepted the Task Force Plan, you will receive an election form and claim form
for the Task Force Plan (if you select the ADR Process pursuant to the Task
Force Plan) (See Answer No. 12).

32. HOW WILL CLAIMS SUBMITTED TO THE ADR PROCESS BE DECIDED?

You will submit your claim to Prudential, which will investigate the claim and
review the materials you submit, plus relevant information from the company's
records, including information regarding your policy, and information from the
agent who sold you the policy. The number of other sales-related complaints
against your agent may also be considered in evaluating your claim. A
determination will be made based solely on the terms and requirements of the
settlement, which includes a number of objective criteria, as to whether your
claim merits relief and, if so, what relief will be offered to you.

33. WHO WILL EVALUATE MY CLAIM?

The first evaluation will be conducted by trained individuals from Prudential's
professional staff who have had no involvement in the sale of life insurance
policies. Those persons will be monitored by state insurance regulators and the
Claimant Representative (who is selected by lawyers representing the Class).
Any claim not receiving the highest relief will receive a separate review by
independent claim evaluators having no affiliation or connection to Prudential,
and who will be approved by insurance regulators and laywers representing the
Class. Those independent claim evaluators will make recommendations to
Prudential, and then Prudential will send you a decision regarding your claim.

34. WHAT CAN I DO IF I AM NOT SATISFIED WITH PRUDENTIAL'S DECISION AND WANT A
    NEW REVIEW BY AN INDEPENDENT REVIEWER?

If you are not satisfied with Prudential's decision and want to have it
reconsidered, you may ask that an independent decision-maker review your claim.
THE DECISION-MAKER'S

                                      -9-
<PAGE>

DETERMINATION MAY RESULT IN AN AWARD OF RELIEF THAT IS GREATER OR LESS THAN THE
RELIEF ORIGINALLY OFFERED TO YOU. The decision-maker will be selected by
insurance regulators and lawyers representing the Class, from lists of persons
satisfactory to insurance regulators, the lawyers representing the Class,
Prudential and the Court, and will not be affiliated with Prudential in any way.
This independent reviewer will not give any deference to the original decision
made by Prudential; rather, the new reviewer will separately consider and review
your claim based on the available evidence. In virtually all circumstances, the
decision-maker's decision will be final and will not be subject to further
review, including review by any court.

35. WILL I RECEIVE ASSISTANCE WITH THE REVIEW BY THE INDEPENDENT
    DECISION-MAKER?

Yes. A representative, selected by lawyers representing the Class and approved
by state insurance regulators, will be available to you at no cost to you. This
representative shall be a qualified professional familiar with the life
insurance industry and/or alternative dispute resolution procedures. The
representative will (i) assist you in preparing for the review process, and (ii)
if requested by you, will appear in person or by telephone at the hearing to
represent you. In lieu of a representative, you may, at your own expense,
retain legal counsel of your own choosing to appear with and/or represent you at
the hearing. You may also appear on your own behalf, without a representative.

36. DO I NEED TO CONTINUE PAYING PREMIUMS ON MY POLICY WHILE MY CLAIM IS BEING
    EVALUATED?

Yes. In order to keep your policy in force, you must continue to pay
premiums. However, the failure to keep your policy in force will not disqualify
you from participation in the settlement if you are otherwise eligible.

                                      -10-
<PAGE>

                               BASIC CLAIM RELIEF

37. WHAT IS BASIC CLAIM RELIEF?

Basic Claim Relief provides relief options to policyholders who do not have to
show that they were misled about the sale or operation of their policies. These
relief options include: Optional Premium Loans, Enhanced Value Policies,
Enhanced Value Annuities or a Mutual Fund Enhancement. Each of these relief
options is described in greater detail below.

OPTIONAL PREMIUM LOANS

38. WHAT IS AN OPTIONAL PREMIUM LOAN?

An Optional Premium Loan is a loan that Prudential is making available to
policyholders, at a rate (reset quarterly) that is equivalent to Prudential's
unsecured short-term cost of borrowing, for the purpose of making out-of-pocket
premium payments. The rate may vary up or down depending on when the loan is
taken and may also vary during the time the loan is outstanding. For example, in
October, 1996, the Optional Premium Loan interest rate would have been 5.59%.
These loans may be taken even if you also elect to purchase an Enhanced Value
Policy, an Enhanced Value Annuity or a Mutual Fund Enhancement (when available).
You may not receive an Optional Premium Loan if you elect to participate in the
ADR Process.

39. WHAT ARE THE REQUIREMENTS TO RECEIVE AN OPTIONAL PREMIUM LOAN?

Your election form will indicate whether you are eligible for an Optional
Premium Loan. To receive an Optional Premium Loan, you must: (i) have a complete
ownership interest in an active policy issued from January 1, 1982 through
December 31, 1995, (ii) not elect to participate in the ADR Process with respect
to this policy, and (iii) satisfy the following conditions:

      (a)   The policy must have, at the time the loan is made, a cash value
            equal to or greater than the sum of (i) any Optional Premium Loans
            outstanding, (ii) the amount of the Optional Premium Loan being
            requested, (iii) existing policy loans and other instruments
            outstanding, and (iv) one year's interest on the total of these
            obligations.

      (b)   The policy's cash value or death benefit has not been previously
            transferred or assigned and is maintained in amounts sufficient to
            serve as security for the obligations listed in sub-paragraph (a)
            above.

                                      -11-
<PAGE>

      (c)   You must agree to use the policy's dividends to purchase paid-up
            additional insurance for the entire period in which any Optional
            Premium Loans are outstanding and to repay each Optional Premium
            Loan in five annual payments.

Contact a member of the Claimant Support Team if you have any questions about
these conditions.

40. HOW DO I REPAY MY OPTIONAL PREMIUM LOAN?

Each Optional Premium Loan must be repaid by the policyholder within five years
from the date on which the loan is made. Each year you will be billed for an
installment of one-fifth (1/5) of the amount of the original loan plus the
interest on the outstanding balance.

41. WHAT HAPPENS IF I DO NOT REPAY MY LOAN?

If at the end of each year you have not repaid your required loan installment,
it will be repaid by borrowing through a normal policy loan. The normal policy
loan would bear interest at the rate stated in your policy. If there is an
outstanding loan at the time of the death of the insured, the loan amount and
outstanding interest will be deducted automatically from the death benefit of
the policy.

42. ARE THERE LIMITS TO THE USE OF AN OPTIONAL PREMIUM LOAN?

Yes. The Optional Premium Loan can only be used to pay the annual premiums on
your Prudential permanent or whole life policy for which you elected the
Optional Premium Loan. If you choose to obtain an Optional Premium Loan, you
will be notified in writing as to the number of possible annual loans you may
take. The number of possible annual loans will range between 2 and 6 depending
on the year your policy was issued.

43. ARE THERE TAX CONSEQUENCES REGARDING AN OPTIONAL PREMIUM LOAN?

While unlikely, there is some risk that the Optional Premium Loan could be
considered a below market rate loan for Federal income tax purposes. In such
event, the difference between the Optional Premium Loan interest rate and a
specified Federal short-term interest rate generally based on the average market
yield of United States Treasury obligations with maturities of three years or
less, if any, would reduce your cost basis for tax purposes in your policy, or
result in taxable income in the event there is no remaining cost basis in your
Policy. Your cost basis in your policy is important because it determines what
portion of distributions under the policy may be taxable. Moreover, as with any
loan secured by your policy, an Optional Premium Loan may be wholly or
partially taxable to you if your policy is a Modified Endowment Contract (as
defined by the Internal Revenue Code) at the time you receive an Optional
Premium Loan or, in

                                      -12-
<PAGE>

some circumstances, if your policy becomes a Modified Endowment Contract
following your receipt of an Optional Premium Loan. You may also be subject to a
10 percent penalty tax on the taxable amount. Please consult your tax advisor if
your policy is a Modified Endowment Contract at the time you request any
Optional Premium Loan, or if you consider making and material changes to your
policy after you receive an Optional Premium Loan.

