Exhibit 10.2


 





 


EXECUTION VERSION


JPMorgan
Chase Bank, National Association


P.O. Box
161


60
Victoria Embankment


London
EC4Y 0JP


England


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


 


The
purpose of this letter agreement (this “Confirmation”)
is to confirm the terms and conditions of the call option transaction entered
into between JPMorgan Chase Bank, National Association, 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
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.


 


JPMorgan
Chase Bank, National Association


Organised
under the laws of the United States as a National Banking Association


Main
Office 1111 Polaris Parkway, Columbus, Ohio 43271


Registered
as a branch in England & Wales branch No. BR000746


Registered
Branch Office 125 London Wall, London EC2Y 5AJ


Authorised
and regulated by the Financial Services Authority


 

















 


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 110
  and (ii) the denominator of which is 170.

  
	
   

  	
   

  	
   

  
	
  Option
  Entitlement:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Strike
  Price:

  	
   

  	
  USD
  12.5000

  
	
   

  	
   

  	
   

  
	
  Premium:

  	
   

  	
  USD
  20,350,000.00

  
	
   

  	
   

  	
   

  
	
  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.

  



 


2

















 


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.

  
	
   

  	
   

  	
   

  
	
  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

  



 


3

















 


	
   

  	
   

  	
  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;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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 

  



 


4

















 


	
   

  	
   

  	
  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 Deutsche Bank AG, 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 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.

  



 


5

















 


	
  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 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 

  



 


6

















 


	
   

  	
   

  	
  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.

  
	
   

  	
   

  	
   

  
	
  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

  



 


7

















 


	
   

  	
   

  	
   

  	
  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 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

  



 


8






 


 












 


	
   

  	
   

  	
  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
  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

  



 


9

















 


	
   

  	
   

  	
  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 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:

  



 


10

















 


	
   

  	
   

  	
  (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

  
	
   

  	
   

  	
   

  
	
  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

  



 


11

















 


	
   

  	
   

  	
  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 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 

  



 


12

















 


	
   

  	
   

  	
  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 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:

  



 


13

















 


	
   

  	
   

  	
  (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.

  
	
   

  	
   

  	
   

  
	
  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.

  
					



 


14

















 


 


(b)           Account for payments to
Dealer:


 


	
  Bank:

  	
  JPMorgan
  Chase Bank, N.A.

  
	
  ABA#:

  	
  021000021

  
	
  Acct No.:

  	
  099997979

  
	
  Beneficiary:

  	
  JPMorgan
  Chase Bank, N.A. New York

  
	
  Ref:

  	
  Derivatives

  



 


Account
for delivery of Shares from Dealer:


 


DTC
0060


 


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


 


JPMorgan
Chase Bank, National Association


London
Branch


P.O. Box
161


60
Victoria Embankment


London
EC4Y 0JP


England


 


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:


 


	
  JPMorgan Chase Bank, National Association

  
	
  4 New York Plaza, Floor 18

  
	
  New York, NY 10004-2413

  
	
  Attention:

  	
  Mariusz Kwasnik

  
	
  Title:

  	
  Operations
  Analyst, EDG Corporate Marketing

  
	
  Telephone
  No:

  	
  (212)
  623-7223

  
	
  Facsimile
  No:

  	
  (212)
  623-7719

  



 


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 


 


15

















 


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).


 


(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 


 


16

















 


(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 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:


 


17






 


 












 


(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


 


(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 JPMorgan Chase &
Co.  If at any time at which (A) the
Section 16 Percentage exceeds 8.0%, (B) the Option Equity Percentage
exceeds 15.5%, 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 


 


18

















 


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 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:


 


19

















 


(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)           Role  of Agent.  Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of Dealer (“JPMS”), has
acted solely as agent and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of
guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the
settlement thereof). Each party agrees it will look solely to the other party
(or any guarantor in respect thereof) for performance of such other party’s
obligations under the Transaction.


 


(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 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 


 


20

















 


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-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.


 


21

















 


(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 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.


 


22

















 


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 “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 


 


23

















 


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) 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 


 


24

















 


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 executing this Confirmation and
returning it to EDG Confirmation Group, J.P. Morgan Securities LLC, 277 Park
Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622
8519.


 


Very
truly yours,


 


 


	
   

  	
  J.P. Morgan Securities LLC, as agent for JPMorgan Chase
  Bank, National Association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Santosh Sreenivasan

  
	
   

  	
  Authorized
  Signatory

  
	
   

  	
  Name:

  	
  Santosh
  Sreenivasan

  
	
   

  	
  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

  	
   

  



 


JPMorgan
Chase Bank, National Association


Organised
under the laws of the United States as a National Banking Association


Main
Office 1111 Polaris Parkway, Columbus, Ohio 43271


Registered
as a branch in England & Wales branch No. BR000746


Registered
Branch Office 125 London Wall, London EC2Y 5AJ


Authorised
and regulated by the Financial Services Authority