10-K

_______________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

_____________

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002 Commission File Number 1-12332

Protective Life Corporation

(Exact name of Registrant as specified in its charter)

2801 HIGHWAY 280 SOUTH
BIRMINGHAM, ALABAMA 35223

(Address of principal executive offices, including zip code)

DELAWARE	95-2492236
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identificiation No.)

Registrant's telephone number, including area code (205) 268-1000

_____________

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.50 Par Value
Series A Junior Participating Cumulative Preferred Stock, $1.00 Par Value
PLC Capital Trust III 7.5% Trust Originated Preferred Securities
PLC Capital Trust IV 7.25% Trust Originated Preferred Securities
Guarantees Issued for the Benefit of Holders of:
PLC Capital Trust III 7.5% Trust Originated Preferred Securities
Guarantees Issued for the Benefit of Holders of:
PLC Capital Trust IV 7.25% Trust Originated Preferred Securities

(Title of Class)

Name of each exchange
on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No[ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in the definitive proxy statement or information statements or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer. Yes [X] No [ ]

Aggregate market value of voting stock held by nonaffiliates of the Registrant as of June 28, 2002, the last business day of the most recent second fiscal quarter: $2,178,186,345

Number of shares of Common Stock, $0.50 Par Value, outstanding as of March 7, 2003: 68,886,738

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's 2002 Annual Report To Share Owners (the "2002 Annual Report To Share Owners") are incorporated by reference into Parts I, II, and IV of this Report.

Portion of the Registrant's Proxy Statement dated March 21, 2003, are incorporated by reference into Part III of this Report.

_______________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________

PROTECTIVE LIFE CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

                                                       PART I

Item 1.       Business..........................................................

Item 2.       Properties........................................................

Item 3.       Legal Proceedings.................................................

Item 4.       Submission of Matters to a Vote of Share Owners...................


                                                       PART II

Item 5.       Market for the Registrant's Common Equity and
                Related Share-Owner Matters.....................................

Item 6.       Selected Financial Data...........................................

Item 7.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations.............................

Item 7A.      Quantitative and Qualitative Disclosure About Market Risk.........

Item 8.       Financial Statements and Supplementary Data.......................

Item 9.       Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure.............................


                                                      PART III

Item 10.      Directors and Executive Officers of the Registrant................

Item 11.      Executive Compensation............................................

Item 12.      Security Ownership of Certain Beneficial Owners and
                Management and Related Share Owner Matters......................

Item 13.      Certain Relationships and Related Transactions....................

Item 14.      Controls and Procedures...........................................

                                                       PART IV

Item 15.      Exhibits, Financial Statement Schedules, and Reports
                on Form 8-K.....................................................

PART I

Item 1. Business

        Protective Life Corporation is a holding company, whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. Founded in 1907, Protective Life Insurance Company is the Company’s largest operating subsidiary. Unless the context otherwise requires, the “Company” refers to the consolidated group of Protective Life Corporation and its subsidiaries.

        Copies of the Company’s Proxy Statement and 2002 Annual Report to Share Owners will be furnished to anyone who requests such documents from the Company. Requests for copies should be directed to: Share-Owner Relations, Protective Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202, Telephone (205) 268-3573, FAX (205) 268-5547. Copies may also be requested through the Internet from the Company’s Worldwide Web Site (www.protective.com). The Company makes periodic and current reports available free of charge on our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information incorporated herein by reference is also electronically accessible through the Internet from the “EDGAR Database of Corporate Information” on the Securities and Exchange Commission’s World Wide Web site (www.sec.gov).

        The Company operates business segments each having a strategic focus which can be grouped into three general categories: life insurance, retirement savings and investment products, and specialty insurance products. The life insurance category includes the Life Marketing and Acquisitions segments. The retirement savings category includes the Stable Value Products and Annuities segments, and the specialty insurance products category includes the Asset Protection segment. In addition, the Company has another business segment referred to herein as the Corporate and Other segment.

        Additional information concerning the Company’s business segments may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” and Note 10 to Consolidated Financial Statements in the Company’s 2002 Annual Report to Share Owners, which are incorporated herein by reference.

        In the following paragraphs, the Company reports sales and new capital invested. These statistics are used by the Company to measure the relative progress of its marketing and acquisition efforts. These statistics were derived from the Company’s various sales tracking and administrative systems and were not derived from the Company’s financial reporting systems or financial statements. These statistics attempt to measure only one of many factors that may affect future profitability, and therefore are not intended to be predictive of future profitability.

LIFE INSURANCE

        A strategic focus of the Company is to expand its individual life insurance operations through internal growth and acquisitions.

Life Marketing

        The Life Marketing segment markets level premium term and term-like insurance, universal life, variable universal life and “bank owned life insurance” (BOLI) products on a national basis. The segment uses several methods of distribution for its products. One distribution network is based on experienced independent personal producing general agents who are recruited by regional sales managers. The segment also distributes insurance products through a distribution system comprised of brokerage general agencies who recruit a network of independent life agents. Also the Company, markets BOLI through an independent marketing organization that specializes in this market. The segment also distributes life insurance products through stockbrokers and banks, and through direct response and worksite arrangements.

        The following table shows the Life Marketing segment’s sales measured by new premium.

             YEAR ENDED
             DECEMBER 31                             SALES
- ------------------------------------------------------------------------
                                             (DOLLARS IN MILLIONS)

                1998                                 $111.8
                1999                                  139.2
                2000                                  161.8
                2001                                  163.4
                2002                                  224.1
- ------------------------------------------------------------------------

Acquisitions

        The Acquisitions segment focuses on acquiring, converting, and servicing policies acquired from other companies. The segment’s primary focus is on life insurance policies sold to individuals. These acquisitions may be accomplished through acquisitions of companies or through the reinsurance of blocks of policies from other insurers. Forty-three transactions have been closed by the segment since 1970, including 16 since 1989. Policies acquired through the segment are usually administered as “closed” blocks; i.e., no new policies are being marketed. Therefore, the amount of insurance in force for a particular acquisition is expected to decline with time due to lapses and deaths of the insureds.

        Most acquisitions closed by the Acquisitions segment do not include the acquisition of an active sales force. In transactions where some marketing activity was included, the Company generally either ceased future marketing efforts or redirected those efforts to another segment of the Company. However, in the case of the acquisition of West Coast Life Insurance Company (West Coast) which was closed by the Acquisitions segment, the Company elected to continue the marketing of new policies and operate West Coast as a component of the Company’s Life Marketing segment.

        The Company believes that its focused and disciplined approach to the acquisition process and its experience in the assimilation, conservation, and servicing of acquired policies give it a significant competitive advantage over many other companies that attempt to make similar acquisitions. The Company expects acquisition opportunities to continue to be available as the life insurance industry continues to consolidate; however, management believes that the Company may face increased competition for future acquisitions.

        Total revenues and income before income tax from the Acquisitions segment are expected to decline with time unless new acquisitions are made. Therefore, the segment’s revenues and earnings may fluctuate from year to year depending upon the level of acquisition activity.

        The following table shows the number of transactions closed by the Acquisitions segment and the approximate amount of (statutory) capital invested for each year in which an acquisition was made.

                                 NUMBER
       YEAR ENDED                  OF                       CAPITAL
      DECEMBER 31             TRANSACTIONS                  INVESTED
- ------------------------------------------------------------------------------
                                                      (DOLLARS IN MILLIONS)
          1997                     1 (1)                      $116.8 (1)
          1998                     1                            77.8
          2001                     2                           247.8
          2002                     1                            60.0

- -----------
(1) West Coast

        Although acquisition opportunities were pursued, no transactions were completed in 1999 or 2000. In 2001, the Company coinsured a block of individual life policies from Standard Insurance Company, and acquired the stock of Inter-State Assurance Company and First Variable Life Insurance Company from ILona Financial Group, Inc., the U.S. subsidiary of Irish Life & Permanent plc of Dublin, Ireland. In 2002, the Company coinsured a block of traditional life and interest-sensitive life insurance policies from Conseco Variable Insurance Company.

        From time to time other of the Company's business segments have acquired companies and blocks of policies which are included in their respective results.

RETIREMENT SAVINGS AND INVESTMENT PRODUCTS

        A second strategic focus of the Company is to offer products that respond to the shift in consumer preference to savings products brought about by demographic trends as "baby-boomers" move into the saving stage of their life cycle. The products that support this strategy are stable value contracts and annuities.

Stable Value Contracts

        The Company's Stable Value Contracts segment markets guaranteed investment contracts (GICs) to 401(k) and other qualified retirement savings plans, and sells funding agreements to special purpose entities that in turn issue notes or certificates in smaller, transferable denominations. The segment also markets fixed and floating rate funding agreements to the trustees of municipal bond proceeds, institutional investors, bank trust departments and money market funds.

        GICs are generally contracts which specify a return on deposits for a specified period and often provide flexibility for withdrawals at book value in keeping with the benefits provided by the plan. The demand for GICs is related to the relative attractiveness of the "fixed rate" investment option in a 401(k) plan compared to the equity-based investment options available to plan participants.

        The Company's emphasis is on a consistent and disciplined approach to product pricing and asset/liability management, careful underwriting of early withdrawal risks and maintaining low distribution and administration costs. Most GIC contracts and funding agreements written by the Company have maturities of three to five years.

        The following table shows the stable value contracts sales.

       YEAR ENDED                              FUNDING
      DECEMBER 31              GICS          AGREEMENTS          TOTAL
- ---------------------------------------------------------------------------
                                        (DOLLARS IN MILLIONS)

          1998                  $488              $336           $ 824
          1999                   584               386             970
          2000                   418               801           1,219
          2001                   409               637           1,046
          2002                   267               888           1,155

        The rate of growth in account balances is affected by the amount of maturing contracts relative to the amount of sales.

Annuities

        The Company’s Annuities segment manufactures, sells, and supports fixed and variable annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Life Marketing segment’s sales force.

        The Company’s fixed annuities are primarily modified guaranteed annuities which guarantee an interest rate for a fixed period. Because contract values are “market-value adjusted” upon surrender prior to maturity, these products afford the Company a measure of protection from the effects of changes in interest rates. The Company also offers variable annuities which offer the policyholder the opportunity to invest in various investment accounts.

        The following table shows fixed and variable annuity sales. The demand for annuity products is related to the general level of interest rates and performance of the equity markets.

       YEAR ENDED                 FIXED                    VARIABLE                   TOTAL
       DECEMBER 31              ANNUITIES                  ANNUITIES                ANNUITIES
- -------------------------------------------------------------------------------------------------
                                                     (dollars in millions)

          1998                     $ 97                      $472                      $569
          1999                      350                       361                       711
          2000                      635                       257                       892
          2001                      689                       263                       952
          2002                      628                       325                       953

SPECIALTY INSURANCE PRODUCTS

        A third strategic focus of the Company is to participate in specialized segments of the insurance industry.

Asset Protection

        The Asset Protection segment markets credit life and disability insurance products through banks, consumer finance companies and automobile dealers and markets vehicle and recreational marine extended service contracts. The segment markets through employee field representatives, wholly-owned subsidiaries and independent agents and administrators.

        The Asset Protection segment also has offered other casualty insurance products, including surety bonds and products that insure or guarantee the residual or market value of vehicles under leases and vehicle finance contracts. The segment’s recent operating results have been negatively affected as a result of casualty claims in these lines being significantly higher than assumed or estimated when these products were priced, and the segment is taking affirmative steps to exit or reduce its risk exposure in these lines. Actual claims experience in these lines is affected by general economic conditions, trends in used vehicle prices and default rates and other factors that can be very difficult to predict when pricing products. Although the Company is taking affirmative steps to exit or reduce its exposure to these casualty product lines, a material adverse development in such casualty claims trends could have a material, adverse affect on the company.

        In 1997, the Company acquired the Western Diversified Group. In 2000, the Company acquired the Lyndon Insurance Group (Lyndon).

        The Company is the sixth largest writer of credit insurance in the United States according to industry surveys. These policies cover consumer loans made by financial institutions located primarily in the southeastern United States and automobile dealers throughout the United States.

        The following table shows the credit insurance and related product sales measured by new premium including the sales of Western Diversified and Lyndon since the date of acquisition.

             YEAR ENDED
             DECEMBER 31                             SALES
- ------------------------------------------------------------------------
                                             (DOLLARS IN MILLIONS)

                1998                                 $273.5
                1999                                  283.4
                2000                                  523.6
                2001                                  521.5
                2002                                  490.3

        In 2002, approximately 55% of the segment’s sales were through automobile dealers, and approximately 40% of sales were extended service contracts. A portion of the sales are reinsured with producer-owned reinsurers.

        In 1999 the Company recaptured a closed block of credit policies that it had previously ceded to another insurer. The segment also includes earnings from other small ancillary lines which the segment is no longer actively marketing.

Corporate and Other

        The Company has an additional business segment referred to as Corporate and Other. The Corporate and Other segment primarily consists of net investment income and expenses not attributable to the other business segments described above (including net investment income on unallocated capital and interest on substantially all debt). This segment also includes earnings from several small lines of business which the Company is not actively marketing (mostly cancer insurance and group annuities), various investment-related transactions, and the operations of several small subsidiaries. The earnings of this segment may fluctuate from year to year. In 2000, the Company sold its participation in a joint venture which owned a small life insurance company in Hong Kong.

Discontinued Operations

        On December 31, 2001, the Company completed the sale to Fortis, Inc. of substantially all of its Dental Benefits Division (Dental Division), and discontinued other remaining Dental Division operations, primarily other health insurance lines.

Investments

        The types of assets in which the Company may invest are influenced by various state laws which prescribe qualified investment assets. Within the parameters of these laws, the Company invests its assets giving consideration to such factors as liquidity needs, investment quality, investment return, matching of assets and liabilities, and the overall composition of the investment portfolio by asset type and credit exposure. For further information regarding the Company’s investments, the maturity of and the concentration of risk among the Company’s invested assets, derivative financial instruments, and liquidity, see Notes 1 and 2 to the Consolidated Financial Statements, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2002 Annual Report to Share Owners.

        A significant portion of the Company’s bond portfolio is invested in mortgage-backed securities. Mortgage-backed securities are constructed from pools of residential mortgages, and may have cash flow volatility as a result of changes in the rate at which prepayments of principal occur with respect to the underlying loans. Prepayments of principal on the underlying residential loans can be expected to accelerate with decreases in interest rates and diminish with increases in interest rates. The Company has not invested in the higher risk tranches of mortgage-backed securities (except mortgage-backed securities issued in securitization transactions sponsored by the Company). In addition, the Company has entered into hedging transactions to reduce the volatility in market value of its mortgage-backed securities.

        The table below shows a breakdown of the Company’s mortgage-backed securities portfolio by type at December 31, 2002. Planned amortization class securities (PACs) pay down according to a schedule. Targeted amortization class securities (TACs) pay down in amounts approximating a targeted schedule. Non-Accelerated Security (NAS) receive no principal payments in the first five years, after which NAS receive an increasing percentage of pro rata principal payments until the tenth year, after which NAS receive principal as principal of the underlying mortgages is received. All of these types of structured mortgage-backed securities give the Company some measure of protection against both prepayment and extension risk.

        Accretion directed securities have a stated maturity but may repay more quickly. Sequentials receive payments in order until each class is paid off. Pass through securities receive principal as principal of the underlying mortgages is received. Support tranches are designed to receive cash after the more stable tranches (i.e., PACs and TACs) are satisfied. The CMBS are commercial mortgage-backed securities issued in securitization transactions sponsored by the Company, in which the Company securitized portions of its mortgage loan portfolio.

                                               PERCENTAGE OF
                                              MORTGAGE-BACKED
     TYPE                                        SECURITIES
- -----------------------------------------------------------------------

     PAC                                             10.5%
     TAC                                              2.8
     NAS                                             11.0
     Accretion Directed                               2.2
     Sequential                                       7.1
     Pass Through                                    58.0
     Support                                          0.6
     CMBS                                             7.8
                                                    ------
                                                    100.0%
                                                    ======

        The Company obtains ratings of its fixed maturities from Moody’s Investors Service, Inc. (Moody’s) and Standard & Poor’s Corporation (S&P). If a bond is not rated by Moody’s or S&P, the Company uses ratings from the Securities Valuation Office of the National Association of Insurance Commissioners (NAIC), or the Company rates the bond based upon a comparison of the unrated issue to rated issues of the same issuer or rated issues of other issuers with similar risk characteristics. At December 31, 2002, approximately 99% of bonds were rated by Moody’s, S&P, or the NAIC.

        The approximate percentage distribution of the Company’s fixed maturity investments by quality rating at December 31, 2002, is as follows:

Rating                                           Maturity Investments
- ---------------------------------------------- -------------------------

AAA                                                      37.7%
AA                                                        5.1
A                                                        22.0
BBB                                                      27.7
BB or less                                                7.4
Redeemable preferred stocks                               0.1
                                                        ------
                                                        100.0%
                                                        ======

        At December 31, 2002, approximately $10.8 billion of the Company’s $11.7 billion bond portfolio was invested in U.S. Government or agency-backed securities or investment grade bonds and approximately $869.2 million of its fixed maturities portfolio was rated less than investment grade, of which $271.6 million are bank loan participations and $70.9 million were securities issued in Company-sponsored commercial mortgage loan securitizations. The Company has increased its investment in bank loan participations over the last two years to take advantage of market conditions.

        Risks associated with investments in less than investment grade debt obligations may be significantly higher than risks associated with investments in debt securities rated investment grade. Risk of loss upon default by the borrower is significantly greater with respect to such debt obligations than with other debt securities because these obligations may be unsecured or subordinated to other creditors. Additionally, there is often a thinly traded market for such securities and current market quotations are frequently not available for some of these securities. Issuers of less than investment grade debt obligations usually have higher levels of indebtedness and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than investment-grade issuers.

        The Company also invests a significant portion of its portfolio in mortgage loans. Results for these investments have been excellent due to careful management and a focus on a specialized segment of the market. The Company generally does not lend on speculative properties and has specialized in making loans on either credit-oriented commercial properties or credit-anchored strip shopping centers. The average size of loans made during 2002 was $2.9 million. The average size mortgage loan in the Company’s portfolio is approximately $2.1 million. The largest single loan amount is $24.8 million.

The following table shows a breakdown of the Company's mortgage loan portfolio by property type at December 31, 2002:

                                               PERCENTAGE OF
                                               MORTGAGE LOANS
     PROPERTY TYPE                             ON REAL ESTATE
- ------------------------------------------------------------------------
     Retail                                          76.2%
     Apartments                                       7.5
     Office Buildings                                 7.4
     Warehouses                                       7.4
     Other                                            1.5
                                                    ------
     Total                                          100.0%
                                                    ======

        Retail loans are generally on strip shopping centers anchored by one or more regional or national retail stores. The anchor tenants enter into long-term leases with the Company’s borrowers. These centers provide the basic necessities of life, such as food, pharmaceuticals, and clothing, and have been relatively insensitive to changes in economic conditions. The following are the largest anchor tenants (measured by the Company’s exposure) at December 31, 2002:

                                                 PERCENTAGE OF
                                                 MORTGAGE LOANS
     ANCHOR TENANTS                              ON REAL ESTATE
- ---------------------------------------------------------------------------

     Walgreen Corporation                               3.1%
     Wal-Mart Stores, Inc.                              2.9
     Food Lion, Inc.                                    2.9
     Ahold Corporation                                  2.6
     Winn Dixie Stores, Inc.                            2.6

        The Company’s mortgage lending criteria generally require that the loan-to-value ratio on each mortgage be at or under 75% at the time of origination. Projected rental payments from credit anchors (i.e., excluding rental payments from smaller local tenants) generally exceed 70% of the property’s projected operating expenses and debt service. The Company also offers a commercial loan product under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. Approximately $475.5 million of the Company’s mortgage loans have this participation feature.

