Document:

Exhibit 10.6

 

Deutsche
Bank 

 

EXECUTION VERSION

Deutsche
Bank AG, London Branch

Winchester
House

1
Great Winchester St, London

EC2N
2DB

Telephone:  44 20 7545 8000

 

c/o
Deutsche Bank Securities Inc.

60
Wall Street

New
York, NY 10005

Telephone:
212-250-2500

 

	
   

  	
  September 17,
  2010

  
	
   

  
	
  To:

  	
  American Equity Investment Life
  Holding Company

  
	
   

  	
  6000 Westown Parkway

  
	
   

  	
  West Des Moines, IA 50266

  
	
   

  	
  Attention:

  	
  Treasurer

  
	
   

  	
  Telephone No.:

  	
  (515) 221-0002

  
	
   

  	
  Facsimile No.:

  	
  (515) 221-9947

  
	
   

  	
   

  
	
  Re:

  	
  Additional
  Warrants

  
				

 

Internal
Reference Nr.: 401229

 

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

 

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

 

The
definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions
(the “Equity Definitions”), as published by
the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the
event of any inconsistency between the Equity Definitions and this
Confirmation, this Confirmation shall govern. 
The Transaction shall be deemed to be a Share Option Transaction within
the meaning set forth in the Equity Definitions.

 

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

 

	
  Chairman
  of the Supervisory Board:  Clemens Börsig

  Board
  of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Dr. Hugo
  Banziger, Anthony DiIorio

  	
   

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

  

 

 

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

 

2.             The Transaction is a Warrant
Transaction, which shall be considered a Share Option Transaction for purposes
of the Equity Definitions.  The terms of
the particular Transaction to which this Confirmation relates are as follows:

 

	
  General Terms.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trade
  Date:

  	
   

  	
  September 17, 2010

  
	
   

  	
   

  	
   

  
	
  Effective
  Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Warrants:

  	
   

  	
  Equity call warrants,
  each giving the holder the right to purchase a number of Shares equal to the
  Warrant Entitlement at a price per Share equal to the Strike Price, subject
  to the terms set forth under the caption “Settlement Terms” below. For the
  purposes of the Equity Definitions, each reference to a Warrant herein shall
  be deemed to be a reference to a Call Option.

  
	
   

  	
   

  	
   

  
	
  Warrant
  Style:

  	
   

  	
  European

  
	
   

  	
   

  	
   

  
	
  Seller:

  	
   

  	
  Company

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  Dealer

  
	
   

  	
   

  	
   

  
	
  Shares:

  	
   

  	
  The common stock of
  Company, par value USD 1.00 per Share (Exchange symbol “AEL”)

  
	
   

  	
   

  	
   

  
	
  Number
  of Warrants:

  	
   

  	
  2,400,000. For the
  avoidance of doubt, the Number of Warrants shall be reduced by any Warrants
  exercised or deemed exercised hereunder. In no event will the Number of
  Warrants be less than zero.

  
	
   

  	
   

  	
   

  
	
  Warrant
  Entitlement:

  	
   

  	
  One Share per Warrant

  
	
   

  	
   

  	
   

  
	
  Maximum
  Number of Shares:

  	
   

  	
  For any day, 5,248,701
  Shares, minus the aggregate number of Shares
  delivered prior to such day pursuant to (i) this Confirmation and
  (ii) any other substantially similar confirmation for Warrants sold by
  Company to Dealer with a trade date within 13 days of the Trade Date and with
  expiration dates the same as the Expiration Dates.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding
  anything to the contrary in the Agreement, this Confirmation or the Equity
  Definitions, in no event shall the Maximum Number of Shares be subject to
  adjustment, except for any adjustment pursuant to the terms of this
  Confirmation and the Equity Definitions in connection with a Potential
  Adjustment

  

 

2

 

	
   

  	
   

  	
  Event (as defined in
  Section 11.2(e)(i) to (vi) of the Equity Definitions, but
  excluding events specified in Section 11.2(e)(vii) of the Equity
  Definitions, and without any amendment to such Sections pursuant to the terms
  of this Confirmation).

  
	
   

  	
   

  	
   

  
	
  Strike
  Price:

  	
   

  	
  USD 16.0000

  
	
   

  	
   

  	
   

  
	
  Premium:

  	
   

  	
  USD 2,340,000.00

  
	
   

  	
   

  	
   

  
	
  Premium
  Payment Date:

  	
   

  	
  September 22, 2010

  
	
   

  	
   

  	
   

  
	
  Exchange:

  	
   

  	
  The New York Stock
  Exchange

  
	
   

  	
   

  	
   

  
	
  Related
  Exchange(s):

  	
   

  	
  All Exchanges

  
	
   

  	
   

  	
   

  
	
  Procedures for Exercise.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Expiration
  Time:

  	
   

  	
  The Valuation Time

  
	
   

  	
   

  	
   

  
	
  Expiration
  Dates:

  	
   

  	
  Each Scheduled Trading
  Day during the period from, and including, the First Expiration Date to, but
  excluding, the 120th Scheduled Trading Day following the First
  Expiration Date shall be an “Expiration Date” for a number of Warrants equal
  to the Daily Number of Warrants on such date; provided that, notwithstanding anything to the contrary in
  the Equity Definitions, if any such date is a Disrupted Day, the Calculation
  Agent shall make adjustments, if applicable, to the Daily Number of Warrants
  or shall reduce such Daily Number of Warrants to zero for which such day
  shall be an Expiration Date and shall designate a Scheduled Trading Day or a
  number of Scheduled Trading Days as the Expiration Date(s) for the
  remaining Daily Number of Warrants or a portion thereof for the originally
  scheduled Expiration Date; and provided  further that if such Expiration Date has not occurred
  pursuant to this clause as of the eighth Scheduled Trading Day following the
  last scheduled Expiration Date under the Transaction, the Calculation Agent
  shall have the right to declare such Scheduled Trading Day to be the final
  Expiration Date and the Calculation Agent shall determine its good faith
  estimate of the fair market value for the Shares as of the Valuation Time on
  that eighth Scheduled Trading Day or on any subsequent Scheduled Trading Day,
  as the Calculation Agent shall determine using commercially reasonable means.

  
	
   

  	
   

  	
   

  
	
  First
  Expiration Date:

  	
   

  	
  December 14, 2015
  (or if such day is not a Scheduled Trading Day, the next following Scheduled
  Trading Day), subject to Market Disruption Event below.

  
	
   

  	
   

  	
   

  
	
  Daily
  Number of Warrants:

  	
   

  	
  For any Expiration
  Date, the Number of Warrants that have not expired or been exercised as of
  such day, divided by the remaining number of
  Expiration Dates (including such day), rounded down to the nearest whole
  number, subject to adjustment pursuant to the provisos to “Expiration Dates”.

  

 

3

 

	
  Automatic
  Exercise:

  	
   

  	
  Applicable; and means
  that for each Expiration Date, a number of Warrants equal to the Daily Number
  of Warrants for such Expiration Date will be deemed to be automatically
  exercised at the Expiration Time on such Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Market
  Disruption Event:

  	
   

  	
  Section 6.3(a)(ii) of
  the Equity Definitions is hereby amended by replacing clause (ii) in its
  entirety with “(ii) an Exchange Disruption, or” and inserting
  immediately following clause (iii) the phrase “; in each case that the
  Calculation Agent determines is material.”

  
	
   

  	
   

  	
   

  
	
  Valuation Terms.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Valuation
  Time:

  	
   

  	
  Scheduled Closing Time;
  provided that if the principal trading
  session is extended, the Calculation Agent shall determine the Valuation Time
  in its reasonable discretion.

  
	
   

  	
   

  	
   

  
	
  Valuation
  Date:

  	
   

  	
  Each Exercise Date.

