Document:

Exhibit 4.30

 

GUARANTEE AGREEMENT

 

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

 

Dated as of February 15, 2006

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS AND INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  Definitions and
  Interpretation

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  Powers and Duties of the
  Guarantee Trustee

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 2.2.

  	
  Certain Rights of the
  Guarantee Trustee

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 2.3.

  	
  Not Responsible for
  Recitals or Issuance of Guarantee

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 2.4.

  	
  Events of Default; Waiver

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 2.5.

  	
  Events of Default; Notice

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  THE GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  The Guarantee Trustee;
  Eligibility

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 3.2.

  	
  Appointment, Removal and
  Resignation of the Guarantee Trustee

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  GUARANTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
  Guarantee

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2.

  	
  Waiver of Notice and
  Demand

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 4.3.

  	
  Obligations Not Affected

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 4.4.

  	
  Rights of Holders

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 4.5.

  	
  Guarantee of Payment

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 4.6.

  	
  Subrogation

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 4.7.

  	
  Independent Obligations

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 4.8.

  	
  Enforcement

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  LIMITATION OF TRANSACTIONS; SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
  Limitation of Transactions

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 5.2.

  	
  Ranking

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
  Termination

  	
  14

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
  Exculpation

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 7.2.

  	
  Indemnification

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 7.3.

  	
  Compensation;
  Reimbursement of Expenses

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
  Successors and Assigns

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2.

  	
  Amendments

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 8.3.

  	
  Notices

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 8.4.

  	
  Benefit

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 8.5.

  	
  Governing Law

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 8.6.

  	
  Counterparts

  	
  17

  

 

ii

 

GUARANTEE AGREEMENT

 

This
GUARANTEE AGREEMENT (the “Guarantee”), dated as of February 15, 2006,
is executed and delivered by American Equity Investment Life Holding Company,
an Iowa corporation (the “Guarantor”), and Wells Fargo Delaware Trust Company,
a national banking association with its principal place of business in the
State of Delaware, as trustee (the “Guarantee Trustee”), for the benefit of the
Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of American Equity Capital Trust XII, a Delaware statutory
trust (the “Issuer”).

 

WHEREAS,
pursuant to an Amended and Restated Declaration of Trust (the “Declaration”),
dated as of February 15, 2006, among the trustees named therein of the
Issuer, American Equity Investment Life Holding Company, as sponsor, and the
Holders from time to time of undivided beneficial interests in the assets of
the Issuer, the Issuer is issuing on the date hereof securities, having an
aggregate liquidation amount of up to $30,000,000, designated the Capital
Securities; and

 

WHEREAS,
as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Guarantee, to pay to the Holders of Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the purchase by each Holder of the Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit
of the Holders.

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1. Definitions and Interpretation.

 

In this Guarantee, unless
the context otherwise requires:

 

(a)                                  capitalized terms used in this Guarantee but
not defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;

 

(b)                                 a term defined anywhere in this Guarantee has
the same meaning throughout;

 

(c)                                  all references to “the Guarantee” or “this
Guarantee” are to this Guarantee as modified, supplemented or amended from time
to time;

 

(d)                                 all references in this Guarantee to Articles
and Sections are to Articles and Sections of this Guarantee, unless otherwise
specified;

 

 

(e)                                  terms defined in the Declaration as of the
date of execution of this Guarantee have the same meanings when used in this
Guarantee, unless otherwise defined in this Guarantee or unless the context
otherwise requires; and

 

(f)                                    a reference to the singular includes the
plural and vice versa.

 

“Beneficiaries”
means any Person to whom the Issuer is or hereafter becomes indebted or liable.

 

“Corporate
Trust Office” means the office of the Guarantee Trustee at which the corporate
trust business of the Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Guarantee is located at 919 Market Street, Suite 700, Wilmington, DE
19801.

 

“Covered
Person” means any Holder of Capital Securities.

 

“Debentures”
means the junior subordinated debentures of American Equity Investment Life
Holding Company, designated the Junior Subordinated Debt Securities due 2036,
held by the Institutional Trustee (as defined in the Declaration) of the
Issuer.

 

“Event
of Default” has the meaning set forth in Section 2.4.

 

“Guarantee
Payments” means the following payments or distributions, without duplication,
with respect to the Capital Securities, to the extent not paid or made by the
Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to the
extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the Redemption Price (as
defined in the Indenture) to the extent the Issuer has funds available in the
Property Account therefor at such time, with respect to any Capital Securities
called for redemption by the Issuer, (iii) the Special Redemption Price
(as defined in the Indenture) to the extent the Issuer has funds available in
the Property Account therefor at such time, with respect to Capital Securities
called for redemption upon the occurrence of a Special Event (as defined in the
Indenture), and (iv) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders of the Capital Securities in
exchange therefor as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Capital Securities to the date of payment, to the extent the Issuer has
funds available in the Property Account therefor at such time, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer after satisfaction of liabilities to creditors of
the Issuer as required by applicable law (in either case, the “Liquidation
Distribution”).

 

“Guarantee
Trustee” means Wells Fargo Delaware Trust Company, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.

 

“Holder”
means any holder, as registered on the books and records of the Issuer, of any
Capital Securities; provided, however, that, in determining whether the holders
of the 

 

2

 

requisite percentage of
Capital Securities have given any request, notice, consent or waiver hereunder,
“Holder” shall not include the Guarantor or any Affiliate of the Guarantor.

 

“Indemnified
Person” means the Guarantee Trustee (including in its individual capacity), any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Guarantee Trustee.

 

“Indenture”
means the Indenture, dated as of February 15, 2006, between the Guarantor
and Wells Fargo Delaware Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the Institutional Trustee of the Issuer.

 

“Liquidation
Distribution” has the meaning set forth in the definition of “Guarantee
Payments” herein.

 

“Majority
in liquidation amount of the Capital Securities” means Holder(s) of outstanding
Capital Securities, voting together as a class, but separately from the holders
of Common Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to, but excluding, the date
upon which the voting percentages are determined) of all Capital Securities
then outstanding.

 

“Obligations”
means any costs, expenses or liabilities (but not including liabilities related
to taxes) of the Issuer, other than obligations of the Issuer to pay to holders
of any Trust Securities the amounts due such holders pursuant to the terms of
the Trust Securities.

 

“Officer’s
Certificate” means, with respect to any Person, a certificate signed by one
Authorized Officer of such Person. Any Officer’s Certificate delivered with respect
to compliance with a condition or covenant provided for in this Guarantee shall
include:

 

(a)                                  a statement that each officer signing the
Officer’s Certificate has read the covenant or condition and the definitions
relating thereto;

 

(b)                                 a brief statement of the nature and scope of
the examination or investigation undertaken by each officer in rendering the
Officer’s Certificate;

 

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

 

(d)                                 a statement as to whether, in the opinion of
each such officer, such condition or covenant has been complied with.

 

“Person”
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust,

 

3

 

unincorporated association,
or government or any agency or political subdivision thereof, or any other
entity of whatever nature.

 

“Responsible
Officer” means, with respect to the Guarantee Trustee, any officer within the
Corporate Trust Office of the Guarantee Trustee with direct responsibility for
the administration of any matters relating to this Guarantee, including any
vice president, any assistant vice president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer’s
knowledge of and familiarity with the particular subject.

 

“Successor
Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 3.1.

 

“Trust
Securities” means the Common Securities and the Capital Securities.

 

ARTICLE II

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

SECTION 2.1. Powers and Duties of the Guarantee Trustee.

 

(a)                                  This Guarantee shall be held by the Guarantee
Trustee for the benefit of the Holders of the Capital Securities, and the
Guarantee Trustee shall not transfer this Guarantee to any Person except a
Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or
to a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee. The right,
title and interest of the Guarantee Trustee shall automatically vest in any
Successor Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.

 

(b)                                 The Guarantee Trustee, before the occurrence
of any Event of Default and after the curing or waiving of all Events of
Default that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Guarantee, and no implied
covenants shall be read into this Guarantee against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.4(b)) and is actually known to a Responsible Officer
of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.