        Many of the Company’s mortgage loans have call or interest rate reset provisions between 3 and 10 years. However, if interest rates were to significantly increase, the Company may be unable to call the loans or increase the interest rates on its existing mortgage loans commensurate with the significantly increased market rates.

        At December 31, 2002, $20.6 million or 0.8% of the mortgage loan portfolio was nonperforming. It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is the Company’s general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place.

        In 1996, the Company sold approximately $554 million of its mortgage loans in a securitization transaction. In 1997, the Company sold approximately $445 million of its loans in a second securitization transaction. In 1998 the Company securitized $146 million of its mortgage loans and in 1999 the Company securitized $263 million. The securitizations’ senior tranches were sold, and the Company retained the junior tranches. The Company continues to service the securitized mortgage loans. At December 31, 2002, the Company had investments related to retained beneficial interests of mortgage loan securitizations of $295.7 million.

        As a general rule, the Company does not invest directly in real estate. The investment real estate held by the Company consists largely of properties obtained through foreclosures or the acquisition of other insurance companies. In the Company’s experience, the appraised value of a foreclosed property often approximates the mortgage loan balance on the property plus costs of foreclosure. Also, foreclosed properties often generate a positive cash flow enabling the Company to hold and manage the property until the property can be profitably sold.

        The following table shows the investment results from continuing operations of the Company:

                                                                                            REALIZED INVESTMENT
                       CASH, ACCRUED                                                           GAINS (LOSSES)
                        INVESTMENT                                   PERCENTAGE      ---------------------------------
                        INCOME, AND                                   EARNED ON          DERIVATIVE
   YEAR ENDED          INVESTMENTS AT                              AVERAGE OF CASH       FINANCIAL         ALL OTHER
   DECEMBER 31           DECEMBER 31      NET INVESTMENT INCOME    AND INVESTMENTS      INSTRUMENTS       INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------
                                                (DOLLARS IN THOUSANDS)

      1998              $ 8,718,455            $629,045                  7.7%                              $  3,121
      1999                8,877,038             667,968                  7.6           $  (2,279)             1,222
      2000               10,419,217             730,149                  7.6               9,013            (16,056)
      2001               13,604,102             884,041                  7.3             (11,431)            (8,740)
      2002               15,765,420           1,031,204                  7.0               5,236                910

Life Insurance in Force

        The following table shows life insurance sales by face amount and life insurance in force.

                                                                       YEAR ENDED DECEMBER 31
                                        ---------------------------------------------------------------------------------
                                            2002            2001             2000           1999            1998
                                        ---------------------------------------------------------------------------------
                                                                        (DOLLARS IN THOUSANDS)
New Business Written
     Life Marketing...................    $ 67,827,198    $ 40,538,738    $ 45,918,373    $ 26,918,775     $ 21,238,653
     Group Products(1)                          44,567         123,062         143,192         123,648          113,056
     Asset Protection.................       4,516,350       5,917,047       7,052,106       6,665,219        5,257,957
                                          ------------    ------------    ------------    ------------     ------------
        Total.........................    $ 72,388,115    $ 46,578,847    $ 53,113,671    $ 33,707,642     $ 26,609,666
                                          ============    ============    ============    ============     ============
Business Acquired
     Acquisitions.....................    $  3,859,788    $ 19,992,424                                     $  7,787,284
     Asset Protection.................                                    $  2,457,296    $    620,000
                                          ------------    ------------    ------------    ------------     ------------
         Total........................    $  3,859,788    $ 19,992,424    $  2,457,296    $    620,000     $  7,787,284
                                          ============    ============    ============    ============     ============

Insurance in Force at End of Year(2)
     Life Marketing...................    $225,667,767    $159,485,393    $129,502,305    $ 91,627,218     $ 66,086,218
     Acquisitions.....................      27,372,622      36,856,042      20,133,370      22,054,734       27,606,592
     Group Products(1)................       5,015,636       5,821,744       7,348,195       6,065,604        6,665,815
     Asset Protection.................      12,461,564      12,094,947      13,438,226      10,069,030        9,632,466
                                          ------------    ------------    ------------    ------------     ------------
         Total........................    $270,517,589    $214,258,126    $170,422,096    $129,816,586     $109,991,091
                                          ============    ============    ============    ============     ============

- -------------------
(1)     On December 31, 2001, The Company  completed the sale of  substantially  all of its Dental  Benefits  Division,  with which the
        group products are associated.
(2)     Reinsurance  assumed  has  been  included;  reinsurance  ceded  (2002  -  $219,025,215;  2001-$171,449,182;  2000-$128,374,583;
        1999-$92,566,755; 1998-$64,846,246) has not been deducted.

        The ratio of voluntary terminations of individual life insurance to mean individual life insurance in force, which is determined by dividing the amount of insurance terminated due to lapses during the year by the mean of the insurance in force at the beginning and end of the year, adjusted for the timing of major acquisitions was:

   YEAR ENDED                            RATIO OF VOLUNTARY
   DECEMBER 31                              TERMINATIONS
- -------------------------------------------------------------
     1998.........................              6.4%
     1999.........................              6.0
     2000.........................              5.8
     2001.........................              7.4
     2002.........................              4.7

        The amount of investment products in force is measured by account balances. The following table shows stable value contract and annuity account balances. Most of the variable annuity account balances are reported in the Company's financial statements as liabilities related to separate accounts.

                                  STABLE                MODIFIED
       YEAR ENDED                 VALUE                GUARANTEED                FIXED                VARIABLE
      DECEMBER 31               CONTRACTS              ANNUITIES               ANNUITIES              ANNUITIES
- --------------------------------------------------------------------------------------------------------------------
                                                            (DOLLARS IN THOUSANDS)
          1998                   $2,691,697           $  818,566               $  432,237             $1,554,969
          1999                    2,680,009              941,692                  391,085              2,085,072
          2000                    3,177,863            1,384,027                  330,428              2,043,878
          2001                    3,716,530            1,883,998                1,143,394              2,131,476
          2002                    4,018,552            2,390,440                1,002,391              1,864,993

        Fixed annuity account balances increased in 2001 due to the acquisition of Inter-State and First Variable.

Underwriting

        The underwriting policies of the Company’s insurance subsidiaries are established by management. With respect to individual insurance, the subsidiaries use information from the application and, in some cases, inspection reports, attending physician statements, or medical examinations to determine whether a policy should be issued as applied for, rated, or rejected. Medical examinations of applicants are required for individual life insurance in excess of certain prescribed amounts (which vary based on the type of insurance) and for most individual insurance applied for by applicants over age 50. In the case of “simplified issue” policies, which are issued primarily through the Asset Protection segment and the Life Marketing segment in the payroll deduction market, coverage is rejected if the responses to certain health questions contained in the application indicate adverse health of the applicant. For other than “simplified issue” policies, medical examinations are requested of any applicant, regardless of age and amount of requested coverage, if an examination is deemed necessary to underwrite the risk. Substandard risks may be referred to reinsurers for full or partial reinsurance of the substandard risk.

        The Company’s insurance subsidiaries require blood samples to be drawn with individual insurance applications above certain face amounts ranging from $150,000 to $250,000 based on the applicant’s age, except in the worksite and BOLI markets where no blood testing is required. Blood samples are tested for a wide range of chemical values and are screened for antibodies to the HIV virus. Applications also contain questions permitted by law regarding the HIV virus which must be answered by the proposed insureds.

Reinsurance Ceded

        The Company’s insurance subsidiaries cede insurance to other insurance companies. The ceding insurance company remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by it. The Company sets a limit on the amount of insurance retained on the life of any one person. In the individual lines it will not retain more than $500,000, including accidental death benefits, on any one life. In many cases the retention is less. At December 31, 2002, the Company had insurance in force of $270.5 billion of which approximately $219.0 billion was ceded to reinsurers.

        Over the past several years, the Company’s reinsurers have reduced the net cost of reinsurance to the Company. Consequently, the Company has increased the amount of reinsurance which it cedes on newly-written individual life insurance policies, and has also ceded a portion of the mortality risk of existing business of the Life Marketing and Acquisitions business segments.

        The Company also has used reinsurance in the sale of the Dental segment and to reinsure fixed annuities in conjunction with the acquisition of two small insurers.

Policy Liabilities and Accruals

        The applicable insurance laws under which the Company’s insurance subsidiaries operate require that each insurance company report policy liabilities to meet future obligations on the outstanding policies. These liabilities are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated in accordance with applicable law to be sufficient to meet the various policy and contract obligations as they mature. These laws specify that the liabilities shall not be less than liabilities calculated using certain named mortality tables and interest rates.

        The policy liabilities and accruals carried in the Company’s financial reports presented on the basis of accounting principles generally accepted in the United States of America (GAAP) differ from those specified by the laws of the various states and carried in the insurance subsidiaries’ statutory financial statements (presented on the basis of statutory accounting principles mandated by state insurance regulations). For policy liabilities other than those for universal life policies, annuity contracts, GICs, and funding agreements, these differences arise from the use of mortality and morbidity tables and interest rate assumptions which are deemed to be more appropriate for financial reporting purposes than those required for statutory accounting purposes; from the introduction of lapse assumptions into the calculation; and from the use of the net level premium method on all business. Policy liabilities for universal life policies, annuity contracts, GICs, and funding agreements are carried in the Company’s financial reports at the account value of the policy or contract plus accrued interest.

Federal Income Tax Consequences

        Existing federal laws and regulations affect the taxation of the Company’s products. Income tax payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. Congress has from time to time considered proposals that, if enacted, would have had an adverse impact on the federal income tax treatment of such products, or would increase the tax-deferred status of competing products. In addition, life insurance products are often used to fund estate tax obligations. Legislation has recently been enacted that would over time, reduce and eventually eliminate the estate tax. If the estate tax is significantly reduced or eliminated, the demand for certain life insurance products could be adversely affected. The Company cannot predict what tax initiatives may be enacted which could adversely affect the Company.

        The Company’s insurance subsidiaries are taxed by the federal government in a manner similar to companies in other industries. However, certain restrictions on consolidating recently acquired life insurance companies and on consolidating life insurance company income with non-insurance income are applicable to the Company; thus, the Company is not able to consolidate all of the operating results of its subsidiaries for federal income tax purposes.

        Under pre-1984 tax law, certain income of the Company was not taxed currently, but was accumulated in a memorandum account designated as “Policyholders’ Surplus” to be taxed only when such income was distributed to share owners or when certain limits on accumulated amounts were exceeded. Consistent with current tax law, amounts accumulated in Policyholders’ Surplus have been carried forward, although no accumulated income may be added to these accounts. As of December 31, 2002, the aggregate accumulation in the Policyholders’ Surplus account was $70.5 million. Under current income tax laws, the Company does not anticipate paying income tax on amounts in the Policyholders’ Surplus accounts.

Competition

        Life and health insurance is a mature industry. In recent years, the industry has experienced little growth in life insurance sales, though the aging population has increased the demand for retirement savings products. Life and health insurance is a highly competitive industry. The Company encounters significant competition in all lines of business from other insurance companies, many of which have greater financial resources than the Company, as well as competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products.

        The insurance industry is consolidating, with larger, potentially more efficient organizations emerging from consolidation. Participants in certain of the Company’s independent distribution channels are also consolidating into larger organizations. Some mutual insurance companies are converting to stock ownership which will give them greater access to capital markets. Additionally, commercial banks, insurance companies, and investment banks may now combine, provided certain requirements are satisfied. The ability of banks to increase their securities-related business or to affiliate with insurance companies may materially and adversely affect sales of all of the Company’s products by substantially increasing the number and financial strength of potential competitors.

        The Company’s ability to compete is dependent upon, among other things, its ability to attract and retain distribution channels to market its insurance and investment products, its ability to develop competitive and profitable products, its ability to maintain low unit costs, and its maintenance of strong ratings from rating agencies.

Regulation

        The Company’s insurance subsidiaries are subject to government regulation in each of the states in which they conduct business. Such regulation is vested in state agencies having broad administrative power dealing with many aspects of the insurance business, which may include premium rates, marketing practices, advertising, policy forms, and capital adequacy, and is concerned primarily with the protection of policyholders rather than share owners.

        A life insurance company’s statutory capital is computed according to rules prescribed by the National Association of Insurance Commissioners (NAIC) as modified by the insurance company’s state of domicile. Statutory accounting rules are different from GAAP and are intended to reflect a more conservative view, for example, requiring immediate expensing of policy acquisition costs and more conservative computations of policy liabilities. The NAIC’s risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. These requirements are intended to allow insurance regulators to identify inadequately capitalized insurance companies based upon the types and mixtures of risks inherent in the insurer’s operations. The formula includes components for asset risk, liability risk, interest rate exposure, and other factors. Based upon the December 31, 2002 statutory financial reports, the Company’s insurance subsidiaries are adequately capitalized under the formula.

        The Company’s insurance subsidiaries are required to file detailed annual reports with the supervisory agencies in each of the jurisdictions in which they do business and their business and accounts are subject to examination by such agencies at any time. Under the rules of the NAIC, insurance companies are examined periodically (generally every three to five years) by one or more of the supervisory agencies on behalf of the states in which they do business. To date, no such insurance department examinations have produced any significant adverse findings regarding any insurance company subsidiary of the Company.

        Under insurance guaranty fund laws in most states, insurance companies doing business in such a state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies. Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer’s financial strength. The Company’s insurance subsidiaries were assessed immaterial amounts in 2002, which will be partially offset by credits against future state premium taxes.

        In addition, many states, including the states in which the Company’s insurance subsidiaries are domiciled, have enacted legislation or adopted regulations regarding insurance holding company systems. These laws require registration of and periodic reporting by insurance companies domiciled within the jurisdiction which control or are controlled by other corporations or persons so as to constitute an insurance holding company system. These laws also affect the acquisition of control of insurance companies as well as transactions between insurance companies and companies controlling them. Most states, including Tennessee, where Protective Life Insurance Company (Protective Life) is domiciled, require administrative approval of the acquisition of control of an insurance company domiciled in the state or the acquisition of control of an insurance holding company whose insurance subsidiary is incorporated in the state. In Tennessee, the acquisition of 10% of the voting securities of an entity is generally deemed to be the acquisition of control for the purpose of the insurance holding company statute and requires not only the filing of detailed information concerning the acquiring parties and the plan of acquisition, but also administrative approval prior to the acquisition.

        The Company’s insurance subsidiaries are subject to various state statutory and regulatory restrictions on the insurance subsidiaries’ ability to pay dividends to Protective Life Corporation. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts are subject to approval by the insurance commissioner of the state of domicile. The maximum amount that would qualify as ordinary dividends to the Company by Protective Life in 2003 is estimated to be $93.1 million. No assurance can be given that more stringent restrictions will not be adopted from time to time by states in which the Company’s insurance subsidiaries are domiciled, which restrictions could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable to the Company by such subsidiaries without affirmative prior approval by state regulatory authorities.

        The Company’s insurance subsidiaries may be subject to regulation by the United States Department of Labor when providing a variety of products and services to employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Severe penalties are imposed for breach of duties under ERISA.

        Certain policies, contracts and annuities offered by the Company’s insurance subsidiaries are subject to regulation under the federal securities laws administered by the Securities and Exchange Commission. The federal securities laws contain regulatory restrictions and criminal, administrative and private remedial provisions.

        Additional issues related to regulation of the Company and its insurance subsidiaries are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2002 Annual Report to Share Owners.

Employees

        At December 31, 2002 the Company had approximately 2,438 authorized positions, including approximately 1,429 in Birmingham, Alabama. Most employees are covered by contributory major medical, dental, group life, and long-term disability insurance plans. The cost of these benefits to the Company in 2002 was approximately $8.2 million. In addition, substantially all of the employees are covered by a pension plan. The Company also matches employee contributions to its 401(k) Plan and makes discretionary profit sharing contributions for employees not otherwise covered by a bonus or sales incentive plan. See Note 11 to Consolidated Financial Statements.

Item 2. Properties

        The Company’s Home Office is located at 2801 Highway 280 South, Birmingham, Alabama. This campus includes the original 142,000 square-foot building which was completed in 1976, a second contiguous 220,000 square-foot building which was completed in 1985, and a third contiguous 315,000 square-foot building that was completed in 2002. In addition, parking is provided for approximately 2,760 vehicles. In February 2000, the Company entered into an arrangement related to the construction of the third building. In connection with the arrangement the Company established a special purpose vehicle (SPV) that owns the building and leases it to the Company. The lease is accounted for as an operating lease under SFAS No. 13 “Accounting For Leases”. The SPV is funded and its equity is held by outside investors, and as a result, neither the debt nor the building owned by the SPV are included in the Company’s consolidated financial statements. Lease payments commence upon completion, which occurred January 31, 2003, and is based on then current LIBOR interest rates and the cost of the building. At the end of the lease term, February 1, 2007, the Company may purchase the building for the original building cost of approximately $75 million. Based upon current interest rates, annual lease payments are estimated to be $1.6 million. Were the Company not to purchase the building, a payment of approximately $66.8 million would be due at the end of the lease term.

        The Company leases administrative and marketing office space in approximately 60 cities including approximately 53,264 square feet in Birmingham, with most leases being for periods of three to ten years. The aggregate annualized rent is approximately $11.0 million.

Item 3. Legal Proceedings

        To the knowledge and in the opinion of management, there are no material pending legal proceedings, other than ordinary routine litigation incidental to the business of the Company, to which the Company or any of its subsidiaries is a party or of which any of the Company’s properties is the subject. For additional information regarding legal proceedings see “Known Trends and Uncertainties” and “Other Developments” in the Company’s 2002 Annual Report to Share Owners.

Item 4. Submission of Matters to a Vote of Security Holders

        No matter was submitted during the fourth quarter of 2002 to a vote of security holders of the Company.

PART II

Item 5. Market for the Registrant's Common Equity and Related Share-Owner Matters

        The Company’s Common Stock is listed and principally traded on the New York Stock Exchange (NYSE symbol: PL). The following table sets forth the highest and lowest closing prices of the Company’s Common Stock, $0.50 par value, as reported by the New York Stock Exchange during the periods indicated, along with the dividends paid per share of Common Stock during the same periods.

                                                           RANGE            DIVIDENDS
                                                    -------------------     ---------
                                                      HIGH        LOW
                                                      ----        ---
2001
  First Quarter............................          32.16       27.69         .13
  Second Quarter...........................          34.51       29.92         .14
  Third Quarter............................          34.48       25.55         .14
  Fourth Quarter...........................          29.88       27.16         .14
2002
  First Quarter............................          32.32       27.94         .14
  Second Quarter...........................          33.46       30.61         .15
  Third Quarter............................          33.75       27.23         .15
  Fourth Quarter...........................          32.60       27.20         .15

        On March 7, 2003, there were approximately 2,250 owners of record of Company Common Stock.

        The Company (or its predecessor) has paid cash dividends each year since 1926 and each quarter since 1934. The Company expects to continue to pay cash dividends, subject to the earnings and financial condition of the Company and other relevant factors. The ability of the Company to pay cash dividends is dependent in part on cash dividends received by the Company from its life insurance subsidiaries. See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations –Liquidity and Capital Resources” in the Company’s 2002 Annual Report to Share Owners. Such subsidiary dividends are restricted by the various insurance laws of the states in which the subsidiaries are incorporated. See Item 1 – “Business – Regulation”.

