Exhibit 10.4


 


Deutsche Bank 


 


EXECUTION VERSION


Deutsche
Bank AG, London Branch


Winchester
House


1
Great Winchester St, London


EC2N
2DB


Telephone:  44 20 7545 8000


 


c/o
Deutsche Bank Securities Inc.


60
Wall Street


New
York, NY 10005


Telephone:
212-250-2500


 


	
   

  	
  September 16, 2010

  



 


	
  To:

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
  6000
  Westown Parkway

  
	
   

  	
  West
  Des Moines, IA 50266

  
	
   

  	
  Attention:

  	
  Treasurer

  
	
   

  	
  Telephone
  No.:

  	
  (515)
  221-0002

  
	
   

  	
  Facsimile
  No.:

  	
  (515)
  221-9947

  



 


Re:                             Call Option
Transaction


 


Internal
Reference Nr.: 400999


 


DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER DEALER UNDER
THE U.S. SECURITIES EXCHANGE ACT OF 1934. 
DEUTSCHE BANK SECURITIES INC. (“DBSI”) HAS ACTED SOLELY AS AGENT IN
CONNECTION WITH THIS TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE,
ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER
PARTY UNDER THE TRANSACTION.  AS SUCH,
ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND
RELATING TO THIS TRANSACTION BETWEEN PARTY A AND PARTY B SHALL BE TRANSMITTED
THROUGH DBSI.  DEUTSCHE BANK AG ACTING
THROUGH ITS LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION
CORPORATION (SIPC).


 


The
purpose of this letter agreement (this “Confirmation”)
is to confirm the terms and conditions of the call option transaction entered
into between Deutsche Bank AG, London Branch (“Dealer”)
and  American Equity Investment Life
Holding Company  (“Counterparty”)
as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation”
as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous
agreements and serve as the final documentation for the Transaction.


 


The
definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”),
as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”) are incorporated into this
Confirmation.  In the event of any
inconsistency between the Equity Definitions and this Confirmation, this
Confirmation shall govern.  Certain
defined terms used herein are based on terms that are defined in the Offering
Memorandum dated September 16, 2010 (the “Offering
Memorandum”) relating to the 3.50% Convertible Senior Notes due September 15,
2015 (as originally issued by Counterparty, the “Convertible
Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate
initial principal amount of USD 170,000,000 (as increased by up to an
aggregate principal amount of USD 30,000,000 if and to the extent that the
Initial Purchasers (as defined herein) exercise their option to purchase
additional 


 


	
  Chairman
  of the Supervisory Board:  Clemens Börsig
 Board of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann,
  Dr. Hugo Banziger,
  Anthony DiIorio

  	
   

  	
  Deutsche
  Bank AG is regulated by the FSA for the conduct of designated investment
  business in the UK, is a member of the London Stock Exchange and is a limited
  liability company incorporated in the Federal Republic of Germany HRB
  No. 30 000 District Court of Frankfurt am Main; Branch Registration
  No. in England and Wales BR000005, Registered address: Winchester House,
  1 Great Winchester Street, London EC2N 2DB.

  



 

















 


Convertible
Notes pursuant to the Purchase Agreement (as defined herein)) pursuant to an
Indenture to be dated September 22, 2010 between Counterparty and U.S.
Bank National Association, as trustee (the “Indenture”).  In the event of any inconsistency between the
terms defined in the Offering Memorandum, the Indenture and this Confirmation,
this Confirmation shall govern.  The
parties acknowledge that this Confirmation is entered into on the date hereof
with the understanding that (i) definitions set forth in the Indenture
which are also defined herein by reference to the Indenture and (ii) sections
of the Indenture that are referred to herein will conform to the descriptions
thereof in the Offering Memorandum.  If
any such definitions in the Indenture or any such sections of the Indenture
differ from the descriptions thereof in the Offering Memorandum, the
descriptions thereof in the Offering Memorandum will govern for purposes of
this Confirmation.  The parties further
acknowledge that the Indenture section numbers used herein are based on the
draft of the Indenture last reviewed by Dealer as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as
executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties.  Subject to the
foregoing, references to the Indenture herein are references to the Indenture
as in effect on the date of its execution, and if the Indenture is amended
following such date, any such amendment will be disregarded for purposes of
this Confirmation unless the parties agree otherwise in writing.


 


Each
party is hereby advised, and each such party acknowledges, that the other party
has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.


 


1.                                     This
Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates.  This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the
2002 ISDA Master Agreement (the “Agreement”) as
if Dealer and Counterparty had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as
the governing law (without reference to
choice of law doctrine)) on the Trade Date. 
In the event of any inconsistency between provisions of the Agreement
and this Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. 
The parties hereby agree that no transaction other than the Transaction
to which this Confirmation relates shall be governed by the Agreement.


 


2.                                     The terms of
the particular Transaction to which this Confirmation relates are as follows:


 


	
  General Terms.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trade
  Date:

  	
   

  	
  September 16,
  2010

  
	
   

  	
   

  	
   

  
	
  Effective
  Date:

  	
   

  	
  The
  third Exchange Business Day immediately prior to the Premium Payment Date

  
	
   

  	
   

  	
   

  
	
  Option
  Style:

  	
   

  	
  “Modified
  American”, as described under “Procedures for Exercise” below

  
	
   

  	
   

  	
   

  
	
  Option
  Type:

  	
   

  	
  Call

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  Counterparty

  
	
   

  	
   

  	
   

  
	
  Seller:

  	
   

  	
  Dealer

  
	
   

  	
   

  	
   

  
	
  Shares:

  	
   

  	
  The
  common stock of Counterparty, par value USD 1.00 per share (Exchange symbol
  “AEL”).

  
	
   

  	
   

  	
   

  
	
  Number
  of Options:

  	
   

  	
  170,000.  For the avoidance of doubt, the Number of
  Options shall be reduced by any Options exercised by Counterparty.  In no event will the Number of Options be
  less than zero.

  
	
   

  	
   

  	
   

  
	
  Applicable
  Percentage:

  	
   

  	
  The
  fraction, expressed as a percentage, (i) the numerator of which is 60
  and (ii) the denominator of which is 170.

  



 


2

















 


	
  Option
  Entitlement:

  	
   

  	
  A
  number equal to the product of the Applicable Percentage and 80.0000.

  
	
   

  	
   

  	
   

  
	
  Strike
  Price:

  	
   

  	
  USD
  12.5000

  
	
   

  	
   

  	
   

  
	
  Premium:
  

  	
   

  	
  USD
  11,100,000.00

  
	
   

  	
   

  	
   

  
	
  Premium
  Payment Date: 

  	
   

  	
  September 22,
  2010

  
	
   

  	
   

  	
   

  
	
  Exchange:
  

  	
   

  	
  The
  New York Stock Exchange

  
	
   

  	
   

  	
   

  
	
  Related
  Exchange(s): 

  	
   

  	
  All
  Exchanges

  
	
   

  	
   

  	
   

  
	
  Excluded
  Provisions:

  	
   

  	
  Section 14.03
  and Section 14.04(g) of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Procedures for Exercise.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Conversion
  Date:

  	
   

  	
  With
  respect to any conversion of a Convertible Note, the date on which the Holder
  (as such term is defined in the Indenture) of such Convertible Note satisfies
  all of the requirements for conversion thereof as set forth in
  Section 14.02(b) of the Indenture; provided
  that in no event shall a Conversion Date be deemed to occur hereunder (and no
  Option shall be exercised or deemed to be exercised hereunder) with respect
  to any Convertible Note surrendered for conversion in respect of which
  Counterparty has elected to designate (and such designation is accepted) a
  financial institution for exchange in lieu of conversion of such Convertible
  Note pursuant to Section 14.13 of the Indenture (regardless of whether
  such financial institution delivers any amounts due in respect of such
  Convertible Note, or whether such Convertible Note is resubmitted to
  Counterparty for conversion following a failure by such financial institution
  to deliver any such amounts or otherwise).

  
	
   

  	
   

  	
   

  
	
  Final
  Settlement Method Election Date:

  	
   

  	
  March 15,
  2015

  
	
   

  	
   

  	
   

  
	
  Expiration
  Time: 

  	
   

  	
  The
  Valuation Time

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date: 

  	
   

  	
  September 15,
  2015, subject to earlier exercise.

  
	
   

  	
   

  	
   

  
	
  Multiple
  Exercise:

  	
   

  	
  Applicable,
  as described under “Automatic Exercise” below.

  
	
   

  	
   

  	
   

  
	
  Automatic
  Exercise: 

  	
   

  	
  Notwithstanding
  Section 3.4 of the Equity Definitions, on each Conversion Date, a number
  of Options equal to the number of Convertible Notes in denominations of USD 1,000
  as to which such Conversion Date has occurred shall be deemed to be
  automatically exercised; provided that
  such Options shall be exercised or deemed exercised only if Counterparty has
  provided a Notice of Exercise to Dealer in accordance with “Notice of
  Exercise” below.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding
  the foregoing, in no event shall the number of Options that are exercised or
  deemed exercised hereunder exceed the Number of Options.