ENHANCED VALUE POLICY

44. WHAT IS AN ENHANCED VALUE POLICY?

An Enhanced Value Policy is a new whole life insurance policy which you may
purchase that Prudential will enhance by paying for additional insurance
coverage. Prudential will buy you this additional life insurance coverage by
spending:

 .     an amount equal to 50 percent of your first annual premium in the first
      year;
 .     an amount equal to 25 percent of your first annual premium in the third
      year;
 .     an amount equal to 25 percent of your first annual premium in the fifth
      year; and
 .     an amount equal to 15 percent of your first annual premium in the seventh
      year (Prudential's purchase of additional life insurance coverage in the
      seventh year will be available only if and when the Court approval of the
      Class action settlement is upheld on any appeal).

This means, for example, that if you buy an Enhanced Value Policy and the first
annual premium on the policy is $500, Prudential will spend $250 in the first
year, $125 in the third year, $125 in the fifth year, and $75 in the seventh
year to purchase additional life insurance coverage for you.

This enhancement will increase the death benefit protection of this policy at no
additional cost to you. In addition, your application for an Enhanced Value
Policy will be evaluated according to liberalized underwriting requirements. The
Policyholder and insured must be the same as on the policy for which you elect
relief, and you are required to pay each year the scheduled premiums on any
Enhanced Value Policy you purchase.

45. AM I ELIGIBLE TO APPLY FOR AN ENHANCED VALUE POLICY?

You are eligible for an Enhanced Value Policy provided that you do not elect,
with respect to each policy, to participate in the ADR Process or apply for an
Enhanced Value Annuity or Mutual Fund Enhancement (when available), and so long
as:

      (a)   You have an in-force policy with outstanding policy loans equal to
            or in excess of (i) three annual policy premiums and (ii) 75 percent
            of the policy's total cash surrender value; or

      (b)   Your policy has lapsed or has terminated without death benefits
            being paid.

                                      -13-
<PAGE>

46. HOW DO I PAY THE PREMIUM ON MY ENHANCED VALUE POLICY?

You may choose any one of Prudential's standard premium payment modes --
annual, semi-annual, quarterly or monthly. The enhancement payments will not be
made to buy more life insurance coverage for your Enhanced Value Policy until
you have paid an amount equal to the annual premium each year.

47. HOW MUCH INSURANCE CAN I BUY WITH AN ENHANCED VALUE POLICY?

You may purchase an Enhanced Value Policy equal to the face amount of your
original policy, but generally not exceeding $1 million.

48. WILL THERE BE ANY UNDERWRITING PRIOR TO THE ISSUING OF MY ENHANCED VALUE
    POLICY?

Yes. Prudential will ask you questions about your health and financial needs.
Under certain circumstances you may also be asked to undergo some medical tests.
However, the underwriting will be less rigorous than typically applied to the
purchase of a new policy.

49. IF I AM IN POOR HEALTH WILL MY ENHANCED VALUE POLICY BE AFFECTED?

Possibly. Based on the medical information learned in the underwriting process,
Prudential may issue your Enhanced Value Policy with an extra charge known as
a rating. It will be up to you to decide whether you wish to accept the
insurance coverage and pay the additional premium or reject the Enhanced Value
Policy.

50. WHAT IF I AM FOUND NOT TO QUALIFY FOR THE ENHANCED VALUE POLICY OR I DECIDE
    NOT TO ACCEPT THE ENHANCED VALUE POLICY?

You would be issued a new election form to select a different form of relief if:

      (a)   you were found not to qualify under the underwriting guidelines for
            an Enhanced Value Policy;

      (b)   you were issued an Enhanced Value Policy with a rating and decide
            not to accept such insurance coverage; or

      (c)   you do not accept the Enhanced Value Policy within the review period
            required under applicable law.

                                      -14-
<PAGE>

ENHANCED VALUE ANNUITIES

51. WHAT IS AN ENHANCED VALUE ANNUITY?

An Enhanced Value Annuity is an annuity which you may purchase and which
Prudential will "enhance" by a payment credited to the annuity at the end of the
first and second contract years. This enhancement will increase the value of
this annuity at no additional cost to you. Specifically, if you purchase an
Enhanced Value Annuity and your initial payment was less than $25,000,
Prudential will pay into the annuity an additional 2 percent of the initial
payment. If your initial payment was between $25,000 and $50,000, Prudential
will credit the annuity with a payment equal to 3 percent of the initial
payment. In either case, Prudential will pay into the Enhanced Value Annuity
another 2 percent of the initial payment at the end of the second year. In
addition, if the Court approval of the Class action settlement is upheld on
appeal, Prudential will pay another 1 percent of the initial premium into the
annuity at the end of the third year.

The Enhanced Value Annuity has several important features:

FIRST, an Enhanced Value Annuity is a non-qualified annuity. This means that
the annuity cannot be an individual retirement annuity (IRA) or part of a
qualified plan. Consult your tax advisor for more information about IRAs or
qualified retirement plans.

SECOND, an Enhanced Value Annuity is a deferred annuity. This means that the
payments under the annuity would commence at a future date rather than
immediately.

THIRD, there are limits to the amount of initial payment that will receive an
enhancement under the Enhanced Value Annuity. You may not pay an aggregate
amount for any Enhanced Value Annuity and/or Mutual Fund Enhancement greater
than the maximum amount of initial payment set forth below:

================================================================================
     If The Face Amount Of Your             The Maximum Amount Of Your Initial
     Original Policy Was:                   Payment Subject To Enhancement Is:
     --------------------                   ----------------------------------
--------------------------------------------------------------------------------
     Less than $100,000                                   $10,000
     From $100,000 to $249,999                            $20,000
     From $250,000 to $999,999                            $30,000
     $1 million or over                                   $50,000
================================================================================

The minimum amount that you can pay for an Enhanced Value Annuity is $1,000. The
maximum amount, subject to enhancement, will depend on the face amount of your
original policy.

                                      -15-
<PAGE>

FOURTH. Prudential will waive any applicable surrender charges on the initial
payment and the enhancements made by the company after the later of the date (1)
you reach age 59 1/2, or (2) your Enhanced Value Annuity has been in force for
at least four years.

FIFTH, the owner and annuitant for the Enhanced Value Annuity must be the owner
of the policy for which you elect relief, unless the owner is not an individual
(e.g. a corporation or trust), in which event the owner and annuitant must be
the insured on the policy.

52. AM I ELIGIBLE TO ELECT AN ENHANCED VALUE ANNUITY?

Yes. You may apply for one as long as you do not, with respect to each policy,
participate in the ADR Process or apply for an Enhanced Value Policy.

