<PAGE>

                           FACE-AMOUNT CERTIFICATE

THIS INSTALLMENT FACE-AMOUNT CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "33 ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA (THE
"BLUE SKY LAWS"). THE HOLDER HEREOF, BY PURCHASING THIS INSTALLMENT
FACE-AMOUNT CERTIFICATE OR ANY INTEREST HEREIN (THE "INTEREST"), REPRESENTS
THAT IT IS AN "ACCREDITED INVESTOR" AS THAT TERM IS DEFINED IN
RULE 501(a)(1),(2),(3) OR (7) UNDER THE '33 ACT AND AGREES THAT SUCH
INTEREST WILL ONLY BE OFFERED, RESOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED IN COMPLIANCE WITH THE '33 ACT, THE APPLICABLE BLUE SKY LAWS,
AND THE RESTRICTIONS SET FORTH IN THE FACE-AMOUNT CERTIFICATE AGREEMENT.
THIS FACE-AMOUNT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

THIS INSTALLMENT FACE-AMOUNT CERTIFICATE IS SUBJECT TO PREPAYMENT AND/OR
REDEMPTION PRIOR TO ITS STATED MATURITY AS SET FORTH IN THE FACE-AMOUNT
CERTIFICATE AGREEMENT.


                               212 Certificate Company

                    $500,000,000 Installment Face-Amount Certificate

                               September 15, 1998

          212 CERTIFICATE COMPANY, a corporation duly organized and existing
under the laws of the State of Delaware (the "Issuer"), shall pay to THE
CHASE MANHATTAN BANK, as funding agent (the "Funding Agent") for the benefit
of Park Avenue Receivables Corporation (the "Purchaser") and any subsequent
entity which in the future purchases an interest in this installment
face-amount certificate (this "Certificate") pursuant to the Asset Purchase
Agreement (collectively, the Purchaser and such future potential purchasers
are hereinafter referred to as the "Certificateholders") the unpaid principal
amount of all installment purchase payments made by the Certificateholders
from time to time (the "Invested Amount"), up to an aggregate principal
amount not to exceed $500,000,000, and to pay interest on the Invested Amount
as more fully set forth in that certain Face-Amount Certificate Agreement,
dated as of September 15, 1998, among the Issuer, the Purchaser and the
Funding Agent (as amended, restated, supplemented or otherwise modified and
in effect from time to time, the "Face-Amount Certificate Agreement").

<PAGE>

          This Face-Amount Certificate is issued pursuant to the Face-Amount
Certificate Agreement.  Reference is hereby made to the Face-Amount
Certificate Agreement for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Issuer, the Funding Agent
and the Certificateholders and the terms upon which this Face-Amount
Certificate is delivered.  All terms used in this Face-Amount Certificate
which are not defined herein shall have the meanings assigned to them in, or
incorporated by reference into, the Face-Amount Certificate Agreement.  The
provisions of the Face-Amount Certificate Agreement are hereby incorporated
by reference herein and shall be binding on the Issuer, the Funding Agent
and the Certificateholders as if fully set forth herein.  As provided in the
Face-Amount Certificate Agreement, this Face-Amount Certificate is secured by
the Pledged Collateral.  To the extent provided in the Face-Amount
Certificate Agreement and the Pledge Agreement, the Certificateholders (and
the Funding Agent on their behalf) shall be entitled to the benefits of a
security interest in the Pledged Collateral, for the benefit of the
Certificateholders.

          IN WITNESS WHEREOF, the Issuer has caused this instrument to be
duly executed as of the date first above-written.

                                        212 CERTIFICATE COMPANY

                                        By: /s/ Robert L. Maddox
                                           ------------------------------------
                                           Name:  Robert L. Maddox
                                           Title: President


                                      2
<PAGE>

     EMPLOYMENT AGREEMENT dated as of April 16, 1999 between ARM FINANCIAL
GROUP, INC., a Delaware corporation (the "COMPANY") and James G. Kaiser, an
individual (the "EXECUTIVE").

     WHEREAS, the Company desires to employ the Executive and to enter into
the Agreement to set forth the terms of such employment; and

     WHEREAS, the Executive desires to accept such employment and enter into
the Agreement;

     NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

     1.   EFFECTIVENESS OF AGREEMENT

          This agreement shall become effective as of the date first set
forth above (the "Effective Date").

