Document:

Exhibit 4.1

 

 

 

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY,

Issuer

 

5.25% Contingent Convertible Senior Notes Due 2029

 

 

INDENTURE

 

 

U.S. Bank National Association,

Trustee

 

 

December 22, 2009

 

 

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (a)(5)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.10

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.11

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  312

  	
  (a)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
   

  	
  11.03

  	
   

  
	
   

  	
  (c)

  	
   

  	
  11.03

  	
   

  
	
  313

  	
  (a)

  	
   

  	
  7.06

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.06

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (d)

  	
   

  	
  N.A.

  	
   

  
	
  314

  	
  (a)

  	
   

  	
  4.02,
  4.03

  	
   

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (c)(1)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (c)(2)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (d)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (e)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  	
   

  
	
  315

  	
  (a)

  	
   

  	
  7.01(b)

  	
   

  
	
   

  	
  (b)

  	
   

  	
  7.05

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (d)

  	
   

  	
  7.01(c)

  	
   

  
	
   

  	
  (e)

  	
   

  	
  6.11

  	
   

  
	
  316

  	
  (a)(1)(A)

  	
   

  	
  6.05

  	
   

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  	
   

  
	
  317

  	
  (a)(1)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  	
   

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  	
   

  
	
  318

  	
  (a)

  	
   

  	
  N.A.

  	
   

  

 

N.A.
means not applicable.

 

* This Cross-Reference
Table is not part of the Indenture.

 

i

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
  ARTICLE 1

  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02.

  	
  Other Definitions

  	
   

  	
  7

  
	
  Section 1.03.

  	
  Incorporation by Reference of Trust Indenture Act

  	
   

  	
  9

  
	
  Section 1.04.

  	
  Rules of Construction

  	
   

  	
  9

  
	
  Section 1.05.

  	
  Acts of Holders

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2

  THE SECURITIES

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form and Dating

  	
   

  	
  11

  
	
  Section 2.02. 

  	
  Execution and Authentication

  	
   

  	
  12

  
	
  Section 2.03. 

  	
  Registrar, Paying Agent and Conversion Agent

  	
   

  	
  13

  
	
  Section 2.04. 

  	
  Paying Agent to Hold Money in Trust

  	
   

  	
  13

  
	
  Section 2.05. 

  	
  Holder Lists

  	
   

  	
  14

  
	
  Section 2.06. 

  	
  Transfer and Exchange

  	
   

  	
  14

  
	
  Section 2.07. 

  	
  Replacement Securities

  	
   

  	
  16

  
	
  Section 2.08. 

  	
  Outstanding Securities; Determinations of Holders’ Action

  	
   

  	
  17

  
	
  Section 2.09. 

  	
  Temporary Securities

  	
   

  	
  18

  
	
  Section 2.10. 

  	
  Cancellation

  	
   

  	
  19

  
	
  Section 2.11. 

  	
  Persons Deemed Owners

  	
   

  	
  19

  
	
  Section 2.12. 

  	
  Global Securities

  	
   

  	
  19

  
	
  Section 2.13. 

  	
  CUSIP Numbers

  	
   

  	
  21

  
	
  Section 2.14. 

  	
  Designation

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3

  REDEMPTION AND REPURCHASES

  	
   

  	
   

  
	
  Section 3.01. 

  	
  Right to Redeem; Notices to Trustee

  	
   

  	
  22

  
	
  Section 3.02. 

  	
  Selection of Securities to Be Redeemed

  	
   

  	
  22

  
	
  Section 3.03. 

  	
  Notice of Redemption

  	
   

  	
  23

  
	
  Section 3.04. 

  	
  Effect of Notice of Redemption

  	
   

  	
  24

  
	
  Section 3.05. 

  	
  Deposit of Redemption Price

  	
   

  	
  24

  
	
  Section 3.06. 

  	
  Securities Redeemed in Part

  	
   

  	
  24

  
	
  Section 3.07. 

  	
  Sinking Fund

  	
   

  	
  25

  
	
  Section 3.08.

  	
  Repurchase of Securities at Option of the Holder on
  Specified Dates

  	
   

  	
  25

  

 

ii

 

	
  Section 3.09. 

  	
  Repurchase of Securities at Option of the Holder Upon a
  Change in Control

  	
   

  	
  27

  
	
  Section 3.10.  

  	
  Effect of Repurchase Notice or Change in Control Repurchase
  Notice

  	
   

  	
  31

  
	
  Section 3.11. 

  	
  Deposit of Repurchase Price or Change in Control Repurchase
  Price

  	
   

  	
  32

  
	
  Section 3.12. 

  	
  Securities Repurchased in Part

  	
   

  	
  32

  
	
  Section 3.13.

  	
  Covenant to Comply with Securities Laws upon Repurchase of
  Securities

  	
   

  	
  33

  
	
  Section 3.14. 

  	
  Repayment to the Company

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4

  COVENANTS

  	
   

  	
   

  
	
  Section 4.01. 

  	
  Payment of Securities

  	
   

  	
  33

  
	
  Section 4.02. 

  	
  SEC and Other Reports

  	
   

  	
  34

  
	
  Section 4.03.

  	
  Compliance Certificate; Notice of Default

  	
   

  	
  34

  
	
  Section 4.04. 

  	
  Further Instruments and Acts

  	
   

  	
  35

  
	
  Section 4.05. 

  	
  Maintenance of Office or Agency

  	
   

  	
  35

  
	
  Section 4.06. 

  	
  Delivery of Certain Information

  	
   

  	
  35

  
	
  Section 4.07. 

  	
  No Registration Rights; Liquidated Damages

  	
   

  	
  36

  
	
  Section 4.08. 

  	
  Calculation of Tax Original Issue Discount

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 5

  SUCCESSOR CORPORATION

  	
   

  	
   

  
	
  Section 5.01. 

  	
  When the Company May Consolidate, Merge or Transfer
  Assets

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 6

  DEFAULTS AND REMEDIES

  	
   

  	
   

  
	
  Section 6.01. 

  	
  Events of Default

  	
   

  	
  39

  
	
  Section 6.02. 

  	
  Acceleration

  	
   

  	
  41

  
	
  Section 6.03. 

  	
  Other Remedies

  	
   

  	
  41

  
	
  Section 6.04. 

  	
  Waiver of Past Defaults

  	
   

  	
  42

  
	
  Section 6.05. 

  	
  Control by Majority

  	
   

  	
  42

  
	
  Section 6.06. 

  	
  Limitation on Suits

  	
   

  	
  42

  
	
  Section 6.07. 

  	
  Rights of Holders to Receive Payment and to Convert

  	
   

  	
  43

  
	
  Section 6.08. 

  	
  Collection Suit by Trustee

  	
   

  	
  43

  
	
  Section 6.09. 

  	
  Trustee May File Proofs of Claim

  	
   

  	
  43

  
	
  Section 6.10. 

  	
  Priorities

  	
   

  	
  44

  
	
  Section 6.11. 

  	
  Suits

  	
   

  	
  44

  
	
  Section 6.12. 

  	
  Waiver of Stay, Extension or Usury Laws

  	
   

  	
  45

  

 

iii

 

	
   

  	
  ARTICLE 7

  TRUSTEE

  	
   

  	
   

  
	
  Section 7.01. 

  	
  Duties of Trustee

  	
   

  	
  45

  
	
  Section 7.02. 

  	
  Rights of Trustee

  	
   

  	
  46

  
	
  Section 7.03. 

  	
  Individual Rights of Trustee

  	
   

  	
  49

  
	
  Section 7.04. 

  	
  Trustee’s Disclaimer

  	
   

  	
  49

  
	
  Section 7.05. 

  	
  Notice of Defaults

  	
   

  	
  49

  
	
  Section 7.06. 

  	
  Reports by Trustee to Holders

  	
   

  	
  49

  
	
  Section 7.07. 

  	
  Compensation and Indemnity

  	
   

  	
  50

  
	
  Section 7.08. 

  	
  Replacement of Trustee

  	
   

  	
  51

  
	
  Section 7.09. 

  	
  Successor Trustee by Merger Etc.

  	
   

  	
  52

  
	
  Section 7.10. 

  	
  Eligibility; Disqualification

  	
   

  	
  52

  
	
  Section 7.11. 

  	
  Preferential Collection of Claims Against Company

  	
   

  	
  52

  
	
  Section 7.12. 

  	
  Force Majeure

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 8

  DISCHARGE OF INDENTURE

  	
   

  	
   

  
	
  Section 8.01. 

  	
  Discharge of Liability on Securities

  	
   

  	
  53

  
	
  Section 8.02. 

  	
  Repayment to the Company

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 9

  AMENDMENTS

  	
   

  	
   

  
	
  Section 9.01. 

  	
  Without Consent of Holders

  	
   

  	
  53

  
	
  Section 9.02. 

  	
  With Consent of Holders

  	
   

  	
  54

  
	
  Section 9.03. 

  	
  Compliance with Trust Indenture Act

  	
   

  	
  55

  
	
  Section 9.04. 

  	
  Revocation and Effect of Consents

  	
   

  	
  55

  
	
  Section 9.05. 

  	
  Notation on or Exchange of Securities

  	
   

  	
  55

  
	
  Section 9.06. 

  	
  Trustee to Sign Supplemental Indentures

  	
   

  	
  56

  
	
  Section 9.07. 

  	
  Effect of Supplemental Indentures

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 10

  CONVERSION OF THE SECURITIES

  	
   

  	
   

  
	
  Section 10.01. 

  	
  Conversion Privilege

  	
   

  	
  56

  
	
  Section 10.02. 

  	
  Conversion Procedure

  	
   

  	
  60

  
	
  Section 10.03. 

  	
  Taxes on Conversion

  	
   

  	
  61

  
	
  Section 10.04. 

  	
  Company to Provide Stock

  	
   

  	
  62

  
	
  Section 10.05. 

  	
  Adjustment of Conversion Price

  	
   

  	
  64

  
	
  Section 10.06. 

  	
  No Adjustment

  	
   

  	
  69

  
	
  Section 10.07. 

  	
  Equivalent Adjustments

  	
   

  	
  70

  
	
  Section 10.08. 

  	
  Adjustment for Tax Purposes

  	
   

  	
  70

  
	
  Section 10.09. 

  	
  Notice of Adjustment

  	
   

  	
  70

  

 

iv

 

	
  Section 10.10. 

  	
  Notice of Certain Transactions

  	
   

  	
  71

  
	
  Section 10.11. 

  	
  Effect of Reclassification, Consolidation, Merger, Share
  Exchange or Sale on Conversion Privilege

  	
   

  	
  71

  
	
  Section 10.12. 

  	
  Trustee’s Disclaimer

  	
   

  	
  73

  
	
  Section 10.13. 

  	
  Voluntary Reduction

  	
   

  	
  73

  
	
  Section 10.14. 

  	
  Conversion Value of Securities Tendered

  	
   

  	
  73

  
	
  Section 10.15. 

  	
  Simultaneous Adjustments

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 11

  MISCELLANEOUS

  	
   

  	
   

  
	
  Section 11.01. 

  	
  Trust Indenture Act Controls

  	
   

  	
  75

  
	
  Section 11.02. 

  	
  Notices

  	
   

  	
  75

  
	
  Section 11.03. 

  	
  Communication by Holders with Other Holders

  	
   

  	
  76

  
	
  Section 11.04. 

  	
  Certificate and Opinion as to Conditions Precedent

  	
   

  	
  76

  
	
  Section 11.05. 

  	
  Statements Required in Certificate or Opinion

  	
   

  	
  77

  
	
  Section 11.06. 

  	
  Separability Clause

  	
   

  	
  77

  
	
  Section 11.07. 

  	
  Rules by Trustee, Paying Agent, Conversion Agent and
  Registrar

  	
   

  	
  78

  
	
  Section 11.08. 

  	
  Legal Holidays

  	
   

  	
  78

  
	
  Section 11.09. 

  	
  Governing Law

  	
   

  	
  78

  
	
  Section 11.10. 

  	
  No Recourse Against Others

  	
   

  	
  78

  
	
  Section 11.11. 

  	
  Successors

  	
   

  	
  78

  
	
  Section 11.12. 

  	
  Multiple Originals

  	
   

  	
  78

  
	
  Section 11.13. 

  	
  Table of Contents and Headings

  	
   

  	
  78

  
	
  Section 11.14. 

  	
  Tax Treatment of The Securities

  	
   

  	
  78

  

 

	
  Exhibit A

  	
  -

  	
  Form of
  Global Security

  
	
  Exhibit B

  	
  -

  	
  Transfer
  Certificate

  
	
  Schedule
  A

  	
  -

  	
   Additional Shares Table

  

 

v

 

INDENTURE dated as of December 22, 2009 among
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY, a Delaware corporation (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States of America
(the “Trustee”).

 

Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders (as defined
below) of the Company’s 5.25% Contingent Convertible Senior Notes due 2029 (the
“Securities”):

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Definitions.

 

“Acquisition
Value” of the Common Stock means, for each Trading Day in the
Valuation Period, the value of the consideration paid per share of Common Stock
in connection with such Public Acquirer Change in Control, (i) for any
cash, 100% of the face amount of such cash; (ii) for any Acquirer Common
Stock, 100% of the closing sale price of such acquirer common stock on each
such Trading Day; and (iii) for any other securities, assets or property,
102% of the fair market value of such security, asset or property on each such
Trading Day, as determined by two independent nationally recognized investment
banks selected by the Trustee for this purpose.

 

“Affiliate” has
the meaning provided in Rule 405 under the Securities Act.

 

“Agent” means
any Registrar, Paying Agent, Conversion Agent or co-registrar.

 

“Applicable Procedures”
means, with respect to any transfer or transaction involving a Global Security
or beneficial interests therein, the rules and procedures of the
Depositary for such Global Security, in each case to the extent applicable to
such transaction and as in effect from time to time.

 

“Bankruptcy Law”
means Title 11, U.S. Code or any similar federal, state, or foreign law for the
relief of debtors.

 

“Beneficial Owner”
shall be determined in accordance with Rule 13d-3 and Rule 13d-5
promulgated by the SEC under the Exchange Act or any successor provision,
except that: (i) a person shall be deemed to have “Beneficial Ownership”
of all shares of Common Stock that the Person has the right to acquire, whether
exercisable immediately or only after the passage of time and (ii)

 

 

any percentage of “Beneficial Ownership”
shall be determined using the definition in clause (i) in both the
numerator and the denominator.

 

“Board of Directors”
means either the board of directors of the Company or any duly authorized
committee of such board of directors authorized to act for it with respect to
this Indenture.

 

“Board Resolutions”
means a copy of one or more resolutions, certified by an Officer of the Company
to have been duly adopted or consented to by the Board of Directors and to be
in full force and effect, and delivered to the Trustee.

 

“Business Day”
means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York.

 

“Capital Stock”
for any corporation means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) stock issued by that corporation, but excluding from all
of the foregoing any debt securities convertible into Capital Stock, whether or
not such debt securities include any right of participation with Capital Stock.

 

“Change in Control”
means the occurrence of one or more of the following events:

 

(a)           any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the properties and assets
of the Company, to any Person or group of related Persons, as defined in Section 13(d) of
the Exchange Act (a “Group”);

 

(b)           the
approval by the holders of the Capital Stock of the Company of any plan or
proposal for the liquidation or dissolution of the Company, whether or not
otherwise in compliance with this Indenture;

 

(c)           any
Person or Group, other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or any Subsidiary, becomes the Beneficial
Owner, directly or indirectly, of shares of Voting Stock representing in excess
of 50% of the aggregate ordinary voting power represented by all of the issued
and outstanding Voting Stock of the Company; or

 

(d)           the
first day on which a majority of the members of the Board of Directors are not
Continuing Directors.

 

“Closing Sale Price”
on any date means the closing sale price per share (or if no closing sale price
is reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask 

 

2

 

prices) on such date for the Acquirer Common
Stock as reported in composite transactions on the New York Stock Exchange or
the principal United States securities exchange on which the Common Stock is
traded or, if the Common Stock is not listed on a United States national or
regional securities exchange, as reported by Pink OTC Markets, Inc.

 

“Common Stock”
shall mean shares of the Company’s Common Stock, $1.00 par value per share, as
they exist on the date of this Indenture or any other shares of Capital Stock
of the Company into which the Common Stock shall be reclassified or changed.

 

“Common Stock Price”
on any date means the closing sale price per share (or if no closing sale price
is reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask prices) on such
date for the Common Stock as reported in composite transactions on the New York
Stock Exchange or the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national or regional securities exchange, as reported by Pink OTC Markets, Inc.  If the Common Stock is not so quoted, the
“Common Stock Price” will be the average of the mid-point of the last bid and
asked prices for the Common Stock on the relevant date quoted by each of at
least three nationally recognized independent investment banking firms selected
by the Company for this purpose.

 

“Company” means
the party named as the “Company” in the first paragraph of this Indenture until
a successor replaces it pursuant to the applicable provisions of this Indenture
and, thereafter, shall mean such successor. 
The foregoing sentence shall likewise apply to any subsequent successor
or successors.

 

“Company Order”
means a written request or order signed in the name of the Company by any two
Officers.

 

“Continuing Directors”
means, as of any date of determination, any member of the Board of Directors
who (a) was a member of the Board of Directors as of the date hereof or (b) was
nominated for election or elected to the Board of Directors with the approval
of a majority of the Continuing Directors who were members of the Board of
Directors at the time of such nomination or election.

 

“Conversion Price”
means $9.69 per share of Common Stock as of the date of this Indenture, subject
to the adjustments described in Section 10.05 hereof.

 

3

 

“Conversion Rate”
means the number of shares of Common Stock equal to $1,000 divided by the
Conversion Price, which shall be approximately 103.1992 prior to any adjustment
thereto.

 

“Corporate Trust Office”
means the office of the Trustee at which at any time the trust created by this
Indenture shall be administered, which office at the date hereof is located at
U.S. Bank National Association, 60 Livingston Avenue EP-MN-WS3C, St. Paul, MN
55107-2292, or such other address as the Trustee may designate from time to
time by notice to the Holders and the Company, or the principal corporate trust
office of any successor Trustee (or such other address as a successor Trustee
may designate from time to time by notice to the Holders and the Company).

 

“Default” means
any event which is, or after notice or passage of time or both would be, an
Event of Default.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time.

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States, which are in effect from time to time.

 

“Holder” means a
Person in whose name a Security is registered on the Registrar’s books.

 

“Indenture”
means this Indenture, as amended or supplemented from time to time in
accordance with the terms hereof, including the provisions of the TIA that are
deemed to be a part hereof.

 

“Initial Purchaser”
shall mean FBR Capital Markets & Co.

 

“Market Price”
means the average of the Common Stock Prices for 20 consecutive Trading Days
commencing 30 Trading Days before the record date with respect to any
distribution, issuance or other event requiring such computation, appropriately
adjusted (as determined in good faith by the Board of Directors, whose
determination shall be conclusive) to take into account the occurrence, during
the period commencing on the first of such 20 consecutive Trading Days and
ending on such record date, of any event requiring adjustment of the Conversion
Price under this Indenture.

 

4

 

“Obligations”
means all obligations for principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation under which any indebtedness is created, evidenced or
secured, including, in the case of the Securities, Contingent Interest and
Liquidated Damages, if any.

 

“Officer” means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President
(whether or not such title is preceded by any modifier such as “Executive, “Senior”
or the like), the Chief Financial Officer, the Treasurer, the Controller or the
Secretary of such Person or any other officer designated by the board of
directors of such Person serving in a similar capacity; provided
that the designation of any such Officer of the Company by the Board of
Directors shall be evidenced in a Board Resolution.

 

“Officers’ Certificate”
means a written certificate containing the information specified in Sections
11.04 and 11.05, signed in the name of the Company by any two Officers, and
delivered to the Trustee.  An Officers’
Certificate given pursuant to Section 4.03 shall be signed by the
principal executive officer, principal financial officer or the principal
accounting officer of the Company but need not contain the information
specified in Sections 11.04 and 11.05.

 

“Opinion of Counsel”
means a written opinion containing the information specified in Sections 11.04
and 11.05, from legal counsel who is acceptable to the Trustee in its
reasonable discretion.  The counsel may
be an employee of, or counsel to, the Company or the Trustee.

 

“Person” means
any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or other entity.

 

“Public Acquirer Change in
Control” means any transaction described in clause (c) of the
definition of Change in Control where the acquirer, or any entity that it is a
direct or indirect ‘‘beneficial owner’’ (as defined in Rule 13d-3 under
the Exchange Act) of more than 50% of the aggregate ordinary voting power of
all shares of such acquirer’s capital stock that are entitled to vote generally
in the election of directors, but in each case other than the Company, has a
class of common stock traded on a national securities exchange or reported by
Pink OTC Markets Inc. or which will be so traded or reported when issued or
exchanged in connection with such Change in Control. Such acquirer’s or other
entity’s class of common stock traded on a national securities exchange or reported
by Pink OTC Markets Inc. which will be so traded or reported when issued or
exchanged in connection with such fundamental change is herein referred to as “Acquirer Common Stock.”

 

5

 

“Responsible Officer”
shall mean, when used with respect to the Trustee, any officer within the
corporate trust department of the Trustee, including any vice president,
assistant vice president, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person’s knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

 

“Rule 144A”
means Rule 144A under the Securities Act (or any successor provision), as
it may be amended from time to time.

 

“SEC” means the
Securities and Exchange Commission.

 

“Security” or “Securities” means any of the Company’s 5.25% Contingent
Convertible Senior Notes Due 2029 issued under this Indenture.

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time.

 

“Significant Subsidiary”
has the meaning ascribed to such term in Regulation S-X (17 CFR Part 210).

 

“Stated Maturity”,
when used with respect to any Security, means the date specified in such
Security as the fixed date on which an amount equal to the principal amount of
such Security is due and payable.

 

“Subsidiary”
means, with respect to any Person, (i) any corporation of which the
outstanding Capital Stock having at least a majority of the votes entitled to
be cast in the election of directors under ordinary circumstances (determined
without regard to any classification of directors) shall at the time be owned,
directly or indirectly, by such Person, (ii) any other Person (other than
a partnership) of which at least a majority of the voting interests under
ordinary circumstances is at the time, directly or indirectly, owned by such
Person or (iii) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of such Person
or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).

 

“Tax Original Issue Discount”
means the amount of ordinary interest income on a Security that must be accrued
as original issue discount for United States federal income tax purposes
pursuant to Treasury regulation section 1.1275-4 or any successor provision.

 

6

 

“TIA” means the
Trust Indenture Act of 1939 as in effect on the date of this Indenture, provided that in the event the TIA is amended after such
date, TIA means, to the extent required by any such amendment, the TIA as so amended.

 

“Trading Day”
means any regular or abbreviated trading day of The New York Stock Exchange.

 

“Trading Price”
on any date of determination means the average of the secondary market bid
quotations per $1,000 principal amount of Securities obtained by the Trustee
for $5,000,000 principal amount of the Securities at approximately 3:30 p.m.,
New York City time, on such determination date from three independent
nationally recognized securities dealers the Company selects, which may include
the Initial Purchaser; provided that
if at least three such bids cannot reasonably be obtained by the Trustee, but
two such bids are obtained, then the average of the two bids shall be used, and
if only one such bid can reasonably be obtained by the Trustee, this one bid shall
be used.  If the Trustee cannot
reasonably obtain at least one such bid or, in the Company’s reasonable
judgment, the bid quotations are not indicative of the secondary market value
of the Securities, then the Trading Price of the Securities will be determined
in good faith by the Trustee, taking into account in such determination such
factors as it, in its sole discretion after consultation with the Company,
deems appropriate.

 

“Transfer Restricted
Securities Legend” means the legend labeled as such and that is set
forth in Exhibit A hereto.

 

“Trustee” means
the party named as the “Trustee” in the
first paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply
to any subsequent such successor or successors.

 

“Voting Stock”
of a Person means Capital Stock of such Person of the class or classes pursuant
to which the holders thereof have the general voting power under ordinary
circumstances (determined without regard to any classification of directors) to
elect at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).

 

Section 1.02.  Other Definitions.

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Acceleration
  Notice

  	
   

  	
  6.02(a)

  
	
  Accepted
  Purchased Shares

  	
   

  	
  10.05(f)

  
	
  Act

  	
   

  	
  1.05(a)

  

 

7

 

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Additional
  Shares

  	
   

  	
  10.01(b)

  
	
  Agent
  Members

  	
   

  	
  2.12(e)

  
	
  Authenticating
  Agent

  	
   

  	
  2.02

  
	
  Change
  in Control Repurchase Date

  	
   

  	
  3.09(a)

  
	
  Change
  in Control Repurchase Price

  	
   

  	
  3.09(a)

  
	
  Change
  in Control Repurchase Notice

  	
   

  	
  3.09(c)

  
	
  Company
  Change in Control Repurchase Notice

  	
   

  	
  3.09(b)

  
	
  Company
  Repurchase Notice

  	
   

  	
  3.08(b)

  
	
  Contingent
  Interest

  	
   

  	
  Exhibit A

  
	
  Contingent
  Interest Average Trading Price

  	
   

  	
  Exhibit A

  
	
  Contingent
  Interest Period

  	
   

  	
  Exhibit A

  
	
  Conversion
  Agent

  	
   

  	
  2.03

  
	
  Conversion
  Date

  	
   

  	
  10.02(a)

  
	
  Conversion
  Value

  	
   

  	
  10.14(a)

  
	
  Damages
  Payment Date

  	
   

  	
  4.07(b)

  
	
  Depositary

  	
   

  	
  2.01(b)

  
	
  Determination
  Date

  	
   

  	
  10.14(b)

  
	
  Divided
  Threshold Amount

  	
   

  	
  10.05(e)

  
	
  DTC

  	
   

  	
  2.01(b)

  
	
  Effective
  Date

  	
   

  	
  10.01(b)

  
	
  Event
  of Default

  	
   

  	
  6.01

  
	
  Ex-Dividend
  Date

  	
   

  	
  10.01(a)(ii)

  
	
  Global
  Security

  	
   

  	
  2.01(b)

  
	
  Interest
  Payment Date

  	
   

  	
  Exhibit A

  
	
  Legal
  Holiday

  	
   

  	
  11.08

  
	
  Liquidated
  Damages

  	
   

  	
  4.07(a)

  
	
  Net
  Share Amount

  	
   

  	
  10.14(b)

  
	
  Net
  Shares

  	
   

  	
  10.14(b)

  
	
  Notice
  of Redemption

  	
   

  	
  3.03

  
	
  Offer
  Expiration Time

  	
   

  	
  10.05(d)

  
	
  Paying
  Agent

  	
   

  	
  2.03

  
	
  Payment
  Default

  	
   

  	
  6.01(e)

  
	
  Principal
  Return

  	
   

  	
  10.14(b)

  
	
  Pre-Dividend
  Sale Price

  	
   

  	
  10.05(e)

  
	
  Principal
  Value Conversion

  	
   

  	
  10.01(a)

  
	
  Purchased
  Shares

  	
   

  	
  10.05(d)

  
	
  Redemption
  Date

  	
   

  	
  3.01(a)

  
	
  Redemption
  Price

  	
   

  	
  3.01(a)

  
	
  Registrar

  	
   

  	
  2.03

  
	
  Repurchase
  Date

  	
   

  	
  3.08(a)

  
	
  Repurchase
  Notice

  	
   

  	
  3.08(a)

  
	
  Repurchase
  Price

  	
   

  	
  3.08(a)

  

 

8

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Paying
  Agent

  	
   

  	
  2.03

  
	
  Purchased
  Shares

  	
   

  	
  10.05(d)

  
	
  QIB

  	
   

  	
  2.06(e)

  
	
  Quarter

  	
   

  	
  10.01(a)

  
	
  Record
  Date

  	
   

  	
  Exhibit A

  
	
  Redemption
  Date

  	
   

  	
  3.01(a)

  
	
  Redemption
  Price

  	
   

  	
  3.01(a)

  
	
  Registrar

  	
   

  	
  2.03

  
	
  Rule 144A
  Information

  	
   

  	
  4.06

  
	
  Share
  Price

  	
   

  	
  10.01(b)

  
	
  Spinoff
  Valuation Period

  	
   

  	
  10.05(c)

  
	
  Transfer
  Restricted Securities

  	
   

  	
  2.06(e)

  
	
  Ten
  Day Average Closing Stock Price

  	
   

  	
  10.14(a)

  
	
  Valuation
  Period

  	
   

  	
  10.01(c)

  

 

Section 1.03.  Incorporation by Reference of
Trust Indenture Act.  Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.  The following TIA terms incorporated by
reference in this Indenture have the following meanings:

 

“Commission”
means the SEC.

 

“Indenture Securities”
means the Securities.

 

“Indenture Security Holder”
means a Holder.

 

“Indenture to be Qualified”
means this Indenture.

 

“Indenture Trustee”
or “Institutional Trustee” means the
Trustee.

 

“Obligor” on the
indenture securities means the Company.

 

All other TIA terms incorporated by reference in
this Indenture that are defined by the TIA, defined by a TIA reference to
another statute or defined by an SEC rule have the meanings assigned to
them by such definitions.

 

Section 1.04.  Rules of
Construction.  Unless the
context otherwise requires:

 

(a)        a term has the meaning assigned to it;

 

(b)        an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;

 

9

 

(c)        “or” is not exclusive;

 

(d)        “including” means including, without limitation; and

 

(e)        words in the singular include the plural, and words in the
plural include the singular.

 

Section 1.05.  Acts of Holders.

 

(a)        Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing or in the case of Securities evidenced by a Global
Security, by any electronic transmission or other message, whether or not in
written format, that complies with the Applicable Procedures; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. 
Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the “Act” of Holders.  Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section.

 

(b)        The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.  Where such execution is by a signer acting in
a capacity other than such signer’s individual capacity, such certificate or
affidavit shall also constitute sufficient proof of such signer’s authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.

 

(c)        The ownership of Securities shall be proved by the register
maintained by the Registrar.

 

(d)        Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.

 

10

 

(e)        If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act, but the Company shall have no obligation to do so.  If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such record
date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.

 

ARTICLE 2

THE SECURITIES

 

Section 2.01.  Form and Dating.

 

(a)        Forms.  The Securities and the Trustee’s certificate
of authentication shall be substantially in the forms set forth on Exhibit A,
which are a part of this Indenture and incorporated by reference herein.  The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage; provided that any such notation, legend or endorsement
required by usage is in a form acceptable to the Company.  The Company shall provide any such notations,
legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its
authentication.

 

The terms and provisions
contained in any series of Securities shall constitute, and are hereby
expressly made, a part of this Indenture and the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.

 

(b)        Global Securities.  Unless otherwise required by law or otherwise
contemplated by Section 2.12(a), all of the Securities will be represented
by one or more Securities in global form (a “Global
Security”), which shall be deposited with the Trustee at its
Corporate Trust Office, as custodian for the depositary and registered in the
name of The Depository Trust Company (“DTC”) or the
nominee thereof (such depositary, or any successor thereto, and any such
nominee being hereinafter referred to as the “Depositary”),
duly executed by the Company and authenticated by the Trustee as hereinafter
provided.

 

11

 

Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions and conversions.

 

Any adjustment of the
aggregate principal amount of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee as required by Section 2.12 hereof
and shall be made on the records of the Trustee and the Depositary.

 

Section 2.02.  Execution and
Authentication.  The
Securities shall be executed on behalf of the Company by the manual or
facsimile signature of any Officer.

 

Securities bearing the manual or facsimile
signatures of individuals who were at the time of the execution of the
Securities the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of authentication of such Securities.

 

No Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears
on such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.

 

The Trustee may appoint an authenticating agent (the
“Authenticating Agent”) reasonably
acceptable to the Company to authenticate Securities.  Unless otherwise provided in the appointment,
the Authenticating Agent may authenticate Securities whenever the Trustee may
do so.  Each reference in this Indenture
to authentication by the Trustee includes authentication by the Authenticating
Agent.  The Authenticating Agent has the
same rights as an Agent to deal with the Company or with any Affiliate of the
Company.

 

The aggregate principal amount of Securities which
may be authenticated and delivered under this Indenture is unlimited.  The Trustee shall authenticate and deliver
Securities for original issue upon receipt of a Company Order and Board
Resolutions authorizing the issuance of the Securities referenced in such
Company Order.

 

12

 

The Securities shall be issued only in registered
form without coupons and only in denominations of $1,000 of principal amount
and any integral multiple thereof.

 

Section 2.03.  Registrar, Paying Agent and
Conversion Agent.  The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the “Registrar”),
an office or agency where Securities may be presented for repurchase or payment
(the “Paying Agent”) and an office or agency
where Securities may be presented for conversion (the “Conversion
Agent”).  The Registrar shall
keep a register of the Securities and of their transfer and exchange.  The Company, upon prior written notice to the
Trustee, may have one or more co-registrars, one or more additional paying
agents reasonably acceptable to the Trustee and one or more additional
conversion agents.  The term “Paying
Agent” includes any additional paying agent, including any named pursuant to Section 4.05.  The term “Conversion Agent” includes any
additional conversion agent, including any named pursuant to Section 4.05.

 

The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar
(if other than the Trustee).  Such
agreement shall implement the provisions of this Indenture that relate to such
Agent.  The Company shall notify the
Trustee, in advance, of the name and address of any such Agent.  If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07.  The Company or any of its Subsidiaries or an
Affiliate of the Company or any of its Subsidiaries may act as Paying Agent,
Registrar, Conversion Agent or co-registrar.

 

The Company initially appoints the Trustee as
Registrar, Conversion Agent and Paying Agent in connection with the Securities.

 

Section 2.04.  Paying Agent to Hold Money in
Trust.  Except as otherwise
provided herein, not later than 11:00 a.m. (New York City time) on each
due date of payments in respect of any Security, the Company shall deposit with
the Paying Agent a sum of money and shares of Common Stock, as applicable,
sufficient to make such payments becoming due. 
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money and shares of Common Stock, as applicable,
held by such Paying Agent for the making of payments in respect of the
Securities and shall notify the Trustee of any default by the Company in making
any such payment.  At any time during the
continuance of any such default, such Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all moneys and shares of
Common Stock, as applicable, held in trust. 
If the Company, a Subsidiary of the 

 

13

 

Company or an Affiliate of the Company or any
of its Subsidiaries acts as Paying Agent, it shall segregate the money and
shares of Common Stock, as applicable, held by it as Paying Agent and hold it
as a separate trust fund.  The Company at
any time may require each Paying Agent to pay all money and shares of Common Stock,
as applicable, held by it to the Trustee and to account for any funds disbursed
by it.  Upon doing so, such Paying Agent
shall have no further liability for such money or shares of Common Stock, as
the case may be.  The Paying Agent and
Trustee shall return to the Company upon written request any money or shares of
Common Stock held by them for the payment of any amount with respect to the
Securities that remains unclaimed for two years, subject to applicable
unclaimed property law.  After return to
the Company, Holders entitled to the money or shares of Common Stock must look
to the Company for payment as general creditors unless an applicable abandoned
property law designates another person.

