Document:

<Page>

                                                                   EXHIBIT 10.11

--------------------------------------------------------------------------------

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                          Dated as of December 30, 2002

                                      Among

                AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY,

                                   THE BANKS,
                               as defined herein,

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,
                             as a Bank and as Agent

--------------------------------------------------------------------------------

<Page>

                                                                  EXECUTION COPY

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

     THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 30, 2002
is by and between AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY, an Iowa
corporation (the "Borrower"), the banks or financial institutions listed on the
signature pages hereof or which hereafter become parties hereto as hereinafter
provided (individually referred to as a "Bank" or collectively as the "Banks"),
WEST DES MOINES STATE BANK, an Iowa state bank, as Co-Agent (in such capacity,
the "Co-Agent"), FLEET NATIONAL BANK, a national banking association, as
Documentation Agent (in such capacity, the "Documentation Agent") and U.S. BANK
NATIONAL ASSOCIATION, a national banking association, as agent for the Banks
(together with its successors in such capacity, the "Agent").

                              Preliminary Statement

     The Borrower, the Banks and the Agent have heretofore entered into a Second
Amended and Restated Revolving Credit Agreement dated as of April 6, 2000 ( the
"Existing Credit Agreement"), pursuant to which the Banks have made certain
loans available to the Borrower on a revolving credit basis. The Borrower
elected, pursuant to the Existing Credit Agreement, to convert such loans into
term loans. The unpaid principal balance of such term loans shall be continued
hereunder and shall constitute the "Tranche A Loans" under this, amending and
restating the Existing Credit Agreement.

     The Borrower and certain of the Banks (the "Tranche B Banks" hereunder)
have agreed that the Tranche B Banks shall make additional loans to the Borrower
called the "Tranche B Loans" hereunder.

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree that the Existing Credit Agreement is
amended and restated in its entirety to read in full as follows:

                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

     Section 1.1 DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the following respective meanings
(and such meanings shall be equally applicable to both the singular and plural
form of the terms defined, as the context may require):

     "ADJUSTED CAPITAL": As to AEILIC, as of any date, the total amount shown on
line 30, page 27, column 1 of the Annual Statement of AEILIC, or an amount
determined in a consistent manner for any date other than one as of which an
Annual Statement is prepared. Such amount is intended to equal the "total
adjusted capital" as defined in IOWA CODE SECTION 521E.1, or such other amount
as is used to calculate risk-based capital level of AEILIC from time to time.

<Page>

     "ADJUSTED CAPITAL AND SURPLUS": As to AEILIC, as of any date, the sum of
(a) Capital and Surplus as of such date, plus (b) IMR/AVR of AEILIC as of such
date.

     "ADVANCE": The portion of the outstanding Loans bearing interest at an
identical rate for an identical Interest Period, provided that all Prime Rate
Advances shall be deemed a single Advance. An Advance may be a "Eurodollar
Advance" or "Prime Rate Advance" (each, a "type" of Advance).

     "AEILIC": American Equity Investment Life Insurance Company, an Iowa
insurance company.

     "AEISC": American Equity Investment Service Company, an Iowa corporation.

     "AEISC NOTE": Promissory Note, dated December 29, 1999, in the principal
amount of $50,000,000, payable by AEISC to the Borrower, as amended, modified,
extended, renewed or replaced from time to time.

     "AEISC NOTE COLLECTIONS" Any Collections representing payment of the AEISC
Notes, proceeds of sale of the AEISC Notes, or distribution, adequate protection
payment or similar amount received in respect of the AEISC Notes for the
Obligations or otherwise in any insolvency case or proceeding involving the
Borrower or AEISC.

     "AEISC SECURITY AGREEMENT": The Third Amended and Restated Security
Agreement dated as of April 6, 2000, as acknowledged and amended by the
Acknowledgement of Security Agreement in the form of EXHIBIT B hereto, between
AEISC and the Agent for the benefit of the Agent and the Banks, as the same may
be amended, supplemented, restated or otherwise modified in writing from time to
time by AEISC and the Agent.

     "AFFILIATE": Any Person (other than a Subsidiary and other than U.S. Bank
National Association): (a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, the Borrower; (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower; or
(c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

     "AGENT": U.S. Bank National Association as agent for the Banks hereunder
and each successor, as provided in SECTION 12.7, who shall act as Agent.

     "AGENT'S FEE LETTER" means the letter agreement, dated as of December 30,
2002 (as thereafter amended, modified, renewed or replaced from time to time)
between the Agent and the Borrower pertaining to certain fees.

     "AGREEMENT": This Amended and Restated Credit Agreement, as it may be
amended, modified, supplemented, restated or replaced from time to time.

     "A.M. BEST": A.M. Best & Company.

<Page>

     "AMOUNTS AVAILABLE FOR DIVIDENDS": For any fiscal year of AEILIC, the
maximum amount of dividends AEILIC is permitted to pay for such fiscal year
under the Applicable Insurance Code of its state of domicile without
necessitating approval of the Insurance Regulatory Authority.

     "ANNUAL STATEMENT": As to any Insurance Subsidiary, the annual financial
statements of such Insurance Subsidiary as required to be filed with the
applicable Insurance Regulatory Authority, together with all exhibits and
schedules filed therewith, prepared in conformity with SAP. References to
amounts on particular exhibits, schedules, lines, pages and columns of the
Annual Statement are based on the format promulgated by the NAIC for 2001 Life,
Accident and Health Insurance Company Annual Statements. If such format is
changed in future years so that different information is contained in such items
or they no longer exist, it is understood that the reference is to information
consistent with that reported in the referenced item in the 2001 Annual
Statement of the Insurance Subsidiary.

     "APPLICABLE INSURANCE CODE": As to any Insurance Subsidiary, the insurance
code of any state where such Insurance Subsidiary is domiciled or doing
insurance business and any successor statute of similar import, together with
the regulations thereunder, as amended or otherwise modified and in effect from
time to time. References to sections of the Applicable Insurance Code shall be
construed to also refer to successor sections.

     "AVERAGE INVESTED ASSETS": The sum of the Weighted Invested Assets for each
of the four quarters within the twelve month period ending on the last day of
any calendar quarter divided by 2.5.

     "BORROWER PLEDGE AGREEMENT": The Second Amended and Restated Pledge
Agreement dated as of April 6, 2000, as acknowledged and amended by the
Acknowledgement of Security Agreement in the form of EXHIBIT C hereto, between
the Borrower and the Agent for the benefit of the Agent and the Banks, as the
same may be amended, supplemented restated or otherwise modified in writing from
time to time by the Borrower and the Agent.

     "BUSINESS DAY": Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota and New York, New York and, with respect to Eurodollar
Advances, a day on which dealings in Dollars may be carried on by the Agent in
the interbank eurodollar market.

     "CAPITAL AND SURPLUS": As to AEILIC as of any date, the total amount shown
on line 38, page 3, column 1 of the Annual Statement of AEILIC.

     "CAPITALIZED LEASE LIABILITIES": With respect to any Person, all monetary
obligations of such Person under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as a capitalized lease, and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.

<Page>

     "CASH COVERAGE RATIO": The ratio, determined on a consolidated basis for
the Borrower and its Subsidiaries at the end of each fiscal quarter for the
period of four consecutive fiscal quarters then ending of:

     (a) the total of the following: (i) Amounts Available for Dividends as of
     (A) the last day of the most recently completed fiscal year, if the
     determination of Cash Coverage Ratio is being made at the end of any of the
     first three fiscal quarters of a fiscal year, or (B) the first day of the
     following fiscal year, if the determination of Cash Coverage Ratio is being
     made at the end of the fourth quarter of a fiscal year; PLUS (ii) interest
     paid on the Surplus Notes; PLUS (iii) commissions paid by AEILIC pursuant
     to the General Agency Commission Agreement; PLUS (iv) revenues of the
     Borrower under the Investment Advisory Agreement; PLUS (v) investments
     income of the Borrower (nonconsolidated), excluding investments in
     Subsidiaries; MINUS (vi) cash operating expenses of the Borrower; and MINUS
     (vii) all Restricted Payments made by the Borrower during the current
     fiscal year;

     TO

     (b) Fixed Charges for such period.

     "CASH EQUIVALENTS": Any of the following: (a) securities with maturities of
one (1) year or less from the date of determination issued or fully guaranteed
or insured by the United States Government, or any instrumentality or agency
thereof, (b) certificates of deposit, eurodollar time deposits, overnight bank
deposits, bankers' acceptances and repurchase agreements of any Bank or any
other commercial bank whose unsecured long-term debt obligations are rated at
least "BBB-" by Fitch, "BBB-"by Standard & Poor's, "Baa-" by Moody's or "NAIC 2"
by the NAIC having maturities of six (6) months or less from the date of
determination, and (c) commercial paper having maturities of six (6) months or
less from the date of determination rated at least "A-" by Standard & Poor's,
"P-2" by Moody's, "F-2" by Fitch or "NAIC 2" by the NAIC, or carrying an
equivalent rating by a nationally recognized rating agency, if all of the named
rating agencies cease publishing ratings of investments.

     "CHANGE OF CONTROL": A Change of Control shall be deemed to have occurred
at such times as: (a) the Borrower ceases to own, free and clear of all Liens
other than the Lien of the Agent pursuant to the Loan Documents, 100% of the
outstanding shares of voting stock of AEILIC; (b) U.S. Bank National Association
shall directly or indirectly have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 30% or more of the outstanding shares of
voting stock of the Borrower; (c) any Person other than U.S. Bank National
Association, or two or more of such other Persons acting in concert who shall,
as of the date of this Agreement, have owned 10% or less of the outstanding
shares of voting stock of the Borrower shall directly or indirectly have
acquired beneficial ownership (within the meaning of said Rule 13d-3) of 30% or
more of the outstanding shares of voting stock of the Borrower, or (d)
individuals who as of the date of this Agreement constitute the Borrower's Board
of Directors (together with any new director whose election or appointment was
approved by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or

<Page>

nomination for election was previously so approved), for any reason, cease to
constitute a majority of the directors at any time then in office.

     "CMO DERIVATIVE INVESTMENTS": Investments consisting of financial
derivatives the value, pricing or yield of which is dependent upon the value,
pricing or yield of collateralized mortgage obligations, as such terms are used
in the United States financial markets, including, in an case, without
limitation interest-only and principal-only bonds, residuals, floaters and
inverse floaters and similar Investments.

     "CODE": The Internal Revenue Code of 1986, as amended, or any successor
statute, together with regulations thereunder.

     "COLLECTIONS": Any payment received by the Agent in respect of the
Obligations or any reduction in the amount of Obligations, whether by voluntary
payment, by realization upon collateral (including payment of any note or
security included thereunder), through the exercise of any right of set-off,
banker's lien or similar right, by counterclaim or cross action or by the
enforcement of any other right under the Loan Documents, or under any other
guaranties or security agreements or otherwise, or as a distribution, adequate
protection payment or similar amount received in respect of any collateral for
the Obligations or otherwise in any insolvency case or proceeding involving the
Borrower, any guarantor, third-party pledgor or obligee under any collateral.

     "COMPANY ACTION LEVEL": AEILIC's "company-action-level risk-based capital"
as calculated under IOWA CODE SECTION 521E, and the equivalent amount for any
other Insurance Subsidiary, as calculated under the laws or regulations of
Insurance Regulatory Authorities applicable to such other Insurance
Subsidiaries.

     "COMPLIANCE CERTIFICATE": A certificate in the form of EXHIBIT D, duly
completed and signed by an authorized officer of the Borrower.

     "CONSENT AND AGREEMENT TO SECURITY AGREEMENT" The Consent and Agreement to
Security Agreement dated as of April 6, 2000, by AEILIC, as acknowledged and
amended by the Acknowledgement of Consent and Agreement to Security Agreement in
the form of EXHIBIT E hereto, as the same may be amended, supplemented restated
or otherwise modified in writing from time to time by the Borrower and the
Agent.

     "CONTINGENT OBLIGATION": Any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the debt, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person; PROVIDED, THAT the Borrower's
assumption of the trade debt of its Subsidiaries and obligations of the Borrower
or the Insurance Subsidiaries under Reinsurance Agreements and Surplus Relief
Reinsurance Agreements shall not be deemed Contingent Obligations of the
Borrower or the Insurance Subsidiaries. The amount of any Person's liability
with respect to any Contingent Obligation shall (subject to any limitation set
forth therein) be deemed to be the

<Page>

outstanding principal amount (or maximum outstanding principal amount, if
larger) of the debt, obligation or other liability outstanding thereunder.

     "DEFAULT": Any event which, with the giving of notice to the Borrower or
lapse of time, or both, would constitute an Event of Default.

     "8% SUBORDINATED DEBENTURES": The 8% Convertible Junior Subordinated
Debentures issued by the Borrower in the aggregate amount of $26,773,237 in
exchange for the proceeds received by Trust I upon issuance of the 8% Trust
Securities.

     "8% TRUST SECURITIES": The preferred securities and the common securities
issued by Trust I.

     "ERISA": The Employee Retirement Income Security Act of 1974, as amended,
and any successor statute, together with regulations thereunder.

     "ERISA AFFILIATE": Any trade or business (whether or not incorporated) that
is a member of a group of which the Borrower is a member and which is treated as
a single employer under Section 414 of the Code.

     "EURODOLLAR ADVANCE": An Advance designated as such in a notice of
continuation or conversion under SECTION 2.3.

     "EURODOLLAR INTERBANK RATE": The offered rate for deposits in United States
Dollars for delivery of such deposits on the first day of an Interest Period of
a Eurodollar Advance, for the number of days comprised therein, quoted by the
Agent from Page 3750 of the Bridge's Telerate Service as of approximately 11:00
a.m., London time, on the day that is two Banking Days preceding the first day
of the Interest Period of such Eurodollar Advance, or the rate for such deposits
determined by the Agent at such time based on such other published service of
general application as shall be selected by the Agent for such purpose;
provided, that in lieu of determining the rate in the foregoing manner, the
Agent may determine the rate based on rates offered to the Agent for deposits in
United States Dollars in the interbank eurodollar market at such time for
delivery on the first day of the Interest Period for the number of days
comprised therein.

     "EURODOLLAR RATE (RESERVE ADJUSTED)": A rate per annum calculated for the
Interest Period of a Eurodollar Advance in accordance with the following
formula:

     ERRA      =     EURODOLLAR INTERBANK RATE
                    --------------------------
                       1.00 - ERR

In such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA" means
"Eurodollar Rate (Reserve Adjusted)", in each instance determined by the Agent
for the applicable Interest Period. The Agent's determination of all such rates
for any Interest Period shall be conclusive in the absence of manifest error.

<Page>

     "EURODOLLAR RESERVE RATE": A percentage equal to the daily average during
such Interest Period of the aggregate maximum reserve requirements (including
all basic, supplemental, marginal and other reserves), as specified under
Regulation D of the Federal Reserve Board, or any other applicable regulation
that prescribes reserve requirements applicable to Eurocurrency liabilities (as
presently defined in Regulation D) or applicable to extensions of credit by the
Agent the rate of interest on which is determined with regard to rates
applicable to Eurocurrency liabilities. Without limiting the generality of the
foregoing, the Eurocurrency Reserve Rate shall reflect any reserves required to
be maintained by the Agent against (i) any category of liabilities that includes
deposits by reference to which the Eurodollar Interbank Rate is to be
determined, or (ii) any category of extensions of credit or other assets that
includes Eurodollar Advances.

     "EVENT OF DEFAULT": Any event described in SECTION 10.1.

     "FBL TRUST SECURITIES": The 5% Trust Preferred Securities issued by FBL
Financial Group, Inc. in the nominal amount of $97,000,000.

     "FEDERAL RESERVE BOARD": The Board of Governors of the Federal Reserve
System or an successor thereto.

     "FITCH": Fitch Investors Services, Inc.

     "5% SUBORDINATED DEBENTURES": The 5% Subordinated Debentures issued by the
Borrower in a nominal amount of $100,000,000 in exchange for the proceeds
received by Trust II upon issuance of Trust II Securities.

     "5% TRUST SECURITIES": The preferred securities and the common securities
issued by Trust II.

     "FIXED CHARGES": With respect to any period of calculation, the total of
the following for the Borrower and its Subsidiaries: (i) interest paid or,
without duplication, accrued but unpaid on the Loans and all other Indebtedness
(other than Indebtedness in respect of Repurchase Transactions), PLUS (ii)
distributions on the 8% Trust Preferred Securities and the 5% Trust Preferred
Securities, PLUS (iii) one fifth (1/5) of the amount of the Loans outstanding on
the last day of such period.

     "GAAP": Generally accepted accounting principles as applied in the
preparation of the audited financial statements of the Borrower referred to in
SECTION 7.5, PROVIDED that changes in generally accepted accounting principles
shall be given effect for purposes of this Agreement as provided in SECTION 1.2.

     "GENERAL AGENCY COMMISSION AGREEMENT": That certain 1999 General Agency
Commission and Servicing Agreement, dated as of June 30, 1999 between AEISC and
AEILIC, as the same shall be modified and supplemented in accordance with
SECTION 9.18 hereof and in effect from time to time.

     "HEDGING OBLIGATIONS": With respect to any Person, all liabilities of such
Person under interest rate swap agreements, total return swap agreements,
interest rate cap agreements, interest

<Page>

rate collar agreements and other agreements designed to protect the such Person
against fluctuations in interest rates or currency exchange rates.

     "IMR/AVR": As to any Insurance Subsidiary at a particular date, the sum of
(a) the interest maintenance reserve of such Insurance Subsidiary, computed in
accordance with SAP as reported on line 9.4, page 3, column 1 of the Annual
Statement PLUS (b) the asset valuation reserve of such Insurance Subsidiary,
computed in accordance with SAP as reported on line 24.1, page 3, column 1 of
the Annual Statement.

     "INDEBTEDNESS": With respect to any Person at any date, all obligations,
contingent or otherwise, which in accordance with GAAP should be classified upon
such Person's balance sheet as liabilities, but in any event including the
following (whether or not they should be classified as liabilities upon such
balance sheet), without duplication: (a) all obligations of such Person for
borrowed money or in respect of loans or advances; (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments; (c)
all obligations in respect of letters of credit, whether or not drawn, and
bankers' acceptances issued for the account of such Person; (d) all Capitalized
Lease Liabilities of such Person; (e) all Hedging Obligations of such Person;
(f) all obligations of such Person secured by a contractual Lien; (g) whether or
not so included as liabilities in accordance with GAAP, all obligations of such
Person to pay the deferred purchase price of property or services, and
Indebtedness secured by a Lien on property owned or being purchased by such
Person (including Indebtedness arising under conditional sales or other title
retention agreements) whether or not such Indebtedness shall have been assumed
by such Person or is limited in recourse; (h) any Indebtedness of another Person
secured by a lien on any assets of such first Person, whether or not such
Indebtedness is assumed by such first Person; (i) any Indebtedness of a
partnership in which such Person is a general partner; and (j) all Contingent
Obligations of such Person whether or not in connection with the foregoing.

     "INSURANCE REGULATORY AUTHORITY": With respect to any Insurance Subsidiary,
each governmental or regulatory agency with which such Insurance Subsidiary is
required to file its Annual Statement or which exercises regulatory authority
over the primary businesses being conducted by such Insurance Subsidiary.

     "INSURANCE SUBSIDIARIES": AEILIC and all other Subsidiaries which at the
time of reference are regulated as insurance companies under the laws of any
state of the United States of America or of the District of Columbia.

     "INTEREST PERIOD" For any Eurodollar Advance, the period commencing on the
borrowing date of such Eurodollar Advance or the date a Prime Rate Advance is
converted into such Eurodollar Advance, or the last day of the preceding
Interest Period for such Eurodollar Advance, as the case may be, and ending on
the numerically corresponding day one, two, three or six months thereafter, as
selected by the Borrower pursuant to SECTION 2.3; PROVIDED, that:

     (a) any Interest Period which would otherwise end on a day which is not a
     Business Day shall end on the next succeeding Business Day unless such next
     succeeding Business Day falls in another calendar month, in which case such
     Interest Period shall end on the next preceding Business Day;

<Page>

     (b) any Interest Period which begins on the last Business Day of a calendar
     month (or on a day for which there is no numerically corresponding day in
     the calendar month at the end of such Interest Period) shall end on the
     last Business Day of the calendar month at the end of such Interest Period;
     and

     (c) Interest Periods shall not be chosen for Advances that would require
     payment of any amount of any Advance prior to the last day of the Interest
     Period in order to pay an installment of the Loans when due.

     "INVESTED ASSETS": As to any Insurance Subsidiary, as of any date, the
amount reported on line 11, page 2, column 1 of the Annual Statement, or an
amount determined in a consistent manner for any date other than one as of which
an Annual Statement is prepared.

     "INVESTMENT": The acquisition, purchase, making or holding of any stock or
other security, any loan, advance, contribution to capital, extension of credit
(except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms), any acquisitions of real or personal property
(other than real and personal property acquired in the ordinary course of
business) and any purchase or commitment or option to purchase stock or other
debt or equity Securities of or any interest in another Person or any integral
part of any business or the assets comprising such business or part thereof.

     "INVESTMENT ADVISORY AGREEMENT": Each agreement between the Borrower and an
Insurance Subsidiary under which the Borrower will act as investment advisor for
such Insurance Subsidiary in consideration of fees paid by the Insurance
Subsidiary thereunder.

     "INVESTMENT GRADE SECURITIES": (a) Investments which are rated at least
"BBB-" by Standard & Poor's, "Baa-3" by Moody's, or "NAIC 2" by the NAIC, and
(b) municipal bonds which are rated at least "SP-2" by Standard & Poor's,
"Baa-3" or "MIG4" by Moody's, or "NAIC 2" by the NAIC.

     "LEVERAGE RATIO": As of the last day of any fiscal quarter of the Borrower,
that ratio (expressed as a percentage) of:

     (a) the total of the following: (i) the aggregate principal amount of Loans
     outstanding plus (ii) Indebtedness of AEISC (without duplication)

     TO

     (b) Adjusted Capital and Surplus.

     "LICENSES": As such term is defined in SECTION 7.18.

     "LIEN": Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of the lessors under capitalized leases and the interest of a vendor
under any conditional sale or other title retention agreement).

<Page>

     "LOAN DOCUMENTS": Collectively, this Agreement, the Notes, the Borrower
Pledge Agreement, the AEISC Security Agreement, the Consent and Agreement to
Security Agreement and any and all other documents or instruments furnished or
required to be furnished in connection with any of the foregoing, as the same
may be amended or modified in accordance with this Agreement.

     "LOAN" AND "LOANS": The Tranche A Loans and the Tranche B Loans.

     "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT": Any change, event,
action, condition or effect which individually or in the aggregate (a) impairs
the validity or enforceability of this Agreement, any other Loan Document, or
(b) materially and adversely affects the business, operations, financial
prospects or condition of the Borrower or AEILIC on an unconsolidated basis, or
(c) materially impairs the ability of the Borrower and its Subsidiaries to
perform their respective Obligations under this Agreement or any of the other
Loan Documents, or (d) materially and adversely affects the perfection or
priority of any Lien granted under any of the Loan Documents.

     "MOODY'S": Moody's Investors Service, Inc. and any successor thereto.

     "NAIC": National Association of Insurance Commissioners, or any successor
organization.

     "NET INVESTMENT INCOME": As to any calendar quarter, the amount reported by
the Borrower as Net Investment Income on its Consolidated Statements of
Operations as filed with the SEC in its Form 10Q or 10K for applicable periods,
less investment income and/or expense arising from the Borrower's derivative
securities.

     "NET ISSUANCE PROCEEDS": With respect to any sale or issuance of any debt
or equity securities of the Borrower or any Subsidiary, cash or readily
marketable cash equivalents received therefrom, whether at the time of such
disposition or subsequent thereto, net of all legal expenses, commissions and
other fees and all costs and expenses directly related to such sale or issuance.

     "NET YIELD PERCENTAGE": The percentage equal to the difference between the
Weighted Average Yield and the Weighted Average Crediting Rate.

     "NOTES": The Tranche A Notes and the Tranche B Notes.

     "OBLIGATIONS": All obligations of the Borrower and/or any of its
Subsidiaries to the Banks or the Agent, howsoever created, arising or evidenced,
whether direct or indirect, joint or several, absolute or contingent, or now or
hereafter existing, or due or to become due, which arise under, out of or in
connection with this Agreement, the Notes or the other Loan Documents.

     "PAYMENT DATE": The final maturity date of each of the Loans, plus (a) the
last day of each Interest Period for each Eurodollar Advance and, if such
Interest Period is in excess of three months after the first day of such
Interest Period, thereafter each day three months after each succeeding Payment
Date; and (b) the last day of each month for each Prime Rate Advance.

<Page>

     "PBGC": The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.

     "PERCENTAGE": As to any Bank the proportion, expressed as a percentage,
that such Bank's outstanding Loans (Tranche A Loans plus Tranche B Loans) bears
to the outstanding Loans (Tranche A Loans plus Tranche B Loans) of all Banks, as
adjusted from time to time as provided in SECTION 4.2(c).

     "PERSON": Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.

     "PLAN": An employee benefit plan or other plan, maintained for employees of
the Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or
Section 412 of the Code.

     "PRIME RATE": The rate of interest from time to time announced by the Agent
as its "prime rate." For purposes of determining any interest rate which is
based on the Prime Rate, such interest rate shall be adjusted each time that the
prime rate changes.

     "PRIME RATE ADVANCE": An Advance designated as such in a notice of
continuation or conversion under SECTION 2.3.

     "REINSURANCE AGREEMENTS": Any agreement, contract, treaty, certificate or
other arrangement (other than a Surplus Relief Reinsurance Agreement) by which
any of the Insurance Subsidiaries agrees to transfer or cede to another insurer
all or part of the liability assumed or assets held by any one of the Insurance
Subsidiaries under a policy or policies of insurance or under a reinsurance
agreement assumed by any one of the Insurance Subsidiaries. Reinsurance
Agreements shall include, but not be limited to, any agreement, contract,
treaty, certificate or other arrangement (other than a Surplus Relief
Reinsurance Agreement) which is treated as such by the applicable Insurance
Regulatory Authority.

     "REPORTABLE EVENT": A reportable event as defined in Section 4043 of ERISA
and the -regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 4 12(d) of the Code.

     "REPURCHASE TRANSACTIONS": Repurchase agreements entered into by the
Borrower, as "Seller," providing for the sale of certain securities to an
investment banking firm, as "Buyer," subject to repurchase obligations of the
Borrower, the total amount of which Repurchase Transactions outstanding at any
time shall be related to the total amount of new annuities that the Borrower
anticipates will be sold by AEILIC during the time such Repurchase Transactions
are outstanding.

<Page>

     "REQUIRED BANKS": Those Banks whose total Percentages equal or exceed 51%,
PROVIDED, that if there are two or three Banks, the Required Banks shall include
not less than two of such Banks.

     "RESTRICTED PAYMENTS": Defined in SECTION 9.5.

     "RISK-BASED CAPITAL": The ratio of Adjusted Capital of AEILIC to the
Company Action Level of AEILIC, as such formula is determined by the Iowa
Insurance Division PROVIDED, HOWEVER, that for the fiscal year ending
December 31, 2002 and the fiscal quarters ending March 31, 2003, June 30, 2003
and September 30, 2003, such ratio shall be determined in accordance with
variations permitted by the letter of the Iowa Commissioner of Insurance dated
November 12, 2002. On and after the fiscal quarter of AEILIC ending December 31,
2003, such ratio shall be determined in accordance with the requirements of the
Iowa Insurance Division without application of such variations.

     "SAP": As to any insurance company, the statutory accounting practices
prescribed or permitted by the Insurance Regulatory Authority.

     "STANDARD & POOR'S": Standard & Poor's Rating Group and any successor
thereto.

     "STATUTORY LIABILITIES": With respect to any of the Insurance Subsidiaries
as of any date, the amount reported on line 28, page 3, column 1 of the Annual
Statement of each of the Insurance Subsidiaries, less IMR/AVR of each of the
Insurance Subsidiaries constituting Statutory Liabilities on the Annual
Statement, or an amount determined in a consistent manner for any date other
than one as of which an Annual Statement is prepared.

     "STATUTORY NET INCOME": With respect to AEILIC for any period, the amount
reported for such period on line 33, page 4, column 1 of the Annual Statement of
AEILIC, or an amount determined in a consistent manner for any period other than
the one for which an Annual Statement is prepared.

     "SUBSIDIARY": Any Person of which or in which the Borrower and its other
Subsidiaries own directly or indirectly 50% or more of: (a) the combined voting
power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, limited liability company, joint venture or similar
entity, or (c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization.

     "SURPLUS NOTE": Any surplus note or debenture issued at any time by AEILIC
to the Borrower, as such surplus note or debenture may be amended or modified in
accordance with this Agreement and approved by the Insurance Regulatory
Authority.

     "SURPLUS NOTE 5": A Surplus Note issued by AEILIC on or about December 31,
2002 in the principal amount of $10,000,000, as amended, modified, extended,
renewed or replaced from time to time.

     "SURPLUS NOTE 5 COLLECTIONS" Any Collections representing payment of the
Surplus Note 5, proceeds of sale of the Surplus Note 5, or distribution,
adequate protection payment or similar

<Page>

amount received in respect of the Surplus Note 5 for the Obligations or
otherwise in any insolvency case or proceeding involving the Borrower or AEILIC.

     "SURPLUS RELIEF REINSURANCE AGREEMENTS": Any agreement whereby any of the
Insurance Subsidiaries assumes or cedes business under a reinsurance agreement
that would be considered a "financing-type" reinsurance agreement as determined
in accordance with the Statement of Financial Accounting Standards 113 or any
successor thereto.

     "TRANCHE A AMOUNT": For each Tranche A Bank, the amount of its loans under
the Existing Credit Agreement, continued as a Tranche A Loan hereunder, as shown
on SCHEDULE 1.1 hereto.

     "TRANCHE A APPLICABLE MARGIN": 0.00% for Prime Rate Advances, and 2.25% for
Eurodollar Rate Advances.

     "TRANCHE A BANKS": The Banks funding the Tranche A Loans, as designated on
SCHEDULE 1.1 attached hereto.

     "TRANCHE A LOANS": The loans described in SECTION 2.1(a).

     "TRANCHE A NOTES": The promissory notes defined and described in
SECTION 2.4(a).

     "TRANCHE A PERCENTAGE": As to any Bank the proportion, expressed as a
percentage, that such Bank's outstanding Tranche A Loans bears to the
outstanding Tranche A Loans of all Tranche A Banks, as initially shown on
SCHEDULE 1.1 hereto, as adjusted from time to time as provided in
SECTION 4.2(c).

     "TRANCHE B AMOUNT": For each Tranche B Bank, the initial amount of its
Tranche B Loan hereunder, as shown on SCHEDULE 1.1 hereto.

     "TRANCHE B APPLICABLE MARGIN": 0.00% for Prime Rate Advances, and 3.00% for
Eurodollar Rate Advances.

     "TRANCHE B BANKS": The Banks funding the Tranche B Loans, as designated on
SCHEDULE 1.1 attached hereto.

     "TRANCHE B LOANS": The loans described in SECTION 2.1(a).

     "TRANCHE B NOTES": The promissory notes defined and described in
SECTION 2.4(b).

     "TRANCHE B PERCENTAGE": As to any Bank the proportion, expressed as a
percentage, that such Bank's outstanding Tranche B Loans bears to the
outstanding Tranche B Loans of all Tranche B Banks, as initially shown on
SCHEDULE 1.1 hereto, as adjusted from time to time as provided in
SECTION 4.2(c).

<Page>

     "TRUST I": American Equity Capital Trust I, a statutory trust created under
the laws of the State of Delaware, of which 100% of the common securities issued
by Trust I are owned by the Borrower.

     "TRUST II": American Equity Capital Trust II, a statutory trust created
under the laws of the State of Delaware, of which 100% of the common securities
issued by Trust II are owned by the Borrower.

     "U.S. GOVERNMENT SECURITIES": Obligations of, or obligations guaranteed as
to principal and interest by, the United States Government or agency or
instrumentality thereof.

     "WEIGHTED AVERAGE CREDITING RATE": The sum of (a) the average rate credited
on the AEILIC'S fixed annuities for the last twelve-month period as certified by
AEILIC's chief actuary multiplied by the percentage equal to the quotient of the
aggregate accumulation values of AEILIC's fixed annuities divided by the
aggregate accumulation values of all of AEILIC's annuities and (b) the average
rate credited on AEILIC's equity index annuities for the last twelve-month
period as certified by AEILIC's chief actuary multiplied by the percentage equal
to the quotient of the aggregate accumulation values of AEILIC's equity index
annuities divided by the aggregate accumulation values of all AEILIC's
annuities.

     "WEIGHTED AVERAGE YIELD": Net Investment Income as determined on the last
day of any calendar quarter for the twelve-month period ending on such date
divided by the Average Invested assets for the same period.

     "WEIGHTED INVESTED ASSETS": For any calendar quarter, the sum of (a) the
available for sale fixed maturity securities, PLUS (b) the held for investment
fixed maturity securities, PLUS (c) mortgage loans, all as reported on the
Borrower's consolidated balance sheets as filed with the SEC in its Form 10Q or
10K for the applicable period multiplied by the percentage reflecting the number
of quarters within the applicable twelve month period in which such assets were
held by the Borrower.

     Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder (including, without
limitation, determination of compliance with financial ratios and restrictions
in ARTICLES VIII and IX hereof) shall be made in accordance with GAAP, of if so
provided, SAP, consistently applied. Any reference to "consolidated" financial
terms shall be deemed to refer to those financial terms as applied to the
Borrower and its Subsidiaries in accordance with GAAP. Notwithstanding the
foregoing, further changes in accounting principles and policies (whether GAAP
or SAP or both) may be given effect for purposes of this Agreement PROVIDED
that:

     (a) if any such changes shall affect computations determining compliance
     with the financial ratios and restrictions ARTICLES VIII and IX hereof, the
     Borrower shall give reasonable notice thereof to the Agent and each of the
     Banks, and shall not give effect to such change unless and until this
     Agreement shall be amended to give effect to such change, and

<Page>

     (b) if at any time the computations determining compliance with financial
     ratios and restrictions in Articles VIII and IX hereof utilize accounting
     principles different from those utilized in the financial statements then
     being furnished to the Banks pursuant to SECTION 8.1, such financial
     statements shall be accompanied by reconciliation work-sheets.

     Section 1.3 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."

     Section 1.4 OTHER DEFINITIONAL TERMS. The words "hereof', "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.

                           ARTICLE II TERMS OF LENDING

     Section 2.1 THE LOANS.

     (a) TRANCHE A LOANS. The Tranche A Banks have made loans under the Existing
     Credit Agreement, which were converted into amortizing term loans subject
     to the repayment requirements of SECTION 4.1 of the Existing Credit
     Agreement. Such loans are continued as the Tranche A Loans hereunder. The
     Tranche A Amount of each Tranche A Bank is listed on Schedule 1.1 hereto.

     (b) TRANCHE B LOANS. Subject to the terms and conditions hereof and in
     reliance upon the warranties of the Borrower herein, the Tranche B Banks
     agree to make additional term loans (the "Tranche B Term Loans") to the
     Borrower not later than December 31, 2002, in such amount as the Borrower
     shall request, but not exceeding the Tranche B Amounts of the Tranche B
     Banks.

     Section 2.2 ADVANCE OPTIONS. The Loans shall be constituted of Eurodollar
Advances and Prime Rate Advances, as shall be selected by the Borrower, except
as otherwise provided herein. Any combination of types of Advances may be
outstanding at the same time. Each Eurodollar Advance shall be in a minimum
amount of $500,000. Each Prime Rate Advance shall be in a minimum amount of
$100,000.

     Section 2.3 CONTINUATION OR CONVERSION OF LOANS. The Borrower may elect to
(i) continue any outstanding Eurodollar Advance from one Interest Period into a
subsequent Interest Period to begin on the last day of the earlier Interest
Period, or (ii) convert any outstanding Advance into another type of Advance (on
the last day of an Interest Period only, in the instance of a Eurodollar
Advance), by giving the Agent notice in writing, or by telephone promptly
confirmed in writing, given so as to be received by the Agent not later than:

     (a) 12:00 noon, Minneapolis time, one Business Day prior to the date of the
     requested continuation or conversion, if the continuing or converted
     Advance shall be a Prime Rate Advance; or

<Page>

     (b) 12:00 noon, Minneapolis time, three Business days prior to the date of
     the requested continuation or conversion, if the continuing or converted
     Advance shall be a Eurodollar Advance.

Each notice of continuation or conversion of an Advance shall specify (i) the
effective date of the continuation or conversion date (which shall be a Business
Day), (ii) the amount and the type or types of Advances following such
continuation or conversion (subject to the limitation on amount set forth in
SECTION 2.2), and (iii) for continuation as, or conversion into, Eurodollar
Advances, the Interest Periods for such Advances. Absent timely notice of
continuation or conversion, following expiration of an Interest Period unless
the Eurodollar Advance is paid in full the Agent may at any time thereafter
convert the Eurodollar Advance into a Prime Rate Advance. Until such time as
such Advance is converted into a Prime Rate Advance by the Agent or the Borrower
or is continued as a Eurodollar Advance with a new Interest Period by notice by
the Borrower as provided above, such Advance shall continue to accrue interest
at a rate equal to the interest rate applicable during the expired Interest
Period. No Advance shall be continued as, or converted into, a Eurodollar
Advance if a Default or Event of Default shall exist.

     Section 2.4 THE NOTES.

     (a) TRANCHE A NOTES. The Tranche A Loans of each Tranche A Bank shall be
     evidenced by a promissory note of the Borrower (the "Tranche A Notes"),
     substantially in the form of EXHIBIT A-1 hereto, in the Tranche A Amount of
     each such Tranche A Bank. The Tranche A Banks shall enter in their
     respective records the amount of each Advance, the rate of interest borne
     by each Advance and the payments made on the Tranche A Loans, and such
     records shall be deemed conclusive evidence of the subject matter thereof,
     absent manifest error.

     (b) TRANCHE B NOTES. The Tranche B Loans of each Tranche B Bank shall be
     evidenced by a promissory note of the Borrower (the "Tranche B Notes"),
     substantially in the form of EXHIBIT A-2 hereto, in the Tranche B Amount of
     each such Tranche B Bank. The Tranche B Banks shall enter in their
     respective records the amount of each Advance, the rate of interest borne
     by each Advance and the payments made on the Tranche B Loans, and such
     records shall be deemed conclusive evidence of the subject matter thereof,
     absent manifest error.

     Section 2.5 FUNDING LOSSES. In the event of (a) any failure of the Borrower
to borrow, continue or convert a Eurodollar Advance on a date specified in a
notice thereof, or (b) any payment (including, without limitation, any payment
pursuant to SECTION 4.2 or 10.2), prepayment or conversion of any Eurodollar
Advance on a date other than the last day of the Interest Period for such
Advance, the Borrower agrees to pay each Bank's costs, expenses and Interest
Differential (as determined by such Bank) incurred as a result of such event.
The term "Interest Differential" shall mean that amount, not less than 0, of the
financial loss incurred by each Bank resulting from such event, calculated as
the difference between the amount of interest such Bank would have earned (from
like investments in the Money Markets as of the first day of the Interest Period
of the relevant Advance) had such event not occurred and the interest the Bank
will actually earn (from like investments in the Money Markets as of the date of
such event) as a result of the redeployment of funds from such event. Because of
the short-term

<Page>

nature of this facility, the Borrower agrees that the Interest Differential
shall not be discounted to its present value. The term "Money Markets" refers to
one or more wholesale funding markets available to the Banks, including
negotiable certificates of deposit, commercial paper, eurodollar deposits, bank
notes, federal funds and others. Such determinations by each Bank of shall be
conclusive in the absence of manifest error.

     Section 2.6 USE OF LOAN PROCEEDS. The proceeds of the Tranche A Loans have
been used for the Borrower's general corporate purposes, including without
limitation, loans to AEISC to be used by AEISC to meet its obligations under the
General Agency Commission Agreement. The proceeds of the Tranche B Loans shall
be used to fund Surplus Note 5.

                          ARTICLE III INTEREST AND FEES

     Section 3.1 INTEREST.

     (a) EURODOLLAR ADVANCES. The unpaid principal amount of each Eurodollar
     Advance shall bear interest prior to maturity at a rate per annum equal to
     the Eurodollar Rate (Reserve Adjusted) in effect for each Interest Period
     for such Eurodollar Advance PLUS (i) for Tranche A Loans, the Tranche A
     Applicable Margin for Eurodollar Advances, or (ii) for Tranche B Loans, the
     Tranche B Applicable Margin for Eurodollar Advances.

     (b) PRIME RATE ADVANCES. The unpaid principal amount of each Prime Rate
     Advance shall bear interest prior to maturity at a rate per annum equal to
     the Base Rate per annum PLUS (i) for Tranche A Loans, the Tranche A
     Applicable Margin for Prime Rate Advances, or (ii) for Tranche B Loans, the
     Tranche B Applicable Margin for Prime Rate Advances.

     (c) INTEREST AFTER MATURITY. Any amount of the Loans not paid when due,
     whether at the date scheduled therefor or earlier upon acceleration, shall
     bear interest until paid in full at a rate per annum equal to the greater
     of (i) 2.00% in excess of the rate applicable to the unpaid principal
     amount immediately before it became due, or (ii) 2.00% in excess of the
     Base Rate in effect from time to time.

     Section 3.2 FEES. The Borrower agrees to pay the Agent the amounts
described in the Agent's Fee Letter.

     Section 3.3 COMPUTATION. Interest shall be computed on the basis of actual
days elapsed and a year of 360 days.

     Section 3.4 PAYMENT DATES. Accrued interest under SECTIONS 3.1(a) and (b)
shall be payable on the Payment Dates for the applicable types of Advances.
Accrued interest under SECTION 3.1(c) shall be payable on demand. Fees under
SECTION 3.2 shall be payable as provided in the Agent's Fee Letter.

                   ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION
                     OR TERMINATION OF THE CREDIT AND SETOFF

     Section 4.1 REPAYMENT.

<Page>

     (a) TRANCHE A LOANS. Principal of the Tranche A Loans shall be payable in
     quarterly installments commencing on December 31, 2002, and continuing on
     each March 31, June 30, September 30 and December 31 thereafter occurring
     to and including March 31, 2005, each in an amount equal to one-eleventh
     (1/11th) of the Tranche A Amount, and a final principal installment payable
     on June 30, 2005 in an amount equal to the aggregate principal balance of
     the Tranche A Loans then outstanding.

     (b) TRANCHE B LOANS. Principal of the Tranche B Loans shall be payable in
     quarterly installments commencing on March 31, 2003, and continuing on each
     March 31, June 30, September 30 and December 31 thereafter occurring to and
     including September 30, 2007, each in an amount equal to one-twentieth
     (1/20th) of the Tranche B Amount, and a final principal installment payable
     on December 31, 2007 in an amount equal to the aggregate principal balance
     of the Tranche B Loans then outstanding.

     Section 4.2 PREPAYMENTS.

     (a) OPTIONAL. The Borrower may prepay the Loans, in whole or in part, at
     any time subject to the provisions of SECTION 2.5, without any other
     premium or penalty. Any such prepayment must be accompanied by accrued and
     unpaid interest on the amount prepaid. Each partial prepayment shall be in
     a minimum amount of $250,000.

     (b) MANDATORY PREPAYMENT AND ELECTION BY BANKS. The Borrower shall offer,
     by written notice to each of the Banks given within three Business Days
     after the receipt of Net Issuance Proceeds, to prepay the Loans in the
     following amounts at the following times:

          (a) 15% of the Net Issuance Proceeds realized upon the sale or
          issuance by the Borrower of any equity securities; and

          (b) 25% of the Net Issuance Proceeds realized upon the sale or
          issuance by the Borrower of any debt securities, notes, subordinated
          notes or equity securities convertible into any of the foregoing.

     Each Bank may elect, at its sole option, to accept or waive receipt of such
     prepayments by giving written notice to the Borrower and Agent of such
     election, which notice shall be given not later than fifteen (15) days
     after the giving of the notice of such receipt by the Borrower. Absent
     response by a Bank, it shall be presumed that such Bank has waived (or not
     accepted) such offer to prepay. If accepted, prepayments under this
     SECTION 4.2(b) shall be (i) made by the Borrower within twenty five (25)
     days after receipt by the Borrower of such Net Issuance Proceeds, (ii)
     applied first, to portions of the Loans that are Prime Rate Advances, and
     thereafter to portions of the Loans that are Eurodollar Rate Advances,
     (iii) not be subject the provisions of SECTION 2.5, and (iv) applied to the
     unpaid installments of the respective Loans in the inverse order of their
     maturities.

