Document:

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                                                                     Exhibit 4.B

                 NATIONWIDE LIFE AND ANNUITY COMPANY OF AMERICA

INSURED:              JOHN DOE
POLICY NUMBER:        9,000,000              POLICY ISSUE DATE:  09/01/2002
FACE AMOUNT:          $50,000.00             ISSUE AGE:          35
DEATH BENEFIT:        OPTION A               POLICY DATE:        09/01/2002

Nationwide Life and Annuity Company of America agrees:

To pay the Beneficiary of this Policy the Insurance Proceeds upon receiving due
proof of the Insured's death;

To provide you (the Policy Owner) with the other rights and benefits of this
Policy. These agreements are subject to the provisions of this Policy.

The amount of the Death Benefit or the duration of the insurance coverage, or
both, may be variable or fixed, as described in the Death Benefit Provisions.

The portion of the Policy Account Value that is in a Subaccount may increase or
decrease, depending upon the unit value of such Subaccount, which in turn
depends upon the investment experience of the corresponding portfolio of a
designated investment company. There is no guaranteed minimum for the portion of
your Policy Account Value in the Subaccounts.

The portion of the Policy Account Value that is in the Guaranteed Account and
the Loan Account will accumulate, after deductions, at rates of interest we
determine. Such rates will not be less than 4% a year.

Please read this Policy with care. A guide to its provisions is on the last
page. A description is on page 2. Any additional benefit riders and a copy of
the Application are included in this Policy before the last page.

       This is a legal contract between the Owner and Nationwide Life and
                          Annuity Company of America.

RIGHT TO EXAMINE POLICY. You may examine this Policy and if for any reason you
are not satisfied with it, you may cancel it by returning the Policy to us with
a written request no later than 10 days after you receive it. All you have to do
is take this Policy or mail it to our Service Center at 300 Continental Drive,
Newark, DE 19713-4399; P.O. Box 15750, Wilmington, DE 19850-5750; or to one of
our offices or to the representative who sold it to you. If you do this, we will
refund an amount equal to: (a) the difference between the premiums you paid
(including any fees and charges) and the sum of the amounts allocated to the
Guaranteed Account and the Subaccounts; plus (b) the value of the amounts
allocated to the Guaranteed Account including any interest accumulated to the
date you return the Policy to us; plus (c) the value of the amounts allocated to
the Subaccounts including the net investment experience of such Subaccounts to
the date you return the Policy to us; plus (d) any fees or charges imposed on
the amounts allocated to the Guaranteed Account or the Subaccounts.

Signed for the Company by:

/s/ J. Tucker                                               /s/  Robert W. Kloss
Designated Officer                                               President

           Flexible Premium Adjustable Variable Life Insurance Policy
         Insurance Proceeds payable upon death before Final Policy Date
  Policy Account Value payable on Final Policy Date / Adjustable Death Benefit
   Values provided by this Policy are based on declared interest rates of the
                          Guaranteed and Loan Accounts
              and on the investment experience of the Subaccounts
                  Non-participating /  Employee Benefit Series

  For Inquiries, Information and Resolution of Complaints, Call: 1-800-688-5177

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                               POLICY DESCRIPTION

This is a flexible premium adjustable variable life insurance policy.

Net premiums are allocated at your direction to one or more of the Subaccounts
and/or the Guaranteed Account.

The Subaccounts invest in securities and other investments whose value is
subject to market fluctuation and investment risk. There is no guarantee of
principal or investment return.

The Guaranteed Account earns interest at rates we declare in advance. The rates
are guaranteed to equal or exceed 4%. The principal, after deductions, is also
guaranteed.

The duration of life insurance coverage depends on the Net Cash Surrender Value
except that during the first five Policy Years, your Policy will remain in force
if the sum of the premiums paid less loans and partial withdrawals equals or
exceeds the Minimum Guarantee Premium.

If Death Benefit Option A has been selected, the Death Benefit is the Face
Amount of this Policy and the amount of the Death Benefit is fixed, except where
it is a percentage of the Policy Account Value. If Death Benefit Option B has
been selected, the Death Benefit is the Face Amount of this Policy plus the
Policy Account Value. The amount of the Death Benefit under Option B is
variable. Under either Option, the Death Benefit will not be less than a
percentage of the Policy Account Value.

To compute the Insurance Proceeds payable upon the Insured's death, we start
with the Death Benefit and adjust this amount if there is a loan.

We make monthly deductions from the Policy Account Value to cover the cost of
benefits provided under this Policy, including the cost of any benefits provided
by rider. We will allocate such deductions to the Subaccounts and the Guaranteed
Account in accordance with your instructions.

If you surrender this Policy for its Net Cash Surrender Value or reduce the Face
Amount of insurance during the first 15 Policy Years or within 15 years after
the effective date of an increase in the Face Amount, we will deduct any
applicable Surrender Charges from the Policy Account Value.

We will pay the proceeds under this Policy in one sum unless a Payment Option is
in force. If you elect a Payment Option it will apply to payment of the Net Cash
Surrender Value if you surrender this Policy or to the Insurance Proceeds paid
to the Beneficiary when the Insured dies. If a Payment Option is not in force
when the Insured dies, the Beneficiary will be able to elect a Payment Option
for the Insurance Proceeds.

If this Policy lapses, coverage will end. If such occurs, you may be able to
reinstate this Policy within three full years with full benefits.

As Policy Owner, you have these rights in this Policy, among others, subject to
the terms, conditions, and limits in this Policy:

      -     You may make premium payments at any time and of any amount.
      -     You may change the allocation of premiums and deductions among your
            investment options.
      -     You may increase or decrease the Face Amount of insurance.
      -     You may change the Death Benefit Option.
      -     You may transfer amounts among your investment options.
      -     You may borrow on this Policy.
      -     You may make a partial withdrawal of the Net Cash Surrender Value.
      -     You may surrender this Policy for its Net Cash Surrender Value.
      -     You may change the Beneficiary of the Insurance Proceeds of this
            Policy.
      -     You may assign this Policy and change the Owner.

This is only a summary of what the Policy provides. You should read the entire
Policy carefully as its terms govern your rights and our obligations.

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                                  DEFINITIONS

ATTAINED AGE. The Issue Age of the Insured plus the number of full years since
the Policy Date.

CASH SURRENDER VALUE. The Policy Account Value minus any applicable Surrender
Charges.

INSURANCE PROCEEDS. The net amount to be paid to the Beneficiary when the
Insured dies. (See Amount of Insurance Proceeds provision.)

INSURED. The person named as the Insured on the first page. He or she need not
be the Owner.

LOAN ACCOUNT. The account to which we transfer the amount of any policy loan
from the Subaccounts and Guaranteed Account.

MINIMUM GUARANTEE PREMIUM. The Minimum Annual Premium multiplied by the number
of months since the Policy Date, including the current month, divided by 12.

NET CASH SURRENDER VALUE. The Policy Account Value minus any applicable
Surrender Charges, minus any outstanding policy loans and accrued interest.

NET PREMIUM. The remainder of a premium after deduction of the Premium Expense
Charge.

POLICY ACCOUNT VALUE. The sum of this Policy's values in the Subaccounts, the
Guaranteed Account and the Loan Account.

POLICY ANNIVERSARY. The same day and month as the Policy Date in each later
year.

POLICY PROCESSING DAY. The day in each calendar month which is the same day of
the month as the Policy Date. The first Policy Processing Day is the Policy
Date.

POLICY YEAR. A year that starts on the Policy Date on a Policy Anniversary.

WE, OUR, US AND COMPANY. Nationwide Life and Annuity Company of America, a
Delaware Corporation.

YOU AND YOUR. The Owner of this Policy.

                        GENERAL PROVISIONS

THE CONTRACT. Policy is issued in consideration of payment of the Minimum
Initial Premium shown in the Policy Schedule. This Policy and the initial
Application, a copy of which is attached, and all subsequent Applications to
change the Policy and all additional Policy Schedule pages added to this Policy,
form the whole contract. We assume that all statements in the applications were
made to the best of the knowledge and belief of the person(s) who made them; in
the absence of fraud, they are assumed to be representations and not warranties.
We relied on those statements when we issued or changed this Policy. We will not
use any statement, unless made in the Applications, to void this Policy or to
deny a claim.

POLICY MODIFICATIONS. Only the President or a Vice President of the Company may
agree to modify this Policy, and then only in writing.

SUICIDE EXCLUSION. If the Insured, whether sane or insane, dies by suicide
within two years from the Policy Issue Date, our payment will be limited to the
sum of premiums paid, minus any loan and loan interest and any partial
withdrawals of Net Cash Surrender Value. If the Insured, whether sane or insane,
dies by suicide within two years of the Effective Date of a policy change which
increases the Death Benefit, our payment with respect to such increase will be
limited to the sum of the monthly deductions for the cost of insurance
attributable to such increase and the expense charge for the increase in Face
Amount deducted from the Policy Account Value.

MISSTATEMENT OF AGE. If the Insured's stated age is not correct, the Death
Benefit and any benefits provided by riders to this Policy shall be those which
would be purchased by the most recent deduction for the cost of insurance and
the cost of any benefits provided by such riders, at the correct age. There is
no adjustment to the Policy Account Value at that time.

                                     Page 6
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INCONTESTABILITY. We have the right to contest the validity of this Policy based
on material misstatements made in the initial Application for this Policy. We
also have a right to contest the validity of any policy change based on material
misstatements made in any Application for that change. However, we will not
contest this Policy after it has been in force during the Insured's lifetime for
two years from the Policy Issue Date, except for nonpayment of the Minimum
Initial Premium. We will not contest any policy change that requires evidence of
insurability, or any reinstatement of this Policy, after such change or
reinstatement has been in effect for two years during the Insured's lifetime.
See any supplementary benefit riders for modifications that apply to them.

PERIODIC REPORT. At least once a year we will send you a report for this Policy.
It will show: (1) the current Death Benefit; (2) the current Policy Account
Value; (3) the Guaranteed Account Value; (4) the Loan Account Value; (5) the
value in each Subaccount (6) premiums paid since the last report; (7) charges
deducted since the last report; (8) any partial withdrawals of Net Cash
Surrender Value since the last report; (9) any policy loans and accrued
interest; (10) the current Net Cash Surrender Value; (11) any other information
that may be required when and where this Policy is delivered.

You may ask for a similar report at some other time. We have the right to make a
reasonable charge for the reports that you ask for, and to limit the scope and
frequency of such reports.

PAYMENTS. We will usually pay any amounts payable as a result of surrender,
partial withdrawal or policy loan within 7 days after we receive your written
request at our Service Center in a form satisfactory to us. We will usually pay
the Insurance Proceeds within 7 days after we receive proof of the Insured's
death at our Service Center and all other requirements deemed necessary are met.

However, payment may be postponed if we are not able to sell securities or
determine the value of the assets of the Subaccounts because:

1.    the New York Stock Exchange is closed;
2.    the Securities and Exchange Commission (SEC) requires trading to be
      restricted or declares an emergency; or
3.    the SEC by order permits us to defer payments for the protection of Policy
      Owners.

As to amounts allocated to the Guaranteed Account, we may defer payment of any
withdrawal or surrender of Net Cash Surrender Value and the making of a loan for
up to six months after we receive your written request at our Service Center.

We will allow interest, at a rate of 3% a year, on any payment we defer for 30
days or more under this provision.

POLICY CHANGES - TAX CONSIDERATIONS. In order to receive the tax treatment
accorded to life insurance under federal tax laws, this Policy must qualify and
continue to qualify as life insurance under the Internal Revenue Code. We
reserve the right to decline to accept a premium payment, to decline to change
the Death Benefit Option, or to decline a partial withdrawal which would cause
this Policy to fail to qualify as life insurance under the applicable tax law,
as interpreted by us. We also reserve the right to make changes in this Policy
or to riders or to make distributions from this Policy to the extent we deem
such to be necessary for this Policy to continue to qualify as life insurance.
Such changes will apply uniformly to all affected policies. You will receive
advance written notification of such changes.

CHANGES IN POLICY COST FACTORS. Changes in credited interest rates, cost of
insurance charges, Percent of Premium Charge, mortality and expense risk
charges, and Monthly Administrative Charges will be by class and will be based
upon changes in future expectations for such factors as:

      (a) investment earnings;
      (b) mortality;
      (c) persistency;
      (d) expenses; and
      (e) taxes.

Any change will be determined in accordance with the procedures and standards on
file, if required, with the insurance supervisory official of the state in which
this Policy is delivered.

POLICY ILLUSTRATIONS. Upon request, we will provide an illustration of the
future benefits under this Policy. We reserve the right to charge a reasonable
fee for this service if you request more than one policy illustration during a
Policy Year.

                                     Page 7
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                    POLICY OWNER AND BENEFICIARY PROVISIONS

OWNERSHIP. Unless otherwise stated in the Application or later changed, the
Owner of this Policy is the Insured. While the Insured is living, the Owner
alone is entitled to exercise any right and privilege granted by this Policy or
by us. If the Insured is living on the Final Policy Date shown in the Policy
Schedule and while this Policy is in force, we will pay you, the Owner, the
Policy Account Value on that date, less any outstanding policy loan and accrued
loan interest. This Policy will then end. If you are not the Insured and you die
while the Insured is still living, all rights will vest in your estate, unless
otherwise provided.

BENEFICIARY. The Beneficiary is entitled to the Insurance Proceeds under this
Policy. The Beneficiary is as stated in the Application, unless later changed.
When a Beneficiary is designated, any relationship shown is to the Insured,
unless otherwise stated. If two or more persons are named, those surviving the
Insured will share the Insurance Proceeds equally, unless otherwise stated. If
none of the persons named survives the Insured, we will pay the Insurance
Proceeds in one sum to the Insured's estate.

PROTECTION OF PROCEEDS. No Beneficiary may commute, encumber or alienate any
payments under this Policy before they are due. No payments shall be subject to
the debts, contract or engagements of any Beneficiary nor to any judicial
process to levy upon or attach the same for payment of such debts.

CHANGES. While the Insured is living, you may change the Owner or Beneficiary by
written notice in a form satisfactory to us. The change will take effect on the
date you sign the notice, except that it will not apply to any payment or other
action we take before we receive the notice at our Service Center. If you change
the Beneficiary, any previous arrangement you made under the Payment Options
provision is cancelled.

ASSIGNMENT. You may assign this Policy but we will not be bound by any
assignment unless it is in writing and we have received it at our Service
Center. Your rights and those of any other person referred to in this Policy
will be subject to the assignment. We assume no responsibility for the validity
of any assignments.