 

Section 2.05.  Holder Lists.  The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. 
If the Trustee is not the Registrar, the Company shall cause to be
furnished to the Trustee on each June 1 and December 1 and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee and dated
not more than 15 days prior to the time such information is furnished; provided that the list of Holders provided on June 1
and December 1 shall contain the list of Holders as of the immediately
preceding May 20 and November 20, respectively.

 

Section 2.06.  Transfer and Exchange.

 

(a)        Subject to Section 2.12 hereof, upon surrender for
registration of transfer of any Securities to the Registrar, together with a
written instrument of transfer satisfactory to the Registrar, substantially in
the form affixed to the form of Security attached as Exhibit A hereto,
duly executed by the Holder thereof or such Holder’s attorney duly authorized
in writing, at the office or agency of the Registrar or co-registrar, the
Company shall execute and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
any authorized denomination or denominations of a like aggregate principal
amount.

 

At the option of the Holder thereof, Securities may
be exchanged for other Securities of any authorized denomination or
denominations, of a like aggregate principal amount, upon surrender of the
Securities to be exchanged, together with a written instrument of transfer
satisfactory to the Registrar duly executed by such Holder or such Holder’s
attorney duly authorized in writing, at the office or agency of the Registrar
or co-registrar.  Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall

 

14

 

authenticate and deliver, the Securities that
the Holder making the exchange is entitled to receive.

 

The Company shall not charge a service charge for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to pay all taxes, assessments or other governmental charges
that may be imposed in connection with the transfer or exchange of the
Securities from the Holder requesting such transfer or exchange.

 

The Company shall not be required to make, and the
Registrar need not register, transfers or exchanges of Securities selected for
redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities in respect of which a
Repurchase Notice or Change in Control Repurchase Notice has been given and not
withdrawn by the Holder thereof in accordance with the terms of this Indenture
(except, in the case of Securities to be repurchased in part, the portion
thereof not to be repurchased) or any Securities for a period of 5 days before
the mailing of a notice of redemption to each Holder of Securities to be
redeemed, as provided in Section 3.03.

 

(b)        Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.

 

(c)        The Registrar shall provide to the Trustee such information
as the Trustee may reasonably require in connection with the delivery by the
Registrar of Securities upon transfer or exchange of Securities.

 

(d)        The Registrar shall not be required to make registrations of
transfer or exchange of Securities during any periods designated in the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.

 

(e)        Notwithstanding any other provision of this Indenture or the
Securities, until the expiration of the applicable holding period set forth in Rule 144(k) of
the Securities Act (or any successor provision), the Securities may not be
transferred or exchanged in whole or in part other than (i) to a person
whom the seller reasonably believes is a qualified institutional buyer, as such
term is defined in Rule 144A (a “QIB”), in a
transaction meeting the requirements of Rule 144A, (ii) pursuant to
an exemption from registration under the Securities Act provided by Rule 144
thereunder (if available), (iii) pursuant to an effective registration
statement under the Securities Act or (iv) to the Company or any of its
Subsidiaries, in each of cases (i) through (iv) in accordance with
any applicable securities laws of any state of the United States.  Whenever any Security is presented or
surrendered for registration of transfer or exchange for a Security registered
in a name other than that of the Holder thereof, such Security must be

 

15

 

accompanied by a certificate
in substantially the form set forth in Exhibit B, dated the date of such
surrender and signed by the Holder of such Security, as to compliance with such
restrictions on transfer.  The Registrar
shall not be required to accept for such registration of transfer or exchange
any Security not so accompanied by a properly completed certificate.

 

Any certificate evidencing a Security (and
all securities issued in exchange therefore or substitution thereof) shall bear
the Transfer Restricted Securities Legend, unless (1) such Security has
been sold pursuant to a registration statement that has been declared effective
under the Securities Act (and which continues to be effective at the time of
such transfer) or pursuant to Rule 144 under the Securities Act or any
similar provision then in force, (2) such Security is eligible for resale
pursuant to Rule 144(k) under the Securities Act (or any successor
provision) or (3) otherwise agreed by the Company in writing, with written
notice thereof to the Trustee.

 

Every Security that bears or is required
under this Section 2.06(e) to bear the Transfer Restricted Securities
Legend (the “Transfer Restricted Securities”)
shall be subject to the restrictions on transfer set forth in this Section 2.06(e) (including
those set forth in the Transfer Restricted Securities Legend), and the Holder
of each such Transfer Restricted Security, by such Security Holder’s acceptance
thereof, agrees to be bound by all such restrictions on transfer.  As used in this Section 2.06(e), the
term “transfer” encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Transfer Restricted
Security or any interest therein.

 

Any Security (or Security issued in exchange or
substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms or as to conditions for removal of the
Transfer Restricted Securities Legend have been satisfied may, upon surrender
of such Security for exchange to the Registrar in accordance with the
provisions of this Section 2.06, be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear
the Transfer Restricted Securities Legend. 
If the Transfer Restricted Security surrendered for exchange is
represented by a Global Security bearing a Transfer Restricted Securities
Legend, the principal amount of the Global Security so legended shall be
reduced by the appropriate principal amount and the principal amount of a
Global Security without the Transfer Restricted Securities Legend shall be
increased by an equal principal amount. 
If a Global Security without the Transfer Restricted Securities Legend
is not then outstanding, the Company shall execute and the Trustee shall
authenticate and deliver a Global Security without the Transfer Restricted
Securities Legend to the Depositary.

 

Section 2.07.  Replacement Securities.  If any mutilated Security is
surrendered to the Trustee, or the Company and the Trustee receive evidence to

 

16

 

their satisfaction of the mutilation,
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity, at the expense of the
Holder thereof, as may be required by them to save each of them harmless, then,
in the absence of notice to the Company or the Trustee that such Security has
been acquired by a protected purchaser (within the meaning of Section 8-303
of the Uniform Commercial Code as adopted in the State of New York), the
Company shall execute, and upon the Company’s written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, at the expense of the
Holder thereof, a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and payable, or is about
to be redeemed or repurchased by the Company pursuant to Article 3 hereof,
the Company in its discretion may, instead of issuing a new Security, pay,
redeem or repurchase such Security, as the case may be.

 

Upon the issuance of any new Securities under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.

 

Every new Security issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

 

The provisions of this Section are exclusive
and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.

 

Section 2.08.  Outstanding Securities; Determinations
of Holders’ Action.  Securities
outstanding at any time are all the Securities authenticated by the Trustee
pursuant to this Indenture, except for those cancelled by it, those delivered
to it for cancellation pursuant to Section 2.10 and those described in
this Section 2.08 as not outstanding. 
A Security does not cease to be outstanding because the Company or any
Affiliate of the Company holds the Security; provided
that in determining whether the Holders of the requisite principal amount of Securities
have given or concurred in any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be

 

17

 

outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
which a Responsible Officer of the Trustee actually knows to be so owned shall
be so disregarded; and provided further
that Securities that the Company or an Affiliate offers to purchase or acquires
pursuant to an offer, exchange offer, tender offer or otherwise shall not be
deemed to be owned by the Company or an Affiliate until legal title to such
Securities passes to the Company or such Affiliate, as the case may be.  Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including, without limitation, determinations pursuant to
Articles 6 and 9).

 

If a Security is replaced pursuant to Section 2.07,
it ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Security is held by a protected purchaser.

 

If the Paying Agent holds, in accordance with this
Indenture, prior to 11:00 a.m., New York City time, on a Redemption Date,
or on the Business Day following a Repurchase Date or a Change in Control
Repurchase Date, or on Stated Maturity, money sufficient to pay amounts owed
with respect to Securities payable on that date, then immediately after such
Redemption Date, Repurchase Date, Change in Control Repurchase Date or Stated
Maturity, as the case may be, such Securities shall cease to be outstanding and
interest (including Contingent Interest and Liquidated Damages, if any) on such
Securities shall cease to accrue; provided that
if such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made.

 

If a Security is converted in accordance with Article 10,
then from and after the time of conversion on the Conversion Date, such
Security shall cease to be outstanding and interest (including Contingent
Interest, if any) shall cease to accrue on such Security.

 

Section 2.09.  Temporary Securities.  Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued, and with such appropriate insertions,
omissions, substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.

 

If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable delay.  After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive

 

18

 

Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.03, without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations.  Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.

 

Section 2.10.  Cancellation.  All Securities surrendered for
payment, redemption, repurchase, conversion, exchange or registration of
transfer shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it, or, if
surrendered to the Trustee, shall be promptly cancelled by it.  The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder that the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly cancelled by the Trustee.  The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 10.  No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture.  All cancelled Securities held by the Trustee
shall be disposed of by the Trustee in accordance with the Trustee’s customary
procedures.

 

Section 2.11.  Persons Deemed Owners.  Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving
payment of the principal amount of the Security or the payment of any
Redemption Price, Repurchase Price or Change in Control Repurchase Price in
respect thereof, and accrued but unpaid interest (including Contingent Interest
and Liquidated Damages, if any) thereon, for the purpose of conversion and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.

 

Section 2.12.  Global Securities.

 

(a)        Notwithstanding any other provisions of this Indenture or the
Securities, a Global Security shall not be exchanged in whole or in part for a
Security registered in the name of any Person other than the Depositary, any
successor Depositary or one or more nominees thereof; provided
that a Global Security may be exchanged for Securities registered in the name
of any Person designated by the Company if 
(1) the Depositary has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Security or such

 

19

 

Depositary has ceased to be
a “clearing agency” registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days, (2) the Company
has provided the Depositary with written notice that it has decided to
discontinue use of the system of book-entry transfer through the Depositary or
any successor Depositary or (3) an Event of Default has occurred or is
continuing with respect to the Securities, and either (i) the Depositary
notifies the Trustee that it elects to cause the issuance of Securities in
definitive form or (ii) a holder of a beneficial interest in a Global
Security requests to exchange such beneficial interest for Securities
registered in the name of another Person. 
Any Global Security exchanged pursuant to clauses (1) or (2) above
shall be so exchanged in whole and not in part, and any Global Security
exchanged pursuant to clause (3) above may be exchanged in whole or from
time to time in part as directed by the Depositary.  Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall
not be a Global Security.

 

(b)        Securities issued in exchange for a Global Security or any
portion thereof shall be issued in definitive, fully registered form, without
interest coupons, shall have an aggregate principal amount equal to that of
such Global Security or portion thereof to be so exchanged, shall be registered
in such names and be in such authorized denominations as the Depositary shall
designate and shall bear the applicable legends provided for herein.  Any Global Security to be exchanged in whole
shall be surrendered by the Depositary to the Trustee, as Registrar.  With regard to any Global Security to be
exchanged in part, either such Global Security shall be so surrendered for
exchange or, if the Trustee is acting as custodian for the Depositary or its
nominee with respect to such Global Security, the principal amount thereof
shall be reduced by an amount equal to the portion thereof to be so exchanged,
by means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender or adjustment, the
Trustee shall authenticate and deliver the Security issuable on such exchange
to or upon the order of the Depositary or an authorized representative thereof.

 

(c)        Subject to the provisions of Section 2.12(e), the
registered Holder may grant proxies and otherwise authorize any Person,
including Agent Members (as defined below) and Persons that may hold interests
through Agent Members, to take any action which a Holder is entitled to take
under this Indenture or the Securities.

 

(d)        If any of the events specified in Section 2.12(a) occurs,
the Company will promptly make available to the Trustee a reasonable supply of
Securities in definitive form.

 

(e)        Neither any members of, or participants in, the Depositary
(collectively, the “Agent Members”)
nor any other Persons on whose behalf

 

20

 

Agent Members may act shall
have any rights under this Indenture with respect to any Global Security
registered in the name of the Depositary or any nominee thereof, or under any
such Global Security, and the Depositary or such nominee, as the case may be,
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner and holder of such Global Security for all
purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or such nominee, as
the case may be, or impair, as between the Depositary, its Agent Members and
any other Person on whose behalf an Agent Member may act, the operation of
customary practices of such Persons governing the exercise of the rights of a holder
of any Security.

 

(f)         With respect to any Global Security, the Company, the
Registrar and the Trustee shall be entitled to treat the Person in whose name
such Global Security is registered as the absolute owner of such Security for
all purposes of this Indenture, and neither the Company, the Registrar nor the
Trustee shall have any responsibility or obligation to any Agent Members or
other beneficial owners of the Securities represented by such Global
Security.  Without limiting the
immediately preceding sentence, neither the Company, the Registrar nor the
Trustee shall have any responsibility or obligation with respect to (1) the
accuracy of the records of the Depositary or any other Person with respect to
any ownership interest in any Global Security, (2) the delivery to any
Person, other than a Holder, of any notice with respect to the Securities
represented by a Global Security, including any notice of redemption or
repurchase, (3) the selection of the particular Securities or portions
thereof to be redeemed or repurchased in the event of a partial redemption or
repurchase of part of the Securities outstanding or (4) the payment to any
Person, other than a Holder, of any amount with respect to the principal of or
Redemption Price, Repurchase Price, Change in Control Repurchase Price or
accrued but unpaid interest (including Contingent Interest and Liquidated
Damages, if any) with respect to any Global Security.

 

Section 2.13.  CUSIP Numbers.  The Company may issue the
Securities with one or more CUSIP numbers (if then generally in use), and, if
the Company so elects, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that
any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Securities or as contained in any
notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee
in writing of any change in the CUSIP numbers.

 

Section 2.14.  Designation.  The indebtedness evidenced by the
Securities is hereby irrevocably designated as “senior indebtedness” or such
other term

 

21

 

denoting seniority for the purposes of any
other existing or future indebtedness of the Company which the Company makes
subordinate in right of payment to any senior (or such other term denoting
seniority) indebtedness of the Company.

 

ARTICLE
3

REDEMPTION AND REPURCHASES

 

Section 3.01.  Right to Redeem; Notices to
Trustee.

 

(a)        Optional Redemption.  On or after December 15, 2014, the
Company, at its option, may redeem the Securities in whole at any time or in
part from time to time (each such date, a “Redemption Date”),
in any integral multiple of $1,000, for cash at a price equal to 100% of the
principal amount of the Securities to be redeemed (the “Redemption
Price”), together with accrued but unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon, up to but not
including the Redemption Date; provided that
if the Redemption Date is between the close of business on an interest record
date and the opening of business on the related Interest Payment Date, accrued
but unpaid interest (including Contingent Interest and Liquidated Damages, if
any) will be payable to the Holders in whose names the Securities are
registered at the close of business on the relevant interest record date.

 

(b)        Notice to Trustee.  If the Company elects to redeem Securities
pursuant to this Section 3.01, it shall notify the Trustee in writing of
the Redemption Date, the principal amount of Securities to be redeemed and the
Redemption Price.  The Company shall give
the notice to the Trustee provided for in this Section 3.01(b) by a
Company Order prior to the date notice of redemption is to be given to Holders
pursuant to Section 3.03 (unless a shorter notice shall be satisfactory to
the Trustee).

 

Section 3.02.  Selection of Securities to Be
Redeemed.  If less than all
the Securities are to be redeemed, subject to the Applicable Procedures in the
case of Global Securities to be so redeemed, the Trustee shall select the
Securities to be redeemed by any method that the Trustee deems fair and
appropriate.  In the event of a partial
redemption, the Trustee may select for redemption portions of the principal
amount of Securities in principal amounts of $1,000 and integral multiples
thereof.

 

Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.  The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be
redeemed.

 

22

 

If any Security selected for partial redemption is
converted in part before termination of the conversion right with respect to
the portion of the Security so selected for redemption, the converted portion
of such Security shall be deemed (so far as possible) to be the portion
selected for redemption.  Securities that
have been converted during a selection of Securities to be redeemed may be
treated by the Trustee as outstanding for the purpose of such selection.

 

Section 3.03.  Notice of Redemption.  At least 30 days but not more than
60 days before any Redemption Date, the Company shall mail a notice of
redemption (the “Notice of Redemption”) by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed
at such Holder’s registered address.

 

The notice of redemption shall identify the
Securities to be redeemed and shall state:

 

(a)        the Redemption Date;

 

(b)        the Redemption Price and, to the extent known at the time of
such notice the amount of accrued but unpaid interest (including Contingent
Interest and Liquidated Damages, if any) payable on the Redemption Date;

 

(c)        the current Conversion Price;

 

(d)        the name and address of the Paying Agent and Conversion
Agent;

 

(e)        that Securities called for redemption may be converted at any
time before the close of business on the second Business Day immediately
preceding the Redemption Date;

 

(f)         that Holders who want to convert Securities must satisfy the
requirements set forth in the Securities and Article 10 of this Indenture;

 

(g)        that Securities called for redemption must be surrendered to
the Paying Agent in order to collect the Redemption Price therefor, together
with accrued but unpaid interest (including Contingent Interest and Liquidated
Damages, if any) thereon;

 

(h)        if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers, if any, and principal amounts of the
particular Securities to be redeemed;

 

(i)         that, unless the Company defaults in paying the Redemption
Price, interest (including Contingent Interest and Liquidated Damages, if any)
on Securities called for redemption will cease to accrue on and after the
Redemption Date and the Securities called for redemption will cease to be
outstanding; and

 

23

 

(j)         the CUSIP number of the Securities called for redemption.

 

At the Company’s request, the Trustee shall give the
Notice of Redemption in the Company’s name and at the Company’s expense, so
long as the Company makes such request at least three Business Days prior to
the date by which such Notice of Redemption is to be given to Holders in
accordance with this Section 3.03 and the Company provides the Trustee
with all information required for such notice of redemption.

 

If any of the Securities is in the form of a Global
Security, then the Company shall modify such Notice of Redemption to the extent
necessary to accord with the Applicable Procedures that apply to the redemption
of Global Securities.

 

Section 3.04.  Effect of Notice of
Redemption.  Once notice of
redemption is given, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price stated in the notice of
redemption, together with accrued but unpaid interest (including Contingent
Interest and Liquidated Damages, if any) thereon, except for Securities which
are converted in accordance with the terms of this Indenture.  Upon surrender to the Paying Agent, such
Securities shall be paid at the Redemption Price stated in the notice of
redemption, together with accrued but unpaid interest (including Contingent
Interest and Liquidated Damages, if any) thereon, up to but not including the
Redemption Date.

 

Section 3.05.  Deposit of Redemption
Price.  Prior to 11:00 a.m.
(New York City time) on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary thereof or an Affiliate of
either of them is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the aggregate Redemption Price of all Securities to be
redeemed on the Redemption Date, together with accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) thereon, up to
but not including the Redemption Date, other than Securities or portions of
Securities called for redemption that on or prior thereto have been delivered
by the Company to the Trustee for cancellation or have been converted pursuant
to Article 10.  The Paying Agent
shall as promptly as practicable return to the Company any money not required
for making payments on the Redemption Date because of the conversion of
Securities pursuant to Article 10. 
If such money is then held by the Company in trust and is not required
for making payments on the Redemption Date, it shall be discharged from such
trust.

 

Section 3.06.  Securities Redeemed in
Part.  Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder thereof, without service charge, a
new Security or Securities of any authorized denomination as requested by such

 

24

 

Holder in an aggregate principal amount equal
to, and in exchange for, the unredeemed portion of the principal amount of the
Security surrendered.

 

Section 3.07.  Sinking Fund.  There shall be no sinking fund
provided for the Securities.

 

Section 3.08.  Repurchase of Securities at
Option of the Holder on Specified Dates.

 

(a)        At the option of the Holder, the Company shall repurchase on December 15,
2014, December 15, 2019 and December 15, 2024 (each, a “Repurchase Date”) all or a portion of the Securities held by
such Holder for cash at a price per Security equal to 100% of the aggregate
principal amount of the Security (the “Repurchase Price”),
together with accrued but unpaid interest (including Contingent Interest and
Liquidated Damages, if any) thereon, up to but not including the Repurchase
Date.

 

Securities shall be repurchased pursuant to this Section 3.08
at the option of the Holder thereof upon:

 

(i)        delivery
to the Company and the Paying Agent by the Holder of a written notice (a “Repurchase Notice”) at any time from the opening of business
on the date that is 30 Business Days prior to the Repurchase Date until the
close of business on the Business Day prior to such Repurchase Date stating:

 

(A)         if
the Security which the Holder will deliver to be repurchased is a Security in
definitive form, the certificate number of such Security, or if such Security
is a Global Security, the notice must comply with the Applicable Procedures;

 

(B)         the
portion of the principal amount of the Security which the Holder will deliver
to be repurchased, which portion must be in a principal amount of $1,000 or any
integral multiple thereof; and

 

(C)         that
such Security shall be repurchased as of the Repurchase Date pursuant to the
terms and conditions specified in this Indenture; and

 

(ii)       delivery
or book-entry transfer of such Security to the Paying Agent prior to, on or
after the Repurchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by the
Holder of the Repurchase Price therefor, together with accrued but unpaid
interest (including Contingent

 

25

 

Interest and Liquidated Damages, if any); provided
that the Repurchase Price, together with accrued but unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon, shall be so paid
pursuant to this Section 3.08 only if the Security so delivered to the
Paying Agent shall conform in all respects to the description thereof in the
related Repurchase Notice.

 

The Company shall repurchase from the Holder
thereof, pursuant to this Section 3.08, a portion of a Security if the
principal amount of such portion is $1,000 or an integral multiple of
$1,000.  Provisions of this Indenture
that apply to the repurchase of all of a Security also apply to the repurchase
of a portion of a Security.

 

Any repurchase by the Company contemplated pursuant
to the provisions of this Section 3.08 shall be consummated by the
delivery to the Paying Agent of the Repurchase Price, together with accrued but
unpaid interest (including Liquidated Damages, if any) thereon, to be received
by the Holder promptly following the later of the Repurchase Date and the time
of delivery or book-entry transfer of the Security to the Paying Agent in
accordance with this Section 3.08.

 

Notwithstanding anything herein to the contrary, any
Holder delivering to the Paying Agent the Repurchase Notice contemplated by
this Section 3.08(a) shall have the right to withdraw such Repurchase
Notice at any time prior to the close of business on the Repurchase Date by
delivery of a written notice of withdrawal to the Paying Agent at the principal
office of the Paying Agent in accordance with Section 3.10.

 

The Paying Agent shall promptly notify the Company
of the receipt by it of any Repurchase Notice or written notice of withdrawal
thereof.

 

(b)        Company Repurchase Notice.  In connection with any repurchase of
Securities pursuant to this Section 3.08, the Company shall give written
notice of the Repurchase Date to the Holders (the “Company
Repurchase Notice”).  The
Company Repurchase Notice shall be sent by first-class mail to the Trustee and
to each Holder not less than 30 Business Days prior to any Repurchase
Date.  Each Company Repurchase Notice
shall include a form of Repurchase Notice to be completed by a Holder and shall
state:

 

(i)        the
Repurchase Price, the Conversion Price and, to the extent known at the time of
such notice, the amount of accrued but unpaid interest (including Contingent
Interest and Liquidated Damages, if any) that will be payable with respect to
the Securities on the Repurchase Date;

 

(ii)       the
name and address of the Paying Agent and the Conversion Agent;

 

26

 

(iii)      that
Securities as to which a Repurchase Notice has been given may be converted only
if (x) the applicable Repurchase Notice has been withdrawn in accordance
with the terms of this Indenture and (y) the Securities may be converted
pursuant to Article 10 of the Indenture;

 

(iv)     that
Securities must be surrendered to the Paying Agent to collect payment of the
Repurchase Price and accrued but unpaid interest (including Contingent Interest
and Liquidated Damages, if any);

 

(v)      that
the Repurchase Price for any Securities as to which a Repurchase Notice has
been given and not withdrawn, together with accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) payable with
respect thereto, shall be paid promptly following the later of the Repurchase
Date and the time of surrender of such Securities as described in clause (iv);

 

(vi)     the
procedures the Holder must follow under this Section 3.08;

 

(vii)    the
conversion rights of the Securities;

 

(viii)   that,
unless the Company defaults in making payment of such Repurchase Price,
interest (including Contingent Interest and Liquidated Damages, if any) on
Securities covered by any Repurchase Notice will cease to accrue on and after
the Repurchase Date;

 

(ix)      the
CUSIP number of the Securities; and

 

(x)       the
procedures for withdrawing a Repurchase Notice or (as specified in Section 3.10).

 

At the Company’s request, which shall be made at
least three Business Days prior to the date by which the Company Repurchase
Notice is to be given to the Holders in accordance with this Section 3.08,
and at the Company’s expense, the Trustee shall give the Company Repurchase
Notice in the Company’s name; provided that,
in all cases, the text of the Company Repurchase Notice shall be prepared by
the Company.

 

If any of the Securities is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the Applicable Procedures that apply to the repurchase of Global
Securities.

 

Section 3.09.  Repurchase of Securities at
Option of the Holder Upon a Change in Control.

 

27

 

(a)        If at any time that Securities remain outstanding there shall
have occurred a Change in Control, Securities shall be repurchased by the
Company, at the option of the Holder thereof, at a price in cash (the “Change in Control Repurchase Price”) equal to 100% of the
aggregate principal amount of such Securities plus accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) thereon, up to but
not including the date (the “Change in Control
Repurchase Date”) fixed by the Company that is not less than 30 days
nor more than 45 days after the date the Company Change in Control Repurchase
Notice (as defined below) is given, subject to satisfaction by or on behalf of
the Holder of the requirements set forth in Section 3.09(c); provided that if the Change in Control Repurchase Date is
between the close of business on an interest record date and the opening of
business on the related Interest Payment Date, accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) will be payable
to the Holders in whose names the Securities are registered at the close of
business on the relevant interest record date.

 

(b)        Company Change in Control Repurchase Notice.  In connection with any repurchase of
Securities pursuant to this Section 3.09, the Company shall give written
notice of the occurrence of a Change in Control, the repurchase right arising
as a result thereof and the Change in Control Repurchase Date to the Holders
and the Trustee (the “Company Change in Control
Repurchase Notice”).  The
Company Change in Control Repurchase Notice shall be sent by first-class mail
to the Trustee and to each Holder not more than 30 days after the occurrence of
a Change in Control.  Each Company Change
in Control Repurchase Notice shall include a form of Change in Control
Repurchase Notice to be completed by a Holder and shall state:

 

(i)        the
Change in Control Repurchase Date;

 

(ii)       the
Change in Control Repurchase Price, the Conversion Price and, to the extent
known at the time of such notice, the amount of accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) that will be
payable with respect to the Securities on the Change in Control Repurchase
Date;

 

(iii)      the
name and address of the Paying Agent and the Conversion Agent;

 

(iv)     that
the Company must receive the Holder’s Change in Control Repurchase Notice on or
before the close of business on the third Business Day prior to the Change in
Control Repurchase Date;

 

(v)      that
Securities must be surrendered to the Paying Agent to collect payment of the
Change in Control Repurchase Price and accrued

 

28

 

but unpaid interest (including Contingent Interest and Liquidated
Damages, if any);

 

(vi)     that
the Change in Control Repurchase Price for any Securities as to which a Change
in Control Repurchase Notice has been given and not withdrawn, together with
any accrued but unpaid interest (including Liquidated Damages, if any) payable
with respect thereto, shall be paid promptly following the later of the Change
in Control Repurchase Date and the time of surrender of such Securities as
described in clause (v);

 

(vii)    the
procedures the Holder must follow under this Section 3.09;

 

(viii)   the
conversion rights of the Securities, including that Securities as to which a
Change in Control Repurchase Notice has been given may be converted only if
such Change in Control Repurchase Notice has been withdrawn in accordance with
the terms of this Indenture;

 

(ix)      that,
unless the Company defaults in making payment of such Change in Control
Repurchase Price, interest (including Contingent Interest and Liquidated Damages,
if any) on Securities covered by any Change in Control Repurchase Notice will
cease to accrue on and after the Change in Control Repurchase Date;

 

(x)       the
CUSIP number of the Securities; and

 

(xi)      the
procedures for withdrawing a Change in Control Repurchase Notice (as specified
in Section 3.10).

 

At the Company’s request, which shall be made at
least three Business Days prior to the date by which the Company Change in
Control Repurchase Notice is to be given to the Holders in accordance with this
Section 3.09 and at the Company’s expense, the Trustee shall give the
Company Change in Control Repurchase Notice in the Company’s name; provided that, in all cases, the text of the Company Change
in Control Repurchase Notice shall be prepared by the Company.

 

If any of the Securities is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the Applicable Procedures that apply to the repurchase of Global
Securities.

 

(c)        For a Security to be so repurchased at the option of the
Holder upon a Change in Control, the Paying Agent must receive such Security
with the form entitled “Option to Elect Repurchase Upon a Change in Control” (a
“Change in

 

29

 

Control Repurchase Notice”) on the
reverse thereof duly completed, together with such Security duly endorsed for
transfer, on or before the close of business on the third Business Day prior to
the Change in Control Repurchase Date. 
All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Security for repurchase shall be determined by
the Company, whose determination shall be final and binding.

 

The Company shall repurchase from the Holder
thereof, pursuant to this Section 3.09, a portion of a Security if the
principal amount of such portion is $1,000 or an integral multiple of
$1,000.  Provisions of this Indenture
that apply to the repurchase of all of a Security also apply to the repurchase
of a portion of a Security.

 

Any repurchase by the Company contemplated pursuant
to the provisions of this Section 3.09 shall be consummated by the
delivery to the Paying Agent of the Change in Control Repurchase Price,
together with accrued but unpaid interest (including Contingent Interest and
Liquidated Damages, if any) thereon, to be received by the Holder promptly
following the later of the Change in Control Repurchase Date and the time of
delivery or book-entry transfer of the Security to the Paying Agent in
accordance with this Section 3.09.

 

Notwithstanding anything herein to the contrary, any
Holder delivering to the Paying Agent the Change in Control Repurchase Notice
contemplated by this Section 3.09(c) shall have the right to withdraw
such Change in Control Repurchase Notice at any time prior to the close of
business on the Change in Control Repurchase Date by delivery of a written
notice of withdrawal to the Paying Agent at the principal office of the Paying
Agent in accordance with Section 3.10.

 

The Paying Agent shall promptly notify the Company
of the receipt by it of any Change in Control Repurchase Notice or written
withdrawal thereof.

 

Notwithstanding anything herein to the contrary, the
Company’s obligations pursuant to this Section 3.09 shall be satisfied if
a third party makes an offer to repurchase outstanding Securities after a
Change in Control in the manner and at the times and otherwise in compliance in
all material respects with the requirements of this Section 3.09 and such
third party purchases all Securities properly tendered and not withdrawn
pursuant to the requirements of this Section 3.09.

 

(d)        Not more than 30 days after the occurrence of a Change in
Control, the Company shall use its commercially reasonable efforts to either (i) obtain
the consents under all existing indebtedness required to permit the repurchase
of the Securities pursuant to any Company Change in Control Repurchase Notice
or (ii) repay in full all existing indebtedness and terminate all
commitments under all

 

30

 

existing indebtedness, in
each case the terms of which would prohibit the repurchase of the Securities
pursuant to any Company Change in Control Repurchase Notice; provided that if
no Holders deliver a Change in Control Repurchase Notice prior to such date or
if the Company shall have satisfied its obligations to repurchase the
Securities of all Holders that have submitted a Change in Control Repurchase
Notice, the Company shall be deemed to have satisfied the requirements of this Section 3.09(d).

 

Section 3.10.  Effect of Repurchase Notice or
Change in Control Repurchase Notice.  Upon
receipt by the Paying Agent of a Repurchase Notice or Change in Control
Repurchase Notice, the Holder of the Security in respect of which such
Repurchase Notice or Change in Control Repurchase Notice, as the case may be,
was given shall (unless such Repurchase Notice or Change in Control Repurchase
Notice is withdrawn as specified in the following two paragraphs) thereafter be
entitled to receive solely the Repurchase Price or Change in Control Repurchase
Price, together with accrued but unpaid interest (including Contingent Interest
and Liquidated Damages, if any) thereon, to but not including the Repurchase
Date or Change in Control Repurchase Date, as the case may be, with respect to
such Security.  Such Repurchase Price or
Change in Control Repurchase Price, together with accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) thereon, to but
not including the Repurchase Date or Change in Control Repurchase Date, as the
case may be, shall be paid to such Holder, subject to receipt of funds by the
Paying Agent, promptly following the later of (x) the Repurchase Date or
the Change in Control Repurchase Date, as the case may be, with respect to such
Security (provided that the conditions in Section 3.08
or Section 3.09, as applicable, have been satisfied) and (y) the time
of delivery or book-entry transfer of such Security to the Paying Agent by the
Holder thereof in the manner required by Section 3.08 or Section 3.09(c),
as applicable.  Securities in respect of
which a Repurchase Notice or Change in Control Repurchase Notice, as the case
may be, has been given by the Holder thereof may not be converted pursuant to Article 10
hereof on or after the date of the delivery of such Repurchase Notice or Change
in Control Repurchase Notice, as the case may be, unless such Repurchase Notice
or Change in Control Repurchase Notice, as the case may be, has first been
validly withdrawn as specified in the following two paragraphs.

 

A Repurchase Notice or Change in Control Repurchase
Notice, as the case may be, may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Repurchase Notice or Change in Control Repurchase Notice, as the case may be,
at any time prior to the close of business on the Repurchase Date or the Change
in Control Repurchase Date, as the case may be, specifying:

 

(i)        if the Security with respect to which such notice of
withdrawal is being submitted is a Security in definitive form, the

 

31

 

certificate number of such Security, or if such Security is a Global
Security, the notice must comply with the Applicable Procedures;

 

(ii)       the principal amount of the Security with respect to which
such notice of withdrawal is being submitted; and

 

(iii)      the principal amount, if any, of such Security which remains
subject to the original Repurchase Notice or Change in Control Repurchase
Notice, as the case may be, and which has been or will be delivered for
repurchase by the Company.