     (c) APPLICATION AND ADJUSTMENT OF PERCENTAGES. All prepayments under this
     Section shall be made to all Banks in proportion to their Percentages,
     unless otherwise waived by a Bank as provided in SECTION 4.2(b). If a
     payment is waived by some, but not all Banks, the Percentages, Tranche A
     Percentages and Tranche B Percentages of the Banks shall be

<Page>

     adjusted by the Agent to reflect the outstanding amounts of the respective
     Loans after application of the payments actually made.

     Section 4.3 PAYMENTS. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other Obligations under the
Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. The Agent shall promptly distribute in like funds to each Bank its
respective Tranche A Percentage or Tranche B Percentage share of each such
payment of principal, interest. Following an Event of Default and acceleration
of the Obligations, allocation of any payments to Tranche A Loans and Tranche B
Loans shall be made as provided in SECTION 10.4, and the Agent shall distribute
to each Bank its respective Tranche A Percentage or Tranche B Percentage share
of each payment applied to Tranche A Loan or Tranche B Loans as provided therein
Subject to the definition of the term "Interest Period", whenever any payment to
be made hereunder or on the Notes shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of any
interest or fees.

     Section 4.4 PRORATION OF PAYMENTS. If any Bank or other holder of a Loan
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset, pursuant to the guaranty hereunder, or otherwise) on
account of principal of, interest on, or fees with respect to any Loan, in any
case in excess of the share of payments and other recoveries of other Banks or
holders, such Bank or other holder shall purchase from the other Banks or
holders, in a manner to be specified by the Agent. such participations in the
Loans held by such other Banks or holders as shall be necessary to cause such
purchasing Bank or other holder to share the excess payment or other recovery
ratably with each of such other Banks or holders; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter recovered
from such purchasing Bank or holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
Following an Event of Default and acceleration of the Obligations, the
recoveries to which the Tranche A Banks or Tranche B Banks shall be,
respectively, entitled shall be determined under SECTION 10.4.

                ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS

     Section 5.1 INCREASED COSTS. If, as a result of any law, rule, regulation,
treaty or directive, or any change therein or in the interpretation or
administration thereof, or compliance by the Banks with any request or directive
(whether or not having the force of law) from any court, central bank.
governmental authority, agency or instrumentality, or comparable agency:

     (a) any tax, duty or other charge with respect to any Loan, the Notes or
     the Commitments is imposed, modified or deemed applicable, or the basis of
     taxation of payments to any Bank of interest or principal of the Loans or
     of the Facility Fees (other than taxes imposed on the overall net income of
     such Bank by the jurisdiction in which such Bank has its principal office)
     is changed;

<Page>

     (b) any reserve, special deposit, special assessment or similar requirement
     against assets of, deposits with or for the account of, or credit extended
     by, any Bank is imposed, modified or deemed applicable;

     (c) any increase in the amount of capital required or expected to be
     maintained by any Bank or any Person controlling such Bank is imposed,
     modified or deemed applicable; or

     (d) any other condition affecting this Agreement or the Commitments is
     imposed on any Bank or the relevant funding markets;

and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans or extending the Commitments is increased, or
the amount of any sum receivable by such Bank hereunder or under the Notes in
respect of any Loan is reduced;

THEN, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that the Banks
have not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Determinations by each Bank for
purposes of this SECTION 5.1 of the additional amounts required to compensate
such Bank shall be conclusive in the absence of manifest error. In determining
such amounts, the Banks may use any reasonable averaging. attribution and
allocation methods.

     Section 5.2 DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE OR
INADEQUATE: IMPRACTICABILITY. If the Agent determines (which determination shall
be conclusive and binding on the parties hereto) that:

     (a) deposits of the necessary amount for the relevant Interest Period for
     any Eurodollar Advance are not available in the relevant markets or that,
     by reason of circumstances affecting such market, adequate and reasonable
     means do not exist for ascertaining the Eurodollar Interbank Rate for such
     Interest Period;

     (b) the Eurodollar Rate (Reserve Adjusted) will not adequately and fairly
     reflect the cost to the Banks of making or funding the Eurodollar Advance
     for a relevant Interest Period; or

     (c) the making or funding of Eurodollar Advances has become impracticable
     as a result of any event occurring after the date of this Agreement which,
     in the opinion of the Agent, materially and adversely affects such Advances
     or the Banks' Commitments to make such Advances or the relevant market;

the Agent shall promptly give notice of such determination to the Borrower, and
(i) any notice of a new Eurodollar Advance previously given by the Borrower and
not yet borrowed or converted shall be deemed to be a notice to make a Prime
Rate Advance, and (ii) the Borrower shall be obligated to either prepay in full
any outstanding Eurodollar Advances, without premium or penalty on the last day
of the current Interest Period with respect thereto or convert any such
Eurodollar Advance to a Prime Rate Advance on such last day.

<Page>

     Section 5.3 CHANGES IN LAW RENDERING EURODOLLAR ADVANCES UNLAWFUL. If at
any time due to the adoption of any law, rule, regulation, treaty or directive,
or any change therein or in the interpretation or administration thereof by any
court, central bank, governmental authority, agency or instrumentality, or
comparable agency charged with the interpretation or administration thereof, or
for any other reason arising subsequent to the date of this Agreement, it shall
become unlawful or impossible for any Bank to make or fund any Eurodollar
Advance, the obligation of such Bank to provide such Advance shall, upon the
happening of such event, forthwith be suspended for the duration of such
illegality or impossibility. If any such event shall make it unlawful or
impossible for any Bank to continue any Eurodollar Advance previously made by it
hereunder, such Bank shall, upon the happening of such event, notify the Agent
and the Borrower thereof in writing, and the Borrower shall, at the time
notified by such Bank, either convert each such unlawful Advance to a Prime Rate
Advance or repay such Advance in full, together with accrued interest thereon,
subject to the provisions of SECTION 2.5.

     Section 5.4 DISCRETION OF THE BANKS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans in
any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each Eurodollar Advance during the Interest
Period for such Advance through the purchase of deposits having a term
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Interbank Rate for such Interest Period (whether or not any Bank
shall have granted any participations in such Advances).

                         ARTICLE VI CONDITIONS PRECEDENT

     Section 6. The obligation of the Agent and the Banks to make or continue
the Loans hereunder shall be subject to the satisfaction of the conditions
precedent that the Agent shall have received all of the following, in form and
substance satisfactory to the Agent, each duly executed by the duly authorized
representative of the appropriate party, and certified or dated the date of the
this Agreement or such other date as is satisfactory to the Agent:

     (a) The Notes.

     (b) The Acknowledgement of and Amendment to the AEISC Security Agreement,
     in the form of EXHIBIT B hereto.

     (c) The Acknowledgement of and Amendment to the Borrower Pledge Agreement,
     in the form of EXHIBIT C hereto.

     (d) The Acknowledgement of and Amendment to the Consent and Agreement to
     Security Agreement in the form of EXHIBIT E hereto.

     (d) Copies of the corporate resolutions of the Borrower authorizing the
     execution, delivery and performance of the Loan Documents to which it is a
     party, certified duly authorized officers thereof.

<Page>

     (e) Incumbency certificates showing the names and titles, and bearing the
     signatures of, the officers of the Borrower authorized to execute the Loan
     Documents to which it is a party, certified by duly authorized officers
     thereof.

     (f) Copies of the Articles or Certificates of Incorporation and By-Laws of
     the Borrower with all amendments thereto, certified by duly authorized
     officers thereof.

     (g) Certificates of Good Standing for the Borrower and AEISC in the
     jurisdictions of their incorporation, certified by the appropriate
     governmental officials.

     (h) A Certificate of Good Standing for AEILIC from the appropriate
     Insurance Regulatory Authority.

     (i) An opinion of the Borrower's general counsel, addressed to the Agent
     and the Banks, in substantially the form of EXHIBIT F.

     (j) The Agent's Fee Letter, and payment of the fees provided therein and in
     SECTION 12.4.

                   ARTICLE VII REPRESENTATIONS AND WARRANTIES

     To induce the Agent and the Banks to enter into this Agreement and to make
or continue the Loans hereunder, the Borrower represents and warrants to the
Agent and the Banks:

     Section 7.1 ORGANIZATION, STANDING. Etc. The Borrower and each of its
corporate Subsidiaries are corporations duly incorporated and validly existing
and in good standing under the laws of the jurisdiction of their respective
incorporation and have all requisite corporate power and authority to carry on
their respective businesses as now conducted, to (in the instance of the
Borrower) enter into the Loan Documents to which it is a party and to pay and
perform its Obligations under such Loan Documents. The Borrower and each of its
Subsidiaries are duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned, leased or
operated by it or the business conducted by it makes such qualification
necessary.

     Section 7.2 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action by the Borrower, and such
Loan Documents constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and subject ~o limitations on the availability of equitable
remedies.

     Section 7.3 NO CONFLICT: NO DEFAULT. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
the Borrower, (b) violate or contravene any provisions of the Articles (or
Certificate) of Incorporation or by-laws of the Borrower, or (c) result in a
breach of or constitute a default under any indenture, loan or credit agreement
or any other agreement, lease or instrument to which the

<Page>

Borrower is a party or by which it or any of its properties may be bound or
result in the creation of any Lien on any asset of the Borrower or any
Subsidiary. Neither the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could constitute a Material Adverse
Change. No Default or Event of Default has occurred and is continuing.

     Section 7.4 GOVERNMENT CONSENT. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents.

     Section 7.5 FINANCIAL STATEMENTS AND CONDITION.

     (a) The Borrower's audited consolidated and consolidating financial
     statements as at December 31, 2001 and its unaudited consolidated and
     consolidating financial statements as at September 30, 2002, as heretofore
     furnished to the Banks, have been prepared in accordance with GAAP on a
     consistent basis and fairly present the financial condition of the Borrower
     and its Subsidiaries as at such dates and the results of their operations
     and changes in financial position for the respective periods then ended. As
     of the dates of such financial statements, neither the Borrower nor any
     Subsidiary had any material obligation, contingent liability, liability for
     taxes or long-term lease obligation which is not reflected in such
     financial statements or in the notes thereto. Since September 30, 2002, no
     Material Adverse Change has occurred.

     (a) AEILIC's statutory annual statement as at December 31, 2001 and its
     quarterly statement as at September 30, 2002, as heretofore furnished to
     the Banks, have been prepared in accordance with SAP on a consistent basis
     and fairly present the financial condition of AEILIC as at such dates and
     the results of its operations and changes in financial position for the
     respective periods then ended. Since September 30, 2002, no Material
     Adverse Change in respect of AEILIC has occurred.

     Section 7.6 LITIGATION AND CONTINGENT LIABILITIES. There are no actions,
suits or proceedings pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary or any of their properties
before any court or arbitrator, or any governmental department, board, agency or
other instrumentality which singly or in the aggregate, if determined adversely
to the Borrower or such Subsidiary, could constitute a Material Adverse Change.
Neither the Borrower nor any Subsidiary has any contingent liabilities which are
material to the Borrower and the Subsidiaries as a consolidated enterprise.

     Section 7.7 COMPLIANCE WITH LAWS. Neither the Borrower nor any Subsidiary
is in violation of any law, ordinance, rule, regulation, order, policy,
guideline or other requirement of any governmental agency or authority, if the
effect of such violation could reasonably be expected to have a Material Adverse
Effect and, to the best of the Borrower's knowledge, no such violation has been
alleged and the Borrower and each Subsidiary (a) has filed in a timely

<Page>

manner all reports, documents and other materials required to be filed by it
with any governmental agency or authority, if such failure to so file could
reasonably be expected to have a Material Adverse Effect; and the information
contained in each of such filings is true, correct and complete in all material
respects and (b) has retained all records and documents required to be retained
by it pursuant to any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any governmental agency or authority, if the failure to
so retain such records and documents could reasonably be expected to have a
Material Adverse Effect.

     Section 7.8 ENVIRONMENTAL. HEALTH AND SAFETY LAWS. There does not exist any
violation by the Borrower or any Subsidiary of any applicable federal, state or
local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to -environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Subsidiary or which would require a material
expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower nor
any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, the consequences of which noncompliance or remedial action could
constitute a Material Adverse Change.

     Section 7.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans' benefits
guaranteed under Title IV or ERISA does not exceed the current value of the
Plans' assets allocable to such benefits.

     Section 7.10 REGULATION U. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.

     Section 7.11 OWNERSHIP OF PROPERTY: LIENS. Each of the Borrower and the
Subsidiaries has good and marketable title to its real properties and good and
sufficient title to its other properties. including all properties and assets
referred to as owned by the Borrower and its Subsidiaries in the audited
financial statements of the Borrower referred to in SECTION 7.5 (other than
property disposed of since the date of such financial statements in the ordinary
course of business). None of the properties. revenues or assets of the Borrower
or any of its Subsidiaries is subject to a Lien, except for (a) Liens disclosed
in the financial statements referred to in SECTION 7.5 or (b) Liens allowed
under SECTION 9.2.

<Page>

     Section 7.12 TAXES. Each of the Borrower and the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrower). No tax Liens have been filed and no material claims
are being asserted with respect to any such taxes, fees or charges. The charges,
accruals and reserves on the books of the Borrower in respect of taxes and other
governmental charges are adequate.

     Section 7.13 TRADEMARKS, PATENTS. Each of the Borrower and the Subsidiaries
possesses or has the right to use all of the patents, trademarks, trade names,
service marks and copyrights, and applications therefor, and all technology,
know-how, processes, methods and designs used in or necessary for the conduct of
its business, without known conflict with the rights of others.

     Section 7.14 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.

     Section 7.15 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.

     Section 7.16 SUBSIDIARIES. SCHEDULE 7.16 sets forth as of the date of this
Agreement a list of all Subsidiaries and the number and percentage of the shares
of each class of capital stock owned beneficially or of record by the Borrower
or any Subsidiary therein, and the jurisdiction of incorporation of each
Subsidiary.

     Section 7.17 PARTNERSHIPS AND JOINT VENTURES. As of the date of this
Agreement, there are no partnerships or joint ventures in which the Borrower or
any Subsidiary is a partner (limited or general) or joint venturer.

     Section 7.18 INSURANCE LICENSES. SCHEDULE 7.18 lists all of the
jurisdictions in which each of the Insurance Subsidiaries hold licenses
(including, without limitation, licenses or certificates of authority from
applicable insurance departments), permits or authorizations to transact
insurance and reinsurance business (collectively, the "Licenses"). Except as set
forth on SCHEDULE 7.18, no such License is the subject of a proceeding for
suspension or revocation or any similar proceedings, there is no sustainable
basis for such a suspension or revocation, and, to the best of the Borrower's
knowledge, no such suspension or revocation is threatened by any Insurance
Regulatory Authority which, in either case, could reasonably be expected to have
a Material Adverse Effect. SCHEDULE 7.18 indicates that line or lines of
insurance which the Insurance Subsidiaries are permitted to be engaged in with
respect to each License therein listed. The Insurance Subsidiaries do not
transact any insurance business, directly or indirectly, in any state or
jurisdiction other than those enumerated on SCHEDULE 7.18, where such business
requires any license, permit, governmental approval, consent or other
authorization.

<Page>

     Section 7.19 REINSURANCE. All persons with whom any Insurance Subsidiaries
have ceded any obligations with respect to any Reinsurance Agreement or Surplus
Relief Reinsurance Agreements have a financial strength rating of "A" or better
by A.M. Best.

     Section 7.20 PLEDGED SHARES. All of the shares of capital stock of AEILIC
are duly authorized and validly issued, fully paid and non-assessable, and
pledged to the Agent pursuant to the terms of the Borrower Pledge Agreement.

     Section 7.21 PLEDGED SURPLUS NOTES. All of the Surplus Notes of AEILIC are
duly authorized and validly issued, and pledged to the Agent pursuant to the
terms of the Borrower Pledge Agreement. There is no order of preference or
priority among the Surplus Notes (i.e., no Surplus Note is paid on a higher
priority than any other Surplus Note) under any instrument or agreement related
thereto or under applicable law respecting insolvency or liquidation of AEILIC.

                       ARTICLE VIII AFFIRMATIVE COVENANTS

     From the date of this Agreement and thereafter until the Loans and all
other Obligations of the Borrower to the Banks hereunder and under the Notes and
the other Loan Documents have been paid in full, the Borrower will do, and will
cause each Subsidiary to do, all of the following:

     Section 8.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. Unless otherwise
provided herein, furnish or cause to be furnished to the Agent (who will forward
copies to each Bank):

     8.1.1 AUDIT REPORT.

          (a) As soon as available and in any event within 120 days after the
          end of each fiscal year of the Borrower and AEISC, respectively, the
          annual audit report of the Borrower and its Subsidiaries and the
          annual report of AEISC, each prepared on a consolidated basis and in
          conformity with GAAP, consisting of at least statements of income,
          cash flows, changes in stockholders' equity, and a consolidated
          balance sheet as at the end of such year, setting forth in each case
          in consolidated form corresponding figures from the previous annual
          audit, certified without qualification by independent certified public
          accountants of recognized standing selected by the Borrower and AEISC,
          respectively, and acceptable to the Required Banks, together with any
          -management letters, management reports or other supplementary
          comments or reports to the Borrower and AEISC, respectively, or their
          respective boards of directors furnished by such accountants and
          together with unaudited consolidating statements prepared for
          Borrower's management and AEISC's management, respectively.

          (b) Together with the audited financial statements required under
          SECTION 8.1(a), a statement by the accounting firm performing each
          such audit stating that it has reviewed this Agreement and that in
          performing its examination nothing came to its attention that caused
          it to believe that any Default or Event of Default exists, or, if such
          Default or Event of Default exists, describing its nature.

<Page>

     8.1.2 QUARTERLY REPORTS. As soon as available and in any event within 60
     days after the end of each fiscal quarter of each fiscal year, a copy of
     the unaudited financial statement of the Borrower and its Subsidiaries and
     a copy of the unaudited financial statement of AEISC, each prepared in the
     same manner as the audit report referred to in SECTION 8.1.1(a), signed by
     the Borrower's or AEISC's, as applicable, responsible officer, consisting
     of at least consolidated statements of income, cash flow, changes in
     stockholders' equity for the Borrower and its Subsidiaries and for AEISC,
     respectively, for such quarter and for the period from the beginning of
     such fiscal year to the end of such quarter, and the consolidated balance
     sheets of the Borrower and of AEISC, respectively, as at the end of such
     quarter.

     8.1.3 TAX RETURNS AND REPORTS. If requested by the Agent or the Required
     Banks, copies of all federal, state, local and foreign Tax Returns and
     Reports filed by the Borrower or any of its Subsidiaries.

     8.1.4 SAP FINANCIAL STATEMENTS.

          (a) As soon as possible, but in any event within sixty (60) days after
          the end of each fiscal year of each of the Insurance Subsidiaries, a
          copy of the Annual Statement of such Insurance Subsidiaries for such
          fiscal year prepared in accordance with SAP and accompanied by the
          certification of the responsible officer of such Insurance
          Subsidiaries that such financial statements present fairly, in
          accordance with SAP, the financial position of such Insurance
          Subsidiaries for the period then ended;

          (b) As soon as possible, but in any event within sixty (60) days after
          the end of each of the first three fiscal quarters of each fiscal year
          of each of the Insurance Subsidiaries, a copy of the quarterly
          statement of such Insurance Subsidiaries for such fiscal quarter, all
          prepared in accordance with SAP and accompanied by the certification
          of the responsible officer of such Insurance Subsidiaries that all
          such financial statements present fairly in accordance with SAP the
          financial position of such Insurance Subsidiaries for the periods then
          ended (subject to normal year-end and audit adjustments);

          (c) Within fifteen (15) days after being delivered to any of the
          Insurance Subsidiaries, any final examination report issued from time
          to time by the applicable Insurance Regulatory Authority or the NAIC;

          (d) Within ninety (90) days after the close of each Fiscal Year of
          each of the Insurance Subsidiaries, a copy of the "Statement of
          Actuarial Opinion" for each of the Insurance Subsidiaries which is
          provided to the applicable Insurance Regulatory Authority (or
          equivalent information should the Insurance Regulatory Authority no
          longer require such a statement). Such statement shall be in the
          format prescribed by the Applicable Insurance Code of the state of
          domicile of such Insurance Subsidiary.

     8.1.5 COMPLIANCE CERTIFICATE AND RISK-BASED CAPITAL CALCULATIONS.

<Page>

          (a) Together with the financial statements furnished by the Borrower
          under SECTIONS 8.1.1 and 8.1.2, a Compliance Certificate signed by the
          chief financial officer of the Borrower, duly completed.

          (b) Together with the financial statements furnished by the Borrower
          under SECTIONS 8.1.1 and 8.1.2, calculations of the Risk Based Capital
          for all or any of Insurance Subsidiaries based on the quarterly or
          annual financial statements being delivered.

     8.1.6 REPORTS TO SEC AND TO STOCKHOLDERS. Promptly upon the mailing or
     filing thereof, copies of all financial statements, reports and proxy
     statements mailed to the Borrower's shareholders, and copies of all
     registration statements, periodic reports and other documents filed with
     the Securities and Exchange Commission (or any successor thereto) or any
     national securities exchange.

     8.1.7 NOTICE OF DEFAULT AND LITIGATION. Promptly upon learning of the
     occurrence of any of the following, written notice thereof, describing the
     same and the steps being taken by the Borrower with respect thereto:

          (a) the occurrence of a Default or Event of Default;

          (b) the institution of any material litigation or the occurrence of
          any material litigation development;

          (c) the commencement of any dispute which might reasonably be expected
          to lead to the material modification, transfer, revocation, suspension
          or termination or any Loan Document; or

          (d) any Material Adverse Change.

     8.1.8 ERISA LIABILITY. Immediately upon becoming aware of the occurrence,
     with respect to any Plan, of any Reportable Event (other than a Reportable
     Event for which the reporting requirements have been waived by PBGC
     regulations) or any "prohibited transaction" (as defined in Section 4975 of
     the Code), a notice specifying the nature thereof and what action the
     Borrower proposes to take with respect thereto,. and, when received, copies
     of any notice from PBGC of intention to terminate or have a trustee
     appointed for any Plan.

     8.1.9 ENVIRONMENTAL LIABILITIES. Immediately upon becoming aware of the
     occurrence thereof, notice of any violation as to any environmental matter
     by the Borrower or any Subsidiary and of the commencement of any judicial
     or administrative proceeding relating to health, safety or environmental
     matters (i) in which an adverse determination or result could result in the
     revocation of or have a material adverse effect on any operating permits,
     air emission permits, water discharge permits, hazardous waste permits or
     other permits held by the Borrower or any Subsidiary which are material to
     the operations of the Borrower or such Subsidiary, or (ii) which will or
     threatens to impose a material liability on the Borrower or such Subsidiary
     to any Person or which will require

<Page>

     a material expenditure by the Borrower or such Subsidiary to cure any
     alleged problem or violation.

     8.1.10 INSURANCE HOLDING COMPANY FILINGS. Copies of all material Insurance
     Holding Company System Act filings with Governmental Authorities by the
     Borrower or any Insurance Subsidiary not later than ten (10) Business Days
     after such filings are made, including, without limitation. filings which
     seek approval of Governmental Authorities with respect to transactions
     between the Borrower and its Affiliates.

     8.1.11 INSURANCE LICENSES. Within five (5) Business Days of such notice,
     notice of actual suspension, termination or revocation of any License or
     restriction thereon (material to the Insurance Subsidiaries) of any of the
     Insurance Subsidiaries by any Insurance Regulatory Authority or of receipt
     of notice from any Insurance Regulatory Authority notifying any of the
     Insurance Subsidiaries of a hearing (which is not withdrawn within ten (10)
     days) relating to such a suspension, termination, revocation or
     restriction, including any request by an Insurance Regulatory Authority
     which commits any of the Insurance Subsidiaries to take, or refrain from
     taking, any action or which otherwise materially and adversely affects the
     authority of any of the Insurance Subsidiaries to conduct its business.

     8.1.12 INSURANCE PROCEEDINGS. Within three (3) Business Days of such
     notice, notice of any pending or threatened investigation or regulatory
     proceeding (other than routine periodic investigations or reviews) by any
     Insurance Regulatory Authority concerning the business, practices or
     operations of any of the Insurance Subsidiaries, including any agent or
     managing general agent thereof.

     8.1.13 CHANGES IN APPLICABLE INSURANCE CODE. Promptly, upon knowledge of
     the Borrower or any Insurance Subsidiary, to the Agent (who shall promptly
     deliver such reports to the Banks), notice of any actual or proposed
     changes in any Applicable Insurance Code, if such changes could reasonably
     be expected to have a Material Adverse Effect.

     8.1.14 REINSURANCE AGREEMENTS.

          (a) Promptly, notice of any material change or modification to any
          Reinsurance Agreements or Surplus Relief Reinsurance Agreements
          whether entered into before or after the date of this Agreement
          including Reinsurance Agreements, if any, which are in a runoff mode
          on the date of this Agreement, which change or modification could
          reasonably be expected to have a Material Adverse Effect;

          (b) promptly, notice of any written notice received by any of the
          Insurance Subsidiaries of any material denial of coverage, litigation
          or arbitration arising out of any Surplus Relief Reinsurance Agreement
          or any material Reinsurance Agreement to which any of the Insurance
          Subsidiaries is a party; and

          (c) promptly, such other financial, actuarial and other information
          with respect to Surplus Relief Reinsurance Agreements and Reinsurance
          Agreements as the Agent may reasonably request.

<Page>

     8.1.15 INVESTMENTS. To the extent not provided with the financial
     statements provided in SECTION 8.1.4, within sixty (60) days of the end of
     each of the first three Fiscal Quarters of each Fiscal Year, and within one
     hundred twenty (120) days of the end of the last Fiscal Quarter of each
     Fiscal Year, a list of the Investments of the Borrower and its Subsidiaries
     including a valuation thereof prepared from sources reasonably acceptable
     to the Agent.

     8.1.16 REVENUE AGENT NOTICES. Promptly, and in any event within ten (10)
     days of receipt, any revenue agent's reports or statutory notices of
     material deficiency related to the Borrower or any Insurance Subsidiary.

     8.1.17 OTHER INFORMATION. From time to time, such other information
     regarding the business, operation and financial condition of the Borrower
     and the Subsidiaries as the Agent or the Required Banks may reasonably
     request.

     Section 8.2 CORPORATE EXISTENCE. Subject to SECTION 9.1 in the instance of
a Subsidiary, maintain its corporate existence in good standing under the laws
of its jurisdiction of incorporation and its qualification to transact business
in each jurisdiction in which the character of the properties owned, leased or
operated by it or the business conducted by it makes such qualification
necessary.

     Section 8.3 INSURANCE. Maintain with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated.

     Section 8.4 PAYMENT OF TAXES AND CLAIMS. File all tax returns and reports
which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.

     Section 8.5 INSPECTION. Permit any Person designated by any Bank to visit
and inspect any of its properties, corporate books and financial records, to
examine and to make copies of its books of accounts and other financial records,
and to discuss the affairs, finances and accounts of the Borrower and the
Subsidiaries with, and to be advised as to the same by, its officers at such
reasonable times and intervals as such Bank may designate. So long as no Event
of Default exists, the expenses of the Banks for such visits, inspections and
examinations shall be at the expense of the Banks, but any such visits,
inspections, and examinations made while any Event of Default is continuing
shall be at the expense of the Borrower.

     Section 8.6 MAINTENANCE OF PROPERTIES. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all

<Page>

necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.

     Section 8.7 BOOKS AND RECORDS. Keep adequate and proper records and books
of account in which full and correct entries will be made of its dealings,
business and affairs.

     Section 8.8 COMPLIANCE. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.

     Section 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.

     Section 8.10 ENVIRONMENTAL MATTERS. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute or result in a Material Adverse Change.

     Section 8.11 DIVIDENDS. Cause AEILIC to make dividends and/or principal and
interest payments to the Borrower (a) in an amount sufficient to satisfy
AEILIC's debt obligations under the Surplus Note (subject to regulatory
approval), the 8% Subordinated Debentures and the 5% Subordinated Debentures and
(b) to permit the Borrower to satisfy its payment obligations hereunder with
respect to the Loans, if necessary.

                          ARTICLE IX NEGATIVE COVENANTS

     From the date of this Agreement and thereafter until the Loans and all
other Obligations of the Borrower to the Banks hereunder and under the Notes and
the other Loan Documents have been paid in full, the Borrower will not, and will
not permit any Subsidiary to, do any of the following:

     Section 9.1 INDEBTEDNESS. Incur, create, issue, assume or suffer to exist
any Indebtedness, except:

     (a) Indebtedness under this Agreement in respect of the Loan, the Surplus
     Note and other Obligations;

     (b) Current liabilities, other than for borrowed money, incurred in the
     ordinary course of business;

     (c) Hedging Obligations entered into in the ordinary course of business;

     (d) Indebtedness consisting of endorsements for collection, deposit or
     negotiation and warranties of products or services, in each case incurred
     in the ordinary course of business;.

<Page>

     (e) Indebtedness in respect of the 8% Subordinated Debentures in a
     principal amount not to exceed $26,773,237;

     (f) Indebtedness in respect of the 5% Subordinated Debentures in a
     principal amount not to exceed $100,000,000; and

     (g) Indebtedness in respect of Repurchase Transactions.

     Section 9.2 LIENS. Create, incur, assume or suffer to exist any Lien with
respect to any property, revenues or assets now owned or hereafter arising or
acquired, except the following Liens:

     (a) Deposits or pledges to secure payment of workers' compensation,
     unemployment insurance, old age pensions or other social security
     obligations, in the ordinary course of business of the Borrower or a
     Subsidiary;

     (b) Liens for taxes, fees, assessments and governmental charges not
     delinquent or to the extent that payments therefor shall not at the time be
     required to be made in accordance with the provisions of SECTION 8.4;

     (c) Liens of carriers, warehousemen, mechanics and materialmen, and other
     like Liens arising in the ordinary course of business, for sums not due or
     to the extent that payment therefor shall not at the time be required to be
     made in accordance with the provisions of SECTION 8.4;

     (d) Deposits to secure the performance of bids, trade contracts, leases,
     statutory obligations and other obligations of a like nature incurred in
     the ordinary course of business:

     (f) Liens on real estate to the extent real estate Investments are
     permitted by SECTION 9.6(f)(ii);

     (g) Liens in favor of the Agent for the benefit of the Banks pursuant to
     this Agreement and the other Loan Documents; and

     (h) the interests of sellers in Repurchase Transactions.

     Section 9.3 MERGER. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person; provided, however, any
wholly-owned Subsidiary may be merged with or liquidated into the Borrower (if
the Borrower is the surviving corporation) or any other wholly-owned Subsidiary.

     Section 9.4 SALE OF ASSETS. Sell, assign, lease, transfer, contribute,
reinsure, cede, convey or otherwise dispose of, or grant options, warrants or
other rights with respect to, any of its assets (including, without limitation,
any books of business) to any Person, unless:

     (a) such sale, assignment, transfer, lease, contribution, reinsurance,
     cession, conveyance or other disposition is in the ordinary course of its
     business including, without limitation,

<Page>

     sales of assets in connection with the management of the investment
     portfolio of the Borrower and its Subsidiaries;

     (b) the aggregate net book value of all assets sold, transferred, leased,
     contributed, reinsured, ceded or conveyed (other than in the ordinary
     course of business) by the Borrower or any of its Subsidiaries pursuant to
     this clause (b) does not exceed $500,000; or

     (c) such sale, assignment, transfer, lease, contribution, reinsurance,
     cession, conveyance or other disposition is with respect to the sale of its
     capital assets and the net proceeds of such sale are used to replace such
     capital assets within ninety (90) days after receipt of such net proceeds.

     Section 9.5 RESTRICTED PAYMENTS. Except as hereinafter provided, do any of
the following:

     (a) Declare or pay any dividends, either in cash or property, on any shares
     of its capital stock of any class (except dividends or other distributions
     payable solely in shares of common stock of the Borrower and except for
     dividends or other distributions payable solely to the Borrower);

     (b) Directly or indirectly, or through any Subsidiary, purchase, redeem or
     retire any shares of its capital stock of any class or any warrants, rights
     or options to purchase or acquire any shares of its capital stock (other
     than in exchange for or out of the net cash proceeds to the Borrower from
     the substantially concurrent issue or sale of other shares of common stock
     of the Borrower or warrants, rights or options to purchase or acquire any
     shares of its common stock);

     (c) Make any other payment or distribution, either directly or indirectly
     or through any Subsidiary, in respect of its capital stock (except for
     payments or distributions made solely to the Borrower); or

     (d) Make payments of (i) principal of the 8% Subordinated Debentures or the
     5% Subordinated Debentures, or (ii) interest of the 8% Subordinated
     Debentures or the 5% Subordinated Debentures at any time that the
     subordination terms of the documents pertaining thereto shall prevent or
     defer such payment or shall provide that the recipient of such payments may
     not retain such payment (it being expressly acknowledged that the Borrower
     may pay accrued interest at the stated rates of the Subordinated Debentures
     and the 5% Subordinated Debentures at any time that the foregoing clause
     shall not apply)

(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto any Default or Event of Default shall
have occurred and be continuing or the sum of the aggregate amount of Restricted
Payments made during any fiscal year of the Borrower shall exceed 25% of the
consolidated net income of the Borrower (determined in accordance with GAAP) for
the prior fiscal year. Notwithstanding the foregoing: (1) Trust I may pay
interest or interest-equivalent dividends on the 8% Trust Securities at a rate
not to exceed 8% per annum; (2) Trust II may pay interest or

<Page>

interest-equivalent dividends on the 5% Trust Securities at a rate not to exceed
5% per annum; (3) the Borrower or any Subsidiary may acquire shares of the
Borrower's common stock to be held in trust to fund the obligations of AEILIC
under its NMO Deferred Stock Compensation Plans and (4) the Borrower may redeem
shares of its capital stock of any class, provided that (aa) the number of
shares of voting capital stock redeemed in any one fiscal year shall not exceed
1% of the total number of such shares outstanding at January 1 of such year, and
(bb) the aggregate redemption price paid for all such shares redeemed in any
fiscal year of the Borrower shall not exceed $750,000.

     Section 9.6 INVESTMENTS. Make, incur, assume or suffer to exist any
Investment in any other Person, except:

     (a) Investments existing on the date of this Agreement and identified in
     SCHEDULE 9.6;

     (b) with respect to the Borrower and the Borrower's Subsidiaries,
     Investment Grade Securities and Cash Equivalents;

     (c) in the ordinary course of business, Investments by the Borrower in any
     of its Subsidiaries or by any such Subsidiary in any of its Subsidiaries,
     by way of contributions to capital or loans or advances;

     (d) in the ordinary course of business, Investments in call options on
     index derivatives acquired to hedge against index yield risk under annuity
     contracts issued by AEILIC;

     (e) Investments in real property and improvements constituting the home
     office of the Borrower and/or one or more of its Subsidiaries;

     (f) other Investments by AEILIC in Investments which are in compliance with
     all of the following guidelines:

          (i) All Investments shall be in compliance with the Applicable
          Insurance Code(s) or as approved by the Insurance Regulatory
          Authority;

          (ii) Investments in mortgage loans and real estate shall not exceed
          10.00% of the Invested Assets of AEILIC as reported on and after
          December 31, 2001;

          (iii) Investments in debt securities which are not Investment Grade
          Securities shall not exceed 5.00% of Invested Assets of AEILIC;

          (iv) Investments in common stock and preferred stock with no
          redemption date (other than call options on index derivatives) shall
          not exceed 2.00% of Invested Assets of AEILIC;

          (v) Without limiting the effect of the guidelines set forth in (ii),
          (iii) and (iv) above. total Investments under (ii), (iii) and (iv)
          above shall not exceed 15.00% of Invested Assets of AEILIC;

<Page>

          (vi) Investments relating to a single issuer (other than U.S.
          Government Securities) shall not exceed 2.5% of Invested Assets of
          AEILIC; and

          (vii) Investments in CMO derivative Investments as reported on and
          after December 31, 2001, shall not exceed the following:

               (x) 16.05% of the Invested Assets of AEILIC through and including
               December 31, 2002; and

               (y) 7.00% of the Invested Assets of AEILIC on and after
               January 1, 2003.

     (g) other Investments by American Equity Investment Properties, L.C. in an
     aggregate amount not to exceed $400,000;

     (h) Investment in the 8% Trust Securities and the 5% Trust Securities, to
     be held by the Borrower, not to exceed 3% of the total amount of the 8%
     Trust Securities or the 5% Trust Securities;

     (i) Investments consisting of loans to AEISC in an amount not to exceed the
     sum of (i) $5,000,000 plus (ii) the aggregate outstanding principal amount
     of Loans the proceeds of which have been loaned by the Borrower to AEISC to
     satisfy AEISC's obligations under the General Agency Commission Agreement;
     and

     (j) Investments in the FBL Trust Securities received in exchange for the 5%
     Trust Securities, and Investment by the Borrower consisting of contribution
     of such FBL Trust Securities to the capital of AEILIC.

     Section 9.7 PLANS. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $200,000.

     Section 9.8 CHANGE IN NATURE OF BUSINESS. Make any material change in the
nature of the business of the Borrower or such Subsidiary, as carried on at the
date hereof.

     Section 9.9 SUBSIDIARIES, PARTNERSHIPS, JOINT VENTURES AND OWNERSHIP OF
STOCK. Do any of the following:

     (a) form or acquire any corporation which would thereby become an Insurance
     Subsidiary or a Subsidiary without approval of the Required Banks, which
     approval may be conditioned upon the pledge of the stock of such Insurance
     Subsidiary or Subsidiary to the Agent for the benefit of the Banks pursuant
     to a pledge agreement in the form of the Borrower Pledge Agreement;

     (b) form or enter into any partnership as a limited or general partner or
     into any joint venture;

<Page>

     (c) permit any Subsidiary to purchase or otherwise acquire any shares of
     the stock of the Borrower; or

     (d) take any action, or permit any Subsidiary to take any action, which
     would result in a decrease in the Borrower's or any Subsidiary's ownership
     interest in any Subsidiary (including, without limitation, decrease in the
     percentage of the shares of any class of stock owned).

     Section 9.10 OTHER AGREEMENTS. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Banks
which would: (a) prohibit the Borrower or such Subsidiary from granting, or
otherwise limit the ability of the Borrower or such Subsidiary to grant, to the
Banks any Lien on any assets or properties of the Borrower or such Subsidiary;
or (b) be violated or breached by the Borrower's payment and performance of its
Obligations under the Loan Documents.

     Section 9.11 TRANSACTIONS WITH AFFILIATES. Enter into or be a party to any
transaction or arrangement, including, without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or the applicable Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person not a
Affiliate.

     Section 9.12 USE OF PROCEEDS. Permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock" within the meaning of
Regulation U of the Federal Reserve Board, as amended from time to time, and
furnish to any Bank, upon its request, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.

     Section 9.13 REINSURANCE.

     (a) Enter into Surplus Relief Reinsurance Agreements except (i) those
     treaties existing on the date of this Agreement and described on
     SCHEDULE 9.13 hereto, and (ii) additional or replacement Surplus Relief
     Reinsurance Agreements so long as such Agreements and those listed in
     clause (i) above, individually or in the aggregate, do not provide
     statutory pre-tax gain of more than an aggregate benefit of the amount then
     outstanding of more than $250,000. Any additional Surplus Relief
     Reinsurance Agreements entered into under this SECTION 9.13(a) shall be
     with responsible reinsurers having a financial strength rating of "A" or
     better by A.M. Best.

     (b) Make any material change or modification to any Reinsurance Agreement
     which change or modification could reasonably be expected to have a
     Material Adverse Effect. In addition, the Borrower and its Subsidiaries
     shall reinsure all amounts of insurance written by it in excess of $500,000
     on any one life. Any Reinsurance Agreement pursuant to which the Borrower
     or any of the Insurance Subsidiaries cede any liabilities shall be with
     responsible reinsurers having a financial strength rating of "A" or better
     by A.M. Best or with reinsurers reasonably acceptable to the Agent.

<Page>

     Section 9.14 MINIMUM SURPLUS. Permit the sum of Capital and Surplus plus
IMR/AVR of AEILIC to be less at any time than the sum of(a) $140,000,000, PLUS
(b) 25% of Statutory Net Income of AEILIC after December 31, 1999, PLUS (c) 75%
of the actual sum of contributions to the Capital and Surplus of AEILIC made
subsequent to December 31, 1999.

     Section 9.15 LEVERAGE RATIO. Permit the Leverage Ratio to be greater than
50% at any time.

     Section 9.16 CASH COVERAGE RATIO. Permit the Cash Coverage Ratio for any
period of four consecutive fiscal quarters to be less than 1.30 to 1.00.

     Section 9.17 RISK-BASED CAPITAL. As of the end of any fiscal quarter or
fiscal year, permit the Risk-Based Capital of AEILIC to fall below the
following, for the following fiscal quarter and fiscal year ends:

<Table>
<Caption>
     FISCAL QUARTER AND YEAR ENDS:                MINIMUM RISK-BASED CAPITAL:
     ----------------------------                 --------------------------
     <S>                                               <C>
     December 31, 2002, March 31, 2003,
     June 30, 2003 and September 30, 2003::            150%

     December 31, 2003 and thereafter:                 200%
</Table>

     Section 9.18 AMENDMENT OF GENERAL AGENCY COMMISSION AGREEMENT. Permit
AEILIC to join in or consent to the amendment, modification, supplement or
waiver of any of the provisions of the General Agency Commission Agreement.

     Section 9.19 NET YIELD PERCENTAGE. Permit the Net Yield Percentage to be
less than 1.50% on the last day of any calendar quarter for the twelve-month
period ending on that day.

                    ARTICLE X EVENTS OF DEFAULT AND REMEDIES

     Section 10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:

     (a) The Borrower shall fail to make when due, whether by acceleration or
     otherwise, any payment of principal of or interest on the Notes or any fee
     or other amount required to be made to the Banks pursuant to the Loan
     Documents;

     (b) Any representation or warranty made or deemed to have been made by or
     on behalf of the Borrower or any Subsidiary by any of the Loan Documents or
     by or on behalf of the Borrower or any Subsidiary in any certificate,
     statement, report or other writing furnished by or on behalf of the
     Borrower to the Banks pursuant to the Loan Documents shall prove to have
     been false or misleading in any material respect on the date as of which
     the facts set forth are stated or certified or deemed to have been stated
     or certified;

     (c) The Borrower shall fail to comply with and of SECTIONS 8.2, 9.3, 9.4,
     9.5, 9.14, 9.15, 9.16, 9.17, 9.18 or 9.19 hereof;

<Page>

     (d) The Borrower shall fail to comply with any agreement, covenant,
     condition, provision or term contained in the Loan Documents (and such
     failure shall not constitute an Event of Default under any of the other
     provisions of this SECTION 10.1) and such failure to comply shall continue
     for 30 days after whichever of the following dates is the earliest: (i) the
     date the Borrower gives notice of such failure to the Agent; (ii) the date
     the Borrower should have given notice of such failure to the Agent pursuant
     to Section 8.1.7; or (iii) the date the Agent gives notice of such failure
     to the Borrower.