MUTUAL FUND ENHANCEMENTS

53. WHAT IS THE MUTUAL FUND ENHANCEMENT?

The Mutual Fund Enhancement provides you with an opportunity to purchase shares
in certain mutual funds with Prudential contributing additional fund shares. You
may make these purchases following receipt of a prospectus (or prospectuses),
for the certain mutual funds distributed by Prudential Securities, Inc., a
subsidiary of Prudential. The prospectus (or prospectuses) will describe in
detail the expenses, charges and risks associated with the mutual fund shares.
The Mutual Fund Enhancement works as follows: For each purchase of these shares
by the policyholder, Prudential will "enhance" the amount of the initial
purchase with a financial contribution to purchase additional shares equal to 4%
of the amount of such purchase. The mutual fund shares will be offered subject
to a contingent deferred sales charge, as described in the relevant prospectus,
that generally decreases to zero over a period of approximately six years. Your
initial purchase of mutual fund shares must be no less than $1,000, or such
other amount as set forth in the applicable prospectus, and the amount entitled
to receive the enhancement is subject to the following limits:

================================================================================
   Policyholder's                   Maximum Policyholder Initial Purchase
   Policy Face Amount                  Amount Subject to Enhancement
--------------------------------------------------------------------------------
   Less than $100,000                              $10,000
   From $100,000 to $249,999                       $20,000
   From $250,000 to $999,999                       $30,000
   $1 million or over                              $50,000
================================================================================

You may not pay an aggregate amount for any Mutual Fund Enhancement and/or
Enhanced Value Annuity greater than the applicable maximum policyholder initial
purchase amount set forth above.

                                      -16-
<PAGE>

54. AM I ELIGIBLE TO ELECT A MUTUAL FUND ENHANCEMENT?

Yes. You may apply for a Mutual Fund Enhancement as long as you do not, with
respect to your policy, participate in the ADR Process or apply for an Enhanced
Value Policy.

55. IF I ELECT THE MUTUAL FUND ENHANCEMENT, WHEN WILL IT BECOME AVAILABLE?

You will be able to select the Mutual Fund Enhancement when electing Basic Claim
Relief. However, you will have the opportunity, to purchase the mutual fund
shares only if and when the class action settlement is approved by the Court
and upheld on appeal. If the class action settlement is rejected by the Court or
not upheld on appeal, you will be notified that the Mutual Fund Enhancement will
not be made available to you. In that case, if the Mutual Fund Enhancement were
your only Basic Claim Relief selection, you may make another selection.

                 PAYMENT AND ELIGIBILITY FOR BASIC CLAIM RELIEF

56. CAN I USE MONEY IN MY EXISTING POLICIES TO BUY AN ENHANCED VALUE POLICY, AN
    ENHANCED VALUE ANNUITY OR A MUTUAL FUND ENHANCEMENT (WHEN AVAILABLE)?

No. To obtain an Enhanced Value Policy, an Enhanced Value Annuity or a Mutual
Fund Enhancement (when available), you must make the initial premium or payment
with money that is not taken from an existing life insurance product issued by
Prudential.

In addition, no money from a tax-qualified plan or product can be accepted as
payment for an Enhanced Value Policy, an Enhanced Value Annuity or a Mutual Fund
Enhancement (when available), and these cannot be issued on a tax-qualified
basis.

57. WHAT IF IT IS DETERMINED THAT I AM NOT ELIGIBLE FOR THE ELECTION THAT I HAVE
MADE?

Prudential will notify you if you are not eligible for the type of Basic Claim
Relief you have elected, and you will be given an opportunity to complete a new
election form.

THE CLAIMANT SUPPORT TEAM WILL BE AVAILABLE TO ANSWER QUESTIONS YOU MAY HAVE
ABOUT PARTICIPATION IN THE REMEDIATION PROGRAM. TELEPHONE REPRESENTATIVES WILL
BE AVAILABLE TO TAKE YOUR CALLS AT 800-736-8913 (FOR TELECOMMUNICATION DEVICE
FOR THE DEAF, CALL 800-782-1863) 24 HOURS A DAY ON WEEKDAYS (BEGINNING MONDAY AT
8 A.M.) AND SATURDAYS FROM 9 A.M. TO 3 P.M., YOUR LOCAL TIME. PLEASE DO NOT
CONTACT THE CLERK OF THE COURT, OR THE COURT WHERE THE CLASS ACTION IS PENDING.

                                      -17-
<PAGE>

                          EXHIBIT G -- SUMMARY NOTICE
<PAGE>

                          UNITED STATES DISTRICT COURT
                             DISTRICT OF NEW JERSEY

------------------------------
                                :       MASTER DOCKET NO. 95-4704 (AMW)
IN RE THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA              :       MDL NO. 1061
SALES PRACTICES LITIGATION
                                :
------------------------------

TO:   ALL PERSONS WHO PURCHASED INDIVIDUAL PERMANENT (WHOLE LIFE)
      INSURANCE POLICIES ISSUED IN THE UNITED STATES BY THE PRUDENTIAL INSURANCE
      COMPANY OF AMERICA OR ITS U.S. LIFE INSURANCE SUBSIDIARIES DURING THE
      PERIOD FROM JANUARY 1, 1982 THROUGH DECEMBER 31, 1995

      PLEASE TAKE NOTICE that a hearing is to be held on January 21, 1997 at
10:00 a.m., before the Honorable Alfred M. Wolin, United States District Court
for the District of New Jersey, located at the Martin Luther King Jr. United
States Courthouse, 50 Walnut Street, Newark, New Jersey. The purpose of the
hearing is to consider a proposed settlement of the class action with the
caption shown above.

      A DETAILED SETTLEMENT NOTICE HAS BEEN MAILED TO ALL CLASS MEMBERS
      DESCRIBING THE PROPOSED SETTLEMENT AND THE RIGHTS OF CLASS MEMBERS (THE
      "NOTICE"). BECAUSE THE PROPOSED SETTLEMENT AND THE SCHEDULED COURT HEARING
      MAY AFFECT THE RIGHTS OF CLASS MEMBERS, IF YOU ARE A MEMBER OF THE CLASS
      AND HAVE NOT RECEIVED A COPY OF THE SETTLEMENT NOTICE, YOU SHOULD
      IMMEDIATELY OBTAIN A COPY EITHER BY (i) CALLING PRUDENTIAL'S CLAIMANT
      SUPPORT TEAM AT 1-800-736-8913 (FOR TELECOMMUNICATION DEVICE FOR THE DEAF,
      CALL 800-782-1863) OR (II) WRITING TO PRUDENTIAL'S CLAIMANT SUPPORT TEAM
      AT P.O. BOX [NUMBER], [CITY, STATE, ZIP].

      (1) THE CLASS. The Court has conditionally certified for settlement
purposes a Class of policyholders who own or owned at its termination an
individual permanent (whole life) insurance policy (the "Policy" or the
"Policies") issued in the United States by The Prudential Life Insurance Company
of America or any, of its United States life insurance subsidiaries
(collectively, "Prudential") during the period from January 1, 1982 through
December 31, 1995 (the "Class Period").
<PAGE>

      The Class does not include the following persons or entities (unless such
persons or entities are members of the Class by virtue of their ownership
interest in other Policies): (i) policyowners who were represented by counsel at
the time they executed a document in connection with a settlement of a claim,
action, lawsuit or proceeding, pending or threatened, that released Prudential
with respect to such Policies, (ii) policyowners that are corporations, banks,
trusts or non-natural entities, which purchased Policies as corporate- or
trust-owned life insurance and under which either (a) there are 50 or more
separate insured individuals or (b) the aggregate premium paid over an eight (8)
year period, ending with the close of 1996, exceeds one million dollars, or
(iii) policyowners who were issued Policies in 1995 by Prudential Select Life
Insurance Company of America.