  



 


3

















 


	
  Notice
  of Exercise:

  	
   

  	
  Notwithstanding
  anything to the contrary in the Equity Definitions or under “Automatic
  Exercise” above, in order to exercise any Options, Counterparty must notify
  Dealer in writing (i) before 5:00 p.m. (New York City time) on the
  Scheduled Valid Day immediately preceding the scheduled first day of the
  Settlement Averaging Period for the Options being exercised or
  (ii) before 5:00 p.m. (New York City time) on the fifth Scheduled
  Valid Day immediately following the scheduled first day of the Settlement
  Averaging Period for the Options being exercised (in which case the
  Calculation Agent will determine the adjustment to be made to any one or more
  of the Strike Price, Number of Options, Option Entitlement and any other
  variable relevant to the exercise, settlement or payment for the Transaction
  in a commercially reasonable manner as appropriate to reflect the additional
  costs (including, but not limited to, hedging mismatches and market losses)
  and reasonable expenses incurred by Dealer in connection with its hedging activities
  (including the unwinding of any Hedge Position)  due to such notification occurring after
  the time specified in the immediately preceding clause (i)) of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (A)         the number of such Options
  (without regard to any adjustments by the Calculation Agent in accordance
  with the immediately preceding clause (ii));

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (B)           in respect of any Options
  relating to Convertible Notes with a Conversion Date occurring prior to the
  Final Settlement Method Election Date, (I) the scheduled first day of
  the Settlement Averaging Period and the scheduled Settlement Date,
  (II) whether the condition set forth in Section 14.01(b)(i)(A) of
  the Indenture (the “Trading Price Condition”)
  was satisfied on such Conversion Date, (III) whether an Option
  Counterparty Reorganization Event (as defined below) has occurred as of the
  close of business on the Valid Day immediately following such Conversion
  Date, (IV) if either the Trading Price Condition was so satisfied or an
  Option Counterparty Reorganization Event has so occurred, the Relevant
  Settlement Method for such Options, (V) if the Relevant Settlement
  Method for such Options is Combination Settlement (as defined below), the
  fixed amount of cash per Convertible Note that Counterparty has elected to
  deliver to Holders (as such term is defined in the Indenture) of the related
  Convertible Notes (the “Specified Dollar Amount”),
  and (VI) if the Relevant Settlement Method for such Options is not Cash
  Settlement, such notice shall also include the information, representations,
  acknowledgements and agreements required pursuant to “Settlement Method
  Election Conditions” below;

  



 


4

















 


	
   

  	
   

  	
  provided that,
  notwithstanding the immediately preceding clause (i), in respect of any
  Options relating to Convertible Notes with a Conversion Date occurring on or
  after the Final Settlement Method Election Date, such notice may be given on
  or prior to the Scheduled Valid Day immediately preceding the Expiration
  Date.

  
	
   

  	
   

  	
   

  
	
  Notice
  of Final Settlement Method:

  	
   

  	
  Notwithstanding
  anything to the contrary in the Equity Definitions or under “Automatic
  Exercise” above, in order to exercise any Options with a Conversion Date
  occurring on or after the Final Settlement Method Election Date in respect of
  which an the Option Counterparty Reorganization Event has occurred as of the
  close of business on the Final Settlement Method Election Date, Counterparty
  must notify Dealer in writing before 9:00 a.m. (New York City time) on
  the Final Settlement Method Election Date specifying:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                that an Option
  Counterparty Reorganization Event has occurred as of the close of business on
  the Final Settlement Method Election Date;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             the Relevant Settlement
  Method for such Options;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)          if the Relevant Settlement
  Method for such Options is Combination Settlement (as defined below), the
  Specified Dollar Amount for all Convertible Notes with Conversion Dates
  occurring on or after the Final Settlement Method Election Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)         if the Relevant Settlement
  Method for such Options is not Cash Settlement, such notice shall also
  include the information, representations, acknowledgements and agreements
  required pursuant to “Settlement Method Election Conditions” below.

  
	
   

  	
   

  	
   

  
	
  Option
  Counterparty Reorganization Event:

  	
   

  	
  Either
  (i) Dealer or JPMorgan Chase Bank, National Association, or one or more
  “significant subsidiaries” (as defined in Article 1, Rule 1-02 of
  Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of one or more of the foregoing (each such
  named party or significant subsidiary, an “Option
  Counterparty”) shall commence a voluntary case or other proceeding
  seeking liquidation, reorganization or other relief with respect to such
  Option Counterparty or its debts under any bankruptcy, insolvency or other
  similar law now or hereafter in effect or seeking the appointment of a
  trustee, receiver, liquidator, custodian or other similar official of such
  Option Counterparty or any substantial part of its property, or shall consent
  to any such relief or to the appointment of or taking possession by any such
  official in an involuntary case or other proceeding commenced against it, or
  shall make a general assignment for the benefit of creditors, or shall fail
  generally to pay its debts as they become due, or (ii) an involuntary
  case or other proceeding shall be commenced

  



 


5

















 


	
   

  	
   

  	
  against
  one or more of the Option Counterparties seeking liquidation, reorganization
  or other relief with respect to such Option Counterparty or its debts under
  any bankruptcy, insolvency or other similar law now or hereafter in effect or
  seeking the appointment of a trustee, receiver, liquidator, custodian or
  other similar official of such Option Counterparty or any substantial part of
  its property, and such involuntary case or other proceeding shall remain
  undismissed and unstayed for a period of 30 consecutive days.

  
	
   

  	
   

  	
   

  
	
  Valuation
  Time:

  	
   

  	
  At
  the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is
  extended, the Calculation Agent shall determine the Valuation Time in its
  reasonable discretion.

  
	
   

  	
   

  	
   

  
	
  Market
  Disruption Event:

  	
   

  	
  Section 6.3(a) of
  the Equity Definitions is hereby replaced in its entirety by the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “‘Market
  Disruption Event’ means, in respect of a Share, (i) a failure by the
  primary United States national securities exchange or market on which the
  Shares are listed or admitted for trading to open for trading during its
  regular trading session or (ii) the occurrence or existence prior to
  1:00 p.m. (New York City time) on any Scheduled Valid Day for the Shares
  for more than one half-hour period in the aggregate during regular trading
  hours of any suspension or limitation imposed on trading (by reason of
  movements in price exceeding limits permitted by the relevant stock exchange
  or otherwise) in the Shares or in any options, contracts or future contracts
  relating to the Shares.”

  
	
   

  	
   

  	
   

  
	
  Settlement Terms.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Method:

  	
   

  	
  For
  any Option, Cash Settlement. Notwithstanding the forgoing:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                in respect of any Option
  relating to a Convertible Note with a Conversion Date occurring prior to the
  Final Settlement Method Election Date, if (A) Counterparty has notified
  Dealer in the Notice of Exercise for such Option that either the Trading
  Price Condition was satisfied on such Conversion Date or an Option
  Counterparty Reorganization Event has occurred as of the close of business on
  the Valid Day immediately following such Conversion Date, and (B) the
  Settlement Method Election Conditions have been satisfied with respect to
  such Option, then the Settlement Method shall be the Relevant Settlement
  Method elected by Counterparty for such Option in such Notice of Exercise;
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             in respect of any Option
  relating to a Convertible Note with a Conversion Date occurring on or after
  the Final Settlement Method Election Date, if (A) Counterparty has
  timely delivered a Notice of Final

  



 


6

















 


	
   

  	
   

  	
  Settlement
  Method to Dealer stating that an Option Counterparty Reorganization Event has
  occurred as of the close of business on the Final Settlement Method Election
  Date, and (B) the Settlement Method Election Conditions have been
  satisfied with respect to such Option, then the Settlement Method shall be
  the Relevant Settlement Method elected by Counterparty for such Option in
  such Notice of Final Settlement Method;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  provided
  that if Counterparty fails to specify in such Notice of Exercise or
  Notice of Final Settlement Method the Relevant Settlement Method, Cash
  Settlement shall apply; provided further
  that if Counterparty elects Combination Settlement in such Notice of Exercise
  or Notice of Final Settlement Method, but fails to specify in such Notice of
  Exercise or Notice of Final Settlement Method the Specified Dollar Amount,
  the Settlement Method shall be Net Share Settlement.