  
	
   

  	
   

  	
   

  
	
  Settlement Terms.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Method Election:

  	
   

  	
  Applicable; provided that (i) references to “Physical Settlement”
  in Section 7.1 of the Equity Definitions shall be replaced by references
  to “Net Share Settlement”; (ii) Company may elect Cash Settlement only
  if Company represents and warrants to Dealer in writing on the date of such
  election that (A) Company is not in possession of any material
  non-public information regarding Company or the Shares, (B) Company is
  electing Cash Settlement in good faith and not as part of a plan or scheme to
  evade compliance with the federal securities laws, and (C) the assets of
  Company at their fair valuation exceed the liabilities of Company (including
  contingent liabilities), the capital of Company is adequate to conduct the
  business of Company, and Company has the ability to pay its debts and
  obligations as such debts mature and does not intend to, or does not believe
  that it will, incur debt beyond its ability to pay as such debts mature; and
  (iii) the same election of settlement method shall apply to all
  Expiration Dates hereunder.

  
	
   

  	
   

  	
   

  
	
  Electing
  Party:

  	
   

  	
  Company

  
	
   

  	
   

  	
   

  
	
  Settlement
  Method Election Date:

  	
   

  	
  The third Scheduled
  Trading Day immediately preceding the First Expiration Date.

  
	
   

  	
   

  	
   

  
	
  Default
  Settlement Method:

  	
   

  	
  Net Share Settlement

  
	
   

  	
   

  	
   

  
	
  Net
  Share Settlement:

  	
   

  	
  If Net Share Settlement
  is applicable, then on the relevant Settlement Date, Company shall deliver to
  Dealer a number of Shares equal to the Share Delivery Quantity for such
  Settlement Date to the account specified hereto free of payment through the
  Clearance System.

  
	
   

  	
   

  	
   

  
	
  Share
  Delivery Quantity:

  	
   

  	
  For any Settlement
  Date, a number of Shares, as calculated by the Calculation Agent, equal to
  the Net Share Settlement Amount for such Settlement Date divided by
  the Settlement Price on the Valuation Date for such Settlement Date, rounded
  down to the nearest whole

  

 

4

 

	
   

  	
   

  	
  number plus any Fractional Share Amount; provided
  that in no event shall the Share Delivery Quantity for any Settlement Date
  exceed the Maximum Number of Shares for such Settlement Date, minus the Share Delivery Quantity (as defined in the
  letter agreement dated September 16, 2010 between Dealer and Company
  regarding Base Warrants (the “Base Warrant
  Confirmation”)), if any, for such Settlement Date.

  
	
   

  	
   

  	
   

  
	
  Net
  Share Settlement Amount:

  	
   

  	
  For any Settlement
  Date, an amount equal to the product of (i) the Number of Warrants
  exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant
  Valuation Date and (iii) the Warrant Entitlement.

  
	
   

  	
   

  	
   

  
	
  Cash
  Settlement:

  	
   

  	
  If Cash Settlement is
  applicable, on the relevant Settlement Date, Company shall pay to Dealer an
  amount of cash in USD equal to the Net Share Settlement Amount for such
  Settlement Date.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Price:

  	
   

  	
  For any Valuation Date,
  the per Share volume-weighted average price as displayed under the heading
  “Bloomberg VWAP” on Bloomberg page AEL <equity> AQR (or any
  successor thereto) in respect of the period from the scheduled opening time
  of the Exchange to the Scheduled Closing Time on such Valuation Date (or if
  such volume-weighted average price is unavailable, the market value of one
  Share on such Valuation Date, as determined by the Calculation Agent). Notwithstanding the
  foregoing, if (i) any Expiration Date is a Disrupted Day and
  (ii) the Calculation Agent determines that such Expiration Date shall be
  an Expiration Date for fewer than the Daily Number of Warrants, as described
  above, then the Settlement Price for the relevant Valuation Date shall be the
  volume-weighted average price per Share on such Valuation Date on the
  Exchange, as determined by the Calculation Agent based on such sources as it
  deems appropriate using a volume-weighted methodology, for the portion of
  such Valuation Date for which the Calculation Agent determines there is no
  Market Disruption Event.

  
	
   

  	
   

  	
   

  
	
  Settlement
  Dates:

  	
   

  	
  As determined pursuant
  to Section 9.4 of the Equity Definitions, subject to
  Section 9(k)(i) hereof.

  
	
   

  	
   

  	
   

  
	
  Other
  Applicable Provisions:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Representation
  and Agreement:

  	
   

  	
  Notwithstanding
  Section 9.11 of the Equity Definitions, the parties acknowledge that any
  Shares delivered to Dealer may be, upon delivery, subject to restrictions and

  

 

5

 

	
   

  	
   

  	
  limitations arising
  from Company’s status as issuer of the Shares under applicable securities
  laws.

  
	
   

  	
   

  	
   

  
	
  3.             Additional Terms applicable to
  the Transaction.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Adjustments
  applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Method
  of Adjustment:

  	
   

  	
  Calculation Agent
  Adjustment. For the avoidance of doubt, in making any adjustments under the
  Equity Definitions, the Calculation Agent may make adjustments, if any, to
  any one or more of the Strike Price, the Number of Warrants, the Daily Number
  of Warrants and the Warrant Entitlement. Notwithstanding the foregoing, any
  cash dividends or distributions on the Shares, whether or not extraordinary,
  shall be governed by Section 9(f) of this Confirmation in lieu of
  Article 10 or Section 11.2(c) of the Equity Definitions.

  
	
  Extraordinary
  Events applicable to the Transaction:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  New
  Shares:

  	
   

  	
  Section 12.1(i) of
  the Equity Definitions is hereby amended (a) by deleting the text in
  clause (i) thereof in its entirety (including the word “and” following
  clause (i)) and replacing it with the phrase “publicly quoted, traded or
  listed (or whose related depositary receipts are publicly quoted, traded or
  listed) on any of the New York Stock Exchange, The NASDAQ Global Select
  Market or The NASDAQ Global Market (or their respective successors)” and
  (b) by inserting immediately prior to the period the phrase “and
  (iii) of an entity or person organized under the laws of the United
  States, any State thereof or the District of Columbia that also becomes
  Company under the Transaction following such Merger Event or Tender Offer”.

  
	
   

  	
   

  	
   

  
	
  Consequence
  of Merger Events:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Merger
  Event:

  	
   

  	
  Applicable; provided that if an event occurs that constitutes both a
  Merger Event under Section 12.1(b) of the Equity Definitions and an
  Additional Termination Event under Section 9(h)(ii)(B) of this Confirmation,
  Dealer may elect, in its
  commercially reasonable judgment, whether the provisions of
  Section 12.1(b) of the Equity Definitions or
  Section 9(h)(ii)(B) will apply.

  
	
   

  	
   

  	
   

  
	
  Share-for-Share:

  	
   

  	
  Modified Calculation
  Agent Adjustment

  
	
   

  	
   

  	
   

  
	
  Share-for-Other:

  	
   

  	
  Cancellation and
  Payment (Calculation Agent Determination)

  
	
   

  	
   

  	
   

  
	
  Share-for-Combined:

  	
   

  	
  Component Adjustment
  (Calculation Agent Determination).

  
	
   

  	
   

  	
   

  
	
  Consequence
  of Tender Offers:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tender
  Offer:

  	
   

  	
  Applicable; provided that if an event occurs that constitutes both a
  Tender Offer under Section 12.1(d) of the Equity Definitions and
  Additional Termination Event

  

 

6

 

	
   

  	
   

  	
  under
  Section 9(h)(ii)(A) of this Confirmation, Dealer may elect, in its
  commercially reasonable judgment, whether the provisions of Section 12.3
  of the Equity Definitions or Section 9(h)(ii)(A) will apply.