      (2) CHOICES AND DEADLINES FOR CLASS MEMBERS. If you are a Class Member,
you have the following choices with respect to each Policy issued during the
Class Period in which you have an ownership interest:

o     YOU MAY REMAIN IN THE CLASS AND PARTICIPATE IN THE BENEFITS OF THE
      PROPOSED SETTLEMENT. IF THIS IS WHAT YOU CHOOSE TO DO, YOU NEED NOT TAKE
      ANY ACTION AT THIS TIME. YOUR INTERESTS WILL BE REPRESENTED WITHOUT COST
      TO YOU BY THE LAW FIRMS OF MILBERG WEISS BERSHAD HYNES & LERACH LLP AND
      MUCH SHELIST FREED DENENBERG AMENT BELL & RUBENSTEIN, P.C., WHICH ARE
      ACTING AS CO-LEAD COUNSEL FOR THE CLASS FOR PURPOSES OF THE SETTLEMENT OF
      THIS LAWSUIT. If the settlement is approved by the Court, you will be
      contacted again and will be asked which of the available benefits, if any,
      you wish to elect. You should keep in mind that, if you remain in the
      Class and the settlement is approved, (i) you will be bound by all orders
      and judgments entered in this case, including the release and waiver of
      claims which absolves Prudential of further liability to you in connection
      with the sale, servicing or operation of your Policy; (ii) the relief
      available to you will consist of the proposed settlement relief discussed
      below; and (iii) and you will not be able to maintain, continue or
      commence any other claim, lawsuit or proceeding against Prudential
      relating to the Policies.

o     IF YOU REMAIN IN THE CLASS, YOU MAY FILE WITH THE COURT A WRITTEN
      OBJECTION TO ANY ASPECT OF THE PROPOSED SETTLEMENT. TO DO SO, YOU MUST
      COMPLY WITH THE REQUIREMENTS DESCRIBED IN THE NOTICE. THE OBJECTION MUST
      BE FILED WITH THE COURT AT THE FOLLOWING ADDRESS: CLERK, UNITED STATES
      DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, PRUDENTIAL CLASS ACTION
      SETTLEMENT, P.O. BOX [__] NEWARK, NEW JERSEY [ZIP CODE], AND MUST BE
      RECEIVED NO LATER THAN DECEMBER 19, 1996 and must also be sent to the
      lawyers for the parties as described in the Notice. In addition, you (or
      an attorney acting on your belief at your expense) may appear before the
      Court to voice your objection to the extent allowed by the Court. If the
      Court does not agree with your objection, you nevertheless will be bound
      by the orders and judgments in this case.

o     YOU MAY EXCLUDE YOURSELF FROM THE CLASS BY SENDING A FORMAL, WRITTEN
      REQUEST FOR EXCLUSION WITH RESPECT TO EACH POLICY FOR WHICH YOU WISH TO BE
      EXCLUDED THAT

                                      -2-
<PAGE>

      COMPLIES WITH THE REQUIREMENTS DESCRIBED IN THE NOTICE. THE REQUEST MUST
      BE SENT TO THE COURT AT THE FOLLOWING ADDRESS: PRUDENTIAL CLASS ACTION
      SETTLEMENT, P.O. BOX [__] BOSTON, MASSACHUSETTS [ZIP CODE], AND MUST BE
      POSTMARKED BY NO LATER THAN DECEMBER 19, 1996. If you request exclusion,
      you will retain the ability to bring your own lawsuit against Prudential,
      but (i) you lose all rights to relief under the proposed class action
      settlement, (ii) you may not file any objection to the proposed
      settlement, and (iii) you will not be bound by any orders or judgments in
      this case.

      (3) CLASS ACTION RELIEF. If the Court approves the settlement, Class
Members who remain in the Class will have a choice between two categories of
settlement benefits: an alternative dispute resolution process ("ADR Process")
and Basic Claim Relief.

      o     ADR PROCESS. Any Class Member, who believes he or she was misled
            regarding the purchase of his or her policy, can submit a claim in
            the ADR Process at no cost to the claimant. This process permits
            the policyholder to have the claim reviewed and evaluated by an
            independent and impartial person, not affiliated with Prudential,
            and whose selection is approved by lawyers for the Class in this
            lawsuit. Depending upon the type of claim involved and evidence
            presented, remedies can range from no relief to returning policy
            values improperly used; allowing a policyholder to cancel an
            unwanted policy and receive a refund of some or all of the premiums
            paid; or relieving a policyholder from making future out-of-pocket
            payments for some or all of the premiums due. Prudential has waived
            defenses such as statute of limitations in the ADR Process.

      o     BASIC CLAIM RELIEF. If a policyholder does not wish to file a claim
            under the ADR Process, he or she may consider the options available
            under Basic Claim Relief. To obtain Basic Claim Relief, the
            policyholder need not show that he or she was misled or harmed in
            any way, or that any improper sales practices occurred. The options
            available under Basic Claim Relief, each of which has particular
            eligibility requirements, include Optional Premium Loans, an
            Enhanced Value Policy, and an Enhanced Value Annuity. Certain
            additional contributions to Enhanced Value Policies and Enhanced
            Value Annuities as well as the availability of a Mutual Fund
            Enhancement will become available only upon the entry of a final,
            non-appealable order approving the class action settlement.

      Each of these forms of settlement relief is described in greater detail in
the Notice.

      (4) TASK FORCE PLAN. If the Court does not approve the settlement by
February 1, 1997, you may be eligible to participate in a remediation plan
jointly developed by Prudential and a Multi-State Life Insurance Task Force (the
"Task Force"), if you are a resident of one of the states or the District of
Columbia that have accepted the Task Force

                                      -3-
<PAGE>

remediation plan. You do not need to exclude yourself from the Class to be
eligible for the Task Force Plan.

      (5) FURTHER INFORMATION: If you have any questions, if you wish to obtain
a copy of the Settlement Notice, or if you need further information about the
terms of the settlement, please call Prudential's Claimant Support Team at
1-800-736-8913 (for Telecommunication Device for the Deaf, call 800-782-1863).
DO NOT TELEPHONE THE COURT OR THE CLERK OF THE COURT.

Dated: Newark, New Jersey
       ____________, 1996

                                                              Clerk of the Court

                                      -4-
<PAGE>

                            EXHIBIT H -- CLAIM FORM
<PAGE>

THE DEADLINE FOR FILING THIS CLAIM IS [DATE]. The completed and signed Claim
Form should be returned in the enclosed postage-paid envelope.

IF YOUR CLAIM IS NOT RECEIVED BY THE ABOVE DATE, YOU WILL NOT BE ALLOWED TO
PARTICIPATE IN THE ADR PROCESS. PLEASE NOTE THAT YOU WILL RECEIVE A SEPARATE
CLAIM FORM FOR EACH POLICY FOR WHICH YOU SELECT THE ADR PROCESS.

PLEASE CORRECT AND COMPLETE ALL INFORMATION IN THIS PART I.