 

(c)                                  No provision of this Guarantee shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

 

4

 

(i)                                     prior to the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred:

 

(A)                              the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee,
and the Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Guarantee,
and no implied covenants or obligations shall be read into this Guarantee
against the Guarantee Trustee; and

 

(B)                                in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee; but in the case of any
such certificates or opinions furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether or not
on their face they conform to the requirements of this Guarantee;

 

(ii)                                  the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that such Responsible Officer of
the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;

 

(iii)                               the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee; and

 

(iv)                              no provision of this Guarantee shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee, or security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk
or liability is not reasonably assured to it.

 

SECTION 2.2. Certain Rights of the Guarantee Trustee.

 

(a)                                  Subject to the provisions of Section 2.1:

 

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

 

5

 

believed
by it to be genuine and to have been signed, sent or presented by the proper
party or parties.

 

(ii)                                  Any direction or act of the Guarantor
contemplated by this Guarantee shall be sufficiently evidenced by an Officer’s
Certificate.

 

(iii)                               Whenever, in the administration of this
Guarantee, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officer’s Certificate of the Guarantor which, upon
receipt of such request, shall be promptly delivered by the Guarantor.

 

(iv)                              The Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument or other writing
(or any rerecording, refiling or reregistration thereof).

 

(v)                                 The Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee from any court of
competent jurisdiction.

 

(vi)                              The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s
agents, nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable advances as
may be requested by the Guarantee Trustee; provided, however,
that nothing contained in this Section 2.2(a)(vi) shall be taken to
relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Guarantee.

 

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

 

6

 

(viii)                        The Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it hereunder.

 

(ix)                                Any action taken by the Guarantee Trustee or
its agents hereunder shall bind the Holders of the Capital Securities, and the
signature of the Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee, both of
which shall be conclusively evidenced by the Guarantee Trustee’s or its agent’s
taking such action.

 

(x)                                   Whenever in the administration of this
Guarantee the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from
the Holders of a Majority in liquidation amount of the Capital Securities, (B) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received and (C) shall be protected in conclusively
relying on or acting in accordance with such instructions.

 

(xi)                                The Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Guarantee.

 

(b)                                 No provision of this Guarantee shall be
deemed to impose any duty or obligation on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Guarantee Trustee shall be construed to be a duty.

 

SECTION 2.3. Not Responsible for Recitals or Issuance of
Guarantee.

 

The
recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee.

 

SECTION 2.4. Events of Default; Waiver.

 

(a)                                  An Event of Default under this Guarantee will
occur upon the failure of the Guarantor to perform any of its payment or
other obligations hereunder; provided, that except with respect to default in
payment of any Guarantee Payments, the Guarantor 

 

7

 

shall
have received notice of default from the Guarantee Trustee and shall not have
cured such default within thirty (30) days after receipt of such notice.

 

(b)                                 The Holders of a Majority in liquidation
amount of the Capital Securities may, voting or consenting as a class, on behalf
of the Holders of all of the Capital Securities, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and shall be deemed to have been cured, for every purpose of
this Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.

 

SECTION 2.5. Events of Default; Notice.

 

(a)                                  The Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Capital Securities, notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee,
unless such defaults have been cured before the giving of such notice, provided,
however, that the Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders of the Capital Securities.

 

(b)                                 The Guarantee Trustee shall not be charged
with knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice thereof from the Guarantor or a Holder of the Capital
Securities, or a Responsible Officer of the Guarantee Trustee charged with the
administration of this Guarantee shall have actual knowledge thereof.

 

ARTICLE III

THE GUARANTEE TRUSTEE

 

SECTION 3.1. The Guarantee Trustee; Eligibility.

 

(a)                                  There shall at all times be a Guarantee
Trustee which shall:

 

(i)                                     not be an Affiliate of the Guarantor; and

 

(ii)                                  be a corporation or national association
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia, or Person
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation or national association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above, then,
for the purposes of this Section 3.1(a)(ii), the combined capital and
surplus of such corporation or national association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.

 

8

 

(b)                                 If at any time the Guarantee Trustee shall
cease to be eligible to so act under Section 3.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set forth in Section 3.2(c).

 

(c)                                  If the Guarantee Trustee has or shall acquire
any “conflicting interest’ within the meaning of Section 310(b) of
the Trust Indenture Act, the Guarantee Trustee shall either eliminate such
interest or resign to the extent and in the manner provided by, and subject to,
this Guarantee.

 

SECTION 3.2. Appointment, Removal and Resignation of the
Guarantee Trustee.

 

(a)                                  Subject to Section 3.2(b), the Guarantee
Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.

 

(b)                                 The Guarantee Trustee shall not be removed in
accordance with Section 3.2(a) until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Guarantee Trustee and delivered to the Guarantor.

 

(c)                                  The Guarantee Trustee appointed to office
shall hold office until a Successor Guarantee Trustee shall have been appointed
or until its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor and
the resigning Guarantee Trustee.

 

(d)                                 If no Successor Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 3.2
within 60 days after delivery of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.

 

(e)                                  No Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Guarantee Trustee.

 

(f)                                    Upon termination of this Guarantee or removal
or resignation of the Guarantee Trustee pursuant to this Section 3.2, the
Guarantor shall pay to the Guarantee Trustee all amounts owing to the Guarantee
Trustee under Sections 7.2 and 7.3 accrued to the date of such termination,
removal or resignation.

 

9

 

ARTICLE IV

GUARANTEE

 

SECTION 4.1. Guarantee.

 

(a)                                  The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as and when due,
regardless of any defense (except as defense of payment by the Issuer), right
of set-off or counterclaim that the Issuer may have or assert. The
Guarantor’s obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.

 

(b)                                 The Guarantor hereby also agrees to assume
any and all Obligations of the Issuer and in the event any such Obligation is
not so assumed, subject to the terms and conditions hereof, the Guarantor
hereby irrevocably and unconditionally guarantees to each Beneficiary the full
payment, when and as due, of any and all Obligations to such Beneficiaries.
This Guarantee is intended to be for the Beneficiaries who have received notice
hereof.

 

SECTION 4.2. Waiver of Notice and Demand.

 

The
Guarantor hereby waives notice of acceptance of this Guarantee and of any
liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

 

SECTION 4.3. Obligations Not Affected.

 

The
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:

 

(a)                                  the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer;

 

(b)                                 the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the Capital
Securities (other than an extension of time for the payment of the
Distributions, Redemption Price, Special Redemption Price, Liquidation
Distribution or other sums payable that results from the extension of any
interest payment period on the Debentures or any extension of the maturity date
of the Debentures permitted by the Indenture);

 

10

 

(c)                                  any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders pursuant to the
terms of the Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;

 

(d)                                 the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer or
any of the assets of the Issuer;

 

(e)                                  any invalidity of, or defect or deficiency
in, the Capital Securities;

 

(f)                                    the settlement or compromise of any
obligation guaranteed hereby or hereby incurred; or

 

(g)                                 any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 4.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.

 

There
shall be no obligation of the Holders to give notice to, or obtain consent of,
the Guarantor with respect to the happening of any of the foregoing.

 

SECTION 4.4. Rights of Holders.

 

(a)                                  The Holders of a Majority in liquidation
amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under this Guarantee; provided,
however, that (subject to Sections 2.1 and 2.2) the Guarantee Trustee
shall have the right to decline to follow any such direction if the Guarantee
Trustee shall determine that the actions so directed would be unjustly
prejudicial to the Holders not taking part in such direction or if the
Guarantee Trustee being advised by legal counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Guarantee
Trustee in good faith by its board of directors or trustees, executive
committee or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceeding so directed would
involve the Guarantee Trustee in personal liability.

 

(b)                                 Any Holder of Capital Securities may institute
a legal proceeding directly against the Guarantor to enforce the Guarantee
Trustee’s rights under this Guarantee, without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person. The
Guarantor waives any right or remedy to require that any such action be brought
first against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.

 

11

 

SECTION 4.5. Guarantee of Payment.

 

This
Guarantee creates a guarantee of payment and not of collection.

 

SECTION 4.6. Subrogation.

 

The
Guarantor shall be subrogated to all (if any) rights of the Holders of Capital
Securities against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any right that it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee, if, after giving effect to
any such payment, any amounts are due and unpaid under this Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

 

SECTION 4.7. Independent Obligations.

 

The
Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Capital Securities and that the
Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g),
inclusive, of Section 4.3 hereof.

 

SECTION 4.8. Enforcement.

 

A
Beneficiary may enforce the Obligations of the Guarantor contained in Section 4.1
(b) directly against the Guarantor, and the Guarantor waives any right or
remedy to require that any action be brought against the Issuer or any other
person or entity before proceeding against the Guarantor.

