Exhibit 10.1


 


EXECUTION VERSION


 


J.P. MORGAN SECURITIES LLC


 


PURCHASE AGREEMENT


 


 


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY


 


3.50% Convertible Senior Notes due 2015


 


Purchase Agreement


 


September 16, 2010


 


J.P. Morgan Securities LLC


As Representative of the


several Initial Purchasers listed


in Schedule 1 hereto


c/o J.P. Morgan Securities LLC


383 Madison Avenue


New York, New York 10179


 


Ladies and Gentlemen:


 


American Equity Investment Life Holding Company, an Iowa corporation
(the “Company”), proposes to issue and sell to the several initial purchasers
listed in Schedule 1 hereto (the “Initial Purchasers”), for whom you are acting
as representative (the “Representative”), $170,000,000 principal amount of its
3.50% Convertible Senior Notes due 2015 (the “Underwritten Securities”) and, at
the option of the Initial Purchasers, up to an additional $30,000,000 principal
amount of its 3.50% Convertible Senior Notes due 2015 (the “Option Securities”)
if and to the extent that the Initial Purchasers shall have determined to
exercise the option to purchase such 3.50% Convertible Senior Notes due 2015
granted to the Initial Purchasers in Section 2 hereof to cover
over-allotments.  The Underwritten
Securities and the Option Securities are herein referred to as the “Securities”.  The Securities will be issued pursuant to an
Indenture to be dated as of September 22, 2010 (the “Indenture”) between
the Company and U.S. Bank National Association, as trustee (the “Trustee”).  The Securities will be convertible into cash on
the terms set forth in the Indenture based on a formula linked to the price of
the common stock, par value $1.00 per share, of the Company.


 


The Company hereby confirms its agreement with the several Initial
Purchasers concerning the purchase and sale of the Securities, as follows:


 


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1.             The Securities
will be sold to the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an
exemption therefrom.  The Company has
prepared a preliminary offering memorandum dated September 15, 2010, as
amended or supplemented through the date hereof, including any exhibits thereto
and any information incorporated by reference therein (the “Preliminary
Offering Memorandum”) and will prepare an offering memorandum dated the date
hereof, as amended or supplemented through the date hereof, including any
exhibits thereto and any information incorporated by reference therein (the “Offering
Memorandum”) setting forth information concerning the Company and the
Securities.  Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be,
delivered by the Company to the Initial Purchasers pursuant to the terms of
this Agreement.  The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum,
the other Time of Sale Information (as defined below) and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement.  References herein to the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering Memorandum shall be
deemed to refer to and include any document incorporated by reference therein.


 


At or prior to the time when sales of the Securities were first made
(the “Time of Sale”), the Company had prepared the following information
(collectively, the “Time of Sale Information”): the Preliminary Offering
Memorandum, as supplemented and amended by the written communications listed on
Annex B hereto.


 


2.             Purchase and
Resale of the Securities by the Initial Purchasers.  (a)  The Company agrees to issue and
sell the Underwritten Securities to the several Initial Purchasers as provided in
this Agreement, and each Initial Purchaser, on the basis of the
representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Underwritten Securities set
forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price
equal to 97% of the principal amount thereof (the “Purchase Price”).


 


In addition, the Company agrees to issue and sell the Option Securities
to the several Initial Purchasers as provided in this Agreement, and the
Initial Purchasers, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein,
shall have the option to purchase, severally and not jointly, from the Company
the Option Securities at the Purchase Price plus accrued interest, if any, from
the Closing Date to the date of payment and delivery.


 


If any Option Securities are to be purchased, the amount of Option Securities
to be purchased by each Initial Purchaser shall be the amount of Option
Securities which bears the same ratio to the aggregate amount of Option
Securities being purchased as the amount of Underwritten Securities set forth
opposite the name of such Initial Purchaser in Schedule 1 hereto


 


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(or such amount increased as set forth in Section 10 hereof) bears
to the aggregate amount of Underwritten Securities being purchased from the
Company by the several Initial Purchasers, subject, however, to such
adjustments to eliminate Securities in denominations other than $1,000 or any
higher multiple of $1,000 as the Representative in its sole discretion shall
make.


 


The Initial Purchasers may exercise the option to purchase the Option
Securities at any time in whole, or from time to time in part, on or before the
thirteenth day following the date of this Agreement, by written notice from the
Representative to the Company.  Such
notice shall set forth the aggregate amount of Option Securities as to which
the option is being exercised and the date and time when the Option Securities
are to be delivered and paid for which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than the Closing
Date or, with regard to any Option Securities to be delivered after the Closing
Date, no earlier than two (2) nor later than ten (10) full business
days (as hereinafter defined) after the date of such notice unless the
Representative and Company otherwise agree in writing (unless such time and
date are postponed in accordance with the provisions of Section 10
hereof).


 


(b)           The Company
understands that the Initial Purchasers intend to offer the Securities for
resale on the terms set forth in the Time of Sale Information.  Each Initial Purchaser, severally and not
jointly, represents, warrants and agrees that:


 


(i)            it is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act (a “QIB”) and an accredited investor within the meaning of Rule 501(a) under
the Securities Act;


 


(ii)           it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D
under the Securities Act (“Regulation D”) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act;
and


 


(iii)          it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities as part of their initial offering except to
persons whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A
under the Securities Act (“Rule 144A”) and in connection with each such
sale, it has taken or will take reasonable steps to ensure that the purchaser
of the Securities is aware that such sale is being made in reliance on Rule 144A.


 


(c)           Each Initial
Purchaser acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 6(f) and
6(h), counsel for the Company and counsel for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers, and compliance by the Initial Purchasers with their
agreements, contained in paragraph (b) above, and each Initial Purchaser
hereby consents to such reliance.


 


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(d)           The Company
acknowledges and agrees that the Initial Purchasers may offer and sell
Securities to or through any affiliate of an Initial Purchaser and that any
such affiliate may offer and sell Securities purchased by it to or through any
Initial Purchaser.


 


(e)           Payment for the
Securities shall be made by wire transfer in immediately available funds to the
account specified by the Company to the Representative in the case of the
Underwritten Securities, at the offices of Davis Polk & Wardwell LLP
at 10:00 A.M. New York City time on September 22, 2010, or at such
other time or place on the same or such other date, not later than the fifth
business day thereafter, as the Representative and the Company may agree upon
in writing or, in the case of the Option Securities, on the date and at the
time and place specified by the Representative in the written notice of the
Initial Purchasers’ election to purchase such Option Securities.  The time and date of such payment for the
Underwritten Securities is referred to herein as the “Closing Date” and the
time and date for such payment for the Option Securities, if other than the
Closing Date, is herein referred to as the “Additional Closing Date”.


 


Payment for the Securities to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the nominee of The Depositary Trust Company (“DTC”), for the respective
accounts of the several Initial Purchasers of the Securities to be purchased on
such date, of one or more global notes representing the Securities
(collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of such Securities duly paid by the Company.  The Global Note will be made available for
inspection by the Representative at the office of J.P. Morgan Securities LLC,
383 Madison Avenue, New York, New York, 10179, not later than 1:00 P.M.,
New York City time, on the business day prior to the Closing Date or the
Additional Closing Date, as the case may be.


 


(f)            The Company
acknowledges and agrees that the Initial Purchasers are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with
respect to the offering of Securities contemplated hereby (including in
connection with determining the terms of the offering) and not as a financial
advisor or a fiduciary to, or an agent of, the Company or any other
person.  Additionally, neither the
Representative nor any other Initial Purchaser is advising the Company or any
other person as to any legal, tax, investment, accounting or regulatory matters
in any jurisdiction.  The Company shall
consult with its own advisors concerning such matters and shall be responsible
for making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Initial Purchasers shall have no responsibility or
liability to the Company with respect thereto. Any review by the Initial
Purchasers of the Company, the transactions contemplated hereby or other
matters relating to such transactions will be performed solely for the benefit
of the Initial Purchasers and shall not be on behalf of the Company.


 


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3.             Representations
and Warranties of the Company.  The Company represents and warrants to each
Initial Purchaser that:


 


(a)           Preliminary
Offering Memorandum.  The
Preliminary Offering Memorandum, as of its date, did not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made in
reliance upon and in conformity with information relating to any Initial
Purchaser furnished to the Company in writing by such Initial Purchaser through
the Representative expressly for use in any Preliminary Offering Memorandum, it
being understood and agreed that the only such information furnished by any
Initial Purchaser consists of the information described as such in Section 7(b) hereof.


 


(b)           Time of
Sale Information. The Time of Sale Information, at the Time of Sale,
did not, and at the Closing Date and as of the Additional Closing Date, as the
case may be, as supplemented, will not, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation
and warranty with respect to any statements or omissions made in reliance upon
and in conformity with information relating to any Initial Purchaser furnished
to the Company in writing by such Initial Purchaser through the Representative
expressly for use in such Time of Sale Information, it being understood and
agreed that the only such information furnished by any Initial Purchaser
consists of the information described as such in Section 7(b) hereof.  No statement of material fact included in the
Offering Memorandum has been omitted from the Time of Sale Information and no
statement of material fact included in the Time of Sale Information that is
required to be included in the Offering Memorandum has been omitted therefrom.


 


(c)           Additional
Written Communications.  Other than the
Preliminary Offering Memorandum and the Offering Memorandum, the Company
(including its agents and representatives, other than the Initial Purchasers in
their capacity as such) has not made, used, prepared, authorized, approved or
referred to and will not prepare, make, use, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under the Securities Act)
that constitutes an offer to sell or solicitation of an offer to buy the
Securities (each such communication by the Company or its agents and
representatives (other than a communication referred to in clauses (i), (ii) and
(iii) below) an “Issuer Written Communication”) other than (i) the
Preliminary Offering Memorandum, (ii) the Offering Memorandum, (iii) the
documents listed on Annex B hereto, including a term sheet substantially in the
form of Annex C hereto, which constitute part of the Time of Sale Information,
and (iv) each electronic road show and any other written communications
approved in writing in advance by the Representative.  Each such Issuer Written Communication, when
taken together with the Time of Sale Information, did not, and at the Closing
Date and as of the Additional Closing Date, as the case may be, as
supplemented, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were


 


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made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made in
each such Issuer Written Communication in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in such Issuer Written Communication, it being understood and agreed that the
only such information furnished by any Initial Purchaser consists of the
information described as such in Section 7(b) hereof.  Each such Issuer Written Communication, as of
its issue date, did not include any information that conflicted, conflicts or
will conflict with the information contained in the Time of Sale Information or
the Offering Memorandum, including any document incorporated by reference
therein.