 

There shall be no repurchase of any Securities
pursuant to Section 3.08 if an Event of Default (other than a default in
the payment of the Redemption Price) has occurred prior to, on or after, as the
case may be, the giving by the Holders of such Securities of the required
Repurchase Notice and such Event of Default is continuing.  The Paying Agent will promptly return to the
respective Holders thereof any Securities (x) with respect to which a
Repurchase Notice has been withdrawn in compliance with this Indenture, or (y) held
by it during the continuance of an Event of Default (other than a default in
the payment of the Repurchase Price) in which case, upon such return, the
Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

 

Section 3.11.  Deposit of Repurchase Price or
Change in Control Repurchase Price.  Prior
to 11:00 a.m. (New York City time) on the Business Day immediately
following the Repurchase Date or the Change in Control Repurchase Date, as the
case may be, the Company shall deposit with the Trustee or with the Paying
Agent (or, if the Company or a Subsidiary thereof or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of money (in immediately available
funds if deposited on such Business Day) sufficient to pay the aggregate
Repurchase Price or Change in Control Repurchase Price, as the case may be,
together with accrued but unpaid interest (including Contingent Interest and
Liquidated Damages, if any) thereon, to but not including the Repurchase Date
or Change in Control Repurchase Date, as the case may be, of all the Securities
or portions thereof which are to be repurchased as of the Repurchase Date or
Change in Control Repurchase Date, as the case may be.

 

Section 3.12.  Securities Repurchased in
Part.  Any Security in
definitive form that is to be repurchased only in part shall be surrendered at
the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder’s attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, one or more new Securities in definitive
form, of any authorized denomination as

 

32

 

requested by such Holder in aggregate
principal amount equal to, and in exchange for, the portion of the principal
amount of the Security in definitive form so surrendered which is not
repurchased.

 

Section 3.13.  Covenant to Comply with
Securities Laws upon Repurchase of Securities. 
When complying with the provisions of Sections 3.08 or 3.09
hereof (so long as such offer or repurchase constitutes an “issuer tender
offer” for purposes of Rule 13e-4 (which term, as used herein, includes
any successor provision thereto) under the Exchange Act at the time of such
offer or repurchase), the Company shall (i) comply in all material
respects with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file
the related Schedule TO (or any successor schedule, form or report) under the
Exchange Act and (iii) otherwise comply in all material respects with all
federal and state securities laws so as to permit the rights and obligations
under Sections 3.08 or 3.09 to be exercised in the time and in the manner
specified in Sections 3.08 or 3.09.

 

Section 3.14.  Repayment to the Company.  To the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 3.11 exceeds
the aggregate Repurchase Price or Change in Control Repurchase Price, as the
case may be, of the Securities or portions thereof which the Company is
obligated to repurchase as of the Repurchase Date or Change in Control
Repurchase Date, as the case may be, together with accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) thereon, then,
unless otherwise agreed in writing with the Company, promptly after the
Business Day following the Repurchase Date or Change in Control Repurchase
Date, as the case may be, the Trustee shall return any such excess to the
Company together with interest, if any, thereon (subject to the provisions of Section 7.01(f)).

 

ARTICLE
4

COVENANTS

 

Section 4.01.  Payment of Securities.  The Company shall promptly make
all payments and deliveries in respect of the Securities on the dates and in
the manner provided in the Securities or pursuant to this Indenture.  Any amounts to be given to the Trustee or
Paying Agent, as the case may be, shall be deposited with the Trustee or Paying
Agent, as the case may be, by 11:00 a.m. (New York City time), on the
dates required pursuant to Section 2.04 hereof.  Interest installments, Liquidated Damages,
Contingent Interest, principal amount, Redemption Price, Repurchase Price,
Change in Control Repurchase Price and interest, if any, due on overdue amounts
shall be considered paid on the applicable date due if at 11:00 a.m. (New
York City time) on such date, the Trustee or the Paying Agent, as the case may
be, holds, in accordance with this Indenture, money sufficient to pay all such
amounts then due.

 

33

 

The Company shall, to the extent permitted by law,
pay interest on overdue amounts at the rate per annum set forth in paragraph 1
of the Securities, compounded quarterly, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for.  All such interest shall be payable on demand.
 The accrual of such interest on overdue
amounts shall be in addition to the continued accrual of interest on the
Securities.

 

Section 4.02.  SEC and Other Reports.  The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to Section 13
or 15(d) of the Exchange Act.  In
the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, it shall
continue to provide the Trustee with reports containing substantially the same
information as would have been required to be filed with the SEC had the
Company continued to have been subject to such reporting requirements.  In such event, such reports shall be provided
to the Trustee at the times the Company would have been required to provide
reports had it continued to have been subject to such reporting
requirements.  In addition, the Company
shall comply with the other provisions of TIA Section 314(a).

 

Section 4.03.  Compliance Certificate; Notice
of Default.

 

(a)        The Company shall deliver to the Trustee within 120 days
after the end of each fiscal year of the Company (beginning with the fiscal
year ending on December 31, 2009) an Officers’ Certificate, stating whether
or not to the best knowledge of the signers thereof the Company is in default
in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder), and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which the signers thereof may have knowledge.

 

(b)        The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee promptly, and in any event within 15 days
after becoming aware of any Default or Event of Default under this Indenture,
an Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.  The Trustee shall not be deemed to have
knowledge of a Default or Event of Default unless one of its Responsible
Officers receives written notice of the Default or Event of Default from the
Company or any of the Holders.

 

34

 

Section 4.04.  Further Instruments and
Acts.  Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

 

Section 4.05.  Maintenance of Office or
Agency.  The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
of the Trustee, Registrar, Paying Agent and Conversion Agent where  Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer,
exchange, repurchase, redemption or conversion and where notices and demands to
or upon the Company in respect of the Securities and this Indenture may be
served.  The Trustee’s office located at
U.S. Bank National Association, 60 Livingston Avenue, EP-MN-WS3C, St. Paul, MN
55107-2292, shall initially be such office or agency where Securities may be
surrendered for payment, and the Corporate Trust Office shall initially be such
office or agency for all of the other aforesaid purposes.  The Company shall give prompt written notice
to the Trustee of the location, and of any change in the location, of any such
office or agency (other than a change in the location of the office or agency
of the Trustee).  If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02. 
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes, and may from time to time rescind such designations; provided that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain at least one Paying
Agent having an office or agency in the Borough of Manhattan, The City of New
York.

 

Section 4.06.  Delivery of Certain
Information.  At any time when
the Company is not subject to Section 13 or 15(d) of the Exchange
Act, upon the request of a Holder or any Beneficial Owner of Securities or
holder or Beneficial Owner of Common Stock delivered upon conversion thereof,
the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder or any Beneficial Owner of
Securities or holder or Beneficial Owner of Common Stock delivered upon
conversion thereof or to a prospective purchaser of any such security
designated by any such holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under the
Securities Act in connection with the resale of any such security.  “Rule 144A Information”
shall be such information as is specified pursuant to Rule 144A(d)(4) under
the Securities Act or any successor provisions. 
Whether a Person is a Beneficial Owner shall be determined by the
Company to the Company’s reasonable satisfaction.

 

35

 

Section 4.07.  No Registration Rights. Liquidated Damages.

 

(a)        Holders shall not have the benefit of any registration rights
with respect to the Securities.  The
Company acknowledges and agrees that Holders of the Securities will suffer
damages if the Company fails to fulfill its obligations under this Section 4.07,
and that it would not be feasible to ascertain the extent of such damages with
precision.  Accordingly, the Company agrees
to pay liquidated damages on the Securities (“Liquidated
Damages”) under the circumstances and to the extent set forth below:

 

(i)        if
at any time during the six month period beginning on, and including, the date
which is six months after December 22, 2009, (1) the Company fails to
timely file with the SEC any reports required to be filed by Section 13 or
15(d) of the Exchange Act, as applicable, (after giving effect to all
applicable grace periods thereunder and other than reports on Form 8-K) or
(2) the Securities are not otherwise freely tradable by Holders other than
Affiliates of the Company (as a result of restrictions pursuant to applicable
law or the terms of the Indenture or the Securities), Liquidated Damages will
accrue on the Securities at the rate of 0.25% per annum on the aggregate
principal amount of all Securities then outstanding for each day during such
period for which an event specified in the foregoing clauses (1) or (2) has
occurred and is continuing, which rate will be increased by an additional 0.25%
per annum following the 90th day on which such Liquidated Damages have accrued,
provided that in no event shall such Liquidated Damages accrue at a rate per
annum exceeding 0.50% of the aggregate principal amount of all Securities then outstanding;
provided further that, in the case of the foregoing clause (1), the Company
shall have fourteen calendar days, in the aggregate, to cure any such late
filings before any such Liquidated Damages shall accrue; and

 

(ii)       if
at any time during the period beginning on, and including, the date which is
365 days after December 22, 2009, the restrictive legend on the Securities
has not been removed or the Securities are not otherwise freely tradable by
Holders other than Affiliates of the Company, Liquidated Damages will accrue on
the Securities at the rate of 0.25% per annum on the aggregate principal amount
of all Securities then outstanding until the restrictive legend on the
Securities has been removed and the Securities are freely tradable, which rate
will be increased by an additional 0.25% per annum following the 90th day on
which such Liquidated Damages have accrued; provided that the rate at which
such Liquidated Damages accrue pursuant to this Section 4.07(a)(ii) shall
in no event exceed 0.50% per annum.

 

(b)        So long as any Securities remain outstanding, the Company
shall notify the Trustee within five Business Days after each and every date on
which an event occurs in respect of which Liquidated Damages are required to be
paid.

 

36

 

Any amounts of Liquidated
Damages due pursuant to clause (a)(i) or (a)(ii) of this Section 4.07
will be payable in cash semiannually on June 6 and December 6 of each
year (each, a “Damages Payment Date”), commencing
with the first such Damages Payment Date occurring after any such Liquidated
Damages commence to accrue, to Holders to whom regular interest is payable on
the Damages Payment Date; provided that any Liquidated Damages accrued with
respect to any Security or portion thereof called for redemption by the Company
on a redemption date or converted into shares of Common Stock on a conversion
date prior to the Damages Payment Date, shall, in any such event, be paid
instead to the Holder who submitted such Security or portion thereof for
redemption or conversion on the applicable redemption date or conversion date,
as the case may be, on such date (or promptly following the conversion date, in
the case of conversion).  The amount of
Liquidated Damages for Securities will be determined by multiplying the
applicable rate of Liquidated Damages by the aggregate principal amount of all
Securities then outstanding on the first Damages Payment Date following the
date on which such Liquidated Damages begin to accrue (and thereafter at the
next succeeding Damages Payment Date until the event giving rise to such
Liquidated Damages shall have been cured), multiplied by a fraction, the
numerator of which is the number of days such Liquidated Damages rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.

 

(c)        If at any time Liquidated
Damages become payable by the Company with respect to the Securities pursuant
to this Section 4.07, the Company shall promptly deliver to the Trustee a
certificate to that effect and stating (i) the amount of such Liquidated
Damages that are payable and (ii) the date on which such Liquidated
Damages are payable pursuant to the terms of this Section 4.07.  Unless and until a Responsible Officer of the
Trustee receives such a certificate, the Trustee may assume without inquiry
that no Liquidated Damages are payable.

 

Section 4.08.  Calculation of Tax Original
Issue Discount.  At the
request of the Trustee, the Company shall file with the Trustee promptly at the
end of each calendar year (i) a written notice specifying the amount of
Tax Original Issue Discount (including daily rates and accrual periods) accrued
on the Notes as of the end of such year and (ii) such other specific
information relating to such Tax Original Issue Discount as may then be
reasonably requested by the Trustee and relevant under the Internal Revenue
Code of 1986, as amended from time to time, or the Treasury regulations
promulgated thereunder.

 

37

 

ARTICLE
5

SUCCESSOR CORPORATION

 

Section 5.01.  When the Company May Consolidate,
Merge or Transfer Assets.  The
Company shall not consolidate with or merge with or into any other Person or
sell, lease exchange or otherwise transfer (in one transaction or a series of
related transactions) all or substantially all of its properties and assets to
any other Person, unless:

 

(a)        (i) the Company shall be the resulting or surviving
corporation or (ii) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, lease, exchange or other transfer all or substantially all of the
properties and assets of the Company (A) shall be a corporation, limited
partnership, limited liability company or other business entity organized and
validly existing under the laws of the United States or any State thereof or
the District of Columbia, and (B) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under the
Securities and this Indenture;

 

(b)        immediately after giving effect to such transaction, no Event
of Default and no Default shall have occurred and be continuing; and

 

(c)        the Company shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, lease, exchange or other transfer and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent
herein provided for relating to such transaction have been satisfied.

 

For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise) of the properties and assets of one or
more Subsidiaries (other than to the Company or another Subsidiary of the
Company), which, if such assets were owned by the Company would constitute all
or substantially all of the properties and assets of the Company, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.  The successor Person
formed by such consolidation or into which the Company is merged or the
successor Person to which such sale, lease, exchange or other transfer is made
shall succeed to, and (except in the case of a lease) be substituted for, and
may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company herein; and
thereafter, except in the case of a lease and except for obligations the
Company may have under a supplemental indenture pursuant to Section 9.06,
the Company shall be discharged from all obligations and covenants under this
Indenture and the Securities.  Subject to
Section 9.06, the Company, the Trustee and the

 

38

 

successor Person shall enter into a
supplemental indenture to evidence the succession and substitution of such
successor Person and such discharge and release of the Company, as applicable.

 

ARTICLE
6

DEFAULTS AND REMEDIES

 

Section 6.01.  Events of Default.  Subject to the provisions set
forth below in this Section 6.01, each of the following events is an “Event of Default”:

 

(a)        the failure to pay interest (including Contingent Interest
and Liquidated Damages, if any) on any Securities when the same becomes due and
payable and the continuation of such default for a period of 30 days, whether
or not such failure shall be due to compliance with agreements with respect to
any other indebtedness or any other cause;

 

(b)        the failure to pay the principal of any Securities, when such
principal becomes due and payable, at Stated Maturity, upon acceleration, upon
redemption or otherwise (including the failure to make cash payments due upon
conversion or make a payment to repurchase Securities tendered pursuant to a
Repurchase Notice or Change in Control Repurchase Notice), whether or not such
failure shall be due to compliance with agreements with respect to any other
indebtedness or any other cause;

 

(c)        the failure to provide a Company Change in Control Repurchase
Notice in accordance with the terms of Section 3.09(b) hereof;

 

(d)        a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default continues for a
period of 45 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or the
beneficial Holders of at least 25% of the outstanding principal amount of the
Securities (except in the case of a default with respect to Section 5.01,
which will constitute an Event of Default with such notice requirement but
without such passage of time requirement);

 

(e)        a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness of the Company or any of its Subsidiaries, or the payment of which
is guaranteed by the Company or any of its Subsidiaries, whether such
indebtedness now exists or is created after the issuance of the Securities,
which default (i) is caused by a failure to pay principal of or premium,
if any, or interest on such indebtedness after any applicable grace period
provided in such indebtedness on the date of such default (a “Payment Default”) or (ii) results in

 

39

 

the acceleration of such
indebtedness prior to its express maturity and, in either such case, the
principal amount of such indebtedness, together with the principal amount of
any other such indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates at least $10,000,000; provided that if any such default is cured or waived or any
such acceleration rescinded, or such indebtedness is repaid, within a period of
45 days from the continuation of such default beyond the applicable grace
period or the occurrence of such acceleration, as the case may be, such event
of default and any consequential acceleration of the Securities shall be
automatically rescinded, so long as such rescission does not conflict with any
judgment or decree;

 

(f)         one or more judgments in an uninsured aggregate amount in
excess of $10,000,000 shall have been rendered against the Company or any of
its Subsidiaries and remain undischarged, unpaid or unstayed for a period of 60
days after such judgment or judgments become final and nonappealable;

 

(g)        the Company or any of its Significant Subsidiaries pursuant
to or under or within the meaning of any Bankruptcy Law:

 

(i)        commences
a voluntary case or proceeding;

 

(ii)       consents
to the entry of an order for relief against it in an involuntary case or
proceeding;

 

(iii)      consents
to the appointment of a custodian of it or for all or substantially all of its
property;

 

(iv)     makes
a general assignment for the benefit of its creditors; or

 

(v)      shall
generally not pay its debts when such debts become due or shall admit in
writing its inability to pay its debts generally; or

 

(h)        a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:

 

(i)        is
for relief against the Company or any Significant Subsidiary of the Company in
an involuntary case or proceeding;

 

(ii)       appoints
a custodian of the Company or any Significant Subsidiary of the Company for all
or substantially all of its properties; or

 

(iii)      orders
the liquidation of the Company or any Significant Subsidiary of Company; 

 

40

 

and in each case the order or decree remains
unstayed and in effect for 60 consecutive days.

 

Section 6.02.  Acceleration.

 

(a)        If an Event of Default (other than an Event of Default
specified in  clause (g) or (h) of
Section 6.01) shall occur and be continuing, the Trustee may, and at the
written request of the Holders of at least 25% in principal amount of
outstanding Securities shall, declare the principal of and accrued but unpaid
interest (including Contingent Interest and Liquidated Damages, if any) on all
the Securities to be due and payable by notice in writing to the Company (the “Acceleration Notice”). 
Such notice shall specify the respective Event of Default and that it is
a “notice of acceleration.”  Upon the
giving of an Acceleration Notice, the principal of and accrued but unpaid
interest (including Contingent Interest and Liquidated Damages, if any) on all
the Securities shall become immediately due and payable.  If an Event of Default specified in clause (g) or
(h) of Section 6.01 occurs and is continuing, then all unpaid
Obligations on all of the outstanding Securities shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.

 

(b)        At any time after a declaration of acceleration with respect
to the Securities as described in the preceding paragraph, the Holders of a
majority in aggregate principal amount of the Securities at the time
outstanding may rescind and cancel such declaration and its consequences (i) if
the rescission would not conflict with any judgment or decree, (ii) if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest (including Contingent Interest and Liquidated Damages, if
any) that has become due solely because of such acceleration, (iii) if
interest on overdue installments of interest (to the extent the payment of such
interest is lawful) and on overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid, (iv) if the
Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances and (v) in the event
of the cure or waiver of an Event of Default of the type described in clause (d) of
Section 6.01, the Trustee shall have received an Officers’ Certificate and
an Opinion of Counsel that such Event of Default has been cured or waived.  No such rescission shall affect any
subsequent Event of Default or impair any right consequent thereto.

 

Section 6.03.  Other Remedies.  If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of the principal amount of all the Securities plus accrued but unpaid
interest (including Contingent Interest and Liquidated Damages, if any)
thereon, or to enforce the performance of any provision of the Securities or
this Indenture.

 

41

 

The Trustee may maintain a proceeding even if the
Trustee does not possess any of the Securities or does not produce any of the
Securities in the proceeding.  A delay or
omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative to the
extent permitted by law.

 

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding, by notice
in writing to the Trustee (and without notice to any other Holder), may waive
an existing Event of Default and its consequences, except (i) an Event of
Default described in Section 6.01(a) or 6.01(b), (ii) an Event
of Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder affected or (iii) an Event of
Default which constitutes a failure to convert any Security in accordance with
the terms of Article 10.  When an
Event of Default is waived, it is deemed cured, but no such waiver shall extend
to any subsequent or other Event of Default or impair any consequent
right.  This Section 6.04 shall be
in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) is
hereby expressly excluded from this Indenture, as permitted by the TIA.

 

Section 6.05.  Control by Majority.  The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee.  However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture or that the
Trustee determines in good faith is unduly prejudicial to the rights of other
Holders or would involve the Trustee in personal liability unless the Trustee
is offered indemnity satisfactory to it. 
This Section 6.05 shall be in lieu of Section 316(a)(1)(A) of
the TIA and such Section 316(a)(1)(A) is hereby expressly excluded
from this Indenture, as permitted by the TIA.

 

Section 6.06.  Limitation on Suits.  A Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:

 

(a)        the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;

 

(b)        the Holders of at least 25% in aggregate principal amount of
the Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;

 

42

 

(c)        such Holder or Holders offer to the Trustee security or
indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(d)        the Trustee does not comply with the request within 60 days
after receipt of such notice, request and offer of security or indemnity; and

 

(e)        the Holders of a majority in aggregate principal amount of
the Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.

 

A Holder may not use this Indenture to prejudice the
rights of any other Holder or to obtain a preference or priority over any other
Holder.

 

Section 6.07.  Rights of Holders to Receive
Payment and to Convert.  Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of interest installments (including Contingent Interest and Liquidated
Damages, if any), the principal amount, Redemption Price, Repurchase Price,
Change in Control Repurchase Price or interest, if any, due on overdue amounts
in respect of the Securities held by such Holder, on or after the respective
due dates expressed in the Securities, and to convert the Securities in
accordance with Article 10, or to bring suit for the enforcement of any
such payment on or after such respective dates or the enforcement of the right
to convert, shall not be impaired or affected adversely without the consent of
such Holder.

 

Section 6.08.  Collection Suit by
Trustee.  If an Event of
Default described in Section 6.01(a) or 6.01(b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor upon the Securities
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 7.07.

 

Section 6.09.  Trustee May File Proofs
of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether any amounts in respect of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of any such amounts) shall be entitled and empowered, by
intervention in such proceeding or otherwise,

 

(a)        to file and prove a claim for any accrued but unpaid amounts
due in respect of the Securities, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any

 

43

 

claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel or any other amounts due the Trustee under Section 7.07) and
of the Holders allowed in such judicial proceeding, and

 

(b)        to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07.

 

Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

Section 6.10.  Priorities.  If the Trustee collects any money
pursuant to this Article 6, it shall pay out the money in the following
order:

 

FIRST:  to the
Trustee for amounts due under Section 7.07;

 

SECOND:  to
Holders for amounts due and unpaid on the Securities and for any accrued but
unpaid interest amounts due (including Contingent Interest and Liquidated
Damages, if any) in respect of the Securities, ratably, without preference or
priority of any kind, according to such amounts due and payable on the
Securities; and

 

THIRD:  the
balance, if any, to the Company.

 

The Trustee may fix a record date and payment date
for any payment to Holders pursuant to this Section 6.10.  At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and the amount to be paid.

 

Section 6.11.  Suits.  In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit,

 

44

 

having due regard to the merits and good
faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities at
the time outstanding.  This Section 6.11
shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is
hereby expressly excluded from this Indenture, as permitted by the TIA.

 

Section 6.12.  Waiver of Stay, Extension or
Usury Laws.  The Company
covenants (to the fullest extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of any amounts
due in respect of the Securities, as contemplated herein, or which may affect
the covenants or the performance of this Indenture; and the Company (to the
fullest extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.

 

ARTICLE
7

TRUSTEE

 

Section 7.01.  Duties of Trustee.

 

(a)        If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

 

(b)        Except during the continuance of an Event of Default:

 

(i)        the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others; and

 

(ii)       in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture, but in case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture, but need not confirm or

 

45

 

investigate the accuracy of mathematical calculations or other facts
stated therein.

 

This Section 7.01(b) shall be in lieu of Section 315(a) of
the TIA and such Section 315(a) is hereby expressly excluded from
this Indenture, as permitted by the TIA.

 

(c)        The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

 

(i)        this
paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;

 

(ii)       the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer unless it is conclusively determined by a court of
competent jurisdiction that the Trustee was negligent in ascertaining the
pertinent facts; and

 

(iii)      the
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.02,
6.04 or 6.05.

 

Sections 7.01(c)(i), (ii) and (iii) shall
be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA
and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby
expressly excluded from this Indenture, as permitted by the TIA.

 

(d)        Every provision of this Indenture that in any way relates to
the Trustee is subject to Sections 7.01(a), (b), (c), (e) and (f).

 

(e)        The Trustee may refuse to perform any duty or exercise any
right or power or expend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.

 

(f)         Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.  The Trustee (acting in any capacity
hereunder) shall be under no liability for interest on any money received by it
hereunder unless otherwise agreed in writing with the Company.

 

Section 7.02.  Rights of Trustee.  Subject to its duties and
responsibilities under the TIA,

 

(a)        the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document

 

46

 

reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties;

 

(b)        whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may obtain and, in the absence of bad faith
or negligence on its part, conclusively rely upon an Officers’ Certificate
and/or an Opinion of Counsel;

 

(c)        the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees, and without limiting the generality of the
foregoing, the Trustee may appoint an agent (i) to obtain the quotations
referred to in the definition of “Trading Price of the Securities, “and (ii) to
report such quotations or determinations to the Company and the Depositary on
behalf of the Trustee; and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee appointed with due care by it hereunder;

 

(d)        the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith which it reasonably
believes to be authorized or within its rights or powers conferred under this
Indenture;

 

(e)        the Trustee may consult with counsel selected by it and any
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion of such
counsel;

 

(f)         the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby;

 

(g)        any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Order and any resolution of the
Board of Directors shall be sufficiently evidenced by a Board Resolution;

 

(h)        the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further

 

47

 

inquiry or investigation, it
shall be entitled, during normal business hours, to examine the books, records
and premises of the Company, personally or by agent or attorney at the sole
cost of the Company and shall incur no liability or additional liability of any
kind by reason of such inquiry or investigation;

 

(i)         except with respect to Section 4.01, the Trustee shall
have no duty to inquire as to the performance of the Company with respect to
the covenants contained in Article 4 of this Indenture.  In addition, the Trustee shall not be deemed
to have knowledge of an Event of Default except (i) any Default or Event
of Default occurring pursuant to Sections 4.01, 6.01(a) and 6.01(b) or
(ii) any Default or Event of Default of which the Trustee shall have
received written notification or obtained actual knowledge;

 

(j)         delivery of reports, information and documents to the
Trustee under Section 4.02 of this Indenture is for informational purposes
only and the Trustee’s receipt of the foregoing shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
their covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers’ Certificates)

 

(k)        the rights, privileges, protections, immunities and benefits
given to the Trustee, including its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder
(including Paying Agent, Registrar and Conversion Agent), and to all other
Persons employed to act hereunder, including the Trustee’s officers, employees,
agents and custodians;

 

(l)         the Trustee may request that the Company deliver an Officers’
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers’ Certificate may be signed by any person authorized to sign an
Officers’ Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded;

 

(m)       neither the Trustee nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted under this
Indenture or in connection therewith except to the extent caused by the
Trustee’s gross negligence, bad faith or willful misconduct, as determined by
the final judgment of a court of competent jurisdiction, no longer subject to
appeal or review; and anything in this Indenture to the contrary
notwithstanding, to the extent permitted by the TIA in no event shall the
Trustee be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action;

 

48

 

(n)        the Trustee is not required to give any bond or surety with
respect to the performance of its duties or the exercise of its powers under
this Indenture; and

 

(o)        notwithstanding anything else herein contained, whenever any
provision of this Indenture indicates that any confirmation of a condition or
event is qualified by the words “to the knowledge of” or “known to” the Trustee
or other words of similar meaning, said words shall mean and refer to the
current awareness of one or more Responsible Officers who are located at the
Corporate Trust Office.

 

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.  Any Paying
Agent, Registrar, Conversion Agent or co-registrar may do the same with like
rights.  However, the Trustee must comply
with Sections 7.10 and 7.11.

 

Section 7.04.  Trustee’s Disclaimer.  The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, shall not be accountable for the Company’s use or application of
the proceeds from the Securities, and shall not be responsible for any
statement in any registration statement for the Securities under the Securities
Act or in any offering document for the Securities, the Indenture or the
Securities (other than its certificate of authentication), or the determination
as to which Beneficial Owners are entitled to receive any notices hereunder.

 

Section 7.05.  Notice of Defaults.  If an Event of Default occurs and
if it is actually known to a Responsible Officer of the Trustee, the Trustee
shall give to each Holder notice of all current Event of Defaults known to it
within 30 days after any such Event of Default occurs or, if later, within 15 days
after it is known to the Trustee, unless such Event of Default shall have been
cured or waived before the giving of such notice.  Notwithstanding the preceding sentence,
except in the case of an Event of Default described in Sections 6.01(a) and
6.01(b), the Trustee may withhold the notice if and so long as a trust
committee of officers of the Trustee in good faith determines that withholding
the notice is in the interests of Holders. 
The second sentence of this Section 7.05 shall be in lieu of the
proviso to Section 315(b) of the TIA and such proviso is hereby
expressly excluded from this Indenture, as permitted by the TIA.

 

Section 7.06.  Reports by Trustee to
Holders.  Within 60 days after
each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to each Holder a brief report dated as of
such May 15 that complies with TIA Section 313(a), if required by
such Section 313(a), but only to the extent any such report is required to
be given pursuant to said TIA Section

 

49

 

313(a), or any successor provision of the
TIA.  The Trustee also shall comply with
TIA Section 313(b).

 

Commencing at the time this Indenture is qualified
under the TIA, a copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each securities exchange, if any, on which the
Securities are listed.  The Company
agrees to notify the Trustee in writing promptly whenever the Indenture is
qualified under the TIA and the Securities become listed on any securities
exchange and of any delisting thereof.

 

Section 7.07.  Compensation and
Indemnity.  The Company
agrees:

 

(a)        to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as the Company and the Trustee shall
from time to time agree in writing for all services rendered by it hereunder
(which compensation shall not be limited (to the extent permitted by law) by
any provision of law in regard to the compensation of a trustee of an express
trust);

 

(b)        to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture or any documents executed in
connection herewith (including the reasonable compensation and the expenses,
advances and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct; and

 

(c)        to indemnify the Trustee or any predecessor Trustee and their
respective agents, officers, directors and employees for, and to hold them
harmless against, any loss, damage, claim, liability, cost or expense
(including attorneys’ fees and expenses and taxes (other than franchise,
capital, net worth, employment and ad valorem taxes and taxes based upon,
measured by or determined by the income or gross receipts of the Trustee))
incurred without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending themselves against any claim (whether asserted
by the Company or any Holder or any other Person) or liability in connection
with the Trustee’s exercise or performance of any of its powers or duties
hereunder.

 

To secure the Company’s payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except any money or property held in trust to
pay interest installments (including Contingent Interest and Liquidated
Damages, if any), the principal amount, Redemption Price, Repurchase Price,
Change in Control Repurchase Price or interest, if any, due on overdue amounts,
as the case may be, in respect of any particular Securities.

 

50

 

The Company’s payment obligations pursuant to this Section 7.07
shall survive the discharge of this Indenture or the earlier termination or
resignation of the Trustee.  When the
Trustee incurs expenses after the occurrence of an Event of Default specified
in Section 6.01(g) or Section 6.01(h), the expenses, including
the reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.

 

Any amounts due and owing the Trustee hereunder
(whether in nature of fees, expenses, indemnification payments or reimbursement
for advances) which have not been paid by or on behalf of the Company within 15
days following written notice thereof given to the Company in accordance with
the provisions of Section 11.02, shall bear interest at an interest rate
equal to the Trustee’s announced prime rate in effect from time to time, plus
four percent (4.0%) per annum.

 

Section 7.08.  Replacement of Trustee.  The Trustee may resign by so
notifying the Company; provided that
no such resignation shall be effective until a successor Trustee has accepted
its appointment pursuant to this Section 7.08.  The Holders of a majority in aggregate
principal amount of the Securities at the time outstanding may remove the
Trustee by so notifying the Trustee and the Company in writing.  The Company shall remove the Trustee if:

 

(a)        the Trustee fails to comply with Section 7.10;

 

(b)        the Trustee is adjudged bankrupt or insolvent;

 

(c)        a receiver or public officer takes charge of the Trustee or
its property; or

 

(d)        the Trustee otherwise becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint, by Board Resolution, a successor Trustee.

 

A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company
satisfactory in form and substance to the retiring Trustee and the
Company.  Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture; provided, notwithstanding the foregoing,
the effectiveness of any such resignation or removal shall be conditioned on
receipt by the retiring Trustee of all amounts due and owing under Section 7.07
hereof.  The successor Trustee shall mail
a notice of its succession to Holders. 
The retiring Trustee shall promptly transfer all

 

51

 

property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.

 

If a successor Trustee does not take office within
30 days after the retiring Trustee gives its notice of resignation or is
removed, the retiring Trustee, the Company or the Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may
petition any court of competent jurisdiction at the expense of the Company for
the appointment of a successor Trustee.

 

If the Trustee fails to comply with Section 7.10,
any Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

 

Section 7.09.  Successor Trustee by Merger
Etc.  If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets (including the administration of the
trust created by this Indenture) to, another Person, the resulting or surviving
Person without any further act shall be the successor Trustee. As soon as
practicable, the successor Trustee shall mail a notice of its succession to the
Company and the Holders.  Any such
successor must nevertheless be eligible and qualified under the provisions of Section 7.01
hereof.

 

Section 7.10.  Eligibility;
Disqualification.  The Trustee
shall at all times satisfy the requirements of TIA Section 310(a)(1).  The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent filed annual report of condition.  Nothing herein contained shall prevent the
Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b). 
The Trustee shall comply with TIA Section 310(b); provided that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.

 

If at any time the Trustee shall cease to be
eligible in accordance with this Section 7.10, it shall resign immediately
in the manner and with the effect specified in Article 7.

 

Section 7.11.  Preferential Collection of
Claims Against Company.  The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). 
A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to
the extent indicated therein.

 

Section 7.12.  Force Majeure.  To the extent permitted by the
TIA, in no event shall the Trustee be liable for any failure or delay in the
performance of its

 

52

 

obligations hereunder because of
circumstances beyond the Trustee’s control, including, but not limited to, acts
of God, flood, war (whether declared or undeclared), terrorism, fire, riot,
embargo or government action, including any laws, ordinances, regulations,
governmental action or the like which delay, restrict or prohibit the providing
of the services contemplated by this Indenture.

 

ARTICLE
8

DISCHARGE OF INDENTURE

 

Section 8.01.  Discharge of Liability on
Securities.  When (a) the
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (b) all
outstanding Securities have become due and payable and the Company deposits
with the Trustee cash and shares of Common Stock (as applicable under the terms
of this Indenture) sufficient to pay all amounts due and owing on all
outstanding Securities (other than Securities replaced pursuant to Section 2.07),
and if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section 7.07, cease to be
of further effect.  The Trustee shall
join in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand at the cost and expense
of the Company and accompanied by an Officers’ Certificate and Opinion of
Counsel.

 

Section 8.02.  Repayment to the Company.  The Trustee, the Paying Agent and
the Conversion Agent shall return to the Company upon written request any money
or shares of Common Stock held by them for the payment of any amount and any
shares of Common Stock with respect to the Securities that remain unclaimed for
two years, subject to applicable unclaimed property law.  After return to the Company, as applicable,
Holders entitled to the money or shares of Common Stock must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person and the Trustee, the Paying Agent and
the Conversion Agent shall have no further liability to the Holders with
respect to such money or shares of Common Stock for that period commencing
after the return thereof.