CREDITOR CLAIMS. To the extent permitted by applicable laws, no right or benefit
under this Policy shall be subject to claims of creditors, except as may be
provided by an Assignment.

                            DEATH BENEFIT PROVISIONS

If the Insured dies while this Policy is in force, we will pay the Insurance
Proceeds to the Beneficiary when we receive: (1) proof that the Insured died
before the Final Policy Date; and (2) all other requirements deemed necessary to
make payment.

DEATH BENEFIT. The Death Benefit will be determined under either Option A or
Option B below, whichever you have chosen and is in effect at such time.

Under either Option, the duration of insurance coverage depends upon your Net
Cash Surrender Value.

OPTION A. Under Option A, the Death Benefit is the greater of the Face Amount of
insurance, or a percentage of the Policy Account Value on the date of death (see
Table of Percentages, below). Under this Option, the amount of the Death Benefit
is fixed, unless it is determined by such a percentage.

OPTION B. Under Option B, the Death Benefit is the greater of the Face Amount of
insurance plus the Policy Account Value on the date of death, or a percentage of
the Policy Account Value on the date of death (see Table of Percentages, below).
Under this Option, the amount of the Death Benefit is variable.

TABLE OF PERCENTAGES. The following table is used in determining the Death
Benefit under Option A and Option B above. For Attained Ages not shown, the
applicable percentages shall decrease by a ratable portion for each full year.

<TABLE>
<CAPTION>
      ATTAINED AGE                   PERCENTAGE
      ------------                   ----------
<S>                                  <C>
      0 through 40                     250%
</TABLE>

                                     Page 8
<PAGE>

<TABLE>
<CAPTION>
      ATTAINED AGE                   PERCENTAGE
      ------------                   ----------
<S>                                  <C>
             45                         215%
             50                         185%
             55                         150%
             60                         130%
             65                         120%
             70                         115%
      75 through 90                     105%
      95 through 99                     100%
</TABLE>

AMOUNT OF INSURANCE PROCEEDS. The Insurance Proceeds will be determined as of
the date of the Insured's death and will be equal to:

1.    the Death Benefit described above;
2.    plus any additional benefits due under a supplementary benefit rider
      attached to this Policy;
3.    less any loan and accrued loan interest on this Policy;
4.    less any overdue deductions if the death of the Insured occurs during the
      Grace Period.

PAYMENT OF INSURANCE PROCEEDS. We will pay the Insurance Proceeds to the
Beneficiary in a lump sum, unless a Payment Option has been selected. If the
proceeds are payable in a lump sum, we will add interest to the amount of such
proceeds for the period from the date of death to the date of payment. The
amount of interest will be computed at the yearly rate of 3% or any higher rate
declared by us or required by law.

CHANGING THE FACE AMOUNT OF INSURANCE OR DEATH BENEFIT OPTION. During the first
Policy Year, the Death Benefit Option and the Face Amount of insurance will be
as selected at the time of application, as shown in the Policy Schedule.

After the first Policy Year while this Policy is in force, you may change the
Death Benefit Option or the Face Amount, except in the 12-month period following
a Face Amount increase. Any change will be effective as of the Policy Processing
Day that coincides with or next follows the date we approve your written
request, provided we have received the premium required for the change. You may
request a change by completing an application for change. A copy of such
application will be attached to new Policy Schedule pages which will be issued
when the change is approved. The application for change and new Policy Schedule
pages will become a part of this Policy. We may require you to return this
Policy to make a change.

FACE AMOUNT INCREASE. You may request a Face Amount increase subject to the
following:
     (a) you must provide evidence satisfactory to us of the Insured's
         insurability;
     (b) the Insured's Attained Age must be 75 years or less;
     (c) you may not have increased the Face Amount in the prior 12-month
         period;
     (d) the Face Amount increase must be for at least $25,000.

We will deduct the expense charge for an increase in Face Amount shown in the
Policy Schedule from the Policy Account Value as of the effective date of the
increase. The deduction will be made in accordance with the allocation schedule
for monthly deductions in effect at such time.

You may cancel an increase in Face Amount and receive a refund by giving us
written notice no later than 10 days after you receive the new Policy Schedule
pages reflecting the increase. The amount of the refund will be equal to the
monthly deductions for such increase plus the expense charge for the increase in
Face Amount shown in the Policy Schedule. If you cancel the increase but do not
request a refund, we will add the refund to the Policy Account Value. This
amount will be allocated in the same proportion as it was deducted. Any premium
payment made after the increase will not be refunded.

CONVERSION PRIVILEGE FOR INCREASE. You have the right once during the first two
years following the Effective Date of an increase in Face Amount to convert the
increase in Face Amount and receive a life insurance policy that provides for
fixed benefits. No evidence of insurability will be required. The new policy
will have the same Face Amount and Issue Date as the amount and Effective Date
of the increase. Premiums for the new policy will be based on our rates in
effect for the same Attained Age, and Premium Class of the Insured as of the
Effective Date of the increase. A refund will be made equal to the monthly
deductions for such increase plus the expense charge for the increase shown in
the Policy Schedule.

FACE AMOUNT DECREASE. You may request a Face Amount decrease provided:

     (a)  the Face Amount of the Policy after the decrease is not less than the
          minimum amount shown in the Policy Schedule;

     (b)  the amount of the decrease is for at least $25,000;

     (c)  you may not have increased the Face Amount in the prior 12-month
          period;

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(d)   if the decrease is made during the first 15 Policy Years, or within 15
      years following the effective date of a Face Amount increase, we will
      deduct a pro rata share of any applicable Surrender Charges from the
      Policy Account Value.

(e)   a decrease in the Face Amount will reduce this Policy's Face Amount in the
      following order:

      1.    the Face Amount attributable to the most recent Face Amount
            increase;
      2.    the Face Amount attributable to the next most recent Face Amount
            increases, successively;
      3.    the Initial Face Amount.

CHANGE FROM DEATH BENEFIT OPTION A TO OPTION B. If you request a change from
Option A to Option B, we will decrease the Face Amount by the Policy Account
Value as of the date of change. We reserve the right to decline to make such a
change if it would reduce the Face Amount below the minimum amount for which we
would then issue this Policy under our rules.

CHANGE FROM DEATH BENEFIT OPTION B TO OPTION A. If you request a change from
Option B to Option A, we will increase the Face Amount by the Policy Account
Value on the date of change.

The decreases and increases in Face Amount described above in connection with
changes in the Death Benefit Option are made so the Death Benefit remains the
same on the date of change. We do not require evidence of insurability, nor do
we deduct a Surrender Charge or the Expense Charge to increase the Face Amount
for such changes.

Tax considerations. We reserve the right to refuse to make a policy change if
such would cause this Policy to fail to qualify as life insurance under
applicable laws, as interpreted by us.

                           PREMIUM PAYMENT PROVISIONS

The Minimum Initial Premium shown in the Policy Schedule is due on or before the
date the Policy is delivered. No insurance will take effect until the Minimum
Initial Premium is paid, while the health and other conditions of the Insured
stay the same as described in the Application for this Policy. Prior to the
Final Policy Date and while this Policy is in force you may make additional
premium payments at any time and in any amount (subject to certain limits
described below). We intend to send premium reminder notices to you for the
Planned Periodic Premium shown in the Policy Schedule, unless at the time of
application or later you request in writing that such notices not be sent. You
do not need to pay the Planned Periodic Premiums and may change their frequency
and amount subject to the limits described below. (However, see Grace Period.)

LIMITS FOR PREMIUM PAYMENTS. Each premium payment after the initial one must be
for at least the Minimum Payment amount shown in the Policy Schedule. We may
increase this minimum amount upon 90 days written notice to you of such
increase. This minimum amount will not exceed $500.

We reserve the right not to accept any portion of premium payments during a
Policy Year if we determine that such portion would cause this Policy to fail to
qualify as life insurance under applicable tax laws, as interpreted by us.

We reserve the right to limit the amount of any premium payment if it increases
the Death Benefit more than it increases the Policy Account Value unless you
provide evidence of the Insured's insurability satisfactory to us.

GRACE PERIOD. During the first five Policy Years, the duration of the insurance
coverage under this Policy depends, in part, upon whether the Net Cash Surrender
Value is sufficient to cover the monthly deductions. If the Net Cash Surrender
Value is not sufficient, we will determine if the Minimum Guarantee Premium has
been paid. If the Net Cash Surrender Value is not sufficient and the sum of the
premiums paid less any loans and partial withdrawals does not equal or exceed
the Minimum Guarantee Premium, the Grace Period described below will begin.
After the first five Policy Years, the duration of the insurance coverage under
this Policy depends solely upon whether the Net Cash Surrender Value is
sufficient to cover the monthly deductions.

If the Net Cash Surrender Value at the beginning of any policy month is less
than the deductions for that month (and during the first five Policy Years, the
Minimum Guarantee Premium has not been

                                     Page 10
<PAGE>

paid), we will send written notice to you and any assignee of record stating
that a Grace Period of 61 days has begun, starting on the date we mail such
notice. The notice will indicate an amount equal to three monthly deductions. If
we do not receive payment of such amount before the end of the Grace Period, we
will withdraw the Policy Account Value including any applicable Surrender Charge
and send you and any assignee of record written notice that the Policy has
lapsed without value.

If the Insured dies during the Grace Period, we will pay the Insurance Proceeds.

REINSTATEMENT. If this Policy has lapsed without value, you may reinstate it
while the Insured is alive if you:

1.    apply for reinstatement within three years after the end of the Grace
      Period;
2.    provide evidence of the Insured's insurability satisfactory to us; and
3.    make a premium payment of an amount sufficient to keep the Policy in force
      for at least three months after the date of reinstatement.

The Effective Date of the reinstated Policy will be the Policy Processing Day,
which coincides with or next follows the date we approve the reinstatement
application.

                             PREMIUM EXPENSE CHARGE

The Premium Expense Charge consists of the following:

1.    Premium Tax Charge; and
2.    Percent of Premium Charge.

The Premium Expense Charge will be deducted from any premiums paid and the
amount remaining will be the Net Premium. The amounts of these charges are shown
in the Policy Schedule.

                              THE SEPARATE ACCOUNT

A Separate Account will be used to support the operation of this Policy and to
support other variable life insurance policies. We will not allocate assets to
the Separate Account to support the operation of any contracts or policies that
are not variable life insurance.

We own the assets in the Separate Account. However, these assets are not part of
our General Account. Income, gains, and losses, whether or not realized, from
assets allocated to the Separate Account will be credited to or charged against
the Separate Account without regard to our other income, gains or losses.

The Separate Account is treated as a unit investment trust under federal
securities laws. It is registered with the Securities and Exchange Commission
(SEC) under the Investment Company Act of 1940 (1940 Act).

The Subaccounts will invest in shares or units of their respective portfolios or
series.

The Separate Account is subject to the laws of the State of Delaware which
regulate the operations of insurance companies incorporated in Delaware. The
investment policies of the Separate Account will not be changed without the
approval of the Delaware Commissioner of Insurance. The approval process has
been filed with the insurance supervisory official of the state in which this
Policy is delivered.

We have the right, subject to compliance with applicable laws, to make additions
to, deletions from, or substitutions for, the shares or units of an investment
company that are held by the Subaccounts or that the Subaccounts may purchase.
We reserve the right to eliminate the shares or units of an eligible portfolio
or series, and to substitute shares or units of another portfolio or series, or
another fund, if the shares or units of the portfolio or series are no longer
available for investments, or if in our judgment further investment in the
portfolio or series should become inappropriate in view of the purposes of the
Subaccount.  In the event of any substitution or

                                     Page 11
<PAGE>

change, we may, subject to your written approval and by appropriate endorsement,
make such changes in this and other policies as may be necessary or appropriate
to reflect the substitution or change.

We also reserve the right to transfer assets of a Subaccount or the Separate
Account, which we determine to be associated with the class of policies to which
this Policy belongs, to another Subaccount or Separate Account. If this type of
transfer is made, the Subaccount or Separate Account specified in this Policy
shall then refer to the Subaccount or Separate Account to which the assets were
transferred.

The Policy Owner will share only in the income, gains, and losses of the
particular Subaccounts to which your Net Premium payments have been allocated or
to which portions of the Policy Account Value have been transferred.

That portion of the assets of the Separate Account which equals the reserves or
other policy liabilities of the policies with respect to the Separate Account
will not be charged with liabilities arising from any other business we conduct.
We have the right to transfer to our General Account any assets of the Separate
Account, which are in excess of such reserves and other policy liabilities.

When permitted by law, we also reserve the right:

1.    to create additional Separate Accounts; to create Subaccounts from, or
      combine or remove Subaccounts from, Separate Accounts; or to combine any
      two or more Separate Accounts;
2.    to operate any one or more of the Separate Accounts as a management
      investment company under the 1940 Act or in any other form permitted by
      law;
3.    to deregister the unit investment trusts under the 1940 Act;
4.    to modify the provisions of this Policy to comply with applicable laws;
5.    to restrict or eliminate any voting rights of policyholders or other
      persons who have voting rights as to the Subaccounts.

We will value the assets of the Subaccounts on each business day.

If you object to a material change in the investment policy of a Subaccount in
which you have at such time a portion of the Policy Account Value, you may
transfer such portion of the Policy Account Value, upon written request, from
that Subaccount, without charge, to another Subaccount or to the Guaranteed
Account. You may then change your premium and deduction allocation percentages.

                POLICY ACCOUNT VALUE: ALLOCATIONS AND TRANSFERS

The Policy Account Value for this Policy is based on the policy values in the
Subaccounts, Guaranteed Account, and the Loan Account to which you have:
allocated Net Premiums; transferred account values; and allocated monthly
deductions. Each allocation percentage must be a whole number.

ALLOCATION OF NET PREMIUMS. Net Premiums will be allocated to the Subaccounts
and the Guaranteed Account on the date we receive such premium payment. The
allocation will be based on the premium allocation percentages then in effect.
The percentage chosen by you at the time of application will apply until you
notify us in writing of a new allocation schedule for premium payments.

ALLOCATION FOR MONTHLY DEDUCTIONS. Monthly Deductions will be allocated to the
Subaccounts and Guaranteed Account based on the allocation percentages chosen by
you at the time of application or as later changed by written request to us. If
we cannot make a monthly deduction on the basis of the allocation schedule then
in effect, we will make such deduction and future deductions based on the
proportion that your Guaranteed Account Value and the value in your Subaccounts
bear to the total unloaned Policy Account Value.

TRANSFERS. We will allow you to make twelve transfers in a Policy Year without
charge. We will make a charge for additional transfers in such Policy Year. The
maximum charge is shown in the Policy Schedule. The transfer charge will be
deducted from the amount being transferred.