 


(d)           Offering
Memorandum.  As of the
date of the Offering Memorandum and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Offering Memorandum does not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that the Company makes no representation and warranty with respect to any
statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in the Offering Memorandum, it being understood and agreed that the only such
information furnished by any Initial Purchaser consists of the information
described as such in Section 7(b) hereof.


 


(e)           Incorporated
Documents.  The
documents incorporated by reference in the Offering Memorandum or the Time of
Sale Information at the time they were or hereafter are filed, or if amended,
as so amended, with the Securities and Exchange Commission (the “Commission”)
comply, and with respect to future filings, will comply, in all material
respects to the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “Exchange Act”) and such documents did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.


 


(f)            Financial
Statements.  The
financial statements and the related notes thereto of the Company and its
consolidated subsidiaries included or incorporated by reference in the Time of
Sale Information and the Offering Memorandum present fairly in all material
respects the financial position and the results of operations and cash flows of
the Company and its consolidated subsidiaries, at the indicated dates and for
the indicated periods and the unaudited interim consolidated financial
statements reflect all adjustments, consisting only of normal recurring items,
which are necessary to present fairly the financial position and results of
operations of the Company on a basis consistent with the prior audited
consolidated financial statements; such financial statements and related notes
and schedules have been prepared in accordance with generally accepted
accounting principles in the United States, consistently applied throughout the
periods involved, except as disclosed therein; the selected consolidated


 


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financial data and summary consolidated financial information of the
Company and its subsidiaries included in or incorporated by reference in the
Time of Sale Information and the Offering Memorandum presents fairly, when
considered in relation to the consolidated financial statements taken as a
whole, in all material respects, the information shown therein and such data
and information has been derived from the audited and unaudited consolidated
financial statements incorporated by reference in the Time of Sale Information
and the Offering Memorandum or the Statutory Financial Statements identified in
Section 3(nn) hereof.


 


(g)           No Material Adverse Change.  Since June 30, 2010, except as otherwise
stated in the Time of Sale Information or the Offering Memorandum, (i) there
has been no material adverse change in the business, results of operations,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, (ii) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its subsidiaries,
taken as a whole, and (iii) except
for dividends on the Company’s common stock in an amount not to exceed $0.08
per share, there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.


 


(h)           Organization
and Good Standing.  The Company
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Iowa, with the corporate power and
authority to own or lease its properties and conduct its business as described
in the Time of Sale Information and the Offering Memorandum and to enter into
and perform its obligations under the Transaction Documents (as defined below);
each of the Company’s “significant subsidiaries” (as such term is defined in Rule 1-02
of Regulation S-X under the Exchange Act) (each, a “Significant Subsidiary” and
together, the “Significant Subsidiaries”) has been duly incorporated or
organized and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the corporate or other
power and authority to own or lease its properties and conduct its business as
described in the Time of Sale Information and the Offering Memorandum; the
Company and each Significant Subsidiary are duly qualified to transact business
in all jurisdictions in which the conduct of their business requires such
qualification, except, in each case, where the failure so to qualify or to be
in good standing would not have a material adverse effect on the business,
results of operations, condition (financial or otherwise) or prospects of the
Company and its subsidiaries, taken as a whole (a “Material Adverse Change”).


 


(i)            Capitalization.  The consolidated capitalization of the
Company set forth under the caption “Capitalization” in the Time of Sale
Information and the Offering Memorandum is true and correct as of the date set
forth therein; all the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable and
none of the outstanding shares of capital stock issued by the Company was
issued in violation of any preemptive or similar rights of any stockholder of
the Company; except as described in or expressly contemplated by the Time of
Sale Information and the Offering Memorandum, there are no


 


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outstanding rights (including, without limitation, pre-emptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interests in the Company or
any Significant Subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any
capital stock of the Company or any Significant Subsidiary, any such
convertible or exchangeable securities or any such rights, warrants or options,
except as disclosed in the Time of Sale Information and the Offering
Memorandum; the capital stock of the Company conforms in all material respects
to the description thereof contained in the Time of Sale Information and the
Offering Memorandum; and all the outstanding shares of capital stock or other
equity interests of each Significant Subsidiary owned, directly or indirectly,
by the Company have been duly and validly authorized and issued, are fully paid
and non-assessable except as otherwise described in Time of Sale Information
and the Offering Memorandum) and are owned directly or indirectly by the
Company or another Significant Subsidiary, free and clear of any lien, charge,
encumbrance, security interest, restriction on voting or transfer or any other
claim of any third party, except those that are immaterial to the Company and
the Significant Subsidiaries, taken as a whole.


 


(j)            Stock
Options.  With respect to the stock
options (the “Stock Options”) granted pursuant to the stock-based compensation
plans of the Company and its subsidiaries (the “Company Stock Plans”), (i) each
Stock Option intended to qualify as an “incentive stock option” under Section 422
of the Code so qualifies, (ii) each grant of a Stock Option was duly
authorized no later than the date on which the grant of such Stock Option was
by its terms to be effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the board of directors of the
Company (or a duly constituted and authorized committee thereof) and any
required stockholder approval by the necessary number of votes or written
consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto, (iii) each such grant was
made in accordance with the terms of the Company Stock Plans, the Exchange Act
and all other applicable laws and regulatory rules or requirements,
including the rules of the New York Stock Exchange and any other exchange
on which Company securities are traded, (iv) the per share exercise price
of each Stock Option was at least equal to the fair market value of a share of
Common Stock on the applicable Grant Date and (v) each such grant was
properly accounted for in accordance with GAAP in the financial statements
(including the related notes) of the Company and disclosed in the Company’s
filings with the Commission in accordance with the Exchange Act and all other
applicable laws. The Company has not knowingly granted, and there is no and has
been no policy or practice of the Company of granting, Stock Options
immediately prior to, or otherwise coordinating the grant of Stock Options
with, the release or other public announcement of material information
regarding the Company or its subsidiaries or their results of operations or
prospects.


 


(k)           Due
Authorization.  The Company has full right, power and authority to execute and deliver this
Agreement, the Indenture and the certificate evidencing the Securities
(collectively, the “Transaction Documents”) and to perform its obligations
hereunder and thereunder; and all action required to be taken for the due and
proper authorization, execution and delivery by it of each of the


 


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Transaction Documents and the consummation by it of the
transactions contemplated thereby or by the Time of Sale Information and the
Offering Memorandum has been duly and validly taken.


 


                (l)            The Indenture.   The Indenture has been duly authorized by
the Company and when duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery of the Indenture by the Trustee,
will be a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or 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 such enforceability is considered in a
proceeding in equity or at law) (collectively, the “Enforceability Exceptions”).


 


(m)          Purchase Agreement.  This Agreement has been duly authorized,
executed and delivered by the Company.


 


(n)           The Securities.  The Securities have been
duly authorized by the Company and, when duly executed, authenticated, issued
and delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions, and will
be entitled to the benefits of the Indenture.


 


(o)           Descriptions of the Transaction
Documents.  The
Securities and the Indenture conform in all material respects to the respective
statements relating thereto contained in the Time of Sale Information and the
Offering Memorandum.


 


(p)           No
Violation or Default. 
Neither the Company nor any of the Significant Subsidiaries is or, with
the giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its certificate of incorporation or bylaws or similar
organizational documents or (ii) any indenture, mortgage, deed of trust,
lease, contract or other agreement or instrument to which any of them is a
party or to which any of them or any of their respective properties is bound
(collectively, “Contracts”) and, solely with respect to this clause (ii), which
violation or default would result in a Material Adverse Change.


 


(q)           No
Conflicts.  The execution,
delivery and performance by the Company of its obligations under each of the
Transaction Documents, the issuance and sale of the Securities and the
consummation of the transactions contemplated by the Transaction Documents will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under (i) any Contract, (ii) the certificate
of incorporation or bylaws of the Company, or (iii) any law, order, rule,
regulation, judgment, order, writ or decree of any court applicable to the
Company or any of its subsidiaries or of any government, regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any subsidiary, except, in the case


 


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of clauses (i) and (iii) to the extent that any such
conflict, breach or default would not reasonably be expected to result in a
Material Adverse Change.


 


(r)            No
Consents Required.  No consent,
approval, authorization or order of or qualification with any governmental body
or agency is required for the performance by the Company of its obligations
under the Transaction Documents, the issuance and sale of the Securities
(including the issuance of the Underlying Securities upon conversion thereof),
except (A) such as have been already obtained or will have been obtained
prior to the Closing Date and (B) for any report or notice required under
Regulation D promulgated under the Securities Act or any applicable state
securities laws and such consents, approvals, authorizations, orders, filings,
registrations or qualifications as may be required under the Exchange Act, the
New York Stock Exchange and applicable state or foreign securities laws, in
each case with respect to transactions contemplated by the Transaction
Documents.


 


(s)           Legal
Proceedings.  Except as
disclosed in the Time of Sale Information and the Offering Memorandum, there is
no action, suit, claim, proceeding or labor dispute pending or, to the
knowledge of the Company, threatened against the Company or any of its subsidiaries
before any court or administrative agency or otherwise which, if determined
adversely to the Company or any of its subsidiaries, would reasonably be
expected to result in a Material Adverse Change, or prevent the consummation of
the transactions contemplated hereby.


 


(t)            Independent
Accountants.  KPMG LLP,
which has audited certain consolidated financial statements of the Company and
its subsidiaries, is an independent registered public accounting firm with
respect to the Company and its subsidiaries within the applicable rules and
regulations adopted by the Commission and the Public Company Accounting
Oversight Board (United States) and as required by the Securities Act.