 

ARTICLE
9

AMENDMENTS

 

Section 9.01.  Without Consent of
Holders.  The Company and the
Trustee may amend or supplement this Indenture or the Securities without notice
to or consent of any Holder:

 

53

 

(a)        to comply with Article 5 or Section 10.11;

 

(b)        to cure any ambiguity, omission, defect or inconsistency in
this Indenture;

 

(c)        to make any other change that does not adversely affect the
rights of any Holder in any material respect;

 

(d)        to make provisions with respect to the conversion right of the
Holders pursuant to the requirements of Section 10.01;

 

(e)        to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities; or

 

(f)         to comply with the provisions of the TIA, or with any
requirement of the SEC arising as a result of the qualification of this
Indenture under the TIA.

 

Section 9.02.  With Consent of Holders.

 

The Company and the Trustee may amend or supplement
this Indenture or the Securities without notice to any Holder but with the
consent of the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding.  The
Holders of a majority in aggregate principal amount of the Securities at the
time outstanding may waive compliance by the Company with restrictive
provisions of this Indenture other than as set forth in this Section 9.02
below, and waive any past Event of Default under this Indenture and its
consequences, except a default in the payment of the principal of, or
Redemption Price, Repurchase Price, Change in Control Repurchase Price of, or
any interest on, any Security, or in respect of a provision which under this
Indenture cannot be modified or amended without the consent of the Holder of
each outstanding Security affected.

 

Subject to Section 9.04, without the consent of
each Holder affected, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:

 

(a)        change the Stated Maturity of, or any payment date of any
installment of interest (including Contingent Interest and Liquidated Damages,
if any) on, any Security;

 

(b)        reduce the principal amount or Redemption Price of, or the
rate of interest (including Contingent Interest and Liquidated Damages, if any)
on, any Security, whether upon acceleration, redemption or otherwise, or alter
the manner of calculation of interest or the rate of accrual thereof on any
Security;

 

(c)        change the currency for payment of principal of, or interest
(including Contingent Interest and Liquidated Damages, if any) on, any Security;

 

54

 

(d)        impair the right to
institute suit for the enforcement of any payment of any amount with respect to
any Security when due;

 

(e)        adversely affect the
conversion rights provided in Article 10;

 

(f)         modify the provisions of
this Indenture requiring the Company to make an offer to repurchase Securities
upon a Change in Control pursuant to Section 3.09, or to repurchase the
Securities at the option of the Holders pursuant to Section 3.08;

 

(g)        reduce the percentage of
principal amount of the outstanding Securities necessary to modify or amend
this Indenture or to consent to any waiver provided for in this Indenture;

 

(h)        waive a default in the
payment of any amount or shares of Common Stock with respect to any Security
when due (except as provided in Section 6.02); or

 

(i)         make any changes to Section 6.04,
Section 6.07 or this Section 9.02.

 

It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.

 

After an amendment under this Section 9.02
becomes effective, the Company shall mail to each Holder a notice briefly
describing the amendment.  Failure to
mail the notice or a defect in the notice shall not affect the validity of the
amendment.

 

Section 9.03.  Compliance with Trust
Indenture Act.  Every
supplemental indenture executed pursuant to this Article 9 shall comply
with the TIA.

 

Section 9.04.  Revocation and Effect of
Consents.  Until an amendment,
waiver or other action by Holders becomes effective, a consent thereto by a
Holder of a Security hereunder is a continuing consent by such Holder and every
subsequent Holder of such Security or portion of such Security that evidences
the same obligation as the consenting Holder’s Security, even if notation of
the consent, waiver or action is not made on such Security.  However, unless otherwise agreed by such
Holder or a predecessor Holder, any such Holder or subsequent Holder may revoke
the consent, waiver or action as to such Holder’s Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
amendment, waiver or action becomes effective. 
After an amendment, waiver or action becomes effective, it shall bind
every Holder.

 

Section 9.05.  Notation on or Exchange of
Securities.  Securities
authenticated and delivered after the execution of any supplemental indenture 

 

55

 

pursuant to this Article 9 may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new
Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company, and such new Securities may be authenticated and
delivered by the Trustee in exchange for outstanding Securities.

 

Section 9.06.  Trustee to Sign Supplemental
Indentures.  The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not, in the sole determination of the
Trustee, adversely affect the rights, duties, powers, privileges, benefits,
indemnities, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not, sign
such supplemental indenture.  In signing
any supplemental indenture the Trustee shall be entitled to receive, and
(subject to the provisions of Section 7.01) shall be fully protected in
relying upon, an Officers’ Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.

 

Section 9.07.  Effect of Supplemental
Indentures.  Upon the execution
of any supplemental indenture under this Article 9, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes, and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

 

ARTICLE 10

CONVERSION OF THE SECURITIES

 

Section 10.01.  Conversion Privilege.

 

(a)        Subject to the provisions of
this Article 10, a Holder of a Security may convert such Security into
cash and Common Stock equal to the Conversion Value (1) at any time on or
after December 15, 2028 or (2) on or prior to December 6, 2029,
if, in the case of clause (2) only, any of the following conditions is
satisfied:

 

(i)            during any fiscal quarter (the “Quarter”)
commencing on or after December 22, 2009, if the Common Stock Price for at
least 20 Trading Days in the period of 30 consecutive Trading Days ending on
the last Trading Day of the Quarter immediately preceding such Quarter
(appropriately adjusted to take into account the occurrence, during such 30
consecutive Trading Day period, of any event requiring adjustment of the
Conversion Price under this Indenture) is more than 120% of the Conversion
Price on such 30th Trading Day;

 

56

 

(ii)           such Security has been called for redemption by the
Company pursuant to Section 3.01 and the redemption has not yet occurred,
so long as the Holder surrenders such Security for conversion prior to the
close of business on the date that is two Business Days prior to the applicable
Redemption Date, even if the Security is not otherwise convertible at such
time;

 

(iii)          (A)          a distribution to all holders of Common Stock of
rights, warrants or options entitling them (for a period commencing no earlier
than the date of distribution and expiring not more than 60 days after the date
of distribution) to subscribe for or purchase shares of Common Stock at a price
less than the average Common Stock Price for the 10 Trading Days immediately
preceding the date such distribution was first publicly announced; or

 

(B)                   a distribution to all holders of Common Stock
of cash or other assets, evidences of Company indebtedness, rights or warrants
to purchase or subscribe for Capital Stock or other securities of the Company,
where the fair market value of such distribution per share of Common Stock (as
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value) exceeds 10% of the Common Stock Price on
the Trading Day immediately preceding the date such distribution was first
publicly announced;

 

provided
that the Holder shall have no right to convert any Security pursuant to
this Section 10.01(a)(iii) if the Holder of a Security otherwise
participates in the distribution described in this Section 10.01(a)(iii) on
an as-converted basis solely into Common Stock at the then applicable
Conversion Price without conversion of such Holder’s Securities; or

 

(iv)          (x) if a Change in Control occurs or (y) if
the Company is party to a consolidation, merger, share exchange, sale of all or
substantially all of its properties and assets or other similar transaction, in
each case pursuant to which the Common Stock is subject to conversion into
cash, securities or other property, which transaction does not otherwise
constitute a Change in Control; in the case or each of subclause (x) and
(y), from and after the effective date of such transaction until and including
the date that is 30 days after the effective date of such transaction.

 

(b)        If a Holder elects to
convert its Securities in connection with a Change in Control that occurs prior
to December 15, 2014, (other than relating to the composition of the Board
of Directors as described in clause (d) of the definition of Change in
Control in Section 1.01) and 10% or more of the fair market value of the
consideration for the Common Stock (as determined by the 

 

57

 

Board of Directors, whose
determination shall be conclusive evidence of such fair market value) in the
corporate transaction consists of (i) cash, (ii) other property or (iii) securities
that are not traded or scheduled to be traded immediately following such
transaction on a U.S. national securities exchange, then the Conversion Rate
shall be increased by the number of additional shares of Common Stock (the “Additional Shares”) determined in the manner set forth
below, which will have the effect of decreasing the Conversion Price for the
Securities surrendered for conversion; provided that
if the Share Price in such transaction is greater than $65.00 per share or less
than $7.75 per share (subject in each case to adjustment as described below),
the number of Additional Shares shall be zero; and provided
further that in no event will the Conversion Rate exceed
approximately 129.0323 per $1,000 principal amount of Securities.  For the avoidance of doubt, (x) the
adjustment provided for in this Section 10.01(b) shall only be made
with respect to the Securities being converted in connection with such Change
in Control and shall not be effective as to any Securities not so converted and
(y) a Security will be deemed to have been converted “in connection with”
a Change of Control if such Security is tendered for conversion from and after
the effective date of such Change in Control until and including the date that
is 30 days after the effective date of such Change in Control.

 

The number of Additional Shares will be determined
by the Company by reference to the table attached as Schedule A hereto, based
on the date the corporate transaction becomes effective (the “Effective Date”) and the share price paid per share of
Common Stock in the corporate transaction (the “Share Price”);
provided that  if
the Share Price is between two Share Price amounts in the table or the
Effective Date is between two Effective Dates in the table, the Company shall
determine the number of Additional Shares by a straight-line interpolation
between the number of Additional Shares set forth for the higher and lower
Share Price amounts and the two dates, as applicable, based on a 365-day
year.  If holders of Common Stock receive
only cash in the corporate transaction, the Share Price shall be the cash
amount paid per share of Common Stock. 
Otherwise, the Share Price shall be the average of the closing per share
sale price of the Common Stock on the five Trading Days prior to but not
including the effective date of the corporate transaction.

 

The Share Prices set forth in the first row of the
table (i.e., column headers) in Schedule A hereto will be adjusted in the same
manner as the Conversion Price of the Securities is adjusted pursuant to this
Indenture.  The number of Additional
Shares will be adjusted as of any date on which the Conversion Price of the
Securities is adjusted pursuant to this Indenture and will equal the number of
Additional Shares applicable immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Conversion Price immediately prior
to the adjustment giving rise to the adjustment of the 

 

58

 

number of Additional Shares and the
denominator of which is the Conversion Price as so adjusted.

 

(c)        Notwithstanding the
foregoing, and in lieu of adjusting the Conversion Rate as set forth in Section 10.01(b),
in the case of a Public Acquirer Change in Control, the Company may elect that,
from and after the Effective Date of such Public Acquirer Change in Control,
the right to convert a Security will be changed into a right to convert a
Security into a number of shares of Acquirer Common Stock.  At any time prior to the twentieth day
immediately preceding the proposed Effective Date of the Public Acquirer Change
in Control, the Company may irrevocably elect to adjust the terms of the
Holder’s conversion privilege set forth in Section 10.14 such that
following such adjustment Acquirer Common Stock shall be deemed to be the
Common Stock and the Conversion Rate on and following the Effective Date of
such transaction described in this Section 10.01(c) shall be the
product of:

 

(i)            the Conversion Rate in effect immediately prior to
the Effective Date of such Change in Control, times

 

(ii)           the average of the quotients obtained, for each
Trading Day in the 10 consecutive Trading Day period commencing on the Trading
Day next succeeding the Effective Date of such Public Acquirer Change in
Control (the ‘‘Valuation Period’’), of:

 

(A)          the Acquisition
Value of our Common Stock on each such Trading Day in the Valuation Period, divided
by

 

(B)           the Closing
Sale Price of the Acquirer Common Stock on each such Trading Day in the
Valuation Period.

 

(d)        In the case of the foregoing
Sections 10.01(a)(iii)(A) and 10.01(a)(iii)(B), the Company shall cause a
notice of such distribution to be filed with the Trustee and the Conversion
Agent and to be mailed to each Holder of Securities no later than 20 days prior
to the Ex-Dividend Date for such distribution. 
Once the Company has given such notice, Holders may surrender their
Securities for conversion at any time thereafter until the earlier of the close
of business on the Business Day prior to the Ex-Dividend Date or the Company’s
announcement that such distribution will not take place.  The “Ex-Dividend Date”
for any such issuance or distribution means the date immediately prior to the
commencement of “ex-dividend” trading for such issuance or distribution on The
New York Stock Exchange or such other national securities exchange or Pink OTC
Markets Inc. or similar system of automated dissemination of quotations of
securities prices on which the Common Stock is then listed or quoted.

 

59

 

(e)        A Holder may convert a
portion of a Security equal to $1,000 or any integral multiple thereof.  Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of a
Security.

 

If a Security is called for redemption pursuant to Section 3.01,
in order to convert such Security, the Holder must deliver the Security to the
Conversion Agent (or, if the Security is held in book-entry form, complete and
deliver to the Depositary appropriate instructions in accordance with the
Applicable Procedures) at any time prior to the close of business on the day
that is two Business Days prior to the applicable Redemption Date for such
Security (unless the Company shall default in paying the Redemption Price when
due, in which case the conversion right shall terminate on the date such
default is cured and such Security is redeemed).  A Security in respect of which a Holder has
delivered a Repurchase Notice pursuant to Section 3.08 or a Change in
Control Repurchase Notice pursuant to Section 3.09 exercising the option
of such Holder to require the Company to repurchase such Security may be
converted only if such Repurchase Notice or Change in Control Repurchase
Notice, as the case may be, is withdrawn by a written notice of withdrawal
delivered to the Paying Agent prior to the close of business on the Repurchase
Date or the Change in Control Repurchase Date, as the case may be, in
accordance with Section 3.10.

 

(f)         A Holder of Securities is
not entitled to any rights of a holder of Common Stock until such Holder has
converted its Securities into Common Stock.

 

Section 10.02.  Conversion Procedure.

 

(a)        To convert a Security, a
Holder must (i) if the Security is in definitive form, complete and
manually sign the irrevocable conversion notice on the back of the Security and
deliver such notice to the Conversion Agent, (ii) if the Security is in
definitive form, surrender the Security to the Conversion Agent, (iii) if
the Security is in definitive form, furnish appropriate endorsements and
transfer documents if required by the Registrar or the Conversion Agent, (iv) pay
any transfer or other tax, if required by Section 10.03 and (v) if
the Security is held in book-entry form, complete and deliver to the Depositary
appropriate instructions pursuant to the Applicable Procedures.  The later of (x) the date on which the
Holder satisfies all of the foregoing requirements and (y) the
Determination Date is the “Conversion Date”.  As promptly as practicable after the
Conversion Date and in any event within four Business Days thereof, the Company
shall deliver to the Holder through the Conversion Agent cash and shares of
Common Stock in the amounts calculated in accordance with Section 10.14.

 

(b)        The Person in whose name the
Security is registered shall be deemed to be a stockholder of record on the
Conversion Date; provided that no 

 

60

 

surrender of a Security on
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such
shares of Common Stock on such date, but such surrender shall be effective to
constitute the Person or Persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are
open; provided, further that such conversion
shall be at the Conversion Price in effect on the date that such Security shall
have been surrendered for conversion, as if the stock transfer books of the
Company had not been closed.  Upon
conversion of a Security, such Person shall no longer be a Holder of such
Security.

 

(c)        No payment or adjustment
will be made for accrued but unpaid interest (including Contingent Interest and
Liquidated Damages, if any) on a converted Security or for dividends or
distributions on shares of Common Stock issued upon conversion of a
Security.  The Company shall not adjust
the Conversion Price to account for the accrued but unpaid interest.  Notwithstanding the foregoing, if Securities
are converted after the close of business on a regular record date and prior to
the opening of business on the next Interest Payment Date, including the date
of maturity, Holders of such Securities at the close of business on such
regular record date shall receive the accrued but unpaid interest (including
Contingent Interest and Liquidated Damages, if any) payable on such Securities
on the corresponding Interest Payment Date notwithstanding the conversion.  In such event, such Security, when
surrendered for conversion, must be accompanied by delivery of a check payable
to the Conversion Agent in an amount equal to the accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) payable on such
Interest Payment Date on the portion so converted.  If such payment does not accompany such
Security, the Security shall not be converted; provided that
no such check shall be required if such Security has been called for redemption
on a Redemption Date within the period between the close of business on such
record date and the opening of business on such Interest Payment Date, or if
such Security is surrendered for conversion on the Interest Payment Date.  If the Company defaults in the payment of
interest (including Contingent Interest and Liquidated Damages, if any) payable
on the Interest Payment Date, the Conversion Agent shall promptly repay such
funds to the Holder.

 

(d)        Upon surrender of a Security
that is converted in part, the Company shall execute, and the Trustee shall,
upon receipt of a Company Order, authenticate and deliver to the Holder, a new
Security equal in principal amount to the unconverted portion of the Security
surrendered.

 

Section 10.03.  Taxes on Conversion.  If a Holder converts a Security,
the Company shall pay any documentary, stamp or similar issue or transfer tax
due on 

 

61

 

the issue of shares of Common Stock upon such
conversion.  However, the Holder shall
pay any tax which is due because the Holder requests the shares to be issued in
a name other than the Holder’s name.  The
Conversion Agent may refuse to deliver the certificates representing the Common
Stock being issued in a name other than the Holder’s name until the Conversion
Agent receives a sum sufficient to pay any tax which will be due because the
shares are to be issued in a name other than the Holder’s name.  Nothing herein shall preclude any tax
withholding required by law or regulations.

 

Section 10.04.  Company to Provide Stock.  The Company shall, prior to
issuance of any Securities hereunder, and from time to time as may be
necessary, reserve, out of its authorized but unissued Common Stock, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.  The certificates representing the shares of
Common Stock issued upon conversion of Transfer Restricted Securities shall
bear a legend substantially in the following form:

 

“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE ‘‘SECURITIES ACT’’), OR ANY STATE OR OTHER SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT IT IS A
‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT (‘‘RULE 144A’’)) AND IS PURCHASING IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY PRIOR TO THE DATE WHICH IS THE LATER OF (X) TWO YEARS (OR SUCH
SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT)
AFTER THE LATER OF THE LAST DATE OF ORIGINAL ISSUANCE OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH AMERICAN EQUITY
INVESTMENT LIFE HOLDING COMPANY OR ANY AFFILIATE OF AMERICAN EQUITY INVESTMENT
LIFE HOLDING COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) 

 

62

 

AND
(Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW
(THE ‘‘RESALE RESTRICTION TERMINATION DATE’’) EXCEPT (A) TO AMERICAN
EQUITY INVESTMENT LIFE HOLDING COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(D) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND; AND, IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO AMERICAN EQUITY
INVESTMENT LIFE HOLDING COMPANY AND THE TRUSTEE (WITH RESPECT TO TRANSFERS OF
SECURITIES) OR THE TRANSFER AGENT (WITH RESPECT TO TRANSFERS OF COMMON STOCK).
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.”

 

The Company covenants that all shares of Common
Stock delivered upon conversion of the Securities shall be newly issued shares
or treasury shares, shall be duly authorized, validly issued, fully paid and
non-assessable and shall be free from preemptive rights and free of any lien or
adverse claim.

 

The Company will endeavor promptly to comply with
all federal and state securities laws regulating the offer and delivery of
shares of Common Stock upon conversion of Securities, if any, and will list or
cause to have quoted such shares of Common Stock on each national securities
exchange or in the over-the-counter market or such other market on which the
Common Stock is then listed or quoted.

 

63

 

Section 10.05.  Adjustment of Conversion
Price.  The Conversion Price
shall be adjusted (without duplication) from time to time by the Company as
follows:

 

(a)        In case the Company shall (i) pay
a dividend or other distribution in shares of Common Stock to all holders of
Common Stock, (ii) subdivide its outstanding Common Stock into a greater
number of shares or (iii) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price shall be adjusted so that the
Holder of any Security thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which it would have owned or
been entitled to receive had such Security been converted immediately prior to
the happening of such event.  For the
purposes of calculating the Conversion Price adjustment pursuant to this Section 10.05(a),
Holders of a Security shall be treated as if they had the right to convert the
Security solely into Common Stock at the then applicable Conversion Price.  An adjustment made pursuant to this Section 10.05(a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of subdivision, combination or reclassification.

 

(b)        In case the Company shall
issue to all holders of Common Stock rights, warrants or options entitling such
holders (for a period commencing no earlier than the date of distribution and
expiring not more than 60 days after the date of distribution) to subscribe for
or purchase shares of Common Stock (or securities convertible into Common
Stock) at a price per share less than the average Common Stock Price for the 10
Trading Days immediately preceding the date the distribution of such rights,
warrants or options was first publicly announced by the Company, the Conversion
Price shall be decreased so that the Conversion Price shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date for such issue by a fraction,

 

(i)            the numerator
of which shall be the number of shares of Common Stock outstanding on such date
of public announcement, plus the number of shares which the aggregate
subscription or purchase price for the total number of shares of Common Stock
offered by the rights, warrants or options so issued (or the aggregate
conversion price of the convertible securities offered by such rights, warrants
or options) would purchase at such average Common Stock Price, and

 

(ii)           the denominator of which shall be the number of
shares of Common Stock outstanding on such date of public announcement plus the
number of additional shares of Common Stock offered by such rights, warrants or
options (or into which the convertible securities so offered by such rights,
warrants or options are convertible).

 

64

 

provided that no
adjustment will be made if Holders of the Securities are entitled to
participate in the distribution on substantially the same terms as holders of
our Common Stock as if such Holders had converted their Securities solely into
Common Stock immediately prior to such distribution at the then applicable
Conversion Price.  Such adjustment shall
be made successively whenever any such rights, warrants or options are issued,
and shall become effective immediately after such record date.  If at the end of the period during which such
rights, warrants or options are exercisable not all rights, warrants or options
shall have been exercised, the adjusted Conversion Price shall be immediately
readjusted to what it would have been upon application of the foregoing
adjustment substituting the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued) for the total number of shares of
Common Stock offered (or convertible securities offered).

 

(c)        In case the Company shall distribute to all holders of Common
Stock any shares of Capital Stock of the Company (other than Common Stock) or
evidences of its indebtedness, other securities or other assets, or shall
distribute to all holders of Common Stock, rights, warrants or options to
subscribe for or purchase any of its securities (excluding (i) those
rights, options and warrants referred to in Section 10.05(b); (ii) those
dividends, distributions, subdivisions and combinations referred to in Section 10.05(a);
and (iii) those dividends and distributions paid in cash referred to in Section 10.05(e)),
then in each such case the Conversion Price shall be decreased so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction,

 

(i)            the
numerator of which shall be the Market Price on the record date for the
determination of holders of Common Stock entitled to receive such distribution
less the fair market value on such record date (as determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair market
value) of the portion of the Capital Stock or evidences of indebtedness, securities
or assets so distributed or of such rights, warrants or options, in each
case  applicable to one share of Common
Stock, and

 

(ii)           the denominator of
which shall be the Market Price on such record date,

 

such adjustment to become effective immediately
after the record date for such distribution; provided
that if the numerator of the foregoing fraction is less than $1.00 (including a
negative amount), then in lieu of the foregoing adjustment, adequate provision
shall be made so that each Holder shall have the right to receive upon
conversion, in addition to the cash and Common Stock issuable upon such
conversion, the distribution such Holder would have received had such 

 

65

 

Holder converted its Security solely into Common
Stock at the then applicable Conversion Price immediately prior to the record
date for such distribution; provided that
no adjustment will be made if Holders of the Securities are entitled to
participate in the distribution on substantially the same terms as holders of
our Common Stock as if such Holders had converted their Securities solely into
Common Stock immediately prior to such distribution at the then applicable
Conversion Price;

 

Notwithstanding the foregoing, if the distribution
by the Company to all holders of its Common Stock consists of Capital Stock of,
or similar equity interests in, a Subsidiary or other business unit of the
Company (unless such Capital Stock or similar equity interests are distributed
to holders in such distribution as if such holders had converted their
Securities into Common Stock), the Conversion Price shall be decreased so that
the same shall be equal to the rate determined by multiplying the Conversion
Price in effect on the record date with respect to such distribution by a
fraction:

 

(i)            the
numerator of which shall be the average Common Stock Price over the Spinoff
Valuation Period; and

 

(ii)           the
denominator of which shall be the sum of (x) the average Common Stock
Price over the ten (10) consecutive Trading Day period (the “Spinoff Valuation Period”) commencing on and including the
fifth Trading Day after the date on which “ex-dividend trading” commences for
such dividend or distribution on the New York Stock Exchange or such other
national or regional exchange or market on which the Common Stock are then
listed or quoted plus (y) the average fair market value (as determined by
the Board of Directors and described in a resolution of the Board of Directors)
over the Spinoff Valuation Period of the portion of the assets so distributed
applicable to one share of Common Stock,

 

such adjustment to become effective immediately
prior to the opening of business on the day following such record date;
provided that the Company may in lieu of the foregoing adjustment make adequate
provision so that each Holder shall have the right to receive upon conversion
the amount of the distribution such holder would have received had such holder
converted each Note on the record date with respect to such distribution.  If any dividend or distribution of the type
described in this Section 10.05(c) is declared but not so paid or
made, such adjustment to the Conversion Price shall be reversed.  In any case in which this paragraph is
applicable, Section 10.05(a), Section 10.05(b) and the first
paragraph of this Section 10.05(c) shall not be applicable.

 

(d)        In case the Company or any Subsidiary of the Company makes a
payment in respect of a tender or exchange offer, other than an odd-lot offer,
to 

 

66

 

holders of our Common Stock
to the extent that, together with any cash and the fair market value of any
other consideration in respect of any tender or exchange offer by us or any of
our subsidiaries for shares of our Common Stock consummated within the
preceding 12 months not triggering a Conversion Price adjustment, exceeds an
amount equal to 12.5% of the market capitalization of our Common Stock on the
expiration date of the tender offer, the Conversion Price shall be decreased so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the last time (the “Offer
Expiration Time”) tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may be amended), by a fraction,

 

(i)            the
numerator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Offer Expiration Time
multiplied by the Common Stock Price on the Trading Day next succeeding the Offer
Expiration Time, and

 

(ii)           the
denominator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to holders of
Common Stock based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares of Common Stock validly tendered
or exchanged and not withdrawn as of the Offer Expiration Time (the shares
deemed so accepted up to any such maximum being referred to as the “Purchased Shares”) and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Offer
Expiration Time and the Common Stock Price on the Trading Day next succeeding
the Offer Expiration Time,

 

such adjustment to become effective
immediately prior to the opening of business on the day following the Offer
Expiration Time.  If the Company is
obligated to purchase shares pursuant to any such tender or exchange offer, but
the Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such
tender or exchange offer had not been made.

 

(e)        In case the Company shall declare a cash dividend or cash
distribution to all of the holders of Common Stock such that the aggregate cash
dividends or cash distributions per share of Common Stock in any fiscal year
exceeds $0.08 (the “Dividend Threshold Amount”),
the Conversion Price shall be decreased so that the Conversion Price shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the record date for such dividend or distribution by a
fraction,

 

67

 

(i)            the
numerator of which shall be the average of the Common Stock Price for the three
consecutive Trading Days ending on the Trading Day immediately preceding the
record date for such dividend or distribution (the “Pre-Dividend
Sale Price”), minus the difference between the full amount of the
dividend or distribution to the extent payable in cash applicable to one share
of our Common Stock and the Dividend Threshold Amount, and

 

(ii)           the
denominator of which shall be the Pre-Dividend Sale Price,

 

such adjustment to become effective
immediately after the record date for such dividend or distribution; provided that if the numerator of the foregoing fraction is
less than $1.00 (including a negative amount), then in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion, in addition to the cash and Common Stock
issuable upon such conversion, the amount of cash such Holder would have
received had such Holder converted its Security solely into Common Stock at the
then applicable Conversion Price immediately prior to the record date for such
cash dividend or cash distribution.  If
such cash dividend or cash distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price that would then be in
effect if such dividend or distribution had not been declared.

 

(f)         In case of a tender or exchange offer made by a Person other
than the Company or any Subsidiary of the Company for an amount that increases
the offeror’s ownership of Common Stock to more than twenty-five percent (25%)
of the Common Stock outstanding and shall involve the payment by such Person of
consideration per share of Common Stock having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a resolution of the Board of Directors) that as of the Offer
Expiration Time exceeds the Common Stock Price on the Trading Day next
succeeding the Offer Expiration Time, and in which, as of the Offer Expiration
Time the Board of Directors is not recommending rejection of the offer, the
Conversion Price shall be decreased so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Offer Expiration Time by a fraction,

 

(i)            the
numerator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Offer Expiration Time
multiplied by the Common Stock Price on the Trading Day next succeeding the
Offer Expiration Time, and

 

(ii)           the
denominator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration 

 

68

 

payable to holders of Common Stock based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Offer Expiration Time
(the shares deemed so accepted up to any such maximum being referred to as the
“Accepted Purchased Shares”) and (y) the
product of the number of shares of Common Stock outstanding (less any Accepted
Purchased Shares) at the Offer Expiration Time and the Common Stock Price on
the Trading Day next succeeding the Offer Expiration Time,

 

such adjustment to become effective
immediately prior to the opening of business on the day following the Offer
Expiration Time.  If such Person is
obligated to purchase shares pursuant to any such tender or exchange offer, but
such Person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such
tender or exchange offer had not been made. 
Notwithstanding the foregoing, the adjustment described in this Section 10.05(f) shall
not be made if, as of the Offer Expiration Time, the offering documents with
respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article 5.

 

(g)        In any case in which this Section 10.05 shall require
that an adjustment be made immediately following a record date established for
purposes of this Section 10.05, the Company may elect to defer (but only
until five Business Days following the filing by the Company with the Trustee
of the certificate described in Section 10.09) issuing to the holder of
any Security converted after such record date the cash, shares of Common Stock
and other Capital Stock of the Company issuable upon such conversion over and
above the cash, shares of Common Stock and other Capital Stock of the Company
issuable upon such conversion only on the basis of the Conversion Price prior
to adjustment; and, in lieu of the cash and shares the issuance of which is so
deferred, the Company shall issue or cause its transfer agents to issue due
bills or other appropriate evidence of the right to receive such shares.

 

(h)        Before taking any action which would cause an adjustment
decreasing the Conversion Price so that the shares of Common Stock issuable
upon conversion of the Securities would be issued for less than the par value
of such Common Stock, the Company will take all corporate action which may be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of such Common Stock at such adjusted Conversion
Price.

 

Section 10.06.  No Adjustment.  No adjustment in the Conversion
Price shall be required unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Price as last adjusted; provided that any adjustments which by reason of this Section 10.06
are not required to be made shall be carried 

 

69

 

forward and taken into account in any
subsequent adjustment.  All calculations
under this Article 10 shall be made to the nearest cent, with one-half
cent rounded up, or to the nearest ten thousandth (0.0001) of a share, with
each five hundred thousandth (0.00005) of a share being rounded up, as the case
may be..

 

No adjustment need be made upon the issuance of
Common Stock under any present or future employee benefits plan or program of
the Company.

 

No adjustment need be made upon the issuance of
Common Stock pursuant to (i) the exercise of any options, warrants or
rights to purchase such Common Stock, (ii) the exchange of any
exchangeable securities for such Common Stock or (iii) the conversion of
any convertible securities into such Common Stock, in each case so long as such
options, warrants, rights to purchase, exchangeable securities or convertible
securities are outstanding as of the date on which the Securities are first
issued.

 

No adjustment need be made for a change in the par
value or a change to no par value of the Common Stock.

 

To the extent that the Securities become convertible
into cash, no adjustment need be made thereafter as to the cash.  Interest will not accrue on the cash.

 

Section 10.07.  Equivalent Adjustments.  If, as a result of an adjustment
made pursuant to Section 10.05 above, the Holder of any Security
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in this Article 10.

 

Section 10.08.  Adjustment for Tax
Purposes.  The Company shall
be entitled to make such reductions in the Conversion Price, in addition to
those required by Section 10.05, as the Board of Directors in its
discretion shall determine to be advisable in order that any stock dividends,
subdivisions of shares, distributions of rights to purchase stock or other
securities, or distributions of securities convertible into or exchangeable for
stock hereafter made by the Company to its holders of Common Stock shall not be
taxable to such holders.

 

Section 10.09.  Notice of Adjustment.  Whenever the Conversion Price is
adjusted, or Holders become entitled to other securities or due bills, the
Company shall promptly mail to Holders a notice of the adjustment and file with
the Trustee an Officers’ Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. 
The certificate shall be conclusive evidence of the 

 

70

 

correctness of such adjustment, absent
manifest error, and the Trustee may conclusively assume that, unless and until
such certificate is received by it, no such adjustment is required.

 

Section 10.10.  Notice of Certain
Transactions.  In case:

 

(a)           the
Company shall declare a dividend (or any other distribution) on the Common
Stock; or

 

(b)           the
Company shall authorize the granting to the holders of Common Stock of rights,
warrants or options to subscribe for or purchase any share of any class or any
other rights, warrants or options; or

 

(c)           of
any reclassification of the Common Stock of the Company (other than a
subdivision or combination of its outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value),
or of any consolidation, merger, or share exchange to which the Company is a
party and for which approval of any holders of Common Stock is required, or of
the sale or transfer of all or substantially all of the properties and assets
of the Company; or

 

(d)           of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company;

 

the Company shall cause to be filed with the
Trustee and the Conversion Agent and to be mailed to each Holder of Securities
at its address appearing on the list provided for in Section 2.05, as
promptly as possible but in any event at least ten days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights,
warrants or options, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding-up.  Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, share exchange, transfer,
dissolution, liquidation or winding-up.

 

Section 10.11.  Effect of Reclassification,
Consolidation, Merger, Share Exchange or Sale on Conversion Privilege.  If any of the following shall
occur, namely:  (i) any
reclassification or change of outstanding shares of Common 

 

71

 

Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination); (ii) any consolidation,
combination, merger or share exchange to which the Company is a party other
than a merger in which the Company is the resulting or surviving corporation
and which does not result in any reclassification of, or change (other than a
change in name, or par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination) in,
outstanding shares of Common Stock; or (iii) any sale or conveyance of all
or substantially all of the properties and assets of the Company, then the
Company, or such successor or purchasing corporation, as the case may be,
shall, as a condition precedent to such reclassification, change,
consolidation, merger, share exchange, sale or conveyance, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each
Security then outstanding shall have the right to convert such Security into
the kind and amount of cash, securities or other property receivable upon such
reclassification, change, consolidation, merger, share exchange, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security solely into Common Stock at the then applicable
Conversion Price immediately prior to such reclassification, change,
consolidation, merger, share exchange, sale or conveyance.  Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this Article 10.  If, in the case of any such consolidation,
merger, share exchange, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
includes shares of Capital Stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, share exchange, sale or conveyance, then
such supplemental indenture shall also be executed by such other corporation
and shall contain such additional provisions to protect the interests of the
Holders of the Securities as the Board of Directors shall reasonably consider
necessary by reason of the foregoing. 
The provision of this Section 10.11 shall similarly apply to
successive consolidations, mergers, share exchanges, sales or conveyances.  Notwithstanding the foregoing, a distribution
by the Company to all or substantially all holders of Common Stock for which an
adjustment to the Conversion Price or provision for conversion of the
Securities may be made pursuant to Section 10.05 shall not be deemed to be
a sale or conveyance of all or substantially all of the properties and assets
of the Company for purposes of this Section 10.11.