Transfers From Subaccounts. You may ask us to transfer all or part of the amount
in one of the Subaccounts to another Subaccount or to the Guaranteed Account.
The minimum amount for

                                     Page 12
<PAGE>

such transfer is the lesser of the amount shown in the Policy Schedule or the
entire value of the Subaccount. The transfer will be made as of the date we
receive your written request at our Service Center.

Transfers From Guaranteed Account. Within 30 days prior to or following any
Policy Anniversary you may ask us to make one transfer for up to 25% of your
Guaranteed Account Value to any of the Subaccounts. The minimum amount for such
transfer is the lesser of the amount shown in the Policy Schedule or your
Guaranteed Account Value on such Policy Anniversary. The date of transfer will
be as of the Policy Anniversary if your written request is received prior to the
Policy Anniversary; if your written request is received after the Policy
Anniversary, the transfer will be made as of the date we receive your request at
our Service Center.

Special Transfer Right. During the first two years following the Policy Issue
Date, you may request one transfer of the entire Policy Account Value in the
Subaccounts to the Guaranteed Account. This request will not count towards the
twelve free transfers in a Policy Year and is not subject to a transfer charge.

                             CALCULATION OF VALUES

BASIS OF CALCULATION. Minimum cash surrender values and maximum cost of
insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality
Table NB or SB. Cash surrender values are at least equal to those required by
law. Reserves are computed by the Commissioners Reserve Valuation Method. A
detailed statement of how we calculate the values for this Policy has been filed
with the insurance supervisory official of the state in which this Policy is
delivered.

CALCULATION OF VALUE OF SUBACCOUNTS. The Policy Account Value in a
Subaccount at any time is equal to the number of units this Policy then has in
that Subaccount multiplied by the Subaccount's unit value at that time.

Amounts allocated, transferred, or added to a Subaccount are used to purchase
units of that Subaccount; units are redeemed when amounts are deducted,
transferred or withdrawn. The number of units in a Subaccount at any time is
equal to the number of units purchased minus the number of units redeemed up to
such time.

The unit value of a Subaccount on any Valuation Day is equal to the unit value
for that Subaccount on the immediately preceding Valuation Day multiplied by the
Net Investment Factor for that Subaccount on that Valuation Day.

VALUATION DAY AND PERIOD. Assets are valued at the close of a Valuation Day. A
Valuation Day is each day that the New York Stock Exchange is open for business
and any other day in which there is a sufficient degree of trading of the
Subaccount's portfolio of securities to materially affect the value of a
Subaccount.

A Valuation Period is the time between two successive Valuation Days. Each
Valuation Period includes a Valuation Day and any non-Valuation Day or
consecutive non-Valuation Days immediately preceding it.

NET INVESTMENT FACTOR. Each Subaccount has its own Net Investment Factor. The
Net Investment Factor of the Subaccount for a Valuation Period is (a) divided by
(b) minus (c), where:

      (a) is:

            1.    the value of the assets in the Subaccount for the preceding
                  Valuation Period; plus

            2.    the investment income and capital gains, realized or
                  unrealized, credited to those assets during the Valuation
                  Period for which the Net Investment Factor is being
                  determined; minus

            3.    the capital losses, realized or unrealized, charged against
                  those assets during the Valuation Period; minus

            4.    any amount charged against the Subaccount for taxes, or any
                  amount we set aside during the Valuation Period as a reserve
                  for taxes attributable to the operation or maintenance of the
                  Subaccount; and

      (b)   is the value of the assets in the preceding Valuation Period; and

      (c)   is a charge no greater than 1.00% per year (0.002739726% for each
            day in the Valuation Period) for mortality and expense risks.

                                    Page 13
<PAGE>

We will value the assets in the Subaccounts at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.

CALCULATION OF GUARANTEED ACCOUNT VALUE. The Guaranteed Account Value at any
time is equal to the amounts allocated and transferred to it plus interest
credited to it, minus amounts deducted, transferred and withdrawn from it.
Amounts deducted, transferred, or withdrawn will be on a last in, first out
basis.

We will credit the Guaranteed Account Value with interest at effective annual
rates we determine. These rates will not be less than 4%. For the amount in the
Guaranteed Account at the beginning of a calendar year, we will determine such
interest rates in advance of each calendar year. Such rates will apply to the
calendar year which follows the date of determination. For amounts allocated or
transferred to the Guaranteed Account during a calendar year, we will determine
such interest rates in advance of the date such amount is received or
transferred. Such rates will apply to the end of the calendar year in which the
payment is received or the transfer is made.

Interest will be credited on each Policy Processing Day as follows:

For amounts in the Guaranteed Account for the entire prior policy month, from
the beginning to the end of such policy month;

For amounts allocated to the Guaranteed Account during the prior policy month,
from the date we allocate a Net Premium to the Guaranteed Account or receive a
loan repayment to the end of the policy month;

For amounts transferred to the Guaranteed Account during the prior policy month,
from the date of transfer to the end of the policy month;

For amounts deducted or withdrawn from the Guaranteed Account during the prior
policy month, from the beginning of the prior policy month to the date of
deduction or withdrawal.

MONTHLY DEDUCTIONS. On each Policy Processing Day, beginning on the Policy Date,
we will deduct the following charges from the Policy Account Value:

1.    The Monthly Administrative Charge shown in the Policy Schedule;

2.    On the first 12 Policy Processing Days, the Initial Administrative Charge
      shown in the Policy Schedule;

3.    The monthly cost of any benefits provided by rider to this Policy, in
      accordance with such rider;

4.    The monthly cost of insurance charge, as described below, and in
      accordance with provisions in any rider attached to this Policy.

The monthly cost of insurance charge is: (a) multiplied by the result of (b)
minus (c):

      (a)   is the current monthly cost of insurance rate per $1000 divided by
            1000;

and the result of (b) minus (c) is the net amount at risk where:

      (b)   is your current Death Benefit; and

      (c)   is your Policy Account Value (after other deductions but before cost
            of insurance).

The cost of insurance rates are based on the Insured's Attained Age, Premium
Class and duration. For the Initial Face Amount, we will use the Premium Class
as of the Policy Issue Date. For each Face Amount increase, we will use the
Premium Class and duration applicable to the increase. Current cost of insurance
rates will be determined by the Company based on our expectations as to future
mortality costs and expenses. However, these rates will never exceed those shown
in the Table of Guaranteed Maximum Cost of Insurance Rates Per $1000 of Net
Amount At Risk shown in the Policy Schedule. If Death Benefit Option A is in
effect and there have been Face Amount increases, the Policy Account Value will
first be considered as part of the Initial Face Amount. If the Policy Account
Value exceeds the Initial Face Amount, it will be considered as a part of the
increases in Face Amount in the order of such increases.

OTHER DEDUCTIONS. We also make the following other deductions from the Policy
Account Value as they occur:

1.    Charge for partial withdrawal of Net Cash Surrender Value;

2.    Surrender charges if during the first 15 Policy Years or within 15 years
      of the effective date of an increase in Face Amount, you surrender this
      policy for its Net Cash Surrender Value, reduce the Face Amount of
      insurance, or this policy lapses at the end of a Grace Period;

3.    Charge to increase the Face Amount of insurance;

                                    Page 14
<PAGE>

4.    Charge for certain transfers of the Policy Account Value.

                           SURRENDERS AND WITHDRAWALS

SURRENDER FOR NET CASH SURRENDER VALUE. You may surrender this Policy for its
Net Cash Surrender Value at any time while the Insured is living. The Net Cash
Surrender Value of this Policy at any time is equal to the Policy Account Value
on such date less any Surrender Charge and any Additional Surrender Charge, less
any outstanding policy loan and accrued interest. We will determine the Net Cash
Surrender Value on the date we receive your signed written surrender request at
our Service Center. Coverage under this Policy will end on the date you send the
surrender request to us.

SURRENDER CHARGE. If you surrender this Policy for its Net Cash Surrender Value
during the first 15 Policy Years, or if this Policy lapses during the first 15
Policy Years, we will deduct a Surrender Charge from the Policy Account Value.
This Surrender Charge has two parts: the Deferred Administrative Charge and the
Deferred Sales Charge. The amounts of such charges are shown in the Policy
Schedule.

If you request a reduction in the Initial Face Amount during any of the first 15
Policy Years, we will deduct a pro rata Surrender Charge from the Policy Account
Value as of the effective date of such reduction. The amount of such pro rata
Surrender Charge will be the Surrender Charge multiplied by the amount of the
reduction in the Initial Face Amount divided by the Initial Face Amount as of
the effective date of such reduction.

We will allocate the pro rata Surrender Charge based on the proportion that your
Guaranteed Account Value and the value in your Subaccounts bear to the total
unloaned Policy Account Value.

ADDITIONAL SURRENDER CHARGE. If you surrender this Policy for its Net Cash
Surrender Value within 15 years of the effective date of an increase in Face
Amount or if this policy lapses within 15 years of the effective date of an
increase in Face Amount, we will deduct an Additional Surrender Charge from the
Policy Account Value. The Additional Surrender Charge has two parts: the
Deferred Additional Administrative Charge and the Deferred Additional Sales
Charge. The amount of such charge or charges will be shown in the Policy
Schedule pages issued when you increase the Face Amount.

If you request a reduction in Face Amount within 15 years of the effective date
of a Face Amount increase, we will deduct a pro rata Additional Surrender Charge
from the Policy Account Value as of the effective date of such reduction. The
amount of such pro rata Additional Surrender Charge will be the Additional
Surrender Charge applicable to the Face Amount increase multiplied by the amount
of reduction in the Face Amount increase divided by the amount of the Face
Amount increase as of the effective date of such reduction.

We will allocate the pro rata Additional Surrender Charge based on the
proportion that your Guaranteed Account Value and the value in your Subaccounts
bear to the total unloaned Policy Account Value.

PARTIAL WITHDRAWAL OF NET CASH SURRENDER VALUE. After the first Policy Year, you
may make a written request for a partial withdrawal of the Net Cash Surrender
Value, subject to the restrictions below and the minimum amount shown in the
Policy Schedule. As of the date we receive your request at our Service Center,
we will reduce the Policy Account Value by the amount withdrawn plus the expense
charge for a partial withdrawal shown in the Policy Schedule. If Death Benefit
Option A is in effect, we will reduce the Face Amount by such amount.

We will allocate the withdrawal and expense charge based on the proportion that
your Guaranteed Account Value and the value in your Subaccounts bear to the
total unloaned Policy Account Value or to the specified Subaccounts based on the
percentages you specify at the time of your withdrawal.

We reserve the right to decline your withdrawal request if: the Face Amount
would be reduced below the minimum amount for which we would then issue this
policy under our rules; or we determine that the withdrawal would cause this
Policy to fail to qualify as life insurance under applicable tax laws, as
interpreted by us.

                                    Page 15
<PAGE>

If we approve your request, we will issue revised Policy Schedule pages
reflecting the changes, if any. The revised pages will become a part of this
Policy. We may require you to return the Policy to make the change.

                             POLICY LOAN PROVISIONS

You may borrow from this Policy while it has a loan value. This Policy will be
the only security for the loan. Any policy loan must be for at least the minimum
amount shown in the Policy Schedule. The maximum amount which may be borrowed is
the Net Cash Surrender Value. We will allocate the loan based on the proportion
that your Guaranteed Account Value and the value of your Subaccounts bear to the
total unloaned Policy Account Value or to the specified Subaccounts based on the
percentages you specify at the time of your loan.

The collateral for the loan will be the loan amount plus accrued interest to the
next Policy Anniversary less interest at 4% per annum which will be earned to
such Policy Anniversary. The collateral for the loan will be deducted from each
account and transferred to the Loan Account. The collateral for any existing
loan will be recalculated: (1) when loan interest is paid or treated as part of
the loaned amount; (2) when a loan repayment is made; and (3) when a new loan is
made.

EFFECT OF LOANS. A policy loan will have a permanent effect on your benefits
under this Policy, even if it is repaid. The loan amount which is transferred to
the Loan Account will be maintained separately.

INTEREST RATE CHARGED ON LOANS. We will charge interest on loans at the fixed
yearly rate of 6%. Loan interest is due at the end of each Policy Year. If you
do not pay the interest when it is due, we will add it to the outstanding loan.
The unpaid interest will then be treated as part of the loaned amount and bear
interest at the policy loan interest rate. We will allocate the unpaid interest
based on the percentages you specified for your last loan. If the value in the
specified Subaccounts is insufficient to allow the collateral for the unpaid
interest to be deducted or no percentages were specified by you, then we will
allocate the unpaid interest based on the proportion that your Guaranteed
Account Value and the value of your Subaccounts bear to the total unloaned
Policy Account Value.

LOAN INTEREST CREDITED. We will credit the Loan Account with interest at an
effective annual rate we determine. This rate will not be less than 4%. We will
determine such rate in advance of each calendar year. This rate will apply to
the calendar year which follows the date of determination. Loan interest
credited will be transferred to each of your accounts: (1) when loan interest is
paid or treated as part of the loaned amount; (2) when a loan repayment is made;
and (3) when a new loan is made.

LOAN REPAYMENTS. You may repay all or part of a policy loan at any time while
the Insured is alive and this Policy is in force. We will assume that any
payments made while there is an outstanding loan on this Policy is a loan
repayment, unless you tell us, in writing, that such is a premium payment.

Repayments will first be allocated to the accounts based on the allocation of
the outstanding loan from each account as of the date of repayment. Any
repayment in excess of the amount of the outstanding loan will be allocated
based on the amount of accrued interest for the outstanding loan.

Failure to repay a loan or pay loan interest will not cause this Policy to lapse
unless the Net Cash Surrender Value on the Policy Processing Day is less than
the monthly deduction due. In that event, the Grace Period provision will apply.

                                PAYMENT OPTIONS

Payments under these Options will not be affected by the investment experience
of any Subaccount after proceeds are applied under such Options.

Instead of being paid in one sum, the proceeds of this Policy may be paid under
one of the following Options:

OPTION 1 - PROCEEDS AT INTEREST. We will pay interest on the proceeds at 12, 6,
3 or 1 month

                                    Page 16
<PAGE>

intervals, as elected. The interest per interval for each $1,000 of proceeds is
shown in the table below:

<TABLE>
<CAPTION>
   INTERVAL IN MONTHS          AMOUNT OF INTEREST
   ------------------          ------------------
<S>                            <C>
             12                        $30.00
             6                         14.89
             3                          7.42
             1                          2.47
</TABLE>

OPTION 2 - INSTALLMENTS OF A SPECIFIED AMOUNT. We will pay the proceeds in equal
installments of the amount elected with our consent at 12, 6, 3, or 1 month
intervals. We will add interest on the balance of proceeds to such balance each
year. We will pay installments until the proceeds and interest are exhausted.
The last installment will be for the balance only of the proceeds and interest.