     (e) The Borrower, any Subsidiary or AEISC shall become insolvent or shall
     generally not pay its debts as they mature or shall apply for, shall
     consent to, or shall acquiesce in the appointment of a custodian, trustee
     or receiver of the Borrower, such Subsidiary or AEISC or for a substantial
     part of the property thereof or, in the absence of such application,
     consent or acquiescence, a custodian, trustee or receiver shall be
     appointed for the Borrower, a Subsidiary or AEISC or for a substantial part
     of the property thereof and shall not be discharged within 30 days;

     (f) Any bankruptcy, reorganization, debt arrangement or other proceedings
     under any bankruptcy or insolvency law shall be instituted by or against
     the Borrower, a Subsidiary or AEISC, and, if instituted against the
     Borrower, a Subsidiary or AEISC, shall have been consented to or acquiesced
     in by the Borrower, such Subsidiary or AEISC, or shall remain undismissed
     for 30 days, or an order for relief shall have been entered against the
     Borrower, such Subsidiary or AEISC, or the Borrower, any Subsidiary or
     AEISC shall take any corporate action to approve institution of, or
     acquiescence in, such a proceeding;

     (g) Any dissolution or liquidation proceeding shall be instituted by or
     against the Borrower, a Subsidiary or AEISC and, if instituted against the
     Borrower, such Subsidiary or AEISC, shall be consented to or acquiesced in
     by the Borrower, such Subsidiary or AEISC or shall remain for 30 days
     undismissed, or the Borrower, any Subsidiary or AEISC shall take any
     corporate action to approve institution of, or acquiescence in, such a
     proceeding;

     (h) A judgment or judgments for the payment of money in excess of the sum
     of $250,000 in the aggregate shall be rendered against the Borrower or a
     Subsidiary and the Borrower or such Subsidiary shall not discharge the same
     or provide for its discharge in accordance with its terms, or procure a
     stay of execution thereof, prior to any execution on such judgments by such
     judgment creditor, within 30 days from the date of entry thereof, and
     within said period of 30 days, or such longer period during which execution
     of such judgment shall be stayed, appeal therefrom and cause the execution
     thereof to be stayed during such appeal;

     (i) The institution by the Borrower or any ERISA Affiliate of steps to
     terminate any Plan if in order to effectuate such termination, the Borrower
     or any ERISA Affiliate would be required to make a contribution to such
     Plan, or would incur a liability or obligation to such Plan, in excess of
     $250,000, or the institution by the PBGC of steps to terminate any Plan;

<Page>

     (j) The maturity of any Indebtedness of the Borrower (other than
     Indebtedness under this Agreement) or a Subsidiary shall be accelerated, or
     the Borrower or a Subsidiary shall fail to pay any such Indebtedness when
     due or, in the case of such Indebtedness payable on demand, when demanded,
     or any event shall occur or condition shall exist and shall continue for
     more than the period of grace, if any, applicable thereto and shall have
     the effect of causing, or permitting (any required notice having been given
     and grace period having expired) the holder of any such Indebtedness or any
     trustee or other Person acting on behalf of such holder to cause, such
     Indebtedness to become due prior to its stated maturity or to realize upon
     any collateral given as security therefor;

     (k) Any Change of Control shall occur;

     (l) (i) AEISC shall fail to comply with any agreement, covenant, condition,
     provision or term contained in the AEISC Security Agreement and such
     failure to comply shall continue for 30 days after whichever of the
     following dates is the earliest: (A) the date the Borrower gives notice of
     such failure to the Agent, (B) the date the Borrower should have given
     notice of such failure to the Agent pursuant to SECTION 8.1.7 or (c) the
     date the Agent gives notice of such failure to the Borrower; or (ii) AEISC
     shall purport to repudiate or revoke the AEISC Security Agreement or
     declare that it has no further obligations thereunder; or

     (m) either (i) the financial strength rating of AEILIC by A.M. Best or by
     Standard & Poor's is reduced to less than "A-", in the case of A.M. Best,
     or to less than "A-", in the case of Standard & Poor's, and is not restored
     to an A.M. Best rating of at least "A-" or a Standard & Poor's rating of at
     least "A-", as the case may be, within 14 months after such rating
     reduction. or (ii) the financial strength rating of AEILIC by A. M. Best or
     by Standard & Poor's is reduced to less than "B++", in the case of A.M.
     Best, or to less than "BBB+", in the case of Standard & Poor's.

     Section 10.2 REMEDIES. If (a) any Event of Default described in
SECTIONS 10.1(e), (f) or (g) shall occur with respect to the Borrower, the
Commitments shall automatically terminate and the outstanding unpaid principal
balance of the Notes, the accrued interest thereon and all other Obligations of
the Borrower to the Banks and the Agent under the Loan Documents shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may take any or all of the
following actions (and shall take any or all of the following actions on
direction of the Required Banks): (i) declare the Commitments terminated,
whereupon the Commitments shall terminate, (ii) declare that the outstanding
unpaid principal balance of the Notes, the accrued and unpaid interest thereon
and all other Obligations of the Borrower to the Banks and the Agent under the
Loan Documents to be forthwith due and payable, whereupon the Notes, all accrued
and unpaid interest thereon and all such Obligations shall immediately become
due and payable, in each case without demand or notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, (iii) exercise all rights and remedies under any other
instrument, document or agreement between the Borrower and the Agent or the
Banks, and (iv) enforce all rights and remedies under any applicable law.

<Page>

     Section 10.3 OFFSET. In addition to the remedies set forth in SECTION 10.2,
upon the occurrence of any Event of Default or at any time thereafter while such
Event of Default continues, each Bank or any other holder of any Note may offset
any and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies of the Borrower then or thereafter
with such Bank or such other holder, or any obligations of such Bank or such
other holder of the Note, against the Indebtedness then owed by the Borrower to
such Bank subject, however, to the provisions of SECTION 4.5.

     Section 10.4 APPLICATION OF PROCEEDS. After the occurrence of an Event of
Default and acceleration of the Obligations, all Collections shall be applied by
the Agent in accordance with the provisions of this SECTION 10.4.

     (a) COLLECTIONS. All Collections except the AEISC Note Collections and the
     Surplus Note 5 Collections shall be applied as follows:

          FIRST, to the payment of all costs and expenses incurred by or on
          behalf of the Agent, including the costs and expenses of any sale or
          enforcement, including reasonable compensation to the Agent's agents
          and counsels, and all expenses, liabilities and advances made or
          incurred by or on behalf of the Agent in connection therewith;

          SECOND, to the payment of the costs and expenses of such sale or
          enforcement, including reasonable compensation to the Banks' agents
          and counsel, and all expenses, liabilities and advances made or
          incurred by or on behalf of any Bank in connection therewith;

          THIRD, to the payment of all amounts due (other than principal and
          interest) under the Notes or this Agreement, payable ratably to the
          Agent and each Bank in accordance with the amount of such obligations
          owed to each of them, until such obligations are paid in full;

          FOURTH, to the payment of interest accrued and unpaid on the Loans and
          the Notes, payable ratably to each Bank in accordance with the amount
          of accrued interest owed to each of them until such interest is paid
          in full;

          FIFTH, to the payment of the outstanding principal amounts of all
          Loans, payable ratably to each Bank in accordance with the Percentage
          of each Bank until such principal is paid in full;

          SIXTH, to the payment of all other Obligations, payable ratably to the
          Agent and the Banks in the proportion that the Agent's and each Bank's
          share of those amounts bears to the total of those amounts for the
          Agent and all Banks; and

          FINALLY, to the payment to the Borrower, or to its successors or
          assigns, or as a court of competent jurisdiction may direct, of any
          surplus then remaining from such proceeds.

<Page>

     (b) AEISC NOTE COLLECTIONS. The AEISC Note Collections shall be payable in
     accordance with (a) above, EXCEPT that for AEISC Note Collections, FOURTH
     and FIFTH in (a) shall be deemed to be replaced by the following:

          FOURTH, to the payment of (i) interest accrued and unpaid on the
          Tranche A Loans, (ii) principal of the Tranche A Loans, payable
          ratably to each Tranche A Bank in accordance with such Tranche A
          Bank's Tranche A Percentage until such interest and principal are paid
          in full;

          FIFTH, to the payment of (i) interest accrued and unpaid on the
          Tranche B Loans, (ii) principal of the Tranche B Loans, payable
          ratably to each Tranche B Bank in accordance with such Tranche B
          Bank's Tranche B Percentage until such interest and principal are paid
          in full;

     (b) SURPLUS NOTE 5 COLLECTIONS. The Surplus Note 5 Collections shall be
     payable in accordance with (a) above, EXCEPT that for Surplus Note 5
     Collections, FOURTH and FIFTH in (a) shall be deemed to be replaced by the
     following:

          FOURTH, to the payment of (i) interest accrued and unpaid on the
          Tranche B Loans, (ii) principal of the Tranche B Loans, payable
          ratably to each Tranche B Bank in accordance with such Tranche B
          Bank's Tranche B Percentage until such interest and principal are paid
          in full;

          FIFTH, to the payment of (i) interest accrued and unpaid on the
          Tranche A Loans, (ii) principal of the Tranche A Loans, payable
          ratably to each Tranche A Bank in accordance with such Tranche A
          Bank's Tranche A Percentage until such interest and principal are paid
          in full;

     (d) DETERMINATION OF SOURCE OF COLLECTION. The Agent shall make the
     determination of whether any given Collection is a AEISC Collection or a
     Surplus Note 5 Collection in its sole, good faith judgment, which shall be
     deemed conclusive in absence of manifest error.

     (e) DEFICIENCY. If the proceeds of any Collections are insufficient to
     cover the costs and expenses of such sale, as aforesaid, and the payment in
     full of all Obligations of the Borrower, the Borrower shall remain liable
     for any deficiency.

                              ARTICLE XI THE AGENT

     Section 11.1 APPOINTMENT AND GRANT OF AUTHORITY. Each Bank hereby appoints
the Agent, and the Agent hereby agrees to act, as agent under this Agreement and
the other Loan Documents. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the terms
hereof and thereof, together with such other powers as are reasonably incidental
thereto. Each Bank hereby authorizes, consents to, and directs the Borrower to
deal with the Agent as the true and lawful agent of such Bank to the extent set
forth herein.

<Page>

     Section 11.2 NON-RELIANCE ON AGENT. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under the
Loan Documents. The Agent shall not be required to keep informed as to the
performance or observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its related companies) which may come into the Agent's possession.

     Section 11.3 RESPONSIBILITY OF THE AGENT AND OTHER MATTERS.

     (a) The Agent shall have no duties or responsibilities except those
     expressly set forth in this Agreement (including, without limitation, the
     duty to forward copies of reports, certificates and other information to
     the Banks pursuant to SECTION 8.1) and those duties and liabilities shall
     be subject to the limitations and qualifications set forth in this Section.
     The duties of the Agent shall be mechanical and administrative in nature.

     (b) Neither the Agent nor any of its directors, officers or employees shall
     be liable for any action taken or omitted (whether or not such action taken
     or omitted is within or without the Agent's responsibilities and duties
     expressly set forth in this Agreement) under or in connection with this
     Agreement, or any other instrument or document in connection herewith,
     except for gross negligence or willful misconduct. Without limiting the
     foregoing, neither the Agent nor any of its directors, officers or
     employees shall be responsible for, or have any duty to examine:

          (i) the genuineness, execution, validity, effectiveness,
          enforceability, value or sufficiency of (A) the Loan Documents, or the
          Notes, or (B) any document or instrument furnished pursuant to or in
          connection with the Loan Documents or the Notes,

          (ii) the collectibility of any amounts owed by the Borrower,

          (iii) any recitals or statements or representations or warranties in
          connection with the Loan Documents or the Notes,

          (iv) any failure of any party to this Agreement to receive any
          communication sent, or

          (v) the assets, liabilities, financial condition, results of
          operations, business or creditworthiness of the Borrower.

     (c ) The Agent shall be entitled to act, and shall be fully protected in
     acting upon, any communication in whatever form believed by the Agent in
     good faith to be genuine and

<Page>

     correct and to have been signed or sent or made by a proper person or
     persons or entity. The Agent may consult counsel and shall be entitled to
     act, and shall be fully protected in-any action taken in good faith, in
     accordance with advice given by counsel. The Agent may employ agents and
     attorneys-in-fact and shall not be liable for the default or misconduct of
     any such agents or attorneys-in-fact selected by the Agent with reasonable
     care. The Agent shall not be bound to ascertain or inquire as to the
     performance or observance of any of the terms, provisions or conditions of
     the Loan Documents or the Notes on the Borrower's part.

     Section 11.4 ACTION ON INSTRUCTIONS. The Agent shall be entitled to act or
refrain from acting, and in all cases shall be fully protected in acting or
refraining from acting under the Loan Documents or the Notes or any other
instrument or document in connection herewith or therewith in accordance with
instructions in writing from (i) the Required Banks except for instructions
which under the express provisions hereof must be received by the Agent from all
the Banks, and (ii) in the case of such instructions, from all the Banks.

     Section 11.5 INDEMNIFICATION. To the extent the Borrower does not reimburse
and save the Agent harmless according to the terms hereof for and from all
costs, expenses and disbursements in connection herewith or with the other Loan
Documents, such costs, expenses and disbursements to the extent reasonable shall
be borne by the Banks ratably in accordance with their Percentages and the Banks
hereby agree on such basis (a) to reimburse the Agent for all such reasonable
costs, expenses and disbursements on request and (b) to indemnify and save
harmless the Agent against and from any and all losses, obligations, penalties,
actions, judgments and suits and other reasonable costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent, arising out of or in
connection with the Loan Documents or the Notes or any instrument or document in
connection herewith or therewith, or any request of the Banks, including without
limitation the reasonable costs, expenses and disbursements in connection with
defending itself against any claim or liability, or answering any subpoena,
related to the exercise or performance of any of its powers or duties under this
Agreement or the other Loan Documents or the taking of any action under or in
connection with the Loan Documents or the Notes.

     Section 11.6 U.S. BANK NATIONAL ASSOCIATION AND AFFILIATES. With respect to
U.S. Bank National Association's Commitment and any Loans by U.S. Bank National
Association under this Agreement and any Note and any interest of U.S. Bank
National Association in any Note, U.S. Bank National Association shall have the
same rights, powers and duties under this Agreement and such Note as any other
Bank and may exercise the same as though it were not the Agent. U.S. Bank
National Association and its affiliates may accept deposits from, lend money to,
and generally engage, and continue to engage, in any kind of business with the
Borrower as if U.S. Bank National Association were not the Agent.

     Section 11.7 NOTICE TO HOLDER OF NOTES. The Agent may deem and treat the
payees of the Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note.

<Page>

     Section 11.8 SUCCESSOR AGENT. The Agent may resign at any time by giving at
least 30 days written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, but shall not be
required to, on behalf of the Banks, appoint a successor Agent.

                            ARTICLE XII MISCELLANEOUS

     Section 12.1 NO WAIVER AND AMENDMENT. No failure on the part of the Banks
or the holders of the Notes to exercise and no delay in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The remedies herein and in any other instrument, document or agreement
delivered or to be delivered to the Banks hereunder or in connection herewith
are cumulative and not exclusive of any remedies provided by law. No notice to
or demand on the Borrower not required hereunder or under the Notes shall in any
event entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the right of the Banks or the
holders of the Notes to any other or further action in any circumstances without
notice or demand.

     Section 12.2 AMENDMENTS, Etc. No amendment or waiver of any provision of
this Agreement or any of the other Loan Documents, nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Borrower and the Agent upon direction of the
Required Banks and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless agreed to by the
Agent and all of the Banks:

     (a) increase the amounts of or extend the terms of the Commitments or
     subject the Banks to any additional obligations;

     (b) reduce the principal of, or interest on, the Notes or any fees or other
     amounts payable hereunder;

     (c) postpone any date fixed for any payment of principal of, or interest
     on, the Notes or any fees or other amounts payable hereunder;

     (d) change the definition of Required Banks or amend this SECTION 12.2; or

     (e) release any collateral or security interest securing the Loans.

PROVIDED, FURTHER that amendments, waivers or consents affecting the rights of
the Agent shall also require the consent of the Agent.

     Section 12.3 ASSIGNMENTS AND PARTICIPATIONS.

<Page>

     (a) ASSIGNMENTS. Each Bank shall have the right, subject to the further
     provisions of this Sections 12.3, to sell or assign all or any part of its
     Commitment, Loans, Note, and other rights and obligations under this
     Agreement and related documents (such transfer, an "Assignment") to any of
     its affiliates and to any commercial lender, other financial institution or
     other entity (an "Assignee"). Upon such Assignment becoming effective as
     provided in SECTION 12.3(b), the assigning Bank shall be relieved from the
     portion of the Commitments, obligations to indemnify the Agent and other
     obligations hereunder to the extent assumed and undertaken by the Assignee,
     and to such extent the Assignee shall have the rights and obligations of a
     "Bank" hereunder. Notwithstanding the foregoing, unless otherwise consented
     to by the Borrower and the Agent (which consent, in the case of the
     Borrower, shall not be required if such assignment is to an affiliate of
     the assigning Bank or if an Event of Default has occurred and is continuing
     and, in any other case, shall not be unreasonably withheld or delayed by
     the Borrower or the Agent, as the case may be), each Assignment shall be in
     the initial principal amount of not less than $2,000,000 in the aggregate
     for all Loans and Commitments assigned, or an integral multiple of
     $1,000,000 if above such amount (or the remaining portion of such assigning
     Bank's commitment, if less than $2,000,000). Each Assignment shall be
     documented by an agreement between the assigning Bank and the Assignee (an
     "Assignment and Assumption Agreement") in form and substance satisfactory
     to the Agent.

     (b) EFFECTIVENESS OF ASSIGNMENTS. An Assignment shall become effective
     hereunder when all of the following shall have occurred: (i) the Assignee
     shall have submitted an Assignment Agreement in the form attached hereto as
     EXHIBIT G, duly completed and executed, in which the Assignee shall have
     agreed in writing to have irrevocably assumed and undertaken the
     transferred portion of the assigning Bank's obligations hereunder
     (including without limitation the obligations to indemnify the Agent
     hereunder), to the Agent with a copy for the Borrower, and shall have
     provided to the Agent information the Agent shall have reasonably requested
     to make payments to the Assignee, (ii) either the assigning Bank or the
     Assignee shall have paid a processing fee of $3,500 to the Agent for its
     own account, (iii) the assigning Bank and the Agent shall have agreed upon
     a date upon which the Assignment shall become effective, and (iv) the Agent
     and the Borrower shall have given their consent to such Assignment by
     executing such Assignment Agreement. Upon the Assignment becoming
     effective, (x) if requested by the assigning Bank, the Agent and the
     Borrower shall make appropriate arrangements so that new Notes are issued
     to the assigning Bank and the Assignee; and (y) the Agent shall forward all
     payments of interest, principal, fees and other amounts that would have
     been made to the assigning Bank, in proportion to the percentage of the
     assigning Bank's rights transferred, to the Assignee.

     (c) PARTICIPATIONS. Each Bank shall have the right, subject to the further
     provisions of this SECTION 12.3, to grant or sell a participation in all or
     any part of its Loans, Note and Commitment (a "Participation") to any
     commercial lender, other financial institution or other entity (a
     "Participant") without the consent of the Borrower, the Agent of any other
     party hereto. The Borrower agrees that if amounts outstanding under this
     Agreement and the Notes are due and unpaid, or shall have been declared or
     shall have become due and payable upon the occurrence of an Event of
     Default, each Participant shall be deemed to have the right of setoff in
     respect of its Participation in amounts owing under this

<Page>

     Agreement and any Note to the same extent as if the amount of its
     Participation were owing directly to it as a Bank under this agreement or
     any note; provided, that such right of setoff shall be subject to the
     obligation of such Participant to share with the Banks, and the Banks agree
     to share with such Participant, as provided in SECTION 4.4 hereof. The
     Borrower also agrees that each Participant shall be entitled to the
     benefits of Article V with respect to its Participation, provided, that no
     Participant shall be entitled to receive any greater amount pursuant to
     such Sections than the transferor Bank would have been entitled to receive
     in respect of the amount of the Participation transferred by such
     transferor Bank to such Participant had no such transfer occurred.

     (d) LIMITATION OF RIGHTS OF ANY ASSIGNEE OR PARTICIPANT. Notwithstanding
     anything in the foregoing to the contrary, except in the instance of an
     Assignment that has become effective as provided in SECTION 12.3(b), (i) no
     Assignee or Participant shall have any direct rights hereunder, (ii) the
     Borrower, the Agent and the Banks other than the assigning or selling Bank
     shall deal solely with the assigning or selling Bank and shall not be
     obligated to extend any rights or make any payment to, or seek any consent
     of, the Assignee or Participant, (iii) no Assignment or Participation shall
     relieve the assigning or selling Bank from its Commitment to make Loans
     hereunder or any of its other obligations hereunder and such Bank shall
     remain solely responsible for the performance hereof, the (iv) no Assignee
     or Participant, other than an affiliate of the assigning or selling Bank,
     shall be entitled to require such Bank to take or omit to take any action
     hereunder, except that such Bank may agree with such Assignee or
     Participant that such Bank will not, without such Assignee's or
     Participant's consent, take any action which would, in the case of any
     principal, interest or fee in which the Assignee or Participant has an
     ownership or beneficial interest: (A) extend the final maturity of any
     Loans or extend the Termination Date, (B) reduce the interest rate on the
     Loans or the rate of Facility Fees, (C) forgive any principal of, or
     interest on, the Loans or any fees, or (D) release all or substantially all
     of the collateral for the Loans.

     (d) TAX MATTERS. No Bank shall be permitted to enter into any Assignment or
     Participation with any Assignee or Participant who is not a United States
     Person, and no New Bank who is not a United States Person shall be
     permitted to become a Bank, unless such Assignee, Participant or New Bank
     represents and warrants to such the assigning or participating Bank, as
     applicable, and to the Agent that, as at the date of such Assignment or
     Participation, or as of the date such New Bank is to become a Bank, as the
     case may be, it is entitled to receive interest payments without
     withholding or deduction of any taxes and such Assignee, Participant or New
     Bank, as the case may be, executes and delivers to the Agent and to the
     assigning or participating Bank, as applicable, on or before the date of
     execution and delivery of documentation of such Participation or Assignment
     or on the date such New Bank is to become a Bank, as the case may be, a
     United States Internal Revenue Service Form W-8ECI or W-8BEN, or any
     successor to either of such forms, as appropriate, properly completed an
     claiming complete exemption from withholding and deduction of all Federal
     Income Taxes. A "United States Person" means any citizen, national or
     resident of the United States, any corporation or other entity created or
     organized in or under the laws of the United States or any political
     subdivision hereof or any estate or trust, in each case that is not subject
     to withholding of

<Page>

     United States Federal income taxes or other taxes on payment of interest,
     principal of fees hereunder.

     (e) INFORMATION. Each Bank may furnish any information concerning the
     Borrower in the possession of such Bank from time to time to Assignees and
     Participants and potential Assignees and Participants.

     (f) FEDERAL RESERVE BANK. Nothing herein stated shall limit the right of
     any Bank to assign any interest herein and in any Note to a Federal Reserve
     Bank.

     Section 12.4 COSTS, EXPENSES AND TAXES. The Borrower agrees, whether or not
any Loan is made hereunder, to pay on demand all costs and expenses of the
following persons (including the reasonable fees and expenses of counsel and
paralegals for such persons who may be employees of such persons), incurred in
connection with the following matters: (i) the Agent in connection with the
preparation, execution and delivery of the Loan Documents and the preparation,
negotiation and execution of any and all amendments to each thereof and (ii) the
Agent and the Banks in connection with the enforcement of the Loan Documents.
The Borrower agrees to pay, and save the Agent and the Banks harmless from all
liability for, any stamp or other taxes which may be payable with respect to the
execution or delivery of the Loan Documents. The Borrower agrees to indemnify
and hold the Agent and the Banks harmless from any loss or expense which may
arise or be created by the acceptance of telephonic or other instructions for
making Loans or disbursing the proceeds thereof. The obligations of the Borrower
under this SECTION 12.4 shall survive any termination of this Agreement.

     Section 12.5 NOTICES. Except when telephonic notice is expressly authorized
by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent under Article II hereof shall be deemed to have been
given only when received by the Agent.

     Section 12.6 CONFIDENTIALITY. The Agent and the Banks may have received,
and may hereafter receive, confidential financial and business information
concerning the Borrower and its Subsidiaries and Affiliates. The Agent and each
Bank agrees to hold non-public information received from the Borrower in
confidence, and not disclose such information to persons other than the Agent's
or Bank's officers, employees, agents and other representatives (who, if they
are not employees of the Agent or the Bank, shall be informed of this
confidentiality provision) except: (a) as required to disclose such information
to a bank regulatory agency or in connection with an examination of its records
by bank examiners or at the express direction of any other authorized government
agency; (b) pursuant to a subpoena or other court order; (c) in connection with
legal process in the Agent's or Bank's lending capacity; or (d) to participants,
assignees, potential participants and potential assignees with respect to the
financing who agree to be bound

<Page>

by confidentiality provisions substantially similar to this paragraph.
Confidential information shall not include (i) information already in the
Agent's or Bank's possession prior to receipt from the Borrower, or (ii)
information which becomes generally available to the public, other than as a
result of disclosure by the Agent or a Bank, or its directors, officers,
employees, advisors or agents or becomes available to the Agent or a Bank on a
nonconfidential basis from a source other than the Borrower or its advisors,
provided that such source is not known by the Agent or Bank to be bound by a
confidentiality agreement with, or other obligation of confidentiality to, the
Borrower or another party.

     Section 12.7 SUCCESSORS. This Agreement shall be binding upon the Borrower,
the Banks and the Agent and their respective successors and assigns, and shall
inure to the benefit of the Borrower, the Banks and the Agent and the successors
and assigns of the Banks. The Borrower shall not assign its rights or duties
hereunder without the written consent of the Banks.

     Section 12.8 SEVERABILITY. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

     Section 12.9 SUBSIDIARY REFERENCES. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.

     Section 12.10 CAPTIONS. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.

     Section 12.11 ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding between the Borrower, the Banks and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.

     Section 12.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.

     Section 12.13 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO
NATIONAL BANKS.

     Section 12.14 CONSENT TO JURISDICTION. AT THE OPTION OF THE BANKS, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY

<Page>

ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANKS AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

     Section 12.15 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT, THE
CO-AGENT, THE DOCUMENTATION AGENT AND THE BANKS (a) WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i) UNDER
THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (ii)
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY AND (b) WAIVES ANY RIGHT TO SEEK OR RECEIVE
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES IN ANY SUCH ACTION OR PROCEEDING.

     Section 12.16 REPLACEMENT OF EXISTING CREDIT AGREEMENT. This Agreement
supersedes and replaces the Existing Credit Agreement, and provides terms and
conditions for loans made hereunder and made previously under the Existing
Credit Agreement. The Tranche A Notes issued hereunder evidence indebtedness
formerly evidenced by notes issued under the Existing Credit Agreement. Entry
into this Agreement and delivery and acceptance of the Notes hereunder shall not
evidence repayment of indebtedness or obligations under the Existing Credit
Agreement.

                            (signature pages follow)

<Page>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.

                                   AMERICAN EQUITY INVESTMENT LIFE
                                   HOLDING COMPANY

                                   By:  /s/ D.J. Noble
                                       -----------------------------------------
                                   Title:  President
                                         ---------------------------------------

                                   5000 Westown Parkway, Suite 200
                                   West Des Moines, Iowa 50266
                                   Attention: Mr. David J. Noble, President
                                   Telephone: (515) 221-0002
                                   Fax: (515) 221-9947

                                   U.S. BANK NATIONAL ASSOCIATION, as
                                   Agent and as a Bank

                                   By:  /s/ Sam S. Pepper
                                       -----------------------------------------
                                   Title:  Vice President
                                         ---------------------------------------

                                   800 Nicollet Mall
                                   Mail Code BC-MN-H03N
                                   Minneapolis, MN 55402
                                   Attention: Mr. Sam S. Pepper
                                   Telephone: (612) 303-3758
                                   Fax: (612) 303-2265

                                   WEST DES MOINES STATE BANK, as
                                   Co-Agent as a Bank

                                   By:  /s/ Brad L. Winterbottom
                                       -----------------------------------------
                                   Title:  President
                                         ---------------------------------------

                                   1601 22nd St.
                                   West Des Moines, Iowa 50266
                                   Attention: Mr. Brad L. Winterbottom
                                   Telephone: (515) 222-2320
                                   Fax: (515) 222-2346

                       (additional signature page follows)

<Page>

                                   FLEET NATIONAL BANK, as

                                   By:  /s/ Robert W. Mcclelland
                                       -----------------------------------------
                                   Title:  Director
                                         ---------------------------------------

                                   Financial Institutions
                                   100 Federal Street -- MA-EH-10010H
                                   Boston, MA 02110
                                   Attention: David A. Bosselait, Vice President
                                   Telephone: (617) 434-3778
                                   Fax: (617) 434-1096

<Page>

                                     EXHIBIT

       Exhibit    Contents

       A-1, A-2   Form of Note

       B          Acknowledgment of AEISC Security Agreement

       C          Acknowledgement of Borrower Pledge Agreement

       D          Compliance Certificate

       E          Acknowledgement of Consent and Agreement to Security Agreement
                  by AEILIC

       F          Form of Legal Opinion

       G          Assignment and Assumption

Schedules

       1.1        Amounts and Percentages

       7.16       Subsidiaries

       7.18       Insurance Licenses

       9.6        Investments

       9.13       Surplus Relief Reinsurance Agreements

<Page>

                                   EXHIBIT A-1
                                 TRANCHE A NOTE

$[Tranche A Amount]                    Minneapolis, Minnesota: December 30, 2002

     FOR VALUE RECEIVED, the undersigned AMERICAN EQUITY INVESTMENT LIFE HOLDING
COMPANY, an Iowa corporation (the "Borrower"), promises to pay to the order of
[BANK] (the "Bank"), on the Termination Date, or other due date or dates
determined under the Credit Agreement hereinafter referred to, the principal sum
of __________ DOLLARS ($Tranche A Amount) (the "Tranche A Amount"), payable in
quarterly installments commencing on December 31, 2002, and continuing on each
March 31, June 30, September 30 and December 31 thereafter occurring to and
including March 31, 2005, each in an amount equal to one-tenth (1/10th) of the
Tranche A Amount, and a final principal installment payable on June 30, 2005 in
an amount equal to the aggregate principal balance of the Tranche A Loans of the
Bank then outstanding.

     The Borrower further promises to pay to the order of the Bank interest on
the aggregate unpaid principal amount hereof from time to time outstanding from
the date hereof until paid in full at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit Agreement.

     All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of U.S. Bank National Association, at 800 Nicollet Mall.,
Minneapolis, Minnesota 55402, or at such other place as may be designated by the
Agent to the Borrower in writing.

     This Note is one of the Tranche A Notes and the Notes referred to in, and
evidences indebtedness incurred under, a Credit Agreement dated as of
December 30, 2002 (herein, as it may be amended, modified or supplemented from
time to time, called the "Credit Agreement") among the Borrower, the Banks, as
defined therein (including the Bank) and U.S. Bank National Association, as
Agent, to which Credit Agreement reference is made for a statement of the terms
and provisions thereof, including those under which the Borrower is permitted
and required to make prepayments and repayments of principal of such
indebtedness and under which such indebtedness may be declared to be immediately
due and payable.

     All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.

<Page>

     This Note is made under and governed by the internal laws of the State of
Minnesota.

                                   AMERICAN EQUITY INVESTMENT LIFE
                                   HOLDING COMPANY

                                   By:
                                      -------------------------------------

                                   Title:
                                         ----------------------------------

<Page>

                                   EXHIBIT A-2
                                 TRANCHE B NOTE

$[Tranche B Amount]                    Minneapolis, Minnesota: December 30, 2002

     FOR VALUE RECEIVED, the undersigned AMERICAN EQUITY INVESTMENT LIFE HOLDING
COMPANY, an Iowa corporation (the "Borrower"), promises to pay to the order of
[BANK] (the "Bank"), on the Termination Date, or other due date or dates
determined under the Credit Agreement hereinafter referred to, the principal sum
of __________ DOLLARS ($Tranche A Amount) (the "Tranche B Amount"), payable in
quarterly installments commencing on March 31, 2003, and continuing on each
March 31, June 30, September 30 and December 31 thereafter occurring to and
including December 31, March 31, 2005, each in an amount equal to one-nineteenth
(1/19th) of the Tranche B Amount, and a final principal installment payable on
December 31, 2007 in an amount equal to the aggregate principal balance of the
Tranche B Loans then outstanding.

     The Borrower further promises to pay to the order of the Bank interest on
the aggregate unpaid principal amount hereof from time to time outstanding from
the date hereof until paid in full at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit Agreement.

     All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of U.S. Bank National Association, at 800 Nicollet Mall.,
Minneapolis, Minnesota 55402, or at such other place as may be designated by the
Agent to the Borrower in writing.

     This Note is one of the Tranche B Notes and the Notes referred to in, and
evidences indebtedness incurred under, a Credit Agreement dated as of
December 30, 2002 (herein, as it may be amended, modified or supplemented from
time to time, called the "Credit Agreement") among the Borrower, the Banks, as
defined therein (including the Bank) and U.S. Bank National Association, as
Agent, to which Credit Agreement reference is made for a statement of the terms
and provisions thereof, including those under which the Borrower is permitted
and required to make prepayments and repayments of principal of such
indebtedness and under which such indebtedness may be declared to be immediately
due and payable.

     All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.

     This Note is made under and governed by the internal laws of the State of
Minnesota.

<Page>

                                   AMERICAN EQUITY INVESTMENT LIFE
                                   HOLDING COMPANY

                                   By:
                                      -------------------------------------

                                   Title:
                                         ----------------------------------

<Page>

                                    EXHIBIT B
            Acknowledgment and Amendment of AEISC Security Agreement

     The undersigned has entered into a Third Amended and Restated Security
Agreement, dated as of April 6, 2000 (the "Security Agreement") in favor of U.S.
Bank National Association, as Agent for the Banks under the Credit Agreement
referred to below. The undersigned acknowledges and agrees as follows:

     1. The Credit Agreement, as defined in the Security Agreement, has been
amended and restated as an Amended and Restated Credit Agreement, dated as of
December 30, 2002. All references to the Credit Agreement in the Security
Agreement shall be deemed to refer to such Amended and Restated Credit
Agreement, as further amended, supplemented, restated or otherwise modified from
time to time.

     2. The "Obligations" specified in the Security Agreement include the
obligations of the Borrower under the Credit Agreement referred to herein.

     The undersigned hereby confirms that the Security Agreement remains in full
force and effect, enforceable against the undersigned in accordance with its
terms.

                                   AMERICAN EQUITY INVESTMENT SERVICE
                                   COMPANY

                                   By:
                                      -------------------------------------

                                   Title:
                                         ----------------------------------

<Page>

                                    EXHIBIT C
                         ACKNOWLEDGMENT AND AMENDMENT OF
                           SECOND AMENDED AND RESTATED
                            BORROWER PLEDGE AGREEMENT

     The undersigned, as Pledgor (the "Pledgor") has executed and delivered a
Second Amended and Restated Borrower Pledge Agreement, dated as of April 6, 2000
(the "Pledge Agreement"), pursuant to which the Pledgor has granted to certain
security interests to U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as agent (in such capacity, the "Agent") for the Banks party to the
Credit Agreement, as hereinafter defined. The Pledgor and the Agent acknowledge
and agree as follows:

     1. The Credit Agreement, as defined in the Pledge Agreement, has been
amended and restated as an Amended and Restated Credit Agreement, dated as of
December 30, 2002. All references to the Credit Agreement in the Pledge
Agreement shall be deemed to refer to such Amended and Restated Credit
Agreement, as further amended, supplemented, restated or otherwise modified from
time to time.

     2. A new definition is added to Section 1 of the Pledge Agreement, and
shall read as follows:

          "'Investment Advisory Agreement' shall mean each agreement between the
     Pledgor and AEILIC or any other subsidiary under which the Borrower will
     act as investment advisor for such subsidiary in consideration of fees paid
     by the subsidiary thereunder."

     2. Section 2 of the Pledge Agreement is amended by re-lettering
subsection "(f)" as "(g)" and adding new subsection (f) to read as follows:

     "(f) all Investment Advisory Agreements and all rights thereunder,
including all accounts and rights to payment thereunder; and"

     3. The Pledgor agrees that the Agent may file any financing statement to
perfect the security interest granted by the Pledgor under the Pledge Agreement
without the signature of the Pledgor, to the extent permitted to do so by
applicable law.

     The Pledgor hereby confirm that the Pledge Agreement remains in full force
and effect, enforceable against the Pledgor in accordance with its terms.

<Page>

                                   Page 1 of 2

<Page>

     IN WITNESS WHEREOF, the Pledgor has executed this Acknowledgment and
Amendment as of December 20, 2002.

                                   AMERICAN EQUITY INVESTMENT LIFE
                                   HOLDING COMPANY

                                   By:
                                      -------------------------------------
                                   Title:
                                         ----------------------------------

Acknowledged and agreed

U.S. Bank National Association

By:
   ----------------------------------------
Title:
      -------------------------------------

<Page>

                                   Page 2 of 2

<Page>

                                    EXHIBIT D
                         FORM OF COMPLIANCE CERTIFICATE

     This Compliance Certificate is being submitted pursuant to Articles VIII
and IX of the Amended and Restate Revolving Credit Agreement dated as of
December 30, 2002 (as originally executed and as amended, modified, supplemented
or restated, the "Credit Agreement"). The undersigned, being a duly acting and
authorized officer of the Borrower and familiar with its books and records and
the books and records of each Subsidiary, Attached are the consolidated
financial statements for the Borrower as of __________________, for American
Equity Investment Life Insurance Company (AEILIC) as of ___________________, and
for American Equity Investment Service Company (AEISC) as of __________,
("Current Financials").

     I hereby certify that the Current Financials have been prepared in
accordance to GAAP and/or statutory accounting practices applied on a consistent
basis with the accounting practices applied in the annual audit reports referred
to in the Credit Agreement.

     Defaults and Events of Default (check one):

     1.   I have no knowledge of the occurrence of any Default or Event of
          Default under the Credit Agreement.

     2.   Attached is a detailed description of all Defaults and Events of
          Default of which I have knowledge and which have not previously been
          reported to U.S. Bank and remedied.

For the dates and periods covered by the Current Financials, the Borrower is in
compliance with the covenants set forth in Article VIII and Article IX of the
Credit Agreement, except as indicated in the attached description. The
calculations made to determine compliance are attached.

                        American Equity Investment Life Holding Company

                        By:
                           -------------------------------------

                        Title:
                              ----------------------------------

<Page>

                            Calculation of Covenants

[NOTE: ATTACHMENT MAY BE DIFFERENTLY FORMATTED]

     For purposes of the following calculations, capitalized terms shall have
the meanings set forth in the Credit Agreement and calculations shall be made in
accordance with GAAP or SAP, as applied as described in the Credit Agreement.

Section 9.14 MINIMUM SURPLUS OF AEILIC:

     Capital & Surplus                                      $_______
     IMR/AVR:
     Interest maintenance reserve                           $_______
     Asset valuation reserve                                $_______

     Adjusted Capital and Surplus                           $_______

     REQUIRED:
     Minimum threshold                                      $_______
     25% of AEILIC statutory net income after 12/31/99      $_______
     75% of contributions to Capital and Surplus
     after 12/31/99:                                        $_______

<Page>

     REQUIRED AMOUNT:

Section 9.15 LEVERAGE RATIO:

     (a) Principal amount of Loans outstanding:                    $_______
         Indebtedness of AEISC:                                    $_______
     Total                                                         $_______

     (b) Adjusted Capital Total Capital & Surplus:                 $_______

     Leverage ratio ((a) to (b) expressed as a percentage):             __%

     REQUIRED:

Section 9.16 CASH COVERAGE RATIO:

     (a) total of
     (i) Amounts Available for Dividends                           $_______
           (see definition for time of determination)
     PLUS (ii) interest paid on the Surplus Notes:                 $_______
     PLUS (iii) General Agency Commission Agreement
              commissions:                                      $_______
     PLUS (iv) revenues under Investment Advisory Agreement:    $_______
     PLUS (v) investments income of the Borrower
             (nonconsolidated), excluding investments
             in Subsidiaries:                                   $_______
     MINUS (vi) cash operating expenses:                        $_______
     MINUS (vii) Restricted Payments:                           $_______

<Page>

     Total:                                                        $_______

     (b) total of:
     (i) interest paid or accrued (other than
              Indebtedness in respect of
              Repurchase Transactions):                            $_______
     PLUS (ii) distributions on the 8% Trust Preferred
               Securities and the 5% Trust Preferred
               Securities:                                         $_______
     PLUS (iii) one fifth (1/5) of outstanding Loans:              $_______

     Total:                                                        $_______

     Cash Coverage Ratio ((a) to (b))                              ______to 1.00

     REQUIRED:                                        Not less than 1.30 to 1.00

Section 9.17 RISK-BASED CAPITAL OF AEILIC.

     (a) Adjusted Capital:                                  $_______

     (b) to the Company Action Level:                       $_______

     Risk Based Capital ((a) to (b) expressed as a percentage):       _____%

     REQUIRED:

     December 31, 2002, March 31, 2003, June 30, 2003
     and September 30, 2003:                                            150%

     December 31, 2003 and thereafter:                                  200%

<Page>

     NOTE: For the fiscal year ending December 31, 2002 and the fiscal quarters
     ending March 31, 2003, June 30, 2003 and September 30, 2003, such ratio
     shall be determined in accordance with variations permitted by the letter
     of the Iowa Commissioner of Insurance dated November 12, 2002.

Section 9.19 MINIMUM NET YIELD PERCENTAGE OF AEILIC:

     (a) WEIGHTED AVERAGE YIELD:

     (i) Net Investment Income (12 month period):                    $_______
     DIVIDED BY
     (ii) Average Invested Assets
             (A)  Weighted Invested Assets
             (4 quarter period):                           $_______
             DIVIDED BY (B) 2.5:                                     $_______

     Weighted Average Yield ((i) divided by (ii):                         _____%

     (b) WEIGHTED AVERAGE CREDITING RATE:

     FIXED ANNUITIES:                                                     _____%

             Average rate credited on
             fixed annuities for the last
             twelve-month period:                                    _____%

             MULTIPLIED BY

                  (i) aggregate accumulation values of
                  fixed annuities                                    $_______
                  DIVIDED BY

<Page>

                  (ii) aggregate accumulation values
                  of all annuities:                        $_______

                  (i) divided by (ii):                     _____%

     EQUITY INDEX ANNUITIES:                                         _____%

             Average rate credited on
             equity index annuities for the last
             twelve-month period:                          _____%

             MULTIPLIED BY

             (i) aggregate accumulation values of
             equity index annuities                        $_______
             DIVIDED BY
             (ii) aggregate accumulation values
             of all annuities:                             $_______

             (i) divided by (ii):                                    _____%

             Weighted Average Crediting Rate
             (sum of "Fixed Annuities"
             and "Equity Index Annuities" lines above):              _____%

     Net Yield Percentage ((a) less (b)):                            _____%

     REQUIRED:                                             Not less than 1.50%

<Page>

                                    EXHIBIT E
          Acknowledgment of Consent and Agreement to Security Agreement

     The undersigned has entered into a Consent and Agreement to Security
Agreement, dated as of April 6, 2000 (the "Consent") in favor of U.S. Bank
National Association, as Agent for the Banks under the Credit Agreement referred
to below. The undersigned acknowledges and agrees as follows:

     1. The Credit Agreement, as defined in the Consent, has been amended and
restated as an Amended and Restated Credit Agreement, dated as of December 30,
2002. All references to the Credit Agreement in the Consent shall be deemed to
refer to such Amended and Restated Credit Agreement, as further amended,
supplemented, restated or otherwise modified from time to time.

     2. The "Obligations" specified in the Consent include the obligations of
the Borrower under the Credit Agreement referred to herein.

     The undersigned hereby confirms that the Consent remains in full force and
effect, enforceable against the undersigned in accordance with its terms.

                                AMERICAN EQUITY INVESTMENT LIFE
                                INSURANCE COMPANY

                                By:
                                   --------------------------------------

                                Title:
                                      -----------------------------------

<Page>

                                    Exhibit F
                               Opinion of Counsel

To: The Agent and Banks party
to the Credit Agreement described herein

[address to each bank]

U.S. Bank National Association
800 Nicollet Mall
Mail Code BC-MN-H03N
Minneapolis, MN 55402
Attention: Mr. Sam S. Pepper

Ladies/Gentlemen:

     We have acted as counsel for AMERICAN EQUITY INVESTMENT LIFE HOLDING
COMPANY, (the "Borrower"), and we are delivering to you this opinion of counsel
upon which you may rely, in connection with a Credit Agreement, dated as of
December 30, 2002, entered into among the Borrower, the Banks, as defined
therein, and U.S. Bank National Association, as Agent (the "Credit Agreement"),
and the transactions and other Loan Documents described therein. Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings assigned to such terms in the Credit Agreement.

     In so acting, we, as counsel for the Borrower, have made such factual
inquiries, and have examined or caused to be examined such questions of law, as
we have considered necessary or appropriate for the purposes of this opinion
and, upon the basis of such inquiries and examinations, advise you that, in our
opinion:

     (1) The Borrower and each of its Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of the state of
their respective incorporation, and each is duly qualified and in good standing
as a foreign corporation in all other jurisdictions in which its respective
present operations or properties require such qualification.

     (2) The Borrower has full corporate power and authority to own and operate
its properties and assets, carry on its business as presently conducted, and
enter into and perform its obligations under the Loan Documents to which it is a
party.

<Page>

     (3)  The execution and delivery of the Loan Documents to which the Borrower
is a party, the performance by the Borrower of its obligations thereunder, and
the borrowing by the Borrower under the Credit Agreement, have been duly
authorized by all necessary corporate action, and all of said Loan Documents
have been duly executed and delivered on behalf of the Borrower and constitute
valid and binding obligations of the Borrower, enforceable in accordance with
their respective terms.