 

In the event the Company shall execute a
supplemental indenture pursuant to this Section 10.11, the Company shall
promptly file with the Trustee an Opinion of Counsel stating that such
supplemental indenture is authorized or permitted by this Indenture and an
Officers’ Certificate briefly stating the reasons therefor, the kind or amount
of cash, securities or other property receivable by 

 

72

 

Holders of the Securities upon the conversion
of their Securities after any such reclassification, change, consolidation,
merger, share exchange, sale or conveyance, any adjustment to be made with
respect thereto and that all conditions precedent have been complied with.

 

Section 10.12.  Trustee’s Disclaimer.  The Trustee has no duty to
determine when an adjustment under this Article 10 should be made, how it
should be made or what such adjustment should be made, but may accept as
conclusive evidence of the correctness of any such adjustment, and shall be
fully protected in relying upon, the Officers’ Certificate with respect thereto
which the Company is obligated to file with the Trustee pursuant to Section 10.09.  The Trustee shall not be accountable for and
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Securities, and the Trustee shall not be responsible
for the Company’s failure to comply with any provisions of this Article 10.  Each Conversion Agent (other than the Company
or an Affiliate of the Company) shall have the same protection under this Section 10.12
as the Trustee.

 

The Trustee shall not be under any responsibility to
determine the correctness of any provisions contained in any supplemental
indenture executed pursuant to Section 10.11, but may accept as conclusive
evidence of the correctness thereof, and shall be protected in relying upon,
the Officers’ Certificate with respect thereto which the Company is obligated
to file with the Trustee pursuant to Section 10.11.

 

Section 10.13.  Voluntary Reduction.  The Company from time to time may
reduce the Conversion Price by any amount for any period of time if such period
is at least 20 Trading Days or such longer period as may be required by law and
if the reduction is irrevocable during such period; if the Board of Directors
determines, in good faith, that such decrease would be in the best interests of
the Company; provided that in no event may the
Conversion Price be less than the par value of a share of Common Stock. Any
such determination by the Board of Directors shall be conclusive.

 

Section 10.14.  Conversion Value of Securities
Tendered.

 

(a)        Holders tendering the Securities for conversion shall be
entitled to receive, upon conversion of such Securities, cash and shares of
Common Stock, the value of which (the “Conversion Value”)
shall be equal to the product of:

 

(i)            (A) the
aggregate principal amount of Securities to be converted divided by 1,000
multiplied by (B) the then applicable Conversion Rate; and

 

73

 

(ii)           the
average of the Common Stock Prices for the ten consecutive Trading Days
(appropriately adjusted to take into account the occurrence during such period
of stock splits, stock dividends and similar events) beginning on the second
Trading Day immediately following the day the Securities are tendered for
conversion (the “Ten Day Average Closing Stock Price”).

 

(b)        Subject to certain exceptions described below and under
Sections 10.01(b) and 10.01(a)(iii), the Company shall deliver the
Conversion Value to converting holders as follows:

 

(i)            an
amount in cash (the “Principal Return”)
equal to the lesser of (a) the Conversion Value of the Securities to be
converted and (b) the aggregate principal amount of the Securities to be
converted;

 

(ii)           if
the Conversion Value of the Securities to be converted is greater than the
Principal Return, an amount in whole shares (the “Net Shares”),
determined as set forth below, equal to such aggregate Conversion Value less
the Principal Return (the “Net Share Amount”);
and

 

(iii)          an
amount paid in cash, determined as set forth below, in lieu of any fractional
shares of Common Stock.

 

The number of Net Shares to be paid shall be
determined by dividing the Net Share Amount by the Ten Day Average Closing
Stock Price, and rounding down to the nearest whole share.  Holders of Securities will not receive
fractional shares upon conversion of Securities.  In lieu of fractional shares, Holders will
receive cash for the value of the fractional shares, which cash payment shall
be based on the Ten Day Average Closing Stock Price.

 

The Conversion Value, Principal Return, number of
Net Shares, Net Share Amount and the cash payment for fractional shares shall
be determined by the Company at the end of the ten consecutive Trading Day
period beginning on the second Trading Day immediately following the day the
Securities are tendered for conversion (the “Determination
Date”).

 

(c)        The Company shall pay the Principal Return and cash for
fractional shares and deliver the Net Shares, if any, as promptly as
practicable after the Conversion Date, but in no event later than four Business
Days thereafter.  Except as provided in Section 10.02(c),
delivery of the Principal Return, Net Shares and cash in lieu of fractional
shares shall be deemed to satisfy the Company’s obligation to pay the principal
amount of a converted Security and accrued but unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon.  Any accrued interest (including Contingent
Interest and Liquidated 

 

74

 

Damages, if any) payable on a converted Security
shall be deemed paid in full rather than canceled, extinguished or forfeited.

 

(d)           Neither
the Trustee nor the Conversion Agent has any duty to determine or calculate the
Conversion Value, Principal Return, number of Net Shares, the Net Share Amount
or any other computation required under this Article 10, all of which
shall be determined by the Company (or the Trustee, as the case may be) in
accordance with the provisions of this Indenture, and the Trustee and
Conversion Agent shall not be under any responsibility to determine the
correctness of any such determinations and/or calculations and may conclusively
rely on the correctness thereof.

 

Section 10.15.  Simultaneous Adjustments.  In the event that this Article 10
requires adjustments to the Conversion Price under more than one of Sections
10.05(a) and (c), and the record dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall
be made by applying, first, the provisions of Section 10.05(c), as
applicable, and, second, the provisions of Section 10.05(a).  If more than one event requiring adjustment
pursuant to Section 10.05 shall occur before completing the determination
of the Conversion Price for the first event requiring such adjustment, then the
Board of Directors (whose determination shall, if made in good faith, be
conclusive) shall make such adjustments to the Conversion Price (and the
calculation thereof) after giving effect to all such events as shall preserve
for Holders the Conversion Price protection provided in Section 10.05.

 

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.01.  Trust Indenture Act
Controls.  If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.

 

Section 11.02.  Notices.  Any request, demand,
authorization, notice, waiver, consent or communication shall be in writing, in
the English language and delivered in person or mailed by first-class mail,
postage prepaid, addressed as follows, or transmitted by facsimile transmission
(confirmed orally) to the following facsimile numbers:

 

if to the Company, to:

 

American Equity Investment Life Holding Company
 6000 Westown Parkway

West Des Moines, Iowa 50266

 

75

 

if to the Trustee, to:

 

U.S. Bank National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

 

The Company or the Trustee by notice given to the
other in the manner provided above may designate additional or different
addresses for subsequent notices or communications.

 

Any notice or communication given to a Holder shall
be mailed to the Holder, by first-class mail, postage prepaid, at the Holder’s
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.

 

Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.  If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not received by the addressee.

 

If the Company mails a notice or communication to
the Holders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.

 

Section 11.03.  Communication by Holders with
Other Holders.  Holders may
communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar, the
Paying Agent, the Conversion Agent and anyone else shall have the protection of
TIA Section 312(c).

 

Section 11.04.  Certificate and Opinion as to
Conditions Precedent.  Upon
any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:

 

(a)        an Officers’ Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and

 

(b)        an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

 

In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one document,
but one such Person may 

 

76

 

certify or give an opinion with respect to
some matters and one or more other such eligible and qualified Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.

 

Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. 
Any such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating the
information on which counsel is relying unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.

 

Section 11.05.  Statements Required in
Certificate or Opinion.  Each
Officers’ Certificate or Opinion of Counsel with respect to compliance with a covenant
or condition provided for in this Indenture shall include:

 

(a)        a statement that each person making such Officers’
Certificate or Opinion of Counsel has read such covenant or condition;

 

(b)        a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officers’ Certificate or Opinion of Counsel are based;

 

(c)        a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

 

(d)        a statement that, in the opinion of such person, such
covenant or condition has been complied with.

 

Section 11.06.  Separability Clause.  In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

77

 

Section 11.07.  Rules by Trustee, Paying
Agent, Conversion Agent and Registrar.  The
Trustee may make reasonable rules for action by or a meeting of
Holders.  The Registrar, the Conversion
Agent and the Paying Agent may make reasonable rules for their functions.

 

Section 11.08.  Legal Holidays.  A “Legal
Holiday” is any day other than a Business Day.  If any specified date (including a date for
giving notice) is a Legal Holiday, the action shall be taken on the next
succeeding day that is not a Legal Holiday, and, if the action to be taken on
such date is a payment in respect of the Securities, no interest (including
Contingent Interest and Liquidated Damages, if any), shall accrue for the
intervening period.

 

Section 11.09.  Governing Law.  THIS INDENTURE AND EACH SECURITY
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK,
AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

Section 11.10.  No Recourse Against
Others.  A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any Obligations of the Company under the Securities or for any claim based
on, in respect of or by reason of such Obligations or their creation.  By accepting a Security, each Holder shall
waive and release all such liability. 
The waiver and release shall be part of the consideration for the issue
of the Securities.

 

Section 11.11.  Successors.  All agreements of the Company in
this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this
Indenture shall bind its successor.

 

Section 11.12.  Multiple Originals.  This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

 

Section 11.13.  Table of Contents and
Headings. The Table of Contents and the headings of the Articles or
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered as part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.

 

Section 11.14.  Tax Treatment of The
Securities.  The Company
agrees, and by acceptance of a beneficial interest in a Security each Holder
and any Beneficial Owner of a Security shall be deemed to agree, to treat, for
United States federal income tax purposes, the Securities as debt instruments
that are subject to Treasury regulation section 1.1275-4 or any successor
provision (the “contingent payment regulations”). For United States federal
income tax 

 

78

 

purposes, the Company further agrees, and by
acceptance of a beneficial interest in a Security each Holder and any
Beneficial Owner of a Security shall be deemed to agree (i) to treat the
cash and the fair market value of any Common Stock received upon the conversion
of a Security as a contingent payment for purposes of the contingent payment
regulations, (ii) to accrue interest with respect to outstanding
Securities as original issue discount for United States federal income tax
purposes (i.e., Tax Original Issue Discount)
according to the “noncontingent bond method” set forth in the contingent
payment regulations, using the comparable yield of 11.50% compounded
semi-annually, and (iii) to be bound by the Company’s determination of the
“projected payment schedule,” within the meaning of the contingent payment
regulations, with respect to the Securities. Holders or Beneficial Owners may
obtain the issue price, amount of Tax Original Issue Discount, issue date,
comparable yield and projected payment schedule, by submitting a written
request for it to the Company at the following address: 6000 Westown Parkway, West
Des Moines, IA 50266. Attention: John M. Matovina.

 

The Company acknowledges and agrees, and by
acceptance of a beneficial interest in a Security each Holder and any
Beneficial Owner of a Security shall be deemed to acknowledge and agree, that (i) the
comparable yield means the annual yield the Company would pay, as of the issue
date, on a noncontingent, nonconvertible, fixed-rate debt instrument with terms
and conditions otherwise similar to those of the Securities and (ii) the
comparable yield and the projected payment schedule that a Holder or Beneficial
Owner may obtain as described above do not constitute a representation by the
Company regarding the actual amounts that will be paid on the Securities or the
value of the Common Stock into which the Securities may be converted.

 

79

 

IN WITNESS WHEREOF, the undersigned, being duly
authorized, have executed this Indenture on behalf of the respective parties
hereto as of the date first above written.

 

	
   

  	
  AMERICAN
  EQUITY INVESTMENT LIFE HOLDING COMPANY

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  John M. Matovina

  
	
   

  	
   

  	
  Name:
  

  	
  John
  M. Matovina

  
	
   

  	
   

  	
  Title:
  

  	
  Chief
  Financial Officer & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Prokosch

  
	
   

  	
   

  	
  Name:

  	
  Richard
  Prokosch

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

EXHIBIT A

 

[FORM OF
FACE OF GLOBAL SECURITY]

 

THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES
ACT’’), OR ANY STATE OR OTHER SECURITIES LAWS. 
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS
THAT IT IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT (‘‘RULE 144A’’)) AND IS PURCHASING IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (2) AGREES NOT TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS THE LATER OF (X) TWO
YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) OF THE
SECURITIES ACT) AFTER THE LATER OF THE LAST DATE OF ORIGINAL ISSUANCE OF THIS
SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DATE ON WHICH
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY OR ANY AFFILIATE OF AMERICAN
EQUITY INVESTMENT LIFE HOLDING COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAW (THE ‘‘RESALE RESTRICTION TERMINATION DATE’’) EXCEPT
(A) TO AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (D) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED
INSTITUTIONAL BUYER’’ AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; AND, IN EACH OF THE FOREGOING
CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND THE TRUSTEE (WITH RESPECT
TO TRANSFERS OF SECURITIES) OR THE TRANSFER AGENT (WITH RESPECT TO 

 

 

TRANSFERS OF COMMON STOCK).
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.

 

FOR PURPOSES OF SECTIONS
1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), THIS SECURITY IS BEING ISSUED WITH TAX ORIGINAL ISSUE DISCOUNT.
BEGINNING ON JANUARY 1, 2010, THE HOLDER MAY, UPON REQUEST, OBTAIN FROM THE
OBLIGOR THE SECURITY’S ISSUE PRICE, ISSUE DATE, AMOUNT OF TAX ORIGINAL ISSUE
DISCOUNT, YIELD TO MATURITY (I.E. THE COMPARABLE YIELD AS DESCRIBED BELOW) AND
“PROJECTED PAYMENT SCHEDULE”, AS DEFINED BELOW, BY CONTACTING 6000 WESTOWN PARKWAY, WEST DES MOINES, IOWA
50266, ATTENTION: JOHN M. MATOVINA. IN ADDITION, THIS SECURITY IS
SUBJECT TO UNITED STATES FEDERAL INCOME TAX REGULATIONS GOVERNING CONTINGENT
PAYMENT DEBT INSTRUMENTS. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE
CODE, THE COMPARABLE YIELD OF THIS SECURITY IS 11.50% COMPOUNDED SEMI-ANNUALLY
(WHICH WILL BE TREATED AS THE YIELD TO MATURITY FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES).

 

FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES, AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AGREES,
AND BY ACCEPTANCE OF A BENEFICIAL INTEREST IN THIS SECURITY EACH HOLDER AND ANY
BENEFICIAL OWNER OF THIS SECURITY SHALL BE DEEMED TO HAVE AGREED, (1) TO
TREAT THIS SECURITY AS A DEBT INSTRUMENT THAT IS SUBJECT TO TREASURY
REGULATIONS SECTION 1.1275-4 OR ANY SUCCESSOR PROVISION (THE “CONTINGENT PAYMENT REGULATIONS”), (2) TO TREAT THE CASH
AND THE FAIR MARKET VALUE OF ANY COMMON STOCK RECEIVED UPON CONVERSION OF THIS
SECURITY AS A CONTINGENT PAYMENT FOR PURPOSES OF THE CONTINGENT PAYMENT
REGULATIONS, (3) TO ACCRUE INTEREST WITH RESPECT TO THIS SECURITY AS
ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES ACCORDING
TO THE “NONCONTINGENT BOND METHOD” SET FORTH IN THE CONTINGENT PAYMENT
REGULATIONS AND (4) TO BE BOUND BY AMERICAN EQUITY INVESTMENT LIFE HOLDING
COMPANY’S DETERMINATION OF THE “COMPARABLE YIELD” AND “PROJECTED PAYMENT
SCHEDULE,” EACH WITHIN THE MEANING OF THE CONTINGENT PAYMENT REGULATIONS, WITH
RESPECT TO THIS SECURITY.

 

UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY 

 

A-2

 

TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.  TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY
TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.

 

A-3

 

AMERICAN
EQUITY INVESTMENT
LIFE HOLDING COMPANY

 

5.25% Contingent Convertible Senior Note Due 2029

 

	
  No.:
  1

  	
   

  	
  CUSIP:
  025676 AH0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue
  Date:

  	
   

  	
  Principal
  Amount:

  	
  $

  

 

American Equity Investment Life Holding
Company, an Iowa corporation, promises to pay to Cede & Co. or
registered assigns, the principal amount of    
, on December 6,
2029, subject to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place. 
This Security is convertible as specified on the other side of this
Security.

 

Interest Payment Dates:  June 6 and December 6,
commencing June 6, 2010.

 

Record Dates:  May 20 and November 20, commencing  May 20, 2010.

 

 

	
   

  	
  American
  Equity Investment Life Holding Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  John M. Matovina

  
	
   

  	
   

  	
  Title: 

  	
  Chief Financial
  Officer & Treasurer

  

 

A-4

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

U.S.
Bank National Association, as Trustee, certifies that this is one of the
Securities referred to in the within-mentioned Indenture.

 

 

	
  By:

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  
	
   

  
	
   

  
	
  Dated:

  

 

A-5

 

[FORM OF
REVERSE SIDE OF GLOBAL SECURITY]

 

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

 

5.25%
Contingent Convertible Senior Note Due 2029

 

(1)           Interest.

 

This Security will bear interest from December 22, 2009 or from the most recent date to which
interest has been paid or duly provided for, semi-annually in arrears on June 6 and December 6 of each year (each, an
“Interest Payment Date”), subject to Section 11.08
of the Indenture, commencing June 6,
2010.  The Company will pay interest on
any overdue principal amount at the interest rate borne by the Securities at
the time such interest on the overdue principal amount accrues, compounded
semi-annually, and it shall pay interest on overdue installments of interest
and Contingent Interest and Liquidated Damages, if any (without regard to any
applicable grace period), at the same interest rate, compounded
semi-annually.  Interest (including
Contingent Interest and Liquidated Damages, if any) on the Securities will be
computed on the basis of a 360-day year comprised of twelve 30-day months.

 

The Company shall pay additional interest (“Contingent
Interest”) to the Holders during any six-month period (a “Contingent Interest Period”) from and including an Interest
Payment Date to but excluding the next Interest Payment Date, commencing with
the six-month period ending June 6, 2015, if the average Trading Price per
Security for the five Trading Days ending on the third Trading Day immediately
preceding the first day of the applicable Contingent Interest Period (the “Contingent Interest Average Trading Price”) equals 120% or
more of the principal amount of such Security. 
The amount of Contingent Interest payable per $1,000 principal amount of
Securities in respect of any Contingent Interest Period shall equal 0.50% per
annum on the Contingent Interest Average Trading Price.  The Company will pay Contingent Interest, if
any, in the same manner and at the same time as it will pay interest as
described above.

 

Upon determination that Holders will be entitled to receive Contingent
Interest for a Contingent Interest Period, on or prior to the first day of such
Contingent Interest Period, the Company shall issue a press release and notify
the Trustee promptly in writing.

 

(2)           Method of Payment.

 

The Company will pay interest (including Contingent Interest and
Liquidated Damages, if any) on this Security to the Person who is the
registered Holder of this Security at the close of business on May 20 or November 20 (each a “Record Date”),
as the case may be, 

 

A-6

 

immediately preceding the related Interest
Payment Date.  Subject to the terms and
conditions of the Indenture, the Company will make all payments and deliveries
in respect of the Redemption Price, Repurchase Price, Change in Control
Repurchase Price and the principal amount at Stated Maturity, as the case may
be, to the Holder who surrenders a Security to a Paying Agent to collect such
payments in respect of the Security.  The
Company will pay cash amounts in money of the United States that at the time of
payment is legal tender for payment of public and private debts.  However, the Company may pay interest
(including Contingent Interest and Liquidated Damages, if any), the Redemption
Price, Repurchase Price, Change in Control Repurchase Price and the principal
amount at Stated Maturity, as the case may be, to a Holder holding Securities
in definitive form by check or wire payable in such money; provided that
a Holder holding Securities in definitive form with an aggregate principal
amount in excess of $1,000,000 may request payment by wire transfer in
immediately available funds to an account in North America at the election of
such Holder.  The Company may mail an
interest check to the Holder’s registered address.  Notwithstanding the foregoing, so long as
this Security is registered in the name of a Depositary or its nominee, all
payments hereon shall be made by wire transfer of immediately available funds
to the account of the Depositary or its nominee.

 

(3)           Paying Agent,
Conversion Agent and Registrar.

 

Initially, U.S. Bank National Association (the “Trustee”)
will act as Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any Paying
Agent, Conversion Agent or Registrar without notice, other than notice to the
Trustee; provided that the Company will maintain
at least one Paying Agent having an office or agency in the State of New York,
City of New York, Borough of Manhattan, which shall initially be an office or
agency of the Trustee.  The Company or
any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Conversion Agent or Registrar.

 

(4)           Indenture.

 

The Company issued the Securities under an
Indenture dated as of December 22,
2009 (the “Indenture”), between the Company
and the Trustee.  The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as in effect from
time to time (the “TIA”).  Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of those
terms.

 

The Securities are senior unsecured obligations of the Company and may
be issued in unlimited principal amount under the Indenture.  The Indenture does not limit other
indebtedness of the Company, secured or unsecured.

 

A-7

 

(5)           Redemption at the
Option of the Company.

 

No sinking fund is provided for the Securities.  Beginning on December 15, 2014 and during the periods thereafter to
maturity, the Securities are redeemable as a whole at any time, or in part from
time to time, in any integral multiple of $1,000, at the option of the Company
for cash at a Redemption Price equal to 100% of the principal amount, together
with accrued but unpaid interest (including Contingent Interest and Liquidated
Damages, if any) thereon, up to but not including the Redemption Date; provided that, if the Redemption Date is between the close
of business on a Record Date and the opening of business on the related
Interest Payment Date, interest will be payable to the Holders in whose names
the Securities are registered at the close of business on the relevant Record
Date.

 

Notice of redemption pursuant to paragraph 5 of this Security will be
mailed at least 30 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at the Holder’s registered
address.  If money sufficient to pay the
Redemption Price of all Securities (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent prior to 11:00 a.m.,
New York City time, on the Redemption Date, immediately after such Redemption
Date, interest (including Contingent Interest and Liquidated Damages, if any)
shall cease to accrue on such Securities or portions thereof.  Securities in denominations larger than $1,000
of principal amount may be redeemed in part but only in integral multiples of
$1,000 of principal amount.

 

(6)           Repurchase By the
Company at the Option of the Holder on Specified Dates; Repurchase at the
Option of the Holder Upon a Change in Control.

 

Subject to the terms and conditions of the Indenture, the Company shall
become obligated to repurchase, at the option of the Holder, on December 15, 2014, December 15, 2019 and December 15, 2024 (each, a “Repurchase Date”), all or a portion of the Securities held
by such Holder, in any integral multiple of $1,000, for cash at a price per
Security equal to 100% of the aggregate principal amount of the Security (the “Repurchase Price”), together with accrued but unpaid
interest (including Contingent Interest and Liquidated Damages, if any) thereon,
up to but not including the Repurchase Date upon delivery of a Repurchase
Notice containing the information set forth in the Indenture, together with the
Securities subject thereto, at any time from the opening of business on the
date that is 30 Business Days prior to such Repurchase Date until the close of
business on the Business Day prior to such Repurchase Date, and upon delivery
of the Securities to the Paying Agent by the Holder as set forth in the
Indenture.

 

At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to repurchase the Securities
held by such Holder after the occurrence of a Change in Control of the Company
for a Change in Control Repurchase Price equal to 100% of the principal amount
thereof plus accrued but unpaid interest (including 

 

A-8

 

Contingent Interest and Liquidated Damages,
if any) thereon, up to but not including the Change in Control Repurchase Date
which Change in Control Repurchase Price shall be paid in cash (provided that if the Change in Control Repurchase Date is
between the close of business on a Record Date and the opening of business on
the related Interest Payment Date, accrued but unpaid interest will be payable
to the Holders in whose names the Securities are registered at the close of
business on the relevant Record Date). 
Holders have the right to withdraw any Repurchase Notice or Change in
Control Repurchase Notice, as the case may be, by delivering to the Paying
Agent a written notice of withdrawal in accordance with the provisions of the
Indenture.

 

If cash sufficient to pay the Repurchase Price or Change in Control
Repurchase Price, as the case may be, and accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) on all
Securities or portions thereof to be repurchased as of the Repurchase Date or
the Change in Control Repurchase Date, as the case may be, is held by the
Paying Agent by 11:00 a.m., New York City time, on the Business Day
immediately following the Repurchase Date or the Change in Control Repurchase
Date, interest (including Contingent Interest and Liquidated Damages, if any)
shall cease to accrue on such Securities (or portions thereof) as of such Repurchase
Date or Change in Control Repurchase Date, and the Holder thereof shall have no
other rights as such, other than the right to receive the Repurchase Price or
Change in Control Repurchase Price, as the case may be, and interest (including
Contingent Interest and Liquidated Damages, if any) upon surrender of such
Security.

 

(7)           Conversion.

 

Upon satisfaction of the conditions set forth in Section 10.01(a) of
the Indenture, a Holder of a Security may convert any portion of the principal
amount of any Security that is an integral multiple of $1,000 into cash and
fully paid and non-assessable shares (calculated as to each conversion to the
nearest 1/10000th of a share) of Common Stock in accordance with the provisions
of Section 10.14 of the Indenture; provided that
if such Security is called for redemption, the conversion right will terminate
at the close of business on the second Business Day immediately preceding the
Redemption Date of such Security (unless the Company shall default in making
the redemption payment when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Security is redeemed).  Such conversion
right shall commence on the initial issuance date of the Securities and expire
at the close of business on the date of maturity, subject, in the case of
conversion of any Global Security, to any Applicable Procedures.  The Conversion Price shall, as of the date of
the Indenture, initially be $9.69 per share of Common Stock.  The Conversion Rate shall, as of the date of
the Indenture, initially be approximately 103.1992.  The Conversion
Price and Conversion Rate will be adjusted under the circumstances specified in
the Indenture.  Upon conversion, no
adjustment for interest (including Contingent Interest and Liquidated Damages,
if any) or dividends will be made.  No
fractional shares will be issued upon conversion; in lieu thereof, an amount
will be paid in cash based upon the Ten Day Average Closing Stock Price (as 

 

A-9

 

defined in the Indenture).  Except as provided in Section 10.02(c) of
the Indenture, delivery of the Principal Return, Net Shares and cash in lieu of
fractional shares shall be deemed to satisfy the Company’s obligation to pay
the principal amount of a converted Security and accrued but unpaid interest
(including Contingent Interest and Liquidated Damages, if any) thereon.  Any accrued interest (including Contingent
Interest and Liquidated Damages, if any) payable on a converted Security will
be deemed paid in full, rather than canceled, extinguished or forfeited.

 

In addition, following a Change in Control that occurs prior to December 15,
2014 (other than relating to the composition of the Board of Directors as
described in clause (d) of the definition of Change in Control in Section 1.01)
and for which 10% or more of the fair market value of the consideration for the
Common Stock (as determined by the Board of Directors) in the corporate
transaction consists of (i) cash, (ii) other property or (iii) securities
that are not traded or scheduled to be traded immediately following such
transaction on a U.S. national securities exchange, a Holder who elects to
convert its Securities in connection with such corporate transaction will be
entitled to receive Additional Shares of Common Stock upon conversion in
certain circumstances.

 

To convert a Security, a Holder must (a) complete and manually
sign the conversion notice set forth below and deliver such notice to the
Conversion Agent, (b) surrender the Security to the Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by the Registrar or
the Conversion Agent, (d) pay any transfer or other tax, if required and (e) if
the Security is held in book-entry form, complete and deliver to the Depositary
appropriate instructions pursuant to the Applicable Procedures.  If a Holder surrenders a Security for
conversion between the close of business on the Record Date and the opening of
business on the related Interest Payment Date, the Security must be accompanied
by payment of an amount equal to the interest (including Contingent Interest
and Liquidated Damages, if any) payable on such Interest Payment Date on the
principal amount of the Security or portion thereof then converted; provided that no such payment shall be required if such
Security has been called for redemption on a Redemption Date within the period
between close of business on such Record Date and the opening of business on
such Interest Payment Date, or if such Security is surrendered for conversion
on the Interest Payment Date.  A Holder
may convert a portion of a Security equal to $1,000 or any integral multiple
thereof.

 

A Security in respect of which a Holder has delivered a Repurchase
Notice or a Change of Control Repurchase Notice exercising the option of such
Holder to require the Company to repurchase such Security as provided in Section 3.08
or Section 3.09, respectively, of the Indenture may be converted only if
such notice of exercise is withdrawn in accordance with the terms of the
Indenture.

 

A-10

 

(8)           Denominations;
Transfer; Exchange.

 

The Securities are in fully registered form, without coupons, in
denominations of $1,000 of principal amount and integral multiples of
$1,000.  A Holder may transfer or
exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed), or any
Securities in respect of which a Repurchase Notice or a Change in Control
Repurchase Notice has been given and not withdrawn (except, in the case of a
Security to be repurchased in part, the portion of the Security not to be
repurchased), or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.

 

(9)           Persons Deemed
Owners.

 

The registered Holder of this Security may be treated as the owner of
this Security for all purposes.

 

(10)         Amendment; Waiver.

 

Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
at the time outstanding and (ii) certain defaults may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Securities at the time outstanding. 
Subject to certain exceptions set forth in the Indenture, without the
consent of any Holder, the Company and the Trustee may amend the Indenture or
the Securities (i) to cure any ambiguity, omission, defect or
inconsistency, or make any other change that does not adversely affect the
rights of any Holder in any material respect, (ii) to comply with Article 5
or Section 10.11 of the Indenture, (iii) to make provisions with
respect to the conversion right of Holders pursuant to the requirements of Section 10.01
of the Indenture, (iv) to evidence and provide for the acceptance of
appointment under the Indenture by a successor Trustee, or (v) to comply
with the provisions of the TIA or any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.

 

(11)         Defaults and
Remedies.

 

Except as set forth in the Indenture, if an Event of Default occurs and
is continuing, the Trustee or the Holders of not less than 25% in principal
amount of Securities then outstanding may declare all the Securities to be due
and payable in the manner, at the time and with the effect provided in the
Indenture.  Holders of Securities may not
enforce the Indenture or the Securities except as provided in the
Indenture.  The Trustee is not obligated
to enforce the 

 

A-11

 

Indenture or the Securities unless it has
received security or indemnity reasonably satisfactory to it.  The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities at the time outstanding to direct the Trustee in its
exercise of any trust or power.  The
Trustee may withhold from Holders of Securities notice of any continuing
Default or Event of Default (except a default in payment of principal or
interest when due, for any reason) if it determines in good faith that
withholding notice is in the interests of Holders.

 

(12)         Trustee Dealings with
the Company.

 

Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.

 

(13)         No Recourse Against
Others.

 

A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. 
By accepting a Security, each Holder waives and releases all such
liability.  The waiver and release are
part of the consideration for the issue of the Securities.

 

(14)         Ranking.

 

The Securities shall be unsecured senior obligations of the Company and
shall rank equally in right of payment with any other existing and future
senior indebtedness of the Company and senior to any future subordinated
indebtedness of the Company.

 

(15)         Authentication.

 

This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee’s Certificate of Authentication on the other
side of this Security.

 

A-12

 

(16)         Abbreviations.

 

Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (“Tenants In Common”),
TEN ENT (“Tenants By The Entireties”), JT TEN (“Joint
Tenants With Right Of Survivorship And Not As Tenants In Common”), CUST (“Custodian”) and U/G/M/A (“Uniform Gift
To Minors Act”).

 

(17)         Governing Law.

 

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.

 

(18)         CUSIP Numbers.

 

Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the
Securities.  No representation is made as
to the accuracy of such numbers as printed on the Securities and reliance may
be placed only on the other identification numbers printed hereon.

 

A-13

 

	
  ASSIGNMENT
  FORM

  	
   

  	
  CONVERSION
  NOTICE

  
	
   

  	
   

  	
   

  
	
  To
  assign this Security, fill in the form below:

   

   

  I
  or we assign and transfer this Security to

   

   

   

  (Insert
  assignee’s soc. sec. or tax ID no.)

   

   

   

  (Print
  or type assignee’s name, address and zip code)

   

   

  and
  irrevocably appoint
                                  
  agent to transfer this Security on the books of the Company. The agent may
  substitute another to act for him.

   

   

  	
   

  	
  To
  convert this Security into Cash and Common Stock of the Company, check the
  box  o

   

  To
  convert only part of this Security, state the principal amount to be
  converted (which must be $1,000 or an integral multiple of $1,000):

   

   

  If
  you want the stock certificate made out in another person’s name fill in the
  form below:

   

   

   

  (Insert
  the other person’s soc. sec. or tax ID no.)