     2.   EMPLOYMENT AND DUTIES

          2.1  GENERAL. The Company hereby employs the Executive, and the
               Executive agrees to serve the Company, upon the terms and
               conditions herein contained.  The Executive shall serve in
               such professional capacities and positions, and shall perform
               such duties and services for the Company and its affiliates,
               as may be designated from time to time by the Board of
               Directors of the Company (the "Board") and the Chief Executive
               Officer.  The Executive agrees to serve the Company faithfully
               and to the best of his ability under the direction of the
               Board and any Chief Executive Officer of the Company. The
               Executive's office shall be located in or adjacent to
               Stamford, Connecticut for the entire term of this Agreement,
               but the Executive shall undertake such reasonable
               business-related travel as may from time to time be required
               in the performance of his duties hereunder.

          2.2  EXCLUSIVE SERVICES.  Except as may otherwise be approved in
               advance by the Board, and except during vacation periods and
               reasonable periods of absence due to sickness, personal
               injury or other disability, the Executive shall devote his
               full working time throughout the Employment Term (as defined
               in Section 2.3) to the services required of him hereunder.
               The Executive shall render his services exclusively to the
               Company during the Employment Term (subject to involvement in
               the activities set forth in Exhibit C attached hereto), and
               shall use his best efforts, judgment and energy to improve
               and advance the business and interests of the Company in a
               manner consistent with the duties of his position.  Without
               limiting the foregoing, the Executive may devote a reasonable
               period of time to community service and

<PAGE>

               charitable activities, and may manage his personal investment
               portfolio, subject to Section 7.3 below.

          2.3  TERM OF EMPLOYMENT.  The Executive's employment under this
               Agreement shall commence as of the Effective Date and shall
               terminate on the earlier of (a) the third anniversary of the
               Effective Date or (b) the date of termination of the
               Executive's employment pursuant to Section 5 or 6 below;
               PROVIDED, HOWEVER, that the term of the Executive's employment
               may be automatically extended by mutual consent of Executive
               and Company for additional one year periods, by means of the
               Board giving written notice to the Executive of its intention
               to extend the term at least sixty days prior to the expiration
               of the then effective term.  The period commencing as of the
               Effective Date and ending on the third anniversary of the
               Effective Date or such later date to which the term of the
               Executive's employment under this Agreement shall have been
               extended is hereinafter referred to as the "EMPLOYMENT TERM".

          2.4  REIMBURSEMENT OF BUSINESS EXPENSES.  The Company shall reimburse
               the Executive for reasonable travel and other business
               expenses incurred by him in the fulfillment of his duties
               hereunder upon presentation by the Executive of an itemized
               account of such expenditures, in accordance with the Company
               practices consistently applied.

     3.   COMPENSATION

          3.1  BASE SALARY. From the Effective Date, the Executive shall be
               entitled to receive a base salary ("Base Salary") at a rate of
               $300,000 per annum, payable in arrears in equal installments
               not less frequently than semi-monthly, on the business day
               coincident with or immediately succeeding each of the 15th day
               and the last of each month, in accordance with the Company's
               payroll practices, with such increases as may be provided in
               accordance with the terms hereof.  Once increased, such higher
               amount shall constitute the Executive's annual Base Salary.

          3.2  ANNUAL REVIEW.  The Executive's Base Salary shall be reviewed
               by the Board, based upon the Executive's performance and then
               current titles and responsibilities, not less often than
               annually, and may be increased, but not decreased, upon the
               recommendation of the Company's Chief Executive Officer, based
               on his performance and upon the Board's view of the
               appropriate Base Salary for the title and responsibilities
               assigned to the Executive from time to time.

<PAGE>

          3.3  BONUS.  The Executive shall not be eligible to participate in
               the Company's Incentive Compensation Plan or other similar
               bonus plan.

          3.4  COMMISSION OVERRIDES. The Executive shall receive, not less
               frequently than semi-monthly, on the business day coincident
               with or immediately succeeding each of the 15th day, and the
               last day of each month, in accordance with the Company's
               payroll practices, commission overrides of (a) five (5) basis
               points on sales of proprietary products (New Momentum, Omni
               Select, SPDA Series, Grand Master, Pinnacle, IQ Smart Annuity,
               and other products agreed to in advance by the Company) in the
               Broker-Dealer distribution channel (unless otherwise agreed to
               in advance); (b) an additional two (2) basis points on sales
               of the above listed proprietary products in excess of the
               amounts set forth in Exhibit A attached hereto for the periods
               described; and (c) three (3) basis points on sales of
               non-proprietary products during 1999 under distribution
               agreements with Allmerica, Canada Life and Mutual of Omaha.