     (4)  There is no provision in the Borrower's Articles of Incorporation or
By-Laws, nor any provision in any indenture, mortgage, contract or agreement to
which the Borrower is a party or by which it or its properties may be bound, nor
any law, statute, rule or regulation, nor any writ, order or decision of any
court or governmental instrumentality binding on the Borrower which would be
contravened by the execution and delivery of the Loan Documents to which the
Borrower is a party, nor do any of the foregoing prohibit the Borrower's
performance of any term, provision, condition, covenant or any other obligation
of the Borrower contained therein.

     (5)  There are no actions, suits or proceedings pending or, to the best of
our knowledge after due inquiry, threatened against or affecting the Borrower
before any court or arbitrator or by or before any administrative agency or
government authority, which, if adversely determined, could constitute an
Adverse Event.

     (6)  Neither the making nor performance of the Loan Documents, nor the
borrowing(s) under the Credit Agreement, requires the consent or approval of any
governmental instrumentality.

     (7)  The Borrower is not a "holding company", a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.

     (8)  The Borrower is not an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended.

     (9)  The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and, to
the best of our knowledge after due inquiry, no part of the proceeds of any loan
under the Credit Agreement will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying any margin
stock.

                     Very truly yours,

<Page>

                                    Exhibit G
                              ASSIGNMENT AGREEMENT

     ASSIGNMENT AGREEMENT, dated as of _____________, 200__, among [ ] (the
"Transferor Bank"), [ ] (the "Purchasing Bank"), AMERICAN EQUITY INVESTMENT LIFE
HOLDING COMPANY, an Iowa corporation (the "Borrower") and U.S. Bank National
Association, as Agent for the Banks under the Credit Agreement described below
(in such capacity, the "Agent").

                               W I T N E S S E T H

     WHEREAS, this Assignment Agreement is being executed and delivered in
accordance with Section 12.3 of the Amended and Restated Credit Agreement, dated
as of December 30, 2002, among the Borrower, the Transferor Bank and the other
Banks party thereto and the Agent (as from time to time amended, supplemented or
otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"
terms defined therein being used herein as therein defined);

     WHEREAS, the Purchasing Bank wishes to become a Bank party to the Credit
Agreement; and

     WHEREAS, the Transferor Bank is selling and assigning to the Purchasing
Bank rights, obligations and commitments under the Credit Agreement;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1.   Upon the execution and delivery of this Assignment Agreement by the
Purchasing Bank, the Transferor Bank, the Agent and the Borrower, the Purchasing
Bank shall be a Bank party to the Credit Agreement for all purposes thereof.

     2.   Effective on [ ] (the "Effective Date"), the Transferor Bank hereby
sells and assigns to the Purchasing Bank [that portion of] its [Tranche A
Loans][Tranche B Loans] equal to $[ ] (the "Assignment Amount"), and that
percentage of the principal amount of and all interest accrued on its Loans
outstanding under the Credit Agreement which the Assignment Amount is of all
[Tranche A Loans][Tranche B Loans]. Together with the Assigned Amount, the
Transferor Bank hereby assigns to the Purchasing Bank the Transferor Bank's
interest as a Bank in the Loan Documents (the Assigned Amount, [such portion of]
such [Tranche A Loans][Tranche B Loans] and such interest in the Loan Documents
being hereinafter referred to as the "Assigned Interest"). The Purchasing Bank
hereby assumes the Assigned Amount and the Transferor Bank's related obligations
under the Loan Documents.

     3.   On the Effective Date, the Purchasing Bank shall pay to the Transferor
Bank a purchase price (the "Purchase Price") equal to the outstanding principal
amount of the [Tranche A Loans][Tranche B Loans] included in the Assigned
Interest as of the day preceding the Effective Date. The Transferor Bank
acknowledges receipt from the Purchasing Bank of an amount equal to the Purchase
Price.

<Page>

     4.   All interest accrued on the Assigned Interest for the billing period
in which the Effective Date falls shall be paid to the Agent as provided in the
Credit Agreement, and distributed by the Agent (a) with respect to amounts
accrued before the Effective Date, to the Transferor Bank and (b) with respect
to amounts accrued on or after the Effective Date, to the Purchasing Bank. The
Transferor Bank has made arrangements with the Purchasing Bank with respect to
the portion, if any, to be paid by the Transferor Bank to the Purchasing Bank of
other fees heretofore received by the Transferor Bank pursuant to the Credit
Agreement.

     5.   Subject to the provisions of paragraph 4 above, from and after the
Effective Date, principal, interest, fees and other amounts that would otherwise
be payable to or for the account of the Transferor Bank pursuant to the Credit
Agreement and the other Loan Documents in respect of the Assigned Interest
shall, instead, be payable to or for the account of the Purchasing Bank pursuant
to the Credit Agreement. Each time the Banks are asked, from and after the
Effective Date, to make Loans or otherwise extend credit under the Loan
Documents, the Agent shall advise the Purchasing Bank, as provided in the Credit
Agreement, of the request, and the Purchasing Bank shall be solely responsible
for making a Loan or otherwise extending credit in accordance with its Assigned
Interest.

     6.   Concurrently with the execution and delivery hereof, (i) the Borrower,
the Transferor Bank and the Purchasing Bank shall make appropriate arrangements
so that a new Note is issued to the Purchasing Bank in respect of the Assigned
Interest and, if the Transferor Bank has retained any [Tranche A Loans][Tranche
B Loans], a new Note is issued to the Transferor Bank in respect of such
retained interest, and the Transferor Bank's existing Revolving Note will be
returned to the Borrower in due course, (ii) as and to the extent provided in
the Credit Agreement, the Agent shall prepare and distribute to the Borrower and
the Banks a revised schedule of the Commitments, Loans and credit percentages of
each Bank, after giving effect to the assignment of the Assigned Interest, and
(iii) the Transferor Bank shall pay to the Agent a processing and recordation
fee of $3,500.

     7.   The Transferor Bank (a) represents and warrants to the Purchasing Bank
that it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (b)
represents and warrants to the Purchasing Bank that the copies of the Loan
Documents and the related agreements, certificates, opinion and letters
previously delivered to the Purchasing Bank are true and correct copies of the
Loan Documents and related agreements, certificates, opinion and letters
executed by and/or delivered in connection with the closing of the credit
facility contemplated by the Credit Agreement; (c) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of any of the Loan Documents or any other instrument or document
furnished pursuant thereto; and (d) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower, or the performance or observance by the Borrower or any other Person
of any of their respective obligations under the Loan Documents or any other
instrument or document furnished pursuant thereto.

<Page>

     8.   The Purchasing Bank (a) confirms to the Transferor Bank and the Agent
that it has received a copy of the Loan Documents together with such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; (b) acknowledges that it
has, independently and without reliance upon the Transferor Bank, the Agent or
any Bank and instead in reliance upon its own review of such documents and
information as the Purchasing Bank deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and agrees that it will,
independently and without reliance upon the Transferor Bank, the Agent or any
Bank, and based on such documents and information as the Purchasing Bank shall
deem appropriate at the time, continue to make its own credit decision in taking
or not taking action under the Loan Documents; (c) agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by the Purchasing Bank as a Bank
under the Credit Agreement, including, without limitation, the provisions of
Section 9.7 of the Credit Agreement relating to confidentiality of information;
and (d) represents and warrants to the Borrower and the Agent that it is either
(i) a corporation organized under the laws of the United States or any State
thereof or (ii) is entitled to complete exemption from United States withholding
tax imposed on or with respect to any payments, including fees, to be made
pursuant to the Credit Agreement (x) under an applicable provision of a tax
convention to which the United States is a party or (y) because it is acting
through a branch, agency or office in the United States and any payment to be
received by it under the Credit Agreement is effectively connected with a trade
or business in the United States.

     9.   The Transferor Bank and the Purchasing Bank each individually
represents and warrants that (a) it is validly existing and in good standing and
has all requisite power to enter into this Agreement and to carry out the
provisions hereof and has duly authorized the execution and delivery of this
Agreement; (b) the execution and delivery of this Agreement and the performance
of the obligations hereunder do not violate any provision of law, any order,
rule or regulation of any court or governmental agency or its charter, articles
of incorporation or bylaws or constitute a default under any agreement or other
instrument to which it is a party or by which it is bound; and (c) it has duly
executed and delivered this Agreement, and this Agreement constitutes a legal,
valid and binding obligation enforceable against it in accordance with its
terms.

     10.  Each of the parties to this Assignment Agreement agrees that at any
time and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Assignment Agreement.

     11.  The address for notices to the Purchasing Bank as well as
administrative information with respect to the Purchasing Bank is as set out
below:

     THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF MINNESOTA.

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date first set forth above.

<Page>

                                 [  ],
                                 Transferor Bank

                                 By:
                                    -----------------------------------
                                 Name:
                                      ---------------------------------
                                 Title:
                                       --------------------------------

                                 [  ],
                                 Purchasing Bank

                                 By:
                                    -----------------------------------
                                 Name:
                                      ---------------------------------
                                 Title:
                                       --------------------------------

                                 U.S. BANK NATIONAL ASSOCIATION
                                 as Agent

                                 By:
                                    -----------------------------------
                                 Name:
                                      ---------------------------------
                                 Title:
                                       --------------------------------

                                 CONSENTED AND ACKNOWLEDGED
                                 AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

                                 By:
                                    -----------------------------------
                                 Name:
                                      ---------------------------------
                                 Title:
                                       --------------------------------

<Page>

Information on Purchasing Bank:
Address:
[  ],
Attention: [  ]
Fax: [  ]

<Page>

                                  Schedule 1.1

                    Tranche A Amounts, Tranche A Percentages,
                        Tranche B Amounts and Percentages

TRANCHE A LOANS

<Table>
<Caption>
TRANCHE A BANKS:    TRANCHE A AMOUNT:        TRANCHE A PERCENTAGE:
---------------     ----------------         --------------------
<S>                 <C>                                <C>
U.S. Bank           $     14,666,666                    40.000000%

Fleet Bank          $     14,666,666                    40.000000%

West Des
Moines Bank         $      7,333,333                    20.000000%
                    ----------------         --------------------

Total:              $     36,666,665                   100.000000%
</Table>

TRANCHE B LOANS:

<Table>
<Caption>
TRANCHED B BANKS:   TRANCHE B AMOUNTS:       TRANCHE B PERCENTAGE:
----------------    -----------------        --------------------
<S>                 <C>                                <C>
U.S. Bank           $      10,000,000                  100.000000%

TOTAL AMOUNT:       $      46,666,665
</Table>

PERCENTAGES:

<Table>
<Caption>
BANKS:                   PERCENTAGE:
-----                    ----------
<S>                       <C>
U.S. Bank:                52.857143%
</Table>

<Page>

<Table>
<S>                      <C>
Fleet Bank:               31.428571%

West Des
Moines Bank               15.714286%
                         ----------

                         100.000000%
</Table>

<Page>

                                  Schedule 7.16

                                                       Subsidiaries

<Table>
<Caption>
         NAME OF SUBSIDIARY                      OWNERSHIP %     JURISDICTION
         ------------------                      -----------     ------------
<S>  <C>                                             <C>             <C>
1.   American Equity Investment Life
     Insurance Company                               100             Iowa

2.   American Equity Investment Life
     Insurance Company of New York                   100             New York

3.   American Equity Capital, Inc.                   100             Iowa

4.   American Equity Investment Properties,
     L.C.                                            100             Iowa

5.   American Equity Capital Trust I                 100             Delaware

6.   American Equity Capital Trust II                100             Delaware
</Table>

**Ownership percentages reflect the percentage of voting common stock or
equivalent equity ownership. All subsidiaries are directly owned by American
Equity Investment Life Holding Company, except (i) American Equity Investment
Life Insurance Company of New York, which is directly owned by American Equity
Investment Life Insurance Company; and (ii) American Equity Investment
Properties, L.C. which is 99% owned by American Equity Investment Life Holding
Company and 1% owned by American Equity Investment Life Insurance Company

<Page>

                                  Schedule 7.18

                AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY
                              GEOGRAPHIC COVERAGE*

1.  District of Columbia
2.  Alabama
3.  Alaska
4.  Arkansas
5.  Arizona
6.  California
7.  Colorado
8.  Delaware
9.  Florida
10. Georgia
11. Hawaii
12. Idaho
13. Illinois
14. Indiana
15. Iowa
16. Kansas
17. Kentucky
18. Louisiana
19. Maine
20. Maryland
21. Massachusetts
22. Michigan
23. Minnesota
24. Mississippi
25. Missouri
26. Montana
27. Nebraska
28. Nevada
29. New Hampshire
30. New Jersey
31. New Mexico
32. New York
33. North Dakota
34. Ohio
35. Oklahoma
36. Oregon
37. Pennsylvania
38. South Carolina
39. South Dakota
40. Tennessee
41. Texas
42. Utah
43. Virginia
44. Washington
45. West Virginia
46. Wisconsin
47. Wyoming

* The above listed states represent those which the Company is licensed to
conduct business.
                    Additional state filings are in process.

<Page>

                                                                    Schedule 9.6

AMERICAN EQUITY PORTFOLIO     11/29/2002

NEW PURCHASES - THIS MONTH

<Table>
<Caption>
                                                                                                    AMORT
PAR                 CUSIP     ISSUER                          COUPON (%)   MATURITY      RATING     COST       BOOK VALUE
----------------   --------   -------------------------       ----------  ----------   ----------   --------   ----------------
<S>                <C>        <C>                               <C>       <C>          <C>          <C>        <C>
$  50,000,000.00   3136F2VL   FEDERAL NATL MTG ASSN MTN *       6.130%    12/13/2027      AGY       $ 100.00   $  50,000,000.00
$ 375,000,000.00   3128X0MX   FEDERAL HOME LN MTG CORP  *       0.000%    11/26/2032      AGY       $  13.66   $  51,227,166.00
$  50,000,000.00   3128X0MY   FEDERAL HOME LN MTG CORP  *       6.100%    11/29/2027      AGY       $ 100.00   $  50,000,000.00
$ 375,000,000.00   3128X0NJ   FEDERAL HOME LN MTG CORP  *       0.000%    12/13/2032      AGY       $  13.65   $  51,179,959.00
$ 380,000,000.00   3128X0NU   FEDERAL HOME LN MTG CORP  *       0.000%    12/10/2032      AGY       $  13.18   $  50,087,861.00
$  50,000,000.00   3136F2VJ   FEDERAL NATL MTG ASSN MTN *       6.050%    12/3/2027       AGY       $ 100.00   $  50,000,000.00
$   9,575,000.00   665772BV   NORTHERN STATES POWER             8.000%    8/28/2012    A3 / BBB+    $ 111.91   $  10,715,346.00
$   5,608,449.86   210805AM   CONTINENTAL AIRLINES EETC         6.940%    10/15/2013   BAA1 / A+    $  85.39   $   4,788,831.00
$  15,000,000.00   38141GCM   GOLDMAN SACHS GROUP INC           5.500%    11/15/2014    AA3 / A+    $  97.88   $  14,682,300.00
$   5,000,000.00   86765BAB   SUNOCO LOGISTICS PARTNERS         7.250%    2/15/2012    BAA2 / BBB   $ 103.93   $   5,196,300.00

                                                                                                               $ 337,877,763.00

<Caption>
                   MARKET     11/30/2002          UNREALIZED G/L
PAR                PRICE      MARKET VALUE        (MKT - BOOK)
----------------   --------   ----------------    ----------------
<S>                <C>        <C>                 <C>
$  50,000,000.00   $  98.49   $  49,246,000.00    $    (754,000.00)
$ 375,000,000.00   $  13.46   $  50,478,750.00    $    (748,416.00)
$  50,000,000.00   $  98.25   $  49,125,000.00    $    (875,000.00)
$ 375,000,000.00   $  13.45   $  50,441,250.00    $    (738,709.00)
$ 380,000,000.00   $  13.18   $  50,072,600.00    $     (15,261.00)
$  50,000,000.00   $  97.49   $  48,743,000.00    $  (1,257,000.00)
$   9,575,000.00   $ 109.07   $  10,443,452.50    $    (271,893.50)
$   5,608,449.86   $  86.00   $   4,823,266.88    $      34,435.88
$  15,000,000.00   $  97.44   $  14,615,400.00    $     (66,900.00)
$   5,000,000.00   $ 104.00   $   5,200,000.00    $       3,700.00

                              $  49,246,000.00    $    (754,000.00)
</Table>

NEW PURCHASES - LAST 60 DAYS

<Table>
<Caption>
                                                                                                 AMORT
PAR                 CUSIP     ISSUER                       COUPON (%)   MATURITY      RATING     COST       BOOK VALUE
----------------   --------   ------------------------     ----------  ----------   ----------   --------   ----------------
<S>                <C>        <C>                            <C>       <C>             <C>       <C>        <C>
$ 200,000,000.00   3128X0BU   FEDERAL HOME LN MTG CORP  *    6.000%    4/21/2020       AGY       $ 100.00   $ 200,000,000.00
$ 400,000,000.00   3128X0DM   FEDERAL HOME LN MTG CORP  *    0.000%    11/5/2032       AGY       $  12.76   $  51,026,649.00
$  50,000,000.00   3128X0DN   FEDERAL HOME LN MTG CORP  *    6.050%    11/5/2027       AGY       $ 100.00   $  50,000,000.00
$ 415,000,000.00   3128X0EF   FEDERAL HOME LN MTG CORP  *    0.000%    11/5/2032       AGY       $  12.22   $  50,693,825.00
$  50,000,000.00   3128X0EJ   FEDERAL HOME LN MTG CORP  *    6.200%    11/7/2022       AGY       $ 100.00   $  50,000,000.00
$ 430,000,000.00   3128X0EW   FEDERAL HOME LN MTG CORP  *    0.000%    11/12/2032      AGY       $  11.68   $  50,228,882.00
$  50,000,000.00   3128X0EX   FEDERAL HOME LN MTG CORP  *    6.400%    11/7/2022       AGY       $ 100.00   $  50,000,000.00
$ 444,000,000.00   3128X0FD   FEDERAL HOME LN MTG CORP  *    0.000%    11/12/2032      AGY       $  11.35   $  50,387,533.00
$  50,000,000.00   3128X0FF   FEDERAL HOME LN MTG CORP  *    6.500%    11/15/2022      AGY       $ 100.00   $  50,000,000.00
$  50,000,000.00   3133MSWC   FEDERAL HOME LN BANK           6.150%    11/5/2027       AGY       $ 100.00   $  50,000,000.00
$  25,000,000.00   3136F2PA   FEDERAL NATL MTG ASSN MTN *    6.050%    11/5/2027       AGY       $ 100.00   $  25,000,000.00
$  10,000,000.00   615337AA   MONY GROUP                     8.350%    3/15/2010       BAA2      $  99.42   $   9,941,838.00
$   9,800,000.00   744448BT   PUBLIC SVCS OF COLORADO        7.880%    10/1/2012       BAA1      $  99.10   $   9,712,912.00
$   6,100,000.00   882850BJ   TXU ELECTRIC CO (ONCOR)        8.250%     4/1/2004        A3       $ 101.82   $   6,204,595.00
$  11,900,000.00   89234SAB   TPREF FUNDING II               8.000%    11/15/2032      AAA       $  99.78   $  11,873,875.00

                                                                                                            $ 715,070,109.00

<Caption>
                   MARKET     11/30/2002          UNREALIZED G/L
PAR                PRICE      MARKET VALUE        (MKT - BOOK)
----------------   --------   ----------------    ----------------
<S>                <C>        <C>                 <C>
$ 200,000,000.00   $  99.38   $ 198,750,000.00    $  (1,250,000.00)
$ 400,000,000.00   $  12.75   $  51,016,000.00    $     (10,649.00)
$  50,000,000.00   $  97.23   $  48,615,000.00    $  (1,385,000.00)
$ 415,000,000.00   $  12.23   $  50,750,350.00    $      56,525.00
$  50,000,000.00   $  99.43   $  49,714,000.00    $    (286,000.00)
$ 430,000,000.00   $  11.72   $  50,400,300.00    $     171,418.00
$  50,000,000.00   $ 100.05   $  50,025,000.00    $      25,000.00
$ 444,000,000.00   $  11.39   $  50,558,280.00    $     170,747.00
$  50,000,000.00   $ 100.15   $  50,075,000.00    $      75,000.00
$  50,000,000.00   $  98.95   $  49,473,000.00    $    (527,000.00)
$  25,000,000.00   $  97.48   $  24,371,000.00    $    (629,000.00)
$  10,000,000.00   $  96.82   $   9,681,900.00    $    (259,938.00)
$   9,800,000.00   $ 109.33   $  10,713,850.00    $   1,000,938.00
$   6,100,000.00   $ 106.83   $   6,516,630.00    $     312,035.00
$  11,900,000.00   $ 100.00   $  11,900,000.00    $      26,125.00

                              $ 712,560,310.00    $  (2,509,799.00)
</Table>

CREDIT TENANT LEASE MKT VALUES

<Table>
<Caption>
                                                                                                 AMORT
PAR                 CUSIP     ISSUER                       COUPON (%)   MATURITY      RATING     COST       BOOK VALUE
----------------   --------   -------------------------    ----------  ----------   ----------   --------   ----------------
<S>                <C>        <C>                             <C>      <C>              <C>      <C>        <C>
$   3,205,096.00   9901301Z   WEC 2000B-DBM-1 GRAND RAP *     7.500    1/15/2023        A1       $ 100.27   $   3,213,825.00
$   3,214,716.00   9901303Z   WEC-2000DBM-2 GRAND RAPID *     7.500    1/15/2023        A1       $ 100.27   $   3,223,470.00
$   2,682,397.00   9901304Z   WEC 2000B-CLF-10 LEBANON  *     7.500    1/15/2023        A1       $ 100.27   $   2,689,661.00
$   3,309,347.00   9901309Z   WEC 2000B-DBM-6 ROYERSFOR *     7.750    1/15/2023        A1       $ 100.27   $   3,318,311.00

                                                                                                            $  12,445,267.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$   3,205,096.00   $ 102.00   $   3,269,197.92   $      55,372.92
$   3,214,716.00   $ 102.00   $   3,279,010.32   $      55,540.32
$   2,682,397.00   $ 102.00   $   2,736,044.94   $      46,383.94
$   3,309,347.00   $ 102.00   $   3,375,533.94   $      57,222.94

                              $  12,659,787.12   $     214,520.12
</Table>

<Page>

TREASURY NOTE MARKET VALUES
<Table>
<Caption>
                                                                                                  AMORT
PAR                 CUSIP     ISSUER                       COUPON (%)   MATURITY      RATING      COST       BOOK VALUE
----------------   --------   -----------------------      ----------   ---------   ----------    --------   ----------------
<S>                <C>        <C>                            <C>        <C>             <C>       <C>        <C>
$     500,000.00   9128276V   UNITED STATES TREAS NTS        4.250      3/31/2003       TSY       $ 100.01   $     500,030.00
$     800,000.00   912827P8   UNITED STATES TREAS NTS        7.250      5/15/2004       TSY       $ 101.81   $     814,467.00
$     620,000.00   9128273E   UNITED STATES TREAS NTS        6.125      8/15/2007       TSY       $ 101.35   $     628,354.00

                                                                                                             $   1,942,851.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$     500,000.00   $ 101.02   $     505,078.13   $       5,048.13
$     800,000.00   $ 107.86   $     862,875.00   $      48,408.00
$     620,000.00   $ 112.47   $     697,306.25   $      68,952.25

                              $   2,065,259.38   $     122,408.38
</Table>

CMO MARKET VALUES

<Table>
<Caption>
                                                                                                        AMORT
PAR                 CUSIP     ISSUER                            COUPON (%)    MATURITY      RATING       COST      BOOK VALUE
----------------   --------   --------------------------        ----------   ---------    ----------   --------   ----------------
<S>                <C>        <C>                                  <C>       <C>             <C>       <C>        <C>
$   6,601,490.00   07383UDQ   BEAR STEARNS STRUCT PROD             6.270     12/30/2029      AAA       $  90.09   $   5,947,244.00
$  50,000,000.00   31339WLL   FHLMC_2419- J                        7.512     2/15/2032       AGY       $ 100.00   $  50,000,000.00
$     872,426.00   31359N7M   FNMA 98-T1 PASS THROUGH              7.050     12/28/2028      AGY       $  98.39   $     858,362.00
$  22,239,726.00   31392UDH   FHR 2506 KB                          5.500     7/15/2029       AGY       $  99.78   $  22,191,088.00
$  10,345,971.00   74254AAA   PRIN GUAR ARM INV                    5.000     4/28/2031       AAA       $  99.08   $  10,250,889.00
$  17,805,760.00   90341PAA   USTDB INC                            6.500     4/28/2031       AAA       $ 100.00   $  17,805,760.00
$  19,540,179.00   90341PAC   USTDB INC                            6.500     4/30/2030       AAA       $  99.73   $  19,487,097.00
$  49,893,229.00   31371KVF   FNMA #254514 PASS THROUGH            5.500     11/1/2032       AGY       $ 100.17   $  49,978,867.00

                                                                                                                  $ 176,519,307.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$   6,601,490.00   $  81.00   $   5,347,206.90   $    (600,037.10)
$  50,000,000.00   $  92.50   $  46,250,000.00   $  (3,750,000.00)
$     872,426.00   $ 103.00   $     898,598.78   $      40,236.78
$  22,239,726.00   $ 100.13   $  22,267,525.66   $      76,437.66
$  10,345,971.00   $  99.00   $  10,242,511.29   $      (8,377.71)
$  17,805,760.00   $  80.00   $  14,244,608.00   $  (3,561,152.00)
$  19,540,179.00   $  75.00   $  14,655,134.25   $  (4,831,962.75)
$  49,893,229.00   $ 100.25   $  50,017,962.07   $      39,095.07

                              $ 163,923,546.95   $  (4,241,740.37)
</Table>

CBO/CLO MARKET VALUES

<Table>
<Caption>
                                                                                                        AMORT
PAR                 CUSIP     ISSUER                             COUPON (%)   MATURITY      RATING       COST      BOOK VALUE
----------------   --------   --------------------------         ----------  ---------    ----------   --------   ----------------
<S>                <C>        <C>                                  <C>       <C>             <C>       <C>        <C>
$  19,000,000.00   00137210   AIG GLOBAL INVT CORP                 0.000     11/2/2011       AAA       $ 100.00   $  19,000,000.00
$   9,108,000.00   268573AA   ELC 1999 -III                        8.100     2/15/2012       AAA       $  85.99   $   7,831,903.00
$   3,000,000.00   25513TAD   DIVERSIFIED ASSET SECUR II           0.000     9/15/2035       BAA3      $ 100.00   $   3,000,000.00
$  19,053,000.00   499007AF   KNIGHT CL C                          8.370     1/23/2011       AAA       $  94.75   $  18,052,952.00
$   5,000,000.00   48202RAD   JUNIPER 99 A-3A                      7.560     4/15/2011        B2       $  60.00   $   3,000,000.00
$   8,419,927.00   53688QAA   LSMFT 2002-4A A                      5.270     10/25/1932       A3       $  91.39   $   7,695,367.00
$  10,000,000.00   86943QAC   SUTTER 99-1 C1                       9.990     11/30/2014      AAA       $  85.26   $   8,526,046.00
$   9,737,000.00   840467AD   SOUTH STREET CBO 99 C4               0.000     8/15/2011       AAA       $ 100.00   $   9,737,000.00

                                                                                                                  $  76,843,268.00
<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$  19,000,000.00   $  67.00   $  12,730,000.00   $  (6,270,000.00)
$   9,108,000.00   $  75.00   $   6,831,000.00   $  (1,000,903.00)
$   3,000,000.00   $  95.85   $   2,875,500.00   $    (124,500.00)
$  19,053,000.00   $  78.00   $  14,861,340.00   $  (3,191,612.00)
$   5,000,000.00   $  32.00   $   1,600,000.00   $  (1,400,000.00)
$   8,419,927.00   $  86.84   $   7,312,180.35   $    (383,186.65)
$  10,000,000.00   $  69.00   $   6,900,000.00   $  (1,626,046.00)
$   9,737,000.00   $  70.00   $   6,815,900.00   $  (2,921,100.00)

                              $  59,925,920.35   $ (16,917,347.65)
</Table>

ABS MARKET VALUES

<Table>
<Caption>
                                                                                                         AMORT
PAR                 CUSIP     ISSUER                             COUPON (%)   MATURITY      RATING        COST     BOOK VALUE
----------------   --------   --------------------------         ----------   ---------    ----------   --------   ----------------
<S>                <C>        <C>                                  <C>        <C>             <C>       <C>        <C>
$   8,166,000.00   67087TAW   OAKWOOD_MTG_1999-E- M2               8.400      3/15/2030       N/A       $  99.74   $   8,144,719.00
$  16,660,000.00   67087TBP   OAKWOOD 2000-C M1                    8.490      10/15/2030      AA3       $ 102.23   $  17,031,135.00
$  10,000,000.00   70556JAD   PEGASUS AVAITION 1999-1A C1          5.878      3/25/2029        NR       $  61.85   $   6,185,495.00
$   9,792,834.00   70557RAH   PEGASUS AVAITION 01-1A CL C2         8.257      5/10/2031       BA1       $  70.04   $   6,858,695.00

                                                                                                                   $  38,220,044.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$   8,166,000.00   $  55.00   $   4,491,300.00   $  (3,653,419.00)
$  16,660,000.00   $  63.00   $  10,495,800.00   $  (6,535,335.00)
$  10,000,000.00   $  30.00   $   3,000,000.00   $  (3,185,495.00)
$   9,792,834.00   $  49.00   $   4,798,488.66   $  (2,060,206.34)

                              $  22,785,588.66   $ (15,434,455.34)
</Table>

TAXABLE MUNICIPALS MARKET VALUES

<Table>
<Caption>
                                                                                                           AMORT
PAR                 CUSIP     ISSUER                             COUPON (%)    MATURITY       RATING       COST     BOOK VALUE
----------------   --------   --------------------------         ----------    ---------    ----------   --------   ----------------
<S>                <C>        <C>                                  <C>         <C>             <C>       <C>        <C>
$   4,827,761.00   62621DAA   MUNICIPAL CORRECIONS FINANCE         8.470       8/1/2016         NR       $ 100.00   $   4,827,761.00
$  16,500,000.00   13100KAE   NJ ECON DEV AUTH *                   0.000       2/15/2018       AAA       $  33.86   $   5,587,195.00

                                                                                                                    $  10,414,956.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$   4,827,761.00   $  77.00   $   3,717,375.97   $  (1,110,385.03)
$  16,500,000.00   $  33.80   $   5,577,000.00   $     (10,195.00)

                              $   9,294,375.97   $  (1,120,580.03)
</Table>

<Page>

PREFERRED STOCK MARKET VALUES

<Table>
<Caption>
                                                                                                  AMORT
PAR                 CUSIP     ISSUER                          COUPON (%)    MATURITY    RATING     COST          BOOK VALUE
----------------   --------   --------------------------      ----------   ----------  --------  --------      ----------------
      <S>          <C>        <C>                              <C>         <C>            <C>    <C>           <C>
      857,000.00   02516320   AMERICAN COIN MERCHANDISING *    10.500      9/15/2028       NR    $    6.83     $   5,855,799.00
       20,000.00   07383J20   BEAR STEARNS CAPITAL PFD          7.500      12/15/2028      A3    $   25.03     $   2,002,240.00
      100,000.00   66577279   NORTHERN STATES POWER             8.000      7/11/2032      BAA1   $   25.00     $   2,500,000.00
       80,000.00   6934ON20   PLC CAPITAL TRUST IV              7.250      PERPETUAL      BAA1   $   25.00     $   2,000,000.00
       48,000.00   70212C20   PARTNERRE CAP TRUST I             7.900      12/31/2031      A3    $   25.00     $   1,200,000.00
      200,000.00   74460D58   PUBLIC STORAGE PRFDS              7.500      PERPETUAL      BAA2   $   25.00     $   5,000,000.00
      142,700.00   74460D68   PUBLIC STORAGE                    8.000      6/28/2032      BAA2   $   25.00     $   3,567,500.00
       25,000.00   75913Y30   REGIONS ASSET MANAGEMENT *        8.440      4/30/2010       A2    $  101.04     $   2,525,888.00
       40,000.00   43090820   TOMMY HILFIGER USA                9.000      12/1/2031       BA1   $   25.00     $   1,000,000.00
      200,000.00   91019740   UNITED DOMINION REALTY  *         8.500      6/28/2032      BAA3   $   25.57     $   5,114,021.00
      100,000.00   90335H20   US BANCORP CAPITAL III *          7.750      5/31/2031       A2    $   25.00     $  10,000,000.00

                                                                                                               $  40,765,448.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
----------------   --------   ----------------   ----------------
<S>                <C>        <C>                <C>
      857,000.00   $    8.40  $   7,198,800.00   $   1,343,001.00
       20,000.00   $   25.32  $   2,025,600.00   $      23,360.00
      100,000.00   $   25.00  $   2,500,000.00   $              -
       80,000.00   $   25.15  $   2,012,000.00   $      12,000.00
       48,000.00   $   25.60  $   1,228,800.00   $      28,800.00
      200,000.00   $   25.12  $   5,024,000.00   $      24,000.00
      142,700.00   $   25.65  $   3,660,255.00   $      92,755.00
       25,000.00   $  104.39  $   2,609,750.00   $      83,862.00
       40,000.00   $   19.84  $     793,600.00   $    (206,400.00)
      200,000.00   $   27.95  $   5,590,000.00   $     475,979.00
      100,000.00   $   26.27  $  10,508,000.00   $     508,000.00

                              $  43,150,805.00   $   2,385,357.00
</Table>

HELD-FOR-INVESTMENT MARKET VALUES

<Table>
<Caption>
                                                                                                      AMORT
PAR                 CUSIP     ISSUER                          COUPON (%)   MATURITY      RATING       COST      BOOK VALUE
------------------  --------   --------------------------     ----------    ---------   ----------    --------   ----------------
<S>                 <C>        <C>                               <C>        <C>             <C>       <C>        <C>
$   230,000,000.00  312923VN   FEDERAL HOME LN MTG CORP *        0.000      11/10/2020      AGY       $  27.15   $  62,450,145.00
$   210,000,000.00  312923XV   FEDERAL HOME LN MTG CORP *        0.000      11/16/2020      AGY       $  26.65   $  55,973,163.00
$   315,000,000.00  312924HC   FEDERAL HOME LN MTG CORP *        0.000      9/24/2026       AGY       $  17.32   $  54,554,755.00
$   590,000,000.00  312924RP   FEDERAL HOME LN MTG CORP MTN      0.000      11/13/2026      AGY       $  18.17   $ 107,176,697.00
$   890,000,000.00  312924WG   FEDERAL HOME LN MTG CORP MTN      0.000      12/10/2026      AGY       $  18.07   $ 160,812,085.00
$   300,000,000.00  3133M7BT   FEDERAL HOME LN BKS               0.000      2/1/2029        AGY       $  16.44   $  49,317,170.00
$   100,000,000.00  3134A24G   FEDERAL HOME LN MTG CORP          0.000      2/22/2029       AGY       $  16.29   $  16,285,987.00
$ 1,000,000,000.00  3134A26X   FEDERAL HOME LN MTG CORP          0.000      3/8/2029        AGY       $  16.24   $ 162,379,030.00
$ 1,050,000,000.00  3134A2T2   FEDERAL HOME LN MTG CORP          0.000      1/28/2029       AGY       $  16.69   $ 175,192,968.00

                                                                                                                 $ 844,142,000.00

<Caption>
                    MARKET     11/30/2002         UNREALIZED G/L
PAR                 PRICE      MARKET VALUE       (MKT - BOOK)
------------------  --------   ----------------   ----------------
<S>                 <C>        <C>                <C>
$   230,000,000.00  $  27.25   $  62,675,000.00   $     224,855.00
$   210,000,000.00  $  26.77   $  56,208,600.00   $     235,437.00
$   315,000,000.00  $  17.34   $  54,633,600.00   $      78,845.00
$   590,000,000.00  $  18.19   $ 107,321,000.00   $     144,303.00
$   890,000,000.00  $  18.07   $ 160,778,500.00   $     (33,585.00)
$   300,000,000.00  $  16.52   $  49,560,000.00   $     242,830.00
$   100,000,000.00  $  16.45   $  16,452,000.00   $     166,013.00
$ 1,000,000,000.00  $  16.40   $ 164,020,000.00   $   1,640,970.00
$ 1,050,000,000.00  $  16.53   $ 173,544,000.00   $  (1,648,968.00)

                               $ 845,192,700.00   $   1,050,700.00
</Table>

CORPORATE MARKET VALUES

<Table>
<Caption>
                                                                                                      AMORT
PAR                 CUSIP     ISSUER                          COUPON (%)   MATURITY      RATING       COST      BOOK VALUE
-----------------  --------   --------------------------      ----------   ---------   ----------    --------   ----------------
<S>                 <C>       <C>                               <C>        <C>             <C>       <C>        <C>
$  10,000,000.00    001957AZ  AT&T CORP 144A                    7.300      11/15/2011      BAA2      $  99.88   $  9,987,785.00
$   1,881,807.00    02378JAH  AMERICAN AIRLINES                 7.377       5/23/2019      BA1       $  97.48   $  1,834,330.00
$   9,500,000.00    025932AB  AMERICAN FINANCIAL GROUP          7.125       4/15/2009      BAA2      $  98.87   $  9,392,832.00
$   9,750,000.00    044540AH  ASHLAND INC                       8.800      11/15/2012      BAA2      $ 111.46   $ 10,867,174.00
$  10,000,000.00    054536AA  AXA                               8.600      12/15/2030       A2       $ 115.51   $ 11,551,162.00
$   4,000,000.00    06605WAC  BANKBOSTON CAP TRUST I            8.250      12/15/2026       A2       $ 101.92   $  4,076,984.00
$   2,500,000.00    06605XAE  BANKBOSTON CAP TRUST II           7.750      12/15/2026       A2       $ 104.63   $  2,615,788.00
$   3,000,000.00    125563AC  CIT CAP TRUST I                   7.700      2/15/2027        A3       $ 104.27   $  3,128,071.00
$  10,000,000.00    125581AB  CIT GROUP                         7.750      4/2/2012         A2       $ 109.54   $ 10,954,026.00
$   8,000,000.00    126117AH  CNA FINANCIAL CORP                6.950      1/15/2018       BAA2      $  87.81   $  7,024,799.00
$   5,000,000.00    13134VAA  CALPINE CDA ENERGY                8.500      5/1/2008         B1       $ 100.49   $  5,024,657.00
$  10,000,000.00    161477AA  CHASE CAPITAL I                   7.670      12/1/2026        A1       $ 102.43   $ 10,243,232.00
$  10,000,000.00    210805DK  CONTNETL_AIR_2001-001- B          7.373      6/15/2017       BAA3      $ 100.63   $ 10,062,543.00
$   5,000,000.00    222371AA  COUNTRYWIDE CAP  *                8.000      12/15/2026      BAA1      $ 102.54   $  5,127,195.00
$   3,000,000.00    22237AAB  COUNTRYWIDE CAP III               8.050      6/15/2027       BAA1      $ 107.08   $  3,212,380.00
$  10,000,000.00    224050AJ  COX ENTERPRISES                   8.000      2/15/2007       BAA1      $ 100.83   $ 10,080,545.00
$   5,000,000.00    25159NAW  DEVELOPERS DIVERSIFIED RLTY       7.500      7/15/2018       BAA3      $ 100.24   $  5,012,052.00
$   3,270,000.00    25468PBV  DISNEY WALT CO MTN                6.300      1/25/2022        A3       $  93.04   $  3,042,312.00
$   3,500,000.00    25746RAE  DOMINION RES CAP TR I             7.830      12/1/2027       BAA2      $ 104.01   $  3,640,235.00
$   4,000,000.00    268766AR  EOP OPERATING LP                  7.250      6/15/2028       BAA1      $  99.37   $  3,974,730.00
$      25,099.00   299920439  EVERGREEN INST TREAS MMKT-IV      0.000                                $ 100.00   $     25,099.00
$  97,000,000.00    30260*11  FBL CAP TRUST I                   5.000      11/15/2047       A2       $  78.01   $ 75,666,221.00
$   6,000,000.00    309588AC  FARMERS EXCHANGE CAP 144A         7.050       7/15/2028      BAA3      $  96.79   $  5,807,190.00
$   2,450,000.00    337364AE  FIRST UNION CAP II                7.850       1/1/2027        A2       $ 104.94   $  2,570,997.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
-----------------  --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$  10,000,000.00   $  97.49   $   9,749,100.00   $    (238,685.00)
$   1,881,807.00   $  72.00   $   1,354,901.04   $    (479,428.96)
$   9,500,000.00   $  99.16   $   9,420,138.63   $      27,306.63
$   9,750,000.00   $ 105.06   $  10,243,057.50   $    (624,116.50)
$  10,000,000.00   $ 106.31   $  10,631,200.00   $    (919,962.00)
$   4,000,000.00   $ 105.81   $   4,232,320.00   $     155,336.00
$   2,500,000.00   $ 103.02   $   2,575,475.00   $     (40,313.00)
$   3,000,000.00   $  94.25   $   2,827,500.00   $    (300,571.00)
$  10,000,000.00   $ 108.88   $  10,887,500.00   $     (66,526.00)
$   8,000,000.00   $  79.75   $   6,380,000.00   $    (644,799.00)
$   5,000,000.00   $  45.50   $   2,275,000.00   $  (2,749,657.00)
$  10,000,000.00   $ 102.33   $  10,232,500.00   $     (10,732.00)
$  10,000,000.00   $  74.00   $   7,400,000.00   $  (2,662,543.00)
$   5,000,000.00   $ 104.95   $   5,247,550.00   $     120,355.00
$   3,000,000.00   $ 105.54   $   3,166,290.00   $     (46,090.00)
$  10,000,000.00   $ 108.07   $  10,807,400.00   $     726,855.00
$   5,000,000.00   $  97.76   $   4,887,800.00   $    (124,252.00)
$   3,270,000.00   $  93.50   $   3,057,450.00   $      15,138.00
$   3,500,000.00   $  98.23   $   3,437,942.81   $    (202,292.19)
$   4,000,000.00   $  98.29   $   3,931,440.00   $     (43,290.00)
$      25,099.00   $ 100.00   $      25,099.00   $              -
$  97,000,000.00   $  78.01   $  75,666,221.00   $              -
$   6,000,000.00   $  80.18   $   4,810,800.00   $    (996,390.00)
$   2,450,000.00   $ 105.18   $   2,576,910.00   $       5,913.00
</Table>