OPTION 3 - INSTALLMENTS FOR A SPECIFIED PERIOD. We will pay the proceeds in the
number of equal monthly installments certain set forth in the election. We will
base the amount of each installment on the Option 3 table. If so elected, the
installments may be paid at 12, 6 or 3 month intervals. The amount of each
installment in such case will be the product of the monthly installment and the
factor shown in the table below:

<TABLE>
<CAPTION>
                                FACTOR APPLIED TO
INTERVALS IN MONTHS             MONTHLY INSTALLMENTS
-------------------             --------------------
<S>                             <C>
    12                                     11.839
     6                                      5.963
     3                                      2.993
</TABLE>

OPTION 4 - LIFE INCOME. We will use the proceeds to provide equal monthly
installments during the payee's life. We will pay the installments, as elected,
either without installments certain or with installments certain for 120 months,
for 240 months, or until the proceeds are refunded.

"Until the proceeds are refunded" means until the sum of the installments paid
by us equals the amount of proceeds settled under this Option. We will base the
amount of each installment on the Option 4 table.

OPTION 5 - JOINT AND SURVIVOR LIFE INCOME. We will use the proceeds to provide
equal monthly installments, with a number of installments certain, during the
joint lives of the payee and one other person and during the life of the
survivor.

We will pay the installments certain for either 120 or 240 months, as elected.
We will base the amount of each installment on the Option 5 table.

DATE OF FIRST PAYMENT. We will make the first payment under Option 1 at the end
of the first payment interval. We will make the first payment under Option 2, 3,
4 or 5 on the date on which the Option takes effect.

INTEREST. The interest rate underlying all of the above Options is 3% per year.
Additional interest may be declared each year by us. Such additional interest
will:

1.    increase the interest payment under Option 1;
2.    be added to the proceeds under Option 2; or
3.    increase the installments certain under Option 3, 4 or 5.

WITHDRAWAL OR COMMUTATION. If expressly provided in the election of the Option
but not otherwise, the payee will have the right to:

1.    withdraw all or part of the balance of the proceeds under Option 1 or 2;
      or

2.    take in one sum the commuted value of any balance of the installments
      certain under Option 3, 4, or 5.

Partial withdrawals will be subject to our published minimum amount limits in
effect at the time the Option is elected. Such commuted value will be based on
compound interest at a yearly rate of 3%. Under Option 4 or 5, no installments
other than installments certain may be commuted.

We may defer payment of the amount withdrawn or commuted for a period not
exceeding 6 months.

SETTLEMENT AT DEATH OF PAYEE. After the death of the payee (the survivor in the
case of Option 5), we will make payment as directed in the election of the
Option. Such direction is subject to our approval.

The amount subject to such payment will be:

1.    any balance of proceeds, with accrued interest, under Option 1 or 2; or

2.    the value of any remaining installments certain under Option 3, 4 or 5.

                                    Page 17
<PAGE>

                  OPTION 3 - INSTALMENTS FOR A SPECIFIED PERIOD
Monthly Instalments for Each $1,000 of the Proceeds of This Policy Settled Under
                                    Option 3

<TABLE>
<CAPTION>
                                              Monthly Instalments Certain
                                              ---------------------------
No.     Amount    No.     Amount      No.    Amount      No.    Amount    No.    Amount    No.     Amount
---     ------    ---     ------      ---    ------      ---    ------    ---    ------    ---     ------
<S>   <C>         <C>    <C>          <C>    <C>         <C>    <C>       <C>    <C>       <C>     <C>
12      $84.47    72       $15.14     132    $8.86       192    $6.53     252      $5.32   312     $4.59
24       42.86    84        13.16     144     8.24       204     6.23     264       5.15   324      4.47
36       28.99    96        11.68     156     7.71       216     5.96     276       4.99   336      4.37
48       22.06    108       10.53     168     7.26       228     5.73     288       4.84   348      4.27
60       17.91    120        9.61     180     6.87       240     5.51     300       4.71   360      4.18
</TABLE>

                             OPTION 4 - LIFE INCOME

Monthly Instalments for Each $1,000 of the Proceeds of This Policy Settled Under
                                    Option 4
      Where the incomes are the same the longer certain period will apply.

<TABLE>
<CAPTION>
           Number of Monthly Instalments                         Number of Monthly Instalments
                    Certain                                                Certain
           -----------------------------                         -----------------------------
Age of                                                Age of
Payee*                                     Until      Payee*                                      Until
                                         Proceeds                                              Proceeds
           None      120          240       Are                 None       120          240       Are
                                         Refunded                                              Refunded
          -----     -----        -----   --------     ------   -----      -----        -----   --------
<S>       <C>       <C>          <C>      <C>          <C>     <C>        <C>          <C>      <C>
5 * *     $2.75     $2.75        $2.75    $2.74        25      $3.02      $3.02        $3.01    $3.01
6          2.76      2.76         2.76     2.75        26       3.04       3.04         3.03     3.02
7          2.77      2.77         2.77     2.76        27       3.06       3.06         3.05     3.04
8          2.78      2.78         2.78     2.77        28       3.08       3.08         3.07     3.06
9          2.79      2.79         2.79     2.78        29       3.10       3.10         3.09     3.09

10         2.80      2.80         2.80     2.79        30       3.13       3.12         3.12     3.11
11         2.81      2.81         2.81     2.80        31       3.15       3.15         3.14     3.13
12         2.82      2.82         2.82     2.82        32       3.18       3.17         3.16     3.15
13         2.83      2.83         2.83     2.83        33       3.20       3.20         3.19     3.18
14         2.85      2.85         2.84     2.84        34       3.23       3.23         3.22     3.20

15         2.86      2.86         2.86     2.85        35       3.26       3.26         3.24     3.23
16         2.87      2.87         2.87     2.86        36       3.29       3.29         3.27     3.26
17         2.89      2.89         2.88     2.88        37       3.32       3.32         3.30     3.29
18         2.90      2.90         2.90     2.89        38       3.35       3.35         3.33     3.32
19         2.92      2.92         2.91     2.91        39       3.39       3.38         3.37     3.35

20         2.93      2.93         2.93     2.92        40       3.42       3.42         3.40     3.38
21         2.95      2.95         2.94     2.94        41       3.46       3.46         3.43     3.42
22         2.96      2.96         2.96     2.95        42       3.50       3.50         3.47     3.45
23         2.98      2.98         2.98     2.97        43       3.54       3.54         3.51     3.49
24         3.00      3.00         2.99     2.99        44       3.59       3.58         3.55     3.53
</TABLE>

<TABLE>
<CAPTION>
        Number of Monthly Instalments                           Number of Monthly Instalments
                    Certain                                                  Certain
           -----------------------------                         -----------------------------
Age of
Payee*
                                            Until      Age of                                    Until
          None       120       240         Proceeds    Payee*     None         120       240    Proceeds
                                             Are                                                  Are
                                           Refunded                                             Refunded
          -----     -----        -----   --------     ------   -----      -----        -----   --------
<S>       <C>       <C>         <C>         <C>         <C>      <C>         <C>       <C>      <C>
 45       $3.63     $3.63       $3.59       $3.57       65       $5.35       $5.22     $4.79    $4.97
 46        3.68      3.67        3.63        3.61       66        5.51        5.36      4.86     5.08
 47        3.73      3.72        3.68        3.66       67        5.67        5.50      4.93     5.20
 48        3.79      3.77        3.72        3.70       68        5.85        5.65      5.00     5.33
 49        3.84      3.83        3.77        3.75       69        6.04        5.80      5.06     5.47

 50        3.90      3.89        3.82        3.80       70        6.25        5.96      5.12     5.61
 51        3.97      3.95        3.88        3.86       71        6.47        6.14      5.18     5.76
 52        4.03      4.01        3.93        3.91       72        6.71        6.31      5.23     5.93
 53        4.10      4.08        3.99        3.97       73        6.97        6.50      5.28     6.10
 54        4.18      4.15        4.04        4.03       74        7.26        6.69      5.32     6.28

 55        4.25      4.22        4.11        4.10       75        7.56        6.89      5.35     6.48
 56        4.34      4.30        4.17        4.17       76        7.90        7.09      5.39     6.68
 57        4.42      4.38        4.23        4.24       77        8.26        7.29      5.41     6.90
 58        4.52      4.47        4.30        4.31       78        8.65        7.49      5.43     7.13
 59        4.61      4.56        4.37        4.39       79        9.07        7.69      5.45     7.38

 60        4.72      4.66        4.44        4.48       80        9.53        7.89      5.47     7.64
 61        4.83      4.76        4.51        4.56       81       10.03        8.08      5.48     7.91
 62        4.95      4.86        4.58        4.66       82       10.57        8.26      5.49     8.21
 63        5.07      4.98        4.65        4.75       83       11.16        8.43      5.49     8.51
 64        5.21      5.10        4.72        4.86       84       11.79        8.59      5.50     8.83
                                                        85 +     12.48        8.74      5.50     9.18
</TABLE>

                                    Page 18
<PAGE>
                    OPTION 5 - JOINT AND SURVIVOR LIFE INCOME
       MONTHLY INSTALMENTS FOR EACH $1,000 OF THE PROCEEDS OF THIS POLICY
                             SETTLED UNDER OPTION 5

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                            WITH 120 MONTHLY INSTALMENTS CERTAIN
---------------------------------------------------------------------------------------------------------------------------
 Age of                                              Age of Other Payee*
Insured*
          -----------------------------------------------------------------------------------------------------------------
            50    51    52    53    54    55    56    57    58    59    60    61    62    63    64    65    70    75    80
---------------------------------------------------------------------------------------------------------------------------
<S>       <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
   50     $3.60 $3.63 $3.66 $3.69 $3.72 $3.75 $3.77 $3.80 $3.83 $3.85 $3.88 $3.90 $3.92 $3.95 $3.97 $3.99 $4.08 $4.14 $4.18
   51      3.62  3.65  3.68  3.71  3.74  3.77  3.80  3.83  3.86  3.89  3.91  3.94  3.97  3.99  4.01  4.04  4.13  4.20  4.25
   52      3.64  3.67  3.70  3.74  3.77  3.80  3.83  3.86  3.89  3.92  3.95  3.98  4.01  4.03  4.06  4.08  4.19  4.27  4.32
   53      3.66  3.69  3.72  3.76  3.79  3.82  3.86  3.89  3.92  3.96  3.99  4.02  4.05  4.08  4.11  4.13  4.25  4.34  4.40
   54      3.67  3.71  3.74  3.78  3.81  3.85  3.89  3.92  3.96  3.99  4.02  4.06  4.09  4.12  4.15  4.18  4.31  4.41  4.48

   55      3.69  3.72  3.76  3.80  3.84  3.87  3.91  3.95  3.99  4.02  4.06  4.10  4.13  4.17  4.20  4.23  4.37  4.48  4.56
   56      3.70  3.74  3.78  3.82  3.86  3.90  3.94  3.98  4.02  4.06  4.10  4.13  4.17  4.21  4.25  4.28  4.44  4.56  4.64
   57      3.72  3.76  3.80  3.84  3.88  3.92  3.96  4.00  4.05  4.09  4.13  4.17  4.21  4.25  4.29  4.33  4.50  4.64  4.73
   58      3.73  3.77  3.81  3.86  3.90  3.94  3.99  4.03  4.08  4.12  4.17  4.21  4.25  4.30  4.34  4.38  4.57  4.72  4.82
   59      3.74  3.79  3.83  3.87  3.92  3.96  4.01  4.06  4.10  4.15  4.20  4.25  4.29  4.34  4.38  4.43  4.64  4.80  4.92

   60      3.75  3.80  3.84  3.89  3.94  3.98  4.03  4.08  4.13  4.18  4.23  4.28  4.33  4.38  4.43  4.48  4.71  4.89  5.02
   61      3.77  3.81  3.86  3.91  3.95  4.00  4.05  4.11  4.16  4.21  4.26  4.32  4.37  4.42  4.48  4.53  4.77  4.98  5.12
   62      3.78  3.82  3.87  3.92  3.97  4.02  4.07  4.13  4.18  4.24  4.29  4.35  4.41  4.46  4.52  4.58  4.84  5.07  5.23
   63      3.79  3.83  3.88  3.93  3.99  4.04  4.09  4.15  4.21  4.26  4.32  4.38  4.44  4.50  4.56  4.62  4.91  5.16  5.34
   64      3.80  3.84  3.90  3.95  4.00  4.06  4.11  4.17  4.23  4.29  4.35  4.41  4.48  4.54  4.60  4.67  4.98  5.25  5.45

   65      3.80  3.85  3.91  3.96  4.01  4.07  4.13  4.19  4.25  4.31  4.38  4.44  4.51  4.58  4.64  4.71  5.05  5.35  5.57

   70      3.84  3.89  3.95  4.01  4.07  4.13  4.20  4.27  4.34  4.41  4.49  4.57  4.65  4.73  4.82  4.91  5.36  5.81  6.18

   75      3.86  3.92  3.98  4.04  4.11  4.17  4.25  4.32  4.40  4.48  4.57  4.66  4.75  4.84  4.94  5.05  5.62  6.23  6.78

   80      3.87  3.93  4.00  4.06  4.13  4.20  4.27  4.35  4.44  4.52  4.61  4.71  4.81  4.91  5.02  5.14  5.79  6.54  7.27
</TABLE>

* On birthday nearest to due date of first instalment. The amount of the monthly
instalment for any combination of ages not shown in this table will be furnished
on request.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                            WITH 240 MONTHLY INSTALMENTS CERTAIN
---------------------------------------------------------------------------------------------------------------------------
 Age of                                              Age of Other Payee*
Insured*
          -----------------------------------------------------------------------------------------------------------------
            50    51    52    53    54    55    56    57    58    59    60    61    62    63    64    65    70    75    80
---------------------------------------------------------------------------------------------------------------------------
<S>       <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>
50        $3.60 $3.63 $3.65 $3.68 $3.71 $3.73 $3.76 $3.79 $3.81 $3.84 $3.86 $3.88 $3.90 $3.92 $3.94 $3.96 $4.03 $4.06 $4.08
51         3.61  3.64  3.67  3.70  3.73  3.76  3.79  3.82  3.84  3.87  3.89  3.92  3.94  3.96  3.98  4.00  4.08  4.12  4.14
52         3.63  3.66  3.69  3.72  3.76  3.79  3.82  3.85  3.87  3.90  3.93  3.95  3.98  4.00  4.02  4.05  4.13  4.17  4.19
53         3.65  3.68  3.71  3.75  3.78  3.81  3.84  3.87  3.90  3.93  3.96  3.99  4.02  4.04  4.07  4.09  4.18  4.23  4.25
54         3.66  3.70  3.73  3.77  3.80  3.83  3.87  3.90  3.93  3.97  4.00  4.03  4.06  4.08  4.11  4.13  4.23  4.29  4.31