  
	
   

  	
   

  	
   

  
	
  Relevant
  Settlement Method:

  	
   

  	
  In
  respect of any Option, subject to the Settlement Method Election Conditions:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                if Counterparty has, in
  accordance with Section 14.02(a) of the Indenture, elected to
  settle its conversion obligations in respect of the related Convertible Note
  (A) entirely in Shares pursuant to Section 14.02(a)(iv)(A) of
  the Indenture (together with cash in lieu of fractional Shares) (such
  settlement method, “Settlement in Shares”),
  (B) in a combination of cash and Shares pursuant to
  Section 14.02(a)(iv)(C) of the Indenture with a Specified Dollar
  Amount less than USD 1,000 (such settlement method, “Low Cash
  Combination Settlement”) or (C) in a combination of cash and
  Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a
  Specified Dollar Amount equal to USD 1,000, then, in each case, the
  Relevant Settlement Method for such Option shall be Net Share Settlement;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             if Counterparty has, in
  accordance with Section 14.02(a) of the Indenture, elected to
  settle its conversion obligations in respect of the related Convertible Note
  in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of
  the Indenture with a Specified Dollar Amount greater than USD 1,000, then the
  Relevant Settlement Method for such Option shall be Combination Settlement;
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)          if Counterparty has, in
  accordance with Section 14.02(a) of the Indenture, elected to
  settle its conversion obligations in respect of the related Convertible Note
  entirely in cash pursuant to Section 14.02(a)(iv)(B) of the
  Indenture, then the Relevant Settlement Method for such Option shall be Cash
  Settlement.

  



 


7






 












 


	
  Settlement
  Method Election Conditions:

  	
   

  	
  In
  respect of any Option, for any Relevant Settlement Method other than Cash
  Settlement, such Relevant Settlement Method shall apply to such Option only
  if the Notice of Exercise or Notice of Final Settlement Method, as
  applicable, for such Option contains:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                a representation that, on
  the date of such Notice of Exercise or Notice of Final Settlement Method, as
  applicable, Counterparty is not in possession of any material non-public
  information with respect to Counterparty or the Shares;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             a representation that
  Counterparty is electing the settlement method for the related Convertible
  Note and such Relevant Settlement Method in good faith and not as part of a
  plan or scheme to evade the prohibitions of Rule 10b-5 under the
  Exchange Act;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)          a representation that
  Counterparty has not entered into or altered any hedging transaction relating
  to the Shares corresponding to or offsetting the Transaction;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)         a representation that
  Counterparty is not electing the settlement method for the related
  Convertible Note and such Relevant Settlement Method to create actual or
  apparent trading activity in the Shares (or any security convertible into or
  exchangeable for the Shares) or to raise or depress or otherwise manipulate
  the price of the Shares (or any security convertible into or exchangeable for
  the Shares); and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)            an acknowledgment by
  Counterparty that (A) any transaction by Dealer following Counterparty’s
  election of the settlement method for the related Convertible Note and such
  Relevant Settlement Method shall be made at Dealer’s sole discretion and for
  Dealer’s own account and (B) Counterparty does not have, and shall not
  attempt to exercise, any influence over how, when, whether or at what price
  to effect such transactions, including, without limitation, the price paid or
  received per Share pursuant to such transactions, or whether such
  transactions are made on any securities exchange or privately.

  
	
   

  	
   

  	
   

  
	
  Cash
  Settlement:

  	
   

  	
  If
  Cash Settlement is applicable to any Option exercised or deemed exercised
  hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will
  pay to Counterparty, on the relevant Settlement Date for each such Option, an
  amount of cash (the “Cash Settlement Amount”)
  equal to the sum, for each Valid Day during the Settlement Averaging Period
  for such Option, of (i) the Daily Option Value for such Valid Day, divided by (ii) the number of Valid Days in the
  Settlement Averaging Period.

  
	
   

  	
   

  	
   

  
	
  Net
  Share Settlement:

  	
   

  	
  If
  Net Share Settlement is applicable to any Option exercised or deemed
  exercised hereunder, Dealer will

  



 


8

















 


	
   

  	
   

  	
  deliver
  to Counterparty, on the relevant Settlement Date for each such Option, a
  number of Shares (the “Net Share Settlement
  Amount”) equal to the sum, for each Valid Day during the
  Settlement Averaging Period for each such Option, of (i) the Daily
  Option Value for such Valid Day, divided by
  (ii) the Relevant Price on such Valid Day, divided by
  (iii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net Share Settlement
  Amount for any Option exceed a number of Shares equal to the Applicable Limit
  for such Option, divided by
  the Applicable Limit Price on the Settlement Date for such Option.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dealer
  will deliver cash in lieu of any fractional Shares to be delivered with
  respect to any Net Share Settlement Share Amount valued at the Relevant Price
  for the last Valid Day of the Settlement Averaging Period.

  
	
   

  	
   

  	
   

  
	
  Combination
  Settlement:

  	
   

  	
  If
  Combination Settlement is applicable to any Option exercised or deemed
  exercised hereunder, Dealer will deliver to Counterparty, on the relevant
  Settlement Date for each such Option:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                an amount of cash (the “Combination Settlement Cash Amount”) equal to the sum, for
  each Valid Day during the Settlement Averaging Period for such Option, of an
  amount of cash for such Valid Day (the “Daily Combination
  Settlement Cash Amount”) equal to (A) the lesser of
  (1) the product of (x) the Applicable Percentage and (y) the
  Specified Dollar Amount, minus USD
  1,000 and (2) the Daily Option Value, divided by
  (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in clause (A) above
  results in zero or a negative number for any Valid Day, the Daily Combination
  Settlement Cash Amount for such Valid Day shall be deemed to be zero; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             a number of Shares (the “Combination Settlement Share Amount”) equal to the sum,
  for each Valid Day during the Settlement Averaging Period for such Option, of
  a number of Shares for such Valid Day (the “Daily
  Combination Settlement Share Amount”) equal to (A) the Daily
  Option Value on such Valid Day, minus the
  Daily Combination Settlement Cash Amount for such Valid Day, divided by (B) the Relevant Price on such Valid Day, divided by (C) the number of Valid Days in the
  Settlement Averaging Period; provided that
  if the calculation in clause (A) above results in zero or a negative
  number for any Valid Day, the Daily Combination Settlement Share Amount for
  such Valid Day shall be deemed to be zero;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  provided that in no
  event shall the sum of (x) the Combination Settlement Cash Amount for
  any Option and (y) the Combination Settlement Share Amount for such

  



 


9

















 


	
   

  	
   

  	
  Option,
  multiplied by the Applicable Limit
  Price on the Settlement Date for such Option, exceed the Applicable Limit for
  such Option.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dealer
  will deliver cash in lieu of any fractional Shares to be delivered with
  respect to any Combination Settlement Share Amount valued at the Relevant
  Price for the last Valid Day of the Settlement Averaging Period.

  
	
   

  	
   

  	
   

  
	
  Daily
  Option Value:

  	
   

  	
  For
  any Valid Day, an amount equal to (i) the Option Entitlement on such
  Valid Day, multiplied by (ii) the
  Relevant Price on such Valid Day less the
  Strike Price on such Valid Day; provided that
  if the calculation contained in clause (ii) above results in a negative
  number, the Daily Option Value for such Valid Day shall be deemed to be
  zero.  In no event will the Daily
  Option Value be less than zero.

  
	
   

  	
   

  	
   

  
	
  Applicable
  Limit:

  	
   

  	
  For
  any Option, an amount of cash equal to the Applicable Percentage, multiplied by the excess of (i) the aggregate of
  (A) the amount of cash, if any, delivered to the Holder of the related
  Convertible Note upon conversion of such Convertible Note and (B) the
  number of Shares, if any, delivered to the Holder of the related Convertible
  Note upon conversion of such Convertible Note, multiplied
  by the Applicable Limit Price on the Settlement Date for such
  Option, over (ii) USD 1,000.

  
	
   

  	
   

  	
   

  
	
  Applicable
  Limit Price:

  	
   

  	
  On
  any day, the opening price as displayed under the heading “Op” on Bloomberg
  page AEL <equity> (or any successor thereto).

  
	
   

  	
   

  	
   

  
	
  Valid
  Day:

  	
   

  	
  A
  day on which (i) there is no Market Disruption Event and
  (ii) trading in the Shares generally occurs on the Exchange or, if the
  Shares are not then listed on the Exchange, on the principal other United
  States national securities exchange on which the Shares are then listed or,
  if the Shares are not then listed on a United States national securities
  exchange, on the principal other market on which the Shares are then listed
  or admitted for trading. If the Shares are not so listed or admitted for
  trading, “Valid Day” means a Business Day.

  
	
   

  	
   

  	
   

  
	
  Scheduled
  Valid Day:

  	
   

  	
  A
  day that is scheduled to be a Valid Day on the principal United States
  national securities exchange or market on which the Shares are listed or
  admitted for trading.  If the Shares
  are not so listed or admitted for trading, “Scheduled Valid Day” means a
  Business Day.

  
	
   

  	
   

  	
   

  
	
  Business
  Day:

  	
   

  	
  Any
  day other than a Saturday, a Sunday or a day on which the Federal Reserve
  Bank of New York is authorized or required by law or executive order to close
  or be closed.