   

   

   

   

  
	
  Date:

  	
   

  	
   

  	
  (Print
  or type other person’s name, address and zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on the other side of this Security)

  
					

 

 

	
  Signature
  Guaranteed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Participant
  in a Recognized Signature Guarantee Medallion Program

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  	
   

  
				

 

A-14

 

FORM OF
REPURCHASE NOTICE

 

To:          American Equity Investment Life
Holding Company

 

The undersigned registered holder of this Security requests and
instructs the Company to repurchase this Security, or the portion hereof (which
is $1,000 principal amount or a multiple thereof) designated below, on the date
specified below, in accordance with the terms and conditions specified in
paragraph 6 of this Security and the Indenture referred to in this Security and
directs that the check in payment for this Security or the portion thereof and
any Securities representing the portion of principal amount hereof not to be so
repurchased, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. 
If any portion of this Security not repurchased is to be issued in the
name of a Person other than the undersigned, the undersigned shall pay all
transfer taxes payable with respect thereto.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
     Signature(s)

  

 

Fill
in for registration of Securities not

repurchased if to be issued other than

to and in the name of registered holder:

 

 

	
   

  
	
  (Name)

  
	
   

  
	
   

  
	
  (Street
  Address)

  
	
   

  
	
   

  
	
  (City,
  state and zip code)

  

 

Please
print name and address

 

principal
amount to be repurchased (if less than all): 
$    ,000

 

date
of requested repurchase:  December 15,
20     

            (specify
either December 15, 2014,
2019 or 2024)

 

A-15

 

FORM OF
OPTION TO ELECT REPURCHASE 

UPON A CHANGE IN CONTROL

 

To:  American Equity Investment Life Holding Company

 

The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from American Equity Investment Life Holding Company (the
“Company”) as to the occurrence of a Change in Control with respect to the
Company and requests and instructs the Company to repurchase this Security, or
the portion hereof (which is $1,000 principal amount or a multiple thereof)
designated below, in accordance with the terms of the Indenture referred to in
this Security and directs that the check in payment for this Security or the
portion thereof and any Securities representing any unrepurchased principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If any portion of this Security not
repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
     Signature(s)

  

 

Fill
in for registration of Securities not

repurchased if to be issued other than

to and in the name of registered holder:

 

 

	
   

  
	
  (Name)

  
	
   

  
	
   

  
	
  (Street
  Address)

  
	
   

  
	
   

  
	
  (City,
  state and zip code)

  

 

Please
print name and address

 

principal
amount to be repurchased (if less than all): 
$    ,000

 

A-16

 

SCHEDULE I

 

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

5.25% Contingent Convertible Senior Notes Due 2029

 

No:

 

	
  Date

  	
   

  	
  Principal Amount

  	
   

  	
  Notation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT B

 

Transfer Certificate

 

In connection with any
transfer of any of the Securities within the period prior to the expiration of
the holding period applicable to the sales thereof under Rule 144(k) under
the Securities Act of 1933, as amended (the “Securities
Act”) (or any successor provision), the undersigned registered owner
of this Security hereby certifies with respect to
$              
principal amount of the above-captioned Securities presented or surrendered on
the date hereof (the “Surrendered Securities”)
for registration of transfer, or for exchange or conversion where the
securities deliverable upon such exchange or conversion are to be registered in
a name other than that of the undersigned registered owner (each such
transaction being a “transfer”), that such transfer complies with the restrictive
legend set forth on the face of the Surrendered Securities for the reason
checked below:

 

o            The
transfer of the Surrendered Securities complies with Rule 144A under the
U.S.  Securities Act of 1933, as amended
(the “Securities Act”); or

o            The
transfer of the Surrendered Securities is pursuant to an exemption from the
registration requirement of the Securities Act provided by Rule 144
thereunder; or

o            The
transfer of the Surrendered Securities is pursuant to an effective registration
statement under the Securities Act; or 

o            A
transfer of the Surrendered Securities is made to the Company or any of its
subsidiaries.

 

The undersigned confirms
that, to the undersigned’s knowledge, such Securities are not being transferred to an
“affiliate” of the Company as defined in Rule 144 under the Securities Act
(an “Affiliate”).

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
   

  
	
   

  	
  (If the registered owner
  is a corporation, partnership or fiduciary, the title of the Person signing
  on behalf of such registered owner must be stated.)

  

 

	
  Signature(s)e
  Guaranteed

  	
   

  
	
   

  	
   

  
	
  Participant
  in a Recognized Signature Guarantee Medallion Program

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  
			

 

B-1

 

SCHEDULE A

 

The
following table sets forth the number of Additional Shares to be received per
$1,000 principal amount of Securities:

 

	
   

  	
   

  	
  Stock Price

  	
   

  
	
  Effective Date

  	
   

  	
  $7.75

  	
   

  	
  $9.00

  	
   

  	
  $9.69

  	
   

  	
  $11.00

  	
   

  	
  $12.00

  	
   

  	
  $15.00

  	
   

  	
  $25.00

  	
   

  	
  $35.00

  	
   

  	
  $45.00

  	
   

  	
  $55.00

  	
   

  	
  $65.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 22,
  2009

  	
   

  	
  25.8331

  	
   

  	
  19.6342

  	
   

  	
  17.1311

  	
   

  	
  13.5554

  	
   

  	
  11.5342

  	
   

  	
  7.6208

  	
   

  	
  2.7768

  	
   

  	
  1.2180

  	
   

  	
  0.5386

  	
   

  	
  0.2081

  	
   

  	
  0.0593

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2010

  	
   

  	
  25.8331

  	
   

  	
  19.6897

  	
   

  	
  16.9866

  	
   

  	
  13.1826

  	
   

  	
  11.0842

  	
   

  	
  7.1408

  	
   

  	
  2.5368

  	
   

  	
  1.1094

  	
   

  	
  0.4875

  	
   

  	
  0.1863

  	
   

  	
  0.0501

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2011

  	
   

  	
  25.8331

  	
   

  	
  19.2230

  	
   

  	
  16.2539

  	
   

  	
  12.1826

  	
   

  	
  10.0258

  	
   

  	
  6.1608

  	
   

  	
  2.1088

  	
   

  	
  0.9265

  	
   

  	
  0.4075

  	
   

  	
  0.1554

  	
   

  	
  0.0393

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2012

  	
   

  	
  25.8331

  	
   

  	
  18.0897

  	
   

  	
  14.7678

  	
   

  	
  10.4099

  	
   

  	
  8.2258

  	
   

  	
  4.6675

  	
   

  	
  1.5368

  	
   

  	
  0.6865

  	
   

  	
  0.3053

  	
   

  	
  0.1154

  	
   

  	
  0.0285

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2013

  	
   

  	
  25.8331

  	
   

  	
  15.1453

  	
   

  	
  11.3829

  	
   

  	
  6.9190

  	
   

  	
  4.9842

  	
   

  	
  2.4475

  	
   

  	
  0.8048

  	
   

  	
  0.3723

  	
   

  	
  0.1742

  	
   

  	
  0.0736

  	
   

  	
  0.0177

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2014

  	
   

  	
  25.8331

  	
   

  	
  7.9119

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000Exhibit 10.1

 

AMERICAN
EQUITY INVESTMENT LIFE HOLDING COMPANY

 

$52,225,000

 

5.25% CONTINGENT CONVERTIBLE SENIOR NOTES DUE 2029

 

PURCHASE
AGREEMENT

 

December 17, 2009

 

 

PURCHASE
AGREEMENT

 

December 17, 2009

 

FBR CAPITAL MARKETS &
CO.

1001 19th Street North

Arlington, Virginia 22209

 

Dear Sirs:

 

American Equity
Investment Life Holding Company, an Iowa corporation (the “Company”),
proposes to issue and sell to you, FBR Capital Markets & Co. (“FBR”),
as initial purchaser, $52,225,000 aggregate principal amount of the Company’s
5.25% Contingent Convertible Senior Notes due 2029 (the “Notes”) in a
transaction exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”).

 

The Notes will be issued
pursuant to the provisions of an indenture to be dated as of December 22,
2009 (the “Indenture”), between the Company and U.S. Bank National
Association, as trustee (the “Trustee”), as it may be supplemented or
amended from time to time.  The offer and
sale of the Notes to you will be made without registration of the Notes under
the Securities Act and the rules and regulations thereunder, in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof. 
You have advised the Company that you will make offers and sales (“Exempt
Resales”) of the Notes purchased by you hereunder (such Notes referred to
collectively herein as “Resale Notes”) in accordance with Section 3
hereof, as soon as you deem advisable after this Agreement has been executed
and delivered.

 

The Company and FBR agree
as follows:

 

1.             Sale and
Purchase. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
agrees to issue and sell to FBR and FBR agrees to purchase from the Company the
following aggregate principal amount of Notes for the purchase price specified
below:

 

Principal Amount of Notes to be
Purchased: $52,225,000 (the “Purchased Notes”).

 

Purchase Price: 97% of the
principal amount of the Purchased Notes ($50,658,250 in cash) (the “Purchase Price”).

 

2.             Payment and Delivery. The closing
of FBR’s purchase of the Purchased Notes shall be held at the office of Sidley
Austin LLP, One South Dearborn Street, Chicago, Illinois 60603 (unless another
place shall be agreed upon by FBR and the Company).  At the closing, subject to the satisfaction
or waiver of the closing conditions set forth herein, FBR shall pay to the
Company the Purchase Price by wire transfer of immediately available funds to
an account previously designated by the Company in writing against delivery by
the Company of the Purchased Notes to FBR for FBR’s account through the
facilities of DTC in such denominations and registered in such 

 

1

 

names as FBR shall specify.  Such
payment and delivery shall be made at 10:00 a.m., New York City time, on
the third business day after the date hereof (unless another time, not later
than ten (10) business days after such date, shall be agreed to by FBR and
the Company).  The time at which such
payment and delivery are actually made is hereinafter called the “Closing
Time”.

 

3.             Offering of the Notes;
Restrictions on Transfer.

 

(a)           FBR represents and warrants
to and agrees with the Company that (i) it has not solicited and will not
solicit any offer to buy, and has not and will not make any offer to sell, the
Notes by means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States; and (ii) it has
solicited and will solicit offers to buy the Resale Notes only from, and has
offered and will offer, to sell and deliver the Resale Notes only to, persons
who FBR reasonably believes to be “qualified institutional buyers” (as defined
in Rule 144A under the Securities Act) (“QIBs”) or, if any such
person is buying for one or more institutional accounts for which such person
is acting as fiduciary or agent, only when such person has represented to it
that each such account is a QIB to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A and who provide to it a fully completed and
executed purchaser’s letter substantially in the form of Exhibit A
hereto (such persons specified in clause (ii) being referred to herein as
the “Eligible Purchasers”).

 

(b)           The Company represents and
warrants to and agrees with FBR that it (together with its respective
affiliates) has not solicited and will not solicit any offer to buy, and it
(together with its respective affiliates) has not offered and will not offer to
sell, the Notes by means of any form of general solicitation or general
advertising (within the meaning of Regulation D).

 

(c)           Each of FBR and the Company
severally represents and warrants to the other that no action is being taken by
it or is contemplated that would permit an offering or sale of the Notes in any
jurisdiction where, or in any other circumstances in which, action for those
purposes is required (other than in jurisdictions where such action has been
duly taken by counsel for FBR).

 

(d)           FBR and the Company agree
that the Notes may be resold or otherwise transferred by the holders thereof
only if the offer and sale of such Notes are registered under the Securities Act
or if an exemption from registration is available.  FBR hereby establishes and agrees that it has
observed and will observe the following procedures in connection with offers,
sales and subsequent resales or other transfers of any Notes placed by FBR:

 

(i)            Sales only to
Eligible Purchasers.  Initial
offers and sales of the Resale Notes will be made only in Exempt Resales by FBR
to investors that FBR reasonably believes to be Eligible Purchasers and who
have delivered to the Company and FBR a fully completed and executed purchaser’s
letter substantially in the form of Exhibit A hereto.

 

2

 

(ii)           No general
solicitation.  The Notes
will be offered only by approaching prospective purchasers on an individual basis
with whom FBR and/or the Company has an existing relationship.  No general solicitation or general
advertising within the meaning of Regulation D will be used in connection with
the offering of the Notes.

 

(e)           Restrictions on
transfer.   The
Company agrees that each Note and each Resale Note shall bear a legend stating
that the offer and sale of the Notes or Resale Notes have not been and will not
be registered under the Securities Act, and that no resale or other transfer of
any Notes or Resale Notes or any interest therein prior to the date that is one
year (or such shorter period as is prescribed by Rule 144(d) under
the Securities Act as then in effect) after the later of the original issuance
of such Notes or Resale Notes, as the case may be, and the last date on which
the Company or any “affiliate” (as defined in Rule 144 under the
Securities Act) of the Company was the owner of such Notes or Resale Notes may
be made by a purchaser of such Notes or Resale Notes, except as follows:

 

(A)          to the Company
or any subsidiary thereof,

 

(B)           pursuant to a
registration statement that has been declared effective under the Securities
Act,

 

(C)           for so long as
the Notes or Resale Notes are eligible for resale pursuant to Rule 144A
under the Securities Act, in a transaction complying with the requirements of Rule 144A
to a person who such purchaser reasonably believes is a QIB that purchases for
its own account or for the account of a QIB and to whom notice is given that
the offer, resale, pledge or transfer is being made in reliance on Rule 144A,
or

 

(D)          pursuant to any
other available exemption from the registration requirements of the Securities
Act,

 

in each case in
accordance with any applicable federal securities laws and the securities laws
of any state of the United States or other jurisdiction.

 

4.             Representations and
Warranties of the Company.

 

The Company hereby represents and
warrants to FBR, as of the date of this Agreement and as of the Closing Time,
and agrees with FBR, as follows:

 

(a)           Disclosure
Package.  The Disclosure Package did
not, as of its date or as of the date of any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  The Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008 (the “2008 Form 10-K”),
the Company’s Proxy Statement pursuant to Section 14(a) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act’”)
filed April 30, 2009, the Company’s Quarterly Reports on Form 10-Q
for the quarters ended March 

 

3

 

31,
2009, June 30, 2009 and September 30, 2009 (collectively, the “2009
Form 10-Qs”), and any Current Reports on Form 8-K filed by the
Company with the Securities and Exchange Commission (the “SEC”) since December 31,
2008 shall be collectively referred to herein as the “Company SEC Filings.”  The term sheet dated December 17, 2009,
the form of which is attached as Exhibit E hereto (the “Term
Sheet”), and the Company SEC Filings shall be collectively referred to
herein as the “Disclosure Package.”

 

(b)           Good
Standing.  The Company
and each of its “significant subsidiaries” (as such term is defined in Rule 405)
(each, a “Significant Subsidiary” and together, the “Significant
Subsidiaries”), has been duly incorporated, organized or formed and is
validly existing in good standing under the laws of the jurisdiction of its incorporation,
organization or formation, with the power and authority to own, lease and
operate its properties and conduct its business as described in the Company SEC
Filings; and each of the Company and its Significant Subsidiaries is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the business conducted by it or the location of the properties
owned, leased or operated by it make such qualification necessary, except where
the failure to be so qualified or in good standing would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), results of operations or business of
the Company and its subsidiaries taken as a whole (a “Material Adverse
Effect”). The Company does not have any subsidiaries or control, directly
or indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.2 to the 2008 Form 10-K.

 

(c)           Corporate
Power.  The Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.  This Agreement has
been duly authorized, executed and delivered by the Company.

 

(d)           No
Default.  Neither the Company nor any of
its Significant Subsidiaries (i) is in violation of its certificate of
incorporation or by-laws or other organizational documents, (ii) is in
default, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, license or other agreement or instrument to which it is
a party or by which it is bound or to which any of its properties or assets is
subject or (iii) is in violation of any law, ordinance, rule, regulation
or order of any court or governmental agency or body having jurisdiction over
it or its property or assets, except in the case of clauses (ii) and
(iii), to the extent any such conflict, breach, violation or default would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(e)           Absence
of Defaults and Conflicts.  None
of the execution, delivery and performance of this Agreement nor the
consummation of any other of the transactions contemplated herein, nor the
fulfillment of the terms hereof by the Company, nor the application of the
proceeds from the sale of the Notes will (i) conflict with or result in a
breach or violation of any agreement, indenture or other instrument to which
the Company or any of its Significant Subsidiaries is a party or by which any
of them is 

 

4

 

bound,
or to which any of their properties is subject; (ii) result in the
creation or imposition of any Lien, charge, claim or encumbrance upon any
property or asset of the Company or any of its Significant Subsidiaries; (iii) result
in a breach or violation of, or constitute a default under, the certificate of
incorporation, by-laws, partnership agreement or other organizational documents
of the Company or any of its Significant Subsidiaries; or (iv) violate any
law, rule, administrative regulation or decree of any court or any governmental
agency or body having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their respective properties, except, with respect to
clauses (i), (ii) and (iv), conflicts or violations that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

 

(f)            Absence
of Further Requirements.  No
permit, consent, approval, authorization or order of, or filing with, any
court, governmental agency or body is required for the issue and sale of the
Notes, the execution, delivery and performance of this Agreement by the
Company, or the application of the proceeds from the sale of the Notes or the
conversion thereof into Underlying Shares (as defined below), except for any
report or notice required under Regulation D promulgated under the Securities
Act or any applicable state securities laws and such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be
required under the Exchange Act, the New York
Stock Exchange, and applicable state or foreign securities laws in
connection with the purchase and sale of the Underlying Shares.

 

(g)           Authorization
of the Indenture.  The
Indenture has been duly authorized by the Company and, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) (collectively, the “Enforceability Exceptions”).

 

(h)           Validity
of Purchased Notes.  The
Purchased Notes have been duly authorized by the Company and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to FBR in accordance with the terms of this Agreement, the Purchased Notes will
be valid and binding obligations of the Company, enforceable in accordance with
their terms, except that such enforcement may be limited by the Enforceability
Exceptions, and the Purchased Notes will not be subject to any preemptive,
participation, rights of first refusal and other similar rights. Assuming the
accuracy of FBR’s representations and warranties hereunder, the Purchased Notes
(i) will be issued pursuant to the Indenture and this Agreement exempt
from the registration requirements of the Securities Act pursuant to Section 4(2) of
the Securities Act and (ii) will be issued in compliance with all applicable
state and federal laws concerning the issuance of the Purchased Notes.  The Purchased Notes will be “restricted
securities” within the meaning of Rule 144 promulgated under the
Securities Act and will not be 

 

5

 

freely
transferable by FBR.  Accordingly, the
Notes will bear restrictive legends provided in Section 3(e) hereof.

 

(i)            Validity
of the Underlying Shares and Common Stock. 
The Purchased Notes may be converted into underlying shares (the “Underlying
Shares”) of the Company’s common stock, par value $1.00 per share (the “Common
Stock”), in accordance with the terms of the Purchased Notes. The
Underlying Shares have been duly authorized and reserved by the Company for
issuance upon conversion of the Purchased Notes and, when issued in connection
with such conversion in accordance with the terms of the Purchased Notes, will
be validly issued, fully paid and non-assessable, in compliance with federal
and state securities laws, and the issuance of the Underlying Shares will not
be subject to any preemptive, resale, participation, rights of first refusal or
other similar rights.  All of the
outstanding shares of capital stock of each Significant Subsidiary of the Company
that is a corporation have been duly authorized and validly issued and are
fully paid and non-assessable.  All of
the outstanding shares of capital stock, partnership interests or other
ownership interests of each Significant Subsidiary of the Company are owned
directly or indirectly by the Company, free and clear of any claim, lien,
encumbrance, security interest, restriction upon voting or transfer, preemptive
rights or any other claim of any third party (collectively, “Liens”),
except such Liens as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(j)            Financial
Statements.  The
consolidated financial statements of the Company and its subsidiaries
(including the related notes and supporting schedules) included in the Company
SEC Filings present fairly in all material respects the financial condition,
results of operations and cash flows of the entities purported to be shown
thereby at the dates and for the periods indicated (subject to year-end
adjustments in the case of unaudited interim financial statements) and have
been prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods indicated,
except as otherwise noted therein; and the supporting schedules included in the
2008 Form 10-K and the 2009 Form 10-Qs present fairly in all material
respects the information required to be stated therein.

 

(k)           Accountants.  KPMG LLP, who have reported on certain
financial statements of the Company included in the 2008 Form 10-K and the
2009 Form 10-Qs, are independent public accountants as required by the
Securities Act, and were independent public accountants as required by the
Securities Act during the periods covered by the financial statements on which
they reported contained in the 2008 Form 10-K and 2009 Form 10-Qs.

 

(l)            Internal
Controls over Financial Reporting.  The Company and its subsidiaries maintain
systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) under
the Exchange Act) that comply with the requirements of the Exchange Act and
have been designed by, or under the supervision of their respective principal
executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with 

 

6

 

GAAP,
including, but not limited to, internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 

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

 

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

 

(o)           No
Material Adverse Change in Business.  Since September 30, 2009: (i) there
has been no material adverse change in the condition (financial or otherwise),
results of operations or business of the Company and its subsidiaries taken as
a whole, whether or not arising in the ordinary course of business; (ii) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries, taken as a whole;
and (iii) except for dividends on the Company’s common stock in an amount
not to exceed $0.08 per share, there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.

 

(p)           Title.  The Company and each of its Significant
Subsidiaries have good and marketable title in fee simple to all real property
and good title to all personal property owned by them, in each case free and
clear of all Liens, encumbrances and defects, except where the failure to have
such good and marketable title or the existence of any such Liens, encumbrances
or defects would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. All assets held under lease by the Company
and its Significant Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as do not materially interfere with the
use made and proposed to be made of such assets by the Company and its
Significant Subsidiaries, except where the failure of any such leases to be
valid, subsisting or enforceable or the 

 

7

 

existence
of such exceptions would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(q)           Regulatory
Filings.  The Company is not required to
be licensed as an insurance company; American Equity Investment Life Insurance
Company (“AELIC”), American Equity Investment Life Insurance Company of
New York (“AELICNY”) and Eagle Life Insurance Company (“Eagle,”
and together with AELIC and AELICNY, the “Insurance Subsidiaries”) are
each duly licensed as insurers under the insurance laws and regulations of
Iowa, New York and Iowa, respectively; and the Insurance Subsidiaries have
filed with the appropriate insurance regulatory authorities all reports,
documents and other information required to be filed under the insurance laws
of Iowa, New York and Iowa, respectively, except as to filings the failure
of which to make would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(r)            Possession
of Licenses and Permits.  Each
of the Company and its Insurance Subsidiaries holds such insurance licenses,
certificates, authorities, approvals, authorizations and permits from
governmental authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts business)
(the “Insurance Licenses”) which are necessary under applicable law to
the conduct of its business as described in the Company SEC Filings; the
Company and each Insurance Subsidiary have fulfilled and performed all
obligations necessary to maintain such Insurance Licenses; there is no pending
or, to the knowledge of the Company, threatened action, suit, proceeding or
investigation that would reasonably be expected to result in the revocation,
termination or suspension of any Insurance License that would reasonably be
expected to result in a Material Adverse Effect; and no insurance regulatory
agency or body has issued, or commenced any proceeding for the issuance of, any
order or decree impairing, restricting or prohibiting the payment of dividends
by any Insurance Subsidiary to its parent. 
Neither the Company nor any of its Insurance Subsidiaries has received
notice of any revocation or modification of any such Insurance Licenses or has
any reason to believe that any such Insurance Licenses will not be renewed in
the ordinary course, except where the revocation, modification or nonrenewal of
such Insurance Licenses, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(s)           Reinsurance.  All reinsurance treaties and arrangements to
which any Insurance Subsidiary is a party are in full force and effect and no
Insurance Subsidiary is in violation of, or in default in the performance,
observance or fulfillment of, any material obligation, agreement, covenant or
condition contained therein, except where the failure to be in full force and
effect or where such violation or default would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any Insurance Subsidiary has received any notice from any of
the other parties to such treaties, contracts or arrangements that such other
party intends not to perform such treaty and, to the best knowledge of the
Company and each Insurance Subsidiary, none of the other parties to such
treaties or arrangements will be unable to perform such treaty or arrangement
except to the extent adequately and properly reserved for in the consolidated
financial statements of the Company included in 

 

8

 

the
Company SEC Filings, except where such nonperformance would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(t)            Filing
of Statutory Statements.  The
statutory annual and quarterly statements of each of the Insurance Subsidiaries
and the statutory balance sheets and summaries of operations included in such
statutory annual and quarterly statements most recently filed in any state have
been prepared in compliance with prescribed or permitted statutory accounting
principles or practices consistently followed, except (i) as may otherwise
be indicated in the notes thereto and (ii) in the case of any such
financial statements for periods less than a full year, for any normal year-end
adjustments, and present fairly in all material respects the statutory
financial position of each Insurance Subsidiary as at the dates thereof, and on
a statutory basis for the periods covered thereby.

 

(u)           Insurance.  The Company and its Significant Subsidiaries
carry or are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is generally
deemed adequate for the conduct of their respective businesses as presently
conducted and the value of their respective properties and as is customary for
companies engaged in similar businesses, and, except as otherwise would not,
individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect, all such insurance is in full force and effect.

 

(v)           Absence
of Proceedings.  Except as
set forth in the Company SEC Filings, there is no litigation or governmental
proceeding to which the Company or any of its subsidiaries is a party or to
which any property or assets of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that would, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(w)          Relationship
with Officers, Directors and Shareholders.  No relationship, direct or indirect, exists
between or among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand, that is
required to be described in the Company SEC Filings which is not so described.

 

(x)            Investment
Company Act.  Neither the
Company nor any subsidiary of the Company is, and after giving effect to the
offering and sale of the Notes and the application of the proceeds thereof,
none of them will be, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(y)           Registration
Rights.  No person has the right to
file a registration statement or otherwise require the Company to register any
securities for sale under the Securities Act by reason of the issuance and sale
of the Notes or the issuance of the Underlying Shares upon the conversion of
the Notes.

 

9

 

(z)            Brokers’
Fees.  Neither the Company nor any of
its subsidiaries is a party to any contract, agreement or understanding with
any person (other than this Agreement) that would give rise to a valid claim
against any of them or FBR for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Notes.

 

(aa)         Additional
Securities.  The Company
has not sold or issued any securities that would be integrated with the
offering of the Notes contemplated by this Agreement pursuant to the Securities
Act, the rules and regulations thereunder or the interpretations thereof
by the SEC.

 

(bb)         Absence
of Manipulation.  Neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company, any
of its affiliates has taken, directly or indirectly, any action designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Notes.

 

(cc)         Actively
Traded.  The Common Stock is an “actively-traded
security” exempted from the requirements of Rule 101 of Regulation M under
the Exchange Act by subsection (c)(1) of such rule.

 

(dd)         Listing.  The Common Stock has been approved for
listing, subject to official notice of issuance, on the New York Stock
Exchange.

 

(ee)         Possession
of Intellectual Property.  The
Company and its Significant Subsidiaries own or possess, or have the ability to
acquire, all patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures), trademarks, service marks
and trade names currently employed by them in connection with the business now
operated by them, except where the failure to own, possess or have the ability
to acquire such patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and none of the
Company nor its Significant Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing which, individually or in the aggregate, if subject to any
unfavorable decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect.

 

(ff)           Environmental
Laws.  The Company and its
subsidiaries are in compliance with any and all applicable foreign, Federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”); (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) are
in compliance with all terms and conditions of any such permit, license or
approval, except where such 

 

10

 

noncompliance
with Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.

 

(gg)         Taxes.  The Company and each of its subsidiaries have
filed all Federal and all material state, local and foreign tax returns
required to be filed through the date hereof, subject to permitted extensions,
which returns are complete and correct in all material respects, and have paid
all taxes due, and neither the Company nor any subsidiary is in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, except for any such taxes or assessments
which are being contested in good faith by appropriate proceedings and for
which appropriate reserves, if any, have been established in accordance with GAAP
and statutory accounting principles, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries, nor does the Company have
any knowledge of any tax deficiencies that have been, or could reasonably be
expected to be, asserted against the Company that would, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(hh)         Employee
Benefits.  The Company
and its subsidiaries are in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has
occurred with respect to any “pension plan” (as defined in ERISA) for which the
Company and its subsidiaries would have any material liability; the Company and
its subsidiaries have not incurred and do not expect to incur any material
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the “Code”); and each “pension
plan” for which the Company or any of its subsidiaries would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects, and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.

 

(ii)           Absence
of Labor Disputes.  To the
knowledge of the Company, after due inquiry, no labor disturbance by or dispute
with the employees of the Company or any of its subsidiaries exists or is
imminent that would reasonably be expected to have a Material Adverse Effect.

 

(jj)           Corrupt
Practices.  Neither the
Company nor any of its subsidiaries, nor, to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries, has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe or
other unlawful payment.

 

11

 

 

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

 

(ll)           OFAC.  Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered
by OFAC.

 

(mm)      Affiliate.  None of the proceeds from the sale of the
Notes has been or will be paid to FBR or, to the knowledge of the Company, to
any affiliate of FBR; and the Company is not an “affiliate” (as defined in NASD
Conduct Rule 2720) of any member of the Financial Industry Regulatory
Authority (“FINRA”).

 

(nn)         Acknowledgement Regarding
Purchase of the Purchased Notes.  The Company acknowledges and agrees that FBR
is acting solely in the capacity of an arm’s length purchaser with respect to
the purchase of the Notes and the transactions contemplated hereby and that to
the knowledge of the Company (i) no officer or director of FBR is an
officer or director of the Company, (ii) FBR is not an “affiliate” of the
Company (as defined in Rule 144 promulgated under the Securities Act) or (iii) FBR
is not a “beneficial owner” of more than 10% of the Common Stock (as defined
for purposes of Rule 13d-3 of the Securities
Act).  The Company further
represents to FBR that the Company’s decision to enter into the Agreement and
the transactions contemplated hereunder has been based solely on an independent
evaluation by the Company and its representatives.

 

(oo)         Officer’s Certificates.  Any certificate signed by any officer of the
Company and delivered to FBR in connection with the offering of the Notes shall
be deemed a representation and warranty by the Company to FBR, as to the
matters covered thereby.

 

5.             Certain Covenants of the
Company.

 

The Company hereby agrees with FBR:

 

12

 

(a)           on or before the first
business day following the date of this Agreement, the Company shall issue a
publicly available press release and/or file with the SEC a Current Report on Form 8-K
disclosing all material terms of the transaction contemplated hereunder (to the
extent not previously publicly disclosed);

 

(b)           that promptly from time to
time during the term of this Agreement, the Company will take such action to
qualify the Notes for offering and sale under the securities or blue sky laws
of such jurisdictions as FBR may reasonably request, and to maintain such
qualifications in effect for as long as may be necessary to complete the sale
or resale of the Notes; provided, that
in connection therewith the Company shall not be required to (A) qualify
as a foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (B) file a general consent to service of process
in any such jurisdiction or (C) subject itself to taxation in any
jurisdiction in which it would not otherwise be subject;

 

(c)           that the Company will
reasonably cooperate on a timely basis with any reasonable due diligence
request from, or review conducted by, FBR or its counsel prior to the Closing
Time in connection with the transactions contemplated hereby, including,
without limitation, and upon reasonable notice, providing information and
making available documents and appropriate corporate officers, during regular
business hours and at the Company’s principal offices and/or by telephone, as
FBR or its counsel may reasonably request;

 

(d)           to furnish to FBR (upon
request) for a period of two years from the Closing Time, (i) copies of
all annual, quarterly and current reports supplied to holders of the Notes, if
any and (ii) copies of all reports filed by the Company with the SEC; provided, however, that so long as the Company is
timely filing reports with the SEC on EDGAR, it is not required to furnish such
reports or statements to FBR;

 

(e)           during any period in the
year (or such shorter period as may then be applicable under the Securities Act
regarding the holding period for securities under Rule 144(d) under
the Securities Act or any successor rule) after the Closing Time in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act to
furnish, upon request, to any holder of the Notes the information (“Rule 144A
Information”) specified in Rule l44A(d)(4) under the Securities
Act and any additional information (“PORTAL Information”) required by
the National Association of Securities Dealers, Inc. PortalSM Market (“PORTAL”), and any such Rule l44A
Information and Portal Information will not, at the date thereof, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading;

 

(f)            that neither the Company nor
any of their respective affiliates (as defined in Section 501(b) of
Regulation D) will, whether directly or through any agent or person acting on
its behalf (other than FBR): (i) offer Notes of the Company or any other
securities convertible into or exchangeable or exercisable for Common Stock in
a manner in violation of the Securities Act or the rules and regulations
thereunder, (ii) distribute any offering material (other than the
Disclosure Package) in connection with the offer

 

13

 

and
sale of the Notes, or (iii) sell, offer for sale, solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act), any of which will be integrated with the offering and sale of the Notes
in a manner that would require the registration under the Securities Act of the
sale to FBR (or to the Eligible Purchasers, in the case of the Resale Notes);

 

(g)           that, except as permitted by
the Securities Act, neither the Company nor any of its affiliates will
distribute any offering materials in connection with Exempt Resales;

 

(h)           to pay all expenses, fees
and taxes in connection with (i) the issuance, sale and delivery of the
Notes, (ii) the qualification of the Notes for offering and sale under
state laws and the determination of their eligibility for investment under
state law as aforesaid (including any filing fees), and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys to
FBR, (iii) all fees and disbursements of counsel and accountants for the
Company, (iv) the designation of the Notes as PORTAL eligible securities
by PORTAL, (v) the fees and expenses of any trustee, transfer agent or
registrar for the Notes or the Underlying Shares and (vi)  performance of
the Company’s other obligations hereunder;

 

(i)            to use reasonable efforts in
cooperation with FBR to obtain permission for the Notes to be eligible for clearance
and settlement through the facilities of The Depository Trust Company;

 

(j)            to refrain during the period
commencing on the date of this Agreement and ending on the date that is 60 days
after the date of this Agreement, without the prior written consent of FBR
(which consent may be withheld or delayed in FBR’s sole discretion), from (i) offering,
pledging, selling, contracting to sell, selling any option or contract to
purchase, purchasing any option or contract to sell, granting any option, right
or warrant for the sale of, lending or otherwise disposing of or transferring,
directly or indirectly, any equity securities of the Company or any securities
convertible into or exercisable or exchangeable for equity securities of the
Company, or filing any registration statement under the Securities Act with
respect to any of the foregoing, or (ii) entering into any swap or other
arrangement that transfers, in whole or in part, directly or indirectly, any of
the economic consequences of ownership of equity securities of the Company,
whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise.  The foregoing sentence shall
not apply to (i) the Notes to be sold hereunder, (ii) any shares of
Common Stock issued by the Company upon the exercise of an option outstanding
on the date hereof and referred to in the Company SEC Filings, or (iii) such
issuances of options or grants of restricted stock under the Company’s stock
option and incentive plans as described in the Company SEC Filings;

 

(k)           if the Purchased Notes are
not delivered by the Company to FBR for any reason other than the termination
of this Agreement pursuant to clauses (ii) through (v) of the first
paragraph of Section 7 hereof or the default by FBR in its obligations
hereunder, to reimburse FBR for all of its out-of-pocket expenses relating to
the transactions

 

14

 

contemplated
hereby, including the reasonable fees and disbursements of its legal counsel;
and

 

(l)            that the Company will not
take, and will cause its subsidiaries not to take, and use reasonable efforts
to cause its affiliates not to take, directly or indirectly, any action
designed to or that has constituted or that reasonably would be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company in connection with the offering of the Notes.