        Additional information called for by this Item related to “Securities authorized for issuance under equity compensation plans” is incorporated herein by reference from the Company’s definitive proxy statement for the Annual Meeting of Share Owners, May 5, 2003.

Item 6. Selected Financial Data

                                                              YEAR ENDED DECEMBER 31
                                           --------------------------------------------------------------------------------
                                                2002             2001            2000            1999            1998
                                           --------------------------------------------------------------------------------
                                                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

INCOME STATEMENT DATA
Premium and policy fees................      $ 1,543,350     $ 1,389,820       $ 1,175,898   $  861,027      $   790,584
Reinsurance ceded......................         (760,218)       (771,151)         (686,108)    (462,297)        (378,397)
                                             ------------    ------------      ------------  -----------     ------------
    Net of reinsurance ceded                     783,132         618,669           489,790      398,730          412,187
Net investment income..................        1,031,204         884,041           730,149      667,968          629,045
Realized investment gains (losses).....
    Derivative financial instruments               5,236         (11,431)            9,013       (2,279)           3,121
    All other investments                            910          (8,740)          (16,056)       1,222           60,022
                                             ------------    ------------      ------------  -----------     ------------
Other income...........................          100,196          120,647          151,833        89,680       1,104,375
    Total revenues.....................        1,920,678       1,603,186         1,364,729    1,155,321          922,404
Benefits and expenses..................        1,653,475       1,393,590         1,153,054      951,932           63,309
Income tax expense.....................           88,444          68,538            74,321       71,941
Income (loss) from discontinued                                                                                   12,119
operations (1)                                                   (30,522)           16,122       21,642
Extraordinary loss(2)                             (1,404)                                        (1,763)
Change in accounting principle (3)                                (7,593)
                                             ------------   -------------      ------------  -----------     ------------
Net income.............................      $   177,355    $    102,943       $   153,476   $  151,327      $   130,781
                                             ============   =============      ============  ===========     ============
PER SHARE DATA(4)
Net income from continuing
    operations(5) - basic..............      $      2.56    $       2.02       $      2.09   $      2.01     $      1.87
Net income - basic.....................      $      2.54    $       1.48       $      2.33   $      2.31     $      2.06
Average shares outstanding - basic.....       69,923,955      69,410,525        65,832,349    65,604,311      63,521,587
Operating income from continuing
    operations(6) - diluted............      $      2.50    $       2.21       $      2.15   $      2.01     $      1.83
Net income from continuing
    operations(5) - diluted............      $      2.54    $       2.01       $      2.08   $      1.99     $      1.85
Net income  - diluted..................      $      2.52    $       1.47       $      2.32   $      2.29     $      2.04
Average shares
    outstanding - diluted..............       70,462,797      69,950,173        66,281,128    66,161,367      64,087,744
Cash dividends.........................      $       .59    $        .55       $       .51   $       .47     $       .43
Share-owners' equity...................      $     25.06    $      20.42       $     17.26   $     13.41     $     14.65
Share-owners' equity excluding
    accumulated other comprehensive
    income(7)..........................      $     21.62    $      19.63       $     18.05   $     15.68     $     13.80



(1)   Income  from  discontinued  operations  in 2001  includes  loss on sale of  discontinued  operations  and loss  from
      discontinued operations, net of income tax.
(2)   Due to early extinguishments of debt, net of income tax.
(3)   Cumulative effect of change in accounting principle relating to SFAS No. 133, net of income tax.
(4)   Prior periods have been restated to reflect a two-for-one stock split on April 1, 1998, and to reflect  discontinued
      operations.
(5)   Net income excluding extraordinary loss, change in accounting principle, and income from discontinued operations.
(6)      "Operating income from continuing  operations" is a non-GAAP measure  consisting of net income excluding realized
     investment  gains and losses and related  amortization,  income (loss) from  discontinued  operations,  extraordinary
     loss,  and change in  accounting  principle.  "Net  income from  continuing  operations"  is a GAAP  measure to which
     "operating income from continuing operations" may be compared.
(7)      "Share-owners'  equity excluding  accumulated other comprehensive  income" is a non-GAAP measure.  "Share-owners'
     equity" is a GAAP measure to which  "Share-owners'  equity excluding  accumulated other comprehensive  income" may be
     compared.

                                                                           DECEMBER 31
                                            --------------------------------------------------------------------------
                                               2002            2001           2000           1999            1998
                                            --------------------------------------------------------------------------
                                                                     (DOLLARS IN THOUSANDS)
BALANCE SHEET DATA
Total assets...........................      $21,953,004  $  19,718,824   $ 15,145,633   $  12,994,164  $  11,989,495
Total debt.............................      $   406,110  $     376,211   $    306,125   $     236,023  $     172,035
Total stable value contract and annuity
    account balances(8)................      $ 4,198,070  $   3,907,892   $  3,385,092   $   2,915,417  $   2,952,030
9% Cumulative Monthly Income
    Preferred Securities, Series A.....                                                                 $      55,000
8.25% Trust Originated Preferred
    Securities.........................                   $      75,000   $     75,000   $      75,000  $      75,000
7.5% Trust Originated Preferred
    Securities.........................      $   100,000  $     100,000
7.25% Trust Originated Preferred
    Securities.........................      $   115,000
6.5% FELINE PRIDES                                                        $    115,000   $     115,000  $     115,000
Share-owners' equity...................      $ 1,720,702  $   1,400,144   $  1,114,058   $     865,223  $     944,194
Share-owners' equity excluding
    accumulated other comprehensive
    income(9)..........................      $ 1,484,788  $   1,345,816   $  1,165,431   $   1,011,304  $     889,137


(8)  Includes stable value contract account balances and annuity account balances which do not pose significant mortality risk.
(9)  "Share-owners'  equity excluding accumulated other comprehensive  income" is a non-GAAP measure.  "Share-owners'  equity" is a
     GAAP measure to which "Share-owners' equity excluding accumulated other comprehensive income" may be compared.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

        Information regarding the Company’s financial condition and results of operations is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2002 Annual Report to Share Owners and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

        The information required by this item is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Consolidated Financial Statements” in the Company’s 2002 Annual Report to Share Owners and is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

        The financial statements and supplementary data for the Company and its subsidiaries, which are included under the caption “Consolidated Financial Statements” in the Company’s 2002 Annual Report to Share Owners, are incorporated herein by reference.

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Share Owners of
Protective Life Corporation

Our audits of the consolidated financial statements referred to in our report dated March 3, 2003 appearing in the 2002 Annual Report to Share Owners of Protective Life Corporation and subsidiaries (which report and consolidated financial statements are incorporated by reference on this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 15 (a) (2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

As discussed in Note 1 of the Notes to the Condensed Financial Statements, effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP

Birmingham, Alabama
March 3, 2003

SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
STATEMENTS OF INCOME
PROTECTIVE LIFE CORPORATION (Parent Company)
Years Ended December 31, 2002, 2001, and 2000
(in thousands)

                                                                                2002              2001             2000
                                                                                ----              ----             ----
REVENUES
       Dividends from subsidiaries*                                          $  5,007           $  3,701        $ 27,362
       Service fees from subsidiaries*                                         97,045             87,239          78,999
       Net investment income                                                    9,117              6,804           7,173
       Realized investment gains (losses)                                       6,791            (12,341)          6,856
       Other income (loss) (2000 - sale of affiliate)                            (328)                            24,856
                                                                             ---------          ---------       ---------
                                                                              117,632             85,403         145,246
                                                                             ---------          ---------       ---------
EXPENSES
       Operating and administrative                                            56,268             55,256          50,600
       Interest - subsidiaries*                                                15,227             10,163          14,085
       Interest - other                                                        10,139             22,859          18,082
                                                                             ---------          ---------       ---------
                                                                               81,634             88,278          82,767
                                                                             ---------          ---------       ---------
INCOME BEFORE INCOME
       TAX AND OTHER ITEMS BELOW                                               35,998             (2,875)         62,479

Income Tax Expense (Benefit)                                                    6,929             (2,150)         16,468
                                                                             ---------          ---------       ---------

INCOME BEFORE EQUITY IN UNDISTRIBUTED
       INCOME OF SUBSIDIARIES                                                  29,069               (725)         46,011

Equity In Undistributed Income Of
       Subsidiaries*                                                          149,690            141,783          91,343
                                                                             ---------          ---------       ---------

NET INCOME FROM CONTINUING OPERATIONS
        BEFORE EXTRAORDINARY LOSS AND
        CUMULATIVE EFFECT OF CHANGE IN
        ACCOUNTING PRINCIPLE                                                  178,759            141,058         137,354

Income (Loss) From Discontinued Operations,
        Net Of Income Tax                                                                         (9,977)         16,122

Loss From Sale Of Discontinued Operations,
        Net Of Income Tax                                                                        (20,545)

Extraordinary (Loss) On Early
        Extinguishment Of Debt, Net Of
        Income Tax                                                             (1,404)
                                                                             ---------          ---------       ---------
                                                                              177,355            110,536         153,476
Cumulative Effect Of Change In
        Accounting Principle, Net Of
        Income Tax                                                                                (7,593)
                                                                             ---------          ---------       ---------
NET INCOME                                                                   $177,355           $102,943        $153,476
                                                                             =========          =========       =========

- -----------------------------
*Eliminated in consolidation.
See notes to condensed financial statements.

SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
BALANCE SHEETS
PROTECTIVE LIFE CORPORATION (Parent Company)
(in thousands)

                                                                                              DECEMBER 31
                                                                                --------------------------------------
                                                                                    2002                    2001
                                                                                    ----                    ----
ASSETS
     Investments:
         Fixed maturities                                                        $    8,600               $   26,000
         Other long-term investments                                                 27,232                   20,303
         Short-term investments                                                       1,105                       10
         Investments in subsidiaries (equity method)*                             2,343,033                1,942,449
                                                                                 -----------              -----------
                                                                                  2,379,970                1,988,762

     Cash                                                                               178                    2,114
     Receivables from subsidiaries*                                                   8,985                   18,171
     Property and equipment, net                                                      1,317                      285
     Other                                                                           41,286                   36,466
                                                                                 -----------              -----------
                                                                                 $2,431,736               $2,045,798
                                                                                 ===========              ===========
LIABILITIES
     Accrued expenses and other liabilities                                      $   57,458               $   77,186
     Accrued income taxes                                                           (34,517)                 (17,336)
     Deferred income taxes                                                           67,277                   36,150
     Debt:
         Senior and Medium-Term Notes                                               399,166                  369,241
         Subsidiaries*                                                              221,650                  180,413
                                                                                 -----------               ----------
                                                                                    711,034                  645,654
                                                                                 -----------               ----------
SHARE-OWNERS' EQUITY
     Preferred Stock
     Junior Participating Cumulative
         Preferred Stock
     Common Stock                                                                    36,626                   36,626
     Additional paid-in capital                                                     408,397                  405,420
     Treasury stock                                                                 (16,402)                 (15,895)
     Stock Held in Trust                                                             (2,417)                  (1,535)
     Unallocated stock in Employee Stock Ownership Plan                              (2,777)                  (3,317)
     Retained earnings (including undistributed
         income of subsidiaries: 2002 - $1,213,878; 2001 - $1,064,188)            1,061,361                  924,517
     Accumulated other comprehensive income
         Net unrealized gains (losses) on
         investments (all from subsidiaries, net
         of income tax: 2002 - $128,145; 2001 - $29,254)                            237,983                   54,328
         Accumulated gain (loss) - hedging
           (net of income tax:  2002 - $(1,114))                                     (2,069)
                                                                                 -----------              -----------
                                                                                  1,720,702                1,400,144
                                                                                 -----------              -----------
                                                                                 $2,431,736               $2,045,798
                                                                                 ===========              ===========


- -----------------------------
*Eliminated in consolidation.
See notes to condensed financial statements.

SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
STATEMENTS OF CASH FLOWS
PROTECTIVE LIFE CORPORATION (Parent Company)
Years Ended December 31, 2002, 2001, and 2000
(in thousands)

                                                                  2002                 2001                2000
                                                                  ----                 ----                ----
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                  $177,355            $ 102,943           $ 153,476
     Adjustments to reconcile net income
        to net cash provided by operating
        activities:
             Realized investment (gains) losses                    (6,791)              12,341              (6,856)
             Equity in undistributed net income
                 of subsidiaries*                                (149,690)            (105,418)           (107,465)
             Deferred income taxes                                 31,127              (18,566)             25,947
             Accrued income taxes                                 (17,180)              14,928             (43,080)
             Accrued expenses                                       2,787               25,313               6,822
             Accrued investment income                                                     247               1,913
             Receivables from subsidiaries                          5,187               (7,823)              8,976
             Other (net)                                           (2,900)             (16,995)            (11,255)
                                                                 ---------           ----------          ----------
     Net cash provided by operating activities                     39,895                6,970              28,478
                                                                 ---------           ----------          ----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of and/or additional investments
        in subsidiaries*                                          (68,272)            (133,406)           (102,987)
     Return of capital from subsidiaries                                                                    34,288
     Purchase of fixed assets                                      (1,275)
     Principal payments received on loan
        to subsidiary*                                              4,000                4,000               4,000
     Change in fixed maturities and long-term
        investments                                                (2,866)              (7,020)              3,047
     Change in short-term investments                              (1,095)               3,990              (2,000)
                                                                 ---------           ----------          ----------
     Net cash used in investing activities                        (69,508)            (132,436)            (63,652)
                                                                 ---------           ----------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Borrowings under line of
        credit arrangements and long-term debt                     69,000              159,160             237,104
     Principal payments on line of credit
        arrangements and debt                                     (39,102)             (93,729)           (166,979)
     Issuance of guaranteed preferred
         beneficial interests                                     115,000              100,000
     Redemption of guaranteed preferred
         beneficial interests                                     (75,000)
     Purchase of Common Stock                                        (882)                (217)               (697)
     Purchase of Treasury Stock                                      (828)              (3,405)                  0
     Dividends to Share Owners                                    (40,511)             (37,187)            (32,919)
                                                                 ---------           ----------          ----------
     Net cash provided by (used in) financing
        activities                                                 27,677              124,622              36,509
                                                                 ---------           ----------          ----------
INCREASE (DECREASE) IN CASH                                        (1,936)                (844)              1,335
CASH AT BEGINNING OF YEAR                                           2,114                2,958               1,623
                                                                 ---------           ----------          ----------
CASH AT END OF YEAR                                              $    178            $   2,114           $   2,958
                                                                 =========           ==========          ==========


- -----------------------------
*Eliminated in consolidation.
See notes to condensed financial statements.

SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
PROTECTIVE LIFE CORPORATION (Parent Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

The Company publishes consolidated financial statements that are its primary financial statements. Therefore, these parent company condensed financial statements are not intended to be the primary financial statements of the Company, and should be read in conjunction with the consolidated financial statements and notes thereto of Protective Life Corporation and subsidiaries.

NOTE 1 - RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 133, as amended by SFAS Nos. 137 and 138, requires the company to record all derivative financial instruments, at fair value on the balance sheet. Changes in fair value of a derivative instrument are reported in net income or other comprehensive income, depending on the designated use of the derivative instrument. The adoption of SFAS No. 133 resulted in a cumulative charge to net income, net of income tax, of $7.6 million on January 1, 2001. The charge to net income primarily resulted from the recognition of derivative instruments embedded in the Company’s corporate bond portfolio. In addition, the charge to net income includes the recognition of the ineffectiveness on existing hedging relationships including the difference in spot and forward exchange rates related to foreign currency swaps used as an economic hedge of foreign-currency-denominated stable value contracts. Prospectively, the adoption of SFAS No. 133 may introduce volatility into the Company’s reported net income and other comprehensive income depending on future market conditions and the Company’s hedging activities.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002.” SFAS No. 145 rescinds SFAS No. 4, which required companies to treat the extinguishment of debt as an extraordinary item. SFAS No. 145 requires companies to apply APB Opinion 30 when determining the accounting for the extinguishment of debt. The statement also rescinds and amends other statements to make various technical corrections and clarifications. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002, and will require the Company to restate previously issued financial statements to reclassify losses related to the early extinguishment of debt from extraordinary losses to operating expenses. As discussed in Note 7, the Company reported an extraordinary loss of $1.4 million related to the extinguishment of debt in 2002. Thus the Company’s 2002 financial statements will be restated to reflect the requirements of this accounting standard in 2003.

NOTE 2 - DEBT

At December 31, 2002, the Company had $30.0 million of borrowings under its $200 million line of credit arrangements at an interest rate of 1.92%. The amounts outstanding under these credit arrangements are due in 2005. $100.0 million of Floating Rate Senior Notes due 2003, $75.0 million of 7.95% Senior Notes due 2004, $49.9 million of 8.00% Senior Notes due 2010, $9.9 million of 7.45% Medium-Term Notes due 2011, $39.9 million of 8.10% Senior Notes due 2015, $59.9 million of 7.50% Senior Notes due 2016, $34.7 million of 8.25% Senior Notes due 2030, $103.1 million of subordinated debentures due 2031, and $118.6 million of subordinated debentures due 2032 were outstanding at December 31, 2002, The subordinated debentures were issued to affiliates in connection with the issuance by such affiliates of Trust Originated Preferred Securities.

NOTE 3 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

                                                                         2002             2001             2000
                                                                   ---------------------------------------------------
CASH PAID (RECEIVED) DURING THE YEAR FOR:

       Interest Paid to Non-Affiliates                                  $17,710          $ 22,693          $14,696

       Interest Paid to Subsidiary*                                      15,227            10,163           14,085
                                                                        -------          --------          -------
                                                                        $32,937          $ 32,856          $28,781
                                                                        =======          ========          =======
       Income Taxes (reduced by amounts received
          from affiliates under a tax sharing agreement)                $ 7,000          $  3,000          $32,039
                                                                        =======          ========          =======

NONCASH INVESTING AND FINANCING ACTIVITIES

       Reissuance of Treasury Stock to ESOP                             $    59          $    879          $   255
                                                                        =======          ========          =======

       Change in unallocated Stock in ESOP                              $   540          $    369          $   357
                                                                        =======          ========          =======

       Stock-based Compensation                                         $ 3,239          $  3,589          $33,655
                                                                        =======          ========          =======

       Redemption of FELINE PRIDES                                                       $113,414
                                                                                         ========

- --------------------
*Eliminated in consolidation.

NOTE 4 - SUBSIDIARY SURPLUS DEBENTURES

Protective Life Insurance Company (Protective Life) has issued surplus debentures to the Company in order to finance acquisitions and growth. At December 31, 2002, the balance of the surplus debentures was $2.0 million. The surplus debentures are included in receivables from subsidiaries. Protective Life must obtain the approval of the Tennessee Commissioner of Insurance before it may pay interest or repay principal on the surplus debentures.

NOTE 5 - SALE OF AFFILIATE

In 2000, the Company completed the sale of its Hong Kong affiliate. Included as a component of other income is $24.8 million relating to the transaction.

NOTE 6 - DISCONTINUED OPERATIONS

On December 31, 2001, the Company completed the sale to Fortis, Inc. of substantially all of its Dental Benefits Division (Dental Division), and discontinued other remaining Dental Division related operations, primarily other health insurance lines.

NOTE 7 - EXTRAORDINARY LOSS

On October 25, 2002, the Company caused PLC Capital Trust I to redeem the 8.25% Trust Originated Preferred Securities (TOPrSSM). In a related transaction, the Company redeemed its subordinated debentures which were held by PLC Capital Trust I. The redemption of the subordinated debentures resulted in an extraordinary loss of $1.4 million due to early extinguishment of debt. The loss is comprised primarily of unamortized deferred debt issue costs, net of an income tax benefit of $0.8 million.