<Page>

<Table>
<S>                <C>        <C>                               <C>        <C>             <C>       <C>        <C>
$   6,030,000.00   338899AA   FLEET FINL GROUP                   7.920     12/11/2026       A2       $ 100.29   $   6,047,370.00
$   3,300,000.00   345220AB   FORD CAPITAL BV                    9.500      6/1/2010       BAA1      $ 107.23   $   3,538,719.00
$  10,000,000.00   345370CA   FORD MOTOR COMPANY                 7.450      7/16/2031      BAA1      $ 100.06   $  10,006,250.00
$   5,000,000.00   37042GC8   GENL MOTORS ACCPT CORP             7.500      8/15/2017       A2       $ 100.00   $   5,000,000.00
$  10,000,000.00   370442AV   GENL MOTORS                        8.100      6/15/2024       A3       $ 100.82   $  10,081,500.00
$   2,500,000.00   39141GAA   GREAT WESTERN FINL TRUST II        8.206      2/1/2027       BAA1      $ 105.94   $   2,648,392.00
$   2,000,000.00   40415B20   HECO C APITAL TRUST II             7.300     12/28/2028      BAA2      $ 100.32   $   2,006,332.00
$   1,400,000.00   428040BN   HERTZ CORPORATION                  7.630      8/15/2007      BAA2      $  99.09   $   1,387,199.00
$   8,000,000.00   428040BQ   HERTZ CORP                         7.400      3/1/2011       BAA2      $  99.70   $   7,975,652.00
$      20,000.00   428999$D1  HIBERNIA NATIONAL BANK             1.790      2/17/2003                $ 100.00   $      20,000.00
$   4,000,000.00   431282AF   HIGHWOODS FORSYTH                  7.500      4/15/2018      BAA2      $ 102.29   $   4,091,744.00
$   5,700,000.00   432848AH   HILTON HOTELS CORP                 7.950      4/15/2007      BA1       $ 103.08   $   5,875,693.00
$   4,750,000.00   44181ELF   HOUSEHOLD FINANCE CORP             7.600      9/15/2017       A2       $ 100.00   $   4,750,000.00
$   3,000,000.00   449669AK   IMC GLOBAL INC                     7.300      1/15/2028      BA2       $  99.99   $   2,999,782.00
$   8,000,000.00   46623MAA   JPM CAP TRUST II           *       7.950      2/1/2027        A1       $ 105.20   $   8,416,376.00
$   2,000,000.00   46623PAA   J P MORGAN CAPITAL                 7.540      1/15/2027       A1       $ 100.76   $   2,015,289.00
$   6,600,000.00   477122AX   JET EQUIPMENT 10.91               10.910      8/15/2014      CAA3      $  25.00   $   1,650,000.00
$   5,000,000.00   493265AC   KEYCORP INSTIT CAP-A 144A          7.826      12/1/2026       A3       $ 104.73   $   5,236,277.00
$   8,000,000.00   514665AA   LAND O LAKES CAP 144A              7.450      3/15/2028      BA3       $ 100.95   $   8,076,189.00
$  14,500,000.00   52517PMP   LEHMAN BROS HOLDINGS               0.000      2/10/2028       A2       $  13.97   $   2,025,654.00
$  21,500,000.00   52517PND   LEHMAN BROS HLDGS MTN      *       0.000      3/25/2028       A2       $  13.73   $   2,950,976.00
$  40,000,000.00   52517PPB   LEHMAN BROS HOLDINGS               0.000      7/28/2028       A2       $  15.12   $   6,047,881.00
$   1,900,000.00   61688AAG   MORGAN JP & CO MTN         *       0.000      4/24/2027       A1       $  15.18   $     288,335.00
$   6,000,000.00   63861QBH   NATIONWIDE HEALTH PPTYS MTN        7.600     11/20/2028      BAA3      $ 100.71   $   6,042,347.00
$   5,000,000.00   638671AC   NATIONWIDE MUTUAL INS 144A         8.250      12/1/2031       A2       $ 105.62   $   5,280,982.00
$   4,000,000.00   64806QAG   NEW PLAN REALTY TR MTN             7.680      11/2/2026      BAA2      $ 104.12   $   4,164,801.00
$   9,310,000.00   667294AK   NORTHWEST_AIR_1999-1C- C           8.130      8/1/2015       BA2       $  99.36   $   9,250,022.00
$   3,000,000.00   69331VAA   PECO ENERGY CAP TRUST III          7.380      4/6/2028       BAA1      $  99.26   $   2,977,668.00
$  10,000,000.00   69362BAD   PSEG POWER 144A                    7.750      4/15/2011      BAA1      $  99.57   $   9,956,670.00
$   3,000,000.00   74531LAC   PUGET SOUND ENERGY INC             8.231      6/1/2027       BA1       $ 105.78   $   3,173,420.00
$  10,000,000.00   74913EAF   QWEST CAP FDG 144A                 7.250      2/15/2011      CAA1      $  98.50   $   9,850,062.00
$       5,000.00   784186AC   SG HOLDINGS INC                    0.000      7/28/2005      AAA       $ 100.00   $       5,000.00
$   5,000,000.00   828783AT   SIMON DEBARTOLO                    7.375      6/15/2018      BAA1      $ 100.10   $   5,005,103.00
$   4,000,000.00   84258RAC   SOUTHERN CO CAP TRUST              8.140      2/15/2027      BAA1      $ 105.68   $   4,227,386.00
$   5,000,000.00   875127AS   TAMPA ELECTRIC                     6.875      6/15/2012       A2       $ 106.06   $   5,302,980.00
$   5,000,000.00   875127AU   TAMPA ELECTRIC                     6.375      8/15/2012       A1       $ 102.14   $   5,106,885.00
$   6,520,000.00   893473AC   TRANSAMERICA CAP III               7.625     11/15/2037       A2       $ 103.76   $   6,765,152.00
$   5,000,000.00   90339HAA   U S TR CAP A 144A                  8.414      2/1/2027       BAA1      $ 106.10   $   5,304,980.00
$   5,000,000.00   977385AK   WITCO CORP                         6.875      2/1/2026       BA1       $  94.22   $   4,711,154.00
$  13,000,000.00              DELOITTE & TOUCHE                  7.610      4/17/2017       A1       $ 146.15   $  19,000,000.00

                                                                                                                $ 424,182,561.00

<Caption>
<S>                <C>        <C>                <C>
$   6,030,000.00   $ 104.75   $   6,316,425.00   $     269,055.00
$   3,300,000.00   $ 107.05   $   3,532,650.00   $      (6,069.00)
$  10,000,000.00   $  84.75   $   8,475,000.00   $  (1,531,250.00)
$   5,000,000.00   $  96.97   $   4,848,300.00   $    (151,700.00)
$  10,000,000.00   $  98.25   $   9,825,000.00   $    (256,500.00)
$   2,500,000.00   $ 107.75   $   2,693,750.00   $      45,358.00
$   2,000,000.00   $ 100.40   $   2,008,000.00   $       1,668.00
$   1,400,000.00   $ 101.25   $   1,417,514.00   $      30,315.00
$   8,000,000.00   $  94.71   $   7,576,400.00   $    (399,252.00)
$      20,000.00   $ 100.00   $      20,000.00   $              -
$   4,000,000.00   $  97.76   $   3,910,520.00   $    (181,224.00)
$   5,700,000.00   $ 102.78   $   5,858,289.00   $     (17,404.00)
$   4,750,000.00   $ 102.50   $   4,868,750.00   $     118,750.00
$   3,000,000.00   $  80.00   $   2,400,000.00   $    (599,782.00)
$   8,000,000.00   $ 105.45   $   8,436,000.00   $      19,624.00
$   2,000,000.00   $ 100.00   $   2,000,000.00   $     (15,289.00)
$   6,600,000.00   $   7.00   $     462,000.00   $  (1,188,000.00)
$   5,000,000.00   $ 102.25   $   5,112,500.00   $    (123,777.00)
$   8,000,000.00   $  44.00   $   3,520,000.00   $  (4,556,189.00)
$  14,500,000.00   $  13.78   $   1,997,955.00   $     (27,699.00)
$  21,500,000.00   $  13.73   $   2,952,165.00   $       1,189.00
$  40,000,000.00   $  14.21   $   5,684,000.00   $    (363,881.00)
$   1,900,000.00   $  14.08   $     267,425.00   $     (20,910.00)
$   6,000,000.00   $ 111.25   $   6,675,000.00   $     632,653.00
$   5,000,000.00   $ 101.66   $   5,083,200.00   $    (197,782.00)
$   4,000,000.00   $ 100.88   $   4,035,000.00   $    (129,801.00)
$   9,310,000.00   $  69.00   $   6,423,900.00   $  (2,826,122.00)
$   3,000,000.00   $  95.91   $   2,877,330.00   $    (100,338.00)
$  10,000,000.00   $ 103.08   $  10,307,900.00   $     351,230.00
$   3,000,000.00   $  99.34   $   2,980,200.00   $    (193,220.00)
$  10,000,000.00   $  62.00   $   6,200,000.00   $  (3,650,062.00)
$       5,000.00   $ 100.00   $       5,000.00   $              -
$   5,000,000.00   $ 102.09   $   5,104,300.00   $      99,197.00
$   4,000,000.00   $ 106.05   $   4,242,000.00   $      14,614.00
$   5,000,000.00   $ 107.36   $   5,368,000.00   $      65,020.00
$   5,000,000.00   $ 104.42   $   5,221,000.00   $     114,115.00
$   6,520,000.00   $  95.61   $   6,233,576.40   $    (531,575.60)
$   5,000,000.00   $ 108.24   $   5,412,000.00   $     107,020.00
$   5,000,000.00   $  71.50   $   3,575,000.00   $  (1,136,154.00)
$  13,000,000.00   $ 105.00   $  13,650,000.00   $  (5,350,000.00)

                              $ 393,399,644.38   $ (30,782,916.62)
</Table>

AGENCY MARKET VALUES (ZEROS)

<Table>
<Caption>
                                                                                                  AMORT
PAR                 CUSIP     ISSUER                       COUPON (%)   MATURITY     RATING       COST    BOOK VALUE
-----------------  --------   --------------------------   ----------  ---------   ----------   --------  ----------------
<S>                <C>        <C>                            <C>       <C>            <C>       <C>       <C>
$ 100,000,000.00   3129245J   FEDERAL HOME LN MTG CORP *     0.000     2/25/2022      AGY       $ 24.83   $  24,834,629.00
$ 182,000,000.00   312924HH   FEDERAL HOME LN MTG CORP *     0.000     10/2/2031      AGY       $ 11.90   $  21,662,822.00
$ 280,000,000.00   312924VR   FEDERAL HOME LN MTG CORP MTN   0.000     12/18/2026     AGY       $ 19.12   $  53,531,597.00
$ 330,000,000.00   312924YK   FEDERAL HOME LN MTG CORP *     0.000     12/18/2026     AGY       $ 16.25   $  53,635,506.00
$ 400,000,000.00   3129252A   FEDERAL HOME LN MTG CORP *     0.000      9/3/2032      AGY       $ 12.91   $  51,634,880.00
$ 400,000,000.00   3129253H   FEDERAL HOME LN MTG CORP *     0.000     9/10/2032      AGY       $ 12.89   $  51,565,847.00
$  34,830,000.00   3129253V   FEDERAL HOME LN MTG CORP *     0.000     9/17/2032      AGY       $ 12.87   $   4,484,093.00
$ 400,000,000.00   3129253Y   FEDERAL HOME LN MTG CORP *     0.000     9/17/2032      AGY       $ 12.87   $  51,496,907.00
$ 218,000,000.00   312925B3   FEDERAL HOME LN MTG CORP *     0.000      8/6/2032      AGY       $ 11.91   $  25,956,443.00
$ 400,000,000.00   312925E2   FEDERAL HOME LN MTG CORP *     0.000     8/19/2032      AGY       $ 12.94   $  51,773,225.00
$ 200,000,000.00   312925E9   FEDERAL HOME LN MTG CORP *     0.000     8/19/2032      AGY       $ 12.94   $  25,886,612.00
$ 400,000,000.00   312925G2   FEDERAL HOME LN MTG CORP *     0.000     8/19/2032      AGY       $ 12.94   $  51,773,221.00

<Caption>
                   MARKET     11/30/2002         UNREALIZED G/L
PAR                PRICE      MARKET VALUE       (MKT - BOOK)
-----------------  --------   ----------------   ----------------
<S>                <C>        <C>                <C>
$ 100,000,000.00   $ 24.85    $  24,852,000.00   $      17,371.00
$ 182,000,000.00   $ 11.99    $  21,812,700.00   $     149,878.00
$ 280,000,000.00   $ 19.11    $  53,516,400.00   $     (15,197.00)
$ 330,000,000.00   $ 16.26    $  53,664,600.00   $      29,094.00
$ 400,000,000.00   $ 12.91    $  51,624,000.00   $     (10,880.00)
$ 400,000,000.00   $ 12.89    $  51,552,000.00   $     (13,847.00)
$  34,830,000.00   $ 12.87    $   4,482,969.30   $      (1,123.70)
$ 400,000,000.00   $ 12.87    $  51,484,000.00   $     (12,907.00)
$ 218,000,000.00   $ 11.93    $  26,000,860.00   $      44,417.00
$ 400,000,000.00   $ 12.94    $  51,760,000.00   $     (13,225.00)
$ 200,000,000.00   $ 12.94    $  25,880,000.00   $      (6,612.00)
$ 400,000,000.00   $ 12.94    $  51,760,000.00   $     (13,221.00)
</Table>

<Page>

<Table>
<S>                <C>        <C>                               <C>       <C>              <C>       <C>       <C>
$ 475,000,000.00   312925J4   FEDERAL HOME LN MTG CORP  *       0.000      8/27/2032       AGY       $ 12.92   $    61,386,775.00
$ 430,000,000.00   312925L8   FEDERAL HOME LN MTG CORP  *       0.000      8/26/2032       AGY       $ 11.86   $    50,994,956.00
$ 650,000,000.00   312925M3   FEDERAL HOME LN MTG CORP  *       0.000      8/27/2032       AGY       $ 11.79   $    76,644,383.00
$ 515,000,000.00   312925MM   FEDERAL HOME LN MTG CORP  *       0.000      5/28/2032       AGY       $ 11.08   $    57,073,347.00
$ 215,000,000.00   312925N7   FEDERAL HOME LN MTG CORP  *       0.000      8/26/2032       AGY       $ 12.03   $    25,865,951.00
$ 200,000,000.00   312925N9   FEDERAL HOME LN MTG CORP  *       0.000      8/26/2032       AGY       $ 12.93   $    25,852,002.00
$ 250,000,000.00   312925RD   FEDERAL HOME LN MTG CORP  *       0.000      6/24/2032       AGY       $ 10.71   $    26,783,052.00
$ 200,000,000.00   312925S6   FEDERAL HOME LN MTG CORP  *       0.000      8/27/2032       AGY       $ 12.92   $    25,847,063.00
$ 800,000,000.00   312925S7   FEDERAL HOME LN MTG CORP  *       0.000      8/27/2032       AGY       $ 12.92   $   103,388,249.00
$  95,000,000.00   312925SF   FEDERAL HOME LN MTG CORP  *       0.000      6/25/2032       AGY       $ 10.86   $    10,321,328.00
$  75,000,000.00   312925TF   FEDERAL HOME LN MTG CORP  *       0.000       7/2/2032       AGY       $ 10.85   $     8,136,531.00
$ 600,000,000.00   312925VB   FEDERAL HOME LN MTG CORP  *       0.000      7/15/2032       AGY       $ 11.29   $    67,755,542.00
$ 230,000,000.00   312925VY   FEDERAL HOME LN MTG CORP  *       0.000      7/15/2032       AGY       $ 11.29   $    25,972,958.00
$ 230,000,000.00   312925XC   FEDERAL HOME LN MTG CORP  *       0.000      7/22/2032       AGY       $ 11.28   $    25,935,800.00
$ 455,000,000.00   312925YG   FEDERAL HOME LN MTG CORP  *       0.000      7/29/2032       AGY       $ 11.26   $    51,234,376.00
$ 400,000,000.00   312925Z8   FEDERAL HOME LN MTG CORP  *       0.000       9/3/2032       AGY       $ 12.91   $    51,634,880.00
$ 230,000,000.00   312925ZB   FEDERAL HOME LN MTG CORP  *       0.000      7/30/2032       AGY       $ 11.26   $    25,893,399.00
$ 200,000,000.00   3133M5HA   FEDERAL HOME LN BKS               0.000      9/15/2028       AGY       $ 15.94   $    31,871,552.00
$  10,000,000.00   3133M6V8   FEDERAL HOME LN BKS               0.000     12/21/2018       AGY       $ 33.03   $     3,302,813.00
$ 200,000,000.00   3134A2MA   FEDERAL HOME LN MTG CORP          0.000       8/3/2028       AGY       $ 16.07   $    32,137,464.00
$  25,000,000.00   3134A2MH   FEDERAL HOME LN MTG CORP          0.000       8/3/2028       AGY       $ 16.07   $     4,017,178.00
$ 200,000,000.00   3134A2QF   FEDERAL HOME LN MTG CORP          0.000      9/15/2028       AGY       $ 15.94   $    31,871,552.00
$  60,000,000.00   3134A2UL   FEDERAL HOME LN MTG CORP          0.000      11/2/2028       AGY       $ 17.06   $    10,233,831.00
$ 222,915,000.00   3134A2WZ   FEDERAL HOME LN MTG CORP          0.000      12/1/2028       AGY       $ 16.51   $    36,794,125.00
$  20,000,000.00   31364FQ6   FEDERAL NATL MTG ASSN MTN *       0.000      6/22/2018       AGY       $ 33.52   $     6,704,201.00

                                                                                                               $ 1,345,889,090.00

<Caption>
<S>                <C>       <C>                  <C>
$ 475,000,000.00   $ 12.92   $    61,374,750.00   $     (12,025.00)
$ 430,000,000.00   $ 11.88   $    51,092,600.00   $      97,644.00
$ 650,000,000.00   $ 11.82   $    76,804,000.00   $     159,617.00
$ 515,000,000.00   $ 11.11   $    57,216,500.00   $     143,153.00
$ 215,000,000.00   $ 12.05   $    25,905,350.00   $      39,399.00
$ 200,000,000.00   $ 12.92   $    25,846,000.00   $      (6,002.00)
$ 250,000,000.00   $ 10.75   $    26,880,000.00   $      96,948.00
$ 200,000,000.00   $ 12.92   $    25,842,000.00   $      (5,063.00)
$ 800,000,000.00   $ 12.92   $   103,368,000.00   $     (20,249.00)
$  95,000,000.00   $ 10.87   $    10,322,700.00   $       1,372.00
$  75,000,000.00   $ 10.87   $     8,149,500.00   $      12,969.00
$ 600,000,000.00   $ 11.32   $    67,944,000.00   $     188,458.00
$ 230,000,000.00   $ 11.32   $    26,045,200.00   $      72,242.00
$ 230,000,000.00   $ 11.31   $    26,010,700.00   $      74,900.00
$ 455,000,000.00   $ 11.29   $    51,387,700.00   $     153,324.00
$ 400,000,000.00   $ 12.91   $    51,624,000.00   $     (10,880.00)
$ 230,000,000.00   $ 11.29   $    25,969,300.00   $      75,901.00
$ 200,000,000.00   $ 15.94   $    31,882,000.00   $      10,448.00
$  10,000,000.00   $ 34.71   $     3,470,500.00   $     167,687.00
$ 200,000,000.00   $ 16.07   $    32,140,000.00   $       2,536.00
$  25,000,000.00   $ 16.07   $     4,017,500.00   $         322.00
$ 200,000,000.00   $ 15.95   $    31,900,000.00   $      28,448.00
$  60,000,000.00   $ 17.23   $    10,338,000.00   $     104,169.00
$ 222,915,000.00   $ 16.71   $    37,251,325.65   $     457,200.65
$  20,000,000.00   $ 33.53   $     6,705,000.00   $         799.00

                             $ 1,347,876,154.95   $   1,987,064.95
</Table>

AGENCY MARKET VALUES (COUPONS)

<Table>
<Caption>
                                                                                                  AMORT
PAR                   CUSIP     ISSUER                       COUPON (%)  MATURITY      RATING       COST    BOOK VALUE
------------------   --------   --------------------------   ---------  ---------    ----------   --------  ----------------
<S>                  <C>        <C>                             <C>     <C>             <C>       <C>       <C>
$    50,000,000.00   3129252B   FEDERAL HOME LN MTG CORP  *     6.400   9/6/2022        AGY       $ 100.00   $    50,000,000.00
$    50,000,000.00   3129253G   FEDERAL HOME LN MTG CORP  *     6.500   9/10/2032       AGY       $ 100.00   $    50,000,000.00
$    50,000,000.00   3129253Z   FEDERAL HOME LN MTG CORP  *     6.450   9/20/2027       AGY       $ 100.00   $    50,000,000.00
$   200,000,000.00   3129254U   FEDERAL HOME LN MTG CORP  *     5.150   9/27/2012       AGY       $ 100.00   $   200,000,000.00
$   100,000,000.00   3129255A   FEDERAL HOME LN MTG CORP  *     6.000   10/3/2017       AGY       $ 100.00   $   100,000,000.00
$    15,000,000.00   3129256Y   FEDERAL HOME LN MTG CORP  *     5.850   10/10/2017      AGY       $ 100.00   $    15,000,000.00
$    25,000,000.00   312925B5   FEDERAL HOME LN MTG CORP  *     6.700    8/6/2032       AGY       $ 100.00   $    25,000,000.00
$    50,000,000.00   312925E3   FEDERAL HOME LN MTG CORP  *     7.000   8/19/2032       AGY       $ 100.00   $    50,000,000.00
$    25,000,000.00   312925F4   FEDERAL HOME LN MTG CORP  *     7.000   8/19/2032       AGY       $ 100.00   $    25,000,000.00
$    50,000,000.00   312925G3   FEDERAL HOME LN MTG CORP  *     7.000   8/19/2032       AGY       $ 100.00   $    50,000,000.00
$    60,000,000.00   312925J3   FEDERAL HOME LN MTG CORP  *     7.000   8/27/2032       AGY       $ 100.00   $    60,000,000.00
$    25,000,000.00   312925N8   FEDERAL HOME LN MTG CORP  *     6.520   8/26/2032       AGY       $ 100.00   $    25,000,000.00
$    25,000,000.00   312925P7   FEDERAL HOME LN MTG CORP  *     7.000   8/26/2032       AGY       $ 100.00   $    25,000,000.00
$    25,000,000.00   312925S5   FEDERAL HOME LN MTG CORP  *     7.000   8/27/2032       AGY       $ 100.00   $    25,000,000.00
$   100,000,000.00   312925S8   FEDERAL HOME LN MTG CORP  *     7.000   8/27/2032       AGY       $ 100.00   $   100,000,000.00
$    50,000,000.00   312925Z9   FEDERAL HOME LN MTG CORP  *     6.400    9/6/2022       AGY       $ 100.00   $    50,000,000.00
$        13,702.00   3133TKM3   FEDERAL HOME LN MTG CORP 214    6.085   4/25/2029       AGY       $  98.85   $        13,544.00
$    10,000,000.00   31364FPJ   FEDERAL NATL MTG ASSN MTN       6.750    2/4/2028       AGY       $  98.95   $     9,895,054.00
$    25,000,000.00   3136F15X   FEDERAL NATIONAL MTG ASSC *     6.750   7/29/2027       AGY       $ 100.00   $    25,000,000.00
$    25,000,000.00   3136F1UJ   FEDERAL NATL MTG ASSN     *     7.000   3/25/2027       AGY       $ 100.00   $    25,000,000.00
$    50,000,000.00   3136F2CG   FEDERAL NATIONAL MTG ASSC *     6.700   8/26/2027       AGY       $ 100.00   $    50,000,000.00
$    75,000,000.00   3136F2CK   FEDERAL NATIONAL MTG ASSC *     6.710   8/26/2027       AGY       $ 100.00   $    75,000,000.00

                                                                                                             $ 1,084,908,598.00

TOTALS:                                                                                                      $ 5,109,221,262.00

<Caption>
                        MARKET     11/30/2002           UNREALIZED G/L
PAR                     PRICE      MARKET VALUE         (MKT - BOOK)
------------------      --------   ------------------   ----------------
<S>                     <C>        <C>                  <C>
$    50,000,000.00      $ 100.05   $    50,025,000.00   $      25,000.00
$    50,000,000.00      $ 100.15   $    50,075,000.00   $      75,000.00
$    50,000,000.00      $ 100.05   $    50,025,000.00   $      25,000.00
$   200,000,000.00      $  99.45   $   198,900,000.00   $  (1,100,000.00)
$   100,000,000.00      $ 100.00   $   100,000,000.00   $              -
$    15,000,000.00      $  99.35   $    14,902,500.00   $     (97,500.00)
$    25,000,000.00      $ 100.25   $    25,062,500.00   $      62,500.00
$    50,000,000.00      $ 100.35   $    50,175,000.00   $     175,000.00
$    25,000,000.00      $ 100.35   $    25,087,500.00   $      87,500.00
$    50,000,000.00      $ 100.35   $    50,175,000.00   $     175,000.00
$    60,000,000.00      $ 100.35   $    60,210,000.00   $     210,000.00
$    25,000,000.00      $ 100.20   $    25,050,000.00   $      50,000.00
$    25,000,000.00      $ 100.35   $    25,087,500.00   $      87,500.00
$    25,000,000.00      $ 100.35   $    25,087,500.00   $      87,500.00
$   100,000,000.00      $ 100.35   $   100,350,000.00   $     350,000.00
$    50,000,000.00      $ 100.05   $    50,025,000.00   $      25,000.00
$        13,702.00      $ 100.00   $        13,702.00   $         158.00
$    10,000,000.00      $ 100.25   $    10,025,000.00   $     129,946.00
$    25,000,000.00      $ 100.25   $    25,062,500.00   $      62,500.00
$    25,000,000.00      $ 100.35   $    25,087,500.00   $      87,500.00
$    50,000,000.00      $ 100.25   $    50,125,000.00   $     125,000.00
$    75,000,000.00      $ 100.25   $    75,187,500.00   $     187,500.00

                                   $ 1,085,738,702.00   $     830,104.00

TOTALS:                            $ 4,747,818,794.76   $ (65,170,684.56)
</Table>

<Page>

COMMON STOCK

<Table>
<Caption>
                                                                          ACTUAL                      MARKET
NO. OF SHARES     CUSIP     ISSUER                              RATING    COST        ACTUAL COST     VALUE
--------------  ---------   --------------------------------    -------   -------   ---------------   -------
<S>             <C>         <C>                                 <C>       <C>       <C>               <C>       <C>
     50,000.00  024937104   AMERICAN CAPITAL STRATEGIES         NR        $ 26.50   $  1,325,000.00   $     -   $            -
  2,000,000.00   02567@10   AMERICAN EQUITY INV LIFE INS CO     NR        $  5.00   $ 10,000,000.00   $     -   $            -
     56,300.00  345370860   FORD MOTOR CO.                      BAA1      $ 17.67   $    994,973.00   $  8.46   $   476,298.00
     20,000.00  718154107   PHILIP MORRIS COMPANIES INC.        A3        $ 38.80   $    998,000.00   $ 40.75   $   815,000.00
     15,000.00  969491109   WILLIAMS ENERGY PARTNERS LP         NR        $ 37.15   $    557,250.00   $ 33.39   $   500,850.00
     44,800.00  902973304   US BANCORP                          A1        $ 18.58   $    998,592.00   $ 21.09   $   944,832.00

                                                                                    $ 14,873,815.00             $ 2,736,980.00
</Table>

<Page>

<Table>
<Caption>
LOAN NUMBER               BORROWER                  AMOUNT OF LOAN     CURRENT PRINCIPAL BALANCE   TOTAL MARKET VALUE   CLOSING DATE
-----------               --------                ------------------   -------------------------   ------------------   ------------
  <S>        <C>                                    <C>                  <C>                         <C>                <C>
  90-0001              4048 Associates              $   3,825,000.00     $   3,700,462.97            $   5,100,000.00    5/31/2001
  90-0003              Chadwick Square              $   2,150,000.00     $   2,109,099.90            $   2,875,000.00    5/31/2001
  90-0004            Colston Commercial             $   4,700,000.00     $   4,620,143.22            $   7,500,000.00    6/18/2001
  90-0002               813 Roosevelt               $   2,800,000.00     $   2,732,626.64            $   3,800,000.00    6/27/2001
  90-0006               Knightsbridge               $   4,150,000.00     $   4,076,131.66            $   5,650,000.00    6/28/2001
  90-0007              Lexington Hotel              $   4,850,000.00     $   4,746,422.76            $   7,200,000.00    7/18/2001
  90-0008              Tennessee Hotel              $   3,650,000.00     $   3,572,050.09            $   5,350,000.00    7/18/2001
  90-0005                Corporate I                $   1,400,000.00     $   1,359,708.05            $   1,950,000.00    7/25/2001
  90-0009            Painter's Crossing             $   5,400,000.00     $   5,259,102.02            $   7,700,000.00    8/14/2001
  90-0018               EIG Merchants               $   5,550,000.00     $   5,405,965.91            $   7,400,000.00    9/14/2001
  90-0024                Mill Creek                 $   2,900,000.00     $   2,857,505.84            $   3,875,000.00    9/18/2001
  90-0013                CBD Parking                $   2,000,000.00     $   1,968,041.16            $   2,850,000.00    9/26/2001
  90-0011             Corporate Park I              $   3,200,000.00     $   3,115,723.89            $   6,250,000.00    9/27/2001
  90-0012                900 Towbin                 $   3,000,000.00     $   2,920,991.05            $   4,350,000.00    9/27/2001
  90-0010       First Tower Sanford Partners        $   3,000,000.00     $   2,883,471.86            $   4,000,000.00    10/3/2001
  90-0014    Fort Road Associates - Irvine Park     $   3,255,000.00     $   3,207,970.68            $   5,450,000.00    10/4/2001
  90-0015        Fort Road - Medical Center         $   5,260,000.00     $   5,185,999.13            $   7,240,000.00    10/4/2001
  90-0022      Evelyn Avenue Associates, LLLP       $   3,500,000.00     $   3,449,876.52            $   4,700,000.00   10/25/2001
  90-0017     Knightsbridge Medical Center, LTD     $   3,150,000.00     $   3,106,077.79            $   4,400,000.00   10/31/2001
  90-0021       Airport Business Center IV LP       $   2,000,000.00     $   1,971,862.80            $   3,000,000.00   10/31/2001
  90-0026             SAP Building, LLC             $   2,550,000.00     $   2,495,510.46            $   3,500,000.00   11/13/2001
  90-0023          Wayzata Bay Center LLC           $   2,600,000.00     $   2,505,633.03            $   3,980,000.00   11/16/2001
</Table>

<Page>

<Table>
  <S>        <C>                                           <C>               <C>                  <C>                   <C>
  90-0019              Northfield- 520 Eagleton            $  1,730,000.00   $     1,710,376.03   $     2,310,000.00    11/19/2001
  90-0020      Northfield- 601 Eagleton & 10401 J. Price   $  1,970,000.00   $     1,945,352.23   $     2,630,000.00    11/19/2001
  90-0027    Brown, Frischman, Friedrich & Brown Trustees  $  4,850,000.00   $     4,786,507.14   $     6,800,000.00    11/19/2001
  90-0031                  White Clay IV, LP               $  5,250,000.00   $     5,181,270.56   $     7,100,000.00    11/27/2001
  90-0032                  White Clay V, LP                $  3,940,000.00   $     3,888,420.23   $     7,000,000.00    11/27/2001
  90-0030           DOT Development Company, L.L.C.        $  1,425,000.00   $     1,394,550.02   $     2,050,000.00    11/30/2001
  90-0025              The Turnac Group, L.L.C.            $  5,000,000.00   $     4,940,598.20   $     6,800,000.00     12/6/2001
  90-0016                 Western Springs LLC              $  3,200,000.00   $     3,094,165.65   $     4,600,000.00    12/11/2001
  90-0028              North Holding Partnership           $  1,950,000.00   $     1,912,165.30   $     2,600,000.00    12/14/2001
  90-0029              Metal Services Commercial           $  3,772,500.00   $     3,699,304.48   $     5,030,000.00    12/14/2001
  90-0035            Philadelphia Partners I, LLC          $    487,500.00   $       478,041.33   $       650,000.00    12/14/2001
  90-0033        GPI-Meridian Office Properties I, LP      $  1,425,000.00   $     1,398,586.94   $     1,900,000.00      1/8/2002
  90-0038       Albemarle Square Investment Group, LLC     $  3,925,000.00   $     3,880,479.43   $     5,240,000.00     1/25/2002
  90-0041             2003 Riverside Parkway, LLC          $  2,800,000.00   $     2,724,050.86   $     3,750,000.00     2/12/2002
  90-0039          Friarsgate Investment Group, LLC        $  4,200,000.00   $     4,163,576.65   $     5,600,000.00     3/29/2002
  90-0044          Crosspointe Partners V & VI, LLC        $  2,450,000.00   $     2,409,486.70   $     3,525,000.00      4/3/2002
  90-0045                   1331 Speer LLC                 $  2,800,000.00   $     2,779,613.32   $     3,925,000.00     4/12/2002
  90-0053               Asset Marketing Systems            $  4,000,000.00   $     3,970,876.11   $     6,050,000.00     4/15/2002
  90-0037              A & R Development II, LLC           $  3,025,000.00   $     3,001,900.19   $     4,050,000.00     4/22/2002
  90-0036              ESTE Building Corporation           $  4,575,000.00   $     4,540,064.01   $     6,100,000.00     4/25/2002
  90-0042            The Waterfront Partners, LLC          $  4,875,000.00   $     4,835,363.51   $     6,500,000.00     4/25/2002
  90-0050                Hurco Companies, Inc.             $  4,500,000.00   $     4,444,909.61   $     7,200,000.00     4/30/2002
  90-0052                  Twin Park Complex               $    975,000.00   $       967,901.08   $     1,300,000.00     4/30/2002
</Table>

<Page>

<Table>
  <S>      <C>                                                 <C>               <C>                <C>                  <C>
  90-0057            Wheeler Square Associates, Inc.           $  4,050,000.00   $   4,017,359.63   $   5,535,000.00      5/1/2002
  90-0054         DOT Development Company, LLC (Hirata)        $  1,500,000.00   $   1,484,703.79   $   2,025,000.00     5/10/2002
  90-0048            Starcrest Business Center, Ltd.           $  2,600,000.00   $   2,553,568.15   $   3,800,000.00     5/16/2002
  90-0040    The Watermark Corporation of Tallahassee, Inc.    $  3,950,000.00   $   3,878,133.19   $   5,800,000.00     5/21/2002
  90-0046           University Place Properties, LLC           $  4,600,000.00   $   4,570,958.82   $   6,520,000.00     5/23/2002
  90-0049                 Bexar Fountains, Ltd.                $  4,400,000.00   $   4,355,284.93   $   6,000,000.00     5/30/2002
  90-0055                Poppleton Associates LP               $  2,550,000.00   $   2,533,901.05   $   3,500,000.00     5/30/2002
  90-0058                 New Sugar Creek, LLC                 $  3,100,000.00   $   3,084,076.54   $   4,300,000.00     6/12/2002
  90-0064         Newburgh Development Associates, LLC         $  1,200,000.00   $   1,185,715.30   $   2,550,000.00     6/12/2002
  90-0063               C&R Familian Project, LLC              $    800,000.00   $     796,088.23   $   1,100,000.00     6/17/2002
  90-0062            University Place Developers, LC           $  3,800,000.00   $   3,768,787.00   $   5,850,000.00     6/27/2002
  90-0070             Randolph Medical Center, LLC             $  3,540,000.00   $   3,520,988.92   $   5,300,000.00     6/28/2002
  90-0072                 Emerald Colorado, LLC                $  2,400,000.00   $   2,378,134.95   $   3,835,000.00      7/2/2002
  90-0060               Greenway Haydon Loop, LLC              $  3,650,000.00   $   3,634,594.41   $   5,355,000.00      7/3/2002
  90-0061              Beemer & Associates V, Ltd              $  2,500,000.00   $   2,463,973.87   $   5,000,000.00      7/8/2002
  90-0051                Maurice M. Weill, Trust               $  1,450,000.00   $   1,432,847.62   $   2,425,000.00     7/10/2002
  90-0066         Physicians and Surgeons Capital Corp.        $  3,300,000.00   $   3,285,807.86   $   4,700,000.00     7/10/2002
  90-0074             Mourning Dove Properties, LLC            $  1,150,000.00   $   1,145,227.96   $   1,700,000.00     7/29/2002
  90-0068  Maurice M. Weill Trustee for B. Lapin-Weill Indust  $  1,000,000.00   $     988,114.90   $   3,875,000.00     7/30/2002
  90-0069   Maurice M. Weill Trustee for M. Feldman-FBE Union  $  2,500,000.00   $   2,489,348.62   $   3,500,000.00     7/30/2002
  90-0073               HD Allstar New Tampa, LLC              $  1,720,000.00   $   1,699,749.51   $   2,600,000.00     7/31/2002
  90-0047            Keiser Commons Associates, Ltd.           $  3,750,000.00   $   3,724,235.47   $   5,100,000.00      8/1/2002
  90-0075             River Glen Office Centre, LLC            $  1,055,000.00   $   1,045,601.94   $   1,450,000.00     8/16/2002
</Table>

<Page>

<Table>
  <S>        <C>                                         <C>                 <C>                  <C>                    <C>
  90-0077                MOP II B1, LLLP                 $    1,775,000.00   $     1,769,056.06   $     2,560,000.00     8/22/2002
  90-0059                   TAS I, LP                    $    2,850,000.00   $     2,840,789.48   $     3,800,000.00     8/29/2002
  90-0065           Prairie Partners Six, LLP            $    6,450,000.00   $     6,428,780.43   $     9,050,000.00     8/29/2002
  90-0081       A-Secured Self & Vehicle Storage         $    1,925,000.00   $     1,918,337.97   $     2,660,000.00     8/29/2002
  90-0078        Lexington Business Park V, LLC          $    2,220,000.00   $     2,209,318.24   $     3,030,000.00      9/3/2002
  90-0071                  Canal, LLC                    $    1,700,000.00   $     1,690,112.61   $     2,400,000.00     9/10/2002
  90-0083              Sycan B Corporation               $    3,400,000.00   $     3,391,745.99   $     4,785,000.00     9/10/2002
  90-0090                Grand Place LLC                 $    8,500,000.00   $     8,481,057.24   $    11,450,000.00     9/12/2002
  90-0088              Ari-Pac Investments               $    2,100,000.00   $     2,087,271.79   $     4,000,000.00     9/19/2002
  90-0085          Beemer & Associates XIV, LC           $    2,150,000.00   $     2,130,837.19   $     3,400,000.00     9/26/2002
  90-0091           PAN AM Investments, Inc.             $    2,600,000.00   $     2,576,826.38   $     4,300,000.00     9/26/2002
  90-0084      Hotel Investment Property One, LLC        $    5,300,000.00   $     5,288,356.02   $     7,550,000.00     9/30/2002
  90-0086                   CFS, LLC                     $    3,975,000.00   $     3,950,850.50   $     5,550,000.00     9/30/2002
  90-0098     999 West Chester Pike Associates, LP       $    1,575,000.00   $     1,571,408.15   $     2,125,000.00     9/30/2002
  90-0099          Fenton Plaza Memebers, LLC            $    1,250,000.00   $     1,248,487.20   $     1,850,000.00     10/8/2002
  90-0094            4901 Burnet Road, Ltd.              $    1,250,000.00   $     1,247,672.38   $     2,000,000.00     10/9/2002
  90-0095     11103 West Avenue, San Antonio, Ltd.       $    3,850,000.00   $     3,842,830.94   $     5,850,000.00     10/9/2002
  90-0101    Moani & Nohea Real Estate Holdings LLC      $    3,500,000.00   $     3,492,013.31   $     4,800,000.00     10/10/2002
  90-0103        First Central Investment Corp.          $    3,000,000.00   $     2,990,739.11   $     4,475,000.00     10/10/2002
  90-0097           The Wescott Building, LLC            $    3,100,000.00   $     3,090,219.65   $     4,650,000.00     10/16/2002
  90-0105              RW Investments, LLC               $    1,800,000.00   $     1,797,777.97   $     2,400,000.00     10/29/2002
  90-0089           Evergreen Properties, LLC            $    3,500,000.00   $     3,495,764.19   $     4,670,000.00     10/31/2002
  90-0102                Gravois Bluffs                  $    5,200,000.00   $     5,186,502.83   $     7,700,000.00     11/1/2002
</Table>

<Page>

<Table>
  <S>        <C>                                         <C>                 <C>                  <C>                    <C>
  90-0107    Beemer & Associates V, Ltd.                 $     2,000,000.00  $     2,000,000.00   $     2,780,000.00     11/14/2002
  90-0104    Rock Hall Real Estate, LLC                  $     1,085,000.00  $     1,085,000.00   $     1,450,000.00     11/20/2002
  90-0076      Roberts Road Associates                   $     3,575,000.00  $     3,575,000.00   $     5,500,000.00     11/21/2002
  90-0100     Naamans Creek Center, LLC                  $     1,350,000.00  $     1,350,000.00   $     1,800,000.00     11/21/2002

                                                         $   289,560,000.00  $   286,171,895.30   $   419,235,000.00
</Table>

<Page>

                                  Schedule 9.13
                      Surplus Relief Reinsurance Agreements

1.   Coinsurance and Yearly Renewable Term Reinsurance between: AMERICAN EQUITY
     INVESTMENT LIFE INSURANCE COMPANY, West Des Moines, Iowa and ATLANTIC
     INTERNATIONAL REINSURANCE COMPANY LTD., Bridgetown, Barbados, West Indies,
     a wholly-owned subsidiary of SWISS REINSURANCE COMPANY. Effective Date:
     January 1, 2001.

2.   Coinsurance and Yearly Renewable Term Reinsurance between: HANNOVER LIFE
     REASSURANCE COMPANY OF AMERICA and AMERICAN EQUITY INVESTMENT LIFE
     INSURANCE COMPANY. Effective Date: November 1, 2002.QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.9    
  

C L I F F O R D

C H A N C E  

LIMITED LIABILITY PARTNERSHIP  

EXECUTION COPY  

        EURO 1,750,000,000  

 SYNDICATED REVOLVING CREDIT AGREEMENT  

dated 17 MAY 2002 

for

KONINKLIJKE KPN N.V.  

with

ABN AMRO BANK N.V.  

 BANC OF AMERICA SECURITIES LIMITED  

 COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.  

 CREDIT SUISSE FIRST BOSTON  

 DEUTSCHE BANK AG  

 HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME  

 ING BANK N.V.  

 J.P. MORGAN PLC  

 SCOTIABANK EUROPE PLC  

 and  

 SALOMON BROTHERS INTERNATIONAL LIMITED  

 as Mandated Lead Arrangers  

and with 

ABN AMRO BANK N.V.  

acting as Facility Agent 

 
 

CONTENTS    
  

	Clause
 
	 	Page

	Section 1	 	1
	
Interpretation	
 	

1
	

1.    Definitions And Interpretation	
 	

1
	
Section 2	
 	

14
	
The Facility	
 	

14
	

2.    The Facility	
 	

14
	

3.    Purpose	
 	

15
	

4.    Conditions Of Utilisation	
 	

15
	
Section 3	
 	

17
	
Utilisation	
 	

17
	

5.    Utilisation	
 	

17
	

6.    Optional Currencies	
 	

18
	
Section 4	
 	

19
	
Repayment, Prepayment And Cancellation	
 	

19
	

7.    Repayment	
 	

19
	

8.    Prepayment And Cancellation	
 	

19
	
Section 5	
 	

21
	
Costs Of Utilisation	
 	

21
	

9.    Interest	
 	

21
	

10.    Interest Periods	
 	

21
	

11.    Changes To The Calculation Of Interest	
 	

22
	

12.    Fees	
 	

23
	
Section 6	
 	

25
	
Additional Payment Obligations	
 	

25
	

13.    Tax Gross Up	
 	

25
	

14.    Increased Costs	
 	

26
	

15.    Other Indemnities	
 	

27
	

16.    Mitigation By The Lenders	
 	

28
	

17.    Costs And Expenses	
 	

28
	
Section 7	
 	

30
	
Guarantee	
 	

30
	

18.    Guarantee And Indemnity	
 	

30
	
Section 8	
 	

32
	
Representations, Undertakings And Events Of Default	
 	

32
	
 	
 	

 

	

19.    Representations And Warranties	
 	

32
	

20.    Information Undertakings	
 	

35
	

21.    General Undertakings	
 	

37
	

22.    Financial Covenants	
 	

43
	

23.    Events Of Default	
 	

46
	
Section 9	
 	

50
	
Changes To Parties	
 	

50
	

24.    Changes To The Lenders	
 	

50
	

25.    Changes To The Obligors	
 	

52
	
Section 10	
 	

54
	
The Finance Parties	
 	

54
	

26.    Role Of The Facility Agent And The Mandated Lead Arrangers	
 	

54
	

27.    Conduct Of Business By The Finance Parties	
 	

58
	

28.    Sharing Among The Lenders	
 	

58
	
Section 11	
 	

60
	
Administration	
 	

60
	

29.    Payment Mechanics	
 	

60
	

30.    Set-Off	
 	

62
	

31.    Notices	
 	

62
	

32.    Calculations And Certificates	
 	

64
	

33.    Partial Invalidity	
 	

64
	

34.    Remedies And Waivers	
 	

65
	

35.    Amendments And Waivers	
 	

65
	

36.    Counterparts	
 	

65
	
Section 12	
 	

66
	
Governing Law And Enforcement	
 	

66
	

37.    Governing Law	
 	

66
	

38.    Enforcement	
 	

66
	

Schedule 1    The Original Lenders	
 	

67
	

Schedule 2    Conditions Precedent	
 	

68
	 	

Part 1    Conditions Precedent To Signing	
 	

68
	 	

Part 2    Conditions Precedent Required To Be Delivered By An Additional Borrower	
 	

69
	

Schedule 3    Utilisation Request	
 	

71
	

Schedule 4    The Margin	
 	

72
	

Schedule 5    Form Of Transfer Certificate	
 	

73
	
 	
 	

 

	

Schedule 6    Form Of Compliance Certificate	
 	

74
	

Schedule 7    Timetables	
 	

75
	

Schedule 8    Mandatory Cost Formulae	
 	

76
	

Schedule 9    Form Of Accession Letter	
 	

78

  

THIS AGREEMENT is dated 17 May 2002 and made between: 

	(1)
	KONINKLIJKE KPN N.V. having its seat (statutaire zetel) in The Hague, The Netherlands
(the "Company");

	(2)
	KONINKLIJKE KPN N.V. having its seat (statutaire zetel) in The Hague, The Netherlands,
as guarantor (the "Guarantor");

	(3)
	ABN AMRO BANK N.V., BANC OF AMERICA SECURITIES LIMITED, COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., CREDIT SUISSE FIRST BOSTON,
DEUTSCHE BANK AG, HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME, ING BANK N.V., J.P. MORGAN PLC, SCOTIABANK EUROPE PLC and SALOMON
BROTHERS INTERNATIONAL LIMITED (the "Mandated Lead Arrangers");

	(4)
	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as
lenders (the "Original Lenders"); and

	(5)
	ABN AMRO BANK N.V. as facility agent (the "Facility Agent"). 