  
	
   

  	
   

  	
   

  
	
  Share-for-Share:

  	
   

  	
  Modified Calculation
  Agent Adjustment

  
	
   

  	
   

  	
   

  
	
  Share-for-Other:

  	
   

  	
  Modified Calculation
  Agent Adjustment

  
	
   

  	
   

  	
   

  
	
  Share-for-Combined:

  	
   

  	
  Modified Calculation
  Agent Adjustment

  
	
   

  	
   

  	
   

  
	
  Announcement
  Event:

  	
   

  	
  If an Announcement Date
  occurs in respect of a Merger Event or Tender Offer (such occurrence, an “Announcement Event”), provided that no adjustments had
  previously been made to account for such events (including pursuant to
  Sections 12.2 and 12.3 of the Equity Definitions), then on the earliest of
  the Expiration Date, Early Termination Date or other date of cancellation
  (the “Announcement Event Adjustment Date”)
  in respect of each Warrant, the Calculation Agent will determine the economic
  effect on such Warrant of the Announcement Event (regardless of whether the
  Announcement Event actually results in a Merger Event or Tender Offer, and
  taking into account such factors as the Calculation Agent may determine,
  including, without limitation, changes in volatility, expected dividends,
  stock loan rate or liquidity relevant to the Shares or the Transaction
  whether prior to or after the Announcement Event or for any period of time,
  including, without limitation, the period from the Announcement Event to the
  relevant Announcement Event Adjustment Date). If the Calculation Agent
  determines that such economic effect on any Warrant is material, then on the
  Announcement Event Adjustment Date for such Warrant, the Calculation Agent
  shall make adjustments to account for such economic effect, which may include
  adjustment to the exercise, settlement, payment or any other terms of such
  Warrant as the Calculation Agent determines appropriate to account for such economic
  effect, which adjustment shall be effective immediately prior to the
  exercise, termination or cancellation of such Warrant, as the case may be.

  
	
   

  	
   

  	
   

  
	
  Announcement
  Date:

  	
   

  	
  The definition of
  “Announcement Date” in Section 12.1 of the Equity Definitions is hereby
  amended by (i) replacing the words “a firm” with the word “any” in the
  second and fourth lines thereof, (ii) replacing the word “leads to the”
  with the words “, if completed, would lead to a” in the third and the fifth
  lines thereof, (iii) replacing the words “voting shares” with the word
  “Shares” in the fifth line thereof, and (iv) inserting the words “by any
  entity” after the word “announcement” in the second and the fourth lines
  thereof.

  
	
   

  	
   

  	
   

  
	
  Nationalization, Insolvency
  or Delisting:

  	
   

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

  

 

7

 

	
   

  	
   

  	
  Global Select Market or
  The NASDAQ Global Market (or their respective successors); if the Shares are
  immediately re-listed, re-traded or re-quoted on any of the New York Stock
  Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or
  their respective successors), such exchange or quotation system shall
  thereafter be deemed to be the Exchange.

  
	
   

  	
   

  	
   

  
	
  Additional
  Disruption Events:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Change
  in Law:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Failure
  to Deliver:

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  
	
  Insolvency
  Filing:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Hedging
  Disruption:

  	
   

  	
  Applicable; provided that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

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

  
	
   

  	
   

  	
   

  
	
  Increased
  Cost of Hedging:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Loss
  of Stock Borrow:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Maximum
  Stock Loan Rate:

  	
   

  	
  200 basis points

  
	
   

  	
   

  	
   

  
	
  Increased
  Cost of Stock Borrow:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Initial
  Stock Loan Rate:

  	
   

  	
  50 basis points

  
	
   

  	
   

  	
   

  
	
  Hedging
  Party:

  	
   

  	
  For all applicable
  Additional Disruption Events, Dealer.

  
	
   

  	
   

  	
   

  
	
  Determining
  Party:

  	
   

  	
  For all applicable
  Extraordinary Events, Dealer.

  
	
   

  	
   

  	
   

  
	
  Non-Reliance:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Agreements
  and Acknowledgments

  	
   

  	
   

  
	
  Regarding
  Hedging Activities:

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  
	
  Additional
  Acknowledgments:

  	
   

  	
  Applicable

  

 

8

 

	
  4.

  	
  Calculation
  Agent.

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Account
  Details.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Account
  for payments to Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank:

  	
  West
  Bank

  	
   

  	
   

  
	
   

  	
   

  	
  ABA#:

  	
  073903354

  	
   

  	
   

  
	
   

  	
   

  	
  Acct No.:

  	
  905432

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficiary:

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
   

  	
  Ref:

  	
  Derivatives

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  for delivery of Shares from Company:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DTC
  50108

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Account
  for payments to Dealer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, London Branch

  	
   

  	
   

  
	
   

  	
   

  	
  The Bank of New York

  	
   

  	
   

  
	
   

  	
   

  	
  Bank Routing: 021-000-018

  	
   

  	
   

  
	
   

  	
   

  	
  Account Name: Deutsche Bank Securities, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  Account No.: 8900327634

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Account
  for delivery of Shares to Dealer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To
  be provided by Dealer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Offices.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  The
  Office of Dealer for the Transaction is: London

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, London Branch

  
	
   

  	
   

  	
  Winchester house

  
	
   

  	
   

  	
  1 Great Winchester St, London

  
	
   

  	
   

  	
  EC2N 2DB

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Notices.

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Address
  for notices or communications to Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
   

  	
  6000
  Westown Parkway

  
	
   

  	
   

  	
  West
  Des Moines, IA 50266

  

 

9

 

	
   

  	
   

  	
  Attention:

  	
  Treasurer

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone
  No.:

  	
  (515)
  221-0002

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile
  No.:

  	
  (515)
  221-9947

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Address
  for notices or communications to Dealer:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG, London Branch

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Deutsche Bank Securities Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  60 Wall Street

  	
   

  	
   

  
	
   

  	
   

  	
  New York, NY 10005

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Andrew Yaeger and Paul Stowell

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone No:

  	
  212-250-6270

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile No:

  	
  212-797-8974

  	
   

  	
   

  
	
   

  	
   

  	
  Email:
  andrew.yaeger@db.com

  	
   

  	
   

  
	
   

  	
   

  	
  Email:
  paul.stowell@db.com

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank AG,
  London Branch

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Deutsche Bank
  Securities Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  60 Wall Street

  	
   

  	
   

  
	
   

  	
   

  	
  New York, NY 10005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Lars Kestner

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  212-250-6043

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  646-593-8200

  	
   

  	
   

  
	
   

  	
   

  	
  Email: lars.kestner@db.com

  	
   

  	
   

  
								

 

8.                                      Representations
and Warranties of Company.

 

Company
hereby represents and warrants to Dealer on the date hereof, on and as of the
Premium Payment Date and, in the case of the representations in Section 8(d),
at all times until termination of the Transaction, that:

 

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

 

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

 

(c)                                  No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required in
connection with the execution, delivery or performance by Company of

 

10

 

this Confirmation, except
such as have been obtained or made and such as may be required under the
Securities Act of 1933, as amended (the “Securities Act”)
or state securities laws.

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (the “Warrant Shares”) have been reserved for issuance pursuant to
the Transaction by all required corporate action of Company.  The Warrant Shares have been duly authorized
and, when delivered against payment therefor (which may include Net Share
Settlement in lieu of cash) and otherwise as contemplated by the terms of the
Warrants following the exercise of the Warrants in accordance with the terms
and conditions of the Warrants, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be subject to
any preemptive or similar rights, in each case which would have a material
adverse effect on the Transaction or Dealer’s rights or obligations relating to
the Transaction.

 

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

 

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

 

(g)                                 Company is not,
on the date hereof, in possession of any material non-public information with
respect to Company.

 

(h)                                 All reports and
other documents filed by Company with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more
recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.