 

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 5.1. Limitation of Transactions.

 

So
long as any Capital Securities remain outstanding, if (a) there shall have
occurred and be continuing an Event of Default or (b) the Guarantor shall
have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (x) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Guarantor’s capital stock or (y) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank pari
passu in all respects with or junior in interest to the Debentures
(other than (i) payments under this Guarantee, (ii) repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor (A) in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors, or consultants, (B) in connection with a dividend reinvestment
or stockholder stock 

 

12

 

purchase plan or (C) in
connection with the issuance of capital stock of the Guarantor (or securities
convertible into or exercisable for such capital stock), as consideration in an
acquisition transaction entered into prior to the occurrence of the Event of
Default or the applicable Extension Period, (iii) as a result of any
exchange or conversion of any class or series of the Guarantor’s
capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or
series of the Guarantor’s capital stock or of any class or series of
the Guarantor’s indebtedness for any class or series of the Guarantor’s
capital stock, (iv) the purchase of fractional interests in shares of the
Guarantor’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (v) any
declaration of a dividend in connection with any stockholder’s rights plan, or the
issuance of rights, stock or other property under any stockholder’s rights
plan, or the redemption or repurchase of rights pursuant thereto, or (vi) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior
to such stock).

 

SECTION 5.2. Ranking.

 

This
Guarantee will constitute an unsecured obligation of the Guarantor and will
rank subordinate and junior in right of payment to all present and future
Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their
acceptance thereof, each Holder of Capital Securities agrees to the foregoing
provisions of this Guarantee and the other terms set forth herein.

 

This
Guarantee will rank pari passu in
right of payment to any similar guarantee agreements issued by the Guarantor
with respect to securities (if any) similar to the Capital Securities, issued
by trusts other than the Issuer established or to be established by the
Guarantor (if any), in each case similar to the Issuer American Equity Capital
Trust I, American Equity Capital Trust II, American Equity Capital Trust III,
American Equity Capital Trust IV, American Equity Capital Trust V, American
Equity Capital Trust VI, American Equity Capital Trust VII, American Equity
Capital Trust VIII, American Equity Capital Trust IX, American Equity Capital
Trust X and American Equity Capital Trust XI.

 

The
right of the Guarantor to participate in any distribution of assets of any of
its subsidiaries upon any such subsidiary’s liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor
of that subsidiary. Accordingly, the Guarantor’s obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor’s subsidiaries, and claimants hereunder should
look only to the assets of the Guarantor for payments thereunder. This
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture or agreement that the Guarantor may enter
into in the future or otherwise.

 

13

 

ARTICLE VI

TERMINATION

 

SECTION 6.1. Termination.

 

This
Guarantee shall terminate (i) upon full payment of the Redemption Price or
the Special Redemption Price, as the case may be, of all Capital
Securities then outstanding, (ii) upon the distribution of all of the
Debentures to the Holders of all of the Capital Securities or (iii) upon
full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities
or under this Guarantee.

 

ARTICLE VII

INDEMNIFICATION

 

SECTION 7.1. Exculpation.

 

(a)                                  In no event shall any Indemnified Person be
liable for any indirect, special punitive or consequential loss or damage of
any kind whatsoever, including, but not limited to, lost profits, even if the
Indemnified Person has been advised of the likelihood of such loss or damage
and regardless of the form of action.

 

(b)                                 In no event shall any Indemnified Person be
liable for any failure or delay in the performance of its obligations hereunder
because of circumstances beyond its control, including, but not limited to,
acts of God, flood, war (declared or undeclared), terrorism, fire, riot,
embargo, government action, including any laws, ordinances, regulations, governmental
action or the like which delay, restrict or prohibit the providing of the
services contemplated by this Guarantee Agreement.

 

SECTION 7.2. Indemnification.

 

(a)                                  The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense incurred without
negligence or willful misconduct on the part of the Indemnified Person,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including but not limited to the costs and expenses
(including reasonable legal fees and expenses) of the Indemnified Person
defending itself against, or investigating, any claim or liability in
connection with the exercise or performance of any of the Indemnified Person’s
powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2
shall survive the resignation or removal of the Guarantee Trustee and the
termination of this Guarantee.

 

(b)                                 Promptly after receipt by an Indemnified
Person under this Section 7.2 of notice of the commencement of any action,
such Indemnified Person will, if a claim in respect thereof is to be made
against the Guarantor under this Section 7.2, notify the Guarantor in
writing of the commencement thereof; but the failure so to notify the Guarantor
(i) will not relieve the Guarantor from liability under paragraph (a) above

 

14

 

unless
and to the extent that the Guarantor did not otherwise learn of such action and
such failure results in the forfeiture by the Guarantor of substantial rights
and defenses and (ii) will not, in any event, relieve the Guarantor from
any obligations to any Indemnified Person other than the indemnification
obligation provided in paragraph (a) above. The Guarantor shall be
entitled to appoint counsel of the Guarantor’s choice at the Guarantor’s
expense to represent the Indemnified Person in any action for which
indemnification is sought (in which case the Guarantor shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the
Indemnified Person or Persons except as set forth below); provided, however,
that such counsel shall be reasonably satisfactory to the Indemnified Person.
Notwithstanding the Guarantor’s election to appoint counsel to represent the
Indemnified Person in any action, the Indemnified Person shall have the right
to employ separate counsel (including local counsel), and the Guarantor shall
bear the reasonable fees, costs and expenses of such separate counsel, if (i) the
use of counsel chosen by the Guarantor to represent the Indemnified Person
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Persons which are different from or additional to
those available to the Guarantor, (iii) the Guarantor shall not have
employed counsel satisfactory to the Indemnified Person to represent the
Indemnified Person within a reasonable time after notice of the institution of
such action or (iv) the Guarantor shall authorize the Indemnified Person
to employ separate counsel at the expense of the Guarantor. The Guarantor will
not, without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not
the Indemnified Persons are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of each Indemnified Person from all liability arising out of such
claim, action, suit or proceeding. The Guarantor may avoid its duty to
indemnify under this Section 7.2 if an Indemnified Person, without the
prior written consent of the Guarantor (which consent shall not be unreasonably
withheld), settles or compromises or consents to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding and
indemnity could have been sought hereunder by such Indemnified Party unless
such settlement, compromise or consent includes an unconditional release of the
Guarantor from all liability arising out of such claim, action, suit or
proceeding. The Guarantor shall not be liable for any settlement of any claim
effected without its consent.

 

(c)                                  The Guarantee Trustee will not claim or exact
any lien or charge on any Guarantee Payments as a result of any amount due to
it under this Guarantee Agreement.

 

SECTION 7.3. Compensation; Reimbursement of Expenses.

 

The
Guarantor agrees:

 

(a)                                  to pay to the Guarantee Trustee from time to
time such compensation for all services rendered by it hereunder as the parties
shall agree to from time to time (which 

 

15

 

compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and

 

(b)                                 except as otherwise expressly provided
herein, to reimburse the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by it in accordance with
any provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
willful misconduct.

 

The
provisions of this Section 7.3 shall survive the resignation or removal of
the Guarantee Trustee and the termination of this Guarantee.

 

ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.1. Successors and Assigns.

 

All
guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Capital Securities then
outstanding. Except in connection with any merger or consolidation of the
Guarantor with or into another entity or any sale, transfer or lease of the
Guarantor’s assets to another entity, in each case to the extent permitted
under the Indenture, the Guarantor may not assign its rights or delegate
its obligations under this Guarantee without the prior approval of the Holders
of not less than a Majority in liquidation amount of the Capital Securities.

 

SECTION 8.2. Amendments.

 

Except
with respect to any changes that do not adversely affect the rights of Holders
of the Capital Securities in any material respect (in which case no consent of
Holders will be required), this Guarantee may be amended only with the
prior approval of the Guarantor and the Holders of not less than a Majority in
liquidation amount of the Capital Securities. The provisions of the Declaration
with respect to amendments thereof shall apply equally with respect to
amendments of the Guarantee.

 

SECTION 8.3. Notices.