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
PROTECTIVE LIFE CORPORATION AND SUBSIDIARIES
(in thousands)

            COL. A                   COL. B           COL. C          COL. D          COL. E           COL. F          COL. G          COL. H           COL. I          COL. J
            ------                   ------           ------          ------          ------           ------          ------          ------           ------          ------
                                                                                    STABLE VALUE
                                                                                     CONTRACTS,
                                                                                      ANNUITY                                                        AMORTIZATION
                                    DEFERRED                                       CONTRACTS AND                                                      OF DEFERRED
                                     POLICY       FUTURE POLICY                        OTHER        NET PREMIUMS        NET         BENEFITS AND        POLICY           OTHER
                                   ACQUISITION     BENEFITS AND      UNEARNED      POLICYHOLDERS'    AND POLICY      INVESTMENT      SETTLEMENT      ACQUISITIONS      OPERATING
            SEGMENT                   COSTS           CLAIMS         PREMIUMS          FUNDS            FEES         INCOME(1)        EXPENSES           COSTS        EXPENSES(1)
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year Ended
  December 31, 2002:
      Life Marketing               $  973,631      $ 4,031,021        $    318       $    48,558       $220,184      $  209,002      $  228,224         $117,836       $ 13,948
      Acquisitions                    437,677        3,240,407             395         1,054,031        239,014         252,147         315,930           35,245         46,525
      Stable Value Contracts            4,908                -               -         3,930,668              -         246,098         196,576            2,304          4,946
      Annuities                        93,140          571,109               -         2,742,643         25,826         220,447         186,107           24,669         30,660
      Asset Protection                164,165          329,713         810,587             9,288        262,011          44,296         200,958           57,957        101,637
      Corporate and Other               7,702           55,863           2,212            95,018         36,097          59,214          34,436            1,479         54,038
      Adjustments(2)                                    88,944             286            23,157
                                   ----------       ----------        --------        ----------       --------      ----------      ----------         --------       --------
TOTAL                              $1,681,223       $8,317,057        $813,798        $7,903,363       $783,132      $1,031,204      $1,162,231         $239,490       $251,754
                                   ==========       ==========        ========        ==========       ========      ==========      ==========         ========       ========
Year Ended
  December 31, 2001:
      Life Marketing               $  829,021       $3,326,841        $    303        $   86,937       $120,995      $  179,346      $  190,538         $ 41,399       $ 38,712
      Acquisitions                    418,268        3,046,401             434           876,221        182,433         187,535         238,877           20,501         43,232
      Stable Value Contracts            6,375                -               -         3,872,637                        261,079         222,306            1,662          3,961
      Annuities                       128,488          281,074               -         2,232,779         28,145         167,905         137,204           24,021         29,434
      Asset Protection                142,229          208,818         901,062             2,773        250,061          48,940         154,893           57,681         99,103
      Corporate and Other               8,302           16,573           2,241               247         37,035          39,236          28,806            1,794         59,466
      Adjustments(2)                                    92,085             334            24,193
                                   ----------       ----------        --------        ----------       --------      ----------      ----------         --------       --------
      TOTAL                        $1,532,683       $6,971,792        $904,374        $7,095,787       $618,669      $  884,041      $  972,624         $147,058       $273,908
                                   ==========       ==========        ========        ==========       ========      ==========      ==========         ========       ========
Year Ended
  December 31, 2000:
      Life Marketing                                                                                   $ 99,813      $  152,511      $  149,430         $ 48,771       $ 47,861
      Acquisitions                                                                                      102,997         116,940         125,151           17,081         24,939
      Stable Value Contracts                                                                                  -         243,132         207,143              900          3,881
      Annuities                                                                                          30,127         132,314         109,607           24,156         25,403
      Asset Protection                                                                                  220,421          47,029         135,494           50,132         90,958
      Corporate and Other                                                                                36,432          38,223          33,953            2,140         56,054
      Adjustments(2)
                                                                                                       --------      ----------      ----------         --------       --------
      TOTAL                                                                                            $489,790      $  730,149      $  760,778         $143,180       $249,096
                                                                                                       ========      ==========      ==========         ========       ========

(1)      Allocations  of Net Investment  Income and Other  Operating  Expenses are based on a number of  assumptions  and estimates and
         results would change if different methods were applied.
(2)      Asset adjustments represent the inclusion of assets related to discontinued operations.

SCHEDULE IV - REINSURANCE
PROTECTIVE LIFE CORPORATION AND SUBSIDIARIES
(dollars in thousands)

            COL. A                    COL. B            COL. C           COL. D            COL. E           COL. F
            ------                    ------            ------           ------            ------           ------
                                                                                                         PERCENTAGE OF
                                                    CEDED TO OTHER    ASSUMED FROM                      AMOUNT ASSUMED
                                   GROSS AMOUNT       COMPANIES      OTHER COMPANIES     NET AMOUNT         TO NET
                                 ----------------------------------------------------------------------------------------
Year Ended
    December 31, 2002:
       Life insurance
       in force                    $248,994,479     $219,025,215       $21,523,110      $51,492,374           41.8%
                                   ============     ============       ===========      ===========           =====

       Premiums and
       policy fees:
       Life insurance              $    854,813     $    545,976       $   235,198      $   544,035           43.2%
       Accident/health
          insurance                     103,858           61,512            44,337           86,683           51.1%
       Property and liability
          insurance                     194,601          152,730           110,543          152,414           72.5%
                                   ------------     ------------       -----------      -----------
       TOTAL                       $  1,153,272     $    760,218       $   390,078      $   783,132
                                   ============     ============       ===========      ===========

Year Ended
    December 31, 2001:
       Life insurance
       in force                    $191,105,511     $171,449,182       $23,152,614      $42,808,943           54.1%
                                   ============     ============       ===========      ===========
       Premiums and
       policy fees:
       Life insurance              $    774,294     $    565,130       $   198,832      $   407,996           48.7%
       Accident/health
          insurance                     181,509          122,747                             58,762            0.0%
       Property and liability
          insurance                     158,890           83,274            76,295          151,911           50.2%
                                   ------------     ------------      ------------      ------------
       TOTAL                       $  1,114,693     $    771,151      $    275,127      $   618,669
                                   ============     ============      ============      ============

Year Ended
    December 31, 2000:
       Life insurance
       in force                   $153,371,754      $128,374,583     $  17,050,342     $ 42,047,513           40.6%
                                  ============      ============     =============     ============
       Premiums and
       policy fees:
       Life insurance             $    670,113      $    493,793     $     112,668     $    288,988           39.0%
       Accident/health
          insurance                    203,430           128,520            17,164           92,074           18.6%
       Property and liability
          insurance                    159,354            63,795            13,169          108,728           12.1%
                                  ------------      ------------     -------------     ------------
       TOTAL                      $  1,032,897      $    686,108     $     143,001     $    489,790
                                  ============      ============     =============     ============

SCHEDULE V - VALUATION ACCOUNTS
PROTECTIVE LIFE CORPORATION AND SUBSIDIARIES
(dollars in thousands)

            COL. A                    COL. B                    COL. C                     COL. D           COL. E
            ------                    ------                    -------                    -------          ------
                                                               ADDITIONS
                                                         (1)
                                    BALANCE AT        CHARGED TO           (2)
                                   BEGINNING OF       COSTS AND        CHARGES TO                       BALANCE AT END
          DESCRIPTION                 PERIOD           EXPENSES      OTHER ACCOUNTS      DEDUCTIONS       OF PERIOD.
- -------------------------------------------------------------------------------------------------------------------------
Allowance for Uncollected
   Reinsurance Receivable                  $0                $0         $24,833                 $0         $24,833

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Registrant

        Except for the information concerning executive officers and directors of the Company set forth below, the information called for by this Item 10 is incorporated herein by reference to the section entitled “Election of Directors and Information about Nominees” in the Company’s definitive proxy statement for the Annual Meeting of Share Owners, May 5, 2003, to be filed with the Securities and Exchange Commission by the Company pursuant to Regulation 14A within 120 days after the end of its 2002 fiscal year.

        The executive officers of the Company are as follows:

                     NAME                              AGE                        POSITION
                     ----                              ---                        --------

John D. Johns                                          51         Chairman of the Board, President, Chief
                                                                  Executive Officer, and a Director
R. Stephen Briggs                                      53         Executive Vice President, Life and Annuity
Jim E. Massengale                                      60         Executive Vice President, Acquisitions
Allen W. Ritchie                                       45         Executive Vice President and Chief Financial
                                                                  Officer
Richard J. Bielen                                      42         Senior Vice President, Chief Investment Officer
                                                                  and Treasurer
Brent E. Griggs                                        47         Senior Vice President, Asset Protection
J. William Hamer, Jr.                                  58         Senior Vice President and Chief
                                                                  Human Resources Officer
Thomas Davis Keyes                                     50         Senior Vice President,
                                                                  Information Services
Carolyn King                                           52         Senior Vice President,
                                                                  Life and Annuity
Deborah J. Long                                        49         Senior Vice President,
                                                                  Secretary and General Counsel
Wayne E. Stuenkel                                      49         Senior Vice President
                                                                  and Chief Actuary
Carl S. Thigpen                                        46         Senior Vice President, Chief Mortgage and Real
                                                                  Estate Officer
Judy Wilson                                            45         Senior Vice President,
                                                                  Stable Value Products
Jerry W. DeFoor                                        50         Vice President and Controller,
                                                                  and Chief Accounting Officer

        All executive officers are elected annually and serve at the pleasure of the Board of Directors. None of the executive officers is related to any director of the Company or to any other executive officer.

        Mr. Johns has been Chairman of the Board of the Company since February 3, 2003, and President and Chief Executive Officer of the Company since December 2001. He has been a Director of the Company since May 1997. He was President and Chief Operating Officer of the Company from August 1996 until December 2001.

        Mr. Briggs has been Executive Vice President, Life and Annuity, of the Company since January 2003 and has responsibility for the Life and Annuity Division. From October 1993 to January 2003, he served as Executive Vice President, Individual Life Division. Mr. Briggs has been associated with the Company and its subsidiaries since 1971.

         Mr. Massengale has been Executive Vice President, Acquisitions of the Company since August 1996 and also has responsibility for the West Coast Division. Mr. Massengale has been employed by the Company and its subsidiaries since 1983.

        Mr. Ritchie has been Executive Vice President and Chief Financial Officer of the Company since August 2001. From July 1998 until 2000, Mr. Ritchie was President, Chief Executive Officer and Director of Per-Se Technologies, Inc. From April 1998 until July 1998, he served as Chief Operating Officer of Per-Se. From January 1998 until April 1998, Mr. Ritchie served as Executive Vice President and Chief Financial Officer of Per-Se Technologies.

        Mr. Bielen has been Senior Vice President, Chief Investment Officer and Treasurer since January 2002. From August 1996 until January 2002, he was Senior Vice President, Investments of the Company. Mr. Bielen has been employed by the Company and its subsidiaries since 1991.

         Mr. Griggs has been Senior Vice President, Asset Protection Division of the Company since February 3, 2003. He served as Vice President, Operations of the Asset Protection Division of Protective Life Insurance Company from January 1998 to February 2003. Mr. Griggs has been employed by the Company and its subsidiaries since 1997.

         Mr. Hamer has been Senior Vice President and Chief Human Resources Officer of the Company since March 2001. He served as Vice President, Human Resources of the Company from May 1982 to March 2001. Mr. Hamer has been employed by the Company and its subsidiaries since 1981.

        Mr. Keyes has been Senior Vice President, Information Services of the Company since April 1999. Mr. Keyes was Vice President, Information Services of the Company from May 1993 to April 1999. Mr. Keyes has been employed by the Company and its subsidiaries since 1982.

        Ms. King has been Senior Vice President, Life and Annuity Division of the Company since January 2003. From April 1995 to January 2003, she served as Senior Vice President, Investment Products Division.

        Ms. Long has been Senior Vice President, Secretary and General Counsel of the Company since November 1996. Ms. Long has been employed by the Company and its subsidiaries since 1993.

         Mr. Stuenkel has been Senior Vice President and Chief Actuary of the Company since March 1987. Mr. Stuenkel is a Fellow of the Society of Actuaries and has been employed by the Company and its subsidiaries since 1978.

        Mr. Thigpen has been Senior Vice President, Chief Mortgage and Real Estate Officer of the Company since January 2002. From March 2001 to January 2002, he was Senior Vice President, Investments. From May 1996 to March 2001, he was Vice President, Investments for the Company. Mr. Thigpen has been employed by the Company and its subsidiaries since 1984.

        Ms. Wilson has been Senior Vice President, Stable Value Products of the Company since January 1995. Ms. Wilson has been employed by the Company and its subsidiaries since 1991.

        Mr. DeFoor has been Vice President and Controller, and Chief Accounting Officer of the Company since April 1989. Mr. DeFoor is a certified public accountant and has been employed by the Company and its subsidiaries since 1982.

        Certain of these executive officers also serve as executive officers and/or directors of various other Company subsidiaries.

        The directors of the Company as as follows:

                                                                                                      COMPANY
                                         PRINCIPAL OCCUPATION                                         DIRECTOR
NAME                             AGE     AND DIRECTORSHIPS                                            SINCE
- ----                             ---     --------------------                                         --------

William J. Cabaniss, Jr.         64      Chairman  of the  Board and Chief  Executive  Officer  of    1974(a)
                                         Precision   Grinding,   Inc.  (steel   processing)   and,
                                         formerly,  its President and Chief Executive  Officer and
                                         its President; Director, Precision Grinding, Inc.


John J. McMahon, Jr.             60      Chairman of Ligon Industries,  LLC (manufacturer of waste    1987
                                         water  treatment  equipment,  aluminum cast and hydraulic
                                         cylinders).   Chairman  of  the  Executive  Committee  of
                                         McWane,   Inc.  (pipe  and  valve   manufacturing)   and,
                                         formerly,  its  Chairman of the Board and its  President;
                                         Director, Alabama National BanCorporation,  National Bank
                                         of Commerce of Birmingham,  John H. Harland Company,  and
                                         ProAssurance Corporation.


James S. M. French               63      Chairman  of the  Board and Chief  Executive  Officer  of    1996
                                         Dunn Investment  Company  (materials,  construction,  and
                                         investment holding company) and,  formerly,  its Chairman
                                         of the  Board,  President  and Chief  Executive  Officer;
                                         Director,   Energen   Corporation,    Regions   Financial
                                         Corporation, and Hilb, Rogal and Hamilton Company.


John D. Johns                    51      Chairman  of the  Board,  President  and Chief  Executive    1997
                                         Officer of the Company and,  formerly,  its President and
                                         Chief  Operating  Officer;  Director,  National  Bank  of
                                         Commerce of Birmingham,  Alabama National BanCorporation,
                                         John H. Harland Company, and Genuine Parts Company. (b)



Donald M. James                  54      Chairman  of the  Board and Chief  Executive  Officer  of    1997
                                         Vulcan  Materials  Company  (construction  materials  and
                                         chemicals)  and,   formerly,   its  President  and  Chief
                                         Executive  Officer;  Director,  Vulcan Materials Company,
                                         SouthTrust Corporation and Southern Company.



J. Gary Cooper                   66      Chairman  of  the  Board,  Chief  Executive  Officer  and    1999
                                         co-founder  of  Commonwealth  National  Bank (banking and
                                         financial   services);   formerly,   U.S.  Ambassador  to
                                         Jamaica  (1994-1997);  formerly,  Senior Vice  President,
                                         Volkert and  Associates  (engineering  and  architectural
                                         services) and  formerly,  its Vice  President;  Director,
                                         Commonwealth  National Bank,  GenCorp Inc., United States
                                         Steel LLC and PNC Financial Services Group.



H. Corbin Day                    65      Chairman  of the  Board of  Jemison  Investment  Company,    2000
                                         Inc.  (diversified  holding  company and venture  capital
                                         investment firm); Director,  Hughes Supply, Inc, European
                                         Investors Holding, Inc. and Blount International, Inc.



W. Michael Warren, Jr.           55      Chairman  of the  Board,  President  and Chief  Executive    2001
                                         Officer  of  Energen   Corporation   (diversified  energy
                                         holding   company)  and  Chairman  and  Chief   Executive
                                         Officer  of  Alabama  Gas   Corporation  and  of  Energen
                                         Resources, Inc.; formerly,  President and Chief Executive
                                         Officer  of  Energen   Corporation;   Director,   Energen
                                         Corporation and AmSouth Bank of Birmingham.



Susan Molinari                   45      President and Chief  Executive  Officer of The Washington    2001
                                         Group   (government   relations  and  consulting   firm);
                                         formerly,  Chairman of Susan Molinari, L.L.C. (government
                                         affairs and  communications)  and Senior  Public  Affairs
                                         Consultant    to    Fleishman-Hillard     (communications
                                         consulting;) formerly, U.S. Congressional  Representative
                                         (NY) (1990-1997)



Malcolm Portera                  57      Chancellor   of  the   University   of  Alabama   System;    2003
                                         formerly,  President of Mississippi  State University and
                                         Vice  Chancellor  Emeritus of the  University  of Alabama
                                         System add Director,  Alabama Power Company,  Mississippi
                                         Power Company,  Furniture Brands  Inernational,  Inc. and
                                         UAB Health System.



A. W. Dahlberg                   62      Chairman of the Board of Mirant Corporation                  1987
                                         (formerly known as Southern Energy, Inc.)
                                         (electric utilities) and, formerly, Chairman of
                                         the Board and Chief Executive Officer of
                                         Southern Company (electric utilities) and,
                                         Formerly, its Chairman of the Board, President
                                         And Chief Executive Officer; Director, Mirant
                                         Corporation, SunTrust Banks, Inc., and Equifax,
                                         Inc.


Robert A. Yellowlees             64      Lead Director of Global Payments Inc. (electronic            1996
                                         payment services company) and, formerly, Chairman
                                         of the Board of Global Payments Inc. and Chairman
                                         of the Board of NDCHealth Corporation (health
                                         information network services company) (formerly
                                         National Data Corporation, an information services
                                         company of which he served as Chairman of the
                                         Board, President, and Chief Executive Officer until
                                         May 7, 2001); Director, Global Payments Inc. and
                                         NDCHealth Corporation.



(a)   with the exception of the period November 1988 - February 1992
(b)   also a director and/or current officer of each principal Company subsidiary

Section 16(a) Beneficial Ownership Reporting Compliance

        The information called for by this Item is incorporated herein by reference from the Company’s definitive proxy statement for the Annual Meeting of Share Owners, May 5, 2003.

Item 11. Executive Compensation

        The information called for by this Item is incorporated herein by reference from the Company’s definitive proxy statement for the Annual Meeting of Share Owners, May 5, 2003.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Share Owner Matters

        The information called for by this Item is incorporated herein by reference from the Company’s definitive proxy statement for the Annual Meeting of Share Owners, May 5, 2003.

Item 13. Certain Relationships and Related Transactions

None.

Item 14. Controls and Procedures

        The Company’s Chief Executive Officer and Chief Financial Officer have, within the 90-day period preceding the filing of the report evaluated the Company’s disclosure controls and procedures and believe them to be operating effectively to make known to them on a timely basis any material information required to be included in the Company’s periodic filings with the Securities and Exchange Commission. There have been no significant changes in the internal controls, or in other factors that could significantly affect internal controls, subsequent to the date this evaluation was completed.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

          (a)     The following documents are filed as part of this report:

           1.     Financial Statements:

                  The following financial  statements set forth in the Company's 2002 Annual Report to Share Owners as indicated in the
                  following table are incorporated by reference (see Exhibit 13).