                                     PART I

1.    Claim Number: [computer produced]

2.    Policy Number: [computer produced]

3.    Insured: [computer produced]

4.    Policyholder(s): [computer produced]

5.    Daytime Telephone Number (for each Policyholder):

6     Mailing Address (for each Policyholder):

7.    Social Security Number, for each Policyholder (optional, for
      identification purposes only):

8.    What address should we use to reach you?

9.    When is the best time to reach you by telephone?

                                                [Policyholder        ]
                                                 Address

                                                [                        ]
<PAGE>

                             ADR PROCESS CLAIM FORM

This form should be used by Policyholder(s) who believe that they were misled in
connection with the sale, servicing or operation of a Prudential whole-life
insurance Policy. IF YOU SUBMIT THIS FORM YOU WILL BE PART OF THE ADR PROCESS,
AND, THEREFORE, YOU MAY NOT BE ABLE TO ELECT ANY OTHER FORM OF RELIEF (OPTIONAL
PREMIUM LOAN, ENHANCED VALUE POLICY, ENHANCED VALUE ANNUITY OR MUTUAL FUND
ENHANCEMENT) FOR WHICH YOU MAY BE ELIGIBLE WITH REGARD TO THE POLICY IN
QUESTION. Claims that may be resolved through the ADR Process include any Claim
based on:

*     Misstatements concerning "Financed Insurance" (generally involving the use
      of loans, dividends or policy values of existing policies to pay premiums
      on new policies);

*     Misstatements concerning "Abbreviated Payment" or "APP" (generally
      involving the use of a policy's dividends or contract values to pay
      premiums on the same policy);

*     Misstatements in connection with the sale of life insurance as a savings,
      investment or retirement vehicle; or

*     Misstatements in connection with other aspects of the sale of life
      insurance.

For purposes of completing this Claim Form a "Misstatement" means an untrue
statement of material fact, or the failure to disclose a material fact necessary
to make the statement made not materially misleading, under the circumstances.

PLEASE KEEP A COPY OF THIS COMPLETED FORM, AND ANY ATTACHMENTS, FOR YOUR
RECORDS.

This Claim Form has four parts:

(1)   Part I - General, which asks you for information about you and your
      Policy;

(2)   Part II - Description of Claim, which asks you to describe events related
      to the purchase and servicing of your Policy;

(3)   Part III - Questions About Your Claim, which requests other information
      that is necessary to ensure that your Claim is properly evaluated; and

(4)   Part IV - Representations, Authorization and Release, which asks you to
      make

                                      -2-
<PAGE>

      representations regarding the accuracy and truthfulness of the information
      provided in Parts I through III, to authorize the use of your personal
      insurance information in the evaluation of your Claim, and to release the
      Company from any claims against it in connection with the Policy.

PLEASE NOTE, THAT IN ORDER TO ENSURE THAT YOUR CLAIM IS PROPERLY EVALUATED, YOU
MUST ATTACH TO THIS CLAIM FORM COPIES OF ALL DOCUMENTS THAT YOU HAVE IN YOUR
POSSESSION THAT RELATE TO YOUR CLAIM. IT IS VERY IMPORTANT THAT YOU ATTACH
COPIES OF ALL DOCUMENTS THAT YOU THINK SHOULD BE CONSIDERED IN THE EVALUATION OF
YOUR CLAIM. WE RECOMMEND THAT YOU MAKE AND RETAIN COPIES OF ALL DOCUMENTS THAT
YOU SUBMIT WITH THIS CLAIM FORM.

If you have any questions about the ADR Process or about this Claim Form, or if
you need assistance in preparing this Claim Form, an independent team approved
by insurance regulators and plaintiffs' counsel in the Class Action is available
to assist you and can be contacted at 800-736-8913 (For TDD, call 800-782-1863).

Please clearly write or print the information requested in this Claim Form.
PLEASE NOTE that it may be necessary, for the Company to reject your Claim or to
return the Claim Form to you if (i) the Claim Form is not properly completed and
signed by an eligible Claimant, (ii) the Claim Form is not timely submitted, or
(iii) the representations and agreements in Part IV are deleted or modified.

                                      -3-
<PAGE>

                                     PART II

PLEASE ANSWER THE FOLLOWING QUESTIONS ABOUT THE EVENTS RELATED TO THE SALE OR
SERVICING OF THE POLICY IDENTIFIED IN PART I. BE AS SPECIFIC AND COMPLETE AS YOU
CAN, TO THE BEST OF YOUR KNOWLEDGE.

IF YOU NEED MORE SPACE FOR YOUR ANSWERS TO PART II, PLEASE USE THE SPACE BELOW
OR ATTACH ADDITIONAL PAGES AT THE END OF THIS CLAIM FORM, PUTTING YOUR CLAIM
NUMBER ON EACH SUCH PAGE.

A.    Allegation of Claim. Describe as fully as possible the particular
      Misstatement(s) that you believe were made to you before, during or after
      the sale of your Policy, or otherwise describe why you think you have a
      Claim.

                                      -4-
<PAGE>

B.    Discussions with Agent.

      1.    What was the name of the Agent who sold you this Policy?

      2.    Who was present at your meeting(s) with the Agent leading up to the
            purchase of this policy?

      3.    Describe as fully as possible the discussions that you or others who
            were present had with the Agent or other Company representatives
            about the Policy:

            (a)   before and during the sale of the Policy to you.

            (b)   after the sale of the Policy to you.

      4.    Did you discuss your financial needs with the Agent? If so, what
            specifically did you discuss?

                                      -5-
<PAGE>

      5.    Describe any discussions that you had with the Agent concerning your
            retirement or other financial circumstances. Indicate any date you
            mentioned concerning your planned retirement. Indicate whether you
            changed your pension benefit elections as a result of the purchase
            of the Policy. Please explain as fully as possible.

      6.    Describe any discussions with the Agent concerning the
            advisability, effect or cost of a new policy if you replaced your
            existing policy. Describe and attach the documents you reviewed,
            received and/or signed concerning these discussions.

C.    Decision for Purchase. Please provide information about your decision to
      purchase your Policy.

      1.    Why did you purchase your Policy?

      2.    To what extent did the Policy serve or not serve your needs or
            purposes, and why ?

D.    Payment of Premiums. At the time of the sale of your Policy:

      1.    How much were you told you would have to pay in premiums?

      2.    For how long were you told you would have to pay premiums?

      3.    Did you expect to pay all future premiums and, if not, how were
            premiums to be paid?

                                      -6-
<PAGE>

E.    Dividends. Describe what was said to you before, during or after the
      purchase of your policy concerning the amount and use of dividends,
      investment returns, or interest paid or earned.

F.    Policy Loans. Describe what was said to you before, during or after the
      purchase of your policy concerning the use of policy loans, interest
      charges on those loans, the repayment of loans or the impact of unpaid
      loans on your policy.

G.    Policy Termination. If your Policy terminated or is no longer in effect,
      describe when and why you believe this occurred.

H.    Records and Documents. Identify to the best of your recollection the
      various documents that were given or shown to you before, during or after
      the sale of the Policy to you. You should include, for example, any sales
      materials, illustrations of premiums, dividends or policy values over
      time, agreements, letters, change forms, correspondence, notes, or loan or
      withdrawal documents that you can recall seeing or receiving before,
      during or after the sale of your Policy. PLEASE NOTE THAT IF YOU STILL
      HAVE THESE DOCUMENTS, INCLUDING YOUR POLICY AND APPLICATION, IN YOUR
      POSSESSION OR CAN OBTAIN THESE DOCUMENTS, YOU MUST ATTACH A COPY OF EACH
      SUCH DOCUMENT TO THIS CLAIM FORM. (IF YOU WISH TO INCLUDE YOUR POLICY AS
      EVIDENCE YOU NEED ONLY TO COPY THE TOP 3 PAGES.)