 

9.                                      Other
Provisions.

 

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

 

(b)                                 Repurchase
Notices.  Company
shall, on any day on which Company effects any repurchase of Shares, promptly
give Dealer a written notice of such repurchase (a “Repurchase
Notice”) on such day if following such repurchase, the number of
outstanding Shares on such day, subject to any adjustments provided herein, is (i) less
than 56.7 million (in the case of the first such notice) or (ii) thereafter
more than 1.7 million less than the number of Shares included in the
immediately preceding Repurchase Notice. 
Company agrees to indemnify and hold harmless Dealer and its affiliates
and their respective officers, directors, employees, affiliates, advisors,
agents and controlling persons (each, an “Indemnified
Person”) from and against any and all losses (including losses
relating to Dealer’s hedging activities as a consequence of becoming, or of the
risk of becoming, a Section 16 “insider”, including without limitation,
any forbearance from hedging activities or cessation of hedging activities and
any losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s
fees), joint or several, which an Indemnified Person actually may become
subject to, as a result of Company’s failure to provide Dealer with a
Repurchase Notice on the day and in the manner specified in this paragraph, and
to reimburse, within 30 days, upon written request, each of such Indemnified
Persons for any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence in
connection with or defending any of the foregoing.  If any suit, action, proceeding (including
any

 

11

 

governmental or regulatory investigation), claim or demand shall be
brought or asserted against the Indemnified Person, such Indemnified Person
shall promptly notify Company in writing, and Company, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others Company
may designate in such proceeding and shall pay the reasonable fees and expenses
of such counsel related to such proceeding. 
Company 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, Company agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment.  Company shall not, without the
prior 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 indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding on terms reasonably satisfactory to such
Indemnified Person.  If the
indemnification provided for in this paragraph is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Company 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.  The remedies provided
for in this paragraph are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Person at law or in
equity.  The indemnity and contribution
agreements contained in this paragraph shall remain operative and in full force
and effect regardless of the termination of the Transaction.

 

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

 

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

 

(e)                                  Transfer
or Assignment.  Company may
not transfer any of its rights or obligations under the Transaction without the
prior written consent of Dealer.  Dealer
may, without Company’s consent, transfer or assign all or any part of its
rights or obligations under the Transaction to any third party.  If at any time at which (A) the Section 16
Percentage exceeds 8.0%, (B) the Warrant Equity Percentage exceeds 14.5%,
or (C) the Share Amount exceeds the Applicable Share Limit (if any
applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using
its commercially reasonable efforts to effect a transfer or assignment of
Warrants to a third party on pricing terms reasonably acceptable to Dealer and
within a time period reasonably acceptable to Dealer such that no Excess
Ownership Position exists, then Dealer may designate any Exchange Business Day
as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following
such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an
Early Termination Date with respect to a Terminated Portion, a payment shall be
made pursuant to Section 6 of the Agreement as if (1) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to the Transaction and a Number of Warrants equal to the number of
Warrants underlying the Terminated Portion, (2) Company were the sole
Affected Party with respect to such partial termination and (3) the
Terminated Portion were the sole Affected Transaction (and, for the avoidance
of doubt, the provisions of Section 9(j) shall apply to any amount
that is payable by Company to Dealer pursuant to this sentence as if Company
was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the number of
Shares that Dealer and each person subject to aggregation of Shares with Dealer
under Section 13 or Section 16 of the Exchange Act

 

12

 

and rules promulgated thereunder directly or indirectly
beneficially own (as defined under Section 13 or Section 16 of the
Exchange Act and rules promulgated thereunder) and (B) the
denominator of which is the number of Shares outstanding.  The “Warrant Equity Percentage”
as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the sum of (1) the product of the Number of Warrants
and the Warrant Entitlement and (2) the aggregate number of Shares
underlying any other warrants purchased by Dealer from Company, and (B) the
denominator of which is the number of Shares outstanding.  The “Share Amount”
as of any day is the number of Shares that Dealer and any person whose
ownership position would be aggregated with that of Dealer (Dealer or any such
person, a “Dealer Person”) under any
insurance or other law, rule, regulation, regulatory order or organizational
documents or contracts of Company that are, in each case, applicable to
ownership of Shares (including, without limitation, state insurance
regulations) (“Applicable Restrictions”), owns,
beneficially owns, constructively owns, controls, holds the power to vote or
otherwise meets a relevant definition of ownership under any Applicable
Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit”
means a number of Shares equal to (A) the minimum number of Shares that
could give rise to reporting or registration obligations or other requirements
(including obtaining prior approval from any person or entity) of a Dealer
Person, or could result in an adverse effect on a Dealer Person, under any
Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares
outstanding.  Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing Dealer to
purchase, sell, receive or deliver any Shares or other securities, or make or
receive any payment in cash, to or from Company, Dealer may designate any of
its affiliates to purchase, sell, receive or deliver such Shares or other
securities, or make or receive such payment in cash, and otherwise to perform
Dealer’s obligations in respect of the Transaction and any such designee may
assume such obligations.  Dealer shall be
discharged of its obligations to Company to the extent of any such performance.

 

(f)                                    Dividends.  If at any time during the
period from and including the Effective Date, to and including the last
Expiration Date, (i) an ex-dividend date for a cash dividend occurs with
respect to the Shares (an “Ex-Dividend Date”),
and that dividend differs from the Regular Dividend on a per Share basis or (ii) if
no Ex-Dividend Date for a cash dividend occurs with respect to the Shares in
any annual dividend period of Company, then the Calculation Agent will adjust
any of the Strike Price, Number of Warrants
and/or Daily Number of Warrants to preserve the fair value of the
Warrants to Dealer after taking into account such dividend or lack
thereof.  “Regular
Dividend” shall mean for any calendar year, USD 0.08 for the sum of
any cash dividends or distributions on the Shares for which the Ex-Dividend
Date falls within such calendar year. For the avoidance of doubt, if at any
time within a calendar year the sum of any cash dividends or distributions on
the Shares for which the Ex-Dividend Date falls within a calendar year exceeds
USD 0.08, the Calculation Agent will, at such time, make the relevant
adjustments as set forth in this Section 9(f), and the Regular Dividend
shall be deemed to be zero for any subsequent dividend or distribution on the
Shares for which the Ex-Dividend Date falls within the same calendar year.

 

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

 

(h)                                 Additional Provisions.

 

(i)                                     Amendments to the
Equity Definitions:

 

(A)                              Section 11.2(a) of
the Equity Definitions is hereby amended by deleting the words “a diluting or
concentrative” and replacing them with the words “a material”; and adding the
phrase “or Warrants” at the end of the sentence.

 

 

(B)                                Section 11.2(c) of
the Equity Definitions is hereby amended by (x) replacing the words “a
diluting or concentrative” with “a material”, (y) adding the phrase “or

 

13

 

Warrants” after the words “the relevant Shares” in the same sentence and (z) deleting
the phrase “(provided that no adjustments will be made to account solely for
changes in volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)” and replacing it with the phrase “(and, for
the avoidance of doubt, adjustments may be made to account solely for changes
in volatility, expected dividends, stock loan rate or liquidity relative to the
relevant Shares).”

 

(C)                                Section 11.2(e)(vii) of
the Equity Definitions is hereby amended by deleting the words “a diluting or
concentrative” and replacing them with the word “a material”; and adding the
phrase “or Warrants” at the end of the sentence.

 

(D)                               [Reserved]

 

(E)                                 Section 12.9(b)(iv) of
the Equity Definitions is hereby amended by:

 

(x)                                   deleting (1) subsection
(A) in its entirety, (2) the phrase “or (B)” following subsection (A) and
(3) the phrase “in each case” in subsection (B); and

 

(y)                                 deleting the phrase “neither
the Non-Hedging Party nor the Lending Party lends Shares in the amount of the
Hedging Shares or” in the penultimate sentence.