55         3.68  3.71  3.75  3.79  3.82  3.86  3.89  3.93  3.96  4.00  4.03  4.06  4.09  4.12  4.15  4.18  4.29  4.35  4.38
56         3.69  3.73  3.77  3.80  3.84  3.88  3.92  3.95  3.99  4.03  4.06  4.10  4.13  4.16  4.19  4.22  4.34  4.41  4.44
57         3.70  3.74  3.78  3.82  3.86  3.90  3.94  3.98  4.02  4.06  4.09  4.13  4.17  4.20  4.24  4.27  4.40  4.47  4.50
58         3.72  3.76  3.80  3.84  3.88  3.92  3.96  4.00  4.04  4.09  4.13  4.16  4.20  4.24  4.28  4.31  4.45  4.53  4.57
59         3.73  3.77  3.81  3.85  3.90  3.94  3.98  4.03  4.07  4.11  4.15  4.20  4.24  4.28  4.31  4.35  4.50  4.59  4.63

60         3.74  3.78  3.82  3.87  3.91  3.96  4.00  4.05  4.09  4.14  4.18  4.23  4.27  4.31  4.35  4.39  4.55  4.65  4.69
61         3.75  3.79  3.84  3.88  3.93  3.97  4.02  4.07  4.12  4.16  4.21  4.26  4.30  4.35  4.39  4.43  4.61  4.71  4.76
62         3.76  3.80  3.85  3.89  3.94  3.99  4.04  4.09  4.14  4.19  4.23  4.28  4.33  4.38  4.42  4.47  4.66  4.77  4.82
63         3.77  3.81  3.86  3.91  3.95  4.00  4.05  4.10  4.16  4.21  4.26  4.31  4.36  4.41  4.46  4.50  4.70  4.83  4.88
64         3.77  3.82  3.87  3.92  3.97  4.02  4.07  4.12  4.17  4.23  4.28  4.33  4.39  4.44  4.49  4.54  4.75  4.88  4.94

65         3.78  3.83  3.88  3.93  3.98  4.03  4.08  4.14  4.19  4.25  4.30  4.36  4.41  4.46  4.52  4.57  4.79  4.93  5.00

70         3.81  3.86  3.91  3.96  4.02  4.07  4.13  4.19  4.25  4.31  4.38  4.44  4.50  4.57  4.63  4.69  4.97  5.15  5.24

75         3.82  3.87  3.92  3.98  4.03  4.09  4.16  4.22  4.28  4.35  4.42  4.48  4.55  4.62  4.69  4.76  5.07  5.28  5.38

80         3.82  3.87  3.93  3.98  4.04  4.10  4.16  4.23  4.29  4.36  4.43  4.50  4.57  4.64  4.71  4.78  5.11  5.33  5.44
</TABLE>

*On birthday nearest to due date of first instalment. The amount of the monthly
instalment for any combination of ages not shown in this table will be furnished
on request.

Form SO-1980U                        Page 19
<PAGE>
                                  ENDORSEMENTS

                    A GUIDE TO THE PROVISIONS OF THIS POLICY

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Allocations and Transfers ...............................................   12
Calculation of Values ...................................................   13
Death Benefit Provisions ................................................   8
Definitions .............................................................   6
General Provisions ......................................................   6
Payment Options .........................................................   16
Policy Description ......................................................   2
Policy Loan provisions ..................................................   16
Policy Owner & Beneficiary Provisions ...................................   8
Policy Schedule & Specifications ........................................   3
Premium Expense Charge ..................................................   11
Premium Payment Provisions ..............................................   10
The Separate Account ....................................................   11
Surrenders and Withdrawals ..............................................   15
</TABLE>

Form VL206
<PAGE>
           Flexible Premium Adjustable Variable Life Insurance Policy
         Insurance Proceeds payable upon death before Final Policy Date
  Policy Account Value payable on Final Policy Date / Adjustable Death Benefit
   Values provided by this Policy are based on declared interest rates of the
Guaranteed and Loan Accounts and on the investment experience of the Subaccounts
                   Non-participating / Employee Benefit Series

                 NATIONWIDE LIFE AND ANNUITY COMPANY OF AMERICA
                     300 Continental Drive, Newark, DE 19713

Form VL206
<PAGE>
                                 POLICY SCHEDULE

INSURED            JOHN DOE

POLICY NUMBER      9,000,000            09/01/2002     POLICY ISSUE DATE

FACE AMOUNT        $50,000.00           35             ISSUE AGE

DEATH BENEFIT      OPTION A             09/01/2002     POLICY DATE

PREMIUM CLASS      STANDARD             09/01/2067     FINAL POLICY DATE

                                    BENEFITS

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE (EBS)
     INITIAL FACE AMOUNT $50,000.00

This Policy provides life insurance coverage on the Insured until the final
policy date, provided the Net Cash Surrender Value is sufficient to cover the
deductions for the cost to that date of the benefits of this Policy and of any
riders. You may have to pay more than the premiums shown below to keep this
Policy and coverage in force to that date, and to keep any additional riders in
force.

MINIMUM INITIAL PREMIUM - $367.50

PLANNED PERIODIC PREMIUM - $500.00   PAYABLE ANNUALLY

MINIMUM ANNUAL PREMIUM - $367.50

MINIMUM FACE AMOUNT - $50,000.00

MINIMUM PAYMENT - $20.00

PARTIAL WITHDRAWAL - MINIMUM AMOUNT $1,500.00

TRANSFERS - MINIMUM AMOUNT $1,000.00

POLICY LOAN - FIXED 6.00% POLICY LOAN INTEREST RATE

                MINIMUM LOAN AMOUNT $500.00

Form VL206                           PAGE 3
<PAGE>
                                 POLICY SCHEDULE
                                   (Continued)

                                                       POLICY NUMBER   9,000,000

                                 EXPENSE CHARGES

PREMIUM EXPENSE CHARGE

      CONSISTS OF THE FOLLOWING:

      1.    A Premium Tax Charge of 2% will be deducted from each premium
            payment for state and local premium taxes. We reserve the right to
            change this percentage if the applicable law changes or the
            insured's residence changes.

      2.    A percent of premium charge not exceeding 10% will be deducted from
            each premium payment.

INITIAL ADMINISTRATIVE CHARGE

            $5.00 deducted monthly from the Policy Account Value on the first 12
            policy processing days.

MONTHLY ADMINISTRATIVE CHARGE

            $7.50 deducted monthly from the Policy Account Value. We reserve the
            right to increase this charge, but it will not be greater than
            $11.00 a month.

FOR PARTIAL WITHDRAWAL OF NET CASH SURRENDER VALUE

            $25.00 deducted from the Policy Account Value whenever you make a
            partial withdrawal.

FOR AN INCREASE IN FACE AMOUNT

            $60.00 plus $0.50 per $1,000 of increase in face amount, but not
            greater than $750.00, deducted from the Policy Account Value. We
            reserve the right to increase this charge, but it will not be
            greater than $60.00 plus $3.00 per $1,000.

FOR TRANSFERS

            After the first twelve transfers of amounts among your investment
            options during a Policy Year, we will charge $25.00 for each
            additional transfer during that Policy Year.

Form VL206                           PAGE 4
<PAGE>
                                 POLICY SCHEDULE
                                   (Continued)

                                                       POLICY NUMBER   9,000,000

                                SURRENDER CHARGES

If this Policy is surrendered or lapses during the first 15 Policy Years, we
will deduct a Surrender Charge from the Policy Account Value in determining its
Net Cash Surrender Value. The Surrender Charge consists of Deferred
Administrative Charge and the Deferred Sales Charge

The Deferred Administrative Charge at any time during the policy year is the
amount shown in the table below for that year, less the amount of any pro rata
Deferred Administrative Charge previously paid under this Policy.

The Deferred Sales Charge at any time during the Policy Year is equal to (A)
minus (B) where: (A) is the lessor of: (1) the maximum charge shown in the table
below for that year; or (2) an amount equal to 35% of all premium payments paid
to such time; and (B) is the amount of any pro rata Deferred Sales Charge
previously paid under this Policy.

<TABLE>
<CAPTION>
               DEFERRED       MAXIMUM                    DEFERRED        MAXIMUM
POLICY          ADMIN          SALES        POLICY        ADMIN           SALES
 YEAR           CHARGE        CHARGE         YEAR         CHARGE         CHARGE
<S>            <C>            <C>           <C>          <C>             <C>
   1           245.00         437.85           9         171.50          306.50
   2           245.00         437.85          10         147.00          262.71
   3           245.00         437.85          11         122.50          218.93
   4           245.00         437.85          12          98.00          175.14
   5           245.00         437.85          13          73.50          131.36
   6           245.00         437.85          14          49.00           87.57
   7           220.50         394.07          15          24.50           43.78
   8           196.00         350.28
</TABLE>

If the Face Amount of this Policy is decreased at any time during the first 15
Policy Years, a pro rata share of the Surrender Charge will be deducted.

If the Face Amount of this Policy is increased at any time, and within 15 years
of the effective date of such increase you decrease the Face Amount or surrender
this Policy, a Deferred Administrative Charge and Deferred Additional Sales
Charge will be deducted.

Form VL206                           PAGE 4A
<PAGE>
                               POLICY SCHEDULE
                                   (Continued)

                                                       POLICY NUMBER   9,000,000

GUARANTEED MONTHLY COST OF INSURANCE RATES PER $1,000 NET AMOUNT AT RISK

<TABLE>
<CAPTION>
ATTAINED                      ATTAINED                 ATTAINED
  AGE            RATE           AGE        RATE          AGE             RATE
<S>             <C>           <C>         <C>          <C>              <C>
   35           0.20833          57       1.37917         79            8.32583
   36           0.22250          58       1.49417         80            8.92833
   37           0.24083          59       1.61333         81            9.59250
   38           0.26167          60       1.74417         82            10.33583
   39           0.28583          61       1.89333         83            11.16750
   40           0.31250          62       2.06250         84            12.08083
   41           0.34500          63       2.25750         85            13.00667
   42           0.37750          64       2.47167         86            13.97917
   43           0.41417          65       2.70417         87            14.91917
   44           0.45167          66       2.94417         88            15.97833
   45           0.49500          67       3.19417         89            17.00333
   46           0.53750          68       3.44500         90            18.11833
   47           0.58417          69       3.71333         91            19.29833
   48           0.63333          70       4.00500         92            20.57333
   49           0.68750          71       4.33500         93            22.12083
   50           0.74583          72       4.71333         94            24.11333
   51           0.81167          73       5.14333         95            27.07417
   52           0.88583          74       5.61583         96            31.74750
   53           0.97000          75       6.13667         97            39.80750
   54           1.06417          76       6.67583         98            54.78167
   55           1.16333          77       7.22000         99            83.33333
   56           1.27000          78       7.76417
</TABLE>

FORM VL206                          PAGE 5Exhibit 10.1

                           LOAN AND SECURITY AGREEMENT

     This Loan and Security Agreement (this "Agreement") is entered into by and
     between RDO Construction Equipment Co. ("Borrower") and CitiCapital
     Commercial Corporation ("CitiCapital") as of October 23, 2002.
                                                          --

     The date upon which this Agreement and all documents, instruments,
     certificates and other agreements required to be executed or delivered
     pursuant to the terms of this Agreement are executed or delivered is
     referred to in this Agreement as the "Closing Date". For mutual
     consideration, the receipt and sufficiency of which is hereby acknowledged
     by Borrower and CitiCapital, Borrower and CitiCapital hereby agree to the
     following terms and conditions:

                              1. CREDIT FACILITIES

1.1  LINE OF CREDIT. CitiCapital, in its sole discretion and subject to the
     terms and conditions of this Agreement, agrees to make loans to Borrower
     during the period from the Closing Date up to and including the last day of
     September, 2003 in an amount not to exceed, in the aggregate at any one
     time outstanding, the "Line of Credit" which will be an amount equal to the
     lesser of (a) the Maximum Line of Credit (as defined below) or (b) the
     Borrowing Base (as defined below).

1.2  MAXIMUM LINE OF CREDIT. The "Maximum Line of Credit" means, at any time, an
     amount equal to $30,000,000 minus the aggregate unpaid balance of (i) that
     certain Loan and Security Agreement of even date herewith by and between
     RDO Agriculture Equipment Co. ("RDOA") and CitiCapital, and (ii) that
     certain Loan and Security Agreement of even date herewith by and between
     RDO Material Handling Co. ("RDOM") and CitiCapital, which shall not exceed
     $9,000,000. RDOA and RDOM will be individually and collectively referred to
     herein as the "Affiliates".

1.3  BORROWING BASE. The "Borrowing Base" means, at any time, an amount, as
     determined by CitiCapital in its sole discretion, equal to 95% of the net
     book value of Eligible Inventory calculated in accordance with GAAP (as
     defined below).

1.4  ELIGIBLE INVENTORY. "Eligible Inventory" shall mean the net book value of
     Borrower's inventory of construction equipment or machinery, which are
     listed on a Borrowing Base Certificate, or any attachment thereto or which
     form the basis for Eligible Inventory.

1.5  BORROWING BASE CERTIFICATE. Borrower must provide, on or before the 15th
     day of each month and also on the day of each request for each Advance
     hereunder, which request is in excess of $2,000,000, Borrower must provide
     a Borrowing Base Certificate in form as provided on the attached Exhibit A
     and in content acceptable to CitiCapital and all other worksheets,
     certificates and schedules relating to the Borrowing Base Certificate as
     shall be required by CitiCapital in its sole discretion. Borrowing Base
     Certificates shall be mailed to the following address or such address as
     CitiCapital may specify in the future: CitiCapital Commercial Corporation,
     250 East John Carpenter Freeway, Irving, Texas 75062, Attn: Wholesale
     Credit, 4 Decker.