 

6.             Conditions of
FBR’s Obligations.  The
obligations of FBR hereunder are subject to (i) the accuracy of the
representations and warranties of the Company on the date hereof and at the
Closing Time, (ii) the accuracy of the statements of the Company’s
officers made in any certificate pursuant to the provisions hereof as of the
date of such certificate, (iii) the performance by the Company of all of
its obligations hereunder and (iv) the following other conditions:

 

(a)           The Company shall furnish to
FBR at the Closing Time opinions of (i) Skadden, Arps, Slate, Meagher &
Flom LLP, counsel for the Company, addressed to FBR and dated the Closing Time,
in form and substance satisfactory to FBR, covering the matters set forth on Exhibit B-1
hereto, and (ii) Marla Lacey, Associate General Counsel of the Company,
addressed to FBR and dated the Closing Time, in form and substance satisfactory
to FBR, covering the matters set forth on Exhibit B-2 hereto.

 

(b)           FBR shall have received from
KPMG LLP, “comfort” letters dated, respectively, as of the date hereof and the
Closing Time, addressed to FBR and in form and substance satisfactory to FBR.

 

(c)           FBR shall have received at
the Closing Time a favorable opinion of Sidley Austin LLP, counsel for FBR,
dated the Closing Time, in form and substance satisfactory to FBR, covering the
matters set forth on Exhibit C hereto.

 

(d)           Prior to the Closing Time, (i) no
suspension of the qualification of the Notes for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes, shall have occurred, and (ii) the Disclosure Package and
all amendments or supplements thereto, or modifications thereof, if any, shall
not contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they are made, not misleading.

 

(e)           Between the time of
execution of this Agreement and the Closing Time, (i) no event,
circumstance or change constituting a Material Adverse Effect shall have
occurred or become known, (ii) no transaction which is material to the
Company, taken as a whole, shall have been entered into by the Company that has
not been fully and accurately disclosed in the Disclosure Package, or any
amendment or supplement thereto, except with the prior written consent of FBR;
and (iii) no order or decree preventing the use of the Indenture, or any
amendment or supplement thereto, or any order asserting that

 

15

 

any
of the transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act shall have been issued.

 

(f)            The Company shall have
delivered to FBR a certificate, executed by the secretary of the Company and
dated as of the Closing Time, as to (i) the resolutions adopted by the
Company’s board of directors, (ii) the Company’s certificate of
incorporation, as amended and (iii) the Company’s bylaws, as amended, each
as in effect at the Closing Time.

 

(g)           The Company shall have delivered
to FBR a certificate, executed by its chief executive officer and chief
financial officer to the effect that the representations and warranties of the
Company set forth in this Agreement shall be true and correct as of the Closing
Time as though made on and as of such date (except to the extent that such
representations and warranties speak as of another date, in which case such
representations and warranties shall be true and correct as of such other
date), and the Company shall have complied with all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied under
this Agreement at or prior to the Closing Time.

 

(h)           At the time of execution and
delivery of this Agreement, FBR shall have received from each of the officers
of the Company a written agreement (a “Lock-up Agreement”) in
substantially the form attached hereto as Exhibit D.

 

7.             Termination.  The obligations of FBR hereunder shall be
subject to termination in the absolute discretion of FBR, at any time prior to
the Closing Time if (i) any of the conditions specified in Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled and FBR has not waived in writing such unfulfilled condition, (ii) trading
in securities in general on any exchange or national quotation system shall
have been suspended or minimum prices shall have been established on such
exchange or quotation system, (iii) there has been a material disruption
in the securities settlement, payment or clearance services in the United
States, (iv) a general banking moratorium shall have been declared either
by the United States or New York State authorities, or (v) if the United
States shall have declared war in accordance with its constitutional processes
or there shall have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic,
political or other conditions of such magnitude in its effect on the financial
markets of the United States as, in the judgment of FBR, to make it
impracticable to purchase or resell the Notes.

 

If FBR elects to
terminate this Agreement as provided in this Section 7, the Company shall
be notified promptly in writing.

 

If the sale to FBR of the
Resale Notes, as contemplated by this Agreement, is not carried out by FBR for
any reason permitted under this Agreement or if such sale is not carried out
because the Company shall be unable to comply with any of the terms of this
Agreement, (i) the Company shall not be under any obligation or liability
to FBR under this Agreement (except to the extent provided in Sections 5(h), 5(k) and
8 hereof), and (ii) FBR shall be under no

 

16

 

obligation or
liability to the Company under this Agreement (except to the extent provided in
Section 8 hereof).

 

8.             Indemnity.

 

(a)           The Company agrees to
indemnify, defend and hold harmless FBR and its affiliates, and their
respective directors, officers, representatives and agents, and any person who
controls FBR within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any loss, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
FBR or any such controlling person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability or claim
arises out of or is based upon (i) any untrue statement or alleged untrue
statement made by the Company herein, (ii) any breach by the Company of
any covenant set forth herein or (iii) any untrue statement or alleged
untrue statement of a material fact contained in the Disclosure Package, or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in the Disclosure Package or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.

 

(b)           If any action is brought
against any person or entity (each an “Indemnified  Party”), in
respect of which indemnity may be sought pursuant to Section 8(a) above,
the Indemnified Party shall promptly notify the party(ies) obligated to provide
such indemnity (each an “Indemnifying Party”) in writing of the
institution of such action and the Indemnifying Party shall assume the defense
of such action, including the employment of counsel and payment of expenses;
provided that the failure so to notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability which the Indemnifying Party may have
to any Indemnified Party unless and to the extent the Indemnifying Party did
not otherwise know of such action and such failure results in the forfeiture by
the Indemnifying Party of rights and defenses that would have had material
value in the defense.  The Indemnified
Party(ies) shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless the employment of such counsel shall have been
authorized in writing by the Indemnifying Party in connection with the defense
of such action or the Indemnifying Party shall not have employed counsel to
have charge of the defense of such action within a reasonable time or such
Indemnified Party(ies) shall have reasonably concluded (based on the advice of
counsel) that counsel selected by the Indemnifying Party has an actual conflict
of interest or there may be defenses available to the Indemnified Party(ies)
which are different from or additional to those available to the Indemnifying
Party (in which case the Indemnifying Party shall not have the right to direct
the defense of such action on behalf of the Indemnified Party(ies)), in any of
which events such fees and expenses shall be borne by the Indemnifying Party
and paid as incurred (it being understood, however, that the Indemnifying Party
shall not be liable for the fees and expenses of more than one separate firm of
counsel (in addition to local counsel) for the Indemnified Party in any one
action or series of related actions in the same jurisdiction representing the
Indemnified Parties who are parties to such action). Anything in this paragraph
to the contrary notwithstanding, the Indemnifying Party shall not be liable for

 

17

 

any
settlement of any such claim or action effected without its written
consent.  The Indemnifying Party shall
have the right to settle any such claim or action for itself and any
Indemnified Party so long as the Indemnifying Party pays any settlement payment
and such settlement (i) includes a complete and unconditional release of
the Indemnified Party from all losses, expenses, claims, damages, injunctions,
liability and other obligations with respect to any claims that are the subject
matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of the
Indemnified Party.

 

(c)           The indemnity agreement
contained in this Section 8 and the covenants, warranties and
representations of the Company contained in this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of FBR or
its affiliates, or their respective directors, officers, representatives and
agents, or any person who controls FBR within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, or by or on behalf
of the Company or their respective directors and officers or any person who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and shall survive any termination
of this Agreement or the sale and delivery of the Notes.  Each party to this Agreement agrees promptly
to notify the other party of the commencement of any litigation or proceeding
against it and, in the case of the Company, against any of their respective
officers and directors, in connection with the sale and delivery of the Notes.

 

9.             Notices.  Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing delivered by
facsimile (with receipt confirmed), overnight courier or registered or
certified mail, return receipt requested, or by telegram and:

 

(a)           if to FBR, shall be
sufficient in all respects if delivered or sent to FBR Capital Markets &
Co., 1001 Nineteenth Street North, Arlington, Virginia 22209, Attention:  Compliance Department, (facsimile:
703-312-9698); with a copy to Sidley Austin LLP, One South Dearborn Street,
Chicago, Illinois, 60603, Attention: Brian Fahrney, (facsimile: 312-853-7036);
and

 

(b)           if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at American Equity Investment Life Holding Company, 6000 Westown
Parkway, West Des Moines, Iowa, 50266, Attention: Wendy L. Carlson, Chief
Executive Officer (facsimile: 515-221-0744, email:
wcarlson@american-equity.com); with a copy to Skadden, Arps, Slate, Meagher &
Flom LLP, 155 North Wacker Drive, Chicago, Illinois 60606-1720, Attention:
William R. Kunkel (facsimile: 312-407-8514).

 

10.          Duties.  Nothing in this Agreement shall be deemed to
create a partnership, joint venture or agency relationship between the
parties.  FBR undertakes to perform such duties and obligations only as
expressly set forth herein.  Such duties and obligations of FBR with
respect to the Notes shall be determined solely by the express provisions of
this Agreement, and FBR shall not be liable except for the performance of
such duties and obligations with respect to the Notes as are specifically set
forth in this

 

18

 

Agreement.  The Company acknowledges and agrees that: (i) the
purchase and sale of the Notes pursuant to this Agreement, including the
determination of the Purchase Price and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand,
and FBR, on the other hand, and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated by this Agreement; (ii) in connection with
each transaction contemplated hereby and the process leading to such
transaction, FBR is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) FBR has not
assumed and will not assume an advisory, agency or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated
hereby or the process leading thereto (irrespective of whether FBR has advised
or is currently advising the Company on other matters); and (iv) FBR and
its affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Company and that FBR has no obligation
to disclose any of such interests.  The
Company acknowledges that FBR disclaims any implied duties (including any
fiduciary duty), covenants or obligations arising from its performance of the
duties and obligations expressly set forth herein.  The Company hereby waives and releases, to
the fullest extent permitted by law, any claims that the Company may have
against FBR with respect to any breach or alleged breach of agency or fiduciary
duty.

 

11.          GOVERNING
LAW; HEADINGS.  
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
STATE.  The section headings in this
Agreement have been inserted as a matter of convenience of reference and are
not a part of this Agreement.

 

12.          Parties at
Interest.  The
Agreement herein set forth has been and is made solely for the benefit of FBR
and the Company and the controlling persons, directors and officers referred to
in Section 8 hereof, and their respective successors, assigns, executors
and administrators.  No other person,
partnership, association or corporation (including a purchaser, in its capacity
as such, from FBR) shall acquire or have any right under or by virtue of this
Agreement.

 

13.          Counterparts.  This Agreement may be signed by the parties
in counterparts, which together shall constitute one and the same agreement
among the parties.

 

[SIGNATURE PAGE FOLLOWS]

 

19

 

If the foregoing
correctly sets forth the understanding among the Company and FBR, please so
indicate in the space provided below for the purpose, whereupon this letter
shall constitute a binding agreement between the Company and FBR.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN EQUITY
  INVESTMENT LIFE HOLDING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Matovina

  
	
   

  	
  Name:

  	
  John M. Matovina

  
	
   

  	
  Title:

  	
  Chief Financial Officer & Treasurer

  

 

[Signature
Page to Purchase Agreement]

 

 

	
  Accepted
  and agreed to as 

  
	
  of
  the date first above written:

  
	
   

  
	
  FBR
  CAPITAL MARKETS & CO.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Paul S. Rosica

  	
   

  
	
  Name:

  	
  Paul S. Rosica

  
	
  Title:

  	
  Senior Managing Director

  

 

[Signature
Page to Purchase Agreement]

 

 

EXHIBIT A

 

FORM OF PURCHASER LETTER

 

December 17,
2009

 

 

To
the Undersigned Purchaser

 

Re:          Sale of $52,200,000 Aggregate Principal Amount of 5.25% Contingent
Convertible Senior Notes due 2029 of American Equity Investment Life Holding
Company

 

Ladies
and Gentlemen:

 

Reference
is hereby made to the proposed purchase (the “Transaction”) by [    ] (the “Purchaser”) of $52,200,000
aggregate principal amount of 5.25% Contingent Convertible Senior Notes due
2029 (the “Securities”) of American Equity Investment Life Holding
Company, an Iowa corporation (the “Issuer”), from FBR Capital Markets &
Co., the initial purchaser (“Initial Purchaser”) of the Securities.  In connection with the Transaction, Purchaser
acknowledges, understands and agrees, as follows:

 

1.             Purchaser
represents that it: (a) is either an “accredited investor” as such term is
defined in Rule 501(a) under the Securities Act of 1933, as amended
(the “Securities Act”), or a “qualified institutional buyer” as such
term is defined in Rule 144A under the Securities Act; (b) has
sufficient knowledge and experience in financial and business matters such that
it is capable of evaluating the merits and risks of the Securities; (c) has
conducted, to the extent it deemed necessary, its own independent investigation
of such matters as, in its judgment, is necessary for it to make an investment
decision with respect to the Securities, the Issuer and the Transaction and has
had the opportunity to ask questions of and receive answers from the Issuer and
its officers and directors and to obtain such additional information which the
Issuer or its subsidiaries possess or could acquire without unreasonable effort
or expense as such Purchaser deems necessary to verify the accuracy of the information
furnished to such Purchaser and has asked such questions, received such answers
and obtained such information as it deems necessary to verify the accuracy of
the information furnished to such Purchaser; (d) has not relied upon the
Initial Purchaser for any investigation into, assessment of, or evaluation or
information with respect to the Securities, the Issuer and/or the Transaction; (e) has
been provided with copies of a term sheet dated December 17, 2009 (the “Term
Sheet”) and the indenture under which the Securities will be issued and has had
the opportunity to ask questions of and receive answers from the Issuer
regarding the terms of the Securities; and (f) acknowledges that the Term
Sheet is meant to be only a summary of certain provisions of the Securities and
is qualified in its entirety by reference to all of the provisions of the
indenture, including definitions of certain terms used in the indenture, and
the notes.

 

2.             Purchaser
represents that it is buying the Securities for investment purposes only and
not with a view toward distribution or resale in violation of any applicable
securities laws.

 

A-1

 

3.             The Initial
Purchaser has informed the Purchaser that it may have possession of confidential
or material, non-public information concerning the Securities and/or the Issuer
(collectively, the “Excluded Information”), which, if publicly disclosed, could
affect the trading price of the Company’s securities, including information
that may be indicative that the value of the Securities is substantially
different than the purchase price being paid for the Securities in the
Transaction.  Purchaser acknowledges that
Initial Purchaser does not now, and will not in the future, have an obligation
to Purchaser to disclose the Excluded Information and has no fiduciary
obligations to the Purchaser.

 

4.             Notwithstanding
any possession of Excluded Information by the Initial Purchaser, the Purchaser
desires to enter into the Transaction for its investment purposes.

 

5.             The Purchaser
hereby irrevocably waives any and all actions, causes, rights or claims,
whether known or unknown, contingent or matured, and whether currently existing
or hereafter arising, that it may have or hereafter acquire (“Claims”)
against the Initial Purchaser or its officers, directors, shareholders,
members, employees, agents, representatives and affiliates (collectively, the “Released Persons”)
in any way, directly or indirectly, arising out of, relating to or resulting
from (i) the Initial Purchaser’s failure to disclose the Excluded
Information to the Purchaser, (ii) the existence or substance of the
Excluded Information or (iii) the fact that the Initial Purchaser has sold
the Securities to the Purchaser in this Transaction, including, without
limitation, Claims it may have or hereafter acquire under applicable federal
and/or state securities laws, including, without limitation, pursuant to
Sections 11, 12 and 17 of the Securities Act, and Sections 10(b) and 20A
of the Securities Exchange Act of 1934, as amended (collectively, the “Acts”),
or the rules and regulations promulgated by the Securities and Exchange
Commission under the Acts.  The Purchaser
agrees that it shall not institute or maintain any cause of action, suit or
complaint or other proceeding against any Released Person as a result of the
Initial Purchaser’s or such person’s failure to disclose the Excluded
Information to the Purchaser.

 

6.             The Purchaser
intends to effect, to the maximum extent permitted by law, a complete and
knowing waiver of its rights as set forth in this letter.

 

7.             Purchaser
acknowledges that the Initial Purchaser is relying on this letter in acting as
the Initial Purchaser of the Securities in the Transaction, and would not act
as the Initial Purchaser of the Securities in the Transaction in the absence of
this letter and the acknowledgment and agreement contained herein.

 

The
foregoing representations, warranties, acknowledgments and agreements shall be
deemed made as of the Trade Date (December 17, 2009) and shall survive the
sale and delivery of the Securities hereunder. 
Please indicate your acknowledgment and agreement to the foregoing by
signing below where indicated, as of the above date.

 

This
agreement shall be governed by the laws of the State of New York.  Both parties agree that any dispute hereunder
shall be resolved by binding arbitration. The parties further agree that
nothing contained herein shall operate as a waiver of any Claims by Purchaser
against the Issuer or any of its respective officers, directors, employees and
affiliates. This agreement is solely for the benefit of the parties hereto and
their respective offices, directors, shareholders,

 

A-2

 

members,
employees and affiliates and no other person shall acquire or have any rights
under or by virtue of this agreement.

 

 

	
  FBR
  CAPITAL MARKETS & CO.

  	
   

  	
  [PURCHASER]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  

 

A-3

 

EXHIBIT
B-1

 

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

 

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

 

2.     The Company is not and, solely after
giving effect to the offering and sale of the Notes pursuant to the Purchase
Agreement and the application of the proceeds thereof as described in the
Disclosure Package will not be, an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended.

 

3.     The Company SEC Filings, as of the date
on which such filings were made, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the rules and regulations promulgated by the SEC thereunder (except
that, in each case, we do not express any view as to the financial statements,
schedules and other financial information included or incorporated by reference
therein or excluded therefrom), and (ii) no facts have come to our
attention that have caused us to believe that the Disclosure Package, as of the
dates on which the statements therein are made, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (except
that, in each case, we do not express any view as to the financial statements,
schedules and other financial information included or incorporated by reference
therein or excluded therefrom).

 

As used herein, (i) “Purchase
Agreement” shall mean that certain Purchase Agreement dated December 17,
2009 by and between the Company and FBR Capital Markets & Co. for the
sale by the Company of $52,225,000 aggregate principal amount of the Company’s
5.25% Contingent Convertible Senior Notes due 2029; (ii) “Applicable Laws”
means those laws, rules and regulations of the State of New York and those
federal laws, rules and regulations of the United States of America, in
each case that, in our experience, are normally applicable to transactions of
the type contemplated by the Purchase Agreement (other than the United States federal
securities laws, state securities or blue sky laws, antifraud laws and the rules and
regulations of the Financial Industry Regulatory Authority, Inc.), but
without our having made any special investigation as to the applicability of
any specific law, rule or regulation; (iii) “Governmental Authorities”
means any court, regulatory body, administrative agency or governmental body of
the State of New York or the United States of America having jurisdiction over
the Company under Applicable Laws; and (iv) “Governmental Approval” means
any consent, approval, license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority required to be
made or obtained by the Company pursuant to Applicable Laws, other than any
consent, approval, license, authorization, validation, filing, qualification or
registration that may have become applicable as a result of the involvement of

 

B-1

 

any party (other
than the Company) in the transactions contemplated by the Purchase Agreement or
because of such party’s legal or regulatory status or because of any other
facts specifically pertaining to such party.

 

Other capitalized terms
used but not defined herein shall have their respective meanings set forth in
the Purchase Agreement.

 

B-2

 

EXHIBIT
B-2

 

FORM OF
OPINION OF ASSOCIATE GENERAL COUNSEL OF THE COMPANY

 

1.     The Company has been duly incorporated
and is validly existing as a corporation and in good standing under the laws of
the State of Iowa, with all corporate power and authority to own, lease or
operate its current property and to conduct its business and to execute,
deliver and perform the Purchase Agreement.

 

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

 

3.     The execution, delivery and performance
by the Company of the Purchase Agreement and have been duly authorized by all
necessary corporate action of the Company.

 

4.     The Purchase Agreement has been duly
executed and delivered on behalf of the Company.

 

5.     The Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due authorization,
valid execution and delivery by the Trustee, the Indenture is a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be subject to
the Enforceability Exceptions.

 

6.     The Notes have been duly authorized,
issued and executed by the Company, and when authenticated in accordance with
the provisions of the Indenture, and delivered to and duly paid for in
accordance with the applicable provisions of the Purchase Agreement, the Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except to the extent that enforcement thereof may be
subject to the Enforceability Exceptions.

 

7.     The Underlying Shares have been duly
authorized and reserved by the Company for issuance upon the exercise of the
equity-linked put right pursuant to the terms of the Purchased Notes and, when
issued in connection with such equity-linked put right in accordance with the
terms of the Purchased Notes, will be validly issued, fully paid and
non-assessable, and the issuance of the Underlying Shares will not be subject
to any preemptive, resale, participation, rights of first refusal or other
similar rights.

 

8.     To the best of my knowledge, the
execution and delivery by the Company of the Purchase Agreement by the Company,
the issuance and sale of the Notes, and the consummation by the Company of the
transactions contemplated by the Purchase Agreement, the Notes and the
Indenture, as the case may be, will not, whether with or without the giving of
notice or lapse of time or both, (i) constitute a violation of, or a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the 

 

B-3

 

Company or any
Significant Subsidiary pursuant to, the terms of any Applicable Contract
(except for such violations, breaches, defaults or liens, charges or
encumbrances that would not reasonably be expected to have a Material Adverse
Effect), (ii) conflict with the articles of incorporation or bylaws or
comparable organizational documents of the Company or any of its subsidiaries,
or (iii) violate or conflict with, or result in any contravention of, any
Applicable Law or any Applicable Order.

 

9.     American Equity Investment Life Insurance
Company, an Iowa corporation, has been duly incorporated and validly exists in
good standing under the laws of the State of Iowa.  American Equity Life has the corporate power
and authority to own, lease and operate its properties and to conduct its
business.

 

10.  American Equity Investment Life Insurance
Company of New York, a New York corporation, has been duly organized and
validly exists in good standing under the laws of the State of New York.  American Equity Life of New York has the
corporate power and authority to own, lease and operate its properties and to
conduct its business.

 

11.  Eagle Life Insurance Company, an Iowa
corporation, has been duly incorporated and validly exists in good standing
under the laws of the State of Iowa. 
Eagle Life has the corporate power and authority to own, lease and
operate its properties and to conduct its business.

 

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

 

13.  To the best of my knowledge, other than
as described in the Company SEC Filings, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or any
Significant Subsidiary is a party, or to which the property of the Company or
any Significant Subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, that could reasonably be
expected to result in a Material Adverse Effect, or that could reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Purchase Agreement or
the Indenture or the performance by the Company of its obligations under the
Purchase Agreement, the Notes or the Indenture.

 

14.  To the best of my knowledge, any pending
or threatened actions, suits, proceedings, inquiries or investigations to which
the Company or any Significant Subsidiary is or may become a party or to which
any of their property is or may be subject which are not described in the
Company SEC Filings, including ordinary routine litigation incidental to the
Company’s or Significant Subsidiary’s business, would, considered in the
aggregate, not reasonably be expected to result in a Material Adverse Effect on
the financial condition, earnings or business of the company and its
Significant Subsidiaries considered together.

 

15.  To the best of my knowledge, each
Insurance Subsidiary holds such Insurance Licenses as are material to the
conduct of its business; to the best of my knowledge, there is no pending 

 

B-4

 

or threatened
action, suit, proceeding or investigation that would reasonably be expected to
result in the revocation, termination or suspension of any such Insurance
License that would reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; and, except as disclosed in the Company SEC
Filings, and to the best of my knowledge, no insurance regulatory agency or
body has issued, or commenced any proceeding for the issuance of, any order or
decree impairing, restricting or prohibiting the payment of dividends by any
Insurance Subsidiary to its parent.

 

As used herein, (i) “Purchase
Agreement” shall mean that certain Purchase Agreement dated December 17,
2009 by and between the Company and FBR Capital Markets & Co. for the
sale by the Company of $52,225,000 aggregate principal amount of the Company’s
5.25% Contingent Convertible Senior Notes due 2029; (ii) “Applicable
Contracts” means those indentures or other agreements or instruments known to
me and to which the Company or any Significant Subsidiary is a party or by
which the Company or any Significant Subsidiary is bound or to which any of
their respective properties or assets are subject; (iii) “Applicable Laws”
means those laws, rules and regulations of the States of Iowa and New
York, including the insurance laws, rules and regulations of the States of
Iowa and New York, that, in my experience, are normally applicable to
transactions of the type contemplated by the Purchase Agreement, the Notes or
the Indenture, as the case may be (other than state securities or blue sky laws
and antifraud laws), but without may having made any special investigation as
to the applicability of any specific law, rule or regulation; and (iv) “Applicable
Orders” means those judgments, orders or decrees known to me to be applicable
to the Company.  Other capitalized terms
herein shall have their respective meanings set forth in the Purchase
Agreement.

 

B-5

 

EXHIBIT C

 

FORM OF
OPINION OF SIDLEY AUSTIN LLP

 

1.     No facts have
come to our attention that have caused us to believe that the Disclosure
Package, as of the dates on which the statements therein are made, contained an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; except in each case that we express no belief and make no statement
with respect to (A) financial statements and schedules and other financial
or statistical data included or incorporated by reference in or omitted from
the Company SEC Filings, or the omission therefrom of the purchase price for
the Notes payable by investors or the amount of net proceeds to be received by
the Company from sales of the Notes or (B) any trustee’s statement of
eligibility on Form T-1.

 

Capitalized terms used
but not defined herein shall have their respective meanings set forth in that
certain Purchase Agreement dated December 17, 2009 by and between the
Company and FBR Capital Markets & Co. for the sale by the Company of
$52,225,000 aggregate principal amount of the Company’s 5.25% Contingent
Convertible Senior Notes due 2029.

 

C-1

 

EXHIBIT D

 

FORM OF
LOCK-UP AGREEMENT

 

December 17, 2009

 

FBR Capital Markets &
Co.

1001 Nineteenth Street
North, 18th Floor

Arlington, Virginia  22209

 

Ladies and Gentlemen:

 

The undersigned
understands and agrees as follows:

 

1.             FBR Capital Markets & Co. (“FBR”)
proposes to enter into a Purchase Agreement (the “Agreement”) with
American Equity Investment Life Holding Company, an Iowa corporation (the “Company”),
providing for the initial purchase by FBR of $52,225,000 aggregate principal
amount of the Company’s 5.25% Contingent Convertible Senior Notes due 2029 (the
“Notes”), and the resale of such shares by FBR to certain eligible
purchasers (the “Offering”), in each case, in transactions exempt from
the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”).

 

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

 

Notwithstanding the
foregoing, subject to applicable securities laws and the restrictions contained
in the Company’s articles of incorporation, as amended, the undersigned may
transfer any securities of the Company (including, without limitation, common
stock) as follows: (i) pursuant to the exercise and issuance of options; (ii) as
a bona fide gift or gifts, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein; (iii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound in writing by the restrictions set forth herein; (iv) as a
distribution to stockholders, partners or members of the undersigned, provided
that such stockholders, partners or members agree to be bound in writing 

 

D-1

 

by the
restrictions set forth herein; (v) any transfer required under any benefit
plans or the Company’s third amended and restated bylaws; (vi) as
collateral for any loan, provided that the lender agrees in writing to be bound
by the restrictions set forth in herein; or (vii) with respect to sales of
securities acquired after the Closing Time in the open market. For purposes of
this agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin.

 

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

 

3.             The undersigned acknowledges that FBR is
relying on the agreements of the undersigned set forth herein in making its
decision to enter into the Agreement and to continue its efforts in connection
with the Offering.

 

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

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

D-2

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  

 

D-3

 

 

EXHIBIT E

 

FORM OF
TERM SHEET

 

[See attached.]

 

E-1

 

 

5.25%
Contingent Convertible Senior Notes due 2029(1)

Summary
of Terms

 

	
  Issuer:

  	
   

  	
  American Equity Investment
  Life Holding Company (“AEL”)

  
	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  December 6, 2029,
  unless earlier exchanged, redeemed or repurchased

  
	
   

  	
   

  	
   

  
	
  Principal
  Amount:

  	
   

  	
  $52,225,000

  
	
   

  	
   

  	
   

  
	
  Ranking:

  	
   

  	
  The notes are our senior
  unsecured obligations and each series ranks equally in right of payment with
  the other series and any of our other existing and future senior indebtedness
  and senior to any existing and future subordinated indebtedness. The notes
  rank junior in right of payment to all of our existing and future secured
  indebtedness to the extent of the value of the assets securing such secured
  indebtedness. In addition, the notes are effectively subordinate to all
  liabilities, including policyholder liabilities, trade payables, lease
  obligations and liquidation preference on any preferred stock, whether or not
  secured, of any of our subsidiaries and any subsidiaries that we may in the
  future acquire or establish.

  
	
   

  	
   

  	
   

  
	
  Interest
  Rate and Payment 

  	
   

  	
  The notes bear interest at
  an annual rate equal to 5.25%, accruing from December 22, 2009.

  
	
  Dates:

  	
   

  	
   

  
	
   

  	
   

  	
  Interest is payable
  semi-annually in arrears on June 6 and December 6 of each year,
  each an interest payment date, beginning June 6, 2010.

  
	
   

  	
   

  	
   

  
	
  Contingent
  Interest:

  	
   

  	
  In addition to regular
  interest on a series of notes, beginning with the six-month interest period
  ending June 6, 2015, we will also pay contingent interest during any
  six-month interest period in which the average trading price per $1,000
  principal amount of a series of notes for the five-day trading period ending
  on the third day immediately preceding the first day of such six-month
  interest period equals 120% or more of the principal amount of such series of
  notes

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  During any interest period
  in which contingent interest shall be payable on a series of notes, the
  contingent interest payable per $1,000 principal amount of such series of
  notes will equal 0.50% per annum of the average trading price of $1,000
  principal amount of notes during the five trading day measuring period ending
  on the third day immediately preceding the applicable six-month interest
  period used to determine whether contingent interest must be paid

  
	
   

  	
   

  	
   

  
	
  Conversion
  Rights:

  	
   

  	
  Holders may surrender notes
  for conversion into cash and shares of our common stock on or prior to the
  maturity date only in the following circumstances:

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  During any fiscal quarter
  commencing after the date of original issuance of the notes, if the common
  stock price for at least 20 trading days in the period of 30 consecutive
  trading days ending on the last trading day of the fiscal quarter preceding
  the quarter in which the conversion occurs is more than 120% of the
  Conversion Price in effect on that 30th trading day;

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  If such notes have been
  called for redemption, at any time prior to the close of business on the
  second business day prior to redemption date;

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  At any time on or after
  December 15, 2028; or

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Upon the occurrence of
  specified transactions described under “Conversion Upon Specified Corporate
  Transactions” below.

  
	
   

  	
   

  	
   

  
	
   

  	
  Upon the occurrence of any
  of the circumstances described above, holders may convert any outstanding
  notes into cash and shares of our common stock at an initial “Conversion
  Price” per share of $9.69. This represents a “Conversion Rate” of
  approximately 103.1992 shares of common stock per $1,000 principal amount of
  notes. Subject to certain exceptions set forth in the indenture, once notes
  are tendered for conversion, the value (the “Conversion Value”) of the cash
  and shares of our common stock, if any, to be received by a holder converting
  $1,000 principal amount of the notes will be determined by multiplying the
  Conversion Rate by the Ten Day Average Closing Stock Price (as defined
  below). We will deliver the Conversion Value to holders as follows: (1) an
  amount in cash (the “Principal Return”) equal to the lesser of (a) the
  aggregate Conversion Value of the notes to be converted and (b) the
  aggregate principal amount of the notes to be converted, (2) if the
  aggregate Conversion Value of the notes to be converted is greater than the
  Principal Return, an amount in whole shares (the “Net Shares”), determined as
  set forth below, equal to such aggregate Conversion Value less the Principal
  Return (the “Net Share Amount”), and (3) an amount in cash in lieu of
  any  fractional shares of
  common stock.  We will pay the Principal Return and cash in
  lieu of fractional shares and deliver the Net Shares, if any, as promptly as
  practicable after determination of the Net Share Amount. The number of Net
  Shares to be paid will be determined by dividing the Net Share Amount by the Ten
  Day Average Closing Stock Price, rounded down to the nearest whole share. The
  “Ten Day Average Closing Stock Price” will be the average of the closing per
  share prices of our common stock on the New York Stock Exchange on the ten
  consecutive trading days beginning on the second trading day following the
  day

  
					

 

(1) The notes will be issued pursuant to an indenture between us and U.S.
Bank National Association, as trustee, dated December 22, 2009 (the “indenture”).
The indenture contains provisions which define your rights under the notes. The
terms of the notes include those stated in the indenture and those made part of
the indenture by reference to the Trust Indenture Act of 1939, as amended. This
term sheet is meant to be only a summary of certain provisions of the indenture
and is subject to and qualified in its entirety by reference to all of the
provisions of the indenture, including definitions of certain terms used in the
indenture, and the notes. We urge that you carefully read the indenture because
the indenture, and not this term sheet, governs your rights as note holders.
See “Additional Information” below.

 

E-2

 

	
  

  	
  Summary of Terms

  	
  December 17, 2009

  

 

	
   

  	
   

  	
  the notes are submitted for
  conversion.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Conversion Price will
  be subject to adjustment in certain circumstances, as set forth in the
  indenture.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If AEL declares a cash
  dividend or cash distribution above $0.08 per share annually (the “dividend
  threshold amount”) to all of the holders of AEL’s common stock, the
  Conversion Price shall be decreased to equal the price determined by
  multiplying the Conversion Price in effect immediately prior to the record
  date for such dividend or distribution by the following fraction:
  ((Pre-Dividend Sale Price - Dividend Adjustment Amount) / (Pre-Dividend Sale
  Price))

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Pre-Dividend Sale Price”
  means the average common stock price for the three consecutive trading days
  ending on the trading day immediately preceding the record date for such
  dividend or distribution.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Dividend Adjustment
  Amount” means the difference between the full amount of the dividend or
  distribution to the extent payable in cash applicable to one share of our
  common stock and the dividend threshold amount.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The “common stock price” on
  any date means the closing sale price per share (or if no closing sale price
  is reported, the average of the bid and ask prices or, if more than one in
  either case, the average of the average bid and the average ask prices) on
  such date for our common stock as reported in composite transactions on the
  New York Stock Exchange or such other principal United States securities
  exchange on which our common stock is then traded or, if our common stock is
  not listed on a United States national or regional securities exchange, as
  reported by Pink OTC Markets Inc. If our common stock is not so reported, the
  “common stock price” will be determined by a U.S. nationally recognized
  independent investment banking firm selected by us for this purpose.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A “trading day” means any
  regular or abbreviated trading day of The New York Stock Exchange.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Upon conversion of the
  notes, the holder will not receive any additional cash payment representing
  accrued and unpaid interest, including contingent interest or liquidated
  damages, if any.