                                      -7-
<PAGE>

                                    PART III

The following questions will provide a more complete picture of your policy's
history. You need only answer the questions that relate to your Claim. You may
skip any questions that do not apply. After each question are blank lines. Use
those lines further to explain your answers. If you need more space attach
additional pages. Please answer all questions that apply to your Claim, even
though some or all of the same information also may appear in Part II. WHERE ANY
OF YOUR ANSWERS REFERENCE DOCUMENTS, PLEASE ATTACH A COPY OF THOSE DOCUMENTS
WHICH YOU STILL HAVE TO THIS CLAIM FORM. PLEASE KEEP YOUR ORIGINALS. WHEN
REFERRING TO OTHER PRUDENTIAL POLICIES, PLEASE INCLUDE THE POLICY NUMBER IF
KNOWN.

1.    When you purchased your Policy, did you plan to use the Policy to meet a
      specific financial need or to satisfy a specific financial obligation?

      Yes_____                No____               I do not recall or know____.

      If yes, describe the circumstances and facts relating to the specific
      financial need or specific financial obligation.

      __________________________________________________________________________

      __________________________________________________________________________

2.    Did you intend to give up or surrender an existing insurance policy when
      you purchased this Policy?

      If yes, please identify the policy that was given up or surrendered.

      __________________________________________________________________________

      __________________________________________________________________________

                                      -8-
<PAGE>

3     Did you have an attorney, financial advisor, accountant or licensed
      insurance broker (other than the Agent) present and providing assistance
      to you at the time of the sale of the Policy? Were any other persons
      present at the sale?

      Yes_____                No____               I do not recall or know____.

      If yes, list that person below, note their occupation and explain their
      role.

      __________________________________________________________________________

      __________________________________________________________________________

      If yes, you may attach a statement under oath written by that person
      describing the discussions during the sale of the Policy and his or her
      role (if any) during the sale.

4.    Were you shown a computer-generated illustration (columns of numbers
      showing how the policy works) prior to, during, or after the sale of the
      Policy to you?

      Yes_____                No____               I do not recall or know____.

      If you received a copy of the illustration and you still have it, please
      attach a copy to this Claim Form.

5.    If you were shown a computer-generated illustration, did the illustration
      show that premiums would not be paid out-of-pocket at some point?

      Yes_____                No____               I do not recall or know____.

      If yes, did you at any time pay an amount different than the illustrated
      out-of-pocket premium payments? Please explain.

      __________________________________________________________________________

      __________________________________________________________________________

                                      -9-
<PAGE>

6.    If you were shown a computer-generated illustration, did it include a
      section showing how premiums could be paid using the policy's values?

      Yes_____                No____               I do not recall or know____.

      If yes, what words were used to describe this?

      __________________________________________________________________________

      __________________________________________________________________________

7.    If you purchased a Survivorship ("second to die") policy, were you shown
      an illustration?

      Yes_____                No____               I do not recall or know____.

      If yes, did the illustration include demonstrations of different dividend
      scales?

      __________________________________________________________________________

      __________________________________________________________________________

8.    Did you take policy loans or dividends in cash from a Policy for use for
      some purpose other than to pay premiums on any Policy?

      Yes_____                No____               I do not recall or know____.

9.    If you purchased a variable appreciable life or variable life insurance
      policy, did you receive a booklet (prospectus) describing the policy and
      its investment options?

      Yes_____                No____               I do not recall or know____.

      If yes, when did you receive the prospectus?

      Before sale____ During sale____ After sale____ I do not recall or know___.

                                      -10-
<PAGE>

10.   Were words other than "premiums" used by your Agent to describe the
      payments due on your Policy?

      Yes_____                No____               I do not recall or know____.

      If yes, please explain.

      __________________________________________________________________________

      __________________________________________________________________________

11.   Did you have a discussion with your Agent or other Company representatives
      concerning Company notices for your Policy?

      Yes_____                No____               I do not recall or know____.

      If yes, what do you recall was said concerning Company notices regarding:

                      a.    Premiums?
                      b.    Loans?
                      c.    Termination of Policy?
                      d.    Reinstatements?
                      e.    Surrenders?
                      f.    Policy Benefits?

      __________________________________________________________________________

      __________________________________________________________________________

12.   Did you change your Policy at any time after the sale of the Policy by
      adding benefits that increased premiums due under the Policy?

      Yes_____                No____               I do not recall or know____.

                                      -11-
<PAGE>

13.   Do you have any reason to believe that any Company document affecting your
      policy bears a signature that is noted to be yours but was not signed or
      authorized by you?

      Yes_____                No____               I do not recall or know____.

      If yes, please explain.

      __________________________________________________________________________

      __________________________________________________________________________

14.   Did you sign any forms where no information had been filled-in?

      Yes_____                No____               I do not recall or know____.

      If yes, did you give permission for its use? Please identify the document
      and explain.

      __________________________________________________________________________

      __________________________________________________________________________

15.   Do you believe that funds or Policy benefits have been taken from your
      Policy without your knowledge or consent?

      Yes_____                No____               I do not recall or know____.

      If yes, please describe the circumstances.

      __________________________________________________________________________

      __________________________________________________________________________

                                      -12-
<PAGE>

16.   Have you previously submitted any complaint to the Company regarding your
      Policy?

      Yes_____                No____               I do not recall or know____.

      If yes, (i) describe the nature and approximate date of the complaint,
      (ii) describe the outcome and any relief accepted by you, (iii) state
      whether you were represented by counsel in connection with a settlement of
      the complaint, and (iv) attach to this Claim Form copies of any documents
      you have regarding the complaint or relief obtained, including any
      settlement and release agreements executed by you.

      __________________________________________________________________________

      __________________________________________________________________________

17.   What was your approximate annual income at the time of the sale of the
      Policy to you?

      |_| Less than $25,000
      |_| Greater than $25,000
      |_| I do not recall or know.

18.   Are you retired?

      Yes_____         No_____

      If yes, when did you retire?

      __________________________________________________________________________

      __________________________________________________________________________

DO YOU HAVE ANY ADDITIONAL INFORMATION OR DOCUMENTS THAT YOU BELIEVE WOULD HELP
THE CLAIM EVALUATION STAFF EVALUATE YOUR CLAIM? IF SO, PLEASE INCLUDE THE
ADDITIONAL INFORMATION AND/OR ATTACH DOCUMENTS TO THIS CLAIM FORM.

                                      -13-
<PAGE>

                               [ADDITIONAL PAGE]

                                      -14-
<PAGE>

                                     PART IV

IMPORTANT: PLEASE READ THE FOLLOWING CAREFULLY BEFORE SIGNING. DELETING OR
CHANGING ANY OF THE FOLLOWING PARAGRAPHS WILL INVALIDATE THIS CLAIM FORM.

A.    COMPLETE AND ACCURATE SUBMISSION

      I/we represent to the best of my/our knowledge that:

      1.    All of the statements and information in this Claim Form are
            complete and accurate:

      2.    All documents attached to this Claim Form or furnished in connection
            with my/our Claim are genuine; and

      3.    I/we have furnished copies of all documents in my/our possession,
            custody or control that relate to or are relevant to my/our Claim or
            Policy, including documents that tend to prove or disprove, or
            support or do not support, my/our Claim.

B.    AUTHORIZATION

      I/we, and others, either independently or on my/our behalf, have provided
      Prudential with information, including without limitation personal and
      medical records, in connection with the application, sale, servicing and
      operation of my/our policy. I/we have requested that Prudential review
      this information, among other things, in order to adjudicate my/our claim
      related to the policy. I/we, therefore, authorize Prudential to disclose
      and provide, if requested, such information to any of its employees, state
      insurance regulators and lawyers for the class-action lawsuit, along with
      any third-parties retained on behalf of these entities, involved in
      evaluating or reviewing my/our claim or who may otherwise be involved in
      the ADR Process. This authorization shall remain in effect until my claim
      has been determined, the final award has been accepted, and the ADR
      Process has been completed.