                  Consolidated Statements of Income for the years
                    ended December 31, 2002, 2001, and 2000.........................
                  Consolidated Balance Sheets as of December 31,
                    2002 and 2001 ..................................................
                  Consolidated Statements of Share-Owners' Equity
                    for the years ended December 31, 2002, 2001, and 2000...........
                  Consolidated Statements of Cash Flows
                    for the years ended December 31, 2002, 2001, and 2000...........
                  Notes to Consolidated Financial Statements........................
                  Report of Independent Accountants.................................

          2.      Financial Statement Schedules:

                  The Report of  Independent  Accountants  which covers the financial  statement  schedules  appears on page 21 of this
                  report.  The following schedules are located in this report on the pages indicated.

                  Schedule II - Condensed Financial Information
                    of Registrant....................................................
                  Schedule III - Supplementary Insurance Information.................
                  Schedule IV - Reinsurance..........................................
                  Schedule V - Valuation Accounts....................................

                  All other  schedules  to the  consolidated  financial  statements  required by Article 7  of  Regulation  S-X are not
                  required under the related instructions or are inapplicable and therefore have been omitted.

          3.      Exhibits:

                  Included as exhibits are the items listed below.  The Company will furnish a copy of any of the exhibits  listed upon
                  the payment of $5.00 per exhibit to cover the cost of the Company in furnishing the exhibit.

                  Item Number                       Document
                  -----------                       --------

                  *2(a)                 Stock and Asset Purchase  Agreement By and Among Protective Life  Corporation,  Protective Life
                                        Insurance  Company,  Fortis,  Inc. and Dental Care  Holdings,  Inc. dated July 9, 2001 filed as
                                        Exhibit 2(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

                  *2(b)                 Indemnity  Reinsurance  Agreement By and Between  Protective Life Insurance  Company and Fortis
                                        Benefits  Insurance  Company  dated  December 31, 2001 filed as Exhibit  2(b) to the  Company's
                                        Annual Report on Form 10-K for the year ended December 31, 2001.

                  *2(c)                 Indemnity  Reinsurance  Agreement By and Between Empire General Life Assurance  Corporation and
                                        Fortis  Benefits  Insurance  Company  dated  December  31,  2001 filed as  Exhibit  2(c) to the
                                        Company's Annual Report on Form 10-K for the year ended December 31, 2001.

                  *2(d)                 Indemnity  Reinsurance  Agreement By and Between  Protective Life & Annuity  Insurance  Company
                                        and First Fortis Life  Insurance  Company dated  December 31, 2001 filed as Exhibit 2(d) to the
                                        Company's Annual Report on Form 10-K for the year ended December 31, 2001.

                  *3(a)                 1998 Restated  Certificate of Incorporation of the Company filed with the Secretary of State of
                                        Delaware on November 12, 1998,  filed as Exhibit 3(a) to the  Company's  Annual  Report on Form
                                        10-K/A for the year ended December 31, 1998.

                  *3(b)                 1998 Restated By-laws of the Company  effective  November 2, 1998, filed as Exhibit 3(b) to the
                                        Company's Annual Report on Form 10-K for the year ended December 31, 1998.

                  *3(b)(1)              Amendment No. 1 dated  February 4, 2002,  to the 1998 Restated  By-Laws of the Company filed as
                                        Exhibit  3(b)(1) to the Company's  Annual  Report on Form 10-K for the year ended  December 31,
                                        2001.

                  4(a)                  Reference is made to Exhibit 3(a) above.

                  4(b)                  Reference is made to Exhibits 3(b) and 3(b)(1) above.

                  *4(c)                 Rights Agreement,  dated as of August 7, 1995,  between the Company and The Bank of New York as
                                        successor to AmSouth Bank (formerly,  AmSouth Bank N.A.), as Rights Agent filed as Exhibit 2 to
                                        the  Company's  Form 8-K  Current  Report  filed  August 7, 1995 and filed as  Exhibit 1 to the
                                        Company's Form 8-A Registration Statement filed August 7, 1995.

                  *4(d)                 Rights Certificate filed as Exhibit 1 to the Company's Form 8-A filed August 7, 1995.

                  *4(e)                 Certificate  of  Trust  of PLC  Capital  Trust  III  filed as  Exhibit  4(bb) to the  Company's
                                        Registration Statement on Form S-3 filed July 8, 1997 (No. 333-30965).

                  *4(f)                 Declaration  of  Trust of PLC  Capital  Trust  III  filed as  Exhibit  4 (ee) to the  Company's
                                        Registration Statement on Form S-3 filed July 8, 1997 (No. 333-30965).

                  *4(g)                 Form of Amended and Restated  Declaration  of Trust of PLC Capital  III,  dated August 22, 2001
                                        filed as Exhibit 4.3 to the Company's Current Filing on Form 8-K filed August 22, 2001.

                  *4(h)                 Form of Preferred Security Certificate for PLC Capital Trust III (included in Exhibit 4(g)).

                  *4(i)                 Preferred  Securities  Guarantee  Agreement,  dated  August 22, 2001 with  respect to Preferred
                                        Securities  issued by PLC  Capital  Trust III filed as  Exhibit  4.4 to the  Company's  Current
                                        Report on Form 8-K filed August 22, 2001.

                  *4(j)                 Certificate  of  Trust  of PLC  Capital  Trust IV  filed  as  Exhibit  4(cc)  to the  Company's
                                        Registration Statement on Form S-3 filed July 8, 1997 (No. 333-30905).

                  *4(k)                 Declaration  of  Trust  of PLC  Capital  Trust IV  filed  as  Exhibit  4(ff)  to the  Company's
                                        Registration Statement on Form S-3 filed July 8, 1997 (No. 333-30905).

                  *4(l)                 Form of Amended and  Restated  Declaration  of Trust for PLC Capital  Trust IV filed as Exhibit
                                        4.09 to the Company's Current Report on Form 8-K filed September 18, 2002.

                  *4(m)                 Form of Preferred  Security  Certificate  for PLC Capital  Trust IV (included as Exhibit A-1 of
                                        Exhibit 4(l)).

                  *4(n)                 Form of  Guarantee  with  respect to  Preferred  Securities  of PLC  Capital  Trust IV filed as
                                        Exhibit  4(x)  to the  Company's  Registration  Statement  on  Form  S-3  filed  July  8,  1997
                                        (No. 333-30905).

                  *10(a)†               The Company's  Annual  Incentive Plan (effective as of January 1,  1997) filed as Exhibit 10(b)
                                        to the Company's Form 10-Q Quarterly Report filed May 14, 1997.

                  *10(b)†               The Company's 1997 Long-Term  Incentive Plan  (formerly,  the "1997  Performance  Share Plan"),
                                        filed as Exhibit 10(a) to the Company's Form 10-Q Quarterly Report filed May 15, 1998.

                  *10(c) †              Excess  Benefit  Plan  amended and  restated as of July 1,  2001 filed as Exhibit  10(c) to the
                                        Company's Annual Report on Form 10-K for the year ended December 31, 2001.

                  *10(d) †              Form of Indemnity  Agreement  for Directors  filed as Exhibit 19.1 to the  Company's  Form 10-Q
                                        Quarterly Report filed August 14, 1986.

                  *10(d)(1) †           Form of Indemnity  Agreement for Officers  filed as Exhibit  10(d)(1) to the  Company's  Annual
                                        Report on Form 10-K for the year ended December 31, 1996.

                  *10(e) †              Form  of the  Company's  Employment  Continuation  Agreement  filed  as  Exhibit  10(a)  to the
                                        Company's Form 10-Q Quarterly Report filed September 30, 1997.

                  *10(f) †              The Company's Deferred  Compensation Plan for Directors Who Are Not Employees of the Company as
                                        amended  through  March 3,  1997,  filed as Exhibit 10(e) to the Company's  Form 10-Q Quarterly
                                        Report filed May 14, 1997.

                   10(f)(1)             Amendment to the Company's  Deferred  Compensation  Plan for Directors who are not Employees of
                                        the Company effective as of November 4, 2002.

                  *10(g) †              The Company's  Deferred  Compensation Plan for Officers as amended through March 3, 1997, filed
                                        as Exhibit 10(d) to the Company's Form 10-Q Quarterly Report filed May 14, 1997.

                   10(g)(1)             Amendment to the Company's Deferred  Compensation Plan for Officers effective as of February 5,
                                        2001.

                   10(g)(2)             Amendment to the Company's Deferred  Compensation Plan for Officers effective as of November 4,
                                        2002.

                  *10(h) †              The Company's 1996 Stock  Incentive Plan as amended  through  March 3,  1997,  filed as Exhibit
                                        10(c) to the Company's Form 10-Q Quarterly Report filed May 14, 1997.

                  *10(h)(1) †           The Company's  specimen letter confirming grants under the Company's 1996 Stock Incentive Plan,
                                        filed as Exhibit 10(2) to the Company's Form 10-Q Quarterly Report filed November 13, 1996.

                  *10(i)                Credit  Agreement  among  Protective  Life  Corporation,  the several lenders from time to time
                                        party thereto,  Suntrust Bank, as Syndication Agent and AmSouth Bank, as Administrative  Agent,
                                        dated October 17, 2001,  filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for
                                        the year ended December 31, 2001.

                  10(j)                 Reference is made to Exhibit 2(a) above.

                  10(k)                 Reference is made to Exhibit 2(b) above.

                  10(l)                 Lease Agreement dated as of February 1, 2000,  between Wachovia Capital  Investments,  Inc. and
                                        the Company.

                  10(l)(l)              First Amendment to Lease Agreement dated as of October 31, 2001, between Wachovia Capital
                                        Investments, Inc. and the Company.

                  10(m)                 Investment  and  Participation  Agreement  dated as of February 1, 2000,  among the Company and
                                        Wachovia Capital Investments, Inc.

                  10(m)(1)              First  Amendment to Investment  and  Participation  Agreement and Lease  Agreement  dated as of
                                        November 30, 2002,  among the Company,  Wachovia Capital  Investments,  Inc., and SunTrust Bank
                                        and LaSalle Bank National Association.

                  10(m)(2)              Second  Amendment to Investment and  Participation  Agreement and Lease  Agreement  dated as of
                                        March 11, 2002 among the Company,  Wachovia  Capital  Investments,  Inc., and SunTrust Bank and
                                        LaSalle Bank National Association.

                  10(m)(3)              Third Amendment to Investment and Participation  Agreement and Lease Agreement dated as of July
                                        22, 2002 among the Company,  Wachovia Capital  Investments,  Inc., and SunTrust Bank an LaSalle
                                        Bank National Association.

                  13                    Selected  portions of the 2001 Annual Report To Share Owners which are  incorporated  herein by
                                        reference.

                  21                    Organization Chart of the Company and Affiliates.

                  23                    Consent of PricewaterhouseCoopers LLP.

                  24                    Powers of Attorney.

                  99(a)                 Safe Harbor for Forward-Looking Statements.

                  99(b)                 Certification  Pursuant to 18 U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.

                  99(c)                 Certification  Pursuant to 18 U.S.C.  Section 1350,  as Adopted  Pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.

               (b)   Current Reports on Form 8-K:

                                        None


- ------------------------------
*incorporated by reference
†Management contract or compensatory plan or arrangement

SIGNATURES

        Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PROTECTIVE LIFE CORPORATION

BY: /s/John D. Johns

John D. Johns

Chairman of the Board, President

and Chief Executive Officer

Dated:   March 25, 2003

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

         SIGNATURE                           CAPACITY IN WHICH SIGNED                         DATE


/s/John D. Johns                             Chairman of the Board, President                 March 25, 2003
- ----------------------                       and Chief Executive Officer
JOHN D. JOHNS                                (Principal Executive Officer)
                                             and Director


/s/Allen W. Ritchie                          Executive Vice President and                     March 25, 2003
- -----------------------                      Chief Fiancial Officer
ALLEN W. RITCHIE                             (Principal Financial Officer)


/s/Jerry W. DeFoor                           Vice President and Controller,                   March 25, 2003
- -----------------------                      and Chief Accounting Officer
JERRY W. DEFOOR                              (Principal Accounting Officer)


                    *                        Director                                         March 25, 2003
- -----------------------
WILLIAM J. CABANISS, JR.



                    *                        Director                                         March 25, 2003
- ----------------------
JOHN J. MCMAHON, JR.


                    *                        Director                                         March 25, 2003
- ----------------------
A. W. DAHLBERG





                    *                        Director                                         March 25, 2003
- ----------------------
JAMES S. M. FRENCH


                    *                        Director                                         March 25, 2003
- ----------------------
ROBERT A. YELLOWLEES


                    *                        Director                                         March 25, 2003
- ----------------------
DONALD M. JAMES


                    *                        Director                                         March 25, 2003
- ----------------------
J. GARY COOPER


                    *                        Director                                         March 25, 2003
- ----------------------
H. CORBIN DAY


                    *                        Director                                         March 25, 2003
- ----------------------
W. MICHAEL WARREN, JR.


                    *                        Director                                         March 25, 2003
- ----------------------
SUSAN MOLINARI


                    *                        Director                                         March 25, 2003
- ----------------------
MALCOLM PORTERA

        *John D. Johns, by signing his name hereto, does sign this document on behalf of each of the persons indicated above pursuant to powers of attorney duly executed by such persons and filed with the Securities and Exchange Commission.

BY/s/John D. Johns

JOHN D. JOHNS

Attorney-in-fact

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John D. Johns, certify that:

1. I have reviewed this annual report on Form 10-K of Protective Life Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material
    fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
    with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
    present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
    the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
        period in which this annual report is being prepared;

    b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
        the filing date of this annual report (the "Evaluation Date"); and

    c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures
        based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's
    auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

    a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
        registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
        auditors any material weaknesses in internal controls; and

    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
        registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant
    changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our
    most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 20, 2003

/s/ John D. Johns

Title: President and Chief Executive Officer

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Allen W. Ritchie, certify that:

1. I have reviewed this annual report on Form 10-K of Protective Life Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material
    fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
    with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
    present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
    the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
        period in which this annual report is being prepared;

    b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
        the filing date of this annual report (the "Evaluation Date"); and

    c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures
        based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's
    auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

    a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
        registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
        auditors any material weaknesses in internal controls; and

    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
        registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant
    changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our
    most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 20, 2003

/s/ Allen W. Ritchie

Title: Executive Vice President and Chief Financial Officer

EX-10

Exhibit 10(f)(1)

AMENDMENT TO THE
PROTECTIVE LIFE CORPORATION
DEFERRED COMPENSATION PLAN
FOR DIRECTORS WHO ARE NOT EMPLOYEES OF TEH COMPANY
NOVEMBER 4, 2002

        Protective Life Corporation (the "Company") hereby amends the Protective Life Corporation Deferred Compensation Plan for Directors Who Are Not Employees of the Company (the "Plan").

        1. Sections 4(c)(1) and 4(c)(2) of the Plan are amended to read in their entirety as follows:

        (c)(1) If a stock allotment is elected in whole or in part, the Account shall be credited with a stock equivalent that shall be equal to the number of full and fractional shares of the Company's Common Stock, par value $0.50 per share (the "Common Stock"), that could be purchased with the dollar amount of the allotment using the average of the Closing Price (as defined below) of the Common Stock for the twenty (20) trading days ending on the day preceding the date the Account is so credited. The "Closing Price" of the Common Stock on any trading day means the daily closing price for a share of the Common Stock on the Composite Tape for the New York Stock Exchange or, if the Common Stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on which the Common Stock is listed or, if the Common Stock is not listed on any such exchange, the average of the daily closing bid quotations with respect to a share of the Common Stock on the National Association of Securities Dealers, Inc., Automated Quotations System or any system then in use or, if no such quotations are available, the fair market value of a share of the Common Stock as determined by a majority of the Board; provided, however, that if a Change in Control (as defined below) shall have occurred, then such determination shall be made by a majority of the Continuing Directors (as defined in Protective Life Corporation's Rights Agreement, as in effect from time to time).

(2) The Account also shall be credited as of the payment date for each dividend on the Common Stock with additional stock equivalents computed by (A) multiplying the dividend paid, either in cash or property (other than Common Stock), upon a share of Common Stock to a shareholder of record by the number of stock equivalents in the Account, and (B) dividing the product thereof by the Closing Price on the trading day preceding the dividend payment date. In the case of dividends payable in property, the amount paid shall be based on the fair market value of the property at the time of distribution of the dividend, as determined by a majority of the Board; provided, however, that if a Change in Control shall have occurred, then such determination shall be made by a majority of the Continuing Directors.

        2. A new Section 7(h) is added to the Plan after Section 7(g), such new Section 7(h) to read in its entirety as follows:

(h) Compliance with Legal and Exchange Requirements. The Plan, and the obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may (1) postpone the issuance or delivery of Common Stock or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation, (2) require any Director to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with applicable laws, rules and regulations, and (3) pay the Director, in lieu of shares of Common Stock, cash in an amount equal to the product of (A) the Closing Price of the Common Stock as of the most recent practicable date before the date of payment, multiplied by (B) the number of stock equivalents in the Account. The Company shall not be obligated to sell or issue Common Stock in violation of any such laws, rules or regulations, and neither the Company nor its directors, officers or employees shall have any obligation or liability to a Director with respect to the Director's Account (or Common Stock issuable thereunder) because of any actions taken pursuant to the provisions of this Section 7(h).

        IN WITNESS WHEREOF, the Company has executed this document as of November 4, 2002.

PROTECTIVE LIFE CORPORATION

By: /s/ John D. Johns

John D. Johns

Chairman of the Board and President

EX-10

Exhibit 10(g)(1)

AMENDMENT TO THE
PROTECTIVE LIFE CORPORATION
DEFERRED COMPENSATION PLAN
FOR OFFICERS
February 5, 2001

        Protective Life Corporation (the "Company") hereby amends the Protective Life Corporation Deferred Compensation Plan for Officers (the "Plan").

        1. Section 4(b) of the Plan is amended to read in its entirety as follows:

        (b)(1) Except as otherwise provided in Section 4(b)(2), if a cash allotment is elected in whole or in part, the Account shall be credited with the dollar amount of the allotment. Interest (at the rate described below) on the Average Daily Balance (computed as described below) shall be credited to the Account as of the last day of each calendar month before and after the termination of the Officer's service and after the Officer's death or disability until the total balance in the Account has been paid out in accordance with the provisions of Section 5 or Section 6. The interest rate for each calendar month shall be the 30-Day London Interbank Offered Rate (LIBOR) plus 75 basis points for the last business day of the immediately preceding calendar month as reported on the Bloomberg financial news system. The "Average Daily Balance" shall be the quotient obtained by dividing the sum of the closing balance in the Account at the end of each calendar day in a calendar month by the number of days in such calendar month.

        (2) An Officer may elect to be paid in cash, in lieu of the credit to his Account as provided in Section 4(b)(1), an amount equal to the amount of interest determined as provided in Section 4(b)(1). The Officer may make such election by executing a form prescribed by or acceptable to the Company and delivering such election form to the Company; provided that any such election shall be effective only with respect to interest to be determined after the date of such election. The Company shall make payments to the Officer pursuant to this Section 4(b)(2) as soon as practicable after the end of the calendar month.