 

All
notices provided for in this Guarantee shall be in writing, duly signed by the
party giving such notice, and shall be delivered, telecopied or mailed by first
class mail, as follows:

 

(a)                                  If given to the Guarantee Trustee, at the
Guarantee Trustee’s mailing address set forth below (or such other address as
the Guarantee Trustee may give notice of to the Holders of the Capital
Securities):

 

16

 

Wells
Fargo Delaware Trust Company

919 Market Street

Suite 700

Wilmington, DE 19801

Attention: Corporate Trust Division

Telecopy: 302-575-2006

Telephone: 302-575-2005

 

(b)                                 If given to the Guarantor, at the Guarantor’s
mailing address set forth below (or such other address as the Guarantor may give
notice of to the Holders of the Capital Securities and to the Guarantee
Trustee):

 

American
Equity Investment Life Holding Company

5000 Westown Parkway, Suite 440

West Des Moines, Iowa 50266

Attention: Wendy L. Carlson

Telecopy: (515) 221-0744

Telephone: (515) 457-1824

 

(c)                                  If given to any Holder of the Capital
Securities, at the address set forth on the books and records of the Issuer.

 

All
such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid, except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the
date of such refusal or inability to deliver.

 

SECTION 8.4. Benefit.

 

This
Guarantee is solely for the benefit of the Holders of the Capital Securities
and, subject to Section 2.1(a), is not separately transferable from the
Capital Securities.

 

SECTION 8.5. Governing Law.

 

THIS
GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

SECTION 8.6. Counterparts.

 

This
Guarantee may contain more than one counterpart of the signature page and
this Guarantee may be executed by the affixing of the signature of the
Guarantor and the Guarantee Trustee to any of such counterpart signature
pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.

 

17

 

THIS
GUARANTEE is executed as of the day and year first above written.

 

	
   

  	
  American
  Equity Investment Life Holding 

  Company, as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wendy L. Carlson

  
	
   

  	
  Name:

  	
  Wendy L. Carlson

  
	
   

  	
  Title:

  	
  CFO & General
  Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO DELAWARE TRUST

  
	
   

  	
  COMPANY,
  as Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward L. Truitt, Jr.

  
	
   

  	
  Name:

  	
  Edward L. Truitt, Jr.

  
	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.22

 

 

REINSURANCE
AGREEMENT

 

EFFECTIVE: OCTOBER 1, 2005

 

BETWEEN

 

AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY

5000
Westown Parkway, Suite 440

WEST
DES MOINES, IOWA 50266

(Referred
to in this Agreement as the Company)

 

AND

 

HANNOVER
LIFE REASSURANCE COMPANY OF AMERICA

800 North Magnolia
Ave., Suite 1400

ORLANDO, FLORIDA
32803

(Referred to in
this Agreement as the Reinsurer)

 

 

AUTOMATIC YRT

HA-AEIL-05

 

March 22, 2006

 

 

Table of Contents

 

	
  Article I

  	
   

  	
  Preamble

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article II

  	
   

  	
  Automatic Reinsurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article III

  	
   

  	
  Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IV

  	
   

  	
  Duration of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article V

  	
   

  	
  Premiums

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VI

  	
   

  	
  Claims and Claim
  Reimbursements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VII

  	
   

  	
  Experience Refunds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VIII

  	
   

  	
  Accounting and
  Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IX

  	
   

  	
  Recapture

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article X

  	
   

  	
  Extra Contractual
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XI

  	
   

  	
  General Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XII

  	
   

  	
  DAC Tax

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIII

  	
   

  	
  Insolvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIV

  	
   

  	
  Reinsurer’s Right of
  Notice of Unusual Practices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XV

  	
   

  	
  Arbitration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVI

  	
   

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVII

  	
   

  	
  Execution

  	
   

  

 

 

	
  Exhibit A

  	
   

  	
  Reinsurer’s Share and
  Company’s Share

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
   

  	
  Plans Covered

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
   

  	
  Reinsured Risks

  
	
   

  	
   

  	
   

  
	
  Exhibit C-1

  	
   

  	
  Procedures For
  Reporting

  
	
   

  	
   

  	
   

  
	
  Exhibit C-2

  	
   

  	
  Request For Financial
  Reporting Information

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Reinsurance Premium
  Calculation

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Experience Refund
  Calculation

  

 

 

ARTICLE I

 

PREAMBLE

 

1)             Parties
to the Agreement. This is a Yearly Renewable Term Reinsurance Agreement for
indemnity reinsurance (the “Agreement”) solely between Hannover Life
Reassurance Company of America, Orlando, Florida (the “Reinsurer”), and
American Equity Investment Life Insurance Company, West Des Moines, Iowa (the “Company”),
collectively referred to as the “parties”.

 

The acceptance of risks
under this Agreement will create no right or legal relationship between the
Reinsurer and the annuitant, owner or beneficiary of any insurance policy or
other contract of the Company.

 

The Agreement will be
binding upon the Company and the Reinsurer and their respective successors and
assigns.

 

2)             Compliance.
This Agreement applies only to the issuance of insurance by the Company in a
jurisdiction in which it is properly licensed.

 

The Company represents
that it is in compliance with all state and federal laws applicable to the
business reinsured under this Agreement. In the event that the Company is found
to be in non-compliance with any law material to this Agreement, the Agreement
will remain in effect and the Company will indemnify the Reinsurer for any loss
the Reinsurer suffers as a result of the non-compliance, and will seek to
remedy the non-compliance immediately upon discovery thereof.

 

3)             Construction.
This Agreement will be construed in accordance with the laws of the state of
Iowa.

 

4)             Entire
Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the business reinsured hereunder. There are no understandings
between the parties other than as expressed in this Agreement. Any change or
modification to this Agreement will be null and void unless made by amendment
to this Agreement and signed by both parties.

 

5)             Severability.
If any provision of this Agreement is determined to be invalid or
unenforceable, such determination will not impair or affect the validity or the
enforceability of the remaining provisions of this Agreement.

 

6)             Assignment.
Neither party may assign, transfer, sell, convey or otherwise dispose of
any of its rights, duties or obligations under this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that the parties acknowledge and agree that the
Reinsurer may retrocede any or all of the risks that it accepts under this
Agreement.

 

...END OF ARTICLE I

 

1

 

ARTICLE II

 

AUTOMATIC
REINSURANCE

 

1)             General
Conditions. On and after the Effective Date (as specified in Article XVII)
of this Agreement, the Company will cede to the Reinsurer a portion of the “Reinsured
Risks”, which are those risks specified in Exhibit B-2, in respect of the
policy plans listed in Exhibit B-1 (the “Reinsured Policies”).

 

The Reinsurer will
automatically accept its share (the “Reinsurer’s Share”) of the Reinsured Risks
on the above-referenced policies, provided that the Company retains in full its
share (the “Company’s Share”) of the same risks. The Company will not transfer,
assign, convey, reinsure or otherwise dispose of its share of the Reinsured
Risks without the Reinsurer’s written consent.

 

The Reinsurer’s Share and
the Company’s Share are specified in Exhibit A. The Reinsurer’s Share and
the Company’s Share may be revised, at any quarter end, by mutual consent
of both parties.

 

...END OF ARTICLE II

 

2

 

ARTICLE III

 

LIABILITY

 

1)             Reinsurer’s
Liability. The Reinsurer’s liability will commence on the effective date of
this Agreement, will continue in accordance with the terms and conditions of
this Agreement, and will end on termination of this Agreement. Payment by the
Company to the Reinsurer of all Reinsurance Premiums due under this Agreement,
as specified in Article V, is a condition precedent to the Reinsurer’s
liability hereunder.

 

...END OF ARTICLE III

 

3

 

ARTICLE IV

 

DURATION OF AGREEMENT

 

1)             This
Agreement is indefinite as to its duration. The Company or the Reinsurer may terminate
this Agreement with respect to the reinsurance of new business by giving ninety
(90) days written notice of such termination to the other party.

 

During the notification
period, the Company will continue to cede and the Reinsurer will continue to
accept policies covered under the terms of this Agreement. The Reinsurer will
not be liable for policies with issue dates on and after the ninetieth (90th)
day after the date notice is given.

 

Reinsurance coverage on
all Reinsured Policies will remain in force until the termination or expiry of
the Reinsured Policies or until the contractual termination of reinsurance
under the terms of this Agreement, as provided for in Article V and Article IX,
whichever comes first. When reinsurance coverage is no longer in force, this
Agreement will be terminated.