          3.5  TITLE. The Executive's title will be Executive Vice President,
               Broker-Dealer Distribution reporting to the President, Retail
               Business Division.

          3.6  AUTOMOBILE LEASE.  During the initial two (2) years of the
               Employment Term, provided this Agreement is in full force and
               effect, the Company shall reimburse the Executive for certain
               automobile lease payments in the amount of $500.00 per month.

          3.7  CERTAIN TRAILER COMMISSIONS. Executive shall be entitled to
               receive trailer commissions from sales made prior to the date
               of this Agreement under the Wholesaler Agreements listed in
               Exhibit B attached hereto.  Executive covenants and agrees
               that he will promptly terminate the Agreements listed in
               Exhibit B upon executing this Agreement, subject to the
               continuation of the trailer commissions thereunder.

     4.   EMPLOYEE BENEFITS; INDEMNIFICATION

          Except as set forth in Section 3.3 above and excluding
participation in the 1997 Equity Incentive Plan, the Executive shall, during
his employment under this Agreement, be included to the extent eligible
thereunder in all employee benefit plans, programs or arrangements
(including, without limitation, any plans, programs or arrangements
providing for retirement benefits, profit sharing, disability benefits,
health, dental and life insurance, or vacation and paid holidays) which
shall be established by the Company for, or made available to, other
Executive Vice Presidents.  The Company will indemnify Executive to the
fullest extent permitted by the laws of the State of Delaware and the
Certificate of Incorporation and By-Laws of the Company as in effect on the
date

<PAGE>

hereof, and the Company shall procure and maintain insurance policies, to
the extent reasonably available, for the benefit of its directors and
officers, including the Executive.

     5.   TERMINATION OF EMPLOYMENT

          5.1  TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON.

          5.1.1  GENERAL. Subject to the provisions of Sections 5.1.2 and 5.1.3,
                 if, prior to the expiration of the Employment Term, the
                 Executive's employment is terminated by the Company without
                 Cause (as defined in Section 5.3), or if the Executive
                 terminates his employment hereunder for Good Reason (as
                 defined in Section 5.4), the Company shall continue to pay
                 the Executive severance pay in an amount equal to the Base
                 Salary for the remainder of the Employment Term (such period
                 being referred to hereinafter as the "Severance Period"), at
                 such intervals as the same would have been paid had the
                 Executive remained in the active service of the Company.
                 Furthermore, the Company shall continue to pay all (or the
                 applicable portion) of the premiums for such group insurance
                 benefits (such as health, life and disability) that covered
                 Executive on the day next preceeding Executive's
                 termination of employment for the Severance Period.

          5.1.2  CONDITIONS APPLICABLE TO THE SEVERANCE PERIOD.  If, during
                 the Severance Period, the Executive breaches his obligations
                 under Sections 7.1, 7.2, 7.3, 7.4, or 7.5 of this Agreement,
                 the Company may, upon written notice to the Executive,
                 terminate the Severance Period and cease to make any further
                 payments or provide any benefits described in Section 5.1.1.

          5.1.3  DEATH DURING SEVERANCE PERIOD.  In the event of the Executive's
                 death during the Severance Period, payments of the severance
                 amounts under this Section shall continue to be made during
                 the remainder of the Severance Period to the beneficiary
                 designated in writing for this purpose by the Executive or,
                 if no such beneficiary is specifically designated, to the
                 Executive' estate.

          5.1.4  DATE OF TERMINATION.  The date of termination of employment
                 without Cause shall be the date specified in a written
                 notice of termination to the Executive (which date shall be
                 coincident with or subsequent to the date of such notice).
                 The date of resignation for Good Reason shall be the date
                 specified in the written notice of resignation from the
                 Executive to the Company (which date shall be coincident
                 with or subsequent to the date of such notice); PROVIDED,
                 HOWEVER, that no such written notice shall be effective
                 unless the cure period specified in Section 5.4 has expired
                 without

<PAGE>

                 the Company having corrected, to the reasonable satisfaction
                 of the Executive, the event or events subject to cure.  If
                 no date of resignation is specified in the written notice
                 from the Executive to the Company, the date of termination
                 shall be the first day following such expiration of such
                 cure period.