  
	
   

  	
   

  	
   

  
	
  Relevant
  Price:

  	
   

  	
  On
  any Valid Day, the per Share volume-weighted average price as displayed under
  the heading “Bloomberg VWAP” on Bloomberg page AEL <equity> AQR
  (or its

  



 


10

















 


	
   

  	
   

  	
  equivalent
  successor if such page is not available) in respect of the period from
  the scheduled open of trading until the scheduled close of trading of the
  primary trading session on such Valid Day (or if such volume-weighted average
  price is unavailable, the market value of one Share on such Valid Day, as
  determined by the Calculation Agent using a volume-weighted method).  The “Relevant Price” will be determined
  without regard to after-hours trading or any other trading outside of the
  regular trading session trading hours.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Averaging Period:

  	
   

  	
  For
  any Option, regardless of the Settlement Method applicable to such Option:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                if the related Conversion Date occurs prior to the Final Settlement Method
  Election Date, the 40 consecutive Valid Days commencing on,
  and including, the second Valid Day following such Conversion Date; provided that if the Notice of
  Exercise for such Option specifies that (A) the Trading Price Condition was satisfied
  on the Conversion Date for such related Convertible Note or an Option Counterparty
  Reorganization Event has occurred as of the close of business on the Valid
  Day immediately following such Conversion Date, and (B) Settlement in
  Shares or Low Cash Combination Settlement applies to the related Convertible
  Note, the Settlement Averaging Period shall be the 80 consecutive Valid Day period
  commencing on, and including, the second Valid Day immediately following such
  Conversion Date; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             if the related Conversion Date occurs on or following the Final Settlement Method
  Election Date,  the 40 consecutive Valid Days
  commencing on, and including, the 42nd Scheduled Valid Day
  immediately prior to the Expiration Date; provided that if Counterparty has timely delivered
  a Notice of Final Settlement Method for such Option specifying that (A) an Option
  Counterparty Reorganization Event has occurred as of the close of business on
  the Final Settlement Method Election Date, and (B) Settlement in Shares or Low
  Cash Combination Settlement applies to the related Convertible Note, the Settlement
  Averaging Period shall be the 80 consecutive Valid Day period commencing on,
  and including, the 82nd Scheduled
  Valid Day immediately prior to the Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
  For
  any Option, the third Business Day immediately following the final Valid Day
  of the Settlement Averaging Period for such Option.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Currency:

  	
   

  	
  USD

  



 


11

















 


	
  Other
  Applicable Provisions: 

  	
   

  	
  The
  provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5 of the Equity
  Definitions will be applicable, except that all references in such provisions
  to “Physically-settled” shall be read as references to “Share Settled”.  “Share Settled” in relation to any Option
  means that Net Share Settlement or Combination Settlement is applicable to
  that Option.

  
	
   

  	
   

  	
   

  
	
  Representation
  and Agreement:

  	
   

  	
  Notwithstanding
  anything to the contrary in Equity Definitions (including, but not limited
  to, Section 9.11 thereof), the parties acknowledge that (i) any
  Shares delivered to Counterparty shall be, upon delivery, subject to
  restrictions and limitations arising from Counterparty’s status as issuer of
  the Shares under applicable securities laws, (ii) Dealer may deliver any
  Shares required to be delivered hereunder in certificated form in lieu of
  delivery through the Clearance System and (iii) any Shares delivered to
  Counterparty may be “restricted securities” (as defined in Rule 144
  under the Securities Act of 1933, as amended (the “Securities Act”)).

  
	
   

  	
   

  	
   

  
	
  3.                                    Additional
  Terms applicable to the Transaction.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Adjustments
  applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Potential
  Adjustment Events:

  	
   

  	
  Notwithstanding
  Section 11.2(e) of the Equity Definitions, a “Potential Adjustment
  Event” means an occurrence of any event or condition, as set forth in any
  Dilution Adjustment Provision, that would result in an adjustment to the
  Conversion Rate (as defined in the Indenture) of the Convertible Notes.

  
	
   

  	
   

  	
   

  
	
  Method
  of Adjustment: 

  	
   

  	
  Calculation
  Agent Adjustment, which means that, notwithstanding Section 11.2(c) of
  the Equity Definitions, upon any Potential Adjustment Event, the Calculation
  Agent shall make a corresponding adjustment to any one or more of the Strike
  Price, Number of Options, Option Entitlement and any other variable relevant
  to the exercise, settlement or payment for the Transaction; provided that, notwithstanding the foregoing, if the
  Calculation Agent in good faith disagrees with any adjustment to the
  Convertible Notes that involves an exercise of discretion by Counterparty or
  its board of directors (including, without limitation, pursuant to
  Section 14.05 of the Indenture or in connection with any proportional
  adjustment or the determination of the fair value of any securities,
  property, rights or other assets), then in each such case, the Calculation
  Agent will determine the adjustment to be made to any one or more of the
  Strike Price, Number of Options, Option Entitlement and any other variable
  relevant to the exercise, settlement or payment for the Transaction in a
  commercially reasonable manner; provided, further,
  that, notwithstanding the foregoing, if
  any Potential Adjustment Event occurs during the Settlement Averaging Period
  but no adjustment was made to any Convertible Note under the Indenture
  because the relevant

  



 


12

















 


	
   

  	
   

  	
  Holder (as such term is defined in the Indenture) was
  deemed to be a record owner of the underlying Shares on the related
  Conversion Date, then the Calculation Agent shall make an adjustment, as
  determined by it, to the terms hereof in order to account for such Potential
  Adjustment Event.

  
	
   

  	
   

  	
   

  
	
  Dilution
  Adjustment Provisions:

  	
   

  	
  Section 14.04(a),
  (b), (c), (d) and (e) and Section 14.05 of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Extraordinary
  Events applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Merger
  Events:

  	
   

  	
  Applicable;
  provided that notwithstanding
  Section 12.1(b) of the Equity Definitions, a “Merger Event” means
  the occurrence of any event or condition set forth in the definition of
  “Merger Event” in Section 14.07 of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Tender
  Offers:

  	
   

  	
  Applicable;
  provided that notwithstanding
  Section 12.1(d) of the Equity Definitions, a “Tender Offer” means
  the occurrence of any event or condition set forth in
  Section 14.04(e) of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Consequence
  of Merger Events / Tender Offers:

  	
   

  	
  Notwithstanding
  Section 12.2 and Section 12.3 of the Equity Definitions, upon the
  occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall
  make a corresponding adjustment in respect of any adjustment under the
  Indenture to any one or more of the nature of the Shares (in the case of a
  Merger Event), Strike Price, Number of Options, Option Entitlement and any
  other variable relevant to the exercise, settlement or payment for the
  Transaction; provided, however,
  that such adjustment shall be made without regard to any adjustment to the
  Conversion Rate pursuant to any Excluded Provision; provided
  further that if, with respect to a Merger Event or a Tender Offer,
  (i) the consideration for the Shares includes (or, at the option of a
  holder of Shares, may include) shares of an entity or person not organized
  under the laws of the United States, any State thereof or the District of
  Columbia or (ii) the Counterparty to the Transaction following such
  Merger Event or Tender Offer, will not be the Issuer following such Merger
  Event or Tender Offer, then Cancellation and Payment (Calculation Agent
  Determination) shall apply.

  
	
   

  	
   

  	
   

  
	
  Nationalization, Insolvency
  or Delisting:

  	
   

  	
  Cancellation
  and Payment (Calculation Agent Determination); provided that, in addition to the provisions of
  Section 12.6(a)(iii) of the Equity Definitions, it will also
  constitute a Delisting if the Exchange is located in the United States and
  the Shares are not immediately re-listed, re-traded or re-quoted on any of
  the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
  Global Market (or their respective successors); if the Shares are immediately
  re-listed, re-traded or re-quoted on any of the New York

  



 


13

















 


	
   

  	
   

  	
  Stock
  Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or
  their respective successors), such exchange or quotation system shall
  thereafter be deemed to be the Exchange.

  
	
   

  	
   

  	
   

  
	
  Additional
  Disruption Events:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Change
  in Law:

  	
   

  	
  Applicable;
  provided that
  Section 12.9(a)(ii)(X) of the Equity Definitions is hereby amended
  by replacing the word “Shares” with the phrase “Hedge Positions.”

  
	
   

  	
   

  	
   

  
	
  Failure
  to Deliver:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Hedging
  Disruption:

  	
   

  	
  Applicable;
  provided that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                Section 12.9(a)(v) of the Equity
  Definitions is hereby amended by inserting the following two phrases at the
  end of such Section:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “For
  the avoidance of doubt, the term “equity price risk” shall be deemed to
  include, but shall not be limited to, stock price and volatility risk. And,
  for the further avoidance of doubt, any such transactions or assets referred
  to in phrases (A) or (B) above must be available on commercially
  reasonable pricing terms.”; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)             Section 12.9(b)(iii) of
  the Equity Definitions is hereby amended by inserting in the third line
  thereof,  after the words “to terminate
  the Transaction”, the words “or a portion of the Transaction affected by such
  Hedging Disruption”.