        2. Section 4(c)(2) of the Plan is amended to read in its entirety as follows:

        (2)(A) Except as otherwise provided in Section 4(c)(2)(B), the Account also shall be credited as of the payment date for each dividend on the Common Stock with additional stock equivalents computed by (i) multiplying the dividend paid, either in cash or property (other than Common Stock), upon a share of Common Stock to a shareholder of record by the number of stock equivalents in the Account, and (ii) dividing the product thereof by the Average Closing Price of the Common Stock for the twenty (20) trading days ending on the day preceding the dividend payment date. In the case of dividends payable in property, the amount paid shall be based on the fair market value of the property at the time of distribution of the dividend, as determined by a majority of the Board; provided, however, that if a Change in Control shall have occurred, then such determination shall be made by a majority of the Continuing Directors.

        (B) An Officer may elect to receive, in lieu of the credit to his Account as provided in Section 4(c)(2)(A), an amount in cash or property equal to the amount of any dividend paid, either in cash or property (other than Common Stock) upon a share of Common Stock to a shareholder of record, multiplied by the number of stock equivalents in the Account. The Officer may make such election by executing a form prescribed by or acceptable to the Company and delivering such election form to the Company; provided that any such election shall be applicable only with respect to dividend record dates that occur after the date of such election. The Company shall make payments to the Officer pursuant to this Section 4(c)(2)(B) as soon as practicable after the applicable dividend payment date.

        IN WITNESS WHEREOF, the Company has executed this document as of February 5, 2001.

PROTECTIVE LIFE CORPORATION

By: /s/ John D. Johns

John D. Johns

Chairman of the Board and President

EX-10

Exhibit 10(g)(2)

AMENDMENT TO THE
PROTECTIVE LIFE CORPORATION
DEFERRED COMPENSATION PLAN
FOR OFFICERS
NOVEMBER 4, 2002

        Protective Life Corporation (the “Company”) hereby amends the Protective Life Corporation Deferred Compensation Plan for Officers (the “Plan”).

        1. Section 4(c) of the Plan is hereby amended to read in its entirety as follows:

        (c)(1) If a stock allotment is elected in whole or in part, the Account shall be credited with a stock equivalent that shall be equal to the number of full and fractional shares of the Company's Common Stock, par value $0.50 per share (the "Common Stock"), that could be purchased with the dollar amount of the allotment using the average of the Closing Price (as defined below) of the Common Stock for the twenty (20) trading days ending on the day preceding the date the Account is so credited. The "Closing Price" of the Common Stock on any trading day means the daily closing price for a share of the Common Stock on the Composite Tape for the New York Stock Exchange or, if the Common Stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on which the Common Stock is listed or, if the Common Stock is not listed on any such exchange, the average of the daily closing bid quotations with respect to a share of the Common Stock on the National Association of Securities Dealers, Inc., Automated Quotations System or any system then in use or, if no such quotations are available, the fair market value of a share of the Common Stock as determined by a majority of the Board; provided, however, that if a Change in Control (as defined below) shall have occurred, then such determination shall be made by a majority of the Continuing Directors (as defined in Protective Life Corporation's Rights Agreement, as in effect from time to time).

        (2)(A) Except as otherwise provided in Section 4(c)(2)(B), the Account also shall be credited as of the payment date for each dividend on the Common Stock with additional stock equivalents computed by (i) multiplying the dividend paid, either in cash or property (other than Common Stock), upon a share of Common Stock to a shareholder of record by the number of stock equivalents in the Account, and (ii) dividing the product thereof by the Closing Price of the Common Stock on the trading day preceding the dividend payment date. In the case of dividends payable in property, the amount paid shall be based on the fair market value of the property at the time of distribution of the dividend, as determined by a majority of the Board; provided, however, that if a Change in Control shall have occurred, then such determination shall be made by a majority of the Continuing Directors.

        (B) An Officer may elect to receive, in lieu of the credit to his Account as provided in Section 4(c)(2)(A), an amount in cash or property equal to the amount of any dividend paid, either in cash or property (other than Common Stock) upon a share of Common Stock to a shareholder of record, multiplied by the number of stock equivalents in the Account. The Officer may make such election by executing a form prescribed by or acceptable to the Company and delivering such election form to the Company; provided that any such election shall be applicable only with respect to dividend record dates that occur after the date of such election. The Company shall make payments to the Officer pursuant to this Section 4(c)(2)(B) as soon as practicable after the applicable dividend payment date.

        2. Section 5(a) of the Plan is amended to read in its entirety as follows:

        (a) Except as otherwise provided in the Plan, at an Officer's election, the balance in his Account shall be paid to the Officer commencing on the date which the Officer has specified on the Officer's election form.

Except as otherwise provided in the Plan, the balance in the Account shall be paid either in a lump sum or, at the Officer's election, in monthly, quarterly, semiannual or annual installments, but such installments shall be payable over a period not to exceed ten (10) years (the "Payout Period"). In order to be effective, an election to change the method and/or timing of distribution with respect to the Account must be made on a form prescribed by or acceptable to the Company and received by the Company before the first day of the calendar year in which payments (i) are to begin pursuant to such election and (ii) would have begun absent such election. The amount of each installment shall be determined as of the first day of the period in which payment is to be made by dividing the then balance in the Account by the then remaining number of payment dates in the Payout Period. The lump sum or first periodic installment shall be paid by the Company as promptly as is convenient, but not more than sixty (60) days following the date specified by the Officer.

        3. A new Section 7(i) is added to the Plan after Section 7(h), such new Section 7(i) to read in its entirety as follows:

        (i) Compliance with Legal and Exchange Requirements. The Plan, and the obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may (1) postpone the issuance or delivery of Common Stock or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation, (2) require any Officer to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with applicable laws, rules and regulations, and (3) pay the Officer, in lieu of shares of Common Stock, cash in an amount equal to the product of (A) the Closing Price of the Common Stock as of the most recent practicable date before the date of payment, multiplied by (B) the number of stock equivalents in the Account. The Company shall not be obligated to sell or issue Common Stock in violation of any such laws, rules or regulations, and neither the Company nor its directors, officers or employees shall have any obligation or liability to an Officer with respect to the Officer's Account (or Common Stock issuable thereunder) because of any actions taken pursuant to the provisions of this Section 7(i).

        IN WITNESS WHEREOF, the Company has executed this document as of November 4, 2002.

PROTECTIVE LIFE CORPORATION

By: /s/ John D. Johns

John D. Johns

Chairman of the Board and President

EX-10

Exhibit 10(l)

THIS DOCUMENT WAS PREPARED BY
AND IS TO BE RETURNED TO:

Christopher L. Carson, Esq.
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street
Atlanta, Georgia 30308-3242

LEASE AGREEMENT

Dated as of February 1, 2000

Between

Wachovia Capital Investments, Inc.,

as the Lessor,

and

Protective Life Insurance Company,

as the Lessee

_______________________________________________________________________

THIS LEASE AGREEMENT IS ALSO A MORTGAGE AND SECURITY AGREEMENT BETWEEN THE LESSEE, PROTECTIVE LIFE INSURANCE COMPANY, AS MORTGAGOR AND DEBTOR, AND THE LESSOR, WACHOVIA CAPITAL INVESTMENTS, INC., AS MORTGAGEE AND SECURED PARTY, SECURING INDEBTEDNESS IN THE PRINCIPAL AMOUNT OF $75,000,000. THE COLLATERAL SUBJECT TO THE SECURITY INTEREST INCLUDES PERSONAL PROPERTY THAT IS, OR MAY BECOME, FIXTURES ATTACHED TO THE REAL PROPERTY DESCRIBED IN THIS LEASE AGREEMENT. THIS LEASE AGREEMENT SHOULD BE FILED AND RECORDED IN THE REAL ESTATE RECORDS AS A LEASE AND AS A MORTGAGE AND FIXTURE FILING. WACHOVIA CAPITAL INVESTMENTS, INC. SHOULD BE INDEXED AS THE GRANTOR OF THE LEASE AND THE GRANTEE (MORTGAGEE) OF THE MORTGAGE AND SECURITY INTEREST. PROTECTIVE LIFE INSURANCE COMPANY SHOULD BE INDEXED AS THE GRANTEE OF THE LEASE AND THE GRANTOR (MORTGAGOR) OF THE MORTGAGE AND SECURITY INTEREST. THE MAILING ADDRESSES OF THE LESSEE (MORTGAGOR AND DEBTOR) AND THE LESSOR (MORTGAGEE AND SECURED PARTY) FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE OBTAINED ARE SET FORTH ON THE SIGNATURE PAGES HEREOF AND A STATEMENT INDICATING THE TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED IN SECTION 26 HEREOF.

THIS INSTRUMENT IS FILED AND SHALL CONSTITUTE A FIXTURE FILING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7-9-402(B) OF THE CODE OF ALABAMA.

THIS INSTRUMENT IS A “CONSTRUCTION MORTGAGE”, AS DEFINED IN SECTION 7-9-313(1)(C) OF THE CODE OF ALABAMA AND SECURES, AMONG OTHER OBLIGATIONS, AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF AN IMPROVEMENT ON LAND.

                                                 TABLE OF CONTENTS

Section 1. Defined Terms.............................................................................

Section 2. Lease of Facility.........................................................................

Section 3. Payments..................................................................................

Section 4. Intentionally Omitted.....................................................................

Section 5. Investment Agreement; Agency Agreement....................................................

Section 6. Title to Remain in the Lessor.............................................................

Section 7. Maintenance of the Facility; Operations...................................................

Section 8. Modifications.............................................................................

Section 9. Further Assurances........................................................................

Section 10. Compliance with Governmental Requirements and Insurance Requirements: Related Contracts..

Section 11. Condition and Use of Facility; Quiet Enjoyment...........................................

Section 12. Liens....................................................................................

Section 13. Permitted Contests.......................................................................

Section 14. Insurance, etc...........................................................................

Section 15. Termination; Cancellation; Purchase Option...............................................

Section 16. Transfer of Title on Removal of Facility; Expenses of Transfer...........................

Section 17. Events of Default and Remedies...........................................................

Section 18. Change in the Lessee's Name or Structure.................................................

Section 19. Inspection; Right to Enter Premises of the Lessee........................................

Section 20. Right to Perform the Lessee's Covenants..................................................

Section 21. Participation by Co-Lessees or Sublessees................................................

Section 22. Notices..................................................................................

Section 23. Amendments and Waivers...................................................................

Section 24. Severability.............................................................................

Section 25. Federal Income Tax Considerations........................................................

Section 26. Other Provisions.........................................................................

Section 27. Miscellaneous............................................................................



EXHIBIT A                  Description of Site

EXHIBIT B                  Other Defined Terms

SCHEDULE 14       Insurance Requirements

LEASE AGREEMENT

        This Lease Agreement dated as of February 1, 2000, (as the same may be amended, modified or supplemented from time to time, this "Lease") is between Wachovia Capital Investments, Inc., a Georgia corporation (together with its successors and permitted assigns, the "Lessor"), and Protective Life Insurance Company, a Tennessee corporation (together with its successors and permitted assigns, the "Lessee").

RECITALS

        WHEREAS, Lessor has acquired a ground lease interest in certain real property in Jefferson County, Alabama, described in greater detail on Exhibit A (the “Site”), and all appurtenances thereto and has entered into certain agreements described in greater detail in that certain Investment and Participation Agreement bearing even date herewith (the “Investment Agreement”) entered into by and among Lessor, Lessee and the Lease Participants parties thereto from time to time to construct certain Improvements on the Site in accordance with the Facility Plan in order to create an annex building and adjacent parking deck together with related enhancements and improvements, including furniture, fixtures and equipment, in accordance with the Facility Plan; and

        WHEREAS, subject to the terms and conditions of this Lease, the Lessee desires to lease from the Lessor the ground lease interest in the Site and such enhancements and Improvements beginning on the Lease Commencement Date for the purpose of occupying and using the Site and such enhancements and Improvements as an annex office building and parking deck in accordance with the terms and conditions set forth in this Lease.

        NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Lessor and the Lessee agree as follows:

        Section 1. Defined Terms.

             (i) In this Lease, the terms "Lease," "Lessee," and "Lessor" shall have the meanings indicated above.

             (ii) As used in this Lease, all capitalized terms used in this Lease and not otherwise defined herein or as set forth on Exhibit B shall have the meanings assigned such terms in Schedule 1.02 to the Investment Agreement, the terms and provisions of which schedule are incorporated herein by reference and made a part hereof.

        Section 2. Lease of Facility.

        (a)During the term of and subject to the terms and conditions of this Lease, the Lessor hereby leases to the Lessee, and the Lessee hereby leases from the Lessor, the Facility for the Lease Term to be occupied and used (i) to cause Completion of the Facility during the portion of the Lease Term consisting of the Construction Term in accordance with the Agency Agreement and (ii) for and only for the Permitted Use with respect to the Basic Term. The entire Facility shall become subject to this Lease as of the effective date hereof; provided that the Lessor will deliver possession of the Facility to Lessee for occupancy and operation in accordance with the Permitted Use in conjunction with and to the extent permitted by certificates of occupancy issued by the applicable Governmental Authority.

        (b) Unless earlier terminated in accordance with the other provisions hereof, including without limitation, Sections 15 and 17, this Lease shall terminate on the Scheduled Lease Termination Date.

        The Lessee shall give to the Lessor written notice as provided below under the circumstances described below specifying its election as to which of the options under Section 15(a)(ii) of this Lease the Lessee intends to exercise upon the applicable Lease Termination Date:

        (x) in the case of a termination on the Scheduled Lease Termination Date, the Lessee shall give the Lessor notice of such election on any date that is not less than 12 months and no more than 18 months prior to the then current Scheduled Lease Termination Date; and

        (z) if the Lessor declares a Non-Completion Event or elects to terminate this Lease due to a Change of Control, the Lessee shall give the Lessor notice of such election within 5 Business Days of the date the Lessee receives written notice of the Lessor's declaration of a Non-Completion Event or of the Lessor's election to terminate this Lease due to a Change of Control.

        In the event the Lessee fails to give timely written notice of such election to the Lessor on or before the dates herein provided, the Lessee shall be deemed to have elected to purchase the Facility on the Lease Termination Date for the Purchase Price.

        Section 3. Payments.

        (a) Basic Rent. Basic Rent during the Construction Term shall be capitalized pursuant to Section 3.03(a) of the Investment Agreement. The Lessee shall pay to the Lessor on the Rent Payment Date for each Rental Period the amount of Basic Rent due for such Rental Period during the Basic Term.

        (b) Final Rent Payment or Completion Costs Payment. On the earlier to occur of the Scheduled Lease Termination Date or the Option Date, Lessee shall pay to Lessor the Final Rent Payment or, if a Non-Completion Event has occurred, the Completion Costs Payment, or, if the Company has elected to purchase the Facility, the Purchase Price.

        (c) Supplemental Rent. In addition to Basic Rent and the Final Rent Payment, the Lessee will also pay to the Lessor, from time to time, within 10 Business Days after demand by the Lessor, or otherwise as and when due pursuant to the Operative Documents, as additional rent ("Supplemental Rent") the following (but without duplication of any amounts included in the calculation of Rent):

             (i) all out-of-pocket costs and expenses reasonably incurred by the Lessor in connection with the preparation, negotiation, execution, delivery, performance and administration of this Lease and the other Operative Documents, including, but not limited to, the following: (A) fees and expenses of the Lessor, including, without limitation, reasonable attorneys' fees and expenses and the fees and expenses for the Approved Appraisal, the Related Contracts, and the Survey, the Environmental Assessment, the Soil Test Reports, the title policy referred to in Section 6.01(k) of the Investment Agreement; (B) all other amounts owing to the Lessor and the Lease Participants pursuant hereto or any other Operative Documents, including, without limitation, the Commitment Supplemental Rent, the Upfront Supplemental Rent, the Arranger's Supplemental Rent and the Administrative Supplemental Rent payable pursuant to Section 2.04 of the Investment Agreement, and all fees, indemnities, expenses, compensation in respect of increased costs of any kind or description payable under the Investment Agreement or any other Operative Document; (C) all yield maintenance, capital adequacy and other costs contemplated under Article V of the Investment Agreement, and (D) all out-of-pocket costs and expenses incurred by the Lessor (and, in the case of clause (3) below, any Lease Participant) after the date of this Lease (including, without limitation, reasonable attorneys' fees and expenses and other expenses and disbursements reasonably incurred) associated with (1) negotiating and entering into, or the giving or withholding of, any future amendments, supplements, waivers or consents with respect to this Lease; (2) any Loss Event, Casualty Occurrence or termination of this Lease; and (3) any Default or Event of Default and the enforcement and preservation of the rights or remedies of the Lessor under this Lease and the other Operative Documents and all reasonable costs and expenses incurred by the Lessor or any of its affiliates in initially syndicating to Lease Participants all or any part of its interests under the Operative Documents, including, without limitation, the related reasonable fees and out-of-pocket expenses of counsel for the Lessor or its affiliates, travel expenses, duplication and printing costs and courier and postage fees, and excluding any fees paid to the Lessor or any Lease Participant purchasing such an interest;

and

             (ii) all other amounts that the Lessee agrees herein to pay other than Basic Rent, the Final Rent Payment, the Completion Costs Payment and amounts described in clause (i) above.

        (d) Computations. All computations of Basic Rent shall be made by the Lessor on the basis of a year of 360 days (or, in the case of computations based on the Base Rate, 365/366 days), in each case for the actual number of days (including the first day but excluding the last day) occurring in the Rental Period for which such Basic Rent payments are payable. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of Rent; provided, however, that if such extension would cause payment of Basic Rent to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

        (e) No Offsets. This Lease is an absolute net lease, and Rent and all other sums payable by the Lessee hereunder shall be paid without notice except as otherwise expressly provided herein, and the Lessee shall not be entitled to any abatement, reduction, setoff, counterclaim, defense or deduction with respect to any Rent or other sums payable hereunder. The obligations of the Lessee to pay Rent and all other sums payable hereunder shall not be affected by reason of: (i) any damage to, or destruction of, the Facility or any part thereof by any cause whatsoever (including, without limitation, fire, casualty or act of God or enemy or any other force majeure event); (ii) any condemnation, including, without limitation, a temporary condemnation of the Facility or any part thereof; (iii) any prohibition, limitation, restriction or prevention of the Lessee's use, occupancy or enjoyment of the Facility or any part thereof by any Person (other than by the Lessor in violation of this Lease); (iv) any matter affecting title to the Facility or any part thereof; (v) any eviction of the Lessee from, or loss of possession by the Lessee of, the Facility or any part thereof, by reason of title paramount or otherwise (other than by the Lessor in violation of this Lease); (vi) any default by the Lessor hereunder or under any other Operative Document; (vii) the invalidity or unenforceability of any provision hereof or the impossibility or illegality of performance by the Lessor or the Lessee or both; (viii) any action of any Governmental Authority; or (ix) any other Loss Event, Casualty Occurrence or other cause or occurrence whatsoever, whether similar or dissimilar to the foregoing. The Lessee shall remain obliged under this Lease in accordance with its terms and shall not take any action to terminate, rescind or avoid this Lease, except as expressly provided in Section 15, notwithstanding any bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting the Lessor or any action with respect to this Lease which may be taken by any trustee, receiver or liquidator or by any court. The Lessee waives all rights to terminate or surrender this Lease, except as expressly provided in Section 15, or to any abatement or deferment of Rent or other sums payable hereunder. The Lessee hereby waives any and all rights now or hereafter conferred by law or otherwise to modify or to avoid strict compliance with its obligations under this Lease. All payments made to the Lessor hereunder as required hereby shall be final and irrevocable, and the Lessee shall not seek to recover any such payment or any part thereof for any reason whatsoever, absent manifest error.