          5.1.5  TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.

          5.2.1  GENERAL. If, prior to the expiration of the Employment Term,
          the Executive's employment is terminated by the Company for Cause,
          or the Executive resigns from his employment hereunder other than
          for Good Reason, the Executive shall be entitled to payment of his
          Base Salary as then in effect through and including the date of
          termination or resignation.  The Executive shall have no further
          right to receive any other compensation or benefits after such
          termination or resignation of employment, except as determined in
          accordance with the terms of the employee benefit plans or programs
          of the Company.

          5.2.2  DATE OF TERMINATION. Subject to the provision to Section 5.3,
          the date of termination for Cause shall be the date specified in a
          written notice of termination to the Executive.  The date of
          resignation without Good Reason shall be the date specified in the
          written notice of resignation from the Executive to the Company
          (which date shall be coincident with or subsequent to the date of
          such notice), or if no date is specified therein, 10 business days
          after receipt by the Company of written notice resignation from the
          Executive.

          5.3.   CAUSE.  Termination for "Cause" shall mean termination of the
          Executive's employment because of:

          (i)    any act or omission that constitutes a material breach by the
                 Executive of any of his material obligations under this
                 Agreement (other than by reason of his death or Permanent
                 Disability);
          (ii)   the continued failure or refusal of the Executive to perform
                 the material duties required of him (and reasonably able to
                 be performed by him) as an employee of the Company (other
                 than by reason of his death or Permanent Disability);\
          (iii)  any willful material violation by the Executive of any law or
                 regulation applicable to the business of the Company or any
                 of its subsidiaries, or the Executive's conviction of a
                 felony, or any willful perpetration by the Executive of a
                 common law fraud; or
          (iv)   any other willful misconduct by the Executive which is
                 materially injurious to the financial condition or business
                 reputation of, or is otherwise materially injurious to, the
                 Company or any of its subsidiaries or affiliates;

<PAGE>

                 PROVIDED, HOWEVER, that if any such Cause relates to the
                 Executive' obligations under this Agreement and (x) is
                 susceptible to cure and (y) does not constitute a repetition
                 of such Cause, the Company shall not terminate the
                 Executive's employment hereunder unless the Company first
                 gives the Executive notice of its intention to terminate and
                 of the grounds for such termination, and the Executive has
                 not, within ten (10) business days following the receipt of
                 the notice, cured such Cause, or in the event such Cause is
                 not susceptible to cure within such 10 business day period,
                 the Executive has not taken all reasonable steps within such
                 10 business day period to cure such Cause as promptly as
                 practicable thereafter.

          5.4 GOOD REASON. For purposes of this Agreement, "Good Reason" shall
          mean any of the following (without the Executive's prior written
          consent);

          (i)    a decrease in the Executive's base rate of compensation or a
                 failure by the Company to pay material compensation due and
                 payable to the Executive in connection with his employment;
          (ii)   a sale of substantially all of the Company's business; or
          (iii)  a Change in Control (as defined in Section 5.5. below).

          5.5 CHANGE IN CONTROL.  As used herein, the term "CHANGE IN CONTROL"
          means:

                 (a) any person (other than the Company, any subsidiary of
          the Company, any employee benefit plan of the Company or of any
          subsidiary of the Company, or any person or entity organized,
          appointed or established by the Company or any subsidiary of the
          Company for or pursuant to the terms of any such plan), alone or
          together with its affiliates and associates (collectively, an
          "Acquiring Person"), shall become the beneficial owner of fifty-one
          percent (51%) or more of the then outstanding shares of common stock
          or the combined voting power of the Company;

                 (b) during any period of two consecutive years, individuals
          who at the beginning of such period constitute the Board, and any new
          director (other than a director who is a representative or nominee
          of an Acquiring Person) whose election by the Board or nomination
          for election by the Company's shareholders was approved by a vote of
          at least a majority of the directors then still in office who either
          were directors at the beginning of the period or whose election or
          nomination for election was previously approved (collectively, the
          "CONTINUING DIRECTORS"), cease for any reason to constitute a
          majority of the Board;

<PAGE>

                 (c) the consummation of a merger or consolidation of the
          Company with any other corporation, other than a merger or
          consolidation which would result in the voting securities of the
          Company outstanding immediately prior thereto continuing to
          represent (either by remaining outstanding or being converted into
          voting securities of the surviving entity of any parent of such
          surviving entity) at least 51% of the combined voting power of the
          Company, such surviving entity or the parent of such surviving entity
          outstanding immediately after such merger or consolidation; or