IT IS AGREED as follows: 

 
 

SECTION 1
  
    INTERPRETATION    
  

1.    DEFINITIONS AND INTERPRETATION

1.1  Definitions

In
this Agreement: 

"Accession Letter" means a document substantially in the form set out in Schedule 9 (Form of Accession
Letter). 

"Additional Borrower" means a company which becomes an Additional Borrower in accordance with Clause 25 (Changes to the
Obligors). 

"Advance" means an advance made or to be made under the Facility or the principal amount outstanding for the time being of that advance. 

"Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding
Company. 

"Agent's Spot Rate of Exchange" means the Facility Agent's spot rate of exchange for the purchase of the relevant currency with the Base Currency in the
London foreign exchange market at or about 11:00 a.m. on a particular day. 

"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing or registration. 

"Available Commitment" means a Lender's Commitment minus: 

	(a)
	the
Base Currency Amount of its participation in any outstanding Advances; and

	(b)
	in
relation to any proposed Utilisation, the Base Currency Amount of its participation in any Advances that are due to be made on or before the proposed Utilisation Date, 

other
than, in either case, the Base Currency Amount of that Lender's participation in any Advances that are due to be repaid or prepaid on or before the proposed Utilisation Date. 

1

 

"Available Facility" means the aggregate for the time being of each Lender's Available Commitment. 

"Availability Period" means the period from and including the date of this Agreement to and including the date falling one month prior to the
Termination Date. 

"Banking Base Case" means the information on sources and uses of funds for the Group prepared in connection with the Facility and provided by the
Company prior to the date of this Agreement. 

"Base Currency" means euro. 

"Base Currency Amount" means, in relation to an Advance, the amount specified in the Utilisation Request delivered by a Borrower for that Advance (or,
if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent's Spot Rate of Exchange on the date which is 3 Business Days before the
Utilisation Date (or, if later, on the date the Facility Agent receives the Utilisation Request) adjusted to reflect any repayment or prepayment of the Advance. 

"BellSouth" means BellSouth Corporation. 

"BellSouth Subordinated Loan Agreement" means the $3,000,000,000 loan agreement dated 9 December 1999, to which BellSouth is party as note
purchaser and the Company is party as note issuer. 

"Borrower" means the Company or an Additional Borrower unless it has ceased to be a Borrower in accordance with Clause 25
(Changes to the Obligors). 

"Borrowings" means: 

	(a)
	any
indebtedness for moneys borrowed and debit balances at banks and other financial institutions;

	(b)
	any
indebtedness raised by acceptance under any credit facility opened by a bank or other financial institution;

	(c)
	any
indebtedness under any bonds, notes, debentures, loan stock or other security;

	(d)
	any
payment obligations under any lease which would, in accordance with GAAP (as used in the Company's most recent audited annual consolidated financial statements from time to time),
be treated as a finance or capital lease;

	(e)
	any
indebtedness for money owing under any interest rate swaps, currency swaps (including spot and forward exchange contracts), caps, collars, floors and similar obligations;

	(f)
	proceeds
raised under any Securitisation Transaction;

	(g)
	receivables
sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis) and which would, in accordance with GAAP (as used in the
Company's most recent audited annual consolidated financial statements from time to time), be treated as a borrowing;

	(h)
	any
amount of any liability under an advance or deferred purchase agreement if the agreement is in respect of the supply of assets or services and payment is due more than
180 days past the period customarily allowed by the relevant supplier for deferred payment but only in circumstances where the aggregate outstanding liability to any supplier or provider
(including their respective affiliates) exceeds euro 50,000,000; 

2

 

	(i)
	any
indebtedness in respect of an arrangement pursuant to which a person has the right to reacquire an asset sold or otherwise disposed of by that person (whether following the
exercise of an option or otherwise) and which would, in accordance with GAAP (as used in the Company's most recent audited annual consolidated financial statements from time to time), be treated as a
borrowing;

	(j)
	any
shares which are redeemable (other than for ordinary shares) by holders thereof (other than any Specified Preference Shares which have been outstanding for less than
2 years from their date of issue);

	(k)
	any
indebtedness having the commercial effect of a borrowing and which would, in accordance with GAAP (as used in the Company's most recent audited annual consolidated financial
statements from time to time), be treated as a borrowing; and

	(l)
	any
indebtedness (actual or contingent) under any guarantee, indemnity and/or other form of assurance against financial loss by any Group Company in respect of any indebtedness of any
person of a type referred to in paragraphs (a) to (k) above. 

"Break Costs" means the amount (if any) by which: 

	(a)
	the
interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in an Advance or Unpaid Sum to the last day of the
current Interest Period in respect of that Advance or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period; 

exceeds:

	(b)
	the
amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant
Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period, 

excluding
any Margin or other loss of profit. 

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London and The Netherlands and: 

	(a)
	(in
relation to any date for payment or purchase of a currency other than euro) the principal financial centre of the country of that currency; or

	(b)
	(in
relation to any date for payment or purchase of euro) any TARGET Day. 

"Cash-backed Borrowings" means Borrowings under equipment leases to the extent matched by cash balances or other forms of defeasance
instrument (but only to the extent such instruments are cash-backed) held by or for the benefit of the relevant Group Companies which are the lessees under such leases or other Group
Companies and which are only available for application against those Borrowings. 

"Commitment" means: 

	(a)
	in
relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading "Commitment" in
Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement; and

	(b)
	in
relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, 

to
the extent not cancelled, reduced or transferred by it under this Agreement. 

3

 

"Compliance Certificate" means a certificate substantially in the form set out in Schedule 6 (Form of Compliance
Certificate). 

"Credit Rating" means a long term (unsecured) debt rating given by S&P or Moody's. 

"Default" means an Event of Default or an event which, with the giving of notice, lapse of time, determination of materiality or fulfilment of any other
applicable condition (or any combination of any of the foregoing) would constitute an Event of Default. 

"E-Plus" means E-Plus GmbH & Co. KG, a limited partnership established under the laws of Germany. 

"E-Plus Group" means E-Plus and each of its Subsidiaries from time to time. 

"EURIBOR" means, in relation to any Advance in euro: 

	(a)
	the
applicable Screen Rate; or

	(b)
	(if
no Screen Rate is available for the period of that Advance) the arithmetic mean of the per annum rates (rounded upwards to four decimal places) as supplied to the Facility Agent
at its request quoted by the Reference Banks to leading banks in the European Interbank Market, 

as
of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Advance. 

"European Interbank Market" means the interbank market for euro operating in Participating Member States. 

"Event of Default" means any event or circumstance specified as such in Clause 23 (Events of
Default). 

"Executive Officer" means a member of the board of management of the Company. 

"Facility" means the euro 1,750,000,000 loan facility made available to the Company under this Agreement as described in Clause 2.1
(The Facility). 

"Facility Office" means in relation to an Original Lender, the office identified as such to the Facility Agent on or prior to the date hereof (or, in
the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee) or such other office as it may from time to time, by notice to the Facility Agent, select. 

"Fee Letter" means any letter or letters between the Mandated Lead Arrangers and the Company or the Facility Agent and the Company setting out any of
the fees referred to in Clause 12 (Fees). 

"Finance Document" means this Agreement, any Fee Letter, any Accession Letter and any other document designated as such by the Facility Agent and the
Company. 

"Finance Party" means any of the Facility Agent, the Mandated Lead Arrangers and the Lenders. 

"Fixed Line Business" means the businesses of providing: 

	(a)
	fixed
public telephone services;

	(b)
	fixed
public telephone networks;

	(c)
	interconnection
services in relation to those networks; and

	(d)
	special
network access services in relation to those networks, 

in
each case, in The Netherlands and as described in paragraphs (j), (k) and (l) of Article 1.1 and Article 6.1 (1) of the Dutch Telecommunications Act 1998. 

4

 

"GAAP" means generally accepted accounting principles in The Netherlands. 

"Group" means the Company and its Subsidiaries from time to time and "Group Company" means any one of
them (for the avoidance of doubt, KPN Qwest is not a member of the Group). 

"Holding Company" means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary. 

"Interest Period" means, in relation to an Advance, each period determined in accordance with Clause 10 (Interest
Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 9.3 (Default
interest).

"KPN Mobile" means KPN Mobile N.V. 

"KPN Qwest" means KPN Qwest N.V. 

"KPN Qwest Group" means KPN Qwest and each of its Subsidiaries from time to time. 

"KPN Telecom" means KPN Telecom B.V. 

"KPN Telecom Group" means KPN Telecom and any of its Subsidiaries which own any part of the Fixed Line Business from time to time. 

"Lender" means: 

	(a)
	any
Original Lender; and

	(b)
	any
bank or financial institution which has become a Party as a Lender in accordance with Clause 24 (Changes to the Lenders), 

which
in each case has not ceased to be a Party in accordance with the terms of this Agreement. 

"LIBOR" means, in relation to any Advance (other than an Advance in euro): 

	(a)
	the
applicable Screen Rate; or

	(b)
	(if
no Screen Rate is available for the currency or period of that Advance) the arithmetic mean of the per annum rates (rounded upwards to four decimal places) as supplied to the
Facility Agent at its request quoted by the Reference Banks to leading banks in the London Interbank Market, 

as
of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Advance and for a period comparable to the Interest Period for that Advance. 

"London Interbank Market" means the interbank market operating in London. 

"Majority Lenders" means: 

	(a)
	until
the Total Commitments have been reduced to zero, a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total
Commitments have been reduced to zero and there are no Advances then outstanding, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction); or

	(b)
	at
any other time, a Lender or Lenders whose participations in the Advances then outstanding aggregate more than 662/3% of all the Advances then outstanding. 

"Mandatory Cost" means the percentage rate per annum calculated by the Facility Agent in accordance with Schedule 8
(Mandatory Cost Formulae). 

5

 

"Margin" means the rate per annum computed in accordance with the table set out in Schedule 4 (The
Margin) except that on any day that the Company has Credit Ratings from S&P and Moody's which are not equivalent (or no Credit
Rating from one of them), the applicable rate per annum for such day shall be the relevant rate per annum computed in accordance with the table set out in Schedule 4
(The Margin) for the lower of the Credit Ratings (or, in the case of a Credit Rating from only one of S&P or Moody's, the Credit Rating the Company is
given). Any change in the Margin shall take effect 10 days after the change in the Company's Credit Ratings. 

"Material Adverse Effect" means a material adverse effect on: 

	(a)
	the
ability of the Obligors taken as a whole to perform their obligations under this Agreement; or

	(b)
	the
business or financial condition of the Group taken as a whole. 

"Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that: 

	(a)
	(subject
to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that
period is to end if there is one, or if there is not, on the immediately preceding Business Day;

	(b)
	if
there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

	(c)
	if
an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period
is to end. 

The
above rules will only apply to the last Month of any period. 

"Moody's" means Moody's Investor Services, Inc., or any successor thereto. 

"Net Disposal Proceeds" means: 

	(a)
	the
gross cash proceeds (including any amount receivable in repayment of intercompany debt) of an asset disposal permitted under any of paragraphs (b)(i), (ii), (iv) and
(v) of Clause 21.5 (Disposals) (but, in the case of paragraph (b)(iv), only where the asset disposed of is a fixed asset); and

	(b)
	(without
double counting) the gross cash proceeds of any asset disposal by a Group Company forming any part of a transaction referred to in paragraphs (g) or (i) of the
definition of "Borrowings" in Clause 1.1 (Definitions) where the indebtedness in respect of the transaction is not, in accordance with GAAP (as
used in the Company's most recent audited annual consolidated financial statements from time to time), treated as a borrowing (it being understood that if such indebtedness is treated as borrowing in
accordance with GAAP as used in the Company's most recent audited annual consolidated financial statements from time to time, the relevant cash proceeds shall not constitute Net Disposal Proceeds for
the purposes of this definition), 

less,
in each case, the amount confirmed by an Executive Officer before, on or within 5 Business Days after the effective date of the disposal to be the aggregate of: 

	(i)
	the
costs of the disposal;

	(ii)
	the
liabilities which are required to be discharged as a result of the disposal (other than liabilities incurred in contemplation of it); 

6

 

	(iii)
	the
provisions which the Executive Officer reasonably determines need to be made for taxes arising as a result of the disposal; and

	(iv)
	where
the asset which is the subject of the disposal is being replaced (and is not shares in, or the business or undertaking of, any person or an asset forming any part of a
transaction referred to in paragraphs (g) or (i) of the definition of "Borrowings" in Clause 1.1 (Definitions)), or the proceeds of
the relevant disposal are being reinvested in other fixed assets, the cost of the replacement asset or, as the case may be, other fixed assets, and the costs incurred or to be incurred in connection
with the acquisition provided that if the proceeds of the sale of the asset or reinvestment which is the subject of the disposal are not applied in
replacement of that asset within 6 months of receipt of such proceeds, such proceeds shall constitute "Net Disposal Proceeds". 

If
the net disposal proceeds would be a negative number they will be taken to be zero. 

"Obligor" means a Borrower or a Guarantor. 

"Optional Currency" means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3
(Conditions relating to Optional Currencies). 

"Original Facility Agreement" means the euro 2.5 billion credit agreement dated 16 November 2001 between, inter
alia, the Company as borrower, ABN AMRO Bank N.V., Banc of America Securities Limited, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., Credit Suisse First
Boston, Deutsche Bank AG, ING Bank N.V. J.P. Morgan PLC and Salomon Brothers International Limited as Mandated Lead Arrangers, ABN AMRO Bank N.V. as Facility Agent, and the financial institutions
referred to therein as lenders. 

"Original Group Financial Statements" means the audited consolidated financial statements of the Group for the year ended 31 December 2001. 

"Outstandings" means the aggregate of the Base Currency Amount from time to time of each of the outstanding Advances. 

"Participating Member State" means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance
with legislation of the European Union relating to European Monetary Union. 

"Party" means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees. 

"Permitted Guarantees" means any guarantees: 

	(a)
	in
existence at the date of this Agreement (and any replacement or renewal of any such guarantee to the same counterparties and for the same purpose to the extent that the principal
amount thereof is not increased);

	(b)
	granted
by any member of the E-Plus Group in respect of Borrowings of any another member of the E-Plus Group;

	(c)
	under
the shareholders agreement (the "Hutchison 3G Shareholders Agreement") dated 12 July 2000 between KPN Mobile and Hutchison
Whampoa Limited pursuant to which KPN Mobile has agreed to make shareholding funding available to Hutchison 3G Holdings Limited, to the extent that the principal amount guaranteed under, or pursuant
to, that agreement (when aggregated with the principal amount of loans made pursuant to paragraph (d) of the definition of Permitted Loans) does not exceed £150,000,000; 

7

 

	(d)
	guarantees
issued in respect of Borrowings of UMC to the extent that the aggregate principal amount so guaranteed, when aggregated with the aggregate principal amount of loans made to
UMC pursuant to paragraph (e) of the definition of Permitted Loans, does not exceed $17,000,000;

	(e)
	given
with the prior written consent of the Majority Lenders; or

	(f)
	the
principal amount of the liabilities in relation to which such were incurred, when aggregated, with the principal amount of any outstanding loans permitted under
paragraph (f) of the definition of "Permitted Loans", do not exceed euro 250,000,000 at any time. 

"Permitted Loans" means any loans: 

	(a)
	in
existence at the date of this Agreement (and any replacement or renewal of any such loan to the same borrowers and for the same purpose to the extent that the principal amount
thereof is not increased);

	(b)
	made
by any Group Company to E-Plus solely for the purpose of enabling E-Plus to finance payments of accrued interest on any shareholder loan owed by
E-Plus to any other Group Company;

	(c)
	advanced
by a Group Company pursuant to the Hutchison 3G Shareholders Agreement, to the extent that the principal amount of such loans (ignoring any interest capitalised thereon)
(when aggregated with the principal amount of guarantees issued pursuant to paragraph (c) of the definition of Permitted Guarantees) does not exceed £150,000,000;

	(d)
	made
to UMC to the extent that the aggregate principal amount of such loan (ignoring any interest capitalised thereon) when aggregated with the aggregate principal amount guaranteed
pursuant to paragraph (d) of the definition of Permitted Guarantees, does not exceed $17,000,000;

	(e)
	made
with the prior written consent of the Majority Lenders; or

	(f)
	made
or provided by any Group Company to any person provided that the amount of such loan(s) do not, when aggregated with the principal
amount of liabilities incurred in relation to any guarantees permitted under paragraph (f) of the definition of "Permitted Guarantees", exceed
euro 250,000,000 in aggregate at any time. 

"Permitted Convertible Preference Shares" means preference shares issued or to be issued by the Company in an aggregate amount not exceeding euro
500,000,000 at any time and which are convertible by the holders thereof for ordinary shares of the Company. 

"Principal Subsidiary" means: 

	(a)
	KPN
Telecom; and

	(b)
	KPN
Mobile, so long as it is a Subsidiary of the Company; and

	(c)
	any
other Subsidiary of the Company whose total assets or EBITDA calculated from the then latest audited financial statements of that Subsidiary represent, not less than five per
cent. (5%) of Total Assets or EBITDA of the Group. 

"Project Borrower" means any person which incurs a Project Borrowing. 

8

 

"Project Borrowing" means any Borrowing (other than a Borrowing by any member of the E-Plus Group or the KPN Qwest Group) to finance or
refinance a project: 

	(a)
	which
is incurred or issued by a single purpose company or other single purpose legal entity (whether or not a Group Company) whose principal assets and business together with the
principal assets and business of its wholly-owned Subsidiaries are constituted by that project and whose liabilities in respect of the Borrowing concerned are not directly or indirectly the subject of
a guarantee from any other Group Company except:

	(i)
	upstream
guarantees given by wholly owned Subsidiaries of that single purpose company (or other single purpose legal entity);

	(ii)
	Security
over (1) the shares or other right of ownership in that company or entity or (2) Borrowings of that company or entity from Group Companies; or

	(iii)
	as
expressly referred to in paragraph (b)(iii) below; or 

	(b)
	in
respect of which the person or persons making such Borrowing available to the relevant borrower (whether or not a Group Company) have no recourse whatsoever to any Group Company
for the repayment of or payment of any sum relating to such Borrowing other than:

	(i)
	recourse
to the borrower for amounts limited to the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow except to the extent that this has
funded cash collateral or other collateral that can be used to repay that Borrowing without enforcement action by such person or persons) from such project; and/or

	(ii)
	recourse
to the borrower for the purpose only of enabling amounts to be claimed in respect of that Borrowing in an enforcement of any Security given by the borrower over the assets
comprised in the project to secure that Borrowing or any recourse referred to in (iii) below, provided that:

	(1)
	the
extent of such recourse to the borrower is limited solely to the amount of any recoveries made on any such enforcement; and

	(2)
	such
person or persons are not entitled, by virtue of any right or claim arising out of or in connection with such Borrowing, to commence proceedings for the winding up or dissolution
of the borrower or to appoint or procure the appointment of any receiver, trustee or similar person or official in respect of the borrower or any of its assets (save for the assets the subject of such
Security); and/or 

	(iii)
	recourse
to such borrower generally, or directly or indirectly to a Group Company under any form of completion guarantee, assurance or undertaking, which recourse is limited to a
claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for breach of an obligation (not being a payment obligation or an obligation to procure
payment by another or an obligation to comply or to procure compliance by another with any financial ratios or other test of financial condition) by the person against whom such recourse is available;
or 

	(c)
	which
the Majority Lenders shall have agreed in writing to treat as a Project Borrowing for the purposes of the Finance Documents. 

"Public Debt" means any form of debt instrument, subordinated or otherwise, offered to the public at large (including, without limitation, any bonds,
notes, debentures, loan stock or other security); 

"Quotation Day" means, in relation to any period for which an interest rate is to be determined: 

	(a)
	(if
the currency is sterling) the first day of that period; 

9

 

	(b)
	(if
the currency is euro) two TARGET Days before the first day of that period; or

	(c)
	(for
any other currency) two Business Days (which for these purposes only shall mean a day on which banks are open for general business in London) before the first day of that period, 

unless
market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Facility Agent in accordance with market
practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those
days). 

"Reference Banks" means ABN AMRO Bank N.V. (London Branch), Citibank, N.A. (London Branch) and Deutsche Bank Luxembourg, S.A. and/or such offices of
such other banks as may be appointed by the Facility Agent and the Company. 

"Relevant Interbank Market" means: 

	(a)
	in
relation to euro, the European Interbank Market; or

	(b)
	in
relation to any other currency, the London Interbank Market. 

"Repeating Representations" means each of the representations referred to in Clause 19.12(b) (Times for making
representations and warranties). 

"Rollover Advance" means one or more Advances: 

	(a)
	made
or to be made on the same day that a maturing Advance is due to be repaid;

	(b)
	the
aggregate amount of which is equal to or less than the maturing Advance;

	(c)
	in
the same currency as the maturing Advance (unless it arose as a result of the operation of Clause 6.2 (Unavailability of a
currency)); and

	(d)
	made
or to be made to a Borrower for the purpose of refinancing a maturing Advance previously drawn by such Borrower. 

"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies or any successor thereto. 

"Screen Rate" means: 

	(a)
	in
relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and

	(b)
	in
relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period, 

displayed
on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Facility Agent may specify another page or service displaying the
appropriate rate after consultation with the Company and the Lenders. 

"Securitisation Transaction" means any transaction under which Borrowings are raised by any person in circumstances where the creditor(s) in respect of
such Borrowings: 

	(a)
	have
recourse to receivables or other identified assets or to a loan secured on receivables or such other assets of that person; and

	(b)
	are
special purpose vehicles established for the purpose of issuing securities backed by those receivables and assets or loans. 

10

 

"Security" means: 

	(a)
	in
the case of any Group Company, any mortgage, charge, assignment by way of security or subject to a proviso for redemption, pledge, hypothecation, lien or other security interest
over any asset of such Group Company; and

	(b)
	in
the case of the Company only, any other type of preferential arrangement (including title transfer and retention arrangements) the effect of which is to give a creditor in respect
of Borrowings a preferential position in relation to any assets of the Company on any insolvency proceedings of the Company. 

"Specified Preference Shares" means the special share of forty eight Eurocent (euro 0.48) held by the State of The Netherlands and any B preference
shares of twenty four Eurocent (euro 0.24) that may be issued in the future to the Foundation for the Protection of KPN. 

"Specified Time" means a time determined in accordance with Schedule 7 (Timetables). 

"Subordinated Indebtedness" means any indebtedness of the Company with terms (in the case of a public issue, standard for the market or, in any other
case, acceptable to the Majority Lenders) as to maturity, payment of interest, principal, early repayment events and other rights on default and insolvency, subordinate to those of the Finance Parties
under the Finance Documents. 

"Subsidiary" means an entity from time to time of which another person (or one or more of its subsidiaries) either (a) by having beneficial
ownership, directly or indirectly of more than 50 per cent. of the issued share capital of such entity; or (b) pursuant to an agreement with other persons, entitled to vote or otherwise, can: 

	(a)
	exercise
solely or jointly more than 50 per cent. of the voting rights attached to the issued share capital of such entity at a general meeting of such entity; or

	(b)
	appoint
or dismiss solely or jointly, more than 50 per cent. of the officers or of the supervisory board members of such entity, if all persons entitled to vote were to cast their
vote. 

For
the avoidance of doubt, as at the date of this Agreement, KPN Qwest is not a Subsidiary of the Company. 

"TARGET" means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system. 

"TARGET Day" means any day on which TARGET is open for the settlement of payments in euro. 

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same). 

"Termination Date" means the 16 November 2004. 

"Total Assets" means the total assets of the Group as shown in the audited consolidated financial statements of the Company last delivered to the
Facility Agent under Clause 20.1 (Financial Information) or, until delivery of the first such set of audited consolidated financial statements,
the Original Group Financial Statements. 

"Total Commitments" means the aggregate of the Commitments, being euro 1,750,000,000 at the date of this Agreement. 

"Total Outstandings" means the aggregate from time to time of the Outstandings. 

11

 

"Transfer Certificate" means a certificate substantially in the form set out in Schedule 5 (Form of Transfer
Certificate) or any other form agreed between the Facility Agent and the Company. 

"Transfer Date" means, in relation to a transfer, the later of: 

	(a)
	the
proposed Transfer Date specified in the Transfer Certificate; and

	(b)
	the
date on which the Facility Agent executes the Transfer Certificate. 

"UMC" means Ukrainian German Dutch Danish Limited Liability Company Ukrainian Mobile Communications. 

"Unpaid Sum" means any sum due and payable but unpaid by an Obligor under the Finance Documents. 

"Utilisation" means a utilisation of the Facility. 

"Utilisation Date" means the date of a Utilisation, being the date on which an Advance is to be made. 

"Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Utilisation
Request). 

"VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature. 

1.2  Construction

	(a)
	Unless
a contrary indication appears a reference in this Agreement to:

	(i)
	"assets" includes present and future properties, revenues and rights of every description;

	(ii)
	a
"Finance Document" or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as
amended or novated;

	(iii)
	a
"guarantee" means any guarantee, bond, indemnity, letter of credit, or other legally binding assurance against financial loss
granted by one person in respect of any indebtedness of another person, or any legally binding agreement by one person to assume any indebtedness of (or any legally binding arrangement by or under
which indebtedness is assumed in respect of) any other person, or any legally binding agreement under which two or more persons assume joint and several liability in respect of any indebtedness of any
person and "guaranteed" shall be construed accordingly;

	(iv)
	"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether
present or future, actual or contingent;

	(v)
	"loan" means any arrangement (other than a guarantee) under which a person incurs a Borrowing;

	(vi)
	a
"person" includes any person, firm, company, corporation, government, state or agency of a state or any association, bank, financial
institution, fund, incorporated association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;

	(vii)
	a
"regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but
being binding) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

	(viii)
	a
provision of law is a reference to that provision as amended or re-enacted; and 

12

 

	(ix)
	unless
a contrary indication appears, a time of day is a reference to London time. 

	(b)
	Where
there is a reference in this Agreement to any amount, limit or threshold specified in euro, in ascertaining whether or not that amount, limit or threshold has been attained,
broken or achieved, as the case may be, a non-euro amount shall be counted on the basis of the equivalent in euro of that amount using the Agent's Spot Rate of Exchange.

	(c)
	Section,
Clause and Schedule headings are for ease of reference only.

	(d)
	Unless
a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that
Finance Document or notice as in this Agreement.

	(e)
	A
Default (other than an Event of Default) is "continuing" if it has not been remedied or waived and an Event of Default is
"continuing" if it has not been waived. 

1.3  Currency Symbols and Definitions

"euro" denotes the single currency unit of the European Union as constituted by the Treaty of Rome (as amended),
"$" and "dollars" denote the lawful currency of the United States of America and
"£" and "sterling" denote the lawful currency of the United Kingdom. 

1.4  Third Party Rights

A
person who is not a Party has no right under the Contract (Rights of Third Parties) Act 1999 to enforce any term of this Agreement. 

13

  

 
 

SECTION 2
  
    THE FACILITY    
  

2.    THE FACILITY

2.1  The Facility

Subject
to the terms of this Agreement, the Lenders make available to the Borrower a multicurrency revolving credit facility in a maximum aggregate amount of euro 1,750,000,000 (the
"Facility"). 

2.2  Lenders' rights and obligations

	(a)
	The
obligations of each Lender under the Finance Documents are several. Failure by a Lender to perform its obligations under the Finance Documents does not affect the obligations of
any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

	(b)
	The
rights of each Lender under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Lender from an
Obligor shall be a separate and independent debt.

	(c)
	A
Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents provided
that if a Lender commences proceedings in respect of any such rights it shall notify the Facility Agent as soon as practicable thereafter and the Facility Agent shall notify
the other Lenders accordingly. 

2.3  Obligors' representative

Each
Obligor irrevocably authorises the Company to give and receive as representative on its behalf all notices (including Utilisation Requests) and sign all documents in connection with the Finance
Documents on its behalf and take such other action as may be necessary or desirable under or in connection with the Finance Documents on its behalf and confirms that it will be bound by any action
taken by the Company under or in connection with the Finance Documents. 

2.4  Actions of Company

The
respective liabilities of each of the Obligors under the Finance Documents shall not be in any way affected by: 

	(a)
	any
irregularity (or purported irregularity) in any act done by or any failure (or purported failure) by the Company; or

	(b)
	the
Company acting (or purporting to act) in any respect outside any authority conferred upon it by any Obligor; or

	(c)
	the
failure (or purported failure) by, or inability (or purported inability) of, the Company to inform any Obligor of receipt by it of any notification under a Finance Document. 

14

 

3.    PURPOSE

3.1  Purpose

Each
Borrower shall apply all amounts borrowed by it under the Facility for the purpose of refinancing existing indebtedness of Group Companies and for general corporate purposes of the Group  provided that
the Facility may not be utilised for the purpose of (a) repaying or prepaying the whole or any part of any loan(s) made under the
BellSouth Subordinated Loan Agreement; (b) repaying or prepaying the whole or any part of any Subordinated Indebtedness; or (c) prepaying any of the obligations set out in
Clause 21.14. 

3.2  Monitoring

No
Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. 

4.    CONDITIONS OF UTILISATION

4.1  Initial conditions precedent

No
Borrower may deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions
Precedent) in form and substance reasonably satisfactory to the Facility Agent. The Facility Agent shall notify the Company and the Lenders promptly upon being so satisfied. 

4.2  Further conditions precedent

	(a)
	The
Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if on the date of the Utilisation Request
and on the proposed Utilisation Date:

	(i)
	in
the case of a Rollover Advance, no Event of Default is continuing or would result from the proposed Advance, and, in the case of any other Advance, no Default is continuing or
would result from the proposed Advance; and

	(ii)
	the
Repeating Representations to be made by each Obligor are true in all material respects, 

	(b)
	An
Advance will not be made if it would result in the Base Currency Amount of all Advances exceeding the Total Commitments. 

4.3  Conditions relating to Optional Currencies

	(a)
	A
currency will constitute an Optional Currency in relation to an Advance if:

	(i)
	it
is a eurocurrency readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation
Date for that Advance; and

	(ii)
	it
is dollars or sterling or has been approved by the Facility Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Facility Agent of the relevant
Utilisation Request for that Loan. 

	(b)
	If
the Facility Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Facility Agent will, as soon as
reasonably practicable, confirm to the Company:

	(i)
	whether
or not the Lenders have granted their approval; and 

15

 

	(ii)
	if
approval has been granted, the minimum amount (and, if required, integral multiples) for any subsequent Utilisation in that currency. 

4.4  Maximum number of Advances

	(a)
	A
Borrower may not deliver a Utilisation Request if, as a result of the proposed Utilisation, more than 10 Advances would be outstanding.

	(b)
	Any
Advance made by a single Lender under Clause 6.2 (Unavailability of a currency) shall not be taken into account in this
Clause 4.4. 

16

  

 
 

SECTION 3
  
    UTILISATION    
  

5.    UTILISATION

5.1  Delivery of a Utilisation Request

A
Borrower may utilise the Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time. 

5.2  Completion of a Utilisation Request

	(a)
	Each
Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation Request) is
irrevocable and will not be regarded as having been duly completed unless:

	(i)
	the
proposed Utilisation Date is a Business Day within the Availability Period;

	(ii)
	the
currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and

	(iii)
	the
proposed Interest Period complies with Clause 10 (Interest Periods). 

	(b)
	Only
one Advance may be requested in each Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation
Request). 

5.3  Currency and amount

	(a)
	The
currency specified in a Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation
Request) must be the Base Currency or an Optional Currency.

	(b)
	The
amount of the proposed Advance must be an amount whose Base Currency Amount is:

	(i)
	if
the currency selected is the Base Currency, a minimum of euro 50,000,000 (or, as the case may be, the remainder of the Available Facility); or

	(ii)
	if
the currency selected is dollars, a minimum of $50,000,000 (or, as the case may be, the remainder of the Available facility);

	(iii)
	if
the currency selected is sterling, a minimum of £30,000,000 (or, as the case may be, the remainder of the Available Facility); or

	(iv)
	if
the currency selected is an Optional Currency (other than dollars or sterling), in such minimum amount as the Facility Agent and the Company may agree, 

or,
if less, the amount of the Available Facility. 

5.4  Lenders' participation

	(a)
	If
the conditions set out in this Agreement have been met, each Lender shall, on the relevant Utilisation Date, make its participation in each Advance available through its Facility
Office.

	(b)
	The
amount of each Lender's participation in each Advance will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the
Advance.

	(c)
	The
Facility Agent shall notify each Lender of the amount, currency and the Base Currency Amount of each Advance at the Specified Time. 

17

 

6.    OPTIONAL CURRENCIES

6.1  Selection of currency

A
Borrower (or the Company on behalf of a Borrower) shall select the currency of an Advance in a Utilisation Request. 

6.2  Unavailability of a currency

If
before the Specified Time on any Quotation Day: 

	(a)
	the
Facility Agent has received notice from a Lender that it is impracticable for that Lender to fund its participation in the relevant Advance in the proposed Optional Currency
during its Interest Period in the ordinary course of business in the European Interbank Market; or

	(b)
	a
Lender notifies the Facility Agent that compliance with its obligation to participate in an Advance in the proposed Optional Currency (other than dollars) would contravene a law or
regulation applicable to it, 

the
Facility Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 6.2 will be
required to participate in the Advance in the Base Currency (in an amount equal to that Lender's proportion of the Base Currency Amount or, in respect of a Rollover Advance, an amount equal to that
Lender's proportion of the Base Currency Amount of the maturing Advance that is due to be repaid) and its participation will be treated as a separate Advance denominated in the Base Currency during
that Interest Period. 

6.3  Participation in an Advance

Each
Lender's participation in an Advance will be determined in accordance with paragraph (b) of Clause 5.4 (Lenders' participation). 

6.4  Notification

The
Facility Agent shall notify the Lenders and the Company of Optional Currency amounts (and the applicable Agent's Spot Rate of Exchange) promptly after they are ascertained. 

18

  

 
 

SECTION 4
  
    REPAYMENT, PREPAYMENT AND CANCELLATION    
  

7.    REPAYMENT

7.1  Repayment of Advances

Each
Borrower which has drawn an Advance shall repay that Advance on the last day of its Interest Period. 

8.    PREPAYMENT AND CANCELLATION

8.1  Illegality

If
it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund its participation in any Advance: 

	(a)
	that
Lender shall promptly notify the Facility Agent upon becoming aware of that event;

	(b)
	upon
the Facility Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and

	(c)
	each
Borrower shall, to the extent required and within the applicable grace period permitted by law or if no such period is allowed,
immediately, repay that Lender's participation in the Advances made to that Borrower on the last day of the Interest Period for each Advance occurring after the Facility Agent has notified the Company
or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent. 

8.2  Mandatory Prepayment on Change of Control

	(a)
	If
at any time any single person or group of persons acting in concert (other than, directly or indirectly, the State of The Netherlands) acquires control of the Company or acquires
more than 50 per cent. of the equity share capital of the Company, then the Company will promptly upon becoming aware thereof notify the Facility Agent who shall inform the Lenders thereof. For this
purpose, "control" means the power to appoint or dismiss the management and the supervisory board of the relevant entity, whether through the ownership
of voting capital, the provisions of the constitutional documents of the entity or otherwise, and "acting in concert" means, a group of persons who,
pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them, either directly or indirectly, of shares in the
Company, to obtain or consolidate control of the Company.

	(b)
	The
Facility Agent will, if instructed to do so by the Majority Lenders, by notice to the Company given no earlier than 30 days and no later than 60 days after the
notification under paragraph (a) above:

	(i)
	call
for prepayment of all Advances on such date as it may specify in such notice (being no earlier than five Business Days after the date of such notice) whereupon all the Advances
will become due and payable on such date together with Break Costs (as notified to the Company by the Facility Agent); and

	(ii)
	declare
that the Total Commitments shall be cancelled, whereupon the Total Commitments shall be cancelled and the Commitment of each Lender shall be cancelled and reduced to zero. 

19

 

8.3  Voluntary cancellation

The
Company may, if it gives the Facility Agent not less than 5 days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum
amount of euro 50,000,000) of the Available Facility. 

8.4  Voluntary Prepayment

The
Borrower to which an Advance has been made may, if it gives the Facility Agent not less than 5 days' (or such shorter period as the Majority Lenders may agree) prior notice, prepay the
whole or any part of an Advance (but if in part, being an amount that reduces the Base Currency Amount of the Advance by a minimum amount of euro 50,000,000). 

8.5  Right of repayment and cancellation in relation to a single Lender

	(a)
	If:

	(i)
	any
sum payable to any Lender by an Obligor is required to be increased under Clause 13 (Tax Gross-up); or

	(ii)
	any
Lender claims indemnification from the Company under Clause 14.1 (Increased costs), 

the
Company may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention
to procure the repayment of that Lender's participation in the Advances. 

	(b)
	On
receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.

	(c)
	On
the last day of each Interest Period in respect of an Advance which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by
the Company in that notice), each Borrower to which an Advance is outstanding shall repay that Lender's participation in that Advance. 

8.6  Restrictions

	(a)
	Any
notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

	(b)
	Any
prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.

	(c)
	Unless
a contrary indication appears in this Agreement, any part of a Facility which is prepaid may be reborrowed in accordance with the terms of this Agreement.

	(d)
	The
Borrowers shall not repay or prepay all or any part of the Advances or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in
this Agreement.

	(e)
	No
amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

	(f)
	If
the Facility Agent receives a notice under this Clause 8 it shall promptly notify either the Company or the affected Lender, as appropriate. 

20

  

 
 

SECTION 5
  
    COSTS OF UTILISATION    
  

9.    INTEREST

9.1  Calculation of interest

The
rate of interest on each Advance for each Interest Period is the percentage rate per annum which is the aggregate of the applicable: 

	(i)
	Margin;

	(ii)
	LIBOR
or, in relation to any Advance in euro, EURIBOR; and

	(iii)
	Mandatory
Cost, if any. 

9.2  Payment of interest

The
Borrower to which an Advance has been made shall pay accrued interest on that Advance on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates
falling at six monthly intervals after the first day of the Interest Period). 

9.3  Default interest

	(a)
	If
an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual
payment (both before and after judgment) at a rate 1.00 per cent. higher than the rate which would have been payable if the overdue amount had, during the period of non-payment,
constituted an Advance in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Facility Agent (acting reasonably). Any interest accruing under this
Clause 9.3 shall be immediately payable by the Borrower on demand by the Facility Agent.

	(b)
	Default
interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will
remain immediately due and payable. 

9.4  Notification of rates of interest

The
Facility Agent shall promptly notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement. 

10.  INTEREST PERIODS

10.1 Selection of Interest Periods

	(a)
	A
Borrower (or the Company on behalf of a Borrower) may select an Interest Period for an Advance in the Utilisation Request for that Advance.

	(b)
	Subject
to this Clause 10, a Borrower (or the Company) may select an Interest Period of, in relation to any Advance, 1, 2, 3 or 6 Months or any period longer than 6 Months
agreed between the Company and the Facility Agent (acting on the instructions of all the Lenders) or any period shorter than 6 Months agreed between the Company and the Facility Agent or ending on the
Termination Date.

	(c)
	An
Interest Period for an Advance shall not extend beyond, as applicable, the Termination Date relating to the Lenders participating in that Advance. 

21

 

	(d)
	Each
Interest Period for an Advance shall start on the Utilisation Date.

	(e)
	Each
Advance has one Interest Period only. 

10.2 Non-Business Days

If
an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not). 

11.  CHANGES TO THE CALCULATION OF INTEREST

11.1 Absence of quotations

Subject
to Clause 11.2 (Market disruption), if LIBOR or EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does
not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks. 

11.2 Market disruption

	(a)
	If
a Market Disruption Event occurs in relation to an Advance for any Interest Period, then the rate of interest on each Lender's share of that Advance for the Interest Period shall
be the rate per annum which is the sum of:

	(i)
	the
Margin;

	(ii)
	the
rate notified to the Facility Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which
expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Advance from whatever source it may reasonably select with a view to providing funding at the
lowest reasonably practicable rate; and

	(iii)
	the
Mandatory Cost, if any, applicable to that Lender's participation in the Advance. 

	(b)
	In
this Agreement "Market Disruption Event" means in relation to an Advance:

	(i)
	at
or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Facility
Agent to determine LIBOR or, if applicable, EURIBOR for the relevant currency and period; or

	(ii)
	the
Facility Agent (after consultation with the Reference Banks) shall have determined (which determination shall be conclusive and binding upon all Parties) that by reason of
circumstances affecting the Relevant Interbank Market generally, adequate and fair means do not exist for ascertaining EURIBOR or, as the case may be, LIBOR applicable to an Advance for the relevant
Interest Period or EURIBOR or, as the case may be, LIBOR does not adequately represent the cost of funding to the Lenders, 

provided that the Company and the Lenders (through the Facility Agent) may agree that, if not already drawn, the Advances concerned shall not be
borrowed (subject to the provisions of paragraph (c) of Clause 15.2 (Other Indemnities). 

22

 

11.3 Alternative basis of interest or funding

	(a)
	If
a Market Disruption Event occurs and the Facility Agent or the Borrower so requires, the Facility Agent and the Borrower shall enter into negotiations (for a period of not more
than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

	(b)
	Any
alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties. 

11.4 Break Costs

	(a)
	Each
Borrower shall, within 5 Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of an Advance or Unpaid Sum being
paid by that Borrower on a day other than the last day of an Interest Period for that Advance or Unpaid Sum.

	(b)
	Any
demand made by a Finance Party pursuant to paragraph (a) above shall be accompanied by a certificate confirming the amount of its Break Costs for the relevant Interest
Period. 

12.  FEES

12.1 Commitment fee

	(a)
	The
Company shall pay to the Facility Agent (for the account of each Lender) a fee in the Base Currency on that Lender's Available Commitment for the Availability Period, at the rate
per annum for each day of each relevant period referred to in paragraph (b) below which is equal to 40 per cent. of the Margin applicable at such time (as computed in accordance with
Schedule 4 (Margin)). Any change in the Commitment Fee shall take effect 10 days after the change in the Company's Credit Rating.

	(b)
	The
accrued commitment fee is payable on the last day of each successive period of three Months commencing from the date of this Agreement and on the last day of the Availability
Period applicable to a Lender and on the cancelled amount of the relevant Lender's Commitment at the time the cancellation is effective. 

12.2 Utilisation Fee

	(a)
	The
Company shall pay to the Facility Agent (for the account of the Lenders pro rata to their Commitments) a utilisation fee computed at the rate of

	(i)
	0.25
per cent. per annum on the Total Outstandings for each day that the Total Outstandings are in an amount exceeding 33.3 per cent. but not exceeding 66.6 per cent. of the Total
Commitments; and

	(ii)
	0.50
per cent. per annum on the Total Outstandings for each day that the Total Outstandings are in an amount exceeding 66.6 per cent. of the Total Commitments. 

	(b)
	The
accrued utilisation fee is payable on the last day of each successive period of three Months commencing from the date of this Agreement and on the Termination Date. 

12.3 Arrangement Fee

The
Company shall pay to the Mandated Lead Arrangers fees in the amounts and at the times agreed in a Fee Letter. 

23

 

12.4 Agency fee

The
Company shall pay to the Facility Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. 

24

  

 
 

SECTION 6
  
    ADDITIONAL PAYMENT OBLIGATIONS    
  

13.  TAX GROSS UP

13.1 Gross-up

	(a)
	All
payments by an Obligor under the Finance Documents shall be made free and clear of and without deduction for or on account of any taxes, except to the extent that the Obligor is
required by law to make payment subject to any tax, or amount in respect of tax ("applicable tax"). If any applicable tax must be deducted from any
amounts payable or paid by an Obligor, or paid or payable by the Facility Agent to a Lender, under the Finance Documents, then the relevant Obligor shall pay such additional amounts as may be
necessary to ensure that the relevant Lender receives and retains free of any liability a net amount equal to the full amount which it would have received had payment not been made subject to
applicable tax.