 

(F)                                 Section 12.9(b)(v) of
the Equity Definitions is hereby amended by:

 

(x)                                   adding the word “or”
immediately before subsection “(B)” and deleting the comma at the end of
subsection (A); and

 

(y)                                 (1) deleting
subsection (C) in its entirety, (2) deleting the word “or”
immediately preceding subsection (C) and (3) deleting the penultimate
sentence in its entirety and replacing it with the sentence “The Hedging Party
will determine the Cancellation Amount payable by one party to the other.”

 

(ii)                                  Notwithstanding
anything to the contrary in this Confirmation, upon the occurrence of one of
the following events, with respect to the Transaction, (1) Dealer shall have the right
to designate such event an Additional Termination Event and designate an Early
Termination Date pursuant to Section 6(b) of the Agreement, (2) Company
shall be deemed the sole Affected Party with respect to such Additional
Termination Event and (3) the Transaction shall be deemed the sole
Affected Transaction:

 

(A)                              A “person” or “group”
within the meaning of Section 13(d) of the Exchange Act, other than
Company, its subsidiaries and its and their employee benefit plans, has become
the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under
the Exchange Act, of Company’s common equity representing more than 50% of the
voting power of Company’s common equity.

 

(B)                                The consummation of (I) any
recapitalization, reclassification or change of the Shares (other than changes
resulting from a subdivision or combination) as a result of which the Shares
would be converted into, or exchanged for, stock, other securities, other
property or assets, (II) any share exchange, consolidation or merger of
Company pursuant to which the Shares will be converted into cash, securities or
other property, or (III) any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially all of the
consolidated assets of Company and its subsidiaries, taken as a whole, to any
person other than one of Company’s subsidiaries (excluding a pledge of
securities issued by any of Company’s subsidiaries); provided
that a transaction

 

14

 

described in clause (II) in which the holders of all classes of
Company’s common equity immediately prior to such transaction own, directly or
indirectly, more than 50% of all classes of common equity of the continuing or
surviving corporation immediately after such transaction in substantially the
same proportions as such ownership (subject to adjustment for any transaction
in which Company’s stockholders have the right to elect to receive more than a
single type of consideration) immediately prior to such transaction shall not
be an Additional Termination Event pursuant to this clause (B).

 

 

(C)                                Default by Company or
any of its subsidiaries with respect to any mortgage, agreement or other
instrument under which there was originally outstanding, or by which there was
originally secured or evidenced, indebtedness for money borrowed in excess of
$120 million in the aggregate of Company and/or any such subsidiary, whether
such indebtedness now exists or shall hereafter be created (I) resulting
in such indebtedness becoming or being declared due and payable or (II) constituting
a failure to pay the principal or interest of any such indebtedness when due and
payable at its stated maturity, upon required repurchase, upon declaration of
acceleration or otherwise.

 

(D)                               A final judgment for
the payment of $10 million or more (excluding any amounts covered by insurance)
rendered against Company or any of its significant subsidiaries (as defined in Article 1,
Rule 1-02 of Regulation S-X), which judgment is not discharged or stayed
within 60 days after (I) the date on which the right to appeal thereof has
expired if no such appeal has commenced, or (II) the date on which all
rights to appeal have been extinguished.

 

(E)                                 Dealer, despite using
commercially reasonable efforts, is unable or reasonably determines, in good
faith based on the advice of outside counsel, that it is impractical or
illegal, to hedge its exposure with respect to the Transaction in the public
market without registration under the Securities Act or as a result of any
legal, regulatory or self-regulatory requirements or related policies and
procedures (whether or not such requirements, policies or procedures are
imposed by law or have been voluntarily adopted by Dealer).

 

(F)                                 At any time on any day
during the period from and including the Trade Date, to and including the final
Expiration Date, (I) the Share Delivery Quantity that would be deliverable
(determined as if such time were the Valuation Time, such date were the
Exercise Date and Valuation Date for a number of Warrants equal to the Number
of Warrants as of such date, and Net Share Settlement applied) exceeds a number
of Shares equal to 66% of the Maximum Number of Shares, or (II) Company
makes a public announcement of any transaction or event that, in the reasonable
opinion of Dealer would, upon consummation of such transaction or upon the
occurrence of such event, as applicable, and after giving effect to any
applicable adjustments hereunder, cause the Share Delivery Quantity immediately
following the consummation of such transaction or the occurrence of such event
(determined as if the time immediately following the consummation of such transaction
or the occurrence of such event were the Valuation Time, the date upon which
such transaction is consummated or such event occurs were the Exercise Date and
Valuation Date for a number of Warrants equal to the Number of Warrants as of
such Date, and Net Share Settlement applied) to exceed a number of Shares equal
to 66% of the Maximum Number of Shares. 
For the purposes of this clause (F), the Share Delivery Quantity shall
be deemed to include the “Share Delivery Quantity” (as defined in the Base Warrant
Confirmation) and the terms set forth above for determining the Share Delivery
Quantity shall apply mutatis mutandis for
the purposes of determining the “Share Delivery Quantity” under the Base
Warrant Confirmation.

 

15

 

For purposes of determining an
Additional Termination Event, any transaction or event that constitutes an
Additional Termination Event under both clauses (A) and (B) above
will be deemed to be an Additional Termination Event solely under clause (B).

 

Notwithstanding the foregoing,
a transaction or transactions described in clauses (A) or (B) above
shall not constitute an Additional Termination Event if at least 90% of the
consideration received or to be received by holders of the Shares, excluding
cash payments for fractional Shares and cash payments made pursuant to
dissenters’ appraisal rights, in connection with such transaction or
transactions consists of shares of common stock or other certificates
representing common equity interests that are listed or quoted on any of The
New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or any of their respective successors) or will be so listed or quoted
when issued or exchanged in connection with such transaction or transactions.

 

(i)                                     No
Collateral or Setoff.  Each party
waives any and all rights it may have to set off obligations arising under the
Agreement and the Transaction against other obligations between the parties,
whether arising under any other agreement, applicable law or otherwise.

 

(j)                                     Alternative
Calculations and Payment on Early Termination and on Certain Extraordinary
Events.

 

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

 

	
  Share
  Termination Alternative:

  	
   

  	
  If
  applicable, Company shall deliver to Dealer the Share Termination Delivery
  Property on the date (the “Share Termination
  Payment Date”) on which the Payment Obligation would otherwise be
  due pursuant to Section 12.7 or Section 12.9 of the Equity
  Definitions or Section 6(d)(ii) of the Agreement, as applicable,
  subject to Section 9(k)(i) below, in satisfaction, subject to
  Section 9(k)(ii) below,  of
  the relevant Payment Obligation, in the manner reasonably requested by Dealer
  free of payment.

  
	
   

  	
   

  	
   

  
	
  Share
  Termination Delivery Property:

  	
   

  	
  A
  number of Share Termination Delivery Units, as calculated by the Calculation
  Agent, equal to the relevant Payment Obligation divided by
  the Share

  

 

16

 

	
   

  	
   

  	
  Termination
  Unit Price. The Calculation Agent shall adjust the amount of Share
  Termination Delivery Property by replacing any fractional portion of a
  security therein with an amount of cash equal to the value of such fractional
  security based on the values used to calculate the Share Termination Unit
  Price (without giving effect to any discount pursuant to
  Section 9(k)(i)).