  
	
   

  	
   

  	
   

  
	
  Conversion
  Upon Specified

  	
   

  	
  If we elect to:

  
	
  Corporate
  Transactions:

  	
   

  	
   

  

 

	
   

  	
  ·

  	
  distribute to all holders
  of our common stock rights, warrants or options entitling them to subscribe
  for or  purchase, for a
  period expiring not more than 60 days after the date of distribution, shares
  of our common stock at less
  than the average common stock price for the ten trading days immediately
  preceding the date that such distribution
  was first publicly announced; or

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  distribute to all holders
  of our common stock cash, other assets, debt securities or certain rights or
  warrants to  purchase our
  securities, which distribution has a per share value exceeding 10% of the
  common stock price on the
  trading day immediately preceding the date that such distribution was first
  publicly announced,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  we must notify the holders
  of notes at least 20 days prior to the ex-dividend date for such
  distribution. Once we  have
  given such notice, holders may surrender their notes for conversion until the
  earlier of the close of business
  on the business day prior to the ex-dividend date or our announcement that
  such distribution will not take
  place. This provision shall not apply if the holder of a note otherwise
  participates in the distribution on an as-converted basis (solely into shares of our common stock at the then
  applicable Conversion Price) without conversion of such holder’s notes.

  
	
   

  	
   

  	
   

  
	
   

  	
  In addition, (x) if a
  change of control occurs or (y) if we are a party to a consolidation,
  merger, share exchange, sale of all  or substantially all of our properties and assets or other similar
  transaction, in each case pursuant to which the shares of our common stock
  would be converted into cash, securities or other property, which transaction
  does not otherwise constitute a change of control, a holder may surrender its
  notes for conversion at any time from and after the effective date of such
  transaction until and including the date that is 30 days after the effective
  date of such transaction.

  
	
   

  	
   

  
	
   

  	
  If you elect to convert
  your notes in connection with a change in control that occurs prior to
  December 15, 2014 (other  than a change in control relating to the composition of our board of
  directors) and 10% or more of the fair market value of the consideration for
  the common stock in such transaction consists of (i) cash,
  (ii) other property or (iii) securities that are not traded or
  scheduled to be traded immediately following such transaction on a U.S.
  national securities exchange, we will increase the Conversion Rate by a
  number of shares (“the additional shares”) as described below, which will
  have the effect of decreasing the Conversion Price for the notes surrendered
  for conversion. A note will be deemed to have been converted “in connection
  with” such a transaction if such note is tendered for conversion from and
  after the effective date of such transaction until and including the date
  that is 30 days after the effective date of such transaction.

  
	
   

  	
   

  
	
   

  	
  A “change in control” means
  (a) any sale, lease, exchange or other transfer (in one transaction or a
  series of related  transactions)
  of all or substantially all of the properties and assets of AEL, to any
  person or group of related persons, as defined in Section 13(d) of
  the Securities Exchange Act of 1934; (b) the approval by the holders of
  the capital stock of AEL of any plan or proposal for the liquidation or
  dissolution of AEL, whether or not otherwise in compliance with the
  indenture; (c) any person or group, other than AEL, any subsidiary of
  AEL or any employee benefit plan of AEL or any subsidiary, becomes the
  beneficial owner, directly or indirectly, of shares of voting stock
  representing in excess of 50% of the aggregate ordinary voting power
  represented by all of the issued and outstanding voting stock of AEL; or
  (d) the first day on which a majority of the members of the AEL board of
  directors are not continuing directors.

  
	
   

  	
   

  
	
   

  	
  The number of additional
  shares will be determined by reference to the table below, based on the date
  on which the  corporate
  transaction becomes effective (the “effective date”) and the share price (the
  “share price”) paid per share of common stock in the corporate transaction.
  If holders of shares of our common stock receive only cash in the corporate
  transaction, the share price shall be the cash amount paid per share.
  Otherwise, the share price shall be the average of the closing per share sale
  price of our common stock on the five trading days prior to but not including
  the effective date of the corporate transaction.

  
				

 

E-3

 

	
   

  	
  The share prices set forth
  in the first row of the table below (i.e., column headers) will be adjusted
  in the same manner as the Conversion Price. The additional share amounts will
  be adjusted as of any date on which the Conversion Price of the notes is
  adjusted in accordance with the provisions of the indenture and will equal
  the additional share amounts applicable immediately prior to such adjustment,
  multiplied by a fraction, the numerator of which is the Conversion Price
  immediately prior to the adjustment giving rise to the additional share
  amount adjustment and the denominator of which is the Conversion Price as so
  adjusted.

  
	
   

  	
   

  
	
   

  	
  The following table sets
  forth the share price and number of additional shares to be received per
  $1,000 principal amount of notes:

  

 

	
   

  	
   

  	
  Stock
  Price

  	
   

  
	
  Effective Date

  	
   

  	
  $7.75

  	
   

  	
  $9.00

  	
   

  	
  $9.69

  	
   

  	
  $11.00

  	
   

  	
  $12.00

  	
   

  	
  $15.00

  	
   

  	
  $25.00

  	
   

  	
  $35.00

  	
   

  	
  $45.00

  	
   

  	
  $55.00

  	
   

  	
  $65.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 22,
  2009

  	
   

  	
  25.8331

  	
   

  	
  19.6342

  	
   

  	
  17.1311

  	
   

  	
  13.5554

  	
   

  	
  11.5342

  	
   

  	
  7.6208

  	
   

  	
  2.7768

  	
   

  	
  1.2180

  	
   

  	
  0.5386

  	
   

  	
  0.2081

  	
   

  	
  0.0593

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2010

  	
   

  	
  25.8331

  	
   

  	
  19.6897

  	
   

  	
  16.9866

  	
   

  	
  13.1826

  	
   

  	
  11.0842

  	
   

  	
  7.1408

  	
   

  	
  2.5368

  	
   

  	
  1.1094

  	
   

  	
  0.4875

  	
   

  	
  0.1863

  	
   

  	
  0.0501

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2011

  	
   

  	
  25.8331

  	
   

  	
  19.2230

  	
   

  	
  16.2539

  	
   

  	
  12.1826

  	
   

  	
  10.0258

  	
   

  	
  6.1608

  	
   

  	
  2.1088

  	
   

  	
  0.9265

  	
   

  	
  0.4075

  	
   

  	
  0.1554

  	
   

  	
  0.0393

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2012

  	
   

  	
  25.8331

  	
   

  	
  18.0897

  	
   

  	
  14.7678

  	
   

  	
  10.4099

  	
   

  	
  8.2258

  	
   

  	
  4.6675

  	
   

  	
  1.5368

  	
   

  	
  0.6865

  	
   

  	
  0.3053

  	
   

  	
  0.1154

  	
   

  	
  0.0285

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2013

  	
   

  	
  25.8331

  	
   

  	
  15.1453

  	
   

  	
  11.3829

  	
   

  	
  6.9190

  	
   

  	
  4.9842

  	
   

  	
  2.4475

  	
   

  	
  0.8048

  	
   

  	
  0.3723

  	
   

  	
  0.1742

  	
   

  	
  0.0736

  	
   

  	
  0.0177

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 15,
  2014

  	
   

  	
  25.8331

  	
   

  	
  7.9119

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  ·

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

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  If the stock price is
  greater than $65.00 per share (subject to adjustment in the same manner as
  the stock prices set forth in the column headings of the table above), no
  additional shares will be added to the Conversion Rate.

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  If the stock price is less
  than $7.75 per share (subject to adjustment in the same manner as the stock
  prices set forth in the column headings of the table above), no additional
  shares will be added to the Conversion Rate.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding the
  foregoing, in no event will the Conversion Rate exceed 129.0323 shares per
  $1,000 principal amount of notes, subject to adjustments in the same manner
  as the Conversion Price as set forth in the indenture.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Our obligation to satisfy
  the additional shares requirement could be considered a penalty, in which
  case the enforceability thereof would be subject to general principles of
  reasonableness and equitable remedies.

  
	
   

  	
   

  	
   

  
	
  Redemption
  of the Notes at  AEL’s Option:

  	
   

  	
  AEL cannot redeem the notes
  before December 15, 2014. AEL may redeem some or all of the notes at any
  time or from time to time on or after December 15, 2014, at a redemption
  price equal to 100% of the principal amount of the notes, plus accrued and
  unpaid interest (including contingent interest and liquidated damages, if
  any) up to but not including the date of redemption, payable in cash.

  
	
   

  	
   

  	
   

  
	
  Redemption
  of the Notes at the  Option of the Holder:

  	
   

  	
  Holders may require AEL to
  repurchase all or a portion of their notes on December 15, 2014, 2019
  and 2024 for a repurchase price equal to 100% of the principal amount of the
  notes, plus accrued and unpaid interest (including contingent interest and
  liquidated damages, if any) up to but not including the date of repurchase,
  payable in cash.

  
	
   

  	
   

  	
   

  
	
  Repurchase
  of Notes at the  Option of the Holder Upon Certain Change of
  Control Transactions:

  	
   

  	
  If a change in control
  occurs, holders will have the right to require AEL to repurchase all or a
  portion of their notes on or before the close of business on the third
  business day prior to the repurchase date fixed by AEL, which will be not
  less than 30 days nor more than 45 days after the date the change in control
  repurchase notice is given. AEL is required to send a change in control
  repurchase notice not more than 30 days after the occurrence of a change in
  control. The repurchase price will be equal to 100% of the principal amount
  of the notes, plus accrued and unpaid interest (including contingent interest
  and liquidated damages, if any) up to but not including the date of
  repurchase, payable in cash.

  
					

 

E-4

 

	
  Registration
  Rights, Additional  Interest:

  	
   

  	
  AEL does not intend to file
  a shelf registration statement for the resale of the notes or any common
  stock issuable upon conversion of the notes. As a result, holders may only
  resell the notes or common stock issued upon conversion of the notes pursuant
  to an exemption from the registration requirements of the Securities Act of
  1933, and other applicable securities laws.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If at any time during the
  six month period beginning on, and including, the date which is 6 months
  after the last date on  which
  any of the notes are issued, (a) we fail to timely file with the
  Securities and Exchange Commission (“SEC”) pursuant to Section 13 or
  15(d) of the Securities Exchange Act of 1934, as applicable (after
  giving effect to all applicable grace periods thereunder and other than
  reports on Form 8-K), or the notes are not otherwise freely tradable by
  holders other than our affiliates (as a result of restrictions pursuant to
  U.S. securities law or the terms of the indenture or the notes), AEL will pay
  additional interest on the notes. Additional interest will accrue on the
  notes at the rate of 0.25% per annum of the principal amount of the notes
  outstanding for each day during such period for which our failure to file, or
  the failure of the notes to be freely tradable by holders other than our
  affiliates, has occurred and is continuing, which rate will be an increased
  by an additional 0.25% per annum following the 90th day on which such
  additional interest has accrued, provided that the rate at which such
  additional interest accrues may in no event exceed 0.50% per annum; and
  provided further that we will have 14 calendar days, in the aggregate, to
  cure any such late filings before any such additional interest shall accrue.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Further, if, and for so
  long as, the restrictive legend on the notes has not been removed or the
  notes are not otherwise freely tradable by holders other than our affiliates
  as of the 365th day after the last date of the issuance of the notes offered
  hereby, AEL will pay additional interest on the notes at a rate equal to
  0.25% per annum of the principal amount of the notes outstanding until the
  restrictive legend on the notes has been removed and the notes are feely
  tradable, which rate will be increased by an additional 0.25% per annum
  following the 90th day on which such additional interest has accrued,
  provided that the rate at which such additional interest accrues may in no
  event exceed 0.50% per annum.

  
	
   

  	
   

  	
   

  
	
  Form of
  Notes:

  	
   

  	
  The notes are in book-entry
  form and represented by permanent global certificates deposited with, or on
  behalf of, DTC and registered in the name of a nominee of DTC. Beneficial
  interests in any of the securities are shown on, and transfers of those
  beneficial interests are effected only through, records maintained by DTC and
  its participants.

  
	
   

  	
   

  	
   

  
	
  Certain
  U.S. Federal Income Tax  Considerations for U.S. Holders:

  	
   

  	
  We and each holder (and
  beneficial owner) of the notes will agree in the indenture governing the notes
  to treat the notes, for U.S. federal income tax purposes, as “contingent
  payment debt instruments” and to be bound by our application of the U.S.
  Treasury regulations governing contingent payment debt instruments (the “CPDI
  Regulations”). Under the CPDI Regulations, even if we do not pay any
  contingent interest on the notes, a U.S. holder of a note will be required to
  include interest in its gross income as original issue discount for U.S.
  federal income tax purposes regardless of whether such holder uses the cash
  or accrual method of accounting for income tax purposes. The amount of such
  required inclusions will be based on the comparable yield of the notes which
  will be based on the rate, as of the initial issue date, at which we would
  issue a fixed-rate non-convertible debt instrument with no contingent
  payments but with terms and conditions otherwise similar to the notes. We
  believe the comparable yield is 11.50%, although this determination is not
  binding on the Internal Revenue Service and could be challenged. Accordingly,
  each U.S. holder generally will recognize taxable income in excess of cash
  received on the notes while they are outstanding. In addition, a U.S. holder
  generally will be required to recognize gain upon the conversion, sale,
  exchange, repurchase or retirement of a note. Any gain recognized by a holder
  on the conversion, sale, exchange, repurchase, redemption or retirement of a
  note generally will be ordinary interest income; any loss generally will be
  ordinary loss to the extent of the interest previously included in income by
  the holder and, thereafter, capital loss. If, as expected, the yield to
  maturity with respect to the notes equals or exceeds the sum of the
  “applicable federal rate” (4.09% for December 2009) plus five percentage
  points, the notes would be treated as applicable high yield discount
  obligations (“AHYDO”) under the Internal Revenue Code of 1986, as amended.
  Under this treatment, (i) original issue discount (“OID”) in excess of
  the sum of the “applicable federal rate” and six percentage points would be
  treated as a dividend for purposes of the dividends received deduction for
  corporations and (ii) we would not be able to deduct such portion of the
  OID on the notes, and (iii) we would not be able to deduct the balance of
  the OID until actually paid.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  We are required to provide
  to holders, solely for U.S. federal income tax purposes, a schedule of
  projected amounts of payments on the notes. This schedule must produce the
  comparable yield. Our determination of the projected payment schedule for the
  notes includes estimates for payments of contingent interest and an estimate
  for a payment at maturity that takes into account the conversion feature of
  the notes. A holder may obtain the projected payment schedule by submitting a
  written request to us at the following address: American Equity Investment
  Life Holding Company, 6000 Westown Parkway, West Des Moines, Iowa 50266,
  Attention: Investor Relations.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The comparable yield and
  the projected payment schedule are not determined for any purpose other than
  for the determination of a holder’s interest accruals and adjustments thereof
  in respect of the notes for U.S. federal income tax purposes and do not
  constitute a projection or representation regarding the actual amounts
  payable to holders of the notes.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THERE IS
  SOME UNCERTAINTY AS TO THE PROPER TREATMENT OF THE NOTES UNDER THE CPDI
  REGULATIONS AND RULES APPLICABLE TO AHYDOS. MOREOVER, SUCH PROVISIONS ARE
  EXTREMELY COMPLEX. THIS DISCUSSION DOES NOT CONSTITUTE TAX ADVICE AND,
  ACCORDINGLY, PROSPECTIVE HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX
  ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL OR OTHER TAX CONSEQUENCES OF
  ACQUIRING, OWNING AND DISPOSING OF THE NOTES AND COMMON STOCK INTO WHICH THE
  NOTES ARE CONVERTIBLE.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TO ENSURE
  COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, HOLDERS OF NOTES ARE HEREBY
  NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS TERM
  SHEET IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED
  UPON, BY HOLDERS

  

 

E-5

 

	
   

  	
   

  	
  FOR THE
  PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON HOLDERS UNDER THE
  INTERNAL REVENUE
  CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE
  PROMOTION OR
  MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUERS OF THE
  TRANSACTIONS OR
  MATTERS ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE  BASED ON THEIR PARTICULAR
  CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

  
	
   

  	
   

  	
   

  
	
  Trading:

  	
   

  	
  The notes will be eligible
  for trading in The PORTALSM Market.
  There is no public market for the notes and we do not  intend to apply for listing of the notes on
  any securities exchange or for quotation of the notes through any automated quotation system.

  
	
   

  	
   

  	
   

  
	
  Transfer
  Restrictions:

  	
   

  	
  Neither the notes nor AEL
  common shares that may be issuable upon exchange of the notes have been
  registered under the  Securities
  Act of 1933 or the securities law of any jurisdiction and are subject to
  certain restrictions on transfer.

  
	
   

  	
   

  	
   

  
	
  Listing of
  Common Stock:

  	
   

  	
  Our common stock is listed
  on the New York Stock Exchange under the symbol “AEL”

  
	
   

  	
   

  	
   

  
	
  Financial
  Covenants:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Use of
  Proceeds:

  	
   

  	
  General corporate purposes

  
	
   

  	
   

  	
   

  
	
  Initial
  Purchaser:

  	
   

  	
  FBR Capital
  Markets & Co.

  
	
   

  	
   

  	
   

  
	
  Expected
  Trade Date:

  	
   

  	
  December 17, 2009

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
  December 22, 2009

  
	
   

  	
   

  	
   

  
	
  Coupon
  Type:

  	
   

  	
  Fixed-rate, payable
  semi-annually in arrears

  
	
   

  	
   

  	
   

  
	
  Interest
  Calculation:

  	
   

  	
  30/360

  
	
   

  	
   

  	
   

  
	
  Clearance:

  	
   

  	
  DTC

  
	
   

  	
   

  	
   

  
	
  Identifiers:

  	
   

  	
  CUSIP: 025676 AH0

  
	
   

  	
   

  	
  ISIN: US025676AH01

  
	
   

  	
   

  	
   

  
	
  Risks
  Related to Your  Investment in the Notes:

  	
   

  	
  An investment in the notes
  involves certain risks. Prospective holders are urged to consult with
  financial and legal  advisors
  as to the risks involved in an investment in the notes and to determine
  whether the notes are a suitable investment for you. Before investing in the
  notes, prospective holders should carefully consider, among other matters,
  the  information set forth under the heading “Risk Factors” in our Annual
  Report on Form 10-K for the fiscal year  ended December 31,
  2008, as updated in our Quarterly Report on Form 10-Q for the quarter
  ended September 30,  2009, which are incorporated herein by reference, as the
  same may be updated from time to time by our filings with  the SEC under the
  Securities Exchange Act of 1934, as amended (the “Exchange Act”). You should
  also consider  the information set forth under the heading “Risk Factors Relating to
  an Investment in the Notes and Our Common  Stock” in Exhibit A
  attached hereto, which is incorporated by reference herein. You should also refer to the other information incorporated by reference herein
  (see “Additional Information” below), including our financial statements and the related notes thereto. Additional
  risks and uncertainties that are not yet identified may also materially harm our business, operating results and
  financial condition and could result in a complete loss of your investment.

  
	
   

  	
   

  	
   

  
	
  Additional
  Information:

  	
   

  	
  This term sheet is meant to
  be only a summary of certain provisions of the indenture and is subject to
  and qualified in its  entirety
  by reference to all of the provisions of the indenture, including definitions
  of certain terms used in the indenture, and the notes. We urge that you
  carefully read the indenture because the indenture, and not this term sheet,
  governs  your rights as note holders. The terms of the indenture, a
  copy of which will be provided upon request, are  incorporated herein by
  reference. A description of
  the general terms and provisions of the notes and our common shares may be found under the headings “Description
  of the Notes” and “Description of Capital Stock,” respectively, in our prospectus dated April 22, 2005,
  as filed with the SEC on April 22, 2005. The description of the notes in
  this term sheet and the
  provisions of the indenture supplement, and to the extent inconsistent
  therewith replace, the descriptions contained in our prospectus dated April 22, 2005.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In addition, we file
  annual, quarterly and current reports, proxy statements and other information
  with the SEC. We  incorporate
  by reference herein our Annual Report on Form 10-K for the fiscal year
  ended December 31, 2008, our proxy statement pursuant to Section 14(a) of the Exchange Act
  filed April 30, 2009, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009,
  June 30, 2009 and September 30, 2009, and any Current Reports on
  Form 8-K filed with the
  SEC since December 31, 2008. Before
  investing in the notes, prospective holders should read the documents we
  have filed with
  the SEC for more information about us. Our SEC filings are available free of charge through our Internet website at
  http://www.american-equity.com or through the SEC’s website at
  http://www.sec.gov.

  

 

E-6

 

EXHIBIT
A

 

Risks
Factors Relating to an Investment in the Notes and Our Common Stock

 

Your right to
receive payments on these notes is effectively subordinated to the rights of
our existing and future unsubordinated, secured creditors.

 

The notes are unsecured
and therefore are effectively subordinated to all of our existing and future
unsubordinated, secured indebtedness to the extent of the value of the assets
securing such indebtedness. As a result, in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding of our company,
our assets will be available to satisfy obligations of our unsubordinated,
secured debt before any payment may be made on the notes. To the extent that
such assets cannot satisfy in full our unsubordinated, secured debt, the
holders of such debt would have a claim for any shortfall that would rank
equally in right of payment (or effectively senior if the debt were issued by a
subsidiary) with the notes. In such an event, we may not have sufficient assets
remaining to pay amounts on any or all of the notes.

 

The notes are
junior to the indebtedness of our subsidiaries.

 

The notes were issued by
American Equity Investment Life Holding Company and are structurally
subordinated to the existing and future claims of our subsidiaries’ creditors.
Holders of the notes are not creditors of our subsidiaries. Any claims of
holders of the notes to the assets of our subsidiaries derive from our own
equity interests in those subsidiaries. Claims of our subsidiaries’ creditors
will generally have priority as to the assets of our subsidiaries over our own
equity interest claims and will therefore have priority over the holders of the
notes. Consequently, the notes are effectively subordinate to all liabilities,
including policyholder liabilities, trade payables, lease obligations and
liquidation preference on any preferred stock, whether or not secured, of any
of our subsidiaries and any subsidiaries that we may in future acquire or
establish. Our subsidiaries’ creditors may also include general creditors and
taxing authorities.

 

We continue to have
the ability to incur additional debt; if we incur substantial additional debt,
these higher levels of debt may affect our ability to pay principal and
interest on the notes.

 

The indenture governing
the notes does not restrict our ability to incur additional indebtedness or
require us to maintain financial ratios or specified levels of net worth or
liquidity. Although our line of credit facility contains restrictions on the
incurrence of additional indebtedness and requires us to comply with specific
financial ratios and tests, these provisions are subject to a number of
qualifications and exceptions, and the indebtedness incurred in compliance with
these provisions could be substantial. If we incur substantial additional indebtedness
in the future, these higher levels of indebtedness may affect our ability to
pay principal and interest on the notes and our creditworthiness generally.

 

Our ability to meet
our payment obligations is dependent upon distributions from our subsidiaries,
but our subsidiaries’ ability to make distributions is limited by law and
several contractual agreements.

 

We are a holding company
and our principal assets are the shares of the capital stock and surplus notes
of our life insurance subsidiaries. As a holding company without independent
means of generating operating revenues, we depend on investment advisory fees,
dividends, interest on surplus notes and other payments from our life insurance
subsidiaries to fund our obligations and meet our cash needs, including to pay
dividends on our common stock.

 

We have a $150 million
revolving line of credit agreement with eight banks, which has been fully drawn
as of September 30, 2009. The transfer of funds by American Equity
Investment Life Insurance Company (“American Equity Life”) is restricted by
certain covenants in our line of credit facility which, among other things,
requires American Equity Life to maintain a minimum risk-based capital ratio of
200%.

 

The payment of dividends
or distributions, including surplus note payments, by our life insurance
subsidiaries is subject to regulation by each subsidiary’s state of domicile’s
insurance department. Currently, American Equity Life may pay dividends or make
other distributions without the prior approval of its state of domicile’s
insurance department, unless such payments, together with all other such
payments within the preceding twelve months, exceed the greater of (1) American
Equity Life’s statutory net gain from operations for the preceding calendar
year, or (2) 10% of American Equity Life’s statutory surplus at the
preceding December 31. In addition, dividends and surplus note payments
may be made only out of statutory earned surplus, and all surplus note payments
are subject to prior approval by regulatory authorities in each life insurance
subsidiary’s state of domicile.

 

E-7

 

The maximum distribution
permitted by law or contract is not necessarily indicative of an insurer’s
actual ability to pay such distributions, which may be constrained by business
and regulatory considerations, such as the impact of such distributions on
surplus, which could affect the insurer’s ratings or competitive position, the
amount of premiums that can be written and the ability to pay future dividends
or make other distributions. Further, state insurance laws and regulations
require that the statutory surplus of our life insurance subsidiaries following
any dividend or distribution must be reasonable in relation to their outstanding
liabilities and adequate for their financial needs.

 

Although we believe our
current sources of funds provide adequate cash flow to us to meet our current
and reasonably foreseeable future obligations, there can be no assurance that
we will continue to have access to these sources in the future.

 

Upon conversion of the notes, you may receive less proceeds
than expected because the value of our common stock may decline between the day
that you exercise your conversion right and the day the value of your shares is
determined.

 

The conversion value that
you will receive upon conversion of your notes is in part determined by the
average of the closing prices per share of our common stock on the New York
Stock Exchange for the ten consecutive trading days beginning on the second
trading day immediately following the day the notes are tendered for
conversion. Accordingly, if the price of our common stock decreases after you
tender your notes for conversion, the conversion value you receive may be
adversely affected.

 

We may be unable to repurchase your notes as required under
the indenture upon a change in control or on the specified dates at the option
of the holder or pay you cash upon conversion of your notes.

 

Upon a change in control,
as defined in the indenture, and on December 15, 2014, 2019 and 2024, you
will have the right to require us to repurchase your notes for cash. In
addition, upon conversion of the notes, you will have the right to receive a
cash payment. If we do not have sufficient funds to pay the repurchase price
for all of the notes you tender upon a change in control, the cash due upon
repurchases of the notes on December 15, 2014, 2019 and 2024 or the cash
due upon conversion, an event of default under the indenture governing the
notes would occur as a result of such failure. In addition, cash payments in
respect of notes that you tender for repurchase or that you convert may be
subject to limits and might be prohibited, or create an event of default, under
our line of credit facility or other agreements relating to borrowings that we
may enter into from time to time. Our failure to make cash payments in respect
of the notes could result in an event of default under such agreements. Such
other borrowings may be secured indebtedness and may prevent us from making
cash payments in respect of the notes under certain circumstances. Our
inability to pay for your notes that are tendered for repurchase or conversion
could result in your receiving substantially less than the principal amount of
the notes.

 

Upon an occurrence of a
change of control, we may be required to offer to repay the notes and may be
required to repay any other debt then outstanding. If a change in control were
to occur, we may not have the financial resources available to repurchase all
the notes for cash.

 

U.S. holders will
recognize income for U.S. federal income tax purposes in excess of current cash
payments on the notes.

 

We and each holder (and
beneficial owner) of the notes will agree in the indenture to treat the notes,
for U.S. federal income tax purposes, as “contingent payment debt instruments.”
As a result of such treatment, U.S. holders of the notes will be required to
include interest in gross income as original issue discount in excess of the
stated interest on the notes. In addition, any gain recognized by a U.S. holder
on the conversion, sale, exchange, repurchase, redemption or retirement of a
note generally will be ordinary interest income; any loss generally will be
ordinary loss to the extent of the interest previously included in income by
the holder and, thereafter, capital loss. There is some uncertainty as to the
proper application of the Treasury regulations governing contingent payment
debt instruments and, if our treatment is successfully challenged by the
Internal Revenue Service, with respect to the series of notes you hold, it
might be determined that, among other things, you should have accrued interest
income at a lower or higher rate, or should have recognized capital gain or
loss, rather than ordinary income or loss, upon the conversion or taxable
disposition of such notes.

 

E-8

 

Our reported
earnings per share may be more volatile because of the conversion provision of
the notes.

 

We are required to include
the dilutive effect of the notes in our diluted earnings per share. Holders of
the notes are entitled to convert the notes prior to their maturity date into
cash and shares of our common stock. Until our common stock price exceeds the
Conversion Price, inclusion of the shares of our common stock underlying the
notes in the calculation of diluted earnings per share will not be dilutive.
Should our common stock price exceed the Conversion Price, diluted earnings per
share would be expected to decrease as a result of including the underlying
shares in the diluted earnings per share calculation. Volatility in our common
stock price could cause this contingency to be met in one quarter and not in a
subsequent quarter, increasing the volatility of diluted earnings per share.

 

There is no public
market for the notes, so if an active trading market does not develop for the
notes you may not be able to resell them.

 

There is no public market
for the notes, we do not intend to apply for listing of the notes on any
securities exchange or for quotation of the notes on any automated dealer
quotation system and we cannot assure you that an active trading market will
ever develop for the notes. We intend to make the notes eligible for trading on
The PORTALSM Market.

 

There can be no assurance
that any market for the notes will develop or, if one does develop, that it
will be maintained. The lack of a trading market could adversely affect your
ability to sell the notes and the price at which you may be able to sell the notes.
The liquidity of the trading market, if any, and future trading prices of the
notes will depend on many factors, including, among other things, the market
price of our common stock, the shares of common stock issuable upon conversion
of the notes, prevailing interest rates, our operating results, financial
performance and prospects, the market for similar securities and the overall
securities market, and may be adversely affected by unfavorable changes in
these factors. Historically, the market for convertible debt has been subject
to disruptions that have caused volatility in prices. It is possible that the
market for the notes will be subject to disruptions which may have a negative
effect on the holders of the notes, regardless of our operating results,
financial performance or prospects.

 

We expect that the
trading value of the notes will be significantly affected by the price of our
common stock and other factors.

 

The market price of the
notes is expected to be significantly affected by the market price of our
common stock. This may result in greater volatility in the trading value of the
notes than would be expected for nonconvertible debt securities. In addition,
the notes have a number of features, including conditions to conversion, which,
if not met, could result in a holder receiving less than the value of our
common stock into which a note would otherwise be convertible. These features
could adversely affect the value and the trading prices of the notes.

 

The price of our
common stock, and therefore of the notes, may fluctuate significantly, and this
may make it difficult for you to resell the notes or the shares of our common
stock issuable upon conversion of the notes when you want or at prices you find
attractive.

 

The price of our common
stock on the New York Stock Exchange constantly changes. Volatility in the
market price of our common stock may prevent you from being able to sell your
shares when you want or at prices you find attractive.

 

The market price of our
common stock may fluctuate in response to numerous factors, many of which are
beyond our control. These factors include the following:

 

·      actual or anticipated
fluctuations in our operating results;

·      changes in expectations as
to our future financial performance, including financial estimates by
securities analysts and investors;

·      changes in laws and
regulations which may affect the sale of our products;

·      the operating and stock
performance of our competitors;

·      announcements by us or our
competitors of new products or services or significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;

·      changes in interest rates;

·      general domestic or
international economic, market and political conditions and regulatory
initiatives;

·      additions or departures of
key personnel; and

·      future sales of our common
stock, including sales of our common stock in short sales transactions.

 

E-9

 

In addition, the stock
markets from time to time experience extreme price and volume fluctuations that
may be unrelated or disproportionate to the operating performance of companies.
These broad fluctuations may adversely affect the trading price of our common
stock, regardless of our actual operating performance.

 

Future sales of our
common stock or equity-related securities in the public market, including sales
of our common stock in short sales transactions by purchasers of the notes,
could adversely affect the trading price of our common stock and the value of
the notes and our ability to raise funds in new stock offerings.

 

Sales of significant
amounts of our common stock or equity-related securities in the public market,
or the perception that such sales will occur, could adversely affect prevailing
trading prices of our common stock and the value of the notes and could impair
our ability to raise capital through future offerings of equity or
equity-related securities. No prediction can be made as to the effect, if any,
that future sales of shares of common stock or the availability of shares of
common stock for future sale, including sales of our common stock in short
sales transactions by purchasers of the notes, will have on the trading price
of our common stock or the value of the notes.

 

Anti-takeover
provisions affecting us could make it difficult for a third party to acquire
our company.

 

Our articles of
incorporation, as amended, our third amended and restated bylaws and Iowa law
contain anti-takeover provisions that could have the effect of delaying or
preventing changes in control of our company or our management. These
provisions could also discourage proxy contests and make it more difficult for
our stockholders to elect directors and take other corporate actions without
the concurrence of our management or board of directors. The provisions in our
charter documents include the following:

 

·      our amended articles of
incorporation provide for a classified board of directors pursuant to which our
directors are divided into three classes, with three-year staggered terms;

·      our amended articles of
incorporation provide our board of directors the ability to issue shares of
preferred stock and to determine the price and other terms, including
preferences and voting rights, of those shares without shareholder approval;

·      our bylaws provide that
shareholder action may be taken only at a special or regular meeting or by
written consent signed by the holders of outstanding shares having not less
than 90% of the votes entitled to be cast at a meeting at which all shares
entitled to vote on the action were present and voted;

·      our bylaws limit our
shareholders’ ability to make proposals at shareholder meetings; and

·      our bylaws establish advance
notice procedures for nominating candidates to our board of directors.

 

We are subject to certain
Iowa laws that could have similar effects. One of these laws, Section 490.1110
of the Iowa Business Corporation Act, prohibits us from engaging in a business
combination with any interested shareholder for a period of three years from
the date the person became an interested shareholder unless certain conditions
are met.

 

The foregoing provisions
may discourage transactions that otherwise could provide for the payment of a
premium over prevailing market prices of our common stock and, possibly, the
notes, and also could limit the price that investors are willing to pay in the
future for shares of our common stock and the notes.

 

Before conversion,
holders of the notes will not be entitled to any shareholder rights, but will
be subject to all changes affecting our shares.

 

If you hold notes, you
will not be entitled to any rights with respect to shares of our common stock,
including voting rights and rights to receive dividends or distributions.
However, the common stock you receive upon conversion of your notes will be
subject to all changes affecting our common stock. Except for limited cases
under the adjustments to the Conversion Price, you will be entitled only to
rights that we may grant with respect to shares of our common stock if and when
we deliver shares to you upon your election to convert your notes into shares. For
example, if we seek approval from shareholders for a potential merger, or if an
amendment is proposed to our articles of incorporation or bylaws that requires
shareholder approval, holders of notes will not be entitled to vote on the
merger or amendment.

 

E-10

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