	(b)
	An
Obligor is not obliged to pay any additional amount under paragraph (a) above in respect of any deduction which:

	(i)
	would
not have been required if the Lender concerned had completed a declaration, claim, exemption or other form (or provided other evidence of eligibility) which it is able to
complete or provide; or

	(ii)
	has
occurred solely as a result of a change in Facility Office or other transfer by the Lender concerned and arises on the date of such change or transfer. 

13.2 Tax receipts

All
taxes required by law to be deducted or withheld by an Obligor from any amounts paid or payable under the Finance Documents shall be paid in full by the relevant Obligor when due and the Obligor
shall, within 15 days of the payment being made, deliver to the Facility Agent for the relevant Lender evidence satisfactory to that Lender (including copies of all relevant tax receipts) that
the payment has been duly remitted to the appropriate authority. 

13.3 Tax Credit

	(a)
	If
an Obligor makes a payment pursuant to Clause 13.1 (Gross-up) for the account of any Lender and such Lender has
received or been granted a credit against, or relief or remission or repayment of, any tax paid or payable by it (a "Tax Credit") which is attributable
to that payment or the corresponding payment under the Finance Document such Lender shall, to the extent that it can do so without prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to the Obligor such amount as the Lender shall have reasonably determined to be attributable to such payments and which will leave the Lender (after such payment) in no
better or worse position than it would have been if the Obligor had not been required to make any deduction or withholding.

	(b)
	Nothing
in this Clause 13.3 shall interfere with the right of a Lender to arrange its tax affairs in whatever manner it thinks fit and without limiting the foregoing no Lender
shall be under any obligation to claim a Tax Credit or to claim a Tax Credit in priority to any other claims, relief, credit or deduction available to it. No Lender shall be obliged to disclose any
information relating to its tax affairs or any computations in respect thereof. 

25

 

13.4 Stamp taxes

The
relevant Obligor shall pay and, promptly on demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other
similar Taxes payable in respect of any Finance Document. 

13.5 Value added tax

	(a)
	All
consideration payable under a Finance Document by an Obligor to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable, the relevant Obligor shall pay to
the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT.

	(b)
	Where
a Finance Document requires an Obligor to reimburse a Finance Party for any costs or expenses, that Obligor shall also at the same time pay and indemnify that Finance Party
against all VAT incurred by that Finance Party in respect of the costs or expenses save to the extent that that Finance Party is entitled to repayment or credit in respect of the VAT. 

14.  INCREASED COSTS

14.1 Increased costs

	(a)
	Subject
to Clause 14.3 (Exceptions) the relevant Obligor shall, immediately on demand by the Facility Agent, pay for the account
of a Finance Party the amount of any Increased Costs incurred by that Finance Party as a result of (i) the introduction of or any change in (or in the interpretation or application of) any law
or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

	(b)
	In
this Agreement "Increased Costs" means:

	(i)
	a
reduction in the rate of return from the Facilities or on a Finance Party's (or any of its Holding Companies') overall capital;

	(ii)
	an
additional or increased cost (including any loss, liability or cost for or on account of Tax); or

	(iii)
	a
reduction of any amount due and payable under any Finance Document, 

which
is incurred or suffered by a Finance Party or any of its Holding Companies to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing
its obligations under any Finance Document. 

14.2 Increased cost claims

	(a)
	A
Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Facility Agent of the event
giving rise to the claim, following which the Facility Agent shall promptly notify the relevant Obligor.

	(b)
	Each
Finance Party shall, together with any demand made pursuant to paragraph (a) above, provide a certificate confirming the amount of its Increased Costs with full supporting
details (which certificate shall constitute prima facie non-binding evidence of the matters to which it relates). 

26

 

14.3 Exceptions

Clause 14.1
(Increased costs) does not apply to the extent any Increased Cost is: 

	(a)
	attributable
to any Tax or amounts in respect of Tax which must be deducted from any amounts payable or paid by an Obligor or paid or payable by the Facility Agent to a Lender under
the Finance Documents or compensated for by the operation of Clause 13.1 (Gross-up);

	(b)
	compensated
for by the payment of the Mandatory Cost; or

	(c)
	attributable
to the breach by the relevant Finance Party or its Holding Companies of any law or regulation; or

	(d)
	attributable
to any Tax on the overall net income, profits or gains of a division or branch of the Lender or any of its Holding Companies imposed in the jurisdiction in which its
principal office or Facility Office is for the time being situate. 

15.  OTHER INDEMNITIES

15.1 Currency indemnity

	(a)
	If
any sum due from an Obligor under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a
Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the
"Second Currency") for the purpose of:

	(i)
	making
or filing a claim or proof against that Obligor;

	(ii)
	obtaining
or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, 

that
Obligor shall as an independent obligation, within 5 Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a
result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of
exchange available to that person at the time of its receipt of that Sum. 

	(b)
	Each
Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to
be payable. 

15.2 Other indemnities

The
Company shall (or shall procure that an Obligor will), indemnify each Finance Party within 5 Business Days of demand against any cost, loss or liability incurred by that Finance Party as a result
of: 

	(a)
	the
occurrence of any Event of Default;

	(b)
	a
failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of
Clause 28 (Sharing among the Lenders);

	(c)
	funding,
or making arrangements to fund, its participation in an Advance requested by the relevant Borrower in a Utilisation Request but not made by reason of the operation of any one
or more of the provisions of this Agreement (other than by reason of default or negligence by a Finance Party or any employee or agent of, or other person instructed by, such Finance Party); or 

27

 

	(d)
	an
Advance (or part of an Advance) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company. 

15.3 Indemnity to the Facility Agent

The
Company shall within 5 Business Days of demand indemnify the Facility Agent against any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of: 

	(a)
	investigating
any event which it reasonably believes is a Default; or

	(b)
	entering
into or performing any foreign exchange contract for the purposes of Clause 6 (Optional Currencies); or

	(c)
	acting
or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised. 

16.  MITIGATION BY THE LENDERS

16.1 Mitigation

	(a)
	Each
Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable
under, or cancelled pursuant to, any of Clause 8.1 (Illegality), Clause 13 (Tax
gross-up) or Clause 14 (Increased costs) including (but not limited to) transferring its rights and
obligations under the Finance Documents to another Affiliate or Facility Office and, in such circumstances a Lender will, at the request of the Company but subject to the Company indemnifying it for
the costs of so doing, transfer its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

	(b)
	Paragraph (a)
above does not in any way limit the obligations of any Obligor under the Finance Documents. 

16.2 Limitation of liability

	(a)
	The
Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 16.1
(Mitigation).

	(b)
	A
Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the bona fide written opinion of that
Finance Party, to do so would or would be likely to have a material adverse effect upon its business, operation or financial condition or would involve it in any unlawful activity or any activity that
is contrary to any request, guidance or directive of any competent authority (whether or not having the force of law) or (unless indemnified to its satisfaction) would involve it in any significant
expense or Tax disadvantage. 

17.  COSTS AND EXPENSES

17.1 Transaction expenses

The
Company shall within 5 Business Days of demand pay to the Facility Agent and the Mandated Lead Arrangers the amount of all out-of-pocket costs and expenses (including legal
fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of: 

	(a)
	this
Agreement and any other documents referred to in this Agreement; and

	(b)
	any
other Finance Documents executed after the date of this Agreement. 

28

 

17.2 Amendment costs

If
(a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.9 (Change of
currency), or (c) any other matter, not of an ordinary administrative nature, arises out of or in connection with a Finance Document which, in the reasonable opinion of
the Facility Agent, is attributable to an Obligor, the Company shall, within 5 Business Days of demand, reimburse the Facility Agent for the amount of all out-of-pocket costs
and expenses (including legal fees) reasonably incurred by the Facility Agent and, if applicable, the Mandated Lead Arrangers in responding to, evaluating, negotiating or complying with that request,
requirement or other matter. 

17.3 Enforcement costs

The
Company shall within 5 Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) properly incurred by that Finance Party in connection with the
enforcement of, or the preservation of any rights under, any Finance Document or in investigating any possible Default of which an Obligor or the Majority Lenders have given notice. 

29

  

 
 

SECTION 7
  
    GUARANTEE    
  

18.  GUARANTEE AND INDEMNITY

18.1 Guarantee and indemnity

The
Guarantor irrevocably and unconditionally jointly and severally: 

	(a)
	guarantees
to each Finance Party punctual performance by each Borrower of all that Borrower's obligations under the Finance Documents;

	(b)
	undertakes
with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, the Guarantor shall immediately on
demand pay that amount as if it was the principal obligor; and

	(c)
	indemnifies
each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover. 

18.2 Continuing guarantee

This
guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in
whole or in part. 

18.3 Reinstatement

If
any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced
as a result of (or must be restored on) insolvency or any similar event: 

	(a)
	the
liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred (but only to the extent that such payment, security or other
disposition is avoided or required to be restored); and

	(b)
	each
Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not
occurred. 

18.4 Waiver of defences

The
obligations of the Guarantor under this Clause 18 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its
obligations under this Clause 18 or prejudice or diminish those obligations in whole or in part (without limitation and whether or not known to it or any Finance Party) including: 

	(a)
	any
time, waiver or consent granted to, or composition with, any Obligor or other person;

	(b)
	the
release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

	(c)
	the
taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor
or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any
security; 

30

 

	(d)
	any
incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

	(e)
	any
amendment (however fundamental) or replacement of a Finance Document or any other document or security;

	(f)
	any
unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security to the intent that the Guarantor's
obligations under this Clause 18 shall remain in full force and its guarantee be construed accordingly, as if there were no unenforceability, illegality or invalidity; or

	(g)
	any
insolvency or similar proceedings. 

18.5 Immediate recourse

The
Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from
any person before claiming from the Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary. 

18.6 Appropriations

Until
all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on
its behalf) may: 

	(a)
	refrain
from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or
apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and

	(b)
	hold
in an interest-bearing suspense account any moneys received from the Guarantor or on account of the Guarantor's liability under this Clause 18. 

18.7 Deferral of Guarantor's rights

Until
all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs,
the Guarantor will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents: 

	(a)
	to
be indemnified by an Obligor;

	(b)
	to
claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents; and/or

	(c)
	to
take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or
security taken pursuant to, or in connection with, the Finance Documents by any Finance Party. 

18.8 Additional security

This
guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party. 

31

  

 
 

SECTION 8
  
    REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT    
  

19.  REPRESENTATIONS AND WARRANTIES

19.1 Representations and warranties

Each
Obligor makes the representations and warranties set out in this Clause 19 (Representations and Warranties) to each Finance Party. 

19.2 Status

	(a)
	It
is, in the case of the Company, a public limited liability company (naamloze vennootschap), duly incorporated and validly existing
under the laws of The Netherlands;

	(b)
	it
is, in the case of any Obligor other than the Company, a limited liability company, duly incorporated and validly existing under the laws of the jurisdiction of its incorporation;
and

	(c)
	it
has the power to own its assets and carry on its business as it is being conducted. 

19.3 Powers and authority

It
has the power to enter into and perform, and has taken all necessary action to authorise the entry into, performance and delivery of, the Finance Documents to which it is or will be a party and the
transactions contemplated by those Finance Documents. 

19.4 Legal validity

Each
Finance Document to which it is or will be a party constitutes, or when executed in accordance with its terms will constitute, its legal, valid and binding obligation enforceable in accordance
with its terms. 

19.5 Non-conflict

The
entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with: 

	(a)
	any
law or regulation or judicial or official order of The Netherlands or the jurisdiction of its incorporation or any other relevant jurisdiction; or

	(b)
	the
constitutional documents of any Obligor; or

	(c)
	any
document which is binding upon any Group Company or any asset of any member of the Group Company, 

(in
the case of paragraph (c) only) to an extent or in a manner which is reasonably likely to have a Material Adverse Effect. 

19.6 No default

	(a)
	No
Default is outstanding or is reasonably likely to result from the making of any Advance; and

	(b)
	no
other event is outstanding which constitutes (or, with the giving of notice, lapse of time, determination of materiality or the fulfilment of any other applicable condition or any
combination of the foregoing, is reasonably likely to constitute) a default under any document which is binding on any Group Company or any asset of any Group Company to an extent or in a manner which
is reasonably likely to have a Material Adverse Effect. 

32

 

19.7 Authorisations

All
Authorisations required in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents have been obtained or effected
(as appropriate) and are in full force and effect. 

19.8 Financial Statements

	(a)
	The
audited consolidated financial statements of the Group most recently delivered to the Facility Agent (which, at the date of this Agreement, are the Original Group Financial
Statements):

	(i)
	have
(subject to Clause 20.3 (Basis of Preparation of Financial Statements) been prepared in accordance with GAAP and using
accounting practices and financial reference periods consistent with those applied in the preparation of the Banking Base Case (and, as applicable, the Original Group Financial Statements); and

	(ii)
	fairly
represent the consolidated financial condition of the Group as at the date to which they were drawn up. 

	(b)
	There
has been no material adverse change in the consolidated financial condition of the Group since the date to which the Original Group Financial Statements were drawn up which
would be reasonably likely to have a Material Adverse Effect (other than any such material adverse change resulting from events or circumstances which are or have been in the public domain on or
before the date of this Agreement).

	(c)
	The
audited financial statements of each Obligor most recently delivered to the Facility Agent:

	(i)
	have
been prepared in accordance with accounting principles and practices generally accepted in the jurisdiction of its incorporation consistently applied; and

	(ii)
	fairly
represent its financial condition as at the date to which they were drawn up. 

	(d)
	There
has been no material adverse change in the business, assets or financial condition of each Obligor since the date to which its audited financial statements most recently
delivered to the Facility Agent were drawn up which would be reasonably likely to have a Material Adverse Effect. 

19.9 Litigation

No
litigation, arbitration or administrative proceedings in relation to any Group Company are current or, to its knowledge, pending or threatened, which would, in the opinion of the members of the
board of management (raad van bestuur) of the Company, have a Material Adverse Effect. 

19.10 Insolvency

No
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 23.9 (Insolvency proceedings) or
creditors' process described in Clause 23.10 (Creditors' process) has been taken or, to the knowledge of the Company, threatened in relation to
any Principal Subsidiary. None of the circumstances described in Clause 23.7 (Insolvency) applies to any Principal Subsidiary. 

33

 

19.11 Information

The
factual written information (other than that obtained from public sources) in relation to this Agreement and the Facility provided by the Company is correct in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements or the information contained therein not misleading in the light of the circumstances
under which they were made and all projections supplied by any member of the Group and included in the Banking Base Case were made in good faith and based on opinions and assumptions considered to be
reasonable at the time of supply. 

19.12 No Material Adverse Change

No
event or series of events (including, without limitation, any relating to an Obligor or any Principal Subsidiary) has occurred which is likely to have a Material Adverse Effect. 

19.13 Times for making representations and warranties

The
representations and warranties set out in this Clause 19: 

	(a)
	other
than in the case of Clauses 19.6 (No default), 19.8(b) and (d) (Financial
Statements), 19.10 (Insolvency) (in the case of the Company only) and 19.11
(Information):

	(i)
	in
the case of the Company, are made by the Company on the date of this Agreement and on the date each Accession Letter is executed; and

	(ii)
	in
the case of an Additional Borrower, will be deemed to be made by that Additional Borrower on the date it executes an Accession Letter; 

	(b)
	are,
other than in the case of Clauses 19.6 (No Default), 19.8(b) and 19.8(d) (Financial
Statements), 19.10 (Insolvency) and 19.11 (Information), deemed to be repeated
by each Borrower on:

	(i)
	the
date of each Utilisation Request; and

	(ii)
	the
first day of each Interest Period; and 

	(c)
	in
the case of Clauses 19.6 (No default), 19.8(b) and (d) (Financial
Statements), 19.10 (Insolvency) and 19.11 (Information), are made by the Company
on the date of this Agreement;

	(d)
	in
the case of Clause 19.8(d) (Financial Statements), are made by each Obligor (other than the Company) (in relation only to
itself) on the date it executes an Accession Letter; and

	(e)
	are
made by the Company (in respect of Clause 19.8(a) (Financial Statements)) and each Obligor (in respect of
Clause 19.8(c) (Financial Statements)) on the date upon which the financial statements referred to therein are delivered pursuant to
Clause 20.1 (Financial Information), 

in
each case with reference to the facts and circumstances then existing. 

19.14 Acknowledgement of the Parties

It
is acknowledged by each Party that, as at the date of this Agreement, the Fixed Line Business is provided by the Fixed Telephony Services Business Unit (Business Unit Vaste
Telefonie) and Carrier Services Business Unit (Business Unit Carrier Services) of KPN Telecom. 

34

 

20.  INFORMATION UNDERTAKINGS

The
undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is or may become outstanding under the Finance Documents or any Commitment is in
force. 

20.1 Financial Information

The
Company shall supply to the Facility Agent in sufficient copies for all the Lenders: 

	(a)
	as
soon as the same are available (and in any event within 120 days of the end of each of its financial years):

	(i)
	the
audited consolidated financial statements of the Group for that financial year; and

	(ii)
	the
audited financial statements of each Obligor for that financial year; 

	(b)
	

	(i)
	as
soon as the same are available (and in any event within 90 days of the end of the first half year of each financial year) its consolidated interim report and accounts for
that financial period and its interim report and accounts for that financial period; and

	(ii)
	to
the extent that the Company prepares them, as soon as the same are available (and in any event within 75 days of the end of each of the first three financial quarters of
each of its financial years) its consolidated interim report and accounts for that financial quarter and its interim report and accounts for that financial quarter; and 

	(c)
	together
with the consolidated financial statements specified in paragraphs (a) and (b) above, a certificate signed by one of its Executive Officers on its behalf
certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it. 

20.2 Compliance Certificates

	(a)
	The
Company shall supply a Compliance Certificate to the Facility Agent with each set of its audited consolidated annual financial statements and each set of its quarterly
consolidated interim report and accounts.

	(b)
	The
Compliance Certificate shall:

	(i)
	set
out (in reasonable detail) computations as to compliance with Clause 22.2 (Financial Covenants) as at the date as at which
those financial statements were drawn up and shall include a statement setting out the relevant figures for the KPN Qwest Group necessary to exclude the results of the KPN Qwest Group from the
financial definitions contained in Clause 22.1 (Financial Definitions) (including allowing for consolidation effects and the effects of
translating KPN Qwest's results from US GAAP to GAAP);

	(ii)
	confirm
which Subsidiaries are Principal Subsidiaries;

	(iii)
	the
amount of the Total Assets of the Group; and

	(iv)
	confirm
no Default has occurred and is continuing or, if a Default has occurred, what Default has occurred and the steps being taken to remedy that Default. 

	(c)
	Each
Compliance Certificate shall be signed by one Executive Officer and one senior officer of the Company and, if delivered with the consolidated annual financial statements of the
Company, be accompanied by a confirmation from the Company's auditors that numbers have been properly extracted and calculations properly made. 

35

 

20.3 Basis of Preparation of Financial Statements

	(a)
	The
Company shall procure that:

	(1)
	each
set of its financial statements and those of the Group are prepared using GAAP (in the case of annual financial statements) or in a manner consistent with GAAP (in the case of
other financial statements, reports and accounts), accounting principles and practices and financial reference periods consistent with those applied in the preparation of the Banking Base Case and the
Original Group Financial Statements; and

	(2)
	each
set of financial statements of any other Obligor are prepared in accordance with accounting principles and practices generally accepted in the jurisdiction of its incorporation
consistently applied, 

unless,
in relation to any set of such financial statements, the Company notifies the Facility Agent that there has been a change in GAAP, or the accounting principles or practices or reference
periods and its auditors (or, if appropriate, the auditors of the Obligor) deliver to the Facility Agent: 

	(i)
	a
description of any change necessary for those financial statements to reflect GAAP, accounting principles or practices and reference periods upon which the Banking Base Case and the
Original Group Financial Statements were prepared; and

	(ii)
	sufficient
information, in form and substance as may be reasonably required by the Facility Agent, to enable the Lenders to determine whether Clause 22.2
(Financial Covenants) has been complied with and to make an accurate comparison between the financial position indicated in those financial statements
and the Banking Base Case and the Original Group Financial Statements. 

	(b)
	If
the Company notifies the Facility Agent of a change in accordance with paragraph (a) above then the Company and Facility Agent (acting on the Majority Lenders' instructions)
shall, at the request of the Facility Agent, enter into negotiations in good faith with a view to agreeing:

	(i)
	whether
or not the change will result in any material alteration in the commercial effect of any of the terms of this Agreement; and

	(ii)
	if
so, any amendments to this Agreement which may be necessary to ensure that the change does not result in any material alteration in the commercial effect of those terms, 

and
if any amendments are agreed they shall take effect and be binding on each of the Parties in accordance with their terms. 

	(c)
	If
no agreement is reached within 30 days of the Facility Agent's request under paragraph (b) above, then the Company shall continue to prepare financial statements and
make the calculations required for the purposes of testing the financial covenants contained in Clause 22.2 (Financial Covenants) as if no such
change had occurred. 

20.4 Information—Miscellaneous

The
Company shall supply to the Facility Agent: 

	(a)
	all
documents (excluding documents despatched only to another member of the Group) despatched by the Company to its shareholders (or any class of them) or any stock exchange (except
to the extent that such documents are confidential as between the Company and such stock exchange) or all its bank lenders generally, holders of its debt securities generally, its trade creditors
generally or its creditors generally at the same time as they are despatched; 

36

 

	(b)
	promptly
upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending, and which would, if adversely
determined, have a Material Adverse Effect; and

	(c)
	promptly,
such further information in the possession or control of any Group Company regarding its financial condition as any Finance Party through the Facility Agent may reasonably
request and which is material in the context of this Agreement, 

in
sufficient copies for all of the Lenders, if the Facility Agent so requests. 

21.  GENERAL UNDERTAKINGS

The
undertakings in this Clause 21 will remain in force from the date of this Agreement for so long as any amount is or may be outstanding under the Finance Documents or any Commitment is in
force. 

21.1 Notification of Default

The
Company shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of it. 

21.2 Authorisations

Each
Obligor shall promptly: 

	(a)
	obtain,
maintain and comply with the terms of; and

	(b)
	if
requested, supply certified copies to the Facility Agent of, 

any
Authorisation required under any law or regulation to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document. 

21.3 Pari passu ranking

Each
Obligor shall procure that its obligations under the Finance Documents do and will rank at least pari passu with all its other present and future
unsecured, unsubordinated obligations, except for obligations which from time to time are mandatorily preferred by law applying to companies generally. 

21.4 Negative pledge

	(a)
	Each
Obligor shall not, and the Company shall procure that no Group Company will, create or permit to subsist any Security over all or any of its assets.

	(b)
	Paragraph (a)
does not apply to:

	(i)
	any
Security created or subsisting with the prior written consent of the Majority Lenders;

	(ii)
	any
lien or rights of set-off arising by operation of law or in the ordinary course of business;

	(iii)
	any
Security over any assets of a Group Company existing at the time that company becomes a Group Company provided that:

	(A)
	the
company is not a Group Company at the date of this Agreement;

	(B)
	the
Security is not created in contemplation of that company becoming a Group Company; 

37

 

	(C)
	the
Security remains confined to the asset(s) it covered at the date the company became a Group Company; and

	(D)
	to
the extent that the amount secured has been increased, such Security shall not fall within this sub-paragraph (iii); 

	(iv)
	any
Security from (or (a) over the shares (or other right of ownership) in or (b) Borrowings from Group Companies of) any member of the E-Plus Group
securing a Borrowing permitted by Clause 21.7(a) (Subsidiary Borrowings);

	(v)
	any
Security arising pursuant to a Cash-backed Borrowing;

	(vi)
	any
Security referred to in paragraph (a)(ii) of the definition of "Project Borrowing" in Clause 1.1
(Definitions) or any Security over the assets of a Project Borrower created by such Project Borrower;

	(vii)
	any
netting or set-off arrangement entered into by any Group Company in the ordinary course of its banking arrangements for the purpose of netting debit and credit
balances;

	(viii)
	any
Security over or affecting any asset acquired by a Group Company after the date of this Agreement provided that:

	(A)
	the
Security existed at the time such acquisition was made and was not created in contemplation of the acquisition of that asset by a Group Company;

	(B)
	the
Security remains confined to those assets subject to such acquisition; and

	(C)
	to
the extent that the principal amount secured since the acquisition of that asset by a Group Company has been increased, such Security shall not fall within this
sub-paragraph (viii); 

	(ix)
	any
title transfer, conditional sale or retention of title arrangement entered into by any Group Company in the ordinary course of business;

	(x)
	any
Security (a "substitute Security") which replaces any other Security permitted under sub-paragraphs (iii) and
(iv) above (an "existing Security") to the extent that the Security secures an amount not exceeding the principal amount secured by such existing
Security at the time it is replaced provided that (1) the existing Security to be replaced is released and all amounts secured thereby are paid
or otherwise discharged in full at or prior to the time of such substitute Security being created or arising and (2) such substitute Security does not extend to cover assets not previously
subject to that existing Security; and

	(xi)
	any
other Security securing Borrowings created or outstanding by any member of the Group other than the Company, but only if the aggregate Borrowings secured by all Security created
or outstanding under this exception on or over any assets of the Obligors and each Principal Subsidiary does not at any time exceed five per cent. (5%) of the Total Assets of the Group at that time. 

	(c)
	The
Company shall supply to the Facility Agent, within 5 Business Days of a request by the Facility Agent, a certificate signed by an Executive Officer certifying:

	(i)
	the
amount of the aggregate Borrowings secured by all Security falling within Paragraph (b)(xi) above; and

	(ii)
	the
amount of the Total Assets of the Group, 

as
at the date of the Facility Agent's request. 

38

 

21.5 Disposals

	(a)
	No
Obligor shall, and the Company shall procure that no other Group Company shall, either in a single transaction or in a series of transactions, whether related or not and whether
voluntarily or involuntarily, sell, transfer, grant or lease or otherwise dispose of any of its assets.

	(b)
	Subject
to paragraph (c) below, paragraph (a) does not apply to:

	(i)
	a
disposal on arm's length terms and for fair market value;

	(ii)
	a
disposal of obsolete or waste assets which are not required for the efficient operation of the business of the Group Company making such disposal;

	(iii)
	disposals
of assets in exchange for other assets comparable or superior as to type, value and quality;

	(iv)
	a
disposal made in the ordinary course of business of the disposing entity;

	(v)
	any
disposal or series of related disposals by Group Companies realising Net Disposal Proceeds of euro 50,000,000 or less or its equivalent in any other currency
(provided that the aggregate Net Disposal Proceeds of all disposals permitted under this paragraph (b)(v) shall not exceed euro
250,000,000);

	(vi)
	payments
of dividends which are not restricted by the terms of this Agreement; or

	(vii)
	any
disposal:

	(1)
	between
two or more members of the E-Plus Group; or

	(2)
	between
two or more other Group Companies which are not members of the E-Plus Group; 

	(viii)
	disposals
with the prior written consent of the Majority Lenders. 

	(c)
	Any
disposal otherwise permitted by paragraph (b) above:

	(i)
	may
not be made between any member of the E-Plus Group and any other member of the Group which is not a member of the E-Plus Group other than:

	(1)
	in
the case of any disposal described in paragraphs b(ii), (iii), (iv) and (vi) above, between any member of the E-Plus Group and any Group Company (other
than a member of the KPN Telecom Group); or

	(2)
	in
the ordinary course of trading. 

	(ii)
	may
not be made between any Group Company and any member of the KPN Telecom Group if such disposal is of an asset previously acquired by that Group Company from a member of the
E-Plus Group and the disposal of such asset directly by a member of the E-Plus Group to the relevant member of the KPN Telecom Group would have been prohibited by
sub-paragraph (i) above;

	(iii)
	may
not be made by any member of the KPN Telecom Group of any business unit or discrete business forming part of the Fixed Line Business other than:

	(1)
	a
disposal to another member of the KPN Telecom Group; or

	(2)
	to
a Subsidiary of KPN Telecom which, immediately upon such disposal becoming effective, automatically becomes a member of the KPN Telecom Group. 

39

 

21.6 Merger

	(a)
	The
Company shall not enter into any statutory merger (juridische fusie) without the prior written consent of the Majority Lenders.

	(b)
	Save
as otherwise permitted by the terms of this Agreement, the Company shall procure that no Principal Subsidiary nor the Group as a whole will enter into any amalgamation, demerger,
merger, corporate reconstruction or reorganisation which would have a Material Adverse Effect. 

21.7 Subsidiary Borrowings

Save
as otherwise permitted by the terms of this Agreement, no Group Company (other than the Company), will incur or have outstanding any Borrowings other than: 

	(a)
	Borrowings
of any member of the E-Plus Group which are not directly or indirectly the subject of a guarantee from any Group Company, except:

	(i)
	upstream
guarantees given by wholly owned Subsidiaries of E-Plus (or by E-Plus Service GmbH); or

	(ii)
	Security
over (1) the shares or other rights of ownership in any member of the E-Plus Group thereof; or (2) Borrowings of any member of the
E-Plus Group; 

	(b)
	any
Borrowings, provided that an amount (net of taxes, fees, costs and expenses) equal to the principal amount of such Borrowing is
promptly applied in or towards cancellation of the Facility (and in or towards prepayment of Advances to the extent that the Total Outstandings would otherwise exceed the Total Commitments);

	(c)
	Borrowings
(other than by any member of the KPN Telecom Group) which constitute a Project Borrowing provided that the aggregate
principal amount of Project Borrowings shall not exceed euro 300,000,000 at any time;

	(d)
	Borrowings
created with the prior written consent of the Majority Lenders;

	(e)
	Borrowings
under this Agreement;

	(f)
	Borrowings
by any Group Company (other than any member of the KPN Telecom Group) pursuant to any Securitisation Transaction provided
that the aggregate principal amount of such Borrowings does not, when aggregated with the amount of Borrowings incurred under paragraph (g)(2) below, exceed euro
500,000,000 (or its equivalent in other currencies) at any time;

	(g)
	Borrowings
by any member of the KPN Telecom Group either:

	(1)
	in
existence as at the date of this Agreement (other than any Securitisation Transaction);

	(2)
	pursuant
to any Securitisation Transaction provided that the aggregate principal amount of such Borrowings does not, when aggregated
with the amount of Borrowings incurred under paragraph (f) above, exceed euro 500,000,000 (or its equivalent in other currencies) at any time; or

	(3)
	from
the Company; 

	(h)
	Subject
to Clause 21.12 (Loans and Guarantees) Borrowings owed to another Group Company (other than Borrowings owed by a member
of the KPN Telecom Group to any Subsidiary of the Company which is not a member of the KPN Telecom Group);

	(i)
	Cash-backed
Borrowings; 

40

 

	(j)
	Borrowings
under cash pooling arrangements in the Group's ordinary banking arrangements, to the extent matched by cash balances held by members of the Group which are treated as
available for netting against those Borrowings; and

	(k)
	any
other Borrowings, by any Group Company (other than by any member of the KPN Telecom Group) provided that the aggregate principal
amount of such Borrowings does not exceed euro 300,000,000 (or its equivalent in other currencies) at any time. 

21.8 Change of business

The
Company shall procure that no substantial change is made to the general nature of the business of the Group taken as a whole or the KPN Telecom Group taken as a whole from that carried on at the
date of this Agreement. 

21.9 Ownership of KPN Mobile and each Additional Borrower

	(a)
	Subject
to paragraph (b), the Company will procure that KPN Mobile and (for as long as it is a Borrower) each Additional Borrower remain its Subsidiaries.

	(b)
	Paragraph (a)
will not apply to KPN Mobile if it ceases to be a Subsidiary of the Company in circumstances where the Company, promptly upon becoming aware of the same, notifies
the Facility Agent and the Majority Lenders give their approval to KPN Mobile ceasing to be a Subsidiary of the Company within 30 days of such notification. 

21.10 Notification of Credit Ratings

The
Company shall: 

	(a)
	upon
any change to its Credit Rating, promptly notify the Facility Agent of the revised Credit Rating; and

	(b)
	promptly
notify the Facility Agent if at any time the Company does not, for whatever reason, have a Credit Rating. 

21.11 KPN Telecom

The
Company shall procure that: 

	(a)
	KPN
Telecom will remain a 100 per cent. wholly owned direct subsidiary of the Company and any other Group Company that owns any part of the Fixed Line Business will remain a 100 per
cent. wholly owned direct or indirect subsidiary of the Company; and

	(b)
	the
Fixed Line Business is, at all times, owned by members of the KPN Telecom Group. 

21.12 Loans and Guarantees

	(a)
	Save
for Permitted Loans and Permitted Guarantees, no Obligor shall, and the Company shall procure that no Group Company shall make any loans to any Restricted Entity or give any
guarantee in respect of Borrowings of any Restricted Entity.

	(b)
	In
this Clause 21.12, "Restricted Entity" means any person which (i) is not a Group Company, or (ii) is a member
of the E-Plus Group. 

41

 

21.13 Share Capital Redemption and Other Capital Distributions

The
Company shall not, prior to the Termination Date redeem or repurchase, purchase, defease or retire any shares or make any capital repayments in respect of any of its shares, other than: 

	(a)
	share
purchases to cover share options of employees of the Group provided that the aggregate number of shares so purchased shall not
exceed 5% of the issued share capital of the Company at any time;

	(b)
	in
respect of any Specified Preference Shares for an amount not exceeding that received by the Company in respect of such shares when originally issued; or

	(c)
	in
respect of any Permitted Convertible Preference Shares or other shares of the Company which are converted into ordinary shares of the Company. 

21.14Prepayments

	(a)
	Subject
to paragraphs (b) and (c) below, no Obligor shall and the Company shall procure that no Group Company shall prepay, make any market purchase, defease or acquire
any economic interest or exposure in or be reference to any Public Debt of the Company or any Group Company, which are scheduled to mature after the Termination Date.

	(b)
	The
Company can prepay any Public Debt subject to the following conditions:

	(i)
	such
prepayment is funded by other Public Debt maturing after 2006 or the proceeds of any Equity Issue made after the date of this Agreement by a Group Company; or

	(ii)
	such
prepayment is of Public Debt scheduled to mature in 2005 and does not exceed, in aggregate, euro 900,000,000, 

provided,
however, that the Facility is not used for such prepayment. 

	(c)
	If
any prepayment referred to in paragraph (b) above is of the euro 1,500,000,000 subordinated convertible bonds maturing in 2005, such prepayment shall be subject to the
further conditions that:

	(i)
	at
the time of such prepayment, the Company has a Credit Rating (with a stable outlook) of at least BBB- with S&P and Baa3 with Moody's; and

	(ii)
	the
Facility Agent has received from S&P and Moody's confirmation that, after taking into account the proposed prepayment, there will be no announced deterioration in the Company's
Credit Rating or credit outlook. 

	(d)
	The
term "Equity Issue" used in this Clause means the issue by any Group Company of any shares, warrants or any other equity
investments, howsoever called, in order to raise funds in the national or international public equity market (and which is not treated as "Borrowings" in the definition thereof contained in
Clause 1.1 (Definitions). 

21.15 Acquisitions

	(a)
	No
Obligor shall, and the Company shall procure that no Group Company, shall acquire a company (or acquire an interest in) shares or other equity interests or a business or
undertaking unless:

	(i)
	the
acquisition is made by one Group Company from another (and the corresponding disposal or, as the case may be, equity issue is permitted under the terms of this Agreement or is the
acquisition of, or subscription for, a new issue of equity); or 

42

 

	(ii)
	the
cash element of the consideration paid for such acquisition, when aggregated with the cash element of all other such acquisitions made in the Relevant Period in which such cash
consideration is paid, does not exceed euro 150,000,000. For the purposes of this sub-paragraph (b), "Relevant Period" means the
period starting on the date of this Agreement and ending on 30 September 2002 and thereafter, each annual period ending on 30 September in any year. 

	(b)
	Paragraph (a)
does not apply at any time when the Company has a Credit Rating of at least BBB with S&P and Baa2 with Moody's (in each case with stable outlook). 

21.16 Arm's Length Basis

The
Company shall not, and shall procure that none of its Subsidiaries shall, enter into any arrangement or contract with any Group Company which is not a wholly-owned subsidiary of the Company save
where: 

	(a)
	such
arrangement or contract is entered into on an arm's length basis and on normal commercial terms; or

	(b)
	such
arrangement or contract would not have a Material Adverse Effect. 

21.17 BellSouth Subordinated Loan Agreement

The
Company shall procure that no amendment or variation is made to any of the provisions as to subordination contained in the BellSouth Subordinated Loan Agreement as described in the certificate
signed by 2 senior officers of the Company and circulated to the Mandated Lead Arrangers prior to the date hereof. 

21.18 No Subordination

No
Obligor shall agree to subordinate any loan to any other Group Company to the claims of any other person against such Group Company other than with respect to any loan made by an Obligor to
E-Plus which is permitted under this Agreement. 

22.  FINANCIAL COVENANTS

22.1 Financial Definitions

	(a)
	In
this Agreement: 

"Cash" means: 

	(i)
	cash
in hand, demand deposits, short term deposits for periods up to 180 days and similar money market instruments;

	(ii)
	securities
issued or guaranteed by the United States government or the government of any member of the European Union;

	(iii)
	

	(1)
	marketable
securities rated at least A1 by Moody's or A by S&P (taken at their market value as at the time for calculation); and

	(2)
	(commercial
paper rated at least A1 by S&P or P1 by Moody's; 

the
face amounts of certificates of deposit issued by a bank or other regulated financial institution; and 

	(iv)
	any
other instrument, security or investment approved in writing by the Majority Lenders, 

43

 

in
each case, to the extent denominated in any freely convertible and transferable currencies and beneficially owned by a Group Company. 

"EBITDA" for any period means the results of the Group (or, for the purposes of the definition of "Principal Subsidiary", the relevant Subsidiary) for
that period: 

	(i)
	before
taking into account all extraordinary items (whether positive or negative) and before taking into account all exceptional items (whether positive or negative);

	(ii)
	before
deducting tax in any relevant jurisdiction;

	(iii)
	before
deducting amortisation of any goodwill and any costs incurred in relation to acquisitions (including licences acquired) (to the extent that these are expensed);

	(iv)
	before
taking into account Interest accrued during that period, whether or not paid, deferred or capitalised (before taking into account financing costs) during that period;

	(v)
	before
taking into account amortisation of financing costs during that period;

	(vi)
	after
deducting any gain, and adding back any loss, relative to book value arising on the sale, lease or other disposal of any asset during that period and after deducting any gain,
and adding back any loss, arising on revaluation of any asset during that period, in each case to the extent that it would otherwise be taken into account;

	(vii)
	before
taking into account any provision against liabilities to be incurred in a future period to the extent that the same would otherwise be taken into account;

	(viii)
	before
deducting depreciation; and

	(ix)
	after
taking into account any dividends or capital distributions received from any associate interests or joint venture interests of a Group Company, 

and,
for the purposes of this definition, "extraordinary items" mean material items possessing a high degree of abnormality which arise from events or transactions that fall outside the ordinary
activities of the reporting entity and which are not expected to recur, and "exceptional items" mean material items which derive from events or transactions that fall within the ordinary activities of
the reporting entity and which individually or, if of a similar type, in aggregate, need to be disclosed by virtue of their size and incidence if the financial statements are to fairly represent the
consolidated financial condition of the Group. 

"Financial Test Date" means each of 30 June and 31 December. 

"Interest" means interest and amounts in the nature of interest (including interest payable under or in respect of any subordinated debt and dividends
payable in respect of any Permitted Convertible Preference Shares), commission, fees, discounts and similar payments and interest elements of leasing and hire purchase payments. 

"Net Interest Expense" for any period means the Interest that has accrued during that period as an obligation of any Group Company (whether or not paid
or capitalised during or deferred for payment after such period), but adjusted to take account of: 

	(i)
	any
amount receivable or payable during that period by any Group Company (after deducting all taxes applicable to that Interest receivable) under interest rate or currency hedging
agreements or instruments; and

	(ii)
	any
amount constituting Interest receivable during that period by any Group Company (after deducting all taxes applicable thereto) in respect of any investment, deposit or loan. 

44

 

"Relevant Period" means (notwithstanding that such period commenced prior to the date hereof) each period of twelve months ending on the last day of
each Financial Test Date. 

"Total Consolidated Net Borrowings" on any date means the aggregate principal amount for each Group Company (on a consolidated basis and without double
counting) of Borrowings (excluding any amount falling within paragraph (e) of the definition thereof and including any amount falling within paragraph (f) of the definition thereof),
less the aggregate (on a consolidated basis and without double counting): 

	(a)
	Cash;
and

	(b)
	Cash-backed
Borrowings (to the extent that these constitute Borrowings and the cash balances in relation thereto do not qualify as Cash),

	(c)
	of
Group Companies on that date. 

	(b)
	All
the terms defined in paragraph (a) above will be determined in accordance with the accounting principles applied in the Original Group Financial Statements and will be and
are to be computed from the applicable consolidated financial statements or consolidated interim report and accounts of the Group delivered pursuant to Clause 20.1
(Financial Information). For the purposes of this Clause 22 no item shall be deducted or credited more than once in any calculation. 

22.2 Financial Covenants

	(a)
	Each
Obligor will procure that:

	(i)
	the
ratio of EBITDA for the Group to Net Interest Expense, in each case for each Relevant Period ending on a Financial Test Date set out below is equal to or in excess of the ratio
set opposite such date: 

	 
	 	Financial Test Date
	 	Ratio

	 	 	30 June 2002	 	2.75
	 	 	31 December 2002	 	3.00
	 	 	30 June 2003	 	3.50
	 	 	31 December 2003	 	3.50
	 	 	30 June 2004	 	4.00

provided that, following any disposal of a (or any interest in a) business, company or other entity or asset which contributes to EBITDA for the
Group, the level of EBITDA for the Group for each period following such disposal shall be reduced by the amount certified by an Executive Officer to the Facility Agent as the forecast (in good faith
and on the basis of assumptions considered reasonable on the date of the certification) contribution of the assets disposed of to EBITDA for those periods; 

	(ii)
	the
ratio of Total Consolidated Net Borrowings on each of the Financial Test Dates to EBITDA for the Group for the Relevant Period ending on the relevant Financial Test Date shall
not exceed the ratio set opposite such date: 

	 
	 	Financial Test Date
	 	Ratio

	 	 	30 June 2002	 	4.75
	 	 	31 December 2002	 	4.50
	 	 	30 June 2003	 	4.25
	 	 	31 December 2003	 	3.75
	 	 	30 June 2004	 	3.50

45

 

	(b)
	The
financial covenants referred to in paragraphs (a)(i) and (ii) above shall be tested on 30 June and again on 31 December, in each case for the immediately preceding
twelve month period.

	(c)
	For
the purposes of determining compliance with the financial covenants in paragraph (a) above, Total Consolidated Net Borrowings, Net Interest Expense and EBITDA of the KPN
Qwest Group that are consolidated in the accounts of the Company shall, to the extent included in such accounts, be excluded. 

23.  EVENTS OF DEFAULT

23.1 Events of Default

Each
of the events set out in Clauses 23.2 (Non-payment) to 23.14 (Material adverse change)
(inclusive) is an Event of Default. 

23.2 Non-payment

An
Obligor does not pay on the due date any amount payable by it under the Finance Documents at the place at and in the currency in which it is expressed to be payable and (if caused by technical or
administrative error) the default is not remedied within 3 Business Days of notice to the Company by the Facility Agent advising that the payment has not been made. 

23.3 Breach of Financial Covenants

An
Obligor does not comply with any provision of Clause 22.2 (Financial Covenants). 

23.4 Breach of other obligations

An
Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 23.2 (Non-Payment) and
Clause 23.3 (Breach of Financial Covenants)) and such failure (if capable of remedy before the expiry of such period) continues unremedied for a
period of 30 days from the date on which the Facility Agent gives notice to the Company requiring the same to be remedied. 

23.5 Misrepresentation

A
representation, warranty or statement made or repeated by an Obligor in or in connection with any Finance Document or in any document delivered by or on behalf of an Obligor under or in connection
with any Finance Document is incorrect in any material respect when made or deemed to be made or repeated. 