 


(u)           Title
to Real and Personal Property.  The Company and the Significant Subsidiaries
have good and marketable title to all real property owned by them and good
title to all other properties owned by them, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind, except those reflected in the
consolidated financial statements hereinabove described or described in the
Time of Sale Information and the Offering Memorandum, except where the failure
to have such good and marketable title or the existence of any such lien,
mortgage, pledge, charge or encumbrance would not reasonably be expected to
have a Material Adverse Change; the Company and the Significant Subsidiaries
occupy their leased properties under valid and binding leases, except where the
failure of any such leases to be valid and binding would not reasonably be
expected to have a Material Adverse Change.


 


(v)           Title
to Intellectual Property.  The
Company and the Significant Subsidiaries each own or possess, or can acquire on
reasonable terms, adequate patents, patent rights, trademarks, trade names,
service marks, service names, copyrights, license rights, know-how (including
trade secrets and other unpatented and unpatentable proprietary or confidential
information, systems or procedures) and other intellectual property rights (“Intellectual
Property”) which in each case are


 


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material to the financial condition of the Company and its
subsidiaries, taken as a whole; none of the Company or any of the Significant
Subsidiaries has received notice of any infringement of or conflict with, any
Intellectual Property of any other person or entity, except to the extent that
such infringement or conflict if determined adversely to the Company or such
Significant Subsidiary would not reasonably be expected to result in a Material
Adverse Change.


 


(w)          Investment
Company Act.  The Company
is not and, after giving effect to the offering and sale of the Securities and
the application of the net proceeds thereof as described in the Time of Sale
Information and the Offering Memorandum, will not be required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended (the “Investment Company Act”).


 


(x)            Taxes.  The Company and each of its subsidiaries have
filed all Federal, State, local and foreign tax returns which have been
required to be filed and have paid all taxes indicated by such returns and all
assessments received by them or any of them to the extent that such taxes have
become due, except to the extent that any failure to so file or pay would not
reasonably be expected to result in a Material Adverse Change; all material tax
liabilities have been adequately provided for in the financial statements of
the Company, and the Company does not know of any actual or proposed additional
material tax assessments.


 


(y)           Licenses and Permits.  The Company and each of the Significant
Subsidiaries hold all licenses, certificates and permits from governmental
authorities which are necessary to the conduct of their businesses, except to the
extent that the failure to obtain such licenses, certificates and permits would
not reasonably be expected to result in a Material Adverse Change.


 


(z)            Compliance
With Environmental Laws.  The
Company and each of its subsidiaries comply with all Environmental Laws (as
defined below), except to the extent that failure to comply with such
Environmental Laws would not, individually or in the aggregate, be reasonably
expected to result in a Material Adverse Change; none of the Company or any of
its subsidiaries is the subject of any pending or, to the knowledge of the
Company, threatened federal, state or local investigation evaluating whether
any remedial action by the Company or any of its subsidiaries is needed to
respond to a release of any Hazardous Materials (as defined below) into the
environment resulting from the Company’s or any of its subsidiaries’ business
operations or ownership or possession of any of their properties or assets, or
is in contravention of any Environmental Law that could reasonably be expected,
individually or in the aggregate, to result in any Material Adverse Change;
none of the Company or any of its subsidiaries has received any notice or
claim, nor are there pending or, to the knowledge of the Company, threatened
lawsuits against them, with respect to violations of an Environmental Law or in
connection with any release of any Hazardous Material into the environment that
could reasonably be expected in the aggregate to result in a Material Adverse
Change; as used herein, “Environmental Laws” means any federal, state or local
law or regulation applicable to the Company’s or any of its subsidiaries’
business operation or ownership or possession of any of their properties or
assets


 


11

















 


relating to environmental matters, and “Hazardous Materials” means
those substances that are regulated by or form the basis of liability under any
Environmental Laws.


 


(aa)         Compliance
With ERISA.  The Company
and each subsidiary is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred
with respect to any “pension plan” (as defined in ERISA) for which the Company
or any subsidiary would have any material liability; neither the Company nor
any subsidiary has incurred or expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any “pension
plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the “Code”); and each “pension plan” for which the Company or any subsidiary
would have any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.


 


(bb)         Disclosure
Controls.  The Company
maintains an effective system of “disclosure controls and procedures” (as
defined in Rule 13a-15(e) of the Exchange Act) that is designed to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Commission’s rules and
forms, including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure.  The Company has carried out evaluations of
the effectiveness of its disclosure controls and procedures as required by Rule 13a-15
of the Exchange Act.


 


(cc)         Accounting
Controls.  Except as
disclosed in the Time of Sale Information and the Offering Memorandum, the
Company and its subsidiaries, taken as a whole, maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management’s general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.  Except
as disclosed in the Time of Sale Information and the Offering Memorandum,
neither the Company nor any of its subsidiaries is aware of (i) any material
weakness in its internal control over financial reporting or (ii) a change
in internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, the Company’s internal control over
financial reporting.


 


12
















 


(dd)         Insurance.  The Company and each of its
subsidiaries, taken as a whole, carry, or are covered by, insurance in such
amounts and covering such risks as is generally deemed adequate for the conduct
of their business as presently conducted and the value of their respective
properties and as is customary for companies engaged in similar businesses.


 


(ee)         No
Broker’s Fees.  Neither the
Company nor any of its subsidiaries is a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or any subsidiary or any Initial Purchaser
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Securities.


 


(ff)           No
Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Securities Act), that is or will
be integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.


 


(gg)         No
General Solicitation or Directed Selling Efforts.  None of the Company, any of its affiliates (as
defined in Rule 501(b) of Regulation D) or any person acting on its
or their behalf (other than the Initial Purchasers and their affiliates, as to
whom the Company makes no representation) has engaged or will engage, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.


 


(hh)         Securities
Law Exemptions.  Assuming
the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 2(b) and their compliance with their agreements
set forth therein, it is not necessary, in connection with the issuance and
sale of the Securities to the Initial Purchasers and the offer, resale and
delivery of the Securities by the Initial Purchasers in the manner contemplated
by this Agreement, the Time of Sale Information and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act.


 


(ii)           No
Stabilization.  Neither the
Company nor any of its subsidiaries has taken, directly or indirectly, any
action designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Securities.


 


(jj)           Sarbanes-Oxley.  The Company, its subsidiaries and, to the
knowledge of the Company, their respective officers and directors (in their
capacities as such), are in compliance in all material respects with the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith.


 


(kk)         Insurance
Laws.  Each of the Company and each
subsidiary that is engaged in the business of insurance or reinsurance
(collectively, the “Insurance Subsidiaries”) is in compliance


 


13

















 


with the requirements of the insurance laws and regulations of its
respective jurisdiction of organization or incorporation, as the case may be,
and the insurance laws and regulations of other jurisdictions which are
applicable to it, and has filed all notices, reports, documents or other
information required to be filed thereunder, in each case, with such exceptions
as would not reasonably be expected to result in a Material Adverse Change;
neither the Company nor any Insurance Subsidiary has received any notification
from any insurance regulatory authority to the effect that any additional
authorization, approval, order, consent, license, certificate, permit,
registration or qualification (“Approvals”) is needed to be obtained by the
Company or any of the Insurance Subsidiaries in any case where it could be
reasonably expected that obtaining such Approvals or the failure to obtain such
Approvals would result in a Material Adverse Change.


 


(ll)           Insurance
Licenses.  Each Insurance
Subsidiary holds such insurance licenses, certificates and permits from
governmental authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts business
(the “Insurance Licenses”)) as are material to the conduct of its business as
described in the Time of Sale Information and the Offering Memorandum; each
Insurance Subsidiary has fulfilled and performed all obligations necessary to
maintain such Insurance Licenses; there is no pending or, to the knowledge of
the Company, threatened action, suit, proceeding or investigation that would
reasonably be expected to result in the revocation, termination or suspension
of any Insurance License that would reasonably be expected to, individually or
in the aggregate, result in a Material Adverse Change; no insurance regulatory
agency or body has issued, or commenced any proceeding for the issuance of, any
order or decree impairing, restricting or prohibiting the payment of dividends
by any Insurance Subsidiary to its parent.


 


(mm)       Reinsurance
Treaties.  All
reinsurance treaties and arrangements to which any Insurance Subsidiary is a
party are in full force and effect and no Insurance Subsidiary is in violation
of, or in default in the performance, observance or fulfillment of, any
obligation, agreement, covenant or condition contained therein, except where
the failure to be in full force and effect or where such violation or default
would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Change. No Insurance Subsidiary has received any notice
from any of the other parties to such treaties, contracts or agreements that
such other party intends not to perform such treaty and, to the knowledge of
the Company, none of the other parties to such treaties or arrangements will be
unable to perform such treaty or arrangement except to the extent adequately
and properly reserved for in the audited consolidated financial statements of
the Company included or incorporated by reference in the Time of Sale
Information and the Offering Memorandum, except where such nonperformance would
not reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change.


 


(nn)         Statutory
Financial Statements. The statutory financial statements of the
Insurance Subsidiaries, from which certain data included in the Time of Sale
Information and the Offering Memorandum have been derived, have been prepared,
for each relevant period, in conformity with statutory accounting principles or
practices required or permitted by the appropriate insurance department of the
jurisdiction of each Insurance Subsidiary, as applicable,


 


14

















 


applied on a consistent basis throughout the periods involved, except (1) as
may otherwise be indicated therein or in the notes thereto and (2) in the
case of any such financial statements for periods less than a full year, for
any normal year-end adjustments, and present fairly in all material respects
the statutory financial position of the Insurance Subsidiaries as of the dates
thereof, and the statutory basis results of operations of the Insurance
Subsidiaries for the periods covered thereby.


 


(oo)         Exchange
Act Reports.  The Company
is subject to and in full compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the
Exchange Act and the rules and regulations of the Commission thereunder.


 


(pp)         No
Unlawful Payments.  Neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.


 


(qq)         Compliance with Money Laundering
Laws.  The operations of the Company
and its subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened.


 


(rr)           Compliance with OFAC.  None of the Company, its
subsidiaries or, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or any subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the
Securities hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.