 

...END OF ARTICLE IV

 

4

 

ARTICLE V

 

PREMIUMS

 

1)             Premiums.
The basis of calculation of the premiums (the “Reinsurance Premiums”) for the
risks reinsured under this Agreement is shown in Exhibit D.

 

2)             Premium
Guarantee. The basis of calculation of the Reinsurance Premiums, and the “Reinsurance
Premium Rate”, which is also specified in Exhibit D, are guaranteed for
the duration of this Agreement.

 

3)             Payment
of Premiums and Reporting. Reinsurance Premiums in respect of each of the
Reinsured Policies are payable by the Company to the Reinsurer quarterly in
arrears. The Company will self-administer the calculation, reporting and
payment of Reinsurance Premiums due, in accordance with Article VIII.

 

4)             Failure
to Pay Premiums. The payment of Reinsurance Premiums is a condition precedent
to the liability of the Reinsurer for reinsurance covered by this Agreement. In
the event that Reinsurance Premiums are not paid within thirty (30) days of the
Remittance Date, as specified in Article VIII, the Reinsurer will have the
right to terminate the reinsurance under all policies having Reinsurance
Premiums in arrears. If the Reinsurer elects to exercise its right of
termination, it will give the Company thirty (30) days written notice of its
intention.

 

If all Reinsurance Premiums
in arrears, including any that become in arrears during the thirty- day notice
period, are not paid before the expiration of the notice period, the Reinsurer
will be relieved of all liability under those policies as of the last date to
which Reinsurance Premiums have been paid. Reinsurance on policies on which
Reinsurance Premiums subsequently fall due will automatically terminate as of
the last date to which premiums have been paid for each policy, unless
reinsurance premiums on those policies are paid on or before their Remittance
Dates. Reinsurance Premiums in arrears shall accrue interest at a rate of ten
percent (10%) per annum.

 

Terminated reinsurance may be
reinstated, subject to approval by the Reinsurer, within sixty (60) days of the
date of termination, and upon payment of all Reinsurance Premiums in arrears
including any interest accrued thereon. The Reinsurer will have no liability
for any claims incurred between the date of termination and the date of the
reinstatement of the reinsurance. The right to terminate reinsurance will not
prejudice the Reinsurer’s right to collect premiums for the period during which
reinsurance was in force prior to the expiration of the thirty (30) days
notice.

 

If the Reinsurer
terminates reinsurance on all of the Reinsured Policies in accordance with the
provisions in this paragraph 4, this will constitute contractual termination of
reinsurance, as referred to in Article IV.

 

The Company will not
force termination under the provisions of this Article solely to avoid the
provisions regarding recapture in Article IX, or to transfer the reinsured
policies to another reinsurer.

 

...END OF ARTICLE V

 

5

 

ARTICLE VI

 

CLAIMS
AND CLAIM REIMBURSEMENTS

 

1)             Claim
Amounts. Claims covered under this Agreement include only claims relating to
the Reinsured Risks on the Reinsured Policies. The amounts payable in respect
of such claims (the “Claim Amounts”) are defined in Exhibit B-2.

 

2)             Claim
Reimbursements. Where claims have been made under this Agreement,
reimbursements of these claims may in certain circumstances be made at a
later date. The amounts payable in respect of such reimbursements (the “Claim
Reimbursements”) are defined in Exhibit B-2.

 

3)             Payment
of Claim Amounts, Claim Reimbursements and Reporting. Claim Amounts in respect
of each of the Reinsured Policies are payable by the Reinsurer to the Company
quarterly in arrears. Claim Reimbursements in respect of each of the Reinsured
Policies are payable by the Company to the Reinsurer quarterly in arrears. The
Company will self-administer the calculation and reporting of the Claim Amounts
and Claim Reimbursements due, in accordance with Article VIII.

 

...END OF ARTICLE VI

 

6

 

ARTICLE VII

 

EXPERIENCE REFUNDS

 

1)             At the end of each quarter, an experience
refund will be calculated and, if positive, paid by the Reinsurer to the
Company. The Company will self-administer the calculation and reporting of any
such amount due (the “Experience Refund Amount”), in accordance with Article VIII.

 

The
calculation of the Experience Refund Amount is described in Exhibit E.

 

...END OF ARTICLE VII

 

7

 

ARTICLE VIII

 

ACOUNTING AND REPORTING

 

1)             Quarterly Reporting. The company will
self-administer the calculation and payment of Reinsurance Premiums, Claim
Amounts, Claim Reimbursements and Experience Refunds due under this Agreement.
Within thirty (30) days after the end of each quarter (the “Remittance Date”),
the Company will send the Reinsurer a report that contains the information
shown in Exhibit C-1 and Exhibit C-2, showing the Reinsurance
Premiums, Claim Amounts, Claim Reimbursements and Experience Refund Amount due
for that quarter. If an amount is due the Reinsurer, the Company will remit
that amount together with the statement. If an amount is due the Company, the
Reinsurer will remit such amount within thirty (30) days of receipt of the
statement.

 

2)             Electronic
Data Transmission. The Company shall report its reinsurance transactions via
electronic media. The Company shall consult with the Reinsurer to determine the
appropriate reporting format. Should the Company subsequently desire to make
changes in the data format or the code structure, the Company shall communicate
such changes to the Reinsurer in writing (describing in reasonable detail the
changes) and obtain the Reinsurer’s written approval thereof prior to the use
of such changes.

 

3)             Policy
Changes. Whenever a change is made in the status, plan, amount or other
material feature of a policy reinsured under this Agreement, the Company will
notify the Reinsurer of such change with the next statement following the month
in which the change was made.

 

...END OF ARTICLE VIII

 

8

 

ARTICLE IX

 

RECAPTURE

 

1)             The
Company may recapture the risks reinsured under this Agreement as of the
end of any quarter beginning October 1, 2008, subject to a
non-negative Experience Account Balance as defined in Exhibit E. On recapture,
the regular quarterly accounting and reporting described in Article VIII
will be completed and any amounts owed the Reinsurer or the Company will be
paid. No amounts other than those specified in Article VIII will be due
either of the parties on recapture or thereafter.

 

On recapture, that
portion of the Reinsured Risks in respect of the Reinsured Policies, which was
previously ceded to the Reinsurer in accordance with Article II, will be
recaptured by the Company. The Reinsurer’s liability in respect of the
Reinsured Risks on the Reinsured Policies will cease and this Agreement will be
terminated with effect from the end of the quarter in question.

 

Recapture
will constitute a contractual termination of reinsurance, as referred to in Article IV.

 

No form of partial
recapture is allowed under this Agreement.

 

...END OF ARTICLE IX

 

9

 

ARTICLE X

 

EXTRA
CONTRACTUAL OBLIGATIONS

 

1)             The
Reinsurer will not participate in any Extra Contractual Obligations, including,
but not limited to, Punitive Damages or Compensatory Damages, that are awarded
against the Company as a result of an act, omission, or course of conduct
committed by the Company, its agents, or representatives in connection with the
risks reinsured under this Agreement.

 

For purposes of this
Article, the following definitions will apply.

 

“Extra
Contractual Obligations” shall mean any liabilities or obligations of
the Company other than those liabilities or obligations arising under the
express terms and conditions of the risks reinsured under this Agreement. Payments
not covered by this Agreement include, but are not limited to: (a) delayed
claims interest; (b) statutory or regulatory fines or other penalties; (c) ex
gratia payments; (d) Compensatory Damages; (e) Punitive Damages or
exemplary damages; (f) consequential damages; (g) declaratory
judgments; (h) legal fees or expenses; (i) costs relating to the
investigation, settlement or handling of claims; (j) payments resulting from
the failure to pay, the delay in payment, or errors in calculating or
administering the payment of benefits or claims or any other amounts due or
alleged to be due under or in connection with the risks reinsured under this
Agreement; (k) costs relating to the administration of the risks reinsured
under this Agreement; (l) costs relating to the design, marketing, sale,
underwriting, production, issuance, rating and cancellation of the risks
reinsured under this Agreement; (m) any other costs or expenses of settling or adjudicating
contested claims, if such costs or expenses are not incurred in the ordinary
course of claims settlement or payment.

 

“Punitive Damages” are
those damages awarded as a penalty, the amount of which is neither governed nor
fixed by statute.