        (f) Taxes. Subject to the Lessee's contest rights under Section 13, all payments of Rent and all other amounts to be paid by the Lessee hereunder to the Lessor shall be made without deduction for, and free from, any taxes, imposts, levies, duties, deductions or withholdings of any nature now or at any time hereafter imposed by any Governmental Authority or by any taxing authority thereof or therein imposed or levied upon, assessed against or measured by any Rent or other sums payable hereunder excluding taxes imposed on or measured by the net income or net worth of the Lessor or any Lease Participant and franchise taxes imposed on the Lessor or any Lease Participant, and any tax arising by reason of a connection between the Lessor or any Lease Participant or the jurisdiction of the Lessor or any Lease Participant or the Applicable Funding Office of the Lessor or any Lease Participant and the jurisdiction imposing such tax (all such non-excluded taxes, imposts, levies, duties, deductions or withholdings of any nature being "Taxes"). In the event that the Lessee is required by applicable law to make any such withholding or deduction of Taxes with respect to any Rent or other amount, the Lessee shall pay such deduction or withholding to the applicable taxing authority, shall promptly furnish to the Lessor or such Lease Participant in respect of which such deduction or withholding is made all receipts and other documents evidencing such payment and shall pay to the Lessor or such Lease Participant additional amounts as may be necessary in order that the amount received by the Lessor or such Lease Participant after the required deduction or withholding shall equal the amount the Lessor or such Lease Participant would have received had no such deduction or withholding been made. In addition, the Lessee agrees that it will promptly pay all other Impositions imposed upon or levied or assessed against the Facility or any part thereof, or against the Lessor or any Lease Participant in connection with the transactions contemplated by this Lease and the other Operative Documents, or any sums levied in connection with the execution, delivery or recording of the Operative Documents, and will furnish to the Lessor or any Lease Participant upon request copies of official receipts or other proof evidencing such payment; provided, however, that the Lessee shall not be obligated to pay (i) any Impositions that are excluded from the definition of Taxes; or (ii) any Impositions attributable to the gross negligence or willful misconduct of the Lessor or any Lease Participant. The Lessee further agrees that, subject to its contest rights under Section 13, it will, at its expense, do all things required to be done by the Lessor in connection with the levy, assessment, billing or payment of any Impositions that it is required to pay pursuant to the preceding sentence, and is hereby authorized by the Lessor or any Lease Participant to act for and on its behalf in any and all such respects and to prepare and file, on behalf of the Lessor or any Lease Participant, all tax returns and reports required to be filed by the Lessor or any Lease Participant (other than federal income tax returns and documents related thereto, subject to Section 25) concerning the Facility. The Lessee's payment obligations under this Section 3(f) shall survive the termination of this Lease. In the event that any withholding or deduction from any payment to be made by the Lessee hereunder is required in respect of any Imposition pursuant to any Governmental Requirement, then the Lessee will:

        (1) pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted;

        (2) promptly forward to the Lessor, if available, an official receipt or other documentation satisfactory to the Lessor evidencing such payment to such Governmental Authority; and

        (3) pay to the Lessor or any Lease Participant, as applicable, such additional amount or amounts as is necessary to ensure that the net amount actually received by the Lessor or such Lease Participant will equal the full amount the Lessor or such Lease Participant would have received had no such withholding or deduction been required.

        (g) Payments to the Lessor. All payments by the Lessee pursuant to this Lease shall be made by the Lessee to the Lessor. All such payments required to be made to the Lessor shall be made not later than 1:00 P.M., Atlanta, Georgia time, on the date due, in immediately available funds, to such account as the Lessor shall specify from time to time by notice to the Lessee. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, except as otherwise expressly provided herein or in the Investment Agreement, such payment shall be made on the next succeeding Business Day and such extension shall be included in computing Rent, interest, yield and fees, if any, in connection with such payment.

        (h) Default Rate. The Lessee shall pay on demand to the Lessor interest at the Default Rate on all amounts payable by the Lessee to the Lessor hereunder or under the Operative Documents in respect of overdue principal of, Yield on, and other amounts owing in respect of all Rent and the Completion Costs Payment, if applicable, and all other amounts payable under this Lease, the Investment Agreement or any of the other Operative Documents, from the due date thereof until paid in full.

        Section 4. Intentionally Omitted.

        Section 5. Investment Agreement; Agency Agreement.

        The Lessee and the Lessor are entering into the Investment Agreement with the Lease Participants pursuant and subject to which the Lessor will fund Lessor Advances for the account of the Lessee as therein provided up to but not exceeding, the Funded Amount for the entire Facility, and the Lease Participants will fund to the Lessor Lease Participation Advances as therein provided, up to but not exceeding their respective Lease Participant Commitments. In addition, the Lessee is entering into the Agency Agreement with the Lessor pursuant to which the Lessee will act as the Acquisition/Construction Agent for the Lessor in causing the completion of certain enhancements and improvements to, and the purchase, manufacture, construction, improvement, renovation, assembly and installation of, the Facility, including negotiation and performance of all Related Contracts, obtaining all Applicable Permits and complying with all Governmental Requirements (including all Environmental Requirements) relating to the Facility. Upon funding pursuant to the Investment Agreement, title to all components of the Facility purchased with such funding shall be and remain in the Lessor, and such components shall be subject to the terms and conditions of this Lease. The Facility and all components thereof shall be purchased, manufactured, constructed, improved, renovated, assembled or installed, as applicable, in accordance with the Related Contracts entered into by the Lessee pursuant to the Agency Agreement.

        Section 6. Title to Remain in the Lessor.

        The Lessor shall own 100% of the ground lease of the Site and the legal and beneficial interest in the remainder of the Facility. All accessories, equipment, parts, fixtures and devices affixed or placed on the Facility from time to time by the Lessee, other than “Excluded Equipment”, and all modifications, alterations, renovations or improvements to the Facility made by the Lessee shall be and become part of the Facility for the purposes of this Lease and shall be Property of the Lessor subject to the terms of this Lease; provided that the Lessor's interest in any part of the Facility that is replaced by the Lessee pursuant to and as permitted by the terms of this Lease shall be deemed released from this Lease (and the Collateral) and thereupon become the Property of the Lessee automatically, without further action by the Lessor, and the Lessor shall perform all acts and execute all documents that the Lessee reasonably requests to give effect to the foregoing at the expense of the Lessee, including the execution and delivery of bills of sale and other documents of transfer. This Lease shall not give or grant to the Lessee any right, title or interest in or to the Facility, except the rights expressly conferred by this Lease. The term “Excluded Equipment” shall mean any computer equipment, telephone equipment, copier equipment, facsimile equipment or other office equipment which is (i) acquired by the Lessee with its own funds or leased under separate lease agreements from third party lessors and not acquired in whole or in part with the proceeds of Lessor Advances, and (ii) does not constitute a modification or replacement of or supplement or accession to any part of the Facility.

        Section 7. Maintenance of the Facility; Operations.

        (a) The Lessee shall, and it shall require and cause any and all employees, contractors, subcontractors, agents, representatives, affiliates, consultants and occupants at the Lessee's own cost and expense to: (i) cause the Facility to be maintained in all material respects in good operating order, repair and condition, in accordance with prudent industry practice and any applicable manufacturer's or supplier's manuals or warranties, subject to normal wear and tear, and take all action, and make all changes and repairs, structural and non-structural, foreseen and unforeseen, ordinary and extraordinary, which are required pursuant to any Governmental Requirement or Insurance Requirement at any time in effect to assure full compliance therewith in all material respects; and (ii) do all things necessary to prevent the incurrence of any Environmental Damages or Environmental Liabilities relating to the Facility or any business conducted in or relating to the Facility or the Site, and cause the Facility to continue to have at all times, in all material respects, and in compliance with all applicable Governmental Requirements and Insurance Requirements, the capacity and functional ability to perform, on a continuing basis (subject to normal interruption in the ordinary course of business for maintenance, inspection, service, repair and testing) and in commercial operation, the functions for which it was designed as specified in the Facility Plan and to be utilized commercially for the Permitted Use.

        (b) The Lessee shall, and it shall require and cause any and all employees, contractors, subcontractors, agents, representatives, affiliates, consultants and occupants at the Lessee's own cost and expense to, promptly replace, or cause to be replaced, any part of the Facility which may from time to time be incorporated or installed in or attached to the Facility, and which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair, obsolete or permanently rendered unfit for use for any reason whatsoever. All replacement parts shall be free and clear of all Liens other than Permitted Liens, and, except for temporary accessions and replacement parts utilized pending installation of permanent replacement parts, shall be of a type customarily used in the industry at such time for such purpose, shall be in as good operating condition as, and shall have a utility and useful life at least equal to, the parts replaced (assuming such replaced parts were in the condition and repair required to be maintained by the terms hereof) and shall have a value at least equal to the parts replaced (assuming such replaced parts were in the condition and repair required to be maintained by the terms hereof).

        (c) Notwithstanding the provisions of Section 8 and the foregoing provisions of this Section 7, the Lessee shall not (except as may be required by any Governmental Requirement) remove, replace or alter any part of the Facility or affix or place any accessory, equipment, part or device on any part of the Facility, if such removal, replacement, alteration or addition would impair the originally intended function or use of the Facility so as to materially reduce the value of the Facility taken as a whole, or materially decrease the estimated useful life of the Facility.

        (d) The Lessor shall not be required in any way to maintain, repair or rebuild the Facility or any part thereof and the Lessee waives any right it may now or hereafter have to make any repairs at the expense of the Lessor pursuant to any Governmental Requirement at any time in effect or otherwise.

        (e) The Lessee shall, and it shall require and cause any and all employees, contractors, subcontractors, agents, representatives, affiliates, consultants and occupants at the Lessee's own cost and expense to: (i) comply in all material respects with all applicable Environmental Requirements with regard to the Facility and all parts thereof; and (ii) use, employ, process, emit, generate, store, handle, transport, dispose of and/or arrange for the disposal of, any and all Hazardous Materials in, on or, directly or indirectly, related to or in connection with the Facility or any part thereof in a manner consistent with prudent industry practice and in compliance with any applicable Environmental Requirement. The Lessor and the Lessee hereby acknowledge and agree that the Lessee's obligations hereunder with respect to Environmental Requirements are intended to bind the Lessee with respect to matters and conditions involving the Facility or any part thereof.

        Section 8. Modifications.

        (a) The Lessee shall make no modifications, alterations, renovations or improvements to the Facility without the prior written consent of the Lessor, provided however, that subject to the terms of Section 8(b), the Lessee shall have the right to make modifications, alterations, renovations or improvements to the Facility so long as such modifications, alterations, renovations or improvements do not (except as may be required by any Governmental Requirement) (i) materially reduce the value of the Facility as a whole; (ii) materially and adversely affect the capacity and performance of the Facility on a continuing basis in commercial operation of the function for which the Facility was designed as specified in the Facility Plan; (iii) materially deviate from the Facility Plan; or (iv) materially and adversely affect the estimated useful life of the Facility. After the Completion Date, within 20 Business Days of the end of each calendar quarter, an Authorized Officer of the Lessee shall deliver to the Lessor a schedule certifying to the Lessor's reasonable satisfaction: (x) the nature of the repairs, replacements, modifications, alterations, renovations or improvements to the Facility made during such quarter having a cost of at least $500,000 at the time made, and (y) that the Facility continues to have, in all material respects, the capacity and functional ability to perform on a continuing basis (subject to normal interruption in the ordinary course of business for maintenance, inspection, service, repair and testing) and in commercial operation, the functions for which it was designed as specified in the Facility Plan or, if not, specifying the reason for any such deficiency, including, without limitation, the occurrence and nature of any Loss Event or Casualty Occurrence with respect to the Facility.

        (b) If the Lessee determines that any part of the Facility is no longer necessary for the performance of the Facility on a continuing basis in commercial operation of the function for which the Facility was designed as specified in the Facility Plan, then the Lessee (except when such action or removal may be required by any applicable Governmental Requirement, in which event, the Lessee shall promptly give the Lessor notice of such action or removal) shall give the Lessor at least 30 days' notice prior to taking any action as the result of such determination and shall not remove any such part unless and until the Lessor has determined that (i) such part is no longer necessary for the performance of the Facility on a continuing basis in commercial operation of the function for which the Facility was designed in all material respects as specified in the Facility Plan, (ii) removal of such part does not materially reduce the value of the Facility as a whole, and (iii) removal of such part does not materially decrease the estimated useful life of the Facility. This Section 8(b) shall not apply to worn out or obsolete Property or damaged Property (to the extent such damage does not constitute a Casualty Occurrence or Loss Event) removed and replaced by the Lessee in accordance with Section 7(b).

        Section 9. Further Assurances.

        The Lessee, at its expense, shall execute, acknowledge and deliver from time to time such further counterparts of this Lease or a memorandum of this Lease acceptable to the Lessor or such affidavits, certificates, certificates of title, bills of sale, financing and continuation statements, consents and other instruments as may be required by applicable law or reasonably requested by the Lessor in order to evidence the Lessor's ground lease of the Site and title to the remainder of the Facility and the Lessor's interests in this Lease, and shall, at the Lessee's expense, cause such documents to be recorded, filed or registered in such places as the Lessor reasonably may request and to be re-recorded, refiled or re-registered in such places as may be required by applicable law or at such times as may be required by applicable law in order to maintain and continue in effect the recordation, filing or registration thereof. The Lessor shall not grant or create any Lien on the Facility to any Person except Permitted Liens, Liens in favor of the Lessor (for itself and in trust for the Lease Participants) and Liens pursuant to this Lease, the Security Instruments and the other Operative Documents.

        Section 10. Compliance with Governmental Requirements and Insurance Requirements: Related Contracts.

        The Lessee, at its expense, will comply with all Governmental Requirements applicable to the Facility or any part thereof or the ownership, construction, operation, mortgaging, occupancy, possession, use, non-use or condition of the Facility or any part thereof, all Insurance Requirements, and all instruments, contracts or agreements affecting title to ownership of the Facility or any part thereof. In addition, the Lessee, so long as no Event of Default has occurred and is continuing, is hereby authorized by the Lessor to, and shall, fully and promptly keep, observe, perform and satisfy on behalf of the Lessor any and all obligations, conditions, covenants and restrictions of or on the Lessor or the Lessee under any and all Related Contracts so that there will be no default thereunder and so that the other parties thereunder shall be, and remain at all times, obliged to perform their obligations thereunder, and the Lessee, to the extent within its control, shall not permit to exist any condition, event or fact that could allow or serve as a basis or justification for any such Person to avoid such performance.

        Section 11. Condition and Use of Facility; Quiet Enjoyment.

        (a) THE FACILITY IS LEASED AND THE LESSEE ACCEPTS AND TAKES POSSESSION OF THE FACILITY AS IS, WHERE IS, AND WITH ALL FAULTS AND IN THE CONDITION THEREOF AND SUBJECT TO THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, THE STATE OF THE TITLE THERETO, THE RIGHTS OF OWNERSHIP THEREIN AND SUBJECT TO ALL GOVERNMENTAL REQUIREMENTS NOW IN EFFECT OR HEREAFTER ADOPTED, IN EACH CASE AS IN EXISTENCE WHEN THE SAME FIRST BECOMES SUBJECT TO THIS LEASE, WITHOUT REPRESENTATIONS AND WARRANTIES OF ANY KIND AS TO TITLE BY THE LESSOR (OTHER THAN, AS TO THE LESSOR, THE ABSENCE OF ANY “LESSOR LIENS”, AS DEFINED IN SECTION 16(a) HEREOF), ANY LEASE PARTICIPANT OR ANY PERSON ACTING ON BEHALF OF ANY OF THEM. THE LESSEE ACKNOWLEDGES AND AGREES THAT THE FACILITY HAS NOT BEEN SELECTED BY THE LESSOR OR ANY LEASE PARTICIPANT, THAT NONE OF THE LESSOR OR ANY LEASE PARTICIPANT HAS SUPPLIED ANY SPECIFICATIONS WITH RESPECT TO THE FACILITY AND THAT NONE OF THE LESSOR OR ANY LEASE PARTICIPANT (I) IS A VENDOR OF, OR MERCHANT OR SUPPLIER WITH RESPECT TO, ANY OF THE PROPERTY COMPRISING THE FACILITY OR ANY PROPERTY OF SUCH KIND, (II) HAS MADE ANY RECOMMENDATION, GIVEN ANY ADVICE OR TAKEN ANY OTHER ACTION WITH RESPECT TO THE CHOICE OF ANY MANUFACTURER, SUPPLIER OR TRANSPORTER OF, OR ANY VENDOR OF OR OTHER CONTRACTOR, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO PROPERTY COMPRISING THE FACILITY, (III) HAS AT ANY TIME HAD PHYSICAL POSSESSION OF ANY SUCH PROPERTY, (IV) HAS MADE OR IS MAKING ANY WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE FACILITY, INCLUDING WITHOUT LIMITATION, WITH RESPECT TO TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, THE DESIGN, CONDITION, QUALITY OF MATERIAL OR WORKMANSHIP, CONFORMITY TO SPECIFICATIONS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, WHETHER ARISING PURSUANT TO THE UCC OR ANY OTHER PRESENT OR FUTURE LAW OR OTHERWISE, OR COMPLIANCE WITH APPLICABLE PERMITS OR OTHER GOVERNMENTAL REQUIREMENTS, OR (V) SHALL BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LIABILITY IN TORT, STRICT OR OTHERWISE). IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE FACILITY OR ANY PROPERTY OR OTHER ITEM CONSTITUTING A PART THEREOF, WHETHER PATENT OR LATENT, NONE OF THE LESSOR OR ANY LEASE PARTICIPANT SHALL HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION 11 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE LESSOR AND THE LEASE PARTICIPANTS WITH RESPECT TO THE FACILITY OR ANY PROPERTY OR OTHER ITEM CONSTITUTING A PART THEREOF, WHETHER ARISING PURSUANT TO THE UCC OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT.

        (b) The Lessor hereby assigns to the Lessee, until the occurrence of a Cancellation Event or Termination Event hereunder, the benefits in respect of any Vendor's warranties or undertakings, express or implied, relating to the Facility (including any labor, equipment or parts supplied therewith), and, to the extent assignment of the same is prohibited or precludes enforcement of any such warranty or undertaking, the Lessor hereby subrogates the Lessee to its rights in respect thereof. The Lessor hereby authorizes the Lessee, at the Lessee's expense, to assert any and all claims and to prosecute any and all suits, actions and proceedings, in its own name or in the name of the Lessor, in respect of any such warranty or undertaking and, except during the continuance of an Event of Default, or after the occurrence of a Cancellation Event or Termination Event hereunder, to retain the proceeds received, and after the termination of this Lease or after the occurrence of a Cancellation Event or Termination Event, to pay the same in the form received (with any necessary endorsement) to the Lessor.

        (c) The Lessee may use the Facility for the Permitted Use provided that the value of the Facility is not diminished by any such use other than as a result of normal wear and tear in the ordinary course of business. During the term of this Lease, the Lessor covenants that unless a Cancellation Event or a Termination Event has occurred and is continuing and except as may arise under a Permitted Lien or as may otherwise be contemplated under the Operative Documents, the Lessor will not, and will not permit any party claiming by, through or under the Lessor to, interfere with the peaceful and quiet possession and enjoyment of the Facility by the Lessee; provided, however, that the Lessor and the Lease Participants and their respective successors, assigns, representatives and agents may, upon reasonable notice to the Lessee, enter upon and examine the Facility or any part thereof at reasonable times, subject to the provisions of Section 19; and provided further, however, that the Lessor is not hereby warranting the state or quality of the title to any part of the Facility. Any failure by the Lessor to comply with the foregoing provisions of this Section 11(c) shall not give the Lessee any right to cancel or terminate this Lease, or to abate, reduce or make reduction from or offset against any Rent or other sum payable under this Lease or any other Operative Document, or to fail to perform or observe any other covenant, agreement or obligation hereunder or thereunder. The Lessee will not do, or fail to do, or permit or suffer to exist any act or thing, which action or thing or failure might impair the value, use or usefulness of the Facility for the Permitted Use in accordance with the design of the Facility, ordinary wear and tear excepted.