 


(tt)           Rule 144A Eligibility.    The Securities are eligible for resale
pursuant to Rule 144A under the Securities Act and will not be, at the
Closing Date, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated interdealer quotation system.


 


15

















 


4.             Further Agreements of the
Company.  The Company covenants and
agrees with each Initial Purchaser that:


 


(a)           Delivery of Copies.  Until the completion of the sale of the
Securities by the Initial Purchaser, the Company will deliver to the Initial
Purchasers as many copies of the Preliminary Offering Memorandum, any other
Time of Sale Information, any Issuer Written Communication and the Offering
Memorandum (including all amendments and supplements thereto) as the
Representative may reasonably request.


 


(b)           Offering Memorandum, Amendments
or Supplements.  Before
finalizing the Offering Memorandum or making or distributing any amendment or
supplement to any of the Time of Sale Information or the Offering Memorandum or
filing with the Commission any document that will be incorporated by reference
therein, the Company will furnish to the Representative and counsel for the
Initial Purchasers a copy of the proposed Offering Memorandum or such amendment
or supplement or document to be incorporated by reference therein for review,
and will not distribute any such proposed Offering Memorandum, amendment or
supplement or file any such document with the Commission to which the
Representative reasonably objects.


 


(c)           Additional Written
Communications.  Before
making, preparing, using, authorizing, approving or referring to any Issuer
Written Communication, the Company will furnish to the Representative and
counsel for the Initial Purchasers a copy of such written communication for
review and will not make, prepare, use, authorize, approve or refer to any such
written communication to which the Representative reasonably objects.


 


(d)           Notice to the Representative.  The Company will advise the Representative
promptly, and confirm such advice in writing, (i) of the issuance by any
governmental or regulatory authority of any order preventing or suspending the
use of any of the Time of Sale Information, any Issuer Written Communication or
the Offering Memorandum or the initiation or threatening of any proceeding for
that purpose; (ii) of the occurrence of any event at any time prior to the
completion of the initial offering of the Securities as a result of which any
of the Time of Sale Information, any Issuer Written Communication or the
Offering Memorandum as then amended or supplemented would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing when such Time of Sale Information, Issuer Written Communication
or the Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of
the receipt by the Company of any notice with respect to any suspension of the
qualification of the Securities for offer and sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and the Company
will use its reasonable best efforts to prevent the issuance of any such order
preventing or suspending the use of any of the Time of Sale Information, any
Issuer Written Communication or the Offering Memorandum or suspending any such
qualification of


 


16

















 


the
Securities and, if any such order is issued, will use its reasonable best
efforts to obtain as soon as possible the withdrawal thereof.


 


(e)           Ongoing Compliance of the
Offering Memorandum and Time of Sale Information.  (1) If at any time prior to the
completion of the initial offering of the Securities (i) any event shall
occur or condition shall exist as a result of which the Offering Memorandum as
then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing when the
Offering Memorandum is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Offering Memorandum to comply with law,
the Company will promptly notify the Initial Purchasers thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial
Purchasers such amendments or supplements to the Offering Memorandum (or any
document to be filed with the Commission and incorporated by reference therein)
as may be necessary so that the statements in the Offering Memorandum as so
amended or supplemented (or including such document to be incorporated by
reference therein) will not, in the light of the circumstances existing when
the Offering Memorandum is delivered to a purchaser, be misleading or so that
the Offering Memorandum will comply with law and (2) if at any time prior
to the Closing Date (i) any event shall occur or condition shall exist as
a result of which any of the Time of Sale Information as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or (ii) it
is necessary to amend or supplement any of the Time of Sale Information to
comply with law, the Company will promptly notify the Initial Purchasers
thereof and forthwith prepare and, subject to paragraph (b) above, furnish
to the Initial Purchasers such amendments or supplements to any of the Time of
Sale Information (or any document to be filed with the Commission and
incorporated by reference therein) as may be necessary so that the statements
in any of the Time of Sale Information as so amended or supplemented will not,
in light of the circumstances under which they were made, be misleading.


 


(f)            Blue Sky Compliance.  The Company will qualify or register (or
obtain exemption from qualifying or registering) the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualifications,
registrations and exemptions in effect so long as required for the offering and
resale of the Securities; provided that the Company shall not be
required to (i) qualify as a foreign corporation or other entity or as a
dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in
any such jurisdiction if it is not otherwise so subject.


 


(g)           Clear Market.  For a period of 60 days after the date
hereof, the Company will not, without the prior written consent of the
Representative (which consent may be withheld or delayed in the Representative’s
sole discretion), (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or


 


17

















 


warrant for the sale of,
lend or otherwise dispose of or transfer, directly or indirectly, any equity
securities of the Company or any securities convertible into or exercisable or
exchangeable for equity securities of the Company, or file any registration
statement under the Securities Act with respect to any of the foregoing, or (ii) enter
into any swap or other arrangement that transfers, in whole or in part,
directly or indirectly, any of the economic consequences of ownership of equity
securities of the Company, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (i) the
Securities to be sold hereunder, (ii) any shares of Common Stock issued by
the Company upon the exercise of an option outstanding on the date hereof and
referred to in the Company’s filings with the Commission, (iii) such
issuances of options or grants of restricted stock under the Company’s stock
option and incentive plans as described in the Company’s filings with the
Commission, (iv) the issuance by the Company of
shares of Common Stock pursuant to its NMO Deferred Compensation Plans as
described in the Company’s filings with the Commission incorporated by reference into the Preliminary Offering Memorandum and the
Offering Memorandum, or any future NMO Deferred Compensation Plan, provided
that the aggregate number of Common Stock issued under clause (iv) shall
not exceed 250,000 shares of Common Stock during the 60-day restricted period
and (v) the filing of a registration statement for up to 2,500,000 shares
of Common Stock issuable upon the exercise of stock options granted under the
Company’s Independent Insurance Agent Stock Option Plan as described in the
Company’s filings with the Commission incorporated by reference into the
Preliminary Offering Memorandum and the Offering Memorandum, or any future
Independent Insurance Agent Stock Option Plan, provided that no shares of
Common Stock shall be issued under clause (v) during the 60-day restricted
period.


 


(h)           Use of Proceeds.  The Company will apply the net proceeds from
the sale of the Securities as described in the Time of Sale Information and the
Offering Memorandum under the heading “Use of Proceeds”.


 


(i)            No
Stabilization.  The Company
will not take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or manipulation
of the price of the Securities and will not take any action prohibited by
Regulation M under the Exchange Act in connection with the distribution of the
Securities contemplated hereby.


 


(j)            Supplying
Information.  While the Securities remain
outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under
the Securities Act, the Company will, during any period in which the Company is
not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, furnish to holders of the Securities, prospective purchasers of
the Securities designated by such holders and securities analysts, in each case
upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.


 


(k)           DTC.  The Company will assist the Initial
Purchasers in arranging for the Securities to be eligible for clearance and
settlement through DTC.


 


18

















 


(l)            No
Resales by the Company. 
During the period from the Closing Date until one year after the Closing
Date or the Option Closing Date, if applicable, the Company will not, and will
not permit any of its affiliates (as defined in Rule 144 under the
Securities Act) to, resell any of the Securities that have been acquired by any
of them, except for Securities purchased by the Company or any of its
affiliates and resold in a transaction registered under the Securities Act.


 


(m)          No
Integration.  Neither the
Company nor any of its affiliates (as defined in Rule 501(b) of
Regulation D) will, directly or through any agent, sell, offer for sale,
solicit offers to buy or otherwise negotiate in respect of, any security (as
defined in the Securities Act), that is or will be integrated with the sale of
the Securities in a manner that would require registration of the Securities
under the Securities Act.


 


(n)           No
General Solicitation or Directed Selling Efforts.  None of the Company or any of its affiliates
(as defined in Rule 501(b) of Regulation D) (or any other person
acting on its or their behalf (other than the Initial Purchasers, as to which
no covenant is given) will (i) solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act or (ii) engage in any directed selling efforts within the
meaning of Regulation S, and all such persons will comply with the offering
restrictions requirement of Regulation S.


 


5.             Certain
Agreements of the Initial Purchasers.  Each Initial Purchaser hereby represents and
agrees that it has not and will not use, authorize use of, refer to, or
participate in the planning for use of, any written communication that
constitutes an offer to sell or the solicitation of an offer to buy the
Securities other than (i) the Preliminary Offering Memorandum and the
Offering Memorandum, (ii) a written communication that contains no “issuer
information” (as defined in Rule 433(h)(2) under the Securities Act)
that was not included (including through incorporation by reference) in the
Preliminary Offering Memorandum or the Offering Memorandum, (iii) any
written communication listed on Annex B or prepared pursuant to Section 4(c) above
(including any electronic road show), (iv) any written communication
prepared by such Initial Purchaser and approved by the Company in advance in
writing or (v) any written communication solely relating to or that only
contains the terms of the Securities and/or other information that was included
(including through incorporation by reference) in the Preliminary Offering
Memorandum or the Offering Memorandum.


 


6.             Conditions of Initial
Purchasers’ Obligations.  The
obligation of each Initial Purchaser to purchase the Underwritten Securities on
the Closing Date or the Option Securities on the Additional Closing Date, as
the case may be, as provided herein is subject to the performance by the
Company of its covenants and other obligations hereunder and to the following
additional conditions:


 


19

















 


(a)           Representations and Warranties.  The representations and warranties of the
Company contained herein shall be true and correct on the date hereof and on
and as of the Closing Date or the Additional Closing Date, as the case may be;
and the statements of the Company and its officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be.


 


(b)           No Downgrade.  Subsequent to the earlier of (A) the
Time of Sale and (B) the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded any securities or
preferred stock of or guaranteed by the Company or any of its subsidiaries by
any “nationally recognized statistical rating organization”, as such term is
defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced
that it has under surveillance or review, or has changed its outlook with
respect to, its rating of any securities or preferred stock of or guaranteed by
the Company or any of its subsidiaries (other than an announcement with
positive implications of a possible upgrading).