                 (d) the shareholders of the Company approve a plan of
          reorganization (other than a reorganization under the United States
          Bankruptcy Code) or complete liquidation of the Company or an
          agreement for the sale or disposition by the Company of all or
          substantially all of the Company's assets;

          PROVIDED, HOWEVER, that a Change in Control shall not be deemed to
          have occurred in the event of (i) a sale or conveyance in which the
          Company continues as a holding company of an entity or entities that
          conduct all or substantially all of the business or businesses
          formerly conducted by the company or (ii) any transaction undertaken
          for the purpose of reincorporating the Company under the laws of
          another jurisdiction, if such sale, conveyance or transaction does
          not materially affect the beneficial ownership of the Company's
          capital stock.

     6.   DEATH OR DISABILITY

          In the event of termination of the Executive's employment by reason
          of death or Permanent Disability (as hereinafter defined), the
          Executive (or his estate, as applicable) shall be entitled to Base
          Salary and benefits determined under Sections 3 and 4 hereof through
          the date of termination or, in the case of disability, through the
          later of the date of termination or the date (not later than one
          year following the date of termination) on which the Executive
          commences to receive disability benefits.  Other benefits shall be
          determined in accordance with the benefit plans maintained by the
          Company, and the Company shall have no further obligation hereunder.
          For purposes of this Agreement, "PERMANENT DISABILITY" means a
          physical or mental disability or infirmity of the Executive that
          prevents the normal performance of substantially all his duties as
          an employee of the Company, which disability or infirmity shall
          exist, or in the opinion of an independent physician is reasonably
          likely to exist, for any continuous period of 180 days.

<PAGE>

     7.   NONSOLICITATION; CONFIDENTIALITY; NONCOMPETITION

          7.1    NONSOLICITATION.  For so long as the Executive is employed by
                 the Company and, upon termination of Executive's employment for
                 any reason, continuing for two years thereafter (unless
                 Executive is terminated on or after the third anniversary of
                 this Agreement, in which case continuing for one year
                 thereafter), the Executive shall not, without the prior
                 written consent of the Company, directly or indirectly, as a
                 sole proprietor, member of a partnership or limited
                 liability company, stockholder or investor, officer or
                 director of a corporation, or as an employee, associate,
                 consultant or agent of any person, partnership, or limited
                 liability company, corporation or other business
                 organization or entity other than the Company:  (x) solicit
                 or endeavor to entice away from the Company or any of its
                 subsidiaries any person or entity who is, or, during the
                 then most recent 12-month period, was employed by, or had
                 served as an agent or key consultant of, the Company or any
                 of its subsidiaries (in the case of a consultant, only if
                 such solicitation or enticement is reasonably likely to
                 cause a termination of or otherwise materially interferes
                 with the continued relationship between the Company and such
                 consultant); or (y) solicit or endeavor to entice away from
                 the Company or any of its subsidiaries any existing or
                 reasonably anticipated (to the general knowledge of the
                 Executive or the public) policy, contract or other business
                 with any person or entity who is, or was within the then
                 most recent 12-month period, a customer or client (or
                 reasonably anticipated (to general knowledge of the Executive
                 or the public) to become a customer or client) of the Company
                 or any of its subsidiaries.

          7.2    CONFIDENTIALITY

                 The Executive covenants and agrees with the Company that he
                 will not at any time, except in performance of his
                 obligations to the Company hereunder or with the prior
                 written consent of the Company, directly or indirectly,
                 disclose any secret or confidential information that he may
                 learn or has learned by reason of his association with the
                 Company or any of its subsidiaries and affiliates.  The term
                 "confidential information" includes information not
                 previously disclosed to the public or to the trade by the
                 management of the Company or otherwise in the public domain,
                 with respect to the products, facilities, applications and
                 methods, trade secrets and other intellectual property,
                 systems, procedures, manuals, confidential reports, product
                 price lists, customer lists, technical information, financial
                 information (including the revenues, costs or profits
                 associated with any of the Company's products or services),
                 business plans, prospects or opportunities, but shall exclude
                 any information which (i) is or becomes available to the
<PAGE>

                 public or is generally known in the industry or industries in
                 which the Company operates other than as a result of
                 disclosure by the Executive in violation of his agreements
                 under this Section 7.2 or (ii) the Executive is required to
                 disclose under any applicable laws, regulations or directives
                 of any government agency, tribunal or authority having
                 jurisdiction in the matter or under subpoena or other process
                 of law.