                     2. SECURITY INTEREST AND DOCUMENTATION

2.1  SECURITY INTEREST. In order to secure the payment and performance of all
     absolute and all contingent obligations and liabilities of Borrower to
     CitiCapital now existing or hereafter arising under this Agreement,
     Borrower hereby grants to CitiCapital a security interest in and to the
     following described collateral (all herein referred to as the
     "Collateral"): all present and future inventory of construction equipment
     or machinery or other goods together with all attachments, accessories,
     exchanges, replacement parts, repairs and additions thereto, and all
     chattel paper, documents, general intangibles, instruments, accounts and
     contract rights now existing or hereafter arising with respect to any
     thereof and the cash and non-cash proceeds (including, without limitation,
     proceeds of proceeds) of any of the foregoing. In the event of default and
     upon the request of CitiCapital, Borrower will promptly (a)

                                       27
<PAGE>

     deliver to CitiCapital all Collateral required by CitiCapital, (b) mark all
     chattel paper, documents and instruments and Borrower's books of account,
     ledger cards and other records relative to the Collateral with a notation
     satisfactory to CitiCapital disclosing that they are subject to
     CitiCapital's security interest, (c) execute and deliver to CitiCapital
     such instruments, Uniform Commercial Code financing statements, statements
     and agreements as CitiCapital may request to further evidence each advance
     or loan hereunder and the security interests granted under this Agreement,
     provided, however, Borrower's failure to comply with such request shall not
     affect or limit CitiCapital's security interest or other rights in and to
     the Collateral, and (d) permit CitiCapital or its representatives to
     examine the Collateral and Borrower's books and records at any and all
     reasonable times.

2.2  STATUS OF COLLATERAL. The Collateral is now, and at all times will be owned
     by Borrower free and clear of all liens, security interests, claims and
     encumbrances except for (i) the security granted to CitiCapital herein (ii)
     the security interest granted to Deere & Company, Deere Credit Services,
     Inc. and John Deere Construction Equipment Company, which must at all times
     be subject to an inter-creditor agreement acceptable in form and content to
     CitiCapital, or (iii) as specifically agreed to in writing by CitiCapital;
     and the interest of CitiCapital in the Collateral hereunder is and shall at
     all times be a valid, perfected, security interest therein.

                       3. ADVANCES, PAYMENTS AND INTEREST

3.1  ADVANCES. Subject to CitiCapital's discretion and the restrictions
     contained in this Agreement, Borrower may request and receive a loan or
     advance pursuant to this Agreement at any time when the aggregate
     outstanding advances to Borrower hereunder are less than the then specified
     Line of Credit. The minimum amount of any such advance is $100,000.
     CitiCapital will remit advances pursuant to the Line of Credit by wire
     transfer or automated clearinghouse payment. All proceeds of any loan or
     advance made by CitiCapital to or on behalf of Borrower under this
     Agreement must be used by Borrower in the continued operation of Borrower's
     business solely for internal business purposes and not for payment of
     dividends, loans, or acquisitions by any entity other than the Borrower.

     CitiCapital will in no event be obligated to make any loan or advance to or
     for the benefit of Borrower if (a) Borrower is then or has in the past been
     in default under the terms of this Agreement or any other agreement between
     Borrower and CitiCapital or between Borrower and any affiliate of
     CitiCapital, (b) guarantor, if any, terminates or attempts to terminate its
     guaranty of the obligations of Borrower, (c) the requested loan or advance
     would increase the amount outstanding under this Agreement to an amount in
     excess of the applicable Line of Credit on the date the loan or advance is
     made, (d) CitiCapital has not received a written request for such advance
     in form and content acceptable to CitiCapital and signed by an authorized
     officer or employee of Borrower by 12:00 p.m. one day prior to the
     requested funding date of such advance, or (e) there shall have been a
     material adverse change in the financial condition of Borrower or any
     guarantor from the Closing Date. All of Borrower's representations and
     warranties must be true and accurate on the date of any advance and the
     request for any such advance will constitute a re-issuance of such
     representations and warranties by Borrower on the date of the advance.

3.2  PAYMENTS. If, at any time, the aggregate principal amount of all loans
     outstanding under this Agreement exceeds the Line of Credit, Borrower will
     immediately pay CitiCapital the amount necessary to reduce the aggregate
     principal outstandings to an amount not exceeding the Line of Credit. Any
     payments made by Borrower to CitiCapital pursuant to this Agreement may be
     applied, at the option of CitiCapital, first to the payment of accrued but
     unpaid interest and then to reduce the principal balance of any then
     outstanding loan or advance. Any payments made by Borrower to CitiCapital
     pursuant to this Agreement may be applied, at the option of CitiCapital,
     first to indebtedness under this Agreement that is not secured, then to
     delinquency charges, then to the payment of accrued but unpaid interest,
     then to insurance payments, then to any other fees or other amounts payable
     hereunder other than indebtedness secured by a purchase money security
     interest in the Collateral, until all of such indebtedness is paid in full,
     and then to the indebtedness secured by a purchase money security interest
     in the Collateral in the order in which that indebtedness was incurred.
     CitiCapital's books and records will be prima facie evidence of the amount
     from time to time owing hereunder.

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<PAGE>

3.3  INTEREST AND RETURNED CHECKS. Borrower agrees to pay CitiCapital interest
     charges promptly as billed by the 15th of each month for such charges that
     have accrued during the prior month. Interest charges for each loan or
     advance which was outstanding pursuant to this Agreement during the prior
     month shall be computed and accrued at the lesser of (a) the Applicable
     Rate (as defined below) which is in effect during such month or (b) the
     lawful maximum rate, if any, in effect from time to time in the applicable
     jurisdiction for loans to borrowers of the type, in the amount, for the
     purposes, and otherwise of the kind contemplated. However, the Applicable
     Rate will not be less than 5.0% per annum unless prohibited by law.

     The "Applicable Rate" shall be the Libor Rate, as defined below, in effect
     on the last business day of the prior month for interest charges accruing
     during such month (as used herein "business day" shall mean any day that is
     not a Saturday, Sunday or other day in which banking institutions in
     Dallas, Texas are generally authorized or required by law or executive
     order to close), plus 3.0% per annum, provided, however, that the
     Applicable Rate, as calculated on the date of this Agreement, shall not
     increase by more than 5.0% per annum.

     The "Libor Rate" shall mean the highest of the London Interbank Offered
     Rates published in the Money Rates section of The Wall Street Journal as
     the average of Interbank offered rates for one month dollar deposits in the
     London market based upon quotations from major banks effective as to
     contracts entered into two days prior to publication by The Wall Street
     Journal. In the event the Libor Rate, as published in The Wall Street
     Journal ceases to exist, or The Wall Street Journal ceases publishing a
     Libor Rate, CitiCapital will substitute a comparable index that is outside
     the control of CitiCapital. In the event of an error by The Wall Street
     Journal, the "Libor Rate" will be based upon the Libor Rate as corrected.

     Borrower agrees to reimburse CitiCapital immediately upon demand for any
     amount charged to CitiCapital by any depository institution because a
     check, draft or other order made or drawn by or for the benefit of Borrower
     is returned unpaid for any reason and, if allowed by law, to pay
     CitiCapital an additional handling charge in the amount of $25.00 or in the
     event applicable law limits or restricts the amount of such reimbursement
     or handling charge, the amounts chargeable under this provision will be
     limited and/or restricted in accordance with applicable law.

     Time is of the essence hereof. If any payment is not received when due, the
     undersigned agrees to pay to the holder a delinquency charge calculated
     thereon at the rate of one and one-half percent (1 1/2%) per month for the
     period of the delinquency or, at CitiCapital's option, five percent (5%) of
     such payment, provided that such a delinquency charge is not prohibited by
     law, otherwise at the highest rate that the Borrower can legally obligate
     itself to pay and/or CitiCapital can legally collect.

3.4  TERM. The Line of Credit shall terminate on September 30, 2003. On the
     termination date, all amounts owing under the Line of Credit shall be due
     and payable in cash. CitiCapital shall also have the right to terminate
     this Agreement at any time without notice because of the occurrence of an
     Event of Default, in which event all advances and interest charges relating
     thereto shall be due and payable immediately upon demand. No termination
     hereunder shall in any way affect or impair any right of CitiCapital
     arising prior thereto or by reason thereof, nor shall any such termination
     relieve Borrower or any other party primarily or secondarily liable as to
     the advances until all of the advances and interest charges relating
     thereto are fully paid.

            4. FINANCIAL AND ORGANIZATIONAL COVENANTS AND INFORMATION

4.1  CORPORATE AUTHORIZATION AND ORGANIZATION. Borrower hereby warrants and
     agrees as follows:

     (a)  Borrower warrants and agrees that the execution of and performance by
          Borrower under the terms of this Agreement have been approved for
          Borrower by all necessary corporate action and by Borrower's
          shareholders and that Borrower is and will continue to be a
          corporation validly existing under the laws of the state of North
          Dakota and is and will continue to be qualified and

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<PAGE>

          licensed to do business in all jurisdictions in which the nature of
          Borrower's business requires Borrower to be qualified or licensed;

     (b)  So long as any amount remains unpaid under this Agreement, the
          Borrower will not take any action or allow any party to take any
          action to liquidate or dissolve Borrower, or make or allow any
          material change in the nature of its business as presently conducted,
          or acquire substantially all of the membership interests or assets of,
          or consolidate or merge with, any other firm, company or corporation
          without the prior written consent of CitiCapital; and

4.2  FINANCIAL INFORMATION AND REPORTS.

     (a)  Borrower represents that the fiscal year of Borrower currently ends
          January 31. Borrower agrees to notify CitiCapital in writing of any
          change in the fiscal year of Borrower at least 90 days prior to
          effectuating any such change. Borrower agrees to provide financial
          statements and such other information with respect to the business and
          operations of Borrower as CitiCapital may from time to time reasonably
          request. Without request, Borrower shall furnish to CitiCapital the
          following:

          (i)  As soon as available, and in any event within 125 days after the
               end of each annual fiscal year of RDO Equipment Co. ("Guarantor")
               and its Subsidiaries (as defined below), a copy of the complete
               audit report for such fiscal period and accompanying financial
               statements (including balance sheet, statement of cash flow and
               profit and loss statement) of Guarantor and its Subsidiaries as
               prepared in accordance with GAAP (as defined below) and certified
               by independent certified public accountants of recognized
               standing selected by Guarantor.

               The term "Subsidiaries" of Guarantor means any corporation,
               partnership, limited liability company or other business entity
               of which an aggregate of more than fifty percent (50%) of the
               outstanding stock is, at the time, directly or indirectly, owned
               or controlled by Guarantor and/or one or more Subsidiaries of
               Guarantor.

               The term "GAAP" means generally accepted accounting principles in
               the United States of America as in effect from time to time set
               forth in the opinions and pronouncements of the Accounting
               Principles Board and the American Institute of Certified Public
               Accountants and the statements and pronouncements of the
               Financial Accounting Standards Board, or in such other statements
               by such other entity as may be in general use by significant
               segments of the accounting profession, which are applicable to
               the circumstances as of the date of determination.

          (ii) As soon as available, and in any event within 50 days after the
               end of each fiscal quarter period of Borrower a copy of the
               balance sheet and profit and loss statement of Borrower for such
               period, signed by a duly authorized officer of Borrower, in
               reasonable detail, prepared by Borrower in accordance with GAAP.

     (b)  Borrower represents and warrants that all data and statements of fact
          furnished by Borrower and Guarantor to CitiCapital with respect to the
          business and financial condition of Borrower, Guarantor and its
          Subsidiaries were and continue to be true, accurate and correct and
          any such information hereafter furnished will be true, accurate and
          correct as of the date when such data or statement is furnished.

     (c)  So long as any amount remains unpaid under this Agreement, Borrower
          will permit CitiCapital or CitiCapital's representatives to enter, at
          all reasonable times and during normal business hours, upon Borrower's
          premises or any other premises where the Collateral may then be
          located to inspect the Collateral and to inspect, examine and audit
          Borrower's books and records with respect to the Collateral. Borrower
          agrees to pay to CitiCapital the greater of CitiCapital's

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<PAGE>

          standard fee or actual costs relating to such examinations immediately
          upon receipt of CitiCapital's invoice therefor. Provided that Borrower
          is not in default in any of its obligations to CitiCapital,
          CitiCapital agrees that (i) it will audit Borrower's books and records
          with respect to the Collateral no more than twice a year and (ii) the
          fees and costs payable by Borrower and the Affiliates for such
          examinations will not exceed an aggregate of $10,000 per year.

     (d)  Borrower covenants and agrees that, unless the taxing authority to
          which the tax is owed agrees to accept payment at a later date without
          the imposition of a lien on any of the assets of Borrower, Borrower
          will pay all local, state and federal taxes (including withholding
          taxes) on or before the date when the same become due. The Federal
          Taxpayer Identification Number of Borrower is 45-0455407.

4.3  Financial Covenants. The following covenants must be satisfied at all times
     throughout the term of this Agreement:

     (a)  Guarantor must maintain an Adjusted Net Worth greater than an amount
          equal to $60,000,000 plus seventy-five percent (75%) of the positive
          Consolidated Net Income for the previous fiscal year. The first
          measurement period, for calculation of Consolidated Net Income, will
          commence on January 31, 2002.

          "Adjusted Net Worth" shall mean Tangible Net Worth plus Subordinated
          Indebtedness.

          The term "Tangible Net Worth" shall mean the excess of all tangible
          assets of the Guarantor and its Subsidiaries over all liabilities of
          the Guarantor and its Subsidiaries. For these purposes, the term
          "tangible assets" shall mean such of Guarantor's and its Subsidiaries'
          assets which have intrinsic and marketable value or collectability,
          such as real estate, plant and equipment, inventory, accounts
          receivable, money, negotiable instruments, marketable securities and
          the like, but shall not include:

          o    the amount, if any, by which the Guarantor's and its
               Subsidiaries' inventory exceeds the lower of cost or market value
               thereof, or the value of any inventory which is obsolete or
               damaged or is otherwise deemed by CitiCapital not to be of a
               marketable quality commensurate with Guarantor's and its
               Subsidiaries' inventory as a whole;

          o    accounts receivable which are deemed by Guarantor or CitiCapital
               to be uncollectable or which should be subject to a reserve for
               bad debts in accordance with generally accepted accounting
               principles, or which are subject to potential claims or setoffs;

          o    any asset which is intangible or lacks intrinsic and marketable
               value or collectability, including but not limited to goodwill,
               patents, copyrights, trademarks, franchises, organization or
               research and development costs.

          The term "Subordinated Indebtedness" means all Indebtedness of
          Guarantor and its Subsidiaries the repayment of which has been
          subordinated to Indebtedness owing to CitiCapital.