  
	
   

  	
   

  	
   

  
	
  Share
  Termination Unit Price:

  	
   

  	
  The
  value to Dealer of property contained in one Share Termination Delivery Unit
  on the date such Share Termination Delivery Units are to be delivered as
  Share Termination Delivery Property, as determined by the Calculation Agent
  in its discretion by commercially reasonable means.  In the case of a Private Placement of Share
  Termination Delivery Units that are Restricted Shares (as defined below), as
  set forth in Section 9(k)(i) below, the Share Termination Unit
  Price shall be determined by the discounted price applicable to such Share
  Termination Delivery Units.  In the
  case of a Registration Settlement of Share Termination Delivery Units that
  are Restricted Shares (as defined below) as set forth in
  Section 9(k)(ii) below, the Share Termination Unit Price shall be
  the Settlement Price on the Merger Date, Tender Offer Date, Announcement Date (in the case of a
  Nationalization, Insolvency or Delisting), Early Termination Date or
  date of cancellation, as applicable.  The
  Calculation Agent shall notify Company of the Share Termination Unit Price at
  the time of notification of such Payment Obligation to Company or, if
  applicable, at the time the discounted price applicable to the relevant Share
  Termination Units is determined pursuant to Section 9(k)(i).

  
	
   

  	
   

  	
   

  
	
  Share
  Termination Delivery Unit:

  	
   

  	
  In
  the case of a Termination Event, Event of Default Additional Disruption Event
  or Delisting, one Share or, in the case of Nationalization, Insolvency,
  Tender Offer or Merger Event, a unit consisting of the number or amount of
  each type of property received by a holder of one Share (without consideration
  of any requirement to pay cash or other consideration in lieu of fractional
  amounts of any securities) in such Nationalization, Insolvency, Tender
  Offer or Merger Event.  If such
  Nationalization, Insolvency, Tender Offer or Merger Event involves a
  choice of consideration to be received by holders, such holder shall be
  deemed to have elected to receive the maximum possible amount of cash.

  
	
   

  	
   

  	
   

  
	
  Failure
  to Deliver:

  	
   

  	
  Inapplicable

  
	
   

  	
   

  	
   

  
	
  Other applicable
  provisions:

  	
   

  	
  If Share Termination
  Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11, 9.12
  and 10.5 (as modified above) of the Equity Definitions will be applicable,
  except that all references in such

  

 

17

 

	
   

  	
   

  	
  provisions
  to “Physically-settled” shall be read as references to “Share Termination
  Settled” and all references to “Shares” shall be read as references to “Share
  Termination Delivery Units”.  “Share
  Termination Settled” in relation to the Transaction means that the Share
  Termination Alternative is applicable to the Transaction.

  

 

(ii)                                  Any deliveries
under Section 9(j)(i) shall be limited to the Maximum Number of
Shares as defined in Section 2.

 

(k)                                  Registration/Private
Placement Procedures.  If,
in the commercially reasonable opinion of Dealer, based on the advice of
outside counsel, following any delivery of Shares or Share Termination Delivery
Property to Dealer hereunder, such Shares or Share Termination Delivery
Property would be in the hands of Dealer subject to any applicable restrictions
with respect to any registration or qualification requirement or prospectus
delivery requirement for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law (including, without
limitation, any such requirement arising under Section 5 of the Securities
Act as a result of such Shares or Share Termination Delivery Property being “restricted
securities”, as such term is defined in Rule 144 under the Securities Act,
or as a result of the sale of such Shares or Share Termination Delivery
Property being subject to paragraph (c) of Rule 145 under the
Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares
shall be effected pursuant to either clause (i) or (ii) below at the
election of Company, unless Dealer waives the need for registration/private
placement procedures set forth in (i) and (ii) below.  Notwithstanding the foregoing, solely in
respect of any Daily Number of Warrants exercised or deemed exercised on any
Expiration Date, Company shall elect, prior to the first Settlement Date for
the First Expiration Date, a Private Placement Settlement or Registration
Settlement for all deliveries of Restricted Shares for all such Expiration Dates
which election shall be applicable to all Settlement Dates for such Warrants
and the procedures in clause (i) or clause (ii) below shall apply for
all such delivered Restricted Shares on an aggregate basis commencing after the
final Settlement Date for such Warrants. 
The Calculation Agent shall make reasonable adjustments to settlement
terms and provisions under this Confirmation to reflect a single Private
Placement or Registration Settlement for such aggregate Restricted Shares
delivered hereunder.

 

(i)                                     If Company
elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted
Shares by Company shall be effected in customary private placement procedures
with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement
Settlement if, on the date of its election, it has taken, or caused to be
taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of
the Securities Act for the sale by Company to Dealer (or any affiliate
designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Restricted
Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such
Restricted Shares shall include customary representations, covenants, blue sky
and other governmental filings and/or registrations, indemnities to Dealer, due
diligence rights (for Dealer or any designated buyer of the Restricted Shares
by Dealer), opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably acceptable to
Dealer.  In the case of a Private
Placement Settlement, Dealer shall determine the appropriate discount to the
Share Termination Unit Price (in the case of settlement of Share Termination
Delivery Units pursuant to Section 9(j) above) or any Settlement
Price (in the case of settlement of Shares pursuant to Section 2 above)
applicable to such Restricted Shares in a commercially reasonable manner and
appropriately adjust the number of such Restricted Shares to be delivered to
Dealer hereunder.  Notwithstanding the
Agreement or this Confirmation, the date of delivery of such Restricted Shares
shall be the Exchange Business Day following notice by Dealer to

 

18

 

Company, of such applicable discount and the number of Restricted
Shares to be delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of
Restricted Shares shall be due as set forth in the previous sentence and not be
due on the Share Termination Payment Date (in the case of settlement of Share
Termination Delivery Units pursuant to Section 9(j) above) or on the
Settlement Date for such Restricted Shares (in the case of settlement in Shares
pursuant to Section 2 above).

 

(ii)                                  If Company
elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but
in any event no later than the beginning of the Resale Period) file and use its
reasonable efforts to make effective under the Securities Act a registration
statement or supplement or amend an outstanding registration statement in form
and substance reasonably satisfactory to Dealer, to cover the resale of such
Restricted Shares in accordance with customary resale registration procedures,
including covenants, conditions, representations, underwriting discounts (if
applicable), commissions (if applicable), indemnities due diligence rights,
opinions and certificates, and such other documentation as is customary for
equity resale underwriting agreements, all reasonably acceptable to
Dealer.  If Dealer, in its sole
reasonable discretion, is not satisfied with such procedures and documentation
Private Placement Settlement shall apply. 
If Dealer is satisfied with such procedures and documentation, it shall
sell the Restricted Shares pursuant to such registration statement during a
period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Restricted Shares (which, for
the avoidance of doubt, shall be (x) the Share Termination Payment Date in
case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above
or (y) the Settlement Date in respect of the final Expiration Date for all
Daily Number of Warrants) and ending on the earliest of (i) the Exchange
Business Day on which Dealer completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds of such sales equals or
exceeds the Payment Obligation (as defined above), (ii) the date upon
which all Restricted Shares have been sold or transferred pursuant to Rule 144
(or similar provisions then in force) or Rule 145(d)(2) (or any
similar provision then in force) under the Securities Act and (iii) the
date upon which all Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144 (or any similar provision then in
force) or Rule 145(d)(2) (or any similar provision then in force)
under the Securities Act.  If the Payment
Obligation exceeds the realized net proceeds from such resale, Company shall
transfer to Dealer by the open of the regular trading session on the Exchange
on the Exchange Trading Day immediately following the last day of the Resale
Period the amount of such excess (the “Additional Amount”)
in cash or in a number of Shares (“Make-whole Shares”)
in an amount that, based on the Settlement Price on the last day of the Resale
Period (as if such day was the “Valuation Date” for purposes of computing such
Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable
the sale of the Make-whole Shares.  If
Company elects to pay the Additional Amount in Shares, the requirements and
provisions for Registration Settlement shall apply.  This provision shall be applied successively
until the Additional Amount is equal to zero. 
In no event shall Company deliver a number of Restricted Shares greater
than the Maximum Number of Shares.