C.    RELEASE AND WAIVER OF CLAIMS

      BY COMPLETING, SIGNING AND SUBMITTING THIS CLAIM FORM, YOU ARE RELEASING
      AND WAIVING ALL CLAIMS YOU MAY HAVE AGAINST PRUDENTIAL AND ITS OFFICERS,
      EMPLOYEES AND AGENTS CONCERNING THE SALE, SERVICING AND OPERATION OF YOUR
      POLICY. THE RELEASE, AS SET FORTH IN THE APPENDIX, ENCOMPASSES ANY MATTER
      RELATING TO THE MARKETING, SOLICITATION, APPLICATION, UNDERWRITING,
      ACCEPTANCE, SALE, PURCHASE, OPERATION, RETENTION, ADMINISTRATION,
      SERVICING, OR REPLACEMENT, BY MEANS OF SURRENDER, PARTIAL SURRENDER, LOANS
      RESPECTING WITHDRAWAL AND/OR TERMINATIONS OF YOUR

                                      -15-
<PAGE>

      POLICY OR ANY INSURANCE POLICY OR ANNUITY SOLD IN CONNECTION WITH OR
      RELATING IN ANY WAY DIRECTLY OR INDIRECTLY TO THE SALE OR SOLICITATION OF,
      YOUR POLICY. THE RELEASE IS INTENDED TO BE VERY BROAD. THE RELEASE IS A
      CRITICAL ELEMENT OF THE ADR PROCESS. YOU SHOULD CAREFULLY READ THIS
      PARAGRAPH AND THE ENTIRE RELEASE.

      I/WE HAVE READ THE RELEASE SET FORTH IN THE APPENDIX, UNDERSTAND IT
      FULLY, AND AGREE TO ALL OF ITS TERMS.

D.    PENALTY OF PERJURY

      I/we declare under penalty of perjury under the laws of the United States
      of America that the foregoing is true and correct (pursuant to 28 U.S.C.
      ss.1746).

                                       _________________________________________
                                       Signature of Policyholder(s)

                                       _________________________________________
                                       Signature(s) of Co-Policyholder(s) and/or
                                       other parties with ownership interests

                                       Dated: ___________________________, 199_

                                      -16-
<PAGE>

                                    APPENDIX

                          RELEASE AND WAIVER OF CLAIMS

I/we, for myself/ourselves and my/our heirs, administrators, executors,
successors and assigns, agree to RELEASE The Prudential Insurance Company of
America and any of its other current, former and future parents, subsidiaries,
affiliates, partners, predecessors, successors and assigns and each of their
respective past, present and future officers, directors, employees, agents,
independent contractors, brokers, representatives, attorneys, heirs,
administrators, executors, predecessors, successors and assigns (collectively,
"Prudential") from, and COVENANT NOT TO SUE upon, any claim or cause of action
of any kind or nature whatsoever, known or unknown (except claims with respect
to receiving any additional amounts made available through a settlement of the
Consolidated Policyholders Class Actions in In re The Prudential Insurance
Company of America Sales Practices Litigation, Master Docket No. 95-4704 (AMW),
MDL No. 1061, after all appeals therefrom have been finally disposed of in a
manner so that the settlement is affirmed in all material respects), that has
been, could have been, may be or could be asserted now or in the future, against
Prudential in any legal action, arbitration, or other proceeding (including
before any state Department of Insurance or any other regulatory commission)
with respect to, or in any way arising from or connected with, in whole or in
part, the marketing, solicitation, application, underwriting, acceptance, sale,
purchase, operation, retention, administration, servicing, or replacement of the
Policy the subject hereof.

This release is given in return for being afforded the opportunity to have
my/our Claim described herein resolved in the ADR Process. I/we agree that this
Release will be, and may be raised as, a complete defense and bar to any action
or proceeding relating to the subjects on which I/we have released Prudential.

I/we understand that nothing in this Release will be deemed to alter my/our
contractual rights (except to the extent that such rights are altered or
affected by the election and award of benefits in connection herewith) to make a
claim for benefits that will become payable in the future pursuant to the
express written terms of the policy form issued by Prudential.

I/we understand that without in any way limiting the scope of the Release, this
Release covers, without limitation, any and all claims for attorneys' fees,
costs or disbursements incurred by counsel representing me/us, or incurred by
me/us, in connection with or related in any manner to the subjects on which I/we
have released Prudential hereby: provided, however, this provision shall not
release any fees, costs or disbursements of counsel representing the putative
class in the Consolidated Policyholders Class Actions described above.

                                      -1-
<PAGE>

I/we understand that Section 1542 of the Civil Code of the State of California
provides that a general release does not extend to claims which a creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor pertaining to Prudential's insurance sales practices. I/we hereby agree
that the provisions of Section 1542 and all similar laws, rights, rules or legal
principles of any other jurisdiction which may be applicable herein (including,
without limitation, North Dakota and South Dakota), are hereby knowingly and
voluntarily waived, and I/we hereby agree and acknowledge that this is an
essential term of this Release.

It is my/our intention 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.

RESCISSION RIGHT: This release may be rescinded and be of no further force or
effect upon The Prudential Insurance Company of America giving notice that the
Court and appellate approvals have not been received in the Consolidated
Policyholders Class Actions described above and if I/we elect to rescind this
release by returning, within 60 days after receipt of the above-described
notice, such election to Prudential's designee on the form it will provide. In
such event, I/we understand that any relief I/we received in connection with the
ADR Process shall be concurrently rescinded and returned to The Prudential
Insurance Company of America and The Prudential Insurance Company of America
shall return, to the extent reasonably practicable, the Policy making me/us
eligible for the ADR Process to its status prior to the inception of the ADR
Process.

                                      -2-
<PAGE>

                  EXHIBIT I -- STIPULATION OF CONFIDENTIALITY
<PAGE>

                          UNITED STATES DISTRICT COURT
                             DISTRICT OF NEW JERSEY

------------------------------
                                :      MASTER DOCKET NO. 95-4704 (AMW)
IN RE THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA              :      MDL NO. 1061
SALES PRACTICES LITIGATION
                                :
------------------------------
                                :
THIS DOCUMENT RELATES TO:
ALL ACTIONS LISTED ON           :
EXHIBIT A
                                :
------------------------------

                         STIPULATION OF CONFIDENTIALITY

      IT IS HEREBY STIPULATED AND AGREED by and between the undersigned as
follows:

      1. Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Notice of Class Action, Proposed
Settlement, Settlement Hearing and Right to Appear, with respect to the
above-referenced Actions, mailed on or about November 4, 1996.

      2. Pursuant to the Court's Order dated October __, 1996, Milberg Weiss
Bershad Hynes & Lerach LLP and Much Shelist Freed Denenberg Ament Bell &
Rubenstein, P.C. ("Lead Counsel") will, upon written request to (i) Melvyn I.
Weiss, Esq., Milberg Weiss Bershad Hynes & Lerach LLP, One Pennsylvania Plaza,
New York, New York 10119, or (ii) Michael B. Hyman, Esq., Much Shelist Freed
Denenberg Ament Bell & Rubenstein, P.C., 200 North LaSalle Street, Suite 2100,
Chicago, Illinois 60601, with a copy in either case to Reid L. Ashinoff, Esq.,
Sonnenschein Nath & Rosenthal, 1221 Avenue of the Americas, New York, New York
10020, provide the persons specified in paragraph 5 hereof access to documents
generated during discovery in the Actions, all in accordance herewith.