          "Indebtedness" of the Guarantor means without duplication (a) all
          indebtedness of Guarantor and its Subsidiaries for borrowed money
          (including reimbursement and all other obligations with respect to
          letters of credit, bankers' acceptances, surety bonds and performance
          bonds, whether or not matured) or for the deferred purchase price of
          property or services, (b) all obligations of Guarantor and its
          Subsidiaries evidenced by notes, bonds, debentures or similar
          instruments, (c) all indebtedness of Guarantor and its Subsidiaries
          created or arising under any conditional sale or other title retention
          agreement with respect to property acquired by Guarantor or its
          Subsidiaries (even though the rights and remedies of the seller or
          lender under such agreement in the event of default are limited to
          repossession or sale of such property), (d) the capitalized amount of
          all obligations of Guarantor or its Subsidiaries under any lease of

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<PAGE>

          property by Guarantor or any of its Subsidiaries as lessee which would
          be accounted for as a capital lease on a balance sheet of Guarantor or
          its Subsidiaries, as determined on a consolidated basis in conformity
          with GAAP, (e) all guaranty obligations of Guarantor and its
          Subsidiaries, (f) all obligations of Guarantor or its Subsidiaries to
          purchase, redeem, retire, defease or otherwise acquire for value any
          stock or stock equivalents of Guarantor or any of its Subsidiaries,
          valued, in the case of redeemable preferred stock, at the greater of
          its voluntary or involuntary liquidation preference plus accrued and
          unpaid dividends, and (g) all Indebtedness referred to above secured
          by (or for which the holder of such Indebtedness has an existing
          right, contingent or otherwise, to be secured by) any lien upon or in
          property (including accounts and general intangibles) owned by the
          Guarantor or any of its Subsidiaries, even though the Guarantor or its
          Subsidiaries has not assumed or become liable for the payment of such
          Indebtedness.

          "Consolidated Net Income" means the net income (or loss) of Guarantor
          and its Subsidiaries for a particular period, determined on a
          consolidated basis in conformity with GAAP.

     (b)  Guarantor must maintain a maximum ratio for any period of Consolidated
          Total Liabilities for such period minus Subordinated Indebtedness for
          such period to Adjusted Net Worth for such period of 4.5 to 1.0. This
          ratio shall be measured on a quarterly basis.

          The term "Consolidated Total Liabilities" means the total liabilities
          of Guarantor and its Subsidiaries for a particular period, determined
          on a consolidated basis in conformity with GAAP.

     (c)  Guarantor must maintain a minimum Interest Coverage Ratio measured on
          a quarterly basis as follows:

          2Q03           3Q03            4Q03           2004 through end of term
          -0.75 to 1     -0.25 to 1      1 to 1                 1.5 to 1

          The term "Interest Coverage Ratio" for any period means the ratio of
          the rolling four quarter (i.e., the most recent and three prior) EBIT
          of Guarantor and its Subsidiaries for such period to the Interest
          Expense of Guarantor and its Subsidiaries for such period.

          The term "EBIT" means an amount equal to (a) Consolidated Net Income
          of Guarantor and its Subsidiaries for such period plus (b) the sum of,
          in each case to the extent included in the calculation of Consolidated
          Net Income of Guarantor and its Subsidiaries for such period in
          accordance with GAAP, but without duplication, (i) any provision for
          income taxes and (ii) interest expense.

          The term "Interest Expense" means, for any period, the difference
          between the total interest expense of Guarantor and its Subsidiaries
          for such period determined on a consolidated basis in conformity with
          GAAP minus any interest income of the Guarantor and its Subsidiaries
          for such period determined on a consolidated basis in conformity with
          GAAP.

             5. REPRESENTATION, WARRANTIES AND ADDITIONAL AGREEMENTS

5.1  ADDITIONAL WARRANTIES AND AGREEMENTS. Borrower warrants and agrees that:
     the Collateral is currently and, subject to ordinary use, will continue to
     be maintained in good operating condition and repair, and is currently and
     will continue to be used and operated with care only by personnel
     experienced in the use of such Collateral in the regular course of
     Borrower's business and in substantial compliance with all applicable
     governmental laws and regulations, manufacturer's specifications and the
     restrictions contained in any insurance policy insuring the Collateral;
     and, the Collateral is not currently and will not be used in conjunction
     with the storage, transportation or disposal of substances considered

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<PAGE>

     to be toxic or hazardous, as defined in applicable environmental laws, or
     in conjunction with any activity that would be illegal or would subject the
     Collateral to confiscation by any governmental entity.

     Borrower further warrants and agrees that: the security interest in the
     Collateral granted to or retained by CitiCapital is and will continue to be
     superior to any title to or interest in the Collateral now or hereafter
     held or claimed by any other party except as specifically agreed to in
     writing by CitiCapital; the Collateral is free from and will be kept free
     from all liens, claims, security interests and encumbrances (whether
     superior or inferior to the interests of CitiCapital) other than that
     created by this Agreement and except as specifically agreed to in writing
     by CitiCapital; Borrower will not and will not allow any other party to
     consign, sell, encumber, pledge, transfer, secrete or otherwise dispose of
     any of the Collateral without CitiCapital's prior written consent except
     for sales in the ordinary course of business by Borrower; Borrower will
     take such action as CitiCapital reasonably requests to perfect or preserve
     the interests granted to CitiCapital under this Agreement and the first
     priority of such interests; any Manufacturer's Statement or Certificate of
     Origin or Certificate of Title relating to the Collateral shall be
     immediately delivered to CitiCapital in the event of default and, if a
     Certificate of Title or registration is required for any item of
     Collateral, Borrower will cooperate with CitiCapital in obtaining the
     Certificate of Title or registration disclosing the interests of Borrower
     and CitiCapital in the Collateral; Borrower will defend any action,
     proceeding or claim affecting the Collateral or the interests of
     CitiCapital in the Collateral; Borrower shall promptly pay all amounts
     payable in conjunction with the storage, maintenance or repair of the
     Collateral and all taxes, assessments, license fees and other public or
     private charges levied or assessed in conjunction with the operation or use
     of the Collateral or levied or assessed against the Collateral or this
     Agreement except for those which are being contested by Borrower in good
     faith by appropriate proceedings and which do not constitute a lien or
     encumbrance upon the Collateral.

     Borrower's obligations and liabilities to CitiCapital are absolute and
     unconditional under all circumstances and regardless of any failure of
     operation or Borrower's loss of possession of any item of Collateral or the
     cessation or interruption of Borrower's business for any reason whatsoever.
     Borrower agrees to notify CitiCapital in writing in the event that Borrower
     anticipates removing any item of Collateral from the states of Arizona,
     California, Minnesota, Montana, Nebraska, North Dakota, south Dakota,
     Texas, Oregon, Nevada, Wisconsin, or Washington for a period in excess of
     30 days.

5.2  INSURANCE AND RISK OF LOSS. Borrower will at all times bear all risk of
     loss of, damage to or destruction of the Collateral. Borrower agrees to
     immediately procure and maintain insurance on the Collateral for the full
     insurable value thereof and for the life of this Agreement, containing the
     same or similar provisions as the insurance policies in place on the
     Closing Date in the form of "All Risk" or similar insurance (insuring the
     Collateral for fire, extended coverage, vandalism, theft and collision and
     containing only those exclusions from coverage which are acceptable to
     CitiCapital) plus such other insurance as CitiCapital may specify from time
     to time, all in form and amount and with such insurers satisfactory to
     CitiCapital. Borrower agrees to deliver promptly to CitiCapital
     certificates or, if requested, policies of insurance satisfactory to
     CitiCapital, each with a standard long-form loss-payable endorsement naming
     CitiCapital or its assigns as loss payee and providing that CitiCapital's
     rights under such policy will not be invalidated by any act, omission or
     neglect of anyone other than CitiCapital, and containing the insurer's
     agreement to give 30 days prior written notice to CitiCapital before any
     cancellation of or material change in the policy(s) will be effective as to
     CitiCapital, whether such cancellation or change is at the direction of
     Borrower or insurer. CitiCapital's acceptance of policies in lesser amounts
     or risks will not be a waiver of Borrower's obligation to procure insurance
     complying with the provisions hereof promptly after notice from
     CitiCapital. Borrower assigns to CitiCapital all proceeds of any physical
     damage or credit insurance that is maintained by Borrower in accordance
     herewith, including returned and unearned premiums, up to the amount owing
     hereunder by Borrower. Borrower directs all insurers to pay such proceeds
     solely to the order of CitiCapital for application to Borrower's
     indebtedness to CitiCapital in a manner determined by CitiCapital in its
     sole discretion.

5.3  PERFORMANCE BY CITICAPITAL. If Borrower fails to perform any of Borrower's
     obligations under this Agreement, CitiCapital may perform the same for the
     account of Borrower. Any such action by

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<PAGE>

     CitiCapital will be in CitiCapital's sole discretion and CitiCapital will
     not be obligated in any way to do so. CitiCapital's performance on behalf
     of Borrower will not obligate CitiCapital to perform the same or any
     similar act in the future and will not cure or waive Borrower's failure of
     performance as an event of default hereunder. All sums advanced or costs
     and expenses incurred by CitiCapital pursuant to this Paragraph, including
     the reasonable fees of any attorney retained by CitiCapital, will be for
     the account of Borrower, will constitute indebtedness secured by
     CitiCapital's security interest in the Collateral, will bear interest at
     the highest rate allowed by law and will be immediately due and payable,
     unless CitiCapital, in CitiCapital's sole discretion, agrees otherwise in
     writing.

5.4  DOCUMENTATION. Prior to any advance hereunder:

     (a)  Borrower must have executed and delivered to CitiCapital this
          Agreement and other documents or instruments as CitiCapital requires
          to grant, evidence, perfect or record the first priority security
          interest or lien of CitiCapital in and to the Collateral described in
          this Agreement.

     (b)  Guarantor must have executed and delivered to CitiCapital Guarantor's
          unconditional continuing guaranty of the payment and performance by
          Debtor of all of its obligations to CitiCapital (the "Guaranty").

     (c)  CitiCapital must have received all documents, instruments, agreements
          and other items required to be executed or delivered pursuant to this
          Agreement.

     In the event that the Guarantor notifies CitiCapital of its intention not
     to guaranty any future advances under this Agreement, CitiCapital will not
     be obligated to make any such future advances. All documentation and the
     validity of all phases of the transactions contemplated by this Agreement,
     including but not limited to the validity and enforceability of any
     guaranty delivered pursuant to or in conjunction with this Agreement or the
     Collateral, must be satisfactory and acceptable to counsel for CitiCapital
     prior to the making of any loan or advance to Debtor.

5.5  DOCUMENTATION FEE. Borrower agrees to pay for CitiCapital's out-of-pocket
     expenses incurred in connection with the transactions contemplated by this
     Agreement including, without limitation, filing and recording fees, title
     searches and the cost of any legal service.

                                   6. DEFAULT

6.1  EVENTS OF DEFAULT. Time is of the essence. An event of default will occur
     if:

     (a)  Borrower fails to pay, within five business days of CitiCapital's
          notice thereof, any amount owed by it to CitiCapital or any affiliate
          (including, without limitation, any direct or indirect parent,
          subsidiary or sister entity), successor or assignee of CitiCapital
          under this Agreement or if Borrower fails to pay when due any amount
          owed by it to CitiCapital or any affiliate (including, without
          limitation, any direct or indirect parent, subsidiary or sister
          entity), successor or assignee of CitiCapital under any other
          document, agreement or instrument;(including, without limitation, any
          direct or indirect parent, subsidiary or sister entity), successor or
          assignee of CitiCapital or otherwise acquired by CitiCapital or any
          affiliate of CitiCapital;

     (b)  Borrower fails to comply, within five business days of CitiCapital's
          notice thereof, with any of its agreements hereunder or any warranty
          made by Borrower in this Agreement, or if Borrower fails to perform or
          observe any term or provision to be performed or observed by it under
          any other document, instrument or agreement furnished by Borrower to
          CitiCapital or any affiliate of CitiCapital or otherwise acquired by
          CitiCapital or any affiliate of CitiCapital;

     (c)  The Affiliates or RDO Financial Services Co. fails to pay, within five
          business days of CitiCapital's notice thereof, when due any amount
          owed by it to CitiCapital or any affiliate

                                       34
<PAGE>

          (including, without limitation, any direct or indirect parent,
          subsidiary or sister entity), successor or assignee of CitiCapital
          under this Agreement or if the Affiliates or RDO Financial Services
          Co. fails to pay when due any amount owed by it to CitiCapital or any
          affiliate(including, without limitation, any direct or indirect
          parent, subsidiary or sister entity), successor or assignee of
          CitiCapital under any other document, agreement or instrument;

     (d)  The Affiliates or RDO Financial Services Co. fails to perform or
          observe, within five business days of CitiCapital's notice thereof,
          any term or provision to be performed or observed by it under any
          other document, instrument or agreement furnished by the Affiliates or
          RDO Financial Services Co. to CitiCapital or any affiliate of
          CitiCapital (including, without limitation, any direct or indirect
          parent, subsidiary or sister entity), successor or assignee of
          CitiCapital or otherwise acquired by CitiCapital or any affiliate of
          CitiCapital;

     (e)  any information, representation, or warranty furnished by Borrower to
          CitiCapital or to any affiliate of CitiCapital is materially
          inaccurate or incorrect as determined by CitiCapital in its sole
          discretion;

     (f)  Borrower becomes insolvent, or ceases to do or is prohibited by any
          court order or governmental action from conducting business as a going
          concern;

     (g)  any surety or bonding company assumes any of Borrower's
          responsibilities under any contract or job where such contract or job
          has a value in excess of $250,000 as a result of Borrower's default in
          its obligations to such surety or bonding company and Borrower has not
          cured such default within 30 days of such occurrence;

     (h)  Collateral with an aggregate book value equal to or greater than
          $250,000 is lost, stolen or destroyed and Borrower has not cured such
          default within 30 days of such occurrence;

     (i)  there shall occur an (i) appropriation, (ii) confiscation, (iii)
          retention, or (iv) seizure of control, custody or possession of
          Collateral with an aggregate book value equal to or greater than
          $100,000 by any governmental agency including, without limitation, any
          municipal, state, federal or other governmental entity or any
          governmental agency or instrumentality (all such entities, agencies
          and instrumentalities shall hereinafter be referred to as
          "Governmental Authority") and Borrower has not cured such default
          within 30 days of such occurrence;

     (j)  if anyone in the control, custody or possession of the Collateral or
          the Borrower is accused or alleged or charged (whether or not
          subsequently arraigned, indicted or convicted) by any Governmental
          Authority to have used the Collateral in connection with the
          commission of any crime (other than a misdemeanor moving violation)
          and such allegation relates to Collateral with an aggregate book value
          equal to or greater than $250,000, and Borrower has not cured such
          default within 30 days of such occurrence;

     (k)  if Borrower attempts to consign or sell any of the Collateral outside
          of the ordinary course of Borrower's business without the prior
          written consent of CitiCapital or allows another to do so;

     (l)  Borrower files a petition in bankruptcy, or for an arrangement,
          reorganization, or similar relief, or makes an assignment for the
          benefit of creditors, or applies for the appointment of a receiver or
          trustee for a substantial part of its assets or for any of the
          Collateral, or attempts to take advantage of any process or proceeding
          for the relief of debtors;

     (m)  or if any action described in subparagraph (l) above is taken against
          Borrower and such action or proceeding is not promptly contested by
          appropriate proceedings or is not dismissed within 60 days;

                                       35
<PAGE>

     (n)  any other party attempts to attach, repossess or execute upon
          Collateral with an aggregate book value equal to or greater than
          $100,000 and Borrower has not cured such default within 30 days of
          such occurrence;

     (o)  Borrower ceases to exist as a legal entity, or Borrower or any party
          in control of Borrower takes any action looking to dissolution of
          Borrower as a legal entity;

     (p)  if there is a material change in ownership, management or control of
          Borrower without the prior written consent of CitiCapital;

     (q)  if there shall be a material adverse change in any of the (i)
          condition (financial or otherwise), business, performance, prospects,
          operations or properties of the Borrower, (ii) legality, validity or
          enforceability of this Agreement, (iii) perfection or priority of the
          lien granted in favor of CitiCapital pursuant to this Agreement, (iv)
          ability of the Borrower to repay the indebtedness or perform its
          obligations under this Agreement or (v) rights and remedies of
          CitiCapital; or

     (r)  except for the security interest, lien or reservation of title in
          favor of CitiCapital or as otherwise granted herein or as specifically
          agreed to in writing by CitiCapital, there shall be any lien, claim or
          encumbrance on any of the Collateral.