23.6 Cross-default

	(a)
	Any
Borrowings of any Group Company are not paid when due or within any applicable grace period provided in the documentation therefor; or

	(b)
	any
Borrowings of any Group Company become (i) prematurely due and payable or (ii) capable of being declared prematurely due and payable, in each case as a result of an
event of default (howsoever described) under the document relating to those Borrowings; or

	(c)
	any
commitment for any Borrowings of any Group Company is cancelled as a result of an event of default (howsoever described) under the document relating to those Borrowings; or 

46

 

	(d)
	any
Security securing Borrowings over any asset of any Group Company becomes enforceable and the holder thereof shall commence proceedings or appoint a receiver, manager or similar
officer to take steps to enforce the same, 

except
that this Clause 23.6 shall not apply to Borrowings of Group Companies the principal or settlement amounts of which are in aggregate euro 25,000,000 or less. 

23.7 Insolvency

	(a)
	Any
Obligor or Principal Subsidiary is, or is deemed for the purposes of any law to be, unable to pay its debts or admits inability to pay its debts as they fall due;

	(b)
	Any
Obligor or Principal Subsidiary suspends making payments on all or any class of its debts or announces an intention to do so, or a moratorium is declared in respect of any of its
indebtedness; or

	(c)
	Any
Obligor or Principal Subsidiary by reason of financial difficulties, begins negotiations with one or more of its creditors with a view to the readjustment or rescheduling of any
of its indebtedness. 

23.8 Compositions etc

Any
Obligor or Principal Subsidiary enters into any composition, scheme of arrangement, compromise or arrangement involving such Obligor or Principal Subsidiary and their respective creditors
generally (other than for the purposes of reconstruction or amalgamation upon terms and within such period as may previously have been approved in writing by the Majority Lenders). 

23.9 Insolvency proceedings

	(a)
	Any
Obligor or Principal Subsidiary is adjudicated bankrupt (failliet) or insolvent or obtains a suspension of payments
(surseance van betaling) or consents to the filing of a bankruptcy proceeding against it or files a petition seeking reorganisation under any bankruptcy
or other similar law or a receiver, administrator (bewindvoerder), liquidator (curator), trustee or
assignee in bankruptcy or insolvency of it or of all or a material part of its assets is appointed; or

	(b)
	bankruptcy
or insolvency proceedings are instituted against any Obligor or Principal Subsidiary which are not dismissed or stayed within 30 days of being instituted; or

	(c)
	an
order is made by any competent court, an effective resolution is passed, any Obligor or Principal Subsidiary applies, or any other person makes an uncontested application, for the
dissolution, winding-up or liquidation of any Obligor or Principal Subsidiary (including "ontbinding" and
"vereffening") except for the purposes of an amalgamation, merger or consolidation of any Obligor or Principal Subsidiary with any other legal entity
upon terms and within such period as may previously have been approved in writing by the Majority Lenders. 

23.10 Creditors' process

Any
attachment, sequestration, distress or execution affects the whole or a substantial part of the assets of any Obligor or Principal Subsidiary and is not discharged within 28 days. 

47

 

23.11 Analogous proceedings

There
occurs, in relation to any Obligor or Principal Subsidiary incorporated outside The Netherlands, any event anywhere which, in the opinion of the Majority Banks, appears to correspond with any of
those mentioned in Clauses 23.7 (Insolvency) to 23.10 (Creditors' process) (inclusive). 

23.12 Unlawfulness

It
is or becomes unlawful for any Obligor to perform any of its obligations under the Finance Documents. 

23.13 Repudiation

The
guarantee contained in Clause 18 (Guarantee and Indemnity) ceases to be in full force and effect or is repudiated by the Company or any other
Guarantor. 

23.14 Material adverse change

Any
event or series of events (including, without limitation, any relating to an Obligor or any Principal Subsidiary) occurs which is likely to have a Material Adverse Effect. 

23.15 Dividends and other distributions

	(a)
	The
Company pays, makes or declares any cash dividend or other cash distribution in respect of any of its financial years except for:

	(i)
	dividends
of up to euro 25,000,000 in aggregate in any financial year of the Company in respect of Specified Preference Shares pursuant to Article 35 of the articles of
association of the Company as at the date of this Agreement; or

	(ii)
	any
dividend payable on Permitted Convertible Preference Shares. 

	(b)
	Paragraph (a)
does not apply at any time when the Company has a Credit Rating of at least BBB with S&P and Baa2 with Moody's (in each case with stable outlook). 

23.16 Acceleration

On
and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Company: 

	(a)
	cancel
the Total Commitments whereupon they shall immediately be cancelled;

	(b)
	declare
that all or part of the Advances, together with accrued interest, and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they
shall become immediately due and payable; and/or

	(c)
	declare
that all or part of the Advances be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent on the instructions of the Majority
Lenders. 

48

  

 
 

SECTION 9
  
    CHANGES TO PARTIES    
  

24.  CHANGES TO THE LENDERS

24.1 Assignments and transfers by the Lenders

Subject
to this Clause 24, a Lender (the "Existing Lender") may: 

	(i)
	assign
any of its rights; or

	(ii)
	transfer
by novation any of its rights and obligations, 

to
any bank or financial institution (the "New Lender"). 

24.2 Conditions of assignment or transfer

	(a)
	An
assignment will only be effective on receipt by the Facility Agent and the Company of written confirmation from the New Lender (in form and substance satisfactory to the Facility
Agent) that the New Lender will assume the same obligations to the other Finance Parties and the Obligors as it would have been under if it was an Original Lender.

	(b)
	A
transfer will only be effective if it is carried out in accordance with the procedure set out in Clause 24.5 (Procedure for
transfer).

	(c)
	If:

	(i)
	a
Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

	(ii)
	as
a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through
its new Facility Office under Clause 13 (Tax gross-up) or Clause 14 (Increased
costs), 

then
the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its
previous Facility Office would have been if the assignment, transfer or change had not occurred. 

24.3 Assignment or transfer fee

The
New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of euro 2,000. 

24.4 Limitation of responsibility of Existing Lenders

	(a)
	Unless
expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

	(i)
	the
legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

	(ii)
	the
financial condition of any Obligor;

	(iii)
	the
performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

	(iv)
	the
accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document, 

50

 

and
any representations or warranties implied by law are excluded. 

	(b)
	Each
New Lender confirms to the Existing Lender and the other Finance Parties that it:

	(i)
	has
made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection
with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

	(ii)
	will
continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance
Documents or any Commitment is in force. 

	(c)
	Nothing
in any Finance Document obliges an Existing Lender to:

	(i)
	accept
a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or

	(ii)
	support
any losses directly or indirectly incurred by the New Lender by reason of the non-performance by each Obligor of its obligations under the Finance Documents or
otherwise. 

24.5 Procedure for transfer

	(a)
	Subject
to the conditions set out in Clause 24.2 (Conditions of assignment or transfer) a transfer is effected in accordance
with paragraph (b) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall,
as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the
terms of this Agreement, execute that Transfer Certificate.

	(b)
	On
the Transfer Date:

	(i)
	to
the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the
Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another shall be cancelled (being the
"Discharged Rights and Obligations");

	(ii)
	each
of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations
only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

	(iii)
	the
Facility Agent, the Mandated Lead Arrangers, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have
acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent each Agent, the Mandated
Lead Arrangers and the Existing Lender shall each be released from further obligations to each other under this Agreement; and

	(iv)
	the
New Lender shall become a Party as a "Lender". 

51

 

24.6 Confidentiality

Each
Finance Party hereby severally undertakes to each Obligor that it will keep confidential and that it will not make use of for any purposes (otherwise than for the purposes of the Finance
Documents), any of the Finance Documents or other documents relating to this Agreement and all of the information acquired by such Finance Party under or in connection with any Finance Document, other
than any such document or information which has become generally available to the public otherwise than by disclosure by any Finance Party, provided
that each Finance Party shall be entitled to make disclosure of the same: 

	(a)
	to
its auditors, accountants, legal counsel and tax advisers, to any other professional advisers appointed to act in connection with the Finance Documents or to its Affiliates  provided that such
information is disclosed only to such person if and to the extent necessary for his activities and each such person will be informed
of the confidential nature of the information and the provisions of this Agreement;

	(b)
	(whether
or not the relevant assignment, transfer, substitution, sub-participation or other arrangement is made) to any proposed assignee, transferee or substitute of, or
proposed party to any proposed sub-participation (or party to any actual sub-participation) or other arrangement with, any Lender permitted pursuant to this Agreement,  provided that before any such
disclosure (except with respect to the disclosure of this Clause 24.6
(Confidentiality), such assignee, transferee, substitute or other party expressly undertakes to the Facility Agent and the Company in writing to be
bound by this Clause 24.6 (Confidentiality) irrespective of whether such assignment, transfer, substitution or other arrangement shall proceed;

	(c)
	to
any other third party where the Company has previously agreed in writing that disclosure may be made to that third party;

	(d)
	to
any banking or other regulatory or examining authorities (whether governmental or otherwise) where such disclosure is formally requested by them and with whose requests that
Finance Party has to comply (or with whose requests banks in the relevant jurisdiction are accustomed to complying);

	(e)
	pursuant
to subpoena or other legal process, or in connection with any action, suit or proceeding relating to any of the Finance Documents;

	(f)
	pursuant
to any law or regulation having the force of law; and

	(g)
	to
any Group Company. 

25.  CHANGES TO THE OBLIGORS

25.1 Assignments and transfer by Obligors

No
Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents. 

25.2 Additional Borrowers

	(a)
	The
Company may request that any of its Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:

	(i)
	it
is incorporated in The Netherlands or, in the case of a Subsidiary incorporated outside of The Netherlands, all the Lenders approve the addition of that Subsidiary;

	(ii)
	the
Company delivers to the Facility Agent a duly completed and executed Accession Letter; 

52

 

	(iii)
	the
Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and

	(iv)
	the
Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions
Precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Facility Agent. 

	(b)
	The
Facility Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other
evidence listed in Part II of Schedule 2 (Conditions Precedent). 

25.3 Resignation of a Borrower

The
Company may request that a Borrower (other than the Company) in respect of which no Advance is outstanding hereunder (including any other amounts in relation thereto) ceases to be a Borrower by
entering into a supplemental agreement to this Agreement in such form as the Facility Agent may reasonably require which shall discharge that Borrower's obligations hereunder. 

25.4 Repetition of Representations

Delivery
of an Accession Letter constitutes confirmation by the relevant Subsidiary that the representations to be made by that Subsidiary in accordance with Clause 19.13
(Times for making representations and warranties) are true and correct in relation to it as at the date of delivery as if made by reference to the facts
and circumstances then existing. 

53

  

 
 

SECTION 10
  
    THE FINANCE PARTIES    
  

26.  ROLE OF THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS

26.1 Appointment of the Facility Agent

	(a)
	Each
of the Mandated Lead Arrangers and the Lenders appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.

	(b)
	Each
of the Mandated Lead Arrangers and the Lenders authorises the Facility Agent to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent
under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. 

26.2 Duties of the Facility Agent

	(a)
	The
Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

	(b)
	If
the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify
the Lenders.

	(c)
	The
Facility Agent shall promptly notify the Lenders of any Default arising under Clause 23.2 (Non-payment).

	(d)
	The
Facility Agent's duties under the Finance Documents are solely mechanical and administrative in nature. 

26.3 Role of the Mandated Lead Arrangers

Except
as specifically provided in the Finance Documents, the Mandated Lead Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document. 

26.4 No fiduciary duties

	(a)
	Nothing
in this Agreement constitutes the Facility Agent or a Mandated Lead Arranger as a trustee or fiduciary of any other person.

	(b)
	Neither
the Facility Agent nor any Mandated Lead Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account. 

26.5 Business with the Group

The
Facility Agent and each Mandated Lead Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Group Company. 

26.6 Rights and discretions of the Facility Agent

	(a)
	The
Facility Agent may rely on:

	(i)
	any
representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

	(ii)
	any
statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power
to verify. 

54

 

	(b)
	The
Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

	(i)
	no
Default has occurred (unless it has actual knowledge of a Default arising under Clause 23.2 (Non-payment));

	(ii)
	any
right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

	(iii)
	any
notice or request made by the Company is made on behalf of and with the consent and knowledge of all the Obligors. 

	(c)
	The
Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

	(d)
	The
Facility Agent may act in relation to the Finance Documents through its personnel and agents. 

26.7 Majority Lenders' instructions

	(a)
	Unless
a contrary indication appears in a Finance Document, the Facility Agent shall (a) act in accordance with any instructions given to it by the Majority Lenders (or, if so
instructed by the Majority Lenders, refrain from acting or exercising any right, power, authority or discretion vested in it as Agent) and (b) not be liable for any act (or omission) if it acts
(or refrains from taking any action) in accordance with such an instruction of the Majority Lenders.

	(b)
	Unless
a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

	(c)
	The
Facility Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may
require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

	(d)
	In
the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Facility Agent may act (or refrain from taking action) as it considers to be in the
best interest of the Lenders.

	(e)
	The
Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's prior written consent) in any legal or arbitration proceedings relating to any
Finance Document. 

26.8 Responsibility for documentation

Neither
the Facility Agent nor any Mandated Lead Arranger: 

	(a)
	is
responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Facility Agent, an Mandated Lead Arranger, an Obligor or any
other person given in or in connection with any Finance Document, the Banking Base Case or any other information delivered to the Facility Agent or any Mandated Lead Arranger; or

	(b)
	is
responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance Document. 

55

 

26.9 Exclusion of liability

	(a)
	Without
limiting paragraph (b) below, the Facility Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused
by its gross negligence or wilful misconduct.

	(b)
	No
Party may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any
act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Facility Agent may rely on this Clause.

	(c)
	The
Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the
Facility Agent if that Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement
system used by the Facility Agent for that purpose. 

26.10Lenders' indemnity to the Facility Agent

The
Lenders shall (in proportion to their Commitments or, if the Total Commitments are then zero, to their Commitments immediately prior to their reduction to zero) severally indemnify the Facility
Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent's negligence or wilful misconduct) in
acting as the Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Finance Document). 

26.11Resignation of the Facility Agent

	(a)
	The
Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the Lenders and the Company.

	(b)
	Alternatively
the Facility Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a
successor Facility Agent.

	(c)
	If
the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the
resigning Facility Agent may appoint a successor Facility Agent.

	(d)
	A
successor Facility Agent may only be appointed with the approval of the Company (such approval not to be unreasonably withheld or delayed).

	(e)
	The
retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility
Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents.

	(f)
	Such
Facility Agent's resignation notice shall only take effect upon the appointment of a successor.

	(g)
	Upon
the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the
benefit of this Clause 26. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an
original Party. 

56

 

	(h)
	After
consultation with the Company, the Majority Lenders may, by notice to a Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, such
Facility Agent shall resign in accordance with paragraph (b) above. 

26.12Confidentiality

	(a)
	In
acting as agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of
its divisions or departments.

	(b)
	If
information is received by another division or department of the Facility Agent, it may be treated as confidential to that division or department and the Facility Agent shall not
be deemed to have notice of it.

	(c)
	Notwithstanding
any other provision of any Finance Document to the contrary, neither the Facility Agent nor any Mandated Lead Arranger is obliged to disclose to any other person
(i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty. 

26.13Relationship with the Lenders

	(a)
	The
Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than 5 Business
Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

	(b)
	Each
Lender shall supply the Facility Agent with any information required by the Facility Agent in order to calculate the Mandatory Cost in accordance with Schedule 8
(Mandatory Cost Formulae). 

26.14Credit appraisal by the Lenders

Without
affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Facility Agent and each
Mandated Lead Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any
Finance Document including but not limited to: 

	(a)
	the
financial condition, status and nature of each Group Company;

	(b)
	the
legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance Document;

	(c)
	whether
that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
and

	(d)
	the
adequacy, accuracy and/or completeness of the Banking Base Case and any other information provided by the Facility Agent, any other Party or by any other person under or in
connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or
in connection with any Finance Document. 

57

 

26.15Reference Banks

If
a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent shall with the consent of the Company appoint another
Lender or an Affiliate of a Lender to replace that Reference Bank. 

27.  CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No
provision of this Agreement will: 

	(a)
	interfere
with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

	(b)
	oblige
any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

	(c)
	oblige
any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. 

28.  SHARING AMONG THE LENDERS

28.1 Payments to Lenders

If
a Lender (a "Recovering Lender") receives or recovers any amount from a Borrower other than in accordance with Clause 29
(Payment mechanics) and applies that amount to a payment due under the Finance Documents then: 

	(a)
	the
Recovering Lender shall, within 3 Business Days, notify details of the receipt or recovery, to the Facility Agent;

	(b)
	the
Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Lender would have been paid had the receipt or recovery been received or
made by the Facility Agent and distributed in accordance with Clause 29 (Payment mechanics), without taking account of any Tax which would be
imposed on the Facility Agent in relation to the receipt, recovery or distribution; and

	(c)
	the
Recovering Lender shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the "Sharing
Payment") equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Lender as its share of any payment to be made,
in accordance with Clause 29.5 (Partial payments). 

28.2 Redistribution of payments

The
Facility Agent shall treat the Sharing Payment as if it had been paid by a Borrower and distribute it between the Finance Parties (other than the Recovering Lender) in accordance with
Clause 29.5 (Partial payments). 

28.3 Recovering Lender's rights

	(a)
	On
a distribution by the Facility Agent under Clause 28.2 (Redistribution of payments), the Recovering Lender will be subrogated
to the rights of the Finance Parties which have shared in the redistribution.

	(b)
	If
and to the extent that the Recovering Lender is not able to rely on its rights under paragraph (a) above, the relevant Borrower shall be liable to the Recovering Lender for
a debt equal to the Sharing Payment which is immediately due and payable. 

58

 

28.4 Reversal of redistribution

If
any part of the Sharing Payment received or recovered by a Recovering Lender becomes repayable and is repaid by that Recovering Lender, then: 

	(a)
	each
Lender which has received a share of the relevant Sharing Payment pursuant to Clause 28.2 (Redistribution of payments)
shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Lender an amount equal to its share of the Sharing Payment (together with an amount as is
necessary to reimburse that Recovering Lender for its proportion of any interest on the Sharing Payment which that Recovering Lender is required to pay); and

	(b)
	that
Recovering Lender's rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Borrower will be liable to the reimbursing Lender for the amount so
reimbursed. 

28.5 Exceptions

	(a)
	This
Clause 28 shall not apply to the extent that the Recovering Lender would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against
the relevant Obligor.

	(b)
	A
Recovering Lender is not obliged to share with any other Lender any amount which the Recovering Lender has received or recovered as a result of taking legal or arbitration
proceedings, if:

	(i)
	it
notified the other Lenders of the legal or arbitration proceedings; and

	(ii)
	the
other Lenders had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice or did not
take separate legal or arbitration proceedings. 

59

  

 
 

SECTION 11
  
    ADMINISTRATION    
  

29.  PAYMENT MECHANICS

29.1 Payments to the Facility Agent

	(a)
	On
each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or, as the case may be, such Lender shall make the same available to
the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time
for settlement of transactions in the relevant currency in the place of payment.

	(b)
	Payment
shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in a Participating
Member State or London) with such bank as the Facility Agent specifies. 

29.2 Distributions by the Facility Agent

Each
payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 29.3 (Distributions to an
Obligor) and Clause 29.4 (Clawback) be made available by the Facility Agent as soon as practicable after receipt to the
Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by
not less than 5 Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating
Member State or London). 

29.3 Distributions to an Obligor

The
Facility Agent may (with the consent of the relevant Obligor or in accordance with Clause 30 (Set-off)) apply any amount received
by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any
amount of any currency to be so applied. 

29.4 Clawback

	(a)
	Where
a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into
or perform any related exchange contract) until it has been able to establish to its absolute satisfaction that it has actually received that sum.

	(b)
	If
the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount
(or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment
to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds. 

60

 

29.5 Partial payments

	(a)
	If
the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by any Obligor under the Finance Documents, the Facility Agent shall
apply that payment towards the obligations of the relevant Obligor under the Finance Documents in the following order:

	(i)
	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Facility Agent and the Mandated Lead Arrangers
under the Finance Documents;

	(ii)
	secondly, in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement;

	(iii)
	thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

	(iv)
	fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. 

	(b)
	The
Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

	(c)
	Paragraphs
(a) and (b) above will override any appropriation made by an Obligor. 

29.6 No set-off by Obligor

All
payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 

29.7 Business Days

	(a)
	Any
payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business
Day (if there is not).

	(b)
	During
any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal at the rate payable on the original due
date. 

29.8 Currency of account

	(a)
	Subject
to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.

	(b)
	A
repayment of an Advance or Unpaid Sum or a part of an Advance or Unpaid Sum shall be made in the currency in which that Advance or Unpaid Sum is denominated on its due date.

	(c)
	Each
payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

	(d)
	Each
payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

	(e)
	Any
amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency. 

61

 

29.9 Change of currency

	(a)
	Unless
otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that
country, then:

	(i)
	any
reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency
or currency unit of that country designated by the Facility Agent (after consultation with the Company); and

	(ii)
	any
translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency
unit into the other, rounded up or down by the Facility Agent (acting reasonably). 

	(b)
	If
a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Company) specifies to be
necessary, be amended to comply with any generally accepted conventions and market practice in the European Interbank Market and otherwise to reflect the change in currency. 

30.  SET-OFF

Following
the occurrence of an Event of Default a Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance
Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in
different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 

31.  NOTICES

31.1 Communications in writing

Any
communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter or to the extent that the relevant
Party has specified such address pursuant to Clause 31.2 (Addresses) by e-mail, and in the case of the notification of rates of
interest by the Facility Agent pursuant to Clause 9.4 (Notification of Rates of Interest) and in the case of the delivery of any document by the
Facility Agent pursuant to paragraph (a) of Clause 26.2 (Duties of the Facility Agent), the Facility Agent may refer the relevant Party or
Parties (by fax or letter (or if so specified) e-mail) to a web site and to the location of the relevant information on such web site in discharge or such notification or delivery
obligation. 

31.2 Addresses

	(a)
	The
address and fax number, and (if so specified) e-mail address, and, where appropriate, web site (and the department or officer, if any, for whose attention the
communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

	(i)
	in
the case of the Company, that identified in Clause 31.2(b);

	(ii)
	in
the case of each Lender, that notified in writing to the Facility Agent on or prior to the date on which it becomes a Party; and 

62

 

	(iii)
	in
the case of the Facility Agent, that identified in Clause 31.2(b), 

or
any substitute address, fax number, e-mail address, web site or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other
Parties, if a change is made by the Facility Agent) by not less than 5 Business Days' prior written notice. 

	(b)
	For
the purposes of Clause 31.2(a)(a), the relevant details are as follows:

	(i)
	the
Company: 

Koninklijke
KPN N.V.

Postbus 30000

Telecomplein 5

2516 CK 's-Gravenhage

The Netherlands

Attn: C J Boogaerdt

Tel: +31 70 446 0259

Fax: +31 70 446 4302 

	(ii)
	the
Facility Agent: 

ABN
AMRO Bank N.V. 

For
Credit matters: 

Attn:
Simon Beedleston, Agency Europe

Tel: +44 207 678 6661

Fax: +44 207 678 6021

e-mail: simon.beedleston@uk.abnamro.com 

For
Administrative matters: 

Attn:
Amber Buchan, Agency Services

Tel: +44 207 678 6014

Fax: +44 207 678 6021

e-mail: amber.buchan@uk.abnamro.com 

31.3 Delivery

	(a)
	Any
communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

	(i)
	if
by way of fax or e-mail, when received in legible form; or

	(ii)
	if
by way of letter, when it has been left at the relevant address or 5 Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that
address; or

	(iii)
	where
reference in such communication is to a web site, when the delivery of the letter, fax or, as the case may be e-mail referring the addressee to such web site is
effective; 

and,
if a particular department or officer is specified as part of its address details provided under Clause 31.2 (Addresses), if addressed to
that department or officer. 

	(b)
	Any
communication or document to be made or delivered to the Facility Agent will be effective only when actually received by the Facility Agent and then only if it is expressly marked
for the attention of the department or officer identified in Clause 31.2 (or any substitute department or officer as the Facility Agent shall specify for this purpose). 

63

 

	(c)
	All
notices from or to an Obligor shall be sent through the Facility Agent.

	(d)
	Any
communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.

	(e)
	Any
document to be delivered pursuant to Clause 4.1 (Initial conditions precedent) shall be delivered in the original form or in
the form of a certified copy of the original form and any Utilisation Request shall be confirmed by letter, although failure to do so shall not invalidate the original request. 

31.4 Notification of address and fax number

Promptly
upon receipt of notification of an address, fax number, e-mail or change of address, e-mail or fax number pursuant to Clause 31.2
(Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties. 

31.5 English language

	(a)
	Any
notice given under or in connection with any Finance Document must be in English.

	(b)
	All
other documents provided under or in connection with any Finance Document must be:

	(i)
	in
English; or

	(ii)
	if
not in English, and if so required by the Facility Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the
document is a constitutional, statutory or other official document. 

32.  CALCULATIONS AND CERTIFICATES

32.1 Accounts

In
any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima
facie evidence of the matters to which they relate. 

32.2 Certificates and Determinations

Any
certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, prima facie  evidence of the matters to which it relates.

32.3 Day count convention

Any
interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in
any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice. 

33.  PARTIAL INVALIDITY

If,
at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. 

64

 

34.  REMEDIES AND WAIVERS

No
failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive
of any rights or remedies provided by law. 

35.  AMENDMENTS AND WAIVERS

35.1 Required consents

	(a)
	Subject
to Clause 35.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the
Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

	(b)
	The
Facility Agent may effect (and is hereby so authorised by each Finance Party), on behalf of any Finance Party, any amendment or waiver permitted by this Clause. 

35.2 Exceptions

	(a)
	An
amendment or waiver that has the effect of changing or which relates to:

	(i)
	the
definition of "Majority Lenders" in Clause 1.1 (Definitions);

	(ii)
	an
extension to the date of payment of any amount under the Finance Documents;

	(iii)
	a
reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;

	(iv)
	an
increase in a Commitment;

	(v)
	a
change to the Borrowers or Guarantors other than in accordance with Clause 25 (Changes to Obligors);

	(vi)
	any
provision which expressly requires the consent of all the Lenders; or

	(vii)
	Clause 2.2
(Lenders' rights and obligations), Clause 18 (Guarantee and
Indemnity), Clause 24 (Changes to the Lenders), Clause 28 (Sharing Among the
Lenders) or this Clause 35, 

shall
not be made without the prior consent of all the Lenders. 

	(b)
	An
amendment or waiver which relates to the rights or obligations of any Agent or Mandated Lead Arranger may not be effected without the consent of the Facility Agent or Mandated Lead
Arranger. 

36.  COUNTERPARTS

Each
Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document. 

65

  

 
 

SECTION 12
  
    GOVERNING LAW AND ENFORCEMENT    
  

37.  GOVERNING LAW

This
Agreement is governed by English law. 

38.  ENFORCEMENT

	(a)
	The
courts of England have non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the
existence, validity or termination of this Agreement).

	(b)
	Service of Process

Without
prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales): 

	(i)
	irrevocably
appoints Fleetside Legal Representative Services Limited (whose registered office at the date of this Agreement is 9 Cheapside, London, EC2V 6AD) as its agent for service
of process in relation to any proceedings before the English courts in connection with any Finance Document; and

	(ii)
	agrees
that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned. 

        This Agreement has been entered into on the date stated at the beginning of this Agreement.

66

 
 
 

SCHEDULE 1
  
    The Original Lenders    
  

	Name
 
	 	Commitment

	 
	 	(euro)
 

	ABN AMRO Bank N.V.	 	224,050,110.14
	Bank of America, N.A.	 	154,666,850.22
	Citibank, N.A., London Branch	 	224,050,110.13
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.	 	224,050,110.13
	Credit Suisse First Boston	 	150,812,224.67
	Deutsche Bank Luxembourg, S.A.	 	208,631,607.93
	ING Bank N.V.	 	224,050,110.13
	JPMorgan Chase Bank	 	204,776,982.38
	HVB Banque Luxembourg Société Anonyme	 	77,092,511.01
	Scotiabank Europe plc	 	57,819,383.26
	 	 	

	Total	 	euro 1,750,000,000
	 	 	

67

  

 
 

SCHEDULE 2
  Conditions Precedent    
  

 
 

Part 1
  Conditions Precedent To Signing    
  

	1.
	A
copy of the Articles of Association of the Company.

	2.
	An
excerpt of the registration of the Company in the Trade Register of the applicable Chamber of Commerce in the Netherlands.

	3.
	
	(a)
	A
copy of a resolution of the board of management of the Company:

	(i)
	approving
the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance
Documents to which it is a party;

	(ii)
	showing
that the board of management considered the giving of the guarantee in Clause 18 (Guarantee and
indemnity) to be for the commercial benefit of the Company;

	(iii)
	authorising
a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

	(iv)
	authorising
a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including Utilisation Requests) to
be signed and/or despatched by it under or in connection with the Finance Documents; 

	(b)
	a
specimen of the signature of each person authorised by the resolution referred to in paragraph (a) above or authorised by a sub power of attorney
(ondervolmacht) acceptable to the Facility Agent; and

	(c)
	a
certificate of the Company (signed by a director (statutair directeur) of the Company) certifying that each copy document specified
in Part 1 of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. 

	4.
	A
certificate of the Company (signed by a director (statutair directeur) of the Company) confirming that borrowing or guaranteeing, as
appropriate, all or any part of the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on any Original Obligor to be exceeded.

	5.
	Legal
opinions of Clifford Chance, Dutch and English legal advisers to the Mandated Lead Arrangers and the Facility Agent, addressed to the Finance Parties.

	6.
	Evidence
that any process agent referred to in Clause 38(b) (Service of process), if not an Original Obligor, has accepted its
appointment.

	7.
	A
copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Company accordingly)
in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

	8.
	The
Banking Base Case.

	9.
	Evidence
satisfactory to the Facility Agent that the Original Facility Agreement has been prepaid and cancelled in full on or prior to the date hereof. 

68

 
	10.
	A
certificate, satisfactory to the Facility Agent, signed by a director (statutair directeur) of the Company, setting out a description
of the provisions as to subordination contained in the BellSouth Subordinated Loan Agreement.

	11.
	A
copy of a written resolution by the supervisory board of the Company signed by all its members, inter alia, confirming the approval
of the entering into, execution and performance of this Agreement.

	12.
	A
certificate, signed by a director (statutair directeur) of the Company setting out details of:

	(a)
	any
guarantees given by any Group Company on or prior to the date of this Agreement which are "Permitted Guarantees" for the purposes of paragraph (a) of the definition
thereof;

	(b)
	any
loans made by any Group Company on or prior to the date of this Agreement which are "Permitted Loans" for the purposes of paragraph (a) of the definition thereof;

	(c)
	the
Borrowings of all members of the KPN Telecom Group incurred on or prior to the date of this Agreement (other than Borrowings from the Company); and

	(d)
	the
Borrowings of all members of the E-Plus Group incurred on or prior to the date of this Agreement (other than Borrowings from members of the Group). 

	13.
	The
Arrangement Fee Letter duly executed by the Company.

	14.
	The
Agency Fee Letter duly executed by the Company. 

 
 

Part 2
  Conditions precedent required to be delivered by an Additional Borrower    
  

	1.
	An
Accession Letter, duly executed by the Additional Borrower and the Company.

	2.
	A
copy of the constitutional documents of the Additional Borrower and, in the case of an Additional Borrower incorporated in The Netherlands, an excerpt of the registration of the
Additional Borrower in the Trade Register of the applicable Chamber of Commerce in The Netherlands.

	3.
	If
applicable in the relevant jurisdiction, a copy of a resolution of the board of directors or, as the case may be, board of management of the Additional Borrower (and of any other
corporate bodies that need to authorise any of the following):

	(i)
	approving
the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute the Accession
Letter;

	(ii)
	authorising
a specified person or persons to execute the Accession Letter on its behalf; and

	(iii)
	authorising
a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an
Additional Borrower, Utilisation Requests) to be signed and/or despatched by it under or in connection with the Finance Documents. 

	4.
	A
certificate of a director of the Additional Borrower confirming that the borrowing or guaranteeing of the Total Commitments in full would not cause any borrowing guaranteeing or
similar limit binding on it to be exceeded.

	5.
	A
copy of any other authorisation or other document, opinion or assurance which the Facility Agent (acting reasonably) considers to be necessary in connection with the entry into and
performance of, and the transactions contemplated by, the Accession Letter or for the validity and enforceability of any Finance Document.

	6.
	A
specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above. 

69

 
	7.
	If
available, the latest audited accounts of the Additional Borrower.

	8.
	A
certificate of an authorised signatory of the Additional Borrower certifying that each copy document specified in Part 2 of this Schedule 2 is correct, complete and in
full force and effect as at a date no earlier than the date of the Accession Letter.

	9.
	A
legal opinion of English legal advisers to the Facility Agent, addressed to the Finance Parties.

	10.
	If
the Additional Borrower is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Mandated Lead Arrangers and the Facility Agent
in the jurisdiction in which the Additional Borrower is incorporated.

	11.
	If
the proposed Additional Borrower is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in Clause 38(b)
(Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Borrower. 

70

  

 
 

SCHEDULE 3    
  

Utilisation Request  

	From:	 	[Borrower]
	

To:	
 	

[Facility Agent]
	

Dated:	
 	

 
	

Dear Sirs	
 	

 

Koninklijke KPN N.V.—euro 1,750,000,000 Credit Agreement

dated 17 May 2002 (the "Credit Agreement")  

	1.
	Words
and expressions defined in the Credit Agreement have the same meaning when used herein.

	2.
	We
wish to borrow an Advance on the following terms: 

	 	 	Proposed Utilisation Date:	 	[        ] (or, if that is not a Business Day, the next Business Day)
	 	 	Currency of Advance:	 	[        ]
	 	 	Amount:	 	[        ]
	 	 	Interest Period:	 	[        ]

	3.
	We
confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied.

	4.
	The
proceeds of this Advance should be credited to [account].

	5.
	This
Utilisation Request is irrevocable. 

        Yours faithfully 

        authorised
signatory for

[Koninklijke KPN N.V.]/[Additional Borrower] 

71

 
 
 

SCHEDULE 4    
  

The Margin  

	Credit Rating of the Company
 
	 	Margin (per cent. per annum)

	BBB+/Baal or higher	 	1.00
	BBB/Baa2	 	1.25
	BBB-/Baa3	 	1.50
	BB+/Ba1	 	3.25
	BB/Ba2 or lower or no rating from either S&P or Moody's	 	4.00

72

 
 
 

SCHEDULE 5    
  

Form of Transfer Certificate  

	To:	 	[        ] as Facility Agent
	

From:	
 	

[The Existing Lender] (the "Existing Lender") and [The New Lender] (the "New
Lender")
	

Dated:	
 	

 

Koninklijke KPN N.V.—euro 1,750,000,000 Credit Agreement

dated 17 May 2002 (the "Credit Agreement")  

	1.
	Words
and expressions defined in the Credit Agreement have the same meaning when used herein.

	2.
	We
refer to Clause 24.5 (Procedure for transfer) of the Credit Agreement:

	(a)
	The
Existing Lender and the New Lender agree to the Existing Lender and the New Lender transferring by novation all or part of the Existing Lender's Commitment, rights and obligations
referred to in the Schedule in accordance with Clause 24.5 (Procedure for transfer).

	(b)
	The
proposed Transfer Date is [            ].

	(c)
	The
Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 31.2
(Addresses) are set out in the Schedule. 

	3.
	The
New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 24.4 (Limitation of
responsibility of Existing Lenders).

	4.
	This
Transfer Certificate is governed by English law. 

 
 

THE SCHEDULE    
  

        Commitment/rights and obligations to be transferred  

[insert relevant details] 

[Facility Office address, fax number and attention details for notices and account details for payments,] 

	[Existing Lender]	 	[New Lender]
	

By:	
 	

By:

        This
Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [            ]. 

[Facility
Agent] 

By:

73

  

 
 

SCHEDULE 6    
  

Form of Compliance Certificate  

	To:	 	[            ] as Facility Agent
	

From:	
 	

Koninklijke KPN N.V
	

Dated:	
 	

 
	

Dear Sirs	
 	

 

Koninklijke KPN N.V.—euro 1,750,000,000 Credit Agreement

dated 17 May 2002 (the "Credit Agreement")  

	1.
	We
refer to the Credit Agreement. This is a Compliance Certificate.

	2.
	We
confirm that: 
	(a)
	the
ratio of EBITDA to Net Interest Expense is [    ]; and the covenant contained in paragraph (a)(i) of Clause 22.2
(Financial Covenants) [has/has not] been complied with;

	(b)
	the
ratio of Total Consolidated Net Borrowings to EBITDA is [            ]; and the covenant contained in paragraph (a)(ii) of
Clause 22.2 (Financial Covenants) [has/has not] been complied with;

	(c)
	the
amount of the Total Assets of the Group is [            ]; and

	(d)
	our
Principal Subsidiaries are [            ]. 

	3.
	The
following amounts attributable to the results of the KPN Qwest Group were deducted from Total Consolidated Net Borrowings, Net Interest Expense and EBITDA: 

	 	 	Total Consolidated Net Borrowings:	 	[            ]
	

 	
 	

Net Interest Expense:	
 	

[            ]
	

 	
 	

EBITDA:	
 	

[            ]

The
above figures were calculated taking into account the translation of KPN Qwest's results from US GAAP to GAAP and the effect of the consolidation of such results as follows: 

[insert description] 

	4.
	[We
confirm that no Default is continuing.]** 

Signed: 

Authorised
Signatory

Of

Koninklijke KPN N.V 

74

 
 
 

SCHEDULE 7    
  

Timetables  

	 
	 	Advances in euro
	 	Advances in sterling

and dollars
	 	Advances in other

currencies

	Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request))	 	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	 	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	 	10 a.m. London time, 3 Business Days prior to the proposed Utilisation Date
	

Facility Agent determines (in relation to a Utilisation) the Base Currency Amount of the Advance, if required under Clause 5.4 (Lenders' participation)	
 	

N/A	
 	

11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	
 	

11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date
	

Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 (Lenders' participation)	
 	

Promptly upon receipt from the Borrower	
 	

Promptly upon receipt from the Borrower	
 	

Promptly upon receipt from the Borrower
	

Facility Agent receives a notification from a Lender under Clause 6.2 (Unavailability of a currency)	
 	

N/A	
 	

N/A	
 	

Quotation Day as of 9 a.m. London time
	

Facility Agent gives notice in accordance with Clause 6.2 (Unavailability of a currency)	
 	

N/A	
 	

N/A	
 	

Upon receipt of notification from the Lenders
	

LIBOR or EURIBOR is fixed	
 	

Quotation Day as of 10 a.m. London time in respect of EURIBOR	
 	

Quotation Day as of 11 a.m. London time	
 	

Quotation Day as of 11 a.m. London time

75

 
 
 

SCHEDULE 8    
  

Mandatory Cost Formulae  

	1.
	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England
and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

	2.
	On
the first day of each Interest Period (or as soon as possible thereafter) the Facility Agent shall calculate, as a percentage rate, a rate (the "Additional
Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost is the weighted average of the rates (rounded up to four decimal places)
calculated by the Facility Agent and will be expressed as a percentage rate per annum.

	3.
	The
Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Facility Agent as the cost
of complying with the minimum reserve requirements of the European Central Bank.

	4.
	The
Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Facility Agent as follows:

	(a)
	in
relation to a domestic sterling Advance: 

	 	 	AB+C(B–D)+E×0.01
 100-(A+C)	 	per cent. per annum

	(b)
	in
relation to an Advance in any currency other than domestic sterling: 

	 	 	E×0.01
 300	 	per cent. per annum

	Where:
	

	A
	is
the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which the Facility Agent is from time to time required to maintain as an interest free
cash ratio deposit with the Bank of England to comply with cash ratio requirements.

	B
	is
the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Advance is an Unpaid Sum, the additional rate of interest specified in paragraph (a)
of Clause 9.3 (Default Interest)) payable for the relevant Interest Period on the Advance.

	C
	is
the percentage (if any) of Eligible Liabilities which the Facility Agent is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.

	D
	is
the percentage rate per annum payable by the Bank of England to the Facility Agent on interest bearing Special Deposits.

	E
	is
the rate of charge payable by the Facility Agent to the Financial Services Authority pursuant to the Fees Regulations (but, for this purpose, ignoring any minimum fee required
pursuant to the Fees Regulations) and expressed in pounds per £1,000,000 of the Fee Base of the Facility Agent. 

	5.
	For
the purposes of this Schedule:

	(a)
	"Eligible Liabilities" and "Special Deposits" have the meanings given to them from time
to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; 

76

 

	(b)
	"Fees Regulations" means the Banking Supervision (Fees) Regulations 2000 or such other law or regulation as may be in force from time
to time in respect of the payment of fees for banking supervision; and

	(c)
	"Fee Base" has the meaning given to it, and will be calculated in accordance with, the Fees Regulations. 

	6.
	In
application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative
result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.

	7.
	The
Facility Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to
assume that the information provided by any Lender pursuant to paragraph 3 above is true and correct in all respects.

	8.
	The
Facility Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender as
calculated above.

	9.
	Any
determination by the Facility Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the
absence of manifest error, be conclusive and binding on all Parties.

	10.
	The
Facility Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all Parties any amendments which are required to be made to this
Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or,
in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties. 

77

 
 
 

SCHEDULE 9    
  

Form of Accession Letter  

	To:	 	[            ] as Facility Agent
	

From:	
 	

[Subsidiary] and Koninklijke KPN N.V.
	

Dated:	
 	

 
	

Dear Sirs	
 	

 

Koninklijke KPN N.V.—euro 1,750,000,000 Facility Agreement

dated 17 May 2002 (the "Facility Agreement")  

	1.
	[Subsidiary] agrees to become an Additional Borrower and to be bound by the terms of the
Facility Agreement as an Additional Borrower pursuant to Clause 25.2 (Additional Borrowers) of the Facility Agreement.
[Subsidiary] is a company duly incorporated under the laws of [name of relevant
jurisdiction].

	2.
	[Subsidiary's] administrative details are as follows: 

Address:

Fax
No: 

Attention:

	3.
	This
letter is governed by English law. 

Koninklijke
KPN N.V.                        [Subsidiary] 

78

  

 
 

SIGNATURES    
  

	The Company

KONINKLIJKE KPN N.V.
 By:	 	 
	

The Guarantor

KONINKLIJKE KPN N.V.
 By:	
 	

 
	

The Mandated Lead Arrangers

ABN AMRO BANK N.V.
 By:	
 	

 
	

BANC OF AMERICA SECURITIES LIMITED
 By:	
 	

 
	

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
 By:	
 	

 
	

CREDIT SUISSE FIRST BOSTON
 By:	
 	

 
	

DEUTSCHE BANK AG
 By:	
 	

 
	

HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME
 By:	
 	

 
	

ING BANK N.V.
 By:	
 	

 
	

J.P. MORGAN PLC
 By:	
 	

 
	

SCOTIABANK EUROPE PLC
 By:	
 	

 
	

SALOMON BROTHERS INTERNATIONAL LIMITED]
 By:	
 	

 
	

The Original Lenders

ABN AMRO BANK N.V.
 By:	
 	

 
	

BANK OF AMERICA, N.A.
 By:	
 	

 
	

CITIBANK, N.A., LONDON BRANCH
 By:	
 	

 
	

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
 By:	
 	

 
	

CREDIT SUISSE FIRST BOSTON
 By:	
 	

 
	

DEUTSCHE BANK LUXEMBOURG, S.A.
 By:	
 	

 
	

ING BANK N.V.
 By:	
 	

 
	
 	
 	

 

79

 

	

JPMORGAN CHASE BANK
 By:	
 	

 
	

HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME
 By:	
 	

 
	

SCOTIABANK EUROPE PLC
 By:	
 	

 
	

The Facility Agent

ABN AMRO BANK N.V.
 By:	
 	

 

80

QuickLinks

Exhibit 4.9

CONTENTS

SECTION 1 INTERPRETATION

SECTION 2 THE FACILITY

SECTION 3 UTILISATION

SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION

SECTION 5 COSTS OF UTILISATION

SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS

SECTION 7 GUARANTEE

SECTION 8 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

SECTION 9 CHANGES TO PARTIES

SECTION 10 THE FINANCE PARTIES

SECTION 11 ADMINISTRATION

SECTION 12 GOVERNING LAW AND ENFORCEMENT

SCHEDULE 1 The Original Lenders

SCHEDULE 2 Conditions Precedent

Part 1 Conditions Precedent To Signing

Part 2 Conditions precedent required to be delivered by an Additional Borrower

SCHEDULE 3

SCHEDULE 4

SCHEDULE 5

THE SCHEDULE

SCHEDULE 6

SCHEDULE 7

SCHEDULE 8

SCHEDULE 9

SIGNATURES

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]