 

(iii)                               Without
limiting the generality of the foregoing, Company agrees that any Restricted
Shares delivered to Dealer, as purchaser of such Restricted Shares, (A) may
be transferred by and among Dealer and its affiliates and Company shall effect
such transfer without any further action by Dealer and (B) after the
period of 6 months from the Trade Date (or 1 year from the Trade Date if, at
such time, informational requirements of Rule 144(c) under the
Securities Act are not satisfied with respect to Company) has elapsed after any
Settlement Date or Share Termination Payment Date, as applicable, for such
Restricted Shares, Company shall promptly remove, or cause the transfer agent
for such Restricted Shares to remove, any legends referring to any such
restrictions or requirements from such Restricted Shares upon request by Dealer
(or such affiliate of

 

19

 

Dealer) to Company or such transfer agent, without any requirement for
the delivery of any certificate, consent, agreement, opinion of counsel, notice
or any other document, any transfer tax stamps or payment of any other amount
or any other action by Dealer (or such affiliate of Dealer).

 

(iv)                              If the Private
Placement Settlement or the Registration Settlement shall not be effected as
set forth in clauses (i) or (ii), as applicable, then failure to effect
such Private Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Company shall be the
Defaulting Party.

 

(l)                                     Limit
on Beneficial Ownership.  Notwithstanding any other provisions hereof,
Dealer may not exercise any
Warrant hereunder or be entitled to take delivery of any Shares
deliverable hereunder,
and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent
(but only to the extent) that, after such receipt of any Shares upon the
exercise of such Warrant or otherwise hereunder and after taking into account
any Shares deliverable to Dealer under the Base Warrant Confirmation, (i) the
Section 16 Percentage would exceed 8.0%, or (ii) the Share Amount
would exceed the Applicable Share Limit. 
Any purported delivery hereunder shall be void and have no effect to the
extent (but only to the extent) that, after such delivery and after taking into
account any Shares deliverable to Dealer under the Base Warrant Confirmation, (i) the
Section 16 Percentage would exceed 8.0%, or (ii) the Share Amount
would exceed the Applicable Share Limit. If any delivery owed to Dealer
hereunder is not made, in whole or in part, as a result of this provision,
Company’s obligation to make such delivery shall not be extinguished and
Company shall make such delivery as promptly as practicable after, but in no
event later than one Business Day after, Dealer gives notice to Company that,
after such delivery, (i) the Section 16 Percentage would not exceed
8.0%, and (ii) the Share Amount would not exceed the Applicable Share
Limit.

 

(m)                               Share
Deliveries. Company acknowledges and agrees that, to the
extent the holder of this Warrant is not then an affiliate and has not been an
affiliate for 90 days (it being understood that Dealer will not be considered
an affiliate under this paragraph solely by reason of its receipt of Shares
pursuant to the Transaction), and otherwise satisfies all holding period and
other requirements of Rule 144 of the Securities Act applicable to it, any
delivery of Shares or Share Termination Delivery Property hereunder at any time
after 6 months from the Trade Date (or 1 year from the Trade Date if, at such
time, informational requirements of Rule 144(c) are not satisfied
with respect to Company) shall be eligible for resale under Rule 144 of
the Securities Act and Company agrees to promptly remove, or cause the transfer
agent for such Shares or Share Termination Delivery Property, to remove, any
legends referring to any restrictions on resale under the Securities Act from
the Shares or Share Termination Delivery Property.  Company further agrees that any delivery of
Shares or Share Termination Delivery Property prior to the date that is 6
months from the Trade Date (or 1 year from the Trade Date if, at such time,
informational requirements of Rule 144(c) are not satisfied with
respect to Company), may be transferred by and among Dealer and its affiliates
and Company shall effect such transfer without any further action by
Dealer.  Notwithstanding anything to the
contrary herein, Company agrees that any delivery of Shares or Share
Termination Delivery Property shall be effected by book-entry transfer through
the facilities of DTC, or any successor depositary, if at the time of delivery,
such class of Shares or class of Share Termination Delivery Property is in
book-entry form at DTC or such successor depositary.  Notwithstanding anything to the contrary
herein, to the extent the provisions of Rule 144 of the Securities Act or
any successor rule are amended, or the applicable interpretation thereof
by the Securities and Exchange Commission or any court change after the Trade
Date, the agreements of Company herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of Company, to comply with Rule 144
of the Securities Act, as in effect at the time of delivery of the relevant
Shares or Share Termination Delivery Property.

 

(n)                                 Waiver
of Jury Trial.  Each party
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any suit, action or proceeding relating
to the Transaction.  Each party (i) certifies
that no representative, agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in the event of such a
suit,

 

20

 

action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into the Transaction, as
applicable, by, among other things, the mutual waivers and certifications
provided herein.

 

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

 

(p)                                 Maximum
Share Delivery.

 

(i)                                     Notwithstanding
any other provision of this Confirmation, the Agreement or the Equity
Definitions, in no event will Company at any time be required to deliver a
number of Shares greater than the Maximum Number of Shares to Dealer in
connection with the Transaction, after taking into account any Shares
deliverable to Dealer under the Base Warrant Confirmation.

 

(ii)                                  In the event
Company shall not have delivered to Dealer the full number of Shares or
Restricted Shares otherwise deliverable by Company to Dealer pursuant to the
terms of the Transaction because Company has insufficient authorized but
unissued Shares (such deficit, the “Deficit Shares”),
Company shall be continually obligated to deliver, from time to time, Shares or
Restricted Shares, as the case may be, to Dealer until the full number of
Deficit Shares have been delivered pursuant to this Section 9(p)(ii),
when, and to the extent that, (A) Shares are repurchased, acquired or
otherwise received by Company or any of its subsidiaries after the Trade Date
(whether or not in exchange for cash, fair value or any other consideration), (B) authorized
and unissued Shares reserved for issuance in respect of other transactions
prior to such date that prior to the relevant date become no longer so reserved
or (C) Company additionally authorizes any unissued Shares that are not
reserved for other transactions; provided that
in no event shall Company deliver any Shares or Restricted Shares to Dealer
pursuant to this Section 9(p)(ii) to the extent that such delivery
would cause the aggregate number of Shares and Restricted Shares delivered to
Dealer to exceed the Maximum Number of Shares. 
Company shall immediately notify Dealer of the occurrence of any of the
foregoing events (including the number of Shares subject to clause (A), (B) or
(C) and the corresponding number of Shares or Restricted Shares, as the
case may be, to be delivered) and promptly deliver such Shares or Restricted
Shares, as the case may be, thereafter.

 

(iii)                               Notwithstanding
anything to the contrary in this Confirmation, any amount payable by Company to Dealer in respect of the Transaction  (A) pursuant to Section 12.7 or Section 12.9 of the Equity
Definitions or (B) pursuant to Section 6(d)(ii) of
the Agreement shall, for all purposes, be calculated as if the Maximum
Number of Shares were equal to 2.0 times the Number of Shares (without regard
to the limitations on adjustment set forth in the second paragraph opposite the
caption “Maximum Number of Shares” in Section 2).

 

(q)                                 Shareholder Approval. Company shall use its commercially reasonable
efforts to seek approval from its shareholders, in accordance with the
requirements of Rule 312.03(c) of The New York Stock Exchange Listed
Company Manual or any successor rule, for the issuance pursuant to the
Transaction of a number of Shares equal to 1.75 times the Number of Shares
(without regard to the limitations on adjustment set forth in the second
paragraph opposite the caption “Maximum Number of Shares” in Section 2). 
If Company succeeds in obtaining such approval, then upon such approval
and without any further action by either party, (i) the two paragraphs set forth opposite the caption
“Maximum Number of Shares” in Section 2 shall be deemed to be replaced in
their entirety with the phrase “A number of Shares equal to 1.75 times the
Number of Shares” and (ii) the Additional Termination Event set forth in Section 9(h)(ii)(F) shall
no longer be applicable.