  
	
   

  	
   

  	
   

  
	
  Increased
  Cost of Hedging:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Hedging
  Party:

  	
   

  	
  For
  all applicable Additional Disruption Events, Dealer.

  
	
   

  	
   

  	
   

  
	
  Determining
  Party:

  	
   

  	
  For
  all applicable Extraordinary Events, Dealer.

  
	
   

  	
   

  	
   

  
	
  Non-Reliance:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Agreements
  and Acknowledgements Regarding Hedging Activities:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Additional
  Acknowledgments:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  4.                                    Calculation
  Agent. 

  	
   

  	
  Dealer,
  whose judgments, determinations and calculations shall be made in good faith
  and in a commercially reasonable manner. Following any calculation by the
  Calculation Agent hereunder and a prior written request by Counterparty, the
  Calculation Agent shall provide Counterparty a written explanation of any
  calculation or adjustment made by it including, where applicable, a
  description of the methodology and the basis for such calculation or
  adjustment in reasonable detail, it being understood that the Calculation
  Agent shall not be obligated to disclose any proprietary models used by it
  for such calculation.

  



 


14






 












 


	
  5.

  	
  Account
  Details.

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Account
  for payments to Counterparty:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank:

  	
  West
  Bank

  
	
   

  	
   

  	
  ABA#:

  	
  073903354

  
	
   

  	
   

  	
  Acct No.:

  	
  905432

  
	
   

  	
   

  	
  Beneficiary:

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
   

  	
  Ref:

  	
  Derivatives

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  for delivery of Shares to Counterparty:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DTC
  50108

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Account
  for payments to Dealer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG,
  London Branch

  
	
   

  	
   

  	
  The Bank of New York

  
	
   

  	
   

  	
  Bank Routing:
  021-000-018

  
	
   

  	
   

  	
  Account Name:
  Deutsche Bank Securities, Inc.

  
	
   

  	
   

  	
  Account No.:
  8900327634

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  for delivery of Shares from Dealer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To
  be provided by Dealer

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Offices.

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  The
  Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
  not a Multibranch Party.

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  The
  Office of Dealer for the Transaction is: London

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, London Branch

  
	
   

  	
   

  	
  Winchester house

  
	
   

  	
   

  	
  1 Great Winchester St, London

  
	
   

  	
   

  	
  EC2N 2DB

  
	
   

  	
   

  
	
  7.

  	
  Notices.

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Address
  for notices or communications to Counterparty:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
   

  	
  6000
  Westown Parkway

  
	
   

  	
   

  	
  West
  Des Moines, IA 50266

  
	
   

  	
   

  	
  Attention:

  	
  Treasurer

  
	
   

  	
   

  	
  Telephone
  No.:

  	
  (515)
  221-0002

  
	
   

  	
   

  	
  Facsimile
  No.:

  	
  (515)
  221-9947

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Address
  for notices or communications to Dealer:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG,
  London Branch

  
	
   

  	
   

  	
  c/o Deutsche Bank
  Securities Inc.

  
	
   

  	
   

  	
  60 Wall Street

  
	
   

  	
   

  	
  New York, NY 10005

  
	
   

  	
   

  	
  Attention: Andrew
  Yaeger and Paul Stowell

  
	
   

  	
   

  	
  Telephone No:

  	
  212-250-6270

  
					



 


15

















 


	
   

  	
   

  	
  Facsimile No:

  	
  212-797-8974

  
	
   

  	
   

  	
  Email:
  andrew.yaeger@db.com

  
	
   

  	
   

  	
  Email: paul.stowell@db.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG,
  London Branch

  
	
   

  	
   

  	
  c/o Deutsche Bank
  Securities Inc.

  
	
   

  	
   

  	
  60 Wall Street

  
	
   

  	
   

  	
  New York, NY 10005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Lars Kestner

  
	
   

  	
   

  	
  Telephone:

  	
  212-250-6043

  
	
   

  	
   

  	
  Facsimile:

  	
  646-593-8200

  
	
   

  	
   

  	
  Email: lars.kestner@db.com

  



 


8.                                      Representations
and Warranties of Counterparty.


 


Counterparty
hereby represents and warrants to Dealer on the date hereof and on and as of
the Premium Payment Date that:


 


(a)                                  Counterparty
has all necessary corporate power and authority to execute, deliver and perform
its obligations in respect of the Transaction; such execution, delivery and
performance have been duly authorized by all necessary corporate action on
Counterparty’s part; and this Confirmation has been duly and validly executed
and delivered by Counterparty and constitutes its valid and binding obligation,
enforceable against Counterparty in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity) and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy relating
thereto.


 


(b)                                 Neither the
execution and delivery of this Confirmation nor the incurrence or performance
of obligations of Counterparty hereunder will conflict with or result in a
breach of the certificate of incorporation or by-laws (or any equivalent
documents) of Counterparty, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument filed as exhibits to Counterparty’s Annual Report
on Form 10-K for the year ended December 31, 2009, as updated by any
subsequent filings, to which Counterparty or any of its subsidiaries is a party
or by which Counterparty or any of its subsidiaries is bound or to which
Counterparty or any of its subsidiaries is subject, or constitute a default
under, or result in the creation of any lien under, any such agreement or
instrument, in each case which would have a material adverse effect on the
Transaction or Dealer’s rights or obligations relating to the Transaction.


 


(c)                                  No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required in
connection with the execution, delivery or performance by Counterparty of this
Confirmation, except such as have been obtained or made and such as may be
required under the Securities Act or state securities laws.


 


(d)                                 Counterparty is
not and will not be required to register as an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.


 


(e)                                  Counterparty is
an “eligible contract participant” (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended, other than a
person that is an eligible contract participant under
Section 1a(12)(C) of the Commodity Exchange Act).


 


16

















 


(f)                                    Counterparty is
not, on the date hereof, in possession of any material non-public information
with respect to Counterparty or the Shares.


 


(g)                                 All reports and
other documents filed by Counterparty with the Securities and Exchange
Commission pursuant to the Exchange Act when considered as a whole (with the
more recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.


 


9.                                      Other
Provisions.


 


(a)                                  Opinions.  Counterparty shall deliver to Dealer an
opinion of counsel, dated as of the Premium Payment Date, with respect to the
matters set forth in Sections 8(a) through (c) of this
Confirmation.  Delivery of such opinion
to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of
the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of
the Agreement.


 


(b)                                 Repurchase
Notices. 
Counterparty shall, on any day on which Counterparty effects any
repurchase of Shares, promptly give Dealer a written notice of such repurchase
(a “Repurchase Notice”) on such day if
following such repurchase, the number of outstanding Shares as determined on
such day is (i) less than 56.7 million (in the case of the first such
notice) or (ii) thereafter more than 1.7 million less than the number of
Shares included in the immediately preceding Repurchase Notice.  Counterparty agrees to indemnify and hold
harmless Dealer and its affiliates and their respective officers, directors,
employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any
and all losses (including losses relating to Dealer’s hedging activities as a
consequence of becoming, or of the risk of becoming, a Section 16 “insider”,
including without limitation, any forbearance from hedging activities or
cessation of hedging activities and any losses in connection therewith with
respect to the Transaction), claims, damages, judgments, liabilities and
expenses (including reasonable attorney’s fees), joint or several, which an
Indemnified Person may become subject to, as a result of Counterparty’s failure
to provide Dealer with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon written
request, each of such Indemnified Persons for any reasonable legal or other expenses
incurred in connection with investigating, preparing for, providing testimony
or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against the Indemnified Person as a result of Counterparty’s
failure to provide Dealer with a Repurchase Notice in accordance with this
paragraph, such Indemnified Person shall promptly notify Counterparty in
writing, and Counterparty, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others Counterparty may designate in such proceeding
and shall pay the fees and expenses of such counsel related to such
proceeding.  Counterparty shall not be
liable for any settlement of any proceeding contemplated by this paragraph that
is effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, Counterparty agrees to indemnify
any Indemnified Person from and against any loss or liability by reason of such
settlement or judgment.  Counterparty
shall not, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding contemplated by this
paragraph that is in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding on terms reasonably satisfactory to such Indemnified
Person.  If the indemnification provided
for in this paragraph is unavailable to an Indemnified Person or insufficient
in respect of any losses, claims, damages or liabilities referred to therein,
then Counterparty hereunder, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result 


 


17

















 


of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph (b) are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements
contained in this paragraph shall remain operative and in full force and effect
regardless of the termination of the Transaction.


 


(c)                                  Regulation
M.  Counterparty is not on the
Trade Date engaged in a distribution, as such term is used in Regulation M
under the Exchange Act, of any securities of Counterparty, other than a
distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M. 
Counterparty shall not, until the second Scheduled Trading Day
immediately following the Effective Date, engage in any such distribution.


 


(d)                                 No
Manipulation. 
Counterparty is not entering into the Transaction to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the
Shares) or otherwise in violation of the Exchange Act.


 


(e)                                  Transfer
or Assignment.