        Section 12. Liens.

        The Lessee will not directly or indirectly create, or permit to be created or to remain, and at the Lessee's expense will discharge within 30 days of notice of the filing or assertion thereof, by bond, deposit or otherwise, any Lien upon the Lease or the Facility except (i) any Lien being contested as permitted by and in accordance with Section 13, or (ii) Permitted Liens. The Lessor agrees that the Lessee shall have during the term of this Lease the exclusive right (so long as no Event of Default has occurred and is continuing) to grant, create or suffer to exist Permitted Liens in the ordinary course of business and in accordance with prudent industry practices, provided that the fair market value or use of the Facility or the applicable part thereof for the Permitted Use is not materially lessened thereby. The Lessor agrees to execute such documents and take all other actions as shall be reasonably necessary, and otherwise to cooperate with the Lessee in connection with the matters described above, provided that all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by the Lessor in connection therewith shall be borne by the Lessee, and the Lessor shall not be required to execute any document that would, in the opinion of the Lessor, materially and adversely affect the value or use of the Facility or any part thereof for the Permitted Use or otherwise materially and adversely affect the transactions contemplated by the Operative Documents or the interests of the Lessor or the Lease Participants in the Facility or under the Operative Documents or otherwise.

        (a) The Lessor will not directly or indirectly create, or permit to be created or to remain, and will discharge, any Lien of any nature whatsoever on, in or with respect to, its interest in the Facility arising by or through it or its actions, except Permitted Liens.

        (b) The Lessee will not directly or indirectly sell, transfer, or otherwise dispose of its interest in the Facility.

        Section 13. Permitted Contests.

        Notwithstanding any other provision of this Lease to the contrary, after prior written notice to the Lessor and provided there is no material risk of sale, forfeiture or loss of the Facility or any material part thereof, the Lessee may at its expense contest any Imposition which it is required to pay hereunder, by appropriate proceedings conducted in good faith and with due diligence, so long as such proceedings are effective to prevent the collection of such Imposition from the Lessor or the Lease Participants or against the Facility or any part thereof (or if such amounts have been paid by the Lessee under protest in connection therewith); provided, however, that the actions of the Lessee, as authorized by this Section 13, shall be subject to the express written consent of the Lessor if such actions would subject the Lessor or any such Lease Participant or the Facility or any part thereof to any liability or loss not indemnified in full by the Lessee hereunder or any sanction, criminal or otherwise, for failure to pay any such Imposition. The Lessee will pay, and save the Lessor and each such Lease Participant harmless against, all losses, Judgments and reasonable costs, including reasonable attorneys' fees and expenses, in connection with any such contest and will, promptly after the final determination of such contest, pay and discharge the amounts which shall be imposed or determined to be payable therein, together with all penalties, costs and expenses incurred in connection therewith. The Lessee shall prevent any foreclosure, judicial sale, taking, loss or forfeiture of the Facility or any part thereof, or any interference with or deductions from any Rent or any other sum required to be paid by the Lessee hereunder by reason of such nonpayment or nondischarge of an Imposition. The Lessor shall cooperate with the Lessee in any contest and shall allow the Lessee to conduct such contest (in the name of the Lessor, if necessary) at the Lessee's sole cost and expense; and the Lessee shall indemnify and hold the Lessor harmless from and against all liabilities, costs and expenses in connection with such contest. The Lessee shall notify the Lessor of each such proceeding within 10 days after the commencement thereof, which notice shall describe such proceeding in reasonable detail.

        Section 14. Insurance, etc.

        (a) The Lessee will, at its own expense, purchase and maintain, or cause to be purchased and maintained (including by the general contractor, as provided in Schedule 14), throughout the term of this Lease, insurance with respect to its business and the Facility in accordance with the requirements of Schedule 14.

        (b) The Lessee shall bear all risk of loss (including any Loss Event or Casualty Occurrence), whether by casualty, theft, taking, confiscation or otherwise, with respect to the Facility or any part thereof, at all times during the term of this Lease until possession of the Facility has been accepted by the Lessor pursuant to Section 17.

        (c) So long as no Termination Event or Cancellation Event shall have occurred, any payments, whether constituting insurance proceeds, amounts paid by any Governmental Authority or otherwise, received by the Lessee or the Lessor upon the occurrence of any loss with respect to the Facility or part thereof (other than a Casualty Occurrence), whether as a result of casualty, theft, taking or other confiscation, shall be applied in payment for necessary repairs and replacement to the Facility in accordance with Section 7 or, to the extent the costs of such repairs and replacement shall have been paid by the Lessee, to reimburse the Lessee. The Lessee shall be entitled to retain any excess funds remaining after necessary repairs and replacements have been completed and all costs therefor paid in full. Upon the occurrence of any Termination Event or Cancellation Event, the Lessor shall be entitled to receive and retain any such payments for application to the obligations of the Lessee hereunder.

        (d) Upon a Casualty Occurrence, the Lessee shall give prompt notice thereof to the Lessor and shall within 60 days of the date of such Casualty Occurrence either (i) offer to purchase the whole of the Facility for the Purchase Price as provided in Section 15(b)(ii), or (ii) provide the Lessor with a replacement plan acceptable to the Lessor setting forth how the Lessee shall replace, or cause to be replaced, at the Lessee's own cost and expense, in no event later than the Scheduled Lease Termination Date, and if the Casualty Occurrence occurs during the Construction Term, in no event later than May 1, 2002, such part of the Facility that is the subject of a Casualty Occurrence in accordance with this Section 14(d) and Section 7. If the Lessee chooses the option set forth in clause (ii) of the preceding sentence, within the later to occur of (x) 60 days after the date of the Casualty Occurrence and (y) satisfaction of all applicable Governmental Requirements, and obtaining all authorizations of Governmental Authorities, required therefor (but in no event later than 180 days after the date of the Casualty Occurrence), the Lessee shall have commenced repairs or replacements as specified in the replacement plan and shall thereafter proceed diligently with such repairs and replacements to completion. After completion of the repairs and replacements, the Lessee shall demonstrate to the satisfaction of the Lessor that operations, capacity and production from the Facility have been restored to the standards required for Completion.

        (e) All replacement Property of the Facility (other than temporary replacement parts and equipment installed pending installation of permanent replacement Property) installed pursuant to Section 14(d) shall be free and clear of all Liens except Permitted Liens, and shall be in as good operating condition as, and shall have a value and utility at least equal to, the Property replaced immediately prior to the Casualty Occurrence to which such Property was subject. For purposes of this Lease (including without limitation Section 14(d) and Section 7), the Funded Amount and book value of the replacement Property shall be deemed to equal the Funded Amount and book value of the part(s) replaced thereby. All Property of the Facility at any time removed from this Lease pursuant to Section 14(d) and Section 7 shall remain the property of the Lessor, no matter where located, until such time as insurance proceeds have been received by the Lessor at least equal to the book value of such part of the Facility or such part shall be replaced by suitable items that have been incorporated or installed on or attached to the Facility and that meet the requirements specified above. Immediately upon any permanent replacement Property becoming incorporated or installed on or attached to the Facility as provided above, without further act, such permanent replacements shall become subject to this Lease and be deemed part of the Facility for all purposes hereof to the same extent as any other parts of the Facility. All amounts of insurance proceeds for Property losses and all other proceeds (whether resulting from damage or destruction or from condemnation, confiscation or seizure) relating to the Facility shall be held and released, together with accrued interest thereon, as hereinafter provided. So long as a Cancellation Event or Termination Event shall not have occurred, and provided that the Lessor shall have received a written application of the Lessee accompanied by a certificate of an Authorized Officer of the Lessee showing in reasonable detail the nature of any necessary repair, rebuilding and restoration, the actual cash expenditures necessary for such repair, rebuilding and restoration, the expected total expenditures required to complete such work and evidence that sufficient funds are or will be available to complete such work on a timely basis (such certificate to be acceptable to the Lessor in all respects), then the amount of such proceeds, together with accrued interest thereon, shall be released by the Lessor immediately upon receipt of such certification or, if applicable, from time to time on the last Business Day of each month during the period of repair, rebuilding and restoration in payment therefor against presentation to the Lessor of a certificate executed by an Authorized Officer of the Lessee to the effect that expenditures have been made, or costs incurred, by or for the account of the Lessee or are reasonably anticipated to be made during the immediately following one month period in a specified amount for the purposes of making repairs, rebuilding and restoration in the amounts specified, that no Event of Default, Cancellation Event or Termination Event exists and all conditions precedent herein provided relating to such withdrawal and payment have been satisfied. Upon the occurrence of any Termination Event or Cancellation Event, the Lessor shall be entitled to retain all such proceeds for application to the obligations of the Lessee hereunder.

        (f) If any Loss Event or Casualty Occurrence shall occur, the Lessee shall promptly notify the Lessor of such event in writing.

        Section 15. Termination; Cancellation; Purchase Option.

        (a)      (i) The termination of this Lease (A) on the Scheduled Lease Termination Date or (B) as a result of a Non-Completion Event, or (C) by reason of the occurrence of a Change in Control and the delivery by the Lessor (acting at the direction of the Majority Funding Parties) to the Lessee of a notice stating that the Lessor elects to terminate this Lease by reason of the occurrence of a Non-Completion Event or such Change in Control, in which case the Lease Termination Date will be the 5th Business Day after the date of delivery of said notice to the Lessee, shall be a "Termination Event," the effect of which shall be to cause this Lease to terminate on the applicable Lease Termination Date.

             (ii) If a Termination Event occurs, the Lessee, on the Lease Termination Date, shall, in accordance with the terms of Section 2(b), without further notice or demand to the Lessee,

either

        (A) purchase the Facility from the Lessor for the Purchase Price; or

        (B) so long as no Cancellation Event has occurred:

             (i) pay to the Lessor the Final Rent Payment or, if the Termination Event is a Non-Completion Event, the Completion Costs Payment and provide to the Lessor a satisfactory update of the Environmental Assessment; and

             (ii) attempt to sell (until such time as the Lessor shall have terminated, in accordance with the Agency Agreement, the Lessee's obligation to so attempt to sell the Facility), subject to the Lessor's prior written approval, the Facility, as agent for the Lessor, without recourse or warranty by the Lessor, for a net cash purchase price not less than, and remit to the Lessor the net cash sales proceeds equal to (unless otherwise approved by all of the Funding Parties), the Termination Value less any amount paid pursuant to Section 15(a)(ii)(B)(i). The Lessor shall also have the right (but not the obligation) to sell the Facility and/or solicit bids, each in its sole and absolute discretion.

        (b)      (i) Each of the following events shall be a "Cancellation Event", the effect of which shall be to cause this Lease to be terminated in accordance with the following provisions on the "Cancellation Date" specified:

        (A) the occurrence of (1) an Event of Default ( other than an Event of Default under Section 17(a)(iv) hereof or Section 9.01(h) or (i) of the Investment Agreement) and the delivery by the Lessor to the Lessee of a notice stating that the Lessor (at the direction of the Majority Funding Parties) elects to terminate this Lease by reason of the existence of such Event of Default, in which case the Cancellation Date will be the 5th Business Day after the date of delivery of said notice to the Lessee, or (2) an Event of Default under Section 17(a)(iv) hereof or Section 9.01(h) or (i) of the Investment Agreement in which case the Cancellation Date shall occur immediately upon the occurrence of such Event of Default; or

        (B) the occurrence of a Loss Event, in which case the Cancellation Date shall be the 5th Business Day after such event occurs; or

        (C) the occurrence of a Casualty Occurrence in respect of the Facility and the failure of the Lessee to purchase the Facility or to replace or repair the Facility or such part thereof in accordance with, and within the time required by, Section 14(d), and the delivery by the Lessor (acting at the direction of the Majority Funding Parties) to the Lessee of a notice after the expiration of such time stating that the Lessor elects to terminate this Lease by reason of the existence of such Casualty Occurrence, in which case the Cancellation Date shall be the 5th Business Day after the date of delivery of said notice.

             (ii) If a Cancellation Event occurs, the Lessee, on the Cancellation Date, shall, without further notice or demand to the Lessee, either (A) purchase the Facility from the Lessor for the Purchase Price, or (B) pay to Lessor the Termination Value.

             (c) The Lessee may, from time to time and at any time following the 3rd anniversary of the Lease Commencement Date, deliver to the Lessor notice of its intent to terminate this Lease, in which case the Lessee shall purchase the Facility from the Lessor for the Purchase Price on any Rent Payment Date that is not less than 30 nor more than 60 days after such notice (the "Option Date"). Upon payment in full of the Purchase Price, this Lease shall terminate.

             (d) This Lease shall cease and terminate on the Lease Termination Date, and payment of all amounts payable by the Lessee on such date, except with respect to (i) obligations and liabilities of the Lessee, actual or contingent, which arose under this Lease, or by reason of events or circumstances occurring or existing, on or prior to its termination, and which have not been satisfied (which obligations shall continue until satisfied and which include, but are not limited to, obligations for Rent and the Termination Value, the Purchase Price and amounts owing pursuant to Section 16), and (ii) obligations of the Lessee which by the terms of this Lease expressly survive termination. Promptly after either the Lessee or the Lessor shall learn of the happening of any Termination Event or Cancellation Event, such party shall give notice thereof to the other party hereto.

             (e) In the event the Lessee elects to purchase the Facility upon the occurrence of a Termination Event (other than the expiration of this Lease on a Scheduled Lease Termination Date) or a Cancellation Event, Lessee in its sole discretion in order to ensure the orderly conveyance of the Facility may postpone the closing date for such conveyance (whether or not extended, the "Purchase Closing Date") to a reasonable date within 60 days following the Lease Termination Date or Cancellation Date, as applicable. The Lessor shall notify the Lessee of any such postponement and the proposed extended Purchase Closing Date in writing on or before the Lease Termination Date or Cancellation Date, as applicable, and the Lessee shall be deemed to have been granted a temporary license by the Lessor entitling the Lessee to retain possession of the Facility through the Purchase Closing Date provided that the Lessee complies with all obligations of the Lessee under this Lease as though this Lease were still in full force and effect (including without limitation, compliance with permitted use, maintenance and insurance coverage requirements). In the event of an extension of the Purchase Closing Date as herein contemplated, the Purchase Price will be calculated as of such extended Purchase Closing Date. This Section 15(e) shall survive the termination of this Lease.

        Section 16. Transfer of Title on Removal of Facility; Expenses of Transfer.

        (a) Upon any sale or purchase of the Facility permitted by Section 15, the Lessor will transfer to the Lessee or the appropriate Third Party all of its title to and legal and beneficial ownership interest in the Facility (i) free and clear of any Lien created by, through or under the Lessor other than Permitted Liens or Liens created at the request of or as a result of the actions of the Lessee or anyone acting by, through or under the Lessee, or a result of the failure of the Lessee or the Guarantor to carry out any of their obligations under this Lease or the other Operative Documents (individually and collectively, as the context shall require, the “Lessor Liens”), and (ii) without recourse, representation or warranty of any nature whatsoever (except as to the absence of such Liens as aforesaid).

        (b) Whenever the Lessee has the right to purchase or transfer to itself the Facility pursuant to any provision of this Lease, the Lessee may cause such purchase to be effected by, or such transfer to be effected to, any other Person specified by the Lessee, but in no event shall the Lessee be relieved from any of its obligations hereunder as a result thereof.

        (c) Upon any sale or transfer of the Facility pursuant to any provision of this Lease, the Lessee shall pay the expenses of the Lessor, including, without limitation, reasonable attorneys' fees and expenses, in connection with such sale or transfer.

        (d) If, on the Lease Termination Date or on the Cancellation Date, as applicable, the Lessee or any of its Affiliates has not elected to acquire the Facility, the Lessee shall surrender the Facility to the Lessor free from all Liens except Permitted Liens (other than those described in clause (ii)(b) of the definition of Permitted Liens), in substantially the same operating condition (except for ordinary wear and tear) with the remaining original estimated useful life contemplated by the Facility Plan intact and having the same capacity and efficiency as the Facility had on the Lease Commencement Date, and in compliance in all material respects with all Governmental Requirements and Insurance Requirements, and free of all Environmental Damages and Environmental Liabilities. To evidence the foregoing and accomplish the surrender of the Facility, the Lessee shall provide the following items (x) in the event of a Termination Event under Section 15(a)(i)(A) within 9 months prior to the Lease Termination Date, with final confirmation of the same at least 30 days but not more than 60 days prior thereto and (y) in the event of a Termination Event under Section 15(a)(i)(B), as soon as practicable but in any event at least 3 Business Days prior to the Lease Termination Date or Cancellation Date, as applicable, all to be held until the Lease Termination Date or Cancellation Date:

              (i) evidence satisfactory to the Lessor that all Applicable Permits, Related Contracts, and all other rights and services reasonably required to operate the Facility have been, or on or prior to the Lease Termination Date shall be, transferred to the Lessor (or the Lessor has been, or on or prior to the Lease Termination Date or Cancellation Date, as applicable, shall be, given the right to use each such item) and can be transferred to (or used by) any successor or assignee of the Lessor without further consent or approval by any Person (subject only to normal Governmental Requirements);

             (ii) conveyancing, assignment, transfer, termination and other documents that, in the sole discretion of the Lessor and the Lease Participants, are sufficient to (A) vest in the Lessor (which it holds for itself and in trust for the Lease Participants) good and marketable title to the Facility, free and clear of all Liens except Permitted Liens (other than those described in clause (ii)(b) of the definition of Permitted Liens) and (B) terminate the rights of the Lessee and all other Persons in and to the Facility;

             (iii) evidence satisfactory to the Lessor that the Facility has been operated and maintained substantially in accordance with the requirements of the Operative Documents, all Governmental Requirements, all Applicable Permits and prudent industry practices;

             (iv) evidence satisfactory to the Lessor that the Facility is being used solely for the Permitted Use and is operating substantially in accordance with the requirements set forth in the Facility Plan, meets or exceeds the original design specifications and is capable of operating and being used for the Permitted Use as set forth in the Facility Plan, and has the remaining original estimated useful life contemplated by the Facility Plan;

             (v) evidence satisfactory to the Lessor, in its sole discretion, that (A) no default exists under the Agency Agreement, (B) all agreements and arrangements to provide the services and rights contemplated by the Agency Agreement are in place, executed by the parties thereto, and are valid, enforceable and in full force and effect on or before the Lease Termination Date or Cancellation Date, as applicable and (C) such agreements and arrangements adequately provide for the services and other rights contemplated by the Agency Agreement;

             (vi) an updated Phase 1 Environmental Assessment; and

             (viii) such other documents, instruments, assessments, investigations, legal opinions, surveys and other items as the Lessor may reasonably request to evidence to the satisfaction of each of the Lessor and the Lease Participants (in each case, in their sole discretion) that (A) the Lessor has all Property, services, Permits, assets and rights necessary to own, operate and maintain the Facility from and after the Lease Termination Date or Cancellation Date, as applicable, and (B) no Default, Loss Event or Casualty Occurrence then exists.

        To the extent the Facility is not in the condition required by this Section 16(d), the Lessee will pay to the Lessor such additional amounts as are reasonably required to