 

“Compensatory Damages”
are those amounts awarded to compensate for the actual damages sustained, and
are not awarded as a penalty, nor fixed in amount by statute.

 

...END OF ARTICLE X

 

10

 

ARTICLE XI

 

GENERAL
PROVISIONS

 

1)             Currency.
All payments and reporting by both parties under this Agreement will be made in
United States Dollars (US$).

 

2)             Premium
Tax. The Reinsurer will not reimburse the Company for premium taxes.

 

3)             Inspection
of Records. The Reinsurer and the Company, or their duly authorized
representatives, will have the right to inspect and audit original papers,
records, and all documents relating to the business reinsured under this
Agreement including but not limited to underwriting, claims processing, and administration.
Such access will be provided during regular business hours at the office of the
inspected party. The Reinsurer may suspend payments relating to matters in
dispute that arise from such inspection and audit until such dispute is
resolved by the parties either through mutual agreement or by arbitration in
accordance with Article XV.

 

4)             USA
Patriot Act and Blocked Persons. The
Company covenants to the Reinsurer that it will comply with United States
Treasury Department’s Office of Foreign Assets Control and USA Patriot Act
requirements (the “Laws”) in connection with the Reinsured Policies. The
Company agrees to indemnify and hold harmless the Reinsurer from and against
any and all sanctions, penalties, assessments and other liabilities suffered or
incurred by the Reinsurer arising from any breach by the Company of the Laws.

 

5)             Off-Set. Any debts or credits, in favor of or
against either the Reinsurer or the Company with respect to this Agreement, are
deemed mutual debts or credits and may be offset, and only the balance
will be allowed or paid.

 

The right of offset will not be affected or diminished
because of the insolvency of either party.

 

6)             Errors
and Omissions. If through unintentional error, oversight, omission, or
misunderstanding (collectively referred to as “errors”), the Reinsurer or the
Company fails to comply with the terms of this Agreement and if, upon discovery
of the error by either party, the other is promptly notified, each thereupon
will be restored to the position it would have occupied if the error had not
occurred, including interest.

 

If it is not possible to
restore each party to the position it would have occupied but for the error,
the parties will endeavor in good faith to promptly resolve the situation in a
manner that is fair and reasonable, and most closely approximates the intent of
the parties as evidenced by this Agreement.

 

For the avoidance of
doubt, the parties agree that this paragraph 6 relates only to clerical errors.

 

11

 

However, the Reinsurer
will not provide reinsurance for policies that do not satisfy the parameters of
this Agreement, nor will the Reinsurer be responsible for negligent or
deliberate acts or for repetitive errors in administration by the Company. If
either party discovers that the Company has failed to cede reinsurance as
provided in this Agreement, or failed to comply with its reporting
requirements, the Reinsurer may require the Company to audit its records
for similar errors and to take the actions necessary to avoid similar errors in
the future.

 

7)     Company
Forms and Rates. The Company will furnish the Reinsurer with copies of its
application forms, policy forms and any other forms or tables needed for proper
handling of reinsurance under this Agreement. The Reinsurer acknowledges that
the Company may on occasion need to make changes to its forms or tables,
or introduce new forms. Where this occurs, the parties agree that:

 

(i) where the forms
in question do not introduce or change any provisions that relate to the
Reinsured Risks, the Company is required only to furnish the Reinsurer with
copies of the relevant forms, and the Reinsurer’s liability will remain
unchanged; and

 

(ii) where the forms
in question introduce or change provisions that relate to the Reinsured Risks,
the Reinsurer’s liability will cease in respect of each of the Reinsured
Policies to which the forms relate, unless the Company obtains from the
Reinsurer written agreement to the contrary.

 

...END OF ARTICLE XI

 

12

 

ARTICLE XII

 

DAC TAX

 

1)             The
parties to this Agreement agree to the following provisions pursuant to Section 1.848-2(g)(8) of
the Income Tax Regulations effective December 29, 1992, under Section 848
of the Internal Revenue Code of 1986, as amended:

 

a.             The
term ‘party’ refers to either the Company or the Reinsurer, as appropriate.

 

b.             The
terms used in this Article are defined by reference to Regulation Section 1.848-2,
effective December 29, 1992.

 

c.             The
party with the net positive consideration for this Agreement for each taxable
year will capitalize specified policy acquisition expenses with respect to this
Agreement with regard to the general deductions limitation of Section 848(c)(1).

 

d.             Both
parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency, or as
otherwise required by the Internal Revenue Service.

 

e.             The
Company will submit a schedule to the Reinsurer by May of each year
with its calculation of the net consideration for the preceding calendar year.
This schedule of calculations will be accompanied by a statement signed by
an officer of the Company stating that the Company will report such net
consideration in its tax return for the preceding calendar year. The Reinsurer may contest
such calculation by providing an alternative calculation to the Company in
writing within thirty (30) days of the Reinsurer’s receipt of the Company’s
calculation. If the Reinsurer does not so notify the Company within the
required timeframe, the Reinsurer will report the net consideration as
determined by the Company in the Reinsurer’s tax return for the previous
calendar year.

 

f.              If
the Reinsurer contests the Company’s calculation of the net consideration, the
parties will act in good faith to reach an agreement as to the correct amount
within thirty (30) days of the date the Reinsurer submits its alternative
calculation. If the Company and the Reinsurer reach an agreement on an amount
of net consideration, each party will report the agreed upon amount in its tax
return for the previous calendar year.

 

g.             Both
the Company and the Reinsurer represent and warrant that they are subject to
United States taxation under either Subchapter L or Subpart F of Part III
of Subchapter N of the Internal Revenue Code of 1986, as amended.

 

...END OF ARTICLE XII

 

13

 

ARTICLE XIII

 

INSOLVENCY

 

1)             Insolvency.
The Company will be deemed insolvent when it:

 

a.  applies for or consents
to the appointment of a receiver, rehabilitator, conservator, liquidator or
statutory successor of its properties or assets; or

 

b. is adjudicated as
bankrupt or insolvent; or

 

c.  files or consents
to the filing of a petition in bankruptcy, seeks reorganization to avoid
insolvency or makes formal application for any bankruptcy, dissolution,
liquidation or similar law or statute; or

 

d. becomes the subject
of an order to rehabilitate or an order to liquidate as defined by the
insurance code of the jurisdiction of the party’s domicile.

 

2)             Insolvency
of the Company. In the event of the insolvency of the Company, all reinsurance
payments due under this Agreement will be payable directly to the liquidator,
rehabilitator, receiver, or statutory successor of the Company, without
diminution because of the insolvency, for those claims allowed against the
Company by any court of competent jurisdiction or by the liquidator,
rehabilitator, receiver or statutory successor having authority to allow such
claims.

 

In the event of
insolvency of the Company, the liquidator, rehabilitator, receiver, or
statutory successor will give written notice to the Reinsurer of all pending
claims against the Company on any policies reinsured within a reasonable time
after such claim is filed in the insolvency proceeding. While a claim is
pending, the Reinsurer may investigate and interpose, at its own expense,
in the proceeding where the claim is adjudicated, any defense or defenses that
it may deem available to the Company or its liquidator, rehabilitator,
receiver, or statutory successor.

 

The expense incurred by
the Reinsurer will be chargeable, subject to court approval, against the
Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit that may accrue to the Company solely
as a result of the defense undertaken by the Reinsurer. Where two or more
reinsurers are participating in the same claim and a majority in interest elect
to interpose a defense or defenses to any such claim, the expense will be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Company.

 

The Reinsurer will be
liable only for the amounts reinsured and will not be or become liable for any
amounts or reserves to be held by the Company on policies reinsured under this
Agreement.