 

21

 

(r)                                    Right to Extend.  Dealer may
postpone, in whole or in part, any Expiration Date or any other date of
valuation or delivery with respect to some or all of the relevant Warrants (in
which event the Calculation Agent shall make appropriate adjustments to the
Daily Number of Warrants with respect to one or more Expiration Dates) if
Dealer determines, in its commercially reasonable judgment, that such extension
is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge
unwind activity hereunder in light of existing liquidity conditions or to
enable Dealer to effect purchases of Shares in connection with its hedging,
hedge unwind or settlement activity hereunder in a manner that would, if Dealer
were Issuer or an affiliated purchaser of Issuer, be in compliance with
applicable legal, regulatory or self-regulatory requirements, or with related
policies and procedures applicable to Dealer.

 

(s)                                  Status of Claims in Bankruptcy.   Dealer acknowledges and
agrees that this Confirmation is not intended to convey to Dealer rights
against Company with respect to the Transaction that are senior to the claims
of common stockholders of Company in any United States bankruptcy proceedings
of Company; provided that nothing
herein shall limit or shall be deemed to limit Dealer’s right to pursue
remedies in the event of a breach by Company of its obligations and agreements
with respect to the Transaction; provided, further, that
nothing herein shall limit or shall be deemed to limit Dealer’s rights in
respect of any transactions other than the Transaction.

 

(t)                                    Securities
Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and
a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the “Bankruptcy Code”),
and the parties hereto to be entitled to the protections afforded by, among
other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of
the Bankruptcy Code, (ii) a
party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to
the other party to constitute a “contractual right” as described in the
Bankruptcy Code, and (iii) each payment and delivery of cash, securities
or other property hereunder to constitute a “margin payment” or “settlement
payment” and a “transfer” as defined in the Bankruptcy Code.

 

(u)                                 Early
Unwind. 
In the event that the sale of the “Option Securities” (as defined in
the Purchase Agreement (the “Purchase Agreement”),
dated as of September 16, 2010, between Company and J.P. Morgan Securities
LLC, as representative of the Initial Purchasers party thereto (the “Initial Purchasers”)) is not consummated with the Initial
Purchasers for any reason, or Company fails to deliver to Dealer opinions of
counsel as required pursuant to Section 9(a), in each case by 5:00 p.m.
(New York City time) on the Premium Payment Date, or such later date as agreed
upon by the parties (the Premium Payment Date or such later date the “Early
Unwind Date”), then the Transaction shall automatically
terminate (the “Early Unwind”),  on the Early Unwind Date and (A) the Transaction
and all of the respective rights and obligations of Dealer and Company under
the Transaction shall be cancelled and terminated and (B) each party shall
be released and discharged by the other party from and agrees not to make any
claim against the other party with respect to any obligations or liabilities of
the other party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date; provided that Company shall purchase from
Dealer on the Early Unwind Date all Shares purchased by Dealer or one or more
of its affiliates in connection with the Transaction at the then prevailing
market price.  Each of Dealer and Company
represent and acknowledge to the other that, subject to the proviso included in
this Section 9(u), upon an Early Unwind, all obligations with respect to
the Transaction shall be deemed fully and finally discharged.

 

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

 

22

 

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

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Dealer is
  regulated by the Financial Services Authority.

  
	
   

  	
   

  
	
   

  	
  Deutsche Bank AG, London
  Branch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lars Kestner

  
	
   

  	
  Name:

  	
  Lars Kestner

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Horton

  
	
   

  	
  Name:

  	
   Natalie Horton

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lars Kestner

  
	
   

  	
  Name:

  	
  Lars Kestner

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Natalie Horton

  
	
   

  	
  Name:

  	
  Natalie Horton

  
	
   

  	
  Title:

  	
  Managing Director

  
				

 

 

Accepted
and confirmed

as of the Trade Date:

 

 

	
  American
  Equity Investment Life Holding Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John M.
  Matovina

  	
   

  
	
  Authorized
  Signatory

  	
   

  
	
  Name:

  	
  John M. Matovina

  	
   

  
	
  Title:

  	
  Chief Financial Officer &
  Treasurer

  	
   

  

 

 

	
  Chairman
  of the Supervisory Board:  Clemens Börsig

  Board
  of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Dr. Hugo
  Banziger, Anthony DiIorio

  	
   

  	
  Deutsche
  Bank AG is regulated by the FSA for the conduct of designated investment
  business in the UK, is a member of the London Stock Exchange and is a limited
  liability company incorporated in the Federal Republic of Germany HRB
  No. 30 000 District Court of Frankfurt am Main; Branch Registration
  No. in England and Wales BR000005, Registered address: Winchester House,
  1 Great Winchester Street, London EC2N 2DB.Exhibit 10.7

 

 

EXECUTION VERSION

 

JPMorgan
Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

 

	
   

  	
  September 17, 2010

  

 

	
  To:

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
  6000
  Westown Parkway

  
	
   

  	
  West
  Des Moines, IA 50266

  
	
   

  	
  Attention:

  	
  Treasurer

  
	
   

  	
  Telephone
  No.:

  	
  (515)
  221-0002

  
	
   

  	
  Facsimile
  No.:

  	
  (515)
  221-9947

  
	
   

  	
   

  	
   

  
	
  Re:

  	
  Amendment
  to Call Option Transaction

  

 

This
letter agreement (this “Amendment”)
amends the terms and conditions of the Call Option Transaction (the “Transaction”) evidenced by the letter agreement between
JPMorgan Chase Bank, National Association, London Branch (“Dealer”)
and American Equity Investment Life Holding Company  (“Counterparty”) dated as of September 16, 2010 (the “Confirmation”).

 

1.             Definitions.  Capitalized terms used herein without
definition shall have the meanings assigned to them in the Confirmation.

 

2.             Representations and Warranties of Counterparty.  Each of the representations and warranties
made pursuant to the Agreement and the Confirmation on the Trade Date are
hereby deemed to be repeated on the date hereof as if references to the Trade
Date were references to the date hereof.

 

3.             Amendments.  The Confirmation is hereby amended by:

 

(a)           increasing the “Number
of Options” from 170,000 to 200,000; and

 

(b)           decreasing the
Applicable Percentage from (i) a fraction, expressed as a percentage, (A) the
numerator of which is 110 and (B) the denominator of which is 170, to (ii) 55%.

 

4.             Effectiveness.  This Amendment shall become effective upon
execution by the parties hereto.  Upon
the effectiveness of this Amendment, all references in the Confirmation to the “Transaction”
will be deemed to be to the Transaction as amended hereby.  Except as amended hereby, all the terms of
the Transaction and provisions in the Confirmation shall remain and continue in
full force and effect and are hereby confirmed in all respects.

 

5.             Counterparts.  This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
all of the signatures thereto and hereto were upon the same instrument.

 

6.             Governing Law.   The provisions of this Amendment shall be
governed by the laws of the State of New York law (without reference to choice
of law doctrine).

 

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

Please confirm that the foregoing correctly
sets forth the terms of our agreement by executing this Amendment and returning
it to EDG Confirmation Group, J.P. Morgan Securities Inc., 277 Park Avenue,
11th Floor, New York, NY 10172-3401, or by fax to (212) 622
8519.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Santosh Sreenivasan

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
  Name:
  Santosh Sreenivasan

  

 

 

Accepted
and confirmed

as of the Trade Date:

 

	
  American Equity Investment Life Holding Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John M. Matovina

  	
   

  
	
  Authorized
  Signatory

  	
   

  
	
  Name:
  John M. Matovina

  	
   

  
	
  Title:
  Chief Financial Officer & Treasurer

  	
   

  
			

 

JPMorgan Chase Bank,
National Association 

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

Main Office 1111 Polaris
Parkway, Columbus, Ohio 43271

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

Registered Branch Office 125
London Wall, London EC2Y 5AJ

Authorised and regulated by
the Financial Services Authority

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