          7.3    NO COMPETING EMPLOYMENT. For so long as the Executive is
                 employed by the Company and, upon the termination of
                 Executive's employment for any reason, continuing for two
                 years thereafter (unless Executive is terminated on or after
                 the third anniversary of this Agreement, in which case
                 continuing for one year thereafter), the Executive shall not,
                 directly or indirectly, as a sole proprietor, member of a
                 partnership or limited liability company, stockholder or
                 investor (other than a stockholder or investor owning not
                 more than a 5% interest), officer or director of a
                 corporation, or as an employee, associate, consultant or
                 agent of any person, partnership, limited liability company,
                 corporation or other business organization or entity other
                 than the Company or any of its subsidiaries, render any
                 service to or in any way be affiliated with a competitor (or
                 any person or entity that is reasonably anticipated (to the
                 general knowledge of the Executive or the public) to become a
                 competitor) of the Company or any of its subsidiaries in the
                 business of accumulation products, insurance businesses and
                 other financial services businesses in which the Company or
                 any of its subsidiaries is engaged.  This noncompetition
                 covenant shall be limited geographically to the United States
                 of America.  Notwithstanding anything contained in this
                 Section 7.3 to the contrary, the period of applicability of
                 this Section 7.3 shall be extended an additional day for each
                 day on which the Executive is in breach of this Section 7.3.

          7.4    EXCLUSIVE PROPERTY. The Executive confirms that all
                 confidential information of the Company is and shall remain
                 the exclusive property of the Company.  All business records,
                 papers and documents kept or made by the Executive for the
                 Company relating to the business of the Company shall be and
                 remain the property of the Company, except for such papers
                 customarily deemed to be the personal copies of the Executive.

          7.5    LIMITATION ON COMMENTS. At no time during or after the
                 Employment Term shall the Executive utter, issue or circulate
                 any false, inappropriate for disparaging statements, remarks
                 or rumors about the Company, its subsidiaries or any of their
                 respective affiliates.  Similarly, at no time during the
                 Employment Term or thereafter shall the Company, its
                 subsidiaries or any of their respective affiliates utter,

<PAGE>

                 issue or circulate any false, inappropriate or disparaging
                 statements, remarks or rumors about the Executive.

          7.6    INJUNCTIVE RELIEF. Without intending to limit the remedies
                 available to the parties hereto, the parties acknowledge that
                 a breach of any of the covenants contained in this Section 7
                 by the other (in the case of the Executive, a breach of
                 Section 7.1, 7.2, 7.3, 7.4 or 7.5 and in the case of the
                 Company, a breach of Section 7.5) may result in material and
                 irreparable injury to the other party for which there is not
                 adequate remedy at law, that it will not be possible to
                 measure damages for such injuries precisely and that, in the
                 event of such a breach or threat thereof, the damaged party
                 shall be entitled to seek a temporary restraining order and/or
                 a preliminary or permanent injunction restraining the breaching
                 party from engaging in activities prohibited by this Section 7
                 or such other relief as may be required specifically to
                 enforce any of the covenants in this Section 7.  If for any
                 reason, it is held that the restrictions under this Section 7
                 are not reasonable or that consideration therefor is
                 inadequate, such restrictions shall be interpreted or modified
                 to include as much of the duration and scope identified in
                 this Section 7 as will render such restriction valid and
                 enforceable.

     8.   ARBITRATION

                 Any dispute or controversy arising under or in connection
with this Agreement that cannot be mutually resolved by the parties hereto
shall be settled exclusively by arbitration in Louisville, Kentucky before
one arbitrator of exemplary qualifications and stature, who shall be selected
jointly by the Company and the Executive, or, if the Company and Executive
cannot agree on the selection of the arbitrator, shall be selected by the
American Arbitration Association (PROVIDED that any arbitrator selected by
the American Arbitration Association shall not, without the consent of the
parties hereto, be affiliated with the Company or the Executive or any of
their respective affiliates).  Judgment may be entered on the arbitrator's
award in any court having jurisdiction.  The parties hereby agree that the
arbitrator shall be empowered to enter an equitable decree mandating specific
enforcement of the terms of this Agreement.  The Company shall bear all
expenses of the arbitrator incurred in any arbitration hereunder and shall
reimburse the Executive for any related reasonable legal fees and
out-of-pocket expenses directly attributable to such arbitration; PROVIDED
that such legal fees are calculated on an hourly, and not on a contingency fee,
basis; and PROVIDED, FURTHER, that the Executive shall bear all expenses of
the arbitrator and all of his legal fees and all out-of-pocket expenses (and
reimburse the Company for its portion of such expenses) if the arbitrator or
relevant trier-of-fact determines that the Executive's claim or position was
frivolous and with reasonable foundation.