 


(c)           No Material Adverse Change.  No event or condition of a type described in Section 3(g) hereof
shall have occurred or shall exist, which event or condition is not described
in the Time of Sale Information (excluding any amendment or supplement thereto)
and the Offering Memorandum (excluding any amendment or supplement thereto) and
the effect of which in the judgment of the Representative makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Securities on the Closing Date or the Additional Closing Date, as the case
may be, on the terms and in the manner contemplated by this Agreement, the Time
of Sale Information and the Offering Memorandum.


 


(d)           Officer’s Certificate.  The Representative shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of the chief financial officer or chief accounting officer or
another senior executive officer of the Company who is satisfactory to the
Representative (i) confirming that such officer has carefully reviewed the
Time of Sale Information and the Offering Memorandum and, to the knowledge of
such officer, the representations set forth in Sections 3(a) and 3(b) hereof
are true and correct, (ii) confirming that the other representations and
warranties of the Company in this Agreement are true and correct and that the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing Date
and (iii) to the effect set forth in paragraphs (b) and (c) above.


 


(e)           Comfort Letters.  The Representative shall have received from
KPMG LLP, “comfort” letters dated, respectively, as of the date of this
Agreement and on the Closing Date or the Additional Closing Date, as the case
may be, addressed to the Representative and in form and substance satisfactory
to the Representative.


 


20

















 


(f)            Opinion and 10b-5 Statement of
Counsel for the Company. 
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Company, shall have furnished to the Representative, at the request of the
Company, their written opinion and 10b-5 statement, dated the Closing Date or
the Additional Closing Date, as the case may be, and addressed to the Initial
Purchasers, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Annex A-1 and Annex A-2 hereto.


 


(g)           Opinion of In-house Counsel for
the Company. Marla Lacey, Associate General Counsel of the
Company, shall have furnished to the Representative, at the request of the
Company, her written opinion, dated the Closing Date or the Additional Closing
Date, as the case may be, and addressed to the Initial Purchasers, in form and
substance reasonably satisfactory to the Representative, to the effect set
forth in Annex A-3 hereto.


 


(h)           Opinion and 10b-5 Statement of
Counsel for the Initial Purchasers.  The Representative shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, an
opinion and 10b-5 statement of Davis Polk & Wardwell LLP, counsel for
the Initial Purchasers, with respect to such matters as the Representative may
reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.


 


(i)            No Legal Impediment to Issuance.  No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date or the Additional Closing Date, as the case may
be, prevent the issuance or sale of the Securities; and no injunction or order
of any federal, state or foreign court shall have been issued that would, as of
the Closing Date or the Additional Closing Date, as the case may be, prevent
the issuance or sale of the Securities.


 


(j)            Good Standing.  The Representative shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be,
satisfactory evidence of the good standing of the Company and its subsidiaries
in their respective jurisdictions of organization and the Company’s good
standing as a foreign entity in such other jurisdictions as the Representative
may reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of such
jurisdictions.


 


(k)           DTC.  The Securities shall be eligible for
clearance and settlement through DTC.


 


(l)            Lock-up Agreements.  The “lock-up” agreements, each substantially
in the form of Exhibit A hereto, between you and the individuals listed on
Exhibit B relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date or
Additional Closing Date, as the case may be.


 


21
















 


(m)          Additional Documents.  On or prior to the Closing Date or the
Additional Closing Date, as the case may be, the Company shall have furnished
to the Representative such further certificates and documents as the
Representative may reasonably request.


 


All
opinions, letters, certificates and evidence mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Initial Purchasers.


 


7.             Indemnification and Contribution.


 


(a)           Indemnification
of the Initial Purchasers. 
The Company agrees to indemnify and hold harmless each Initial
Purchaser, its affiliates, directors and officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation,
reasonable legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, any of the other Time of Sale Information, any
Issuer Written Communication or the Offering Memorandum (or any amendment or
supplement thereto) or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, in each case
except insofar as such losses, claims, damages or liabilities arise out of, or
are based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use therein, it being understood
and agreed that the only such information furnished by any Initial Purchaser
consists of the information described as such in subsection (b) below.


 


(b)           Indemnification of the
Company.  Each Initial
Purchaser agrees, severally and not jointly, to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above,
but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any information
relating to such Initial Purchaser furnished to the Company in writing by such
Initial Purchaser through the Representative expressly for use in the
Preliminary Offering Memorandum, any of the other Time of Sale Information, any
Issuer Written Communication or the Offering Memorandum (or any amendment or
supplement thereto), it being understood and agreed upon that the only such
information furnished by any Initial Purchaser consists of the following
information in the Preliminary Offering Memorandum and the Offering Memorandum
furnished on behalf of each Initial Purchaser: the eighth and


 


22

















 


eleventh
paragraphs under the caption “Plan of Distribution” of the Preliminary Offering
Memorandum and the Offering Memorandum.


 


(c)           Notice and Procedures.  If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person
(the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have under paragraph (a) or (b) above
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under paragraph (a) or (b) above.  If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the
consent of the Indemnified Person, be counsel to the Indemnifying Person) to
represent the Indemnified Person in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person; (iii) the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the Indemnifying Person; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or potential
differing interest between them.  It is
understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and expenses
shall be paid or reimbursed as they are incurred.  Any such separate firm for any Initial
Purchaser, its affiliates, directors and officers and any control persons of
such Initial Purchaser shall be designated in writing by J.P. Morgan Securities
LLC and any such separate firm for the Company, its directors, its officers and
any control persons of the Company shall be designated in writing by the Company.  The Indemnifying Person shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify each Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at
any time an Indemnified Person shall have requested that an Indemnifying Person
reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered


 


23

















 


into
more than 30 days after receipt by the Indemnifying Person of such request and (ii) the
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.  No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional
release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (y) does not include any
statement as to or any admission of fault, culpability or a failure to act by
or on behalf of any Indemnified Person.


 


(d)           Contribution.  If the indemnification provided for in
paragraphs (a) and (b) above is unavailable to an Indemnified Person
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, 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 (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Initial Purchasers, on the other, from the offering of the
Securities or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the
relative fault of the Company, on the one hand, and the Initial Purchasers, on
the other, in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.  The relative benefits
received by the Company, on the one hand, and the Initial Purchasers, on the
other, shall be deemed to be in the same respective proportions as the net
proceeds (before deducting expenses) received by the Company from the sale of
the Securities and the total discounts and commissions received by the Initial
Purchasers in connection therewith, as provided in this Agreement, bear to the
aggregate offering price of the Securities. 
The relative fault of the Company, on the one hand, and the Initial
Purchasers, on the other, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.


 


(e)           Limitation on Liability.  The Company and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro  rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. 
The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. 
Notwithstanding the provisions of this Section 7, in no event shall
an Initial Purchaser be required to contribute any


 


24

















 


amount
in excess of the amount by which the total discounts and commissions received
by such Initial Purchaser with respect to the offering of the Securities
exceeds the amount of any damages that such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The Initial Purchasers’ obligations to
contribute pursuant to this Section 7 are several in proportion to their
respective purchase obligations hereunder and not joint.


 


(f)            Non-Exclusive Remedies.  The remedies provided for in this Section 7
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.


 


8.             Effectiveness of Agreement.  This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.


 


9.             Termination.  This Agreement may be terminated in the
absolute discretion of the Representative, by notice to the Company, if after
the execution and delivery of this Agreement and prior to the Closing Date or,
in the case of the Option Securities, prior to the Additional Closing Date (i) trading
generally shall have been suspended or materially limited on or by any of the
New York Stock Exchange or the Nasdaq Global Market; (ii) trading of any
securities issued or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis, either within or outside the United States, that, in the judgment of
the Representative, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Securities on
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum.


 


10.           Defaulting
Initial Purchaser.  (a)  If, on
the Closing Date or the Additional Closing Date, as the case may be, any
Initial Purchaser defaults on its obligation to purchase the Securities that it
has agreed to purchase hereunder on such date, the non-defaulting Initial
Purchasers may in their discretion arrange for the purchase of such Securities
by other persons satisfactory to the Company on the terms contained in this
Agreement.  If, within 36 hours after any
such default by any Initial Purchaser, the non-defaulting Initial Purchasers do
not arrange for the purchase of such Securities, then the Company shall be
entitled to a further period of 36 hours within which to procure other persons
satisfactory to the non-defaulting Initial Purchasers to purchase such
Securities on such terms.  If other
persons become obligated or agree to purchase the Securities of a defaulting
Initial Purchaser, either the non-defaulting Initial Purchasers or the Company
may postpone the Closing Date or the Additional Closing Date, as the case may
be, for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or


 


25

















 


counsel
for the Initial Purchasers may be necessary in the Time of Sale Information,
the Offering Memorandum or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the Time of
Sale Information or the Offering Memorandum that effects any such changes.  As used in this Agreement, the term “Initial
Purchaser” includes, for all purposes of this Agreement unless the context
otherwise requires, any person not listed in Schedule 1 hereto that, pursuant
to this Section 10, purchases Securities that a defaulting Initial
Purchaser agreed but failed to purchase.


 


(b)           If, after giving
effect to any arrangements for the purchase of the Securities of a defaulting
Initial Purchaser or Initial Purchasers by the non-defaulting Initial
Purchasers and the Company as provided in paragraph (a) above, the
aggregate number of Securities that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be, does not exceed one-eleventh
of the aggregate number of Securities to be purchased on such date, then the
Company shall have the right to require each non-defaulting Initial Purchaser
to purchase the number of Securities that such Initial Purchaser agreed to
purchase hereunder on such date plus such Initial Purchaser’s pro rata share
(based on the number of Securities that such Initial Purchaser agreed to
purchase on such date) of the Securities of such defaulting Initial Purchaser
or Initial Purchasers for which such arrangements have not been made.