 

...END OF ARTICLE XIII

 

14

 

ARTICLE XIV

 

REINSURER’S RIGHT OF NOTICE OF
UNUSUAL PRACTICES

 

1)             In
providing reinsurance facilities to the Company under this Agreement, the
Reinsurer has granted the Company considerable authority with respect to
automatic binding power, reinstatements, claim settlements, and the general
administration of the reinsurance account. To facilitate transactions, the
Reinsurer has required the minimum amount of information and documentation
possible, reflecting its utmost faith and confidence in the Company. The
Reinsurer assumes that, except as otherwise notified in writing by the Company,
and agreed to in writing by the Reinsurer, the underwriting, claims, general
administrative processing rules or guidelines, and other insurance
practices employed by the Company with respect to reinsurance ceded under this
Agreement are generally consistent with the customary and usual practices of
the insurance industry as a whole. Where the Company does engage in exceptional
or uncustomary practices or implements a change in its underwriting rules or
guidelines, with respect to business covered under this Agreement, the Company
agrees to advise the Reinsurer in writing forty-five (45) days prior to
implementing such practice or change and receive a written acceptance of said
practice or change from the Reinsurer before assigning any liability to the
Reinsurer with respect to any reinsurance issued under such practice or change.
The Company acknowledges and agrees that its covenant to the Reinsurer to so
advise the Reinsurer of any exceptional or uncustomary practice or
implementation of such a significant change including changes in its key
managerial personnel and corporate or legal structure is a material incentive
to the Reinsurer agreeing to enter into this Agreement, and absent such a
covenant, the Reinsurer would not have entered into this Agreement.

 

...END OF ARTICLE XIV

 

15

 

ARTICLE XV

 

ARBITRATION

 

1)             It is the intention of the Reinsurer and the
Company that the customs and practices of the life insurance and reinsurance
industry will be given full effect in the operation and interpretation of this
Agreement. The parties agree to act in all matters with the highest good faith.
However, if the Reinsurer and the Company cannot mutually resolve a dispute
that arises out of or relates to this Agreement, the dispute will be decided
through arbitration as a precedent to any right of action hereunder.

 

To
initiate arbitration, either the Company or the Reinsurer will notify the other
party in writing of its desire to arbitrate, stating the nature of its dispute
and the remedy sought. The party to which the notice is sent will respond to
the notification in writing within fifteen (15) days of its receipt.

 

There
will be three arbitrators who will be current or former senior officers of life
insurance or life reinsurance companies other than the parties to this
Agreement, their affiliates or subsidiaries. Each of the parties will appoint
one of the arbitrators and these two arbitrators will select the third. If
either party refuses or neglects to appoint an arbitrator within sixty (60)
days of the initiation of the arbitration, the other party may appoint the
second arbitrator. If the two arbitrators do not agree on a third arbitrator
within thirty (30) days of the appointment of the second arbitrator, then each
arbitrator shall nominate three individuals selected from the ARIAS-US list of
certified arbitrators. Each arbitrator shall then decline two of the
nominations presented by the other arbitrator. The third arbitrator shall then
be chosen from the remaining two nominations by drawing lots.

 

Once
chosen, the arbitrators are empowered to select the site of the arbitration and
decide all substantive and procedural issues by a majority of votes. As soon as
possible, the arbitrators will establish arbitration procedures as warranted by
the facts and issues of the particular case. The arbitrators will have the
power to determine all procedural rules of the arbitration, including but
not limited to inspection of documents, examination of witnesses and any other
matter relating to the conduct of the arbitration. The arbitrators may consider
any relevant evidence; they will weigh the evidence and consider any
objections. Each party may examine any witnesses who testify at the
arbitration hearing.

 

The
arbitrators will base their decision on the terms and conditions of this
Agreement and the customs and practices of the life insurance and reinsurance
industries rather than on strict interpretation of the law. The decision of the
arbitrators will be made by majority rule and will be submitted in
writing. The decision will be final and binding on both parties and there will
be no appeal from the decision. Either party to the arbitration may petition
any court having jurisdiction over the parties to reduce the decision to
judgment.

 

Unless the arbitrators decide otherwise, each
party will bear the expense of its own arbitration activities, including its
appointed arbitrator and any outside attorney and witness fees. The parties
will jointly and equally bear the expense of the third arbitrator and other
costs of the arbitration.

 

This
Article will survive termination of this Agreement.

 

...END OF ARTICLE XV

 

16

 

ARTICLE XVI

 

CONFIDENTIALITY

 

1)             The
Company and the Reinsurer agree that Customer and Proprietary Information will
be treated as confidential. Customer Information includes, but is not limited
to, medical, financial, and other personal information about proposed, current,
and former policyowners, annuitants, applicants, and beneficiaries of policies
issued by the original Company. Proprietary Information includes, but is not
limited to, business plans and trade secrets, mortality and lapse studies,
underwriting manuals and guidelines, applications and contract forms, and the
specific terms and conditions of this Agreement.

 

Customer and Proprietary
Information will not include information that:

 

a.             is
or becomes available to the general public through no fault of the party
receiving the Customer or Proprietary Information (the “Recipient”);

 

b.             is
independently developed by the Recipient;

 

c.             is
acquired by the Recipient from a third party not covered by a confidentiality
agreement; or

 

d.             is
disclosed under a court order, law or regulation.

 

The parties will not
disclose such information to any other parties unless agreed to in writing,
except as necessary for retrocession purposes, as requested by external
auditors, as required by court order, or as required or allowed by law or
regulation.

 

The Company acknowledges
that the Reinsurer can aggregate data with other companies reinsured with the
Reinsurer as long as the data cannot be identified as belonging to the Company.

 

...END OF ARTICLE XVI

 

17

 

ARTICLE XVII

 

EXECUTION

 

This Agreement is
effective as of 12:01 a.m. on October 1, 2005 (the “Effective Date”).

 

This Agreement has been
made in duplicate and is hereby executed by both parties.

 

AMERICAN EQUITY INVESTMENT LIFE
INSURANCE COMPANY

WEST DES MOINES, IOWA

 

	
  Date:

  	
   

  	
  3/26/06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Wendy L. Carlson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  General Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
  /s/ Sandra Lockhart

  	
   

  

 

 

HANNOVER LIFE REASSURANCE COMPANY
OF AMERICA

ORLANDO, FLORIDA

 

	
  Date:

  	
   

  	
  3/29/06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Jeffrey R. Burt

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  VP – Marketing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
  /s/ Gary L. Gray

  	
   

  

 

...END OF ARTICLE XVII

 

18

 

EXHIBIT A

 

REINSURER’S SHARE AND COMPANY’S SHARE

 

The Reinsurer’s Share is
forty percent (40%), which is the portion of the Reinsured Risks accepted by
the Reinsurer. The Company’s Share is sixty percent (60%), which is the portion
of the Reinsured Risks retained by the Company.

 

19

 

EXHIBIT B-1

 

PLANS COVERED

 

This
Agreement provides for reinsurance of the Company’s Single Premium Deferred
Annuities (SPDAs) and Flexible Premium Deferred Annuities (FPDAs), with the
plan codes listed below.

 

All
such plans issued and in-force as of the Effective Date of the Agreement and
all such plans issued on or after the Effective Date are reinsured under the
Agreement.

 

With
respect to plans reinsured with EquiTrust Life Insurance Company as of the
Effective Date of this Agreement, the Agreement provides reinsurance on the
portion of such plans not reinsured with EquiTrust Life Insurance Company.

 

	
  Plan
  Codes

  
	
   

  
	
  ACCUMULATOR

  	
   

  	
  FPDA-3 7.3

  	
   

  	
  I-2001TX

  	
   

  	
  INDEX-26

  	
   

  	
  SNF ACC55

  
	
  BN PROCEED

  	
   

  	
  FPDA-3 REV

  	
   

  	
  I-2001TX-5

  	
   

  	
  INDEX-27

  	
   

  	
  SNF ACCUM

  
	
  BRAVO

  	
   

  	
  FPDA-3FL

  	
   

  	
  I-2002

  	
   

  	
  INDEX-27IN

  	
   

  	
  SPDA-1

  
	
  BRAVO 2003

  	
   

  	
  FPDA-3IN

  	
   

  	
  I-2002 REV

  	
   

  	
  INDEX-28

  	
   

  	
  SPDA-1(3%)

  
	
  CUMULATOR

  	
   

  	
  FPDA-3TX

  	
   

  	
  I-25 (REV)

  	
   

  	
  INDEX-28IN

  	
   

  	
  SPDA-1PA

  
	
  F-3FLREV

  	
   

  	
  FPDA-4

  	
   

  	
  I-27 (REV)

  	
   

  	
  INDEX-28KY

  	
   

  	
  SPDA-1PLUS

  
	
  F-3INREV

  	
   

  	
  FPDA-4PA

  	
   

  	
  I-27REV IN

  	
   

  	
  INDEX-29

  	
   

  	
  SPDA-1SNF

  
	
  F-3REVTX

  	
   

  	
  FPDA-4SNF

  	
   