 


(i)                                   Counterparty
shall have the right to transfer or assign its rights and obligations hereunder
with respect to all, but not less than all, of the Options hereunder (such
Options, the “Transfer Options”); provided that such transfer or assignment shall be subject
to reasonable conditions that Dealer may impose, including but not limited, to
the following conditions:


 


(A)                            With respect to any
Transfer Options, Counterparty shall not be released from its notice and
indemnification obligations pursuant to Section 9(b) or any
obligations under Section 9(o) or 9(s) of this Confirmation;


 


(B)                              Any Transfer Options
shall only be transferred or assigned to a third party that is a United States
person (as defined in the Internal Revenue Code of 1986, as amended);


 


(C)                              Such transfer or
assignment shall be effected on terms, including any reasonable undertakings by
such third party (including, but not limited to, an undertaking with respect to
compliance with applicable securities laws in a manner that, in the reasonable
judgment of Dealer, will not expose Dealer to material risks under applicable
securities laws) and execution of any documentation and delivery of legal
opinions with respect to securities laws and other matters by such third party
and Counterparty, as are requested and reasonably satisfactory to Dealer;


 


(D)                             Dealer will not, as a
result of such transfer and assignment, be required to pay the transferee on
any payment date an amount under Section 2(d)(i)(4) of the Agreement
greater than an amount that Dealer would have been required to pay to
Counterparty in the absence of such transfer and assignment;


 


(E)                               An Event of Default,
Potential Event of Default or Termination Event will not occur as a result of
such transfer and assignment;


 


(F)                               Without limiting the
generality of clause (B), Counterparty shall cause the transferee to make such
Payee Tax Representations and to provide such tax documentation as may be
reasonably requested by Dealer to permit Dealer to determine that results
described in clauses (D) and (E) will not occur upon or after such
transfer and assignment; and


 


18

















 


(G)                              Counterparty shall be
responsible for all reasonable costs and expenses, including reasonable counsel
fees, incurred by Dealer in connection with such transfer or assignment.


 


(ii)                                Dealer may,
without Counterparty’s consent, transfer or assign all or any part of its
rights or obligations under the Transaction to any affiliate of Dealer (1) that
has a rating for its long term, unsecured and unsubordinated indebtedness that
is equal to or better than Dealer’s credit rating at the time of such transfer
or assignment, or (2) whose obligations hereunder will be guaranteed,
pursuant to the terms of a customary guarantee in a form used by Dealer
generally for similar transactions, by Dealer or Deutsche Bank AG.  If at any time at which (A) the Section 16
Percentage exceeds 8.0%, (B) the Option Equity Percentage exceeds 14.5%,
or (C) the Share Amount exceeds the Applicable Share Limit (if any
applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using
its commercially reasonable efforts to effect a transfer or assignment of
Options in accordance with the preceding sentence within a time period
reasonably acceptable to Dealer such that no Excess Ownership Position exists,
then Dealer may designate any Exchange Business Day as an Early Termination
Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following
such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an
Early Termination Date with respect to a portion of the Transaction, a payment
shall be made pursuant to Section 6 of the Agreement as if (1) an
Early Termination Date had been designated in respect of a Transaction having
terms identical to the Transaction and a Number of Options equal to the number
of Options underlying the Terminated Portion, (2) Counterparty were the
sole Affected Party with respect to such partial termination and (3) the
Terminated Portion were the sole Affected Transaction (and, for the avoidance
of doubt, the provisions of Section 9(m) shall apply to any amount
that is payable by Dealer to Counterparty pursuant to this sentence as if
Counterparty was not the Affected Party). 
The “Section 16 Percentage” as of
any day is the fraction, expressed as a percentage, (A) the numerator of
which is the number of Shares that Dealer and each person subject to
aggregation of Shares with Dealer under Section 13 or Section 16 of
the Exchange Act and rules promulgated thereunder directly or indirectly
beneficially own (as defined under Section 13 or Section 16 of the
Exchange Act and rules promulgated thereunder) and (B) the
denominator of which is the number of Shares outstanding.  The “Option Equity Percentage”
as of any day is the fraction, expressed as a percentage, (A) the numerator
of which is the sum of (1) the product of the Number of Options and the
Option Entitlement and (2) the aggregate number of Shares underlying any
other call option transaction sold by Dealer to Counterparty, and (B) the
denominator of which is the number of Shares outstanding.  The “Share Amount”
as of any day is the number of Shares that Dealer and any person whose
ownership position would be aggregated with that of Dealer (Dealer or any such
person, a “Dealer Person”) under any
insurance or other law, rule, regulation, regulatory order or organizational
documents or contracts of Counterparty that are, in each case, applicable to
ownership of Shares (“Applicable Restrictions”),
owns, beneficially owns, constructively owns, controls, holds the power to vote
or otherwise meets a relevant definition of ownership under any Applicable
Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit”
means a number of Shares equal to (A) the minimum number of Shares that
could give rise to reporting or registration obligations or other requirements
(including obtaining prior approval from any person or entity) of a Dealer
Person, or could result in an adverse effect on a Dealer Person, under any
Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares
outstanding.


 


(iii)                             Notwithstanding
any other provision in this Confirmation to the contrary requiring or allowing
Dealer to purchase, sell, receive or deliver any Shares or other securities, or
make or receive any payment in cash, to or from Counterparty, Dealer may
designate any of its affiliates to purchase, sell, receive or deliver such
Shares or other securities, or to 


 


19

















 


make or receive such payment in cash, and otherwise to perform Dealer’s
obligations in respect of the Transaction and any such designee may assume such
obligations.  Dealer shall be discharged
of its obligations to Counterparty to the extent of any such performance.


 


(f)                                    Ratings
Decline.  If at any
time the long term, unsecured and unsubordinated indebtedness of Dealer is
rated Ba1 or lower by Moody’s or BB+ or lower by S&P (any such rating, a “Ratings Downgrade”), then Counterparty may, at any time
following the occurrence and during the continuation of such Ratings Downgrade,
provide written notice to Dealer specifying that it elects for this Section 9(f) to
apply (a “Trigger Notice”).  Upon receipt by Dealer of a Trigger Notice
from Counterparty, Dealer shall promptly elect that either (i) the parties
shall negotiate in good faith terms for collateral arrangements pursuant to
which Dealer is required to provide collateral (including, but not limited to,
equity or equity-linked securities issued by Counterparty) to Counterparty in
respect of the Transaction with a value equal to the full mark-to-market
exposure of Counterparty under the Transaction, or (ii) an Additional
Termination Event shall occur and, with respect to such Additional Termination
Event, (A) Counterparty shall be deemed to be the sole Affected Party, and
(B) the Transaction shall be the sole Affected Transaction.


 


(g)                                 Staggered
Settlement.  If upon
advice of counsel with respect to applicable legal and regulatory requirements,
including any requirements relating to Dealer’s hedging activities hereunder,
Dealer reasonably determines that it would not be practicable or advisable to
deliver, or to acquire Shares to deliver, any or all of the Shares to be
delivered by Dealer on the Settlement Date for the Transaction, Dealer may, by
notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on
two or more dates (each, a “Staggered Settlement Date”)
as follows:


 


(i)                                   in such notice,
Dealer will specify to Counterparty the related Staggered Settlement Dates (the
first of which will be such Nominal Settlement Date and the last of which will
be no later than the twentieth (20th) Exchange Business Day following such
Nominal Settlement Date) and the number of Shares that it will deliver on each
Staggered Settlement Date;


 


(ii)                                the aggregate
number of Shares that Dealer will deliver to Counterparty hereunder on all such
Staggered Settlement Dates will equal the number of Shares that Dealer would otherwise
be required to deliver on such Nominal Settlement Date; and


 


(iii)                             the Settlement
Method applicable on the Nominal Settlement Date will apply on each Staggered
Settlement Date, except that the cash and/or Shares deliverable to Counterparty
will be allocated among such Staggered Settlement Dates as specified by Dealer
in the notice referred to in clause (i) above.


 


(h)                                 Method of Delivery.  Whenever
delivery of funds or other assets is required hereunder by or to Counterparty,
such delivery shall be effected through DBSI. 
In addition, all notices, demands and communications of any kind
relating to the Transaction between Dealer and Counterparty shall be
transmitted exclusively through DBSI.


 


(i)                                     Dividends.  If at any time during the period from and including
the Effective Date, to but excluding the Expiration Date, (i) an ex-dividend date for a regular annual cash
dividend occurs with respect to the Shares (an “Ex-Dividend
Date”), and that dividend is less than the Regular Dividend on a per
Share basis or (ii) if no
Ex-Dividend Date for a regular annual cash dividend occurs with respect to the
Shares in any annual dividend period of Counterparty, then the Calculation
Agent will make a corresponding adjustment to any one or more of the  Strike Price, Number of Options, Option
Entitlement and/or any other variable relevant to the exercise, settlement or
payment for the Transaction to preserve the fair
value of the Options to Dealer after
taking into account such dividend or lack thereof.  “Regular Dividend”
shall mean USD 0.08 per Share per calendar year.  Upon any adjustment to the Initial Dividend
Threshold (as defined in the 


 


20

















 


Indenture) for the Convertible Notes pursuant to
the Indenture, the Calculation Agent will make a corresponding adjustment to
the Regular Dividend for the Transaction.