     CitiCapital's inaction with respect to an event of default will not be a
     waiver of such default and CitiCapital's waiver of any default will not be
     a waiver of any other default.

6.2  REMEDIES UPON DEFAULT. Upon the occurrence of an event of default, and at
     any time thereafter as long as the default continues, CitiCapital may, at
     its option, with or without notice to Borrower:

     (a)  declare this Agreement to be in default;

     (b)  declare the indebtedness hereunder to be immediately due and payable;

     (c)  declare all other debts then owing by Borrower to CitiCapital or any
          affiliate (including, without limitation, any direct or indirect
          parent, subsidiary or sister entity), successor or assignee of
          CitiCapital to be immediately due and payable;

     (d)  cancel any insurance and credit any refund to the indebtedness; and

     (e)  exercise all of the rights and remedies of a secured party under the
          Uniform Commercial Code and any other applicable laws, including,
          without limitation, the right to require Borrower to assemble the
          Collateral and deliver it to CitiCapital at a place to be designated
          by CitiCapital which is reasonably convenient to both parties, and to
          lawfully enter any premises where the Collateral may be without
          judicial process and take possession thereof.

     Acceleration of any or all indebtedness, if so elected by CitiCapital, will
     be subject to all applicable laws including those pertaining to refunds and
     rebates of unearned charges. Any property other than the Collateral that is
     in or upon the Collateral at the time of repossession may be taken and held
     without liability until its return is requested by Borrower. Any sale or
     other disposition of any of the Collateral may be made at public or private
     sale or through public auction at the option of CitiCapital. CitiCapital
     may buy at any sale and become the owner of the Collateral. CitiCapital may
     sell the Collateral without giving any warranties as to the Collateral.
     CitiCapital may disclaim any warranties of title, possession, quiet
     enjoyment, or the like. This procedure will not be considered to adversely
     affect the commercial reasonableness of any sale of the Collateral. Unless
     otherwise provided by law, any requirement of reasonable notice which
     CitiCapital may be obligated to give regarding the sale or other
     disposition of Collateral will be met if such notice is given to Borrower
     at least ten days before the time of sale or other disposition. Borrower
     agrees that CitiCapital may bring any legal proceedings it deems necessary
     to enforce the payment and performance of Borrower's obligations hereunder
     in any court in the state of

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<PAGE>

     North Dakota, or Texas. The filing by CitiCapital of any action or
     proceeding with respect to the Collateral or any of Borrower's obligations
     hereunder will not constitute an election by CitiCapital of CitiCapital's
     remedies or a waiver of CitiCapital's rights to take possession of the
     Collateral as provided above. Expenses of retaking, holding, preparing for
     sale, selling and the like will include (a) the reasonable fees of any
     attorneys retained by CitiCapital, (b) any amounts advanced or expenses
     incurred by CitiCapital pursuant hereto, and (c) all other legal and other
     expenses incurred by CitiCapital. Borrower agrees that they will continue
     to be liable for and will promptly pay any deficiency remaining after any
     disposition of Collateral after default and all costs and expenses,
     including the reasonable fees of any attorney, incurred by CitiCapital in
     the collection of any such deficiency.

                                   7. NOTICES

     Any notices or consents required or permitted by the terms of this
     Agreement will be in writing and will be deemed delivered if (a) delivered
     in person, (b) sent by certified or registered mail, postage prepaid,
     return receipt requested, (c) sent by means of an overnight carrier such as
     Federal Express with a delivery receipt required or (d) transmitted by
     facsimile machine with receipt of such facsimile transmission confirmed, to
     the such address or fax number as the recipient designates in writing.
     Notices delivered in person or sent by overnight carrier will be deemed
     delivered at the time of delivery. Notices sent by mail in accordance with
     this paragraph will be deemed delivered on the third business day after the
     deposit of such notice with the United States Post Office. If a notice is
     sent by facsimile transmission prior to 3:00 p.m. (recipient's time) on a
     day, which is a normal business day for the recipient, it will be deemed
     delivered on the date upon which receipt of the transmission by the
     recipient is confirmed. Any other notice sent by facsimile transmission
     will be deemed delivered normal business day of the recipient which
     immediately follows the date upon which receipt of the transmission by the
     recipient is confirmed.

                              8. GENERAL PROVISIONS

8.1  POWER OF ATTORNEY. Borrower hereby appoints CitiCapital or any officer,
     employee or designee of CitiCapital or any assignee of CitiCapital (or any
     designee of such assignee) as Borrower's attorney-in-fact, to, in the event
     of default, and acting in Borrower's or CitiCapital's name: (a) prepare,
     execute and submit any notice or proof of loss in order to realize the
     benefits of any insurance policy insuring the Collateral, and (b) prepare,
     execute and file any agreement, document, financing statement, instrument
     (or any other writing or record) that, in CitiCapital's opinion, is
     necessary to perfect and/or give public notice of the interests of
     CitiCapital in any collateral that secures or may secure any obligations or
     indebtedness of Borrower to CitiCapital, and (c) endorse Borrower's name on
     any remittance representing proceeds of any insurance relating to the
     Collateral or the proceeds of the sale or other disposition of any of the
     Collateral (whether or not such disposition is a default hereunder).
     Borrower agrees to execute and deliver to CitiCapital, upon CitiCapital's
     request, such documents, writings, records and assurances as CitiCapital
     deems necessary or advisable for the confirmation or perfection of the
     security interest in the Collateral and CitiCapital's rights hereunder,
     including such documents, writings, records and assurances as CitiCapital
     may require for filing or recording. Borrower authorizes CitiCapital or any
     officer, employee or designee of CitiCapital or any assignee of CitiCapital
     (or any designee of such assignee) to file a financing statement describing
     the Collateral as well as any assets of the Borrower other than the
     Collateral described herein. These powers are coupled with an interest and
     are irrevocable so long as any indebtedness secured hereunder remains
     unpaid.

8.2  ASSIGNMENT. Borrower will not assign this Agreement without the prior
     written consent of CitiCapital. CitiCapital, or any assignee or successor
     of CitiCapital shall have the right to transfer, sell or assign all or any
     portion of this Agreement or the indebtedness or obligations hereunder,
     with notice, but without acknowledgment or consent from Borrower. Upon
     assignment, the term "CitiCapital" shall mean and refer to any assignee who
     is the holder of this Agreement. The assignor will not be the assignee's
     agent for any purpose. Borrower waives and will not assert against any
     assignee of Borrower any claims, counterclaims, claims in recoupment,
     abatement, reduction, defenses or set-offs for breach of warranty or for
     any other reason that Borrower could assert against CitiCapital, except
     defenses that cannot be

                                       37
<PAGE>

     waived under the Uniform Commercial Code. Upon full payment of all
     obligations secured by this Agreement, the assignee may deliver all
     original papers to the assignor for Borrower.

8.3  PRIVACY WAIVER. CitiCapital may receive from and disclose to any
     individual, corporation, business trust, association, company, partnership,
     joint venture, or other entity (herein collectively, the "Entity"),
     including, without limiting the generality of the foregoing, CitiCapital's
     parent or any affiliate or any subsidiary of CitiCapital and any credit
     reporting agency or other entity whether or not related to CitiCapital for
     any purpose SOLELY RELATED TO THE EXTENSION OF CREDIT TO BORROWER HEREUNDER
     OR THE OBLIGATIONS OF PARTIES UNDER THIS AGREEMENT, information about
     Borrower's accounts, credit application and credit experience with
     CitiCapital and Borrower authorizes any Entity to release to CitiCapital
     any information related to Borrower's accounts, credit experience and
     account information regarding the Borrower. This shall be continuing
     authorization for all present and future disclosures of Borrower's account
     information, credit application and credit experience on Borrower made by
     CitiCapital, or any Entity requested to release such information to
     CitiCapital.

8.4  LOCATION OF BORROWER. (i) If Borrower is a corporation, limited liability
     company, limited partnership or other registered organization, its state of
     incorporation is in the state set forth immediately below its signature on
     the last page of this Agreement; (ii) if Borrower is an individual, his/her
     principal place of residence is at the address set forth immediately below
     his/her signature on the last page of this Agreement; (iii) if Borrower is
     an organization, its place of business or if it has more than one place of
     business its chief executive office, is located at the address set forth
     immediately below its signature on the last page of this Agreement.
     Borrower agrees that it will not, without the prior written consent of
     CitiCapital, change its state of organization if it is a corporation,
     limited liability company, limited partnership or other registered
     organization or the location of its chief executive office or its place of
     business if it is an organization. If Borrower is an individual, Borrower
     must notify CitiCapital in writing of a change in his/her principal place
     of residence 30 days prior to such change.

8.5  PAYMENT PROCESSING. Borrower hereby agrees that any payments made by
     Borrower hereunder by check and received by CitiCapital at an address other
     than the address specified on the related invoice may be replaced by
     CitiCapital with a substitute instrument of equal amount and presented to
     Borrower's financial institution for payment from the account referenced on
     the check from Borrower. If Borrower sends any payment hereunder by check
     to CitiCapital at an address other than the one specified on the related
     invoice, then Borrower shall be deemed to have authorized CitiCapital to
     substitute such check with an instrument of equal amount and present the
     substitute instrument to CitiCapital's financial institution for payment
     from the account referenced on Borrower's check.

8.6  MISCELLANEOUS.

     (a)  All of CitiCapital's rights hereunder are cumulative and not
          alternative.

     (b)  All of the terms and provisions hereof will apply to and be binding
          upon Borrower, and their representatives, successors and assigns and
          will inure to the benefit of CitiCapital, its successors and assigns.

     (c)  BORROWER AND CITICAPITAL HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN
          ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTION
          CONTEMPLATED HEREBY.

     (d)  BORROWER HEREBY EXPRESSLY WAIVES NOTICE OF NONPAYMENT, PRESENTMENT,
          PROTEST, DISHONOR, DEFAULT, INTENT TO ACCELERATE THE MATURITY HEREOF
          AND OF ACCELERATION OF THE MATURITY HEREOF.

     (e)  No waiver or change in this Agreement or in any related note will be
          binding upon CitiCapital, or CitiCapital's assignee, unless such
          waiver or change is in writing and signed by one of its officers and
          any such waiver or change will then be effective only upon the terms
          and to the extent provided in such writing.

                                       38
<PAGE>

     (f)  The acceptance by CitiCapital of any remittance from a party other
          than the obligor on the related indebtedness will in no way constitute
          CitiCapital's consent to the transfer of any of the Collateral to such
          party.

     (g)  Any captions or headings included in this Agreement are for
          convenience of reference only and will not limit or otherwise affect
          the meaning of any provision contained in this Agreement.

     (h)  Any provision contained herein which is contrary to, prohibited by or
          invalid under applicable laws or regulations will be deemed
          inapplicable and omitted from this Agreement, but will not invalidate
          the remaining provisions hereof.

                                    INSURANCE

     PHYSICAL DAMAGE INSURANCE COVERING THE COLLATERAL IS REQUIRED. BORROWER CAN
     FURNISH THIS INSURANCE THROUGH AN AGENT OR BROKER OF BORROWER'S CHOICE.
     BORROWER HEREBY AUTHORIZES CITICAPITAL AND ANY ASSIGNEE TO RELEASE TO ANY
     INSURANCE COMPANY AFFILIATED WITH CITICAPITAL ANY INFORMATION RELATING TO A
     CONTRACT OR POLICY OF INSURANCE, WHICH IS PROVIDING OR MAY PROVIDE
     INSURANCE COVERAGE AGAINST PHYSICAL DAMAGE TO THE COLLATERAL.

     THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
     AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
     SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
     AGREEMENTS BETWEEN THE PARTIES.

     THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
     OF THE STATE OF NORTH DAKOTA.

RDO CONSTRUCTION EQUIPMENT CO.                CITICAPITAL COMMERCIAL CORPORATION

By: /s/ Steven B. Dewald                      By: /s/ James C. Chesser
    ------------------------------------          ------------------------------
Title:  CFO                                   Title: VP
        --------------------------------             ---------------------------

State of Organization: North Dakota
                       -----------------

Chief Executive Office:
       2829 South University Drive
----------------------------------------
       Fargo, ND 58103
----------------------------------------

Acknowledged and agreed to this 25th day
                                ----
of October, 2002
   -------------

RDO EQUIPMENT CO.

By: /s/ Steven B. Dewald
    ------------------------------------
Title: CFO
       ---------------------------------

AD102180 (Rev. 10/14/02)

                                       39

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