  	
  I-27REV KY

  	
   

  	
  INDEX-30

  	
   

  	
  SPDA-1UT

  
	
  FPD22.25IN

  	
   

  	
  FPDA-5

  	
   

  	
  I-29 (REV)

  	
   

  	
  INDEX-3-05

  	
   

  	
  SPDA-2

  
	
  FPD32.25IN

  	
   

  	
  FPDA5 2.25

  	
   

  	
  IDX-1-05IN

  	
   

  	
  INDEX-30IN

  	
   

  	
  SPDA-2(3%)

  
	
  FPD72.25IN

  	
   

  	
  FPDA5225IN

  	
   

  	
  IDX-1-05KY

  	
   

  	
  INDEX-30KY

  	
   

  	
  SPDA-2PA

  
	
  FPD82.25IN

  	
   

  	
  FPDA-5FL

  	
   

  	
  IDX-26 7.5

  	
   

  	
  INDEX-4

  	
   

  	
  SPDA-2SNF

  
	
  FPDA-1

  	
   

  	
  FPDA-5PLUS

  	
   

  	
  IDX-4-05TX

  	
   

  	
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  FPDA2-2001

  	
   

  	
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20

 

EXHIBIT B-2

 

REINSURED
RISKS

 

The following risks are
covered under this Agreement, resulting in the Claim Amounts and Claim
Reimbursements defined below, for each of the Reinsured Policies:

 

(a) Waiver of
Surrender Charge on Partial Withdrawal

 

Where the contract issued
by the Company to the holder of one of the Reinsured Policies provides for it,
the Company waives the surrender charge that normally applies to surrenders or
withdrawals, and allows a free partial withdrawal. The cost to the Company of
such waived surrender charges is a Reinsured Risk under this Agreement.

 

Any surrender charge
waived for any reason other than as provided for in the contract originally
issued to the holder of the Reinsured Policy by the Company is not a Reinsured
Risk.

 

Without prejudice to the
generality of the foregoing, in no event will a surrender charge waived in the
following circumstances be considered a Reinsured Risk:

 

(i) on withdrawal in
the first contract year of the Reinsured Policy;

(ii) on partial
withdrawals in excess of 10% of the fund value in any contract year of the
Reinsured Policy;

(iii) at the
discretion of the Company;

(iv) as required or
demanded of the Company by any third party.

 

Where a surrender charge
actually waived by the Company is a Reinsured Risk, the Reinsurer’s Share of
that surrender charge is a Claim Amount.

 

Where the contract issued
by the Company to the holder of one of the Reinsured Policies provides for it,
the Company applies a charge on surrender, to recover any surrender charge
waived on partial withdrawal during the preceding twelve months. Where the
waived surrender charge on the partial withdrawal in question was a Reinsured
Risk under this Agreement, the Reinsurer’s Share of the charge applied on
surrender (to recover the surrender charge waived on the partial withdrawal) is
a Claim Reimbursement.

 

(b) Waiver of
Surrender Charge on Death

 

In the event of the death
of the holder of one of the Reinsured Policies, the Company waives the
surrender charge that would have applied if the policy had been surrendered as
at the date of death. The cost to the Company of such waived surrender charges
is a Reinsured Risk under this Agreement.

 

The Reinsurer’s Share of
any such waived surrender charge is a Claim Amount.

 

21

 

EXHIBIT C-1

 

PROCEDURES FOR REPORTING

 

The Company will maintain
adequate records to administer the reinsurance accounts and will cede
reinsurance under this Agreement on a bordereau self-administration basis. The
Company will provide the Reinsurer with an activity report on computer disk or
other mutually agreed upon electronic media, substantially in conformity with
the following:

 

A)            Quarterly
Statement of Reinsured Policies

 

The Company will provide
the Reinsurer with a report of all reinsured policies issued or renewing during
the past quarter, which should include the following:

 

1)             Policy
number

2)             Policy
status

3)             Policy
plan

4)             Name:
surname, first name, middle initial

5)             Issue
age

6)             Sex

7)             Issue
date

8)             Fund
value at beginning of quarter

9)             Applicable
surrender charge at beginning of quarter (or policy date if later)

10)           Reinsurance
Premium for quarter

11)           Claim
Amount(s) for quarter

12)           Claim
Reimbursement for quarter

 

B)            Quarterly
Experience Refund Statement

 

The Company will provide
the Reinsurer with a statement showing the calculation of the Experience Refund
Amount for the quarter, which should include the following items:

 

1)             Total
Reinsurance Gain (TRG)

2)             Total
Reinsurance Risk Charge (TRRC)

3)             Experience
Account Balance at the end of the previous quarter (EABt-1)

4)             Experience
Account Balance at the end of the current quarter (EABt)

5)             Experience
Refund Amount (ERA)

 

The terms and symbols
used above are defined in Exhibit E.

 

22

 

EXHIBIT C-2

 

REQUEST FOR FINANCIAL REPORTING
INFORMATION

 

Please
provide the following information as soon as practical after the close of the
quarter but not later than the due date as stated in Article VIII. Please
provide monthly or other interim reports if available. All reports should include both the Reinsurer’s Treaty Number
(HA-AEIL-05) as well as the Company’s reference number. The Company must
maintain and provide, upon request, sufficiently detailed reports such that
reserve calculations can be independently verified by the Reinsurer’s auditors
and examiners.

 

A)            Quarterly Reporting

 

1)     Policy counts.

2)     Statutory reserves, split by issue year and
(if appropriate) in accordance with Exhibits 5–8 of the statutory annual
statement.

3)     Policy level detail statutory reserve listing via electronic media.

 

B)            Annual Statutory Reporting

 

1)     Statutory reserves, in Exhibit 5 format.

2)     Page 7, Analysis of Increase in Reserves.

3)     Policy Exhibit.

4)     Policy level detail statutory reserve listing via electronic media.

5)     Exhibit reconciling detail listing to summary reports.

 

C)            Statutory Annual Statement, when published.

 

23

 

EXHIBIT D

 

REINSURANCE PREMIUM CALCULATION

 

The Reinsurance Premium (RP) payable each quarter in respect of each of the Reinsured
Policies is given by:

 

RP = RPR × FV × RS × SC ÷ 4

 

where

 

RPR is the
Reinsurance Premium Rate, which is 7.2%;

FV is the fund
value of the policy at the beginning of the quarter (or zero if the policy date
falls after the beginning of the quarter in question);

RS is the
Reinsurer’s Share, as specified in Exhibit A;

SC is the
surrender charge applicable to the policy at the beginning of the quarter (or
zero if the policy date falls after the beginning of the quarter in question).

 

24

 

EXHIBIT E

 

EXPERIENCE
REFUND CALCULATION

 

The
method of calculation of the Experience Refund Amount is described below.

 

Define
the following terms in respect of each Reinsured Policy:

 

RP is the Reinsurance Premium for the quarter,
calculated in accordance with Exhibit D;

FV is the fund value of the policy at the
beginning of the quarter;

RS is the Reinsurer’s Share, as specified in Exhibit A;

SC is the surrender charge applicable to the policy
at the beginning of the quarter (or policy date if later);

CA is the Claim Amount on the policy in the
quarter, where the Claim Amount is as defined in Exhibit B-2;

CR is the Claim Reimbursement on the policy in
the quarter, where the Claim Reimbursement is as defined in Exhibit B-2;

 

Calculate
the Reinsurance Gain (RG) on the
policy as:

 

RG = RP
- (CA - CR)

 

Calculate
the Reinsurance Risk Charge (RRC) for the
policy as:

 

RRC =
FV × RS × SC × (0.1 + 0.02) × 0.0125

 

Calculate
the Total Reinsurance Gain (TRG) and Total
Reinsurance Risk Charge (TRRC) as the
sum of the values of RG and RRC, calculated as described above, for all the Reinsured
Policies.

 

The
Experience Account Balance at the end of the quarter (EABt)
is defined as:

 

EABt = min[0, (EABt-1 ×
1.03) + TRG -
TRRC]

 

where
EABt-1 is the Experience Account Balance at the end
of the previous quarter (or zero if the Experience Refund Calculation is being
done for the first time).

 

The
Experience Refund Amount (ERA) for the
quarter is given by:

 

ERA =
max[0, (EABt-1 × 1.03) + TRG - TRRC]

 

25

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