 


(c)           If, after giving
effect to any arrangements for the purchase of the Securities of a defaulting
Initial Purchaser or Initial Purchasers by the non-defaulting Initial
Purchasers and the Company as provided in paragraph (a) above, the
aggregate number of Securities that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be, exceeds one-eleventh of the
aggregate amount of Securities to be purchased on such date, or if the Company
shall not exercise the right described in paragraph (b) above, then this
Agreement or, with respect to any Additional Closing Date, the obligation of
the Initial Purchasers to purchase Securities on the Additional Closing Date,
as the case may be, shall terminate without liability on the part of the
non-defaulting Initial Purchasers.  Any
termination of this Agreement pursuant to this Section 10 shall be without
liability on the part of the Company, except that the Company will continue to
be liable for the payment of expenses as set forth in Section 11 hereof
and except that the provisions of Section 7 hereof shall not terminate and
shall remain in effect.


 


(d)           Nothing contained
herein shall relieve a defaulting Initial Purchaser of any liability it may
have to the Company or any non-defaulting Initial Purchaser for damages caused
by its default.


 


11.           Payment of Expenses.  (a)  Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder, including
without limitation, (i) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (ii) the costs incident to the preparation and printing of the
Preliminary Offering Memorandum, any other Time of Sale Information, any Issuer
Written Communication and the Offering Memorandum (including any


 


26

















 


amendments
and supplements thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the
fees and expenses of the Company’s counsel and independent accountants; (v) the
fees and expenses incurred in connection with the registration or qualification
and determination of eligibility for investment of the Securities under the
laws of such jurisdictions as the Representative may designate and the
preparation, printing and distribution of a Blue Sky Memorandum (including the
related fees and expenses of counsel for the Initial Purchasers); (vi) any
fees charged by rating agencies for rating the Securities, if applicable;
(vii) the fees and expenses of the Trustee and any paying agent (including
related reasonable fees and expenses of any counsel to such parties); (viii) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (ix) all expenses incurred
by the Company in connection with any “road show” presentation to potential
investors.


 


(b)           If (i) this Agreement is
terminated pursuant to Section 9, (ii) the Company for any reason
fails to tender the Securities for delivery to the Initial Purchasers or (iii) the
Initial Purchasers decline to purchase the Securities for any reason permitted
under this Agreement, the Company agrees to reimburse the Initial Purchasers
for all out-of-pocket costs and expenses (including the fees and expenses of
their counsel) reasonably incurred by the Initial Purchasers in connection with
this Agreement and the offering contemplated hereby.


 


12.           Persons Entitled to Benefit of
Agreement.  This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and any controlling
persons referred to in Section 7 hereof. 
Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein.  No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor merely by reason of such purchase.


 


13.           Survival.  The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchasers contained in this Agreement or made by or on behalf of the
Company or the Initial Purchasers pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
termination of this Agreement or any investigation made by or on behalf of the
Company or the Initial Purchasers.


 


14.           Certain Defined
Terms.  For purposes of this
Agreement, (a) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act; (b) the
term “business day” means any day other than a day on which banks are permitted
or required to be closed in New York City; and (c) the term “subsidiary”
has the meaning set forth in Rule 405 under the Securities Act.


 


15.           Miscellaneous.  (a)  Authority of the
Representative.  Any action by
the Initial Purchasers hereunder may be taken by J.P. Morgan Securities LLC on
behalf of the Initial


 


27

















 


Purchasers,
and any such action taken by J.P. Morgan Securities LLC shall be binding upon
the Initial Purchasers.


 


(b)           Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted and confirmed by any standard form of telecommunication.  Notices to the Initial Purchasers shall be
given to the Representative c/o J.P. Morgan Securities LLC, 383 Madison Avenue,
New York, New York 10179 (fax: (212) 622-8358); Attention: Equity Syndicate
Desk.  Notices to the Company shall be
given to it at 6000 Westown Parkway, West Des Moines, Iowa, 50266, (fax:
(515) 221-0744); Attention: Wendy C. Waugaman; with a copy to Skadden, Arps,
Slate, Meagher & Flom LLP, 155 North Wacker Drive, Chicago, Illinois
60606-1720, Attention: William R. Kunkel (facsimile: (312) 407-0411)


 


(c)           Governing Law.  This Agreement and any claim, controversy or
dispute arising under or related to this Agreement shall be governed by and
construed in accordance with the laws of the State of New York.


 


(d)           Counterparts.  This Agreement may be signed in counterparts
(which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of which
together shall constitute one and the same instrument.


 


(e)           Amendments or Waivers.  No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.


 


(f)            Headings.  The
headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.


 


(g)           Xtract
Research LLC.  The Company
hereby agrees that the Initial Purchasers may provide copies of the Preliminary
Offering Memorandum and the Final Offering Memorandum relating to the offering
of the Securities and any other agreements or documents relating thereto,
including, without limitation, trust indentures, to Xtract Research LLC (“Xtract”)
following the completion of the offering for inclusion in an online research
service sponsored by Xtract, access to which is restricted to “qualified
institutional buyers” as defined in Rule 144A under the Securities Act.


 


28

















 


If
the foregoing is in accordance with your understanding, please indicate your
acceptance of this Agreement by signing in the space provided below.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  AMERICAN EQUITY INVESTMENT LIFE

  HOLDING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  John M. Matovina

  
	
   

  	
   

  	
  Name:
  John M. Matovina

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer and Treasurer

  



 


29

















 


Accepted:
September 16, 2010


 


J.P.
MORGAN SECURITIES LLC


 


For
itself and on behalf of the


several
Initial Purchasers listed


in
Schedule 1 hereto.


 


 


	
  By

  	
  /s/
  Ranbeer Bhatia

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  



 


30

















 


Schedule 1


 


	
  Initial Purchaser

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  J.P. Morgan Securities LLC

  	
   

  	
  $

  	
  136,000,000

  	
   

  
	
  KeyBanc Capital Markets Inc.

  	
   

  	
  $

  	
  10,200,000

  	
   

  
	
  SunTrust Robinson Humphrey, Inc.

  	
   

  	
  $

  	
  8,500,000

  	
   

  
	
  FBR Capital Markets & Co.

  	
   

  	
  $

  	
  6,800,000

  	
   

  
	
  Macquarie Capital (USA) Inc.

  	
   

  	
  $

  	
  6,800,000

  	
   

  
	
  Madison Williams and Company LLC

  	
   

  	
  $

  	
  1,700,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  170,000,000

  	
   

  



 
















 


Annex A-1


 


FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LLP & AFFILIATES, 

SPECIAL COUNSEL TO THE COMPANY


 


(1)           The statements in the Time of Sale
Information and the Offering Memorandum under the caption “Plan of Distribution”,
insofar as such statements purport to summarize certain provisions of the
Purchase Agreement, fairly summarize such provisions in all material respects.


 


(2)           No Governmental Approval which has
not been obtained or taken and is not in full force and effect is required to authorize,
or is required for the execution or delivery of the Purchase Agreement by the
Company or the consummation by the Company of the transactions contemplated
thereby.


 


(3)           The Company is not and, solely after
giving effect to the offering and sale of the Securities pursuant to the
Purchase Agreement and the application of the proceeds thereof as described in
the Time of Sale Information and the Offering Memorandum, will not be, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.


 


(4)           American Equity Life of New York has
been duly organized and validly exists in good standing under the laws of the
State of New York. American Equity Life of New York has the corporate power and
authority to own, lease and operate its properties and to conduct its business.


 


(5)           The Indenture is a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be subject to the
Enforceability Exceptions.


 


(6)           The Securities, when duly
authenticated by the Trustee and issued and delivered by the Company against
payment therefor in accordance with the terms of the Indenture will constitute
valid and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except to the extent that enforcement thereof may be subject to the
Enforceability Exceptions.


 


(7)           Assuming (i) the accuracy of the
representations and warranties of the Company set forth in Section 3 of
the Purchase Agreement (ii) the due performance by the Company of the
covenants and agreements set forth in Section 4 of the Purchase Agreement (iii) the
accuracy of the representations of, and due performance of the agreements by,
the Initial Purchasers set forth in Section 5 of the Purchase Agreement
and (iv) the Initial Purchasers’ compliance with the offering and transfer
procedures and restrictions described in the Offering


 

















 


Memorandum,
the offer, sale and delivery of the Securities to the Initial Purchasers in the
manner contemplated by the Purchase Agreement, the Time of Sale Information and
the Offering Memorandum and the initial resale of the Securities by the Initial
Purchasers in the manner contemplated in the Purchase Agreement, Time of Sale
Information and Offering Memorandum do not require registration under the
Securities Act, it being understood that we do not express any opinion as to
the Common Stock issuable upon conversion of any Security or any subsequent
reoffer or resale of any Security.


 


For
purposes of the foregoing, (i) “Applicable Laws” means those laws, rules and
regulations of the State of New York and those federal laws, rules and
regulations of the United States of America, in each case that, in our
experience, are normally applicable to transactions of the type contemplated by
the Purchase Agreement and the other Transaction Documents (other than the
United States federal securities laws, state securities or blue sky laws, antifraud
laws and the rules and regulations of the Financial Industry Regulatory
Authority, Inc.), but without our having made any special investigation as
to the applicability of any specific law, rule or regulation; (ii) “Governmental
Authorities” means any court, regulatory body, administrative agency or
governmental body of the State of New York or the United States of America
having jurisdiction over the Company under Applicable Laws; and (iii) “Governmental
Approval” means any consent, approval, license, authorization or validation of,
or filing, qualification or registration with, any Governmental Authority
required to be made or obtained by the Company pursuant to Applicable Laws,
other than any consent, approval, license, authorization, validation, filing,
qualification or registration that may have become applicable as a result of
the involvement of any party (other than the Company) in the transactions
contemplated by the Purchase Agreement and the other Transaction Documents or
because of such party’s legal or regulatory status or because of any other
facts specifically pertaining to such party.


 


In addition, such counsel shall provide a letter, substantially to the
effect that no facts have come to the attention of such counsel that have
caused such counsel to believe that (A) the Time of Sale Information, at
the Time of Sale, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (B) the Offering Memorandum, as of
its date and as of the Closing Date (or the Additional Closing Date, as the
case may be), contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except that in each case such counsel need not express
any view as to the financial statements, schedules and other financial
information included or incorporated by reference therein).