      3. All information disclosed to the persons specified in paragraph 5
hereof is subject to this Stipulation of Confidentiality (this "Stipulation"),
and shall be deemed "Confidential Information" and shall not be used or
disclosed except as expressly provided herein.

      4. Confidential Information shall not be disclosed to any person and shall
not be used for any purpose other than for purposes of evaluating the fairness,
reasonableness and adequacy of the proposed settlement in these Actions as
contained in the Stipulation of Settlement entered into with respect to the
above-referenced Actions (the "Stipulation of Settlement"). Without any
limitation of the foregoing sentence, Confidential Information shall not be used
(a) in the litigation of these Actions should the Actions not be settled for
<PAGE>

any reasons, including should the court with jurisdiction over the Actions not
approve a settlement or should the court's approval of the settlement be
overturned on appeal, or (b) in any other litigation, arbitration or other
proceeding, or in the investigation or preparation therefor.

      5. Access to Confidential Information shall be limited to (a) Class
Members and (b) such of (i) their counsel, (ii) employees of such Class Member
(in the case of a Class Member which is an entity) or counsel assigned to and
necessary to assist such Class Member or counsel in evaluating the proposed
settlement and (iii) consultants or experts retained by Class Members, to the
extent necessary to assist Class Members and/or their counsel in evaluating the
proposed settlement.

      6. No person specified in paragraph 5 shall be given access to
Confidential Information unless and until such person shall have executed a
document in the form of Annex A hereto acknowledging that he or she has read a
copy of this Stipulation and agrees to comply with the provisions hereof.

      7. The persons specified in paragraph 5 can inspect the Confidential
Information in the offices of Lead Counsel, by prior appointment, during
regular business hours, in accordance with the provisions of this Stipulation.

      8. Copies of Confidential Information shall not be disclosed to any
person, except such copies may be disclosed to the Court in connection with
proceedings regarding the fairness, reasonableness and adequacy of the proposed
settlement of these Actions. All Confidential Information (including all copies
and notes therefrom) shall be returned to Lead Counsel or certified to Lead
Counsel, in writing, as destroyed in accordance with Lead Counsel's
instructions, upon completion of such proceedings and any appeals therefrom.

      9. In the event any person receiving Confidential Information pursuant to
this Stipulation is required by order of any court or government agency or
official to disclose Confidential Information, such person shall not disclose
such Confidential Information except upon ten days prior written notice (which
notice shall include a copy of the order) to Prudential.

      10. Nothing in this Stipulation shall limit Prudential's use of
Confidential Information it has provided Lead Counsel, nor shall it limit the
access of those state insurance regulators in the jurisdictions set forth on
Exhibit 1 to the Stipulation of Settlement to such Confidential Information held
by Lead Counsel or Prudential. Prudential shall preserve all such Confidential
Information as required by paragraph P of the Stipulation of Settlement.

      11. The provisions of this Stipulation shall survive the termination of
the Actions. At the earlier of (a) the termination of record of the Actions or
(b) such other time as the parties to the Actions decide not to continue to seek
settlement of the Actions, all Confidential Information shall be returned or
destroyed in accordance with paragraph 8 hereof. At any time thereafter at which
Confidential Information shall be in the possession

                                      -2-
<PAGE>

or control of any person bound by this Stipulation, such Confidential
Information shall be returned in accordance with paragraph 8 herein.

      12. The consent of Prudential to the provision of Confidential Information
to any person shall not be construed as an admission or concession by Prudential
of any matter.

      13. This Stipulation may be executed in any number of counterparts.

      14. No waiver by either party hereto of any breach by any other person of
any conditions or provisions in this Stipulation shall be deemed a waiver of a
similar or dissimilar provision or condition at the same time or at any prior or
subsequent time.

      15. This Stipulation constitutes the complete understanding between the
parties and supersedes all previous and contemporaneous agreements or
representations, whether written or oral, with respect to the subject matter
hereof. This Stipulation may not be modified, supplemented, amended or waived
except in a writing signed by authorized representatives of the parties.

      16. In the event that any provision of this Stipulation is determined to
be unlawful, such provision shall be deemed to be severed from this Stipulation,
but every other provision of this Stipulation shall remain in full force and
effect.

Dated: ______________

                                                APPROVED AND AGREED TO BY AND ON
                                                BEHALF OF THE PRUDENTIAL
                                                INSURANCE COMPANY OF AMERICA

                                                By: ____________________________
                                                    Reid L. Ashinoff, Esq.

                                                APPROVED AND AGREED TO
                                                INDIVIDUALLY AND BY AND ON
                                                BEHALF OF THE NAMED PLAINTIFFS,
                                                IN THEIR INDIVIDUAL AND
                                                REPRESENTATIVE CAPACITIES

                                                MILBERG WEISS BERSHAD HYNES &
                                                LERACH LLP

                                                By: ____________________________
                                                    Melvyn I. Weiss, Esq.

                                                MUCH SHELIST FREED DENENBERG
                                                AMENT BELL & RUBENSTEIN, P.C.

                                                By: ____________________________
                                                    Michael B. Hyman, Esq.

                                      -3-
<PAGE>

                   EXHIBIT A TO STIPULATION OF CONFIDENTIALITY

George A. Zoller v. Prudential Insurance Company of America, District of New
Jersey, Civil Action No. 95-1093 (AMW).

Lester H. Groth, et al. v. The Prudential Insurance Company of America, District
of New Jersey, Civil Action No. 95-1104 (AMW).

Martin Dorfner v. The Prudential Insurance Company of America, District of New
Jersey, Civil Action No. 95-1107 (AMW).

Toni Wachtler, et al. v. Prudential Insurance Company of America, District of
New Jersey, Civil Action No. 95-2473 (AMW).

Elizabeth Kuchas, et al. v. Prudential Insurance Company of America, District of
Connecticut, Civil Action No. 3:95-353.

Carol Nicholson, et al. v. The Prudential Insurance Company of America, Southern
District of Illinois, Civil Action No. 3:95-206.

Allan W. Amlee, et al. v. Prudential Insurance Company of America, District of
Minnesota, Civil Action No. 3:95-380.

Gary Dugan, et al. v. Prudential Life Insurance Company of America, et al.,
Southern District of New York, Civil Action No. 1:94-1195.

E. Eugene Price, et al. v. Prudential Insurance Company of America, Western
District of Pennsylvania, Civil Action No. 2:94-75.

Charles J. Harris, et al. v. Prudential Insurance Company of America, Southern
District of Illinois, Civil Action No. 95-203-WLB.

John A. Hunter, et al. v. The Prudential Life Insurance Company of America,
Western District of New York, Civil Action No. 95-CV-0364E(F).

                                      -4-
<PAGE>

                    ANNEX A TO STIPULATION OF CONFIDENTIALITY

      The undersigned hereby certifies that (s)he has read the attached
Stipulation of Confidentiality, understands the terms thereof, is a person
described in clause __ of paragraph 5 thereof and agrees to be bound thereby.

                                                ___________________________

Dated: _____________

STATE OF                )
                        )   SS.
COUNTY OF               )

      On this __ day of __________, __ before me personally appeared the
above-named person, [to me known] [identified to my satisfaction], who being by
me duly sworn according to law, and acknowledged that he/she understands and is
familiar with the contents and effect of the foregoing instrument and signed,
sealed and delivered the foregoing instrument of his own free will.

                                                ___________________________
                                                Notary Public

                                      -5-

My Commission Expires:

_____________________

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