 


(j)                                   Additional Termination Events.  Notwithstanding anything to
the contrary in this Confirmation:


 


(i)                                       If an event of
default with respect to Counterparty that results in an acceleration of the
Convertible Notes pursuant to the terms of the Indenture occurs under the terms
of the Convertible Notes as set forth in Section 6.01 of the Indenture,
then such event of default shall constitute an Additional Termination Event
applicable to the Transaction and, with respect to such Additional Termination
Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the
Transaction shall be the sole Affected Transaction and (C) Dealer shall
designate, at its own election or at Counterparty’s request, an Exchange
Business Day (which Exchange Business Day shall be on or as promptly as
reasonably practicable after the occurrence of such acceleration) as an Early
Termination Date pursuant to Section 6(b) of the Agreement.


 


(ii)                                    Following any
repurchase of Convertible Notes (whether pursuant to Section 15.02 of the
Indenture in connection with a Fundamental Change (as defined in the Indenture)
or otherwise), Counterparty may notify Dealer of such repurchase and the aggregate
principal amount of Convertible Notes so repurchased and cancelled (any such
notice, a “Repurchase Notice”). 
The receipt by Dealer from Counterparty of any Repurchase Notice shall
constitute an Additional Termination Event as provided in this Section 9(j)(ii).
Upon receipt of any such Repurchase Notice, Dealer shall designate an Exchange
Business Day following receipt of such Repurchase Notice (which Exchange
Business Day shall be on or as promptly as reasonably practicable after the
related settlement date for the repurchase of such Convertible Notes) as an
Early Termination Date with respect to the portion of this Transaction
corresponding to a number of Options (the “Repurchase
Options”) equal to the lesser of (A) the aggregate principal
amount of such Convertible Notes specified in such Repurchase Notice, divided by USD 1,000 and (B) the Number of Options as
of the date Dealer designates such Early Termination Date and, as of such date,
the Number of Options shall be reduced by the number of Repurchase
Options.  Any payment hereunder with respect to such termination shall be
calculated pursuant to Section 6 of the Agreement as if (1) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to this Transaction and a Number of Options equal to the number of
Repurchase Options, (2) Counterparty were the sole Affected Party with
respect to such Additional Termination Event and (3) the terminated
portion of the Transaction were the sole Affected Transaction.


 


(iii)                                 The receipt by
Dealer from Counterparty, within the applicable time period set forth under “Notice
of Exercise” above, of any Notice of Exercise in respect of Options that
relates to Convertible Notes as to which additional Shares would be added to
the Conversion Rate pursuant to Section 14.03 of the Indenture in
connection with a “Fundamental Change” (as defined in the Indenture) shall
constitute an Additional Termination Event as provided in this Section 9(j)(iii). 
Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange
Business Day following such Additional Termination Event (which Exchange
Business Day shall be on or as promptly as reasonably practicable after the
related settlement date for such Convertible Notes) as an Early Termination
Date with respect to the portion of this Transaction corresponding to a number
of Options (the “Make-Whole Conversion
Options”) equal to the lesser of (A) the number of such Options
specified in such Notice of Exercise and (B) the Number of Options as of
the date Dealer designates such Early Termination Date and, as of such date,
the Number of Options shall be reduced by the number of Make-Whole Conversion
Options.  Any payment hereunder with respect to such termination (the “Make-Whole Unwind Payment”) shall be
calculated pursuant to Section 6 of the Agreement as if (1) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to this Transaction and a Number of Options equal to the number of
Make-


 


21






 












 


Whole
Conversion Options, (2) Counterparty were the sole Affected Party with
respect to such Additional Termination Event and (3) the terminated
portion of the Transaction were the sole Affected Transaction (and, for the
avoidance of doubt, in determining the amount payable pursuant to Section 6
of the Agreement, the Calculation Agent shall not take into account any
adjustments to the Option Entitlement that result from corresponding
adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture);
provided that the amount of cash
deliverable in respect of such early termination by Dealer to Counterparty
shall not be greater than the product of (x) the Applicable Percentage and
(y) the excess of (I) (1) the number of Make-Whole Conversion Options
multiplied by (2) the
Conversion Rate (after taking into account any applicable adjustments to the
Conversion Rate pursuant to Section 14.03 of the Indenture) multiplied by (3) a price per Share
determined by the Calculation Agent over (II) the aggregate principal
amount of such Convertible Notes, as determined by the Calculation Agent in a commercially
reasonable manner.  Counterparty may
irrevocably elect, if so designated in its Notice of Exercise to Dealer as set
forth above, to receive the Make-Whole Unwind Payment in Shares, in which case,
in lieu of making such Make-Whole Unwind Payment as set forth above, Dealer
shall deliver to Counterparty, within a commercially reasonable period of time
after such designation as determined by Dealer (taking into account existing
liquidity conditions and Dealer’s hedging and hedge unwind activity or
settlement activity in connection with such delivery) a number of Shares equal
to such Make-Whole Unwind Payment divided by
a price per Share determined by the Calculation Agent in good faith and in a
commercially reasonable manner.


 


(k)                                Amendments
to Equity Definitions.


 


(i)                                   Section 12.6(a)(ii) of
the Equity Definitions is hereby amended by (1) deleting from the fourth
line thereof the word “or” after the word “official” and inserting a comma
therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof
and inserting the following words therefor “or (C) at Dealer’s option, the
occurrence of any of the events specified in Section 5(a)(vii)(1) through
(9) of the ISDA Master Agreement with respect to that Issuer.”


 


(ii)                                Section 12.9(b)(i) of
the Equity Definitions is hereby amended by (1) replacing “either party
may elect” with “Dealer may elect” and (2) replacing
“notice to the other party” with “notice to Counterparty” in the first sentence
of such section.


 


(l)                                   Setoff.  Each party waives any and all rights it may
have to set off obligations arising under the Agreement and the Transaction
against other obligations between the parties, whether arising under any other
agreement, applicable law or otherwise.


 


(m)                             Alternative
Calculations and Payment on Early Termination and on Certain Extraordinary
Events.  If in respect of the Transaction, an amount is payable by Dealer to Counterparty (i) pursuant to Section 12.7 or Section 12.9
of the Equity Definitions or (ii) pursuant to Section 6(d)(ii) of the Agreement (any such amount,
a “Payment Obligation”), Counterparty may
request Dealer to satisfy the
Payment Obligation by the Share Termination Alternative (as defined below)
(except that Counterparty shall not have the right to make such an election in
the event of (I) a Nationalization, Insolvency, Merger Event or Tender
Offer, in each case, in which the consideration to be paid to holders of Shares
consists solely of cash, (II) a Merger Event or Tender Offer that is
within Counterparty’s control, or (III) an Event of Default in which
Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party, other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or a Termination Event of the type described in Section 5(b)
of the Agreement in each case that resulted from an event or events outside
Counterparty’s control) and shall give irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled
Trading Day, no later than 12:00 p.m. (New York City time) on the Merger
Date, the Tender Offer Date, the Announcement Date (in the case of
Nationalization, Insolvency or Delisting), the Early Termination Date or
date of cancellation, as applicable; provided that
if Counterparty does not 


 


22

















 


validly request Dealer to satisfy the Payment Obligation by the Share
Termination Alternative, Dealer
shall have the right, in its sole discretion, to satisfy its Payment Obligation
by the Share Termination Alternative, notwithstanding Counterparty’s election
to the contrary.


 


	
  Share
  Termination Alternative:

  	
  If
  applicable, Dealer shall deliver to Counterparty the Share Termination
  Delivery Property on, or within a commercially reasonable period of time
  after, the date when the relevant Payment Obligation would otherwise be due
  pursuant to Section 12.7 or 12.9 of the Equity Definitions or
  Section 6(d)(ii) and 6(e) of the Agreement, as applicable (the
  “Share Termination Payment Date”), in
  satisfaction of such Payment Obligation in the manner reasonably requested by
  Counterparty free of payment.

  
	
   

  	
   

  
	
  Share
  Termination Delivery Property:

  	
  A
  number of Share Termination Delivery Units, as calculated by the Calculation
  Agent, equal to the Payment Obligation divided by the Share Termination Unit
  Price. The Calculation Agent shall adjust the Share Termination Delivery
  Property by replacing any fractional portion of a security therein with an
  amount of cash equal to the value of such fractional security based on the
  values used to calculate the Share Termination Unit Price.