 

















 


Annex A-2


 


FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LLP & AFFILIATES,

SPECIAL TAX COUNSEL TO THE COMPANY


 


(1) Under
current U.S. federal income tax law, although the discussions set forth in the
Time of Sale Information and the Offering Memorandum under the heading “Certain
United States Federal Income Tax Considerations” does not purport to discuss
all possible U.S. federal income tax consequences of the purchase, ownership or
disposition of the Securities, such discussion constitutes, in all material
respects, a fair and accurate summary of the U.S. federal income tax
consequences that are anticipated to be material to holders who purchase the
Securities pursuant to the Offering Memorandum, subject to the qualifications
set forth in such discussion.


 

















 


Annex A-3


 


FORM OF OPINION OF MARLA LACEY,


ASSOCIATE GENERAL COUNSEL OF THE COMPANY


 


(1)           The Company has been duly
incorporated and validly exists in good standing under the laws of the State of
Iowa.


 


(2)           To the best of my knowledge, the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
could not reasonably be expected to result in a Material Adverse Change.


 


(3)           The Company has the corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Time of Sale Information and the Offering
Memorandum and to execute and deliver each of the Transaction Documents and to
consummate the transactions contemplated thereby.


 


(4)           American Equity Life has been duly
incorporated and validly exists in good standing under the laws of the State of
Iowa. American Equity Life has the corporate power and authority to own, lease
and operate its properties and to conduct its business.


 


(5)           Eagle Life has been duly incorporated
and validly exists in good standing under the laws of the State of Iowa. Eagle
Life has the corporate power and authority to own, lease and operate its
properties and to conduct its business.


 


(6)           To the best of my knowledge, each
Significant Subsidiary is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not reasonably be expected to result in a Material
Adverse Change.


 


(7)           The Company has an authorized
capitalization as set forth in the Time of Sale Information and the Offering
Memorandum. The outstanding shares of capital stock of the Company have been
duly authorized and are validly issued, fully paid and non-assessable and free
and clear of any preemptive or similar rights arising under the laws of the
State of Iowa, the Articles of Incorporation or Bylaws of the Company or any
Applicable Contract.


 


(8)           The outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and are validly
issued, fully paid and non-assessable and, to my knowledge, are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims, except those that are immaterial to the Company and the
Subsidiaries taken as a whole.


 

















 


(9)           Each of the Transaction Documents
have been duly authorized, executed and delivered on behalf of the Company. The
performance by the Company of the Purchase Agreement has been duly authorized
by all necessary corporate action of the Company.


 


(10)         Each of the Transaction Documents
conform in all material respects to the description contained in the Time of
Sale Information and the Offering Memorandum.


 


(11)         The documents incorporated by reference
in the Time of Sale Information and the Offering Memorandum (other than the
financial statements and related schedules therein, as to which I express no
opinion), when they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder; and I have no reason to believe that
any of such documents, when such documents were so filed, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statement therein, in light of the circumstances under which
they were made when such documents were so filed, not misleading.


 


(12)         The execution and delivery by the
Company of each of the Transaction Documents and the consummation by the
Company of the transactions contemplated thereby, including the issuance and
sale of the Securities to the Initial Purchasers and the issuance of the
Underlying Shares upon any conversion of the Securities, will not (i) constitute
a violation of, or a breach or default under, the terms of any Applicable
Contract or (ii) violate or conflict with, or result in any contravention
of, any Applicable Law or any Applicable Order.


 


(13)         The Underlying Shares have been duly
authorized and reserved by the Company for issuance upon the conversion of the
Securities pursuant to the terms of the Securities and, when issued in
connection with such conversion in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable, and the issuance of the
Underlying Shares will not be subject to any preemptive, resale, participation,
rights of first refusal or other similar rights.


 


(14)         There are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any property of the Company or any of
its subsidiaries is subject that would have been required to be disclosed
pursuant to Item 103 of Regulation S-K of the Rules and Regulations that
are not so disclosed.


 


(15)         To the best of my
knowledge, each Insurance Subsidiary holds such Insurance Licenses as are
material to the conduct of its business; to the best of my knowledge, there is
no pending or threatened action, suit, proceeding or investigation that would
reasonably be expected to result in the revocation, termination or suspension
of any such Insurance License that would reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Change on the
Company and its subsidiaries, taken as a whole; and except as disclosed in the
Time of Sale Information and the Offering Memorandum, to the best of my knowledge,
no insurance regulatory agency or body has issued, or commenced any proceeding
for the issuance


 

















 


of, any order or decree impairing, restricting or prohibiting the
payment of dividends by any Insurance Subsidiary to its parent.


 


(16)         Neither the Company nor any of the
subsidiaries is or, with the giving of notice or lapse of time or both, will
be, in violation of or in default under (i) its certificate of
incorporation or bylaws or similar organizational documents or (ii) any
Applicable Contract and, solely with respect to this clause (ii), which
violation or default would have a Material Adverse Change.


 


For
the purposes of the foregoing, (i) “Applicable Contracts” means those
indentures or other agreements or instruments known to me and to which the
Company or any Significant Subsidiary is a party or by which the Company or any
Significant Subsidiary is bound or to which any of their respective properties
or assets are subject; (ii) “Applicable Laws” means those laws, rules and
regulations of the State of Iowa, including the insurance laws, rules and
regulations of the State of Iowa, that, in my experience, are normally
applicable to transactions of the type contemplated by the Transaction
Documents (other than state securities or blue sky laws and antifraud laws),
but without my having made any special investigation as to the applicability of
any specific law, rule or regulation; and (iii) “Applicable Orders”
means those judgments, orders or decrees known to me to be applicable to the
Company.


 


In
addition, such counsel shall provide a statement, substantially to the effect
that no facts have come to the attention of such counsel that have caused such
counsel to believe that (A) the Time of Sale Information, at the Time of
Sale, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (B) the Offering Memorandum, as of its date and
as of the Closing Date (or the Additional Closing Date, as the case may be),
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading
(except that in each case such counsel need not express any view as to the
financial statements, schedules and other financial information included or
incorporated by reference therein).


 

















 


Annex B


 


a.  Time of Sale Information


 


Term
sheet containing the terms of the Securities, substantially in the form of
Annex C.


 
















 


Annex C


 


Pricing Term Sheet


 


American Equity Investment Life Holding Company


3.50% Convertible Senior Notes due 2015


 


The information in this pricing
term sheet supplements American Equity Investment Life Holding Company’s
preliminary offering memorandum, dated September 15, 2010 (the “Preliminary
Offering Memorandum”), and supersedes the information in the Preliminary
Offering Memorandum to the extent inconsistent with the information in the
Preliminary Offering Memorandum.  In all
other respects, this term sheet is qualified in its entirety by reference to
the Preliminary Offering Memorandum. 
Terms used herein but not defined herein shall have the respective
meanings as set forth in the Preliminary Offering Memorandum. All references to
dollar amounts are references to U.S. dollars.


 


	
  Issuer:

  	
   

  	
  American Equity Investment Life Holding
  Company (“American Equity”)

  
	
   

  	
   

  	
   

  
	
  Ticker / Exchange:

  	
   

  	
  AEL / The New York Stock Exchange (“NYSE”)

  
	
   

  	
   

  	
   

  
	
  Title of securities:

  	
   

  	
  3.50% Convertible Senior Notes due 2015 (the
  “Notes”)

  
	
   

  	
   

  	
   

  
	
  Aggregate principal
  amount offered:

  	
   

  	
  $170,000,000 of Notes

  
	
   

  	
   

  	
   

  
	
  Offering price:

  	
   

  	
  The Notes will be
  issued at a price of 100% of their principal amount, plus
  accrued interest, if any, from September 22, 2010.

  
	
   

  	
   

  	
   

  
	
  Over-allotment option:

  	
   

  	
  $30,000,000 principal
  amount of Notes

  
	
   

  	
   

  	
   

  
	
  Annual interest rate:

  	
   

  	
  The Notes will bear interest at a rate equal
  to 3.50% per annum from September 22, 2010.

  
	
   

  	
   

  	
   

  
	
  NYSE Last Reported Sale Price on
  September 16, 2010:

  	
   

  	
  $10.00 per share of American Equity common
  stock

  
	
   

  	
   

  	
   

  
	
  Conversion premium:

  	
   

  	
  25.00% above the NYSE Last Reported Sale Price on September 16, 2010

  
	
   

  	
   

  	
   

  
	
  Initial conversion price:

  	
   

  	
  $12.50 per share of
  American Equity common stock

  
	
   

  	
   

  	
   

  
	
  Initial conversion
  rate:

  	
   

  	
  80.0000 shares of American Equity common stock per $1,000 principal amount of
  Notes

  
	
   

  	
   

  	
   

  
	
  Interest payment dates:

  	
   

  	
  March 15 and September 15,
  commencing on March 15, 2011

  
	
   

  	
   

  	
   

  
	
  Maturity date:

  	
   

  	
  September 15, 2015

  
	
   

  	
   

  	
   

  
	
  Sole book-running
  manager:

  	
   

  	
  J.P. Morgan Securities LLC

  
	
   

  	
   

  	
   

  
	
  Co-managers:

  	
   

  	
  FBR Capital Markets & Co.

  KeyBanc Capital Markets Inc.

  Macquarie Capital (USA) Inc.

  



 

















 


	
   

  	
   

  	
  Madison Williams and Company LLC

  SunTrust Robinson Humphrey, Inc.

  
	
   

  	
   

  	
   

  
	
  Trade date to initial
  purchasers:

  	
   

  	
  September 16, 2010

  
	
   

  	
   

  	
   

  
	
  Settlement date:

  	
   

  	
  September 22, 2010

  
	
   

  	
   

  	
   

  
	
  CUSIP:

  	
   

  	
  025676 AJ6

  
	
   

  	
   

  	
   

  
	
  ISIN:

  	
   

  	
  US025676AJ66

  
	
   

  	
   

  	
   

  
	
  Convertible note hedge
  and warrant transactions:

  	
   

  	
  In connection with the pricing of the Notes,
  American Equity entered into convertible note hedge transactions with
  counterparties that include affiliates of certain of the initial purchasers
  of the Notes (the “option counterparties”). The convertible note hedge
  transactions are expected to reduce both the potential dilution upon
  conversion of the Notes and American Equity’s exposure to potential cash
  payments it may be required to make upon a conversion of the Notes. American
  Equity also entered into warrant transactions with the option counterparties
  pursuant to which it sold warrants for the purchase of American Equity common
  stock. The warrant transactions could separately have a dilutive effect to
  the extent that the market price per share of American Equity common stock
  exceeds the applicable strike price of the warrants. However, subject to
  certain conditions as specified under the terms of the warrant transactions,
  American Equity may elect to settle the warrants in cash. If the initial
  purchasers exercise their over-allotment option, American Equity may increase
  the size of the convertible note hedge transactions and enter into additional
  warrant transactions.