<PAGE>

     9.   MISCELLANEOUS

          9.1    NOTICES. All notices or communications hereunder shall be in
                 writing, addressed as follows:

          To the Company:

          ARM Financial Group, Inc.
          515 West Market Street
          Louisville, Kentucky 40202
          Telecopier No: (502) 582-7995
          Attention:  John R. Lindholm
          Copy to:  General Counsel

          Or to such other address as either party may have furnished to the
          other in writing in accordance herewith.  All such notices shall be
          conclusively deemed to be received and shall be effective, (i) if
          sent by hand delivery, upon receipt, (ii) if sent by telecopy or
          facsimile transmission, upon confirmation of receipt by the sender
          of such transmission or (iii) if sent by registered or certified
          mail, on the third day after the day on which such notice is mailed.

          9.2    SEVERABILITY. Each provision of this Agreement shall be
                 interpreted in such manner as to be effective and valid
                 under applicable law, but if any provision of this Agreement
                 is held to be prohibited by or invalid under applicable law,
                 such provision will be ineffective only to the extent of
                 such prohibition or invalidity, without invalidating the
                 remainder of such provision or the remaining provisions of
                 this Agreement.

          9.3    ASSIGNMENT. The Company's rights and obligations under this
                 Agreement shall not be assignable by the Company except as
                 incident to a reorganization, merger or consolidation, or
                 transfer of all or substantially all of the Company's
                 business and properties (or portion thereof in which the
                 Executive is employed). Neither this Agreement nor any
                 rights hereunder shall be assignable or otherwise subject to
                 hypothecation by the Executive.  Nothing herein is intended
                 to affect the provision of Section 5.4 (ii) and (iii).

          9.4    ENTIRE AGREEMENT. Except as expressly set forth herein, this
                 Agreement represents the entire agreement of the parties
                 concerning the subject matter hereof and shall supersede any
                 and all previous contracts, arrangements or understandings
                 between the Company and

<PAGE>

                 the Executive.  This Agreement may be amended at any time by
                 mutual written agreement of the parties hereto.

          9.5    WITHHOLDING. The Payment of any amount pursuant to this
                 Agreement shall be subject to applicable withholding and
                 payroll taxes, and such other deductions as may be required
                 under the Company's employee benefit plans, if any.

          9.6    GOVERNING LAW. This Agreement shall be governed by and
                 construed in accordance with the laws of the Commonwealth of
                 Kentucky.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Executive has hereunto set his hand, as of the day and year first
above written.

                                        ARM FINANCIAL GROUP, INC.

                                        By: /s/ John R. Lindholm
                                           ------------------------------------

                                        Title:  President
                                              ---------------------------------

                                        EXECUTIVE

                                        By: /s/ James G. Kaiser
                                           ------------------------------------
                                                James G. Kaiser
<PAGE>

                                    EXHIBIT A

                            (Target Bonus Override Amounts)


4/1/1999 - 12/31/99                                    $500,000,000

1/1/2000 - 12/31/2000                                  $750,000,000

1/1/2001 - 12/31/2001                                  $750,000,000

1/1/2002 - Termination of this Agreement               $750,000,000
                                                       (multiplied by
                                                       (number of
                                                       days Executive worked
                                                       in 2002) divided by 365)

<PAGE>

                                    EXHIBIT B

                   (Wholesaler Agreements - Trailer Commissions)

                    SECURITY LIFE OF DENVER WHOLESALER AGREEMENT
                                (TERMINATED 6/98)

<PAGE>

                                    EXHIBIT C

                                (Other Activities)

<PAGE>

                                    EXHIBIT C

               JAMES G. KAISER (JGK) PERSONAL INVESTMENT PORTFOLIO

    JGK is a member of the Board of Directors of AffinCorp. Inc., Orinda, CA
      and an investor in many private companies.  These types of investment
     activities are expected to continue into the future, including possible
     directorships; provided, that such activities do not violate Section
         7.3 of this Agreement and do not substantially interfere with
          the obligations of JGK under Section 2.1 of this Agreement.