  
	
   

  	
   

  
	
  Share
  Termination Unit Price:

  	
  The
  value to Dealer of property contained in one Share Termination Delivery Unit,
  as determined by the Calculation Agent in its discretion by commercially
  reasonable means and notified by the Calculation Agent to Dealer at the time
  of notification of the Payment Obligation.
  For the avoidance of doubt, the parties agree that in determining the Share
  Termination Delivery Unit Price the Calculation Agent may consider the
  purchase price paid in connection with the purchase of Share Termination
  Delivery Property.

  
	
   

  	
   

  
	
  Share
  Termination Delivery Unit:

  	
  One
  Share or, if a Merger Event has occurred and a corresponding adjustment to
  the Transaction has been made, a unit consisting of the number or amount of
  each type of property received by a holder of one Share (without
  consideration of any requirement to pay cash or other consideration in lieu
  of fractional amounts of any securities) in such Merger Event, as determined
  by the Calculation Agent.

  
	
   

  	
   

  
	
  Failure
  to Deliver:

  	
  Applicable

  
	
   

  	
   

  
	
  Other
  applicable provisions:

  	
  If Share Termination
  Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11, 9.12
  and 10.5 (as modified above) of the Equity Definitions and the provisions set
  forth opposite the caption “Representation and Agreement” in Section 2
  will be applicable, except that all references in such provisions to
  “Physically-settled” shall be read as references to “Share Termination
  Settled” and all references to “Shares” shall be read as references to

  



 


23

















 


	
   

  	
  “Share
  Termination Delivery Units”.  “Share
  Termination Settled” in relation to the Transaction means that the Share
  Termination Alternative is applicable to the Transaction.

  



 


(n)                                 Waiver
of Jury Trial.  Each party
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any suit, action or proceeding relating
to the Transaction.  Each party (i) certifies
that no representative, agent or attorney of either party has represented,
expressly or otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into the Transaction, as
applicable, by, among other things, the mutual waivers and certifications
provided herein.


 


(o)                                 Registration.  Counterparty hereby agrees that if, in the
good faith reasonable judgment of Dealer, 
based on the advice of outside counsel, the Shares (“Hedge Shares”) acquired by Dealer for the purpose of hedging
its obligations pursuant to the Transaction cannot be sold in the public market
by Dealer without registration under the Securities Act, Counterparty shall, at
its election, either (i) in order to allow Dealer to sell the Hedge Shares
in a registered offering, make available to Dealer an effective registration
statement under the Securities Act and enter into an agreement, in form and
substance reasonably satisfactory to Dealer, substantially in the form of an
underwriting agreement for a registered secondary offering; provided, however, that
if Dealer, in its sole reasonable discretion, is not satisfied with access to
due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then
clause (ii) or clause (iii) of this paragraph shall apply at the
election of Counterparty, (ii) in order to allow Dealer to sell the Hedge
Shares in a private placement, enter into a private placement agreement
substantially similar to private placement purchase agreements customary for
private placements of equity securities, in form and substance satisfactory to
Dealer (in which case, the Calculation Agent shall make any adjustments to the
terms of the Transaction that are necessary, in its reasonable judgment, to
compensate Dealer for any discount from the public market price of the Shares
incurred on the sale of Hedge Shares in a private placement), or (iii) purchase
the Hedge Shares from Dealer at the Relevant Price on such Exchange Business
Days, and in the amounts, requested by Dealer.


 


(p)                                 Tax
Disclosure.  Effective
from the date of commencement of discussions concerning the Transaction,
Counterparty and each of its employees, representatives, or other agents may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the Transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to Counterparty
relating to such tax treatment and tax structure.


 


(q)                                 Right
to Extend.  Dealer may
postpone or add, in whole or in part, any Valid Day or Valid Days during the
Settlement Averaging Period or any other date of valuation, payment or delivery
by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably
determines, in its discretion, that such action is reasonably necessary or
appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in
light of existing liquidity conditions or to enable Dealer to effect purchases
of Shares in connection with its hedging, hedge unwind or settlement activity
hereunder in a manner that would, if Dealer were Counterparty or an affiliated
purchaser of Counterparty, be in compliance with applicable legal, regulatory
or self-regulatory requirements, or with related policies and procedures
applicable to Dealer.


 


(r)                                    Securities
Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and
a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the “Bankruptcy Code”),
and the parties hereto to be entitled to the protections afforded by, among
other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of
the Bankruptcy Code, (ii) a
party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to
the other party to constitute a “contractual right” as described in the
Bankruptcy Code, and (iii) 


 


24

















 


each payment and delivery of cash, securities or
other property hereunder to constitute a “margin payment” or “settlement
payment” and a “transfer” as defined in the Bankruptcy Code.


 


(s)                                Notice of Certain Other Events. Counterparty covenants and agrees that:


 


(i)                                   promptly
following the public announcement of the results of any election by the holders
of Shares with respect to the consideration due upon consummation of any
consolidation, merger and binding share exchange to which Counterparty is a
party, or any sale of all or substantially all of Counterparty’s assets, in
each case pursuant to which the Shares will be converted into cash, securities
or other property, Counterparty shall give Dealer written notice of the types
and amounts of consideration that holders of Shares have elected to receive
upon consummation of such transaction or event (the date of such notification,
the “Consideration Notification Date”); provided that in no event shall the Consideration
Notification Date be later than the date on which such transaction or event is
consummated; and


 


(ii)                                promptly
following any adjustment to the Convertible Notes in connection with any
Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall
give Dealer written notice of the details of such adjustment.


 


(t)                                  Early
Unwind. 
In the event that the sale of
the “Underwritten Securities” (as defined in the Purchase Agreement (the “Purchase Agreement”), dated as of September 16, 2010,
between Counterparty and J.P. Morgan Securities LLC, as representative of the
Initial Purchasers party thereto (the “Initial Purchasers”))
is not consummated with the Initial Purchasers for any reason, or Counterparty
fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a),
in each case by 5:00 p.m. (New York City time) on the Premium Payment
Date, or such later date as agreed upon by the parties (the Premium Payment
Date or such later date, the “Early Unwind Date”), then the
Transaction shall automatically terminate (the “Early Unwind”)  on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of Dealer and
Counterparty under the Transaction shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and agrees not
to make any claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in connection
with the Transaction either prior to or after the Early Unwind Date; provided that Counterparty shall, to the
extent permitted by the Credit
Agreement, dated as of November 20, 2006, among Counterparty, as Borrower,
the several lenders from time to time party thereto, Keybank National
Association, as Administrative Agent, Co-Lead Arranger, Sole Book Runner and
Swingline Lender, and LaSalle Bank National Association, as Co-Lead Arranger,
purchase from Dealer on the Early Unwind Date all Shares purchased by Dealer or
one or more of its affiliates in connection with the Transaction at the then
prevailing market price.  Each of Dealer
and Counterparty represent and acknowledge to the other that, subject to the
proviso included in this Section 9(t), upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and finally
discharged.


 


(u)                               Payment
by Counterparty. In the event that (i) an Early Termination
Date occurs or is designated with respect to the Transaction as a result of a
Termination Event or an Event of Default (other than an Event of Default
arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement)
and, as a result, Counterparty owes to Dealer an amount calculated under Section 6(e) of
the Agreement, or (ii) Counterparty owes to Dealer, pursuant to Section 12.7
or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8
of the Equity Definitions, such amount shall be deemed to be zero.


 


25

















 


Please confirm that the foregoing correctly
sets forth the terms of our agreement by sending to us a letter or telex
substantially similar to this facsimile, which letter or telex sets forth the
material terms of the Transaction to which this Confirmation relates and
indicates your agreement to those terms. Dealer will make the time of execution
of the Transaction available upon request.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dealer
  is regulated by the Financial Services Authority.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche
  Bank AG, London Branch

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Lars Kestner

  
	
   

  	
   

  	
  Name:

  	
  Lars
  Kestner

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Natalie Horton

  
	
   

  	
   

  	
  Name:

  	
  Natalie
  Horton

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche
  Bank Securities Inc., acting solely as Agent in connection with the
  Transaction

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Lars Kestner

  
	
   

  	
   

  	
  Name:

  	
  Lars
  Kestner

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Natalie Horton

  
	
   

  	
   

  	
  Name:

  	
  Natalie
  Horton

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted and confirmed

  	
   

  	
   

  	
   

  
	
  as of the Trade Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  American Equity Investment Life
  Holding Company

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  John M. Matovina

  	
   

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  	
   

  	
   

  
	
  Name:

  	
  John
  M. Matovina

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer & Treasurer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Chairman
  of the Supervisory Board:  Clemens Börsig
 Board of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann,
  Dr. Hugo Banziger,
  Anthony DiIorio

  	
   

  	
  Deutsche
  Bank AG is regulated by the FSA for the conduct of designated investment
  business in the UK, is a member of the London Stock Exchange and is a limited
  liability company incorporated in the Federal Republic of Germany HRB
  No. 30 000 District Court of Frankfurt am Main; Branch Registration
  No. in England and Wales BR000005, Registered address: Winchester House,
  1 Great Winchester Street, London EC2N 2DB.