  
	
   

  	
   

  	
   

  
	
  Use of proceeds:

  	
   

  	
  American Equity estimates that the net
  proceeds from the Notes offering, after deducting estimated fees and expenses
  and the initial purchasers’ discounts and commissions, will be approximately
  $164.3 million (or approximately $193.3 million if the initial purchasers
  exercise their over-allotment option in full). American Equity intends to use
  approximately $18.2 million of the net proceeds from the Notes offering to
  pay the cost of the convertible note hedge transactions, taking into account the
  proceeds of the warrant transactions, and approximately $146.1 million of the
  net proceeds from the Notes offering to repay outstanding amounts of
  principal and interest under American Equity’s credit facility.

   

  If the initial purchasers exercise their
  over-allotment option, American Equity may sell additional warrants. American
  Equity intends to use a portion of the net proceeds from the sale of the
  additional Notes to pay the cost of any increase in the size of the
  convertible note hedge transactions (taking into account the proceeds of the
  additional warrant transactions), approximately $4.0 million of the net
  proceeds from the sale of the additional Notes to repay outstanding amounts
  of principal and interest under American Equity’s credit facility (assuming
  the initial purchasers exercise their over-allotment option in full), and the
  remainder, if any, of the net proceeds from the sale of the additional Notes
  to repurchase outstanding convertible notes and for general corporate
  purposes, including the repayment of existing

  



 

















 


	
   

  	
   

  	
  indebtedness.

  
	
   

  	
   

  	
   

  
	
  Adjustment to
  conversion rate upon a make-whole
  fundamental change:

  	
   

  	
  The
  table below sets forth the number of additional shares, if any, of American
  Equity common stock to be added to the conversion rate per $1,000 principal
  amount of Notes in connection with a “make-whole fundamental change” as
  described in the Preliminary Offering Memorandum, based on the stock price
  and effective date of the make-whole fundamental change.

  



 


	
   

  	
   

  	
  Stock Price

  	
   

  
	
  Effective date

  	
   

  	
  $10.00

  	
   

  	
  $15.00

  	
   

  	
  $20.00

  	
   

  	
  $25.00

  	
   

  	
  $30.00

  	
   

  	
  $35.00

  	
   

  	
  $40.00

  	
   

  	
  $45.00

  	
   

  	
  $50.00

  	
   

  	
  $55.00

  	
   

  
	
  September 22,
  2010

  	
   

  	
  20.0000

  	
   

  	
  9.0889

  	
   

  	
  4.7998

  	
   

  	
  2.9181

  	
   

  	
  1.9220

  	
   

  	
  1.3208

  	
   

  	
  0.9243

  	
   

  	
  0.6471

  	
   

  	
  0.4459

  	
   

  	
  0.2964

  	
   

  
	
  September 15,
  2011

  	
   

  	
  20.0000

  	
   

  	
  8.3571

  	
   

  	
  4.1275

  	
   

  	
  2.4125

  	
   

  	
  1.5591

  	
   

  	
  1.0624

  	
   

  	
  0.7402

  	
   

  	
  0.5159

  	
   

  	
  0.3529

  	
   

  	
  0.2308

  	
   

  
	
  September 15,
  2012

  	
   

  	
  20.0000

  	
   

  	
  7.2731

  	
   

  	
  3.2248

  	
   

  	
  1.7767

  	
   

  	
  1.1203

  	
   

  	
  0.7582

  	
   

  	
  0.5280

  	
   

  	
  0.3679

  	
   

  	
  0.2502

  	
   

  	
  0.1609

  	
   

  
	
  September 15,
  2013

  	
   

  	
  20.0000

  	
   

  	
  5.5960

  	
   

  	
  2.0145

  	
   

  	
  0.9906

  	
   

  	
  0.5967

  	
   

  	
  0.3976

  	
   

  	
  0.2755

  	
   

  	
  0.1909

  	
   

  	
  0.1273

  	
   

  	
  0.0769

  	
   

  
	
  September 15,
  2014

  	
   

  	
  20.0000

  	
   

  	
  2.9818

  	
   

  	
  0.5342

  	
   

  	
  0.1586

  	
   

  	
  0.0322

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  
	
  September 15,
  2015

  	
   

  	
  20.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  



 


The
exact stock prices and effective dates may not be set forth in the table above,
in which case:


 


·                  If the stock price is between two stock
prices in the table or the effective date is between two effective dates in the
table, the number of additional shares will be determined by a straight-line
interpolation between the number of additional shares set forth for the higher
and lower stock prices and the earlier and later effective dates, as
applicable, based on a 365-day year.


 


·                  If the stock price is greater than $55.00 per
share (subject to adjustment in the same manner as the stock prices set forth in
the column headings of the table above), no additional shares will be added to
the conversion rate.


 


·                  If the stock price is less than $10.00 per
share (subject to adjustment in the same manner as the stock prices set forth
in the column headings of the table above), no additional shares will be added
to the conversion rate.


 


Notwithstanding the foregoing, in no event will the total number of
shares of American Equity common stock issuable upon conversion exceed 100.0000
per $1,000 principal amount of Notes, subject to adjustment in the same manner
as the conversion rate as set forth under “Description of notes—Conversion
rights—Conversion rate adjustments” in the Preliminary Offering Memorandum.


 


General


 


This communication is intended for
the sole use of the person to whom it is provided by the sender.


 


This communication shall not
constitute an offer to sell or the solicitation of an offer to buy securities
nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the laws of any such state.


 

















 


The Notes and any
shares of common stock issuable upon conversion of the Notes have not been, and
will not be, registered under the Securities Act of 1933, as amended (the “Securities
Act”), or any state securities laws. Accordingly, the Notes are being offered
and sold only to “qualified institutional buyers” as defined in Rule 144A
promulgated under the Securities Act. The Notes are not transferable except in
accordance with the restrictions described under “Transfer restrictions” in the
Preliminary Offering Memorandum.


 

















 


Exhibit A


 


FORM OF LOCK-UP AGREEMENT


 


	
   

  	
            ,
  200  

  



 


J.P.
MORGAN SECURITIES LLC


As
Representative of


the
several Initial Purchasers listed in


Schedule
1 to the Purchase Agreement


referred
to below


c/o
J.P. Morgan Securities LLC


383
Madison Avenue


New
York, NY 10179


 


Re:          AMERICAN EQUITY INVESTMENT LIFE
HOLDING COMPANY --- Rule 144A Offering


 


Ladies and Gentlemen:


 


The
undersigned understands and agrees as follows:


 


1.             J.P. Morgan Securities LLC (“JPM”)
proposes to enter into a Purchase Agreement (the “Agreement”) with
American Equity Investment Life Holding Company, an Iowa corporation (the “Company”),
providing for the initial purchase by JPM and the several initial purchasers
listed in Schedule 1 of the Agreement (the “Initial Purchasers”) of
$170,000,000 aggregate principal amount of the Company’s 3.50% Convertible
Senior Notes due 2015 (the “Notes”), and the resale of such shares by
JPM and the Initial Purchasers to certain eligible purchasers (the “Offering”),
in each case, in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”).


 


2.             In recognition of the benefit that
the Offering will confer upon the undersigned and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the undersigned, the undersigned hereby agrees that, without the prior written
consent of JPM (which consent may be withheld or delayed in JPM’s sole
discretion), he, she or it will refrain during the period commencing on the
date of the Agreement and ending on the date that is 60 days after the date of
the Agreement, from (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase, purchasing any option or contract
to sell, granting any option, right or warrant for the sale of, lending or
otherwise disposing of or transferring, directly or indirectly, any equity securities
of the Company, or any securities convertible into or exercisable or
exchangeable for equity securities of the Company, or (ii) entering into
any swap or other arrangement that transfers to another, in whole or in part,
directly or indirectly, any of


 

















 


the economic consequences of
ownership of equity securities of the Company, whether any such transaction
described in clause (i) or (ii) above is to be settled by
delivery of common stock of the Company or such other securities, in cash or
otherwise.


 


Notwithstanding
the foregoing, subject to applicable securities laws and the restrictions
contained in the Company’s articles of incorporation, as amended, the
undersigned may transfer any securities of the Company (including, without
limitation, common stock) as follows: (i) pursuant to the exercise and
issuance of options; (ii) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound in writing by the restrictions set
forth herein; (iii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set
forth herein; (iv) as a distribution to stockholders, partners or members
of the undersigned, provided that such stockholders, partners or members agree
to be bound in writing by the restrictions set forth herein; (v) any
transfer required under any benefit plans or the Company’s third amended and
restated bylaws; (vi) as collateral for any loan, provided that the lender
agrees in writing to be bound by the restrictions set forth in herein; or
(vii) with respect to sales of securities acquired after the Closing Time
in the open market. For purposes of this agreement, “immediate family” shall
mean any relationship by blood, marriage or adoption, not more remote than
first cousin.


 


For
the avoidance of doubt, nothing shall prevent the undersigned from, or restrict
the ability of the undersigned to, (i) purchase common stock on the open
market or (ii) exercise any options or other convertible securities
granted under any benefit plan of the Company.


 


3.             The undersigned acknowledges that
the Initial Purchasers are relying on the agreements of the undersigned set
forth herein in making their decision to enter into the Agreement and to
continue their efforts in connection with the Offering.


 


4.             This Lock-Up Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflict of laws.


 


5.             This Lock-Up Agreement may be
delivered by facsimile.


 


IN
WITNESS WHEREOF, the undersigned has executed this Lock-Up Agreement, or caused
this Lock-Up Agreement to be executed, as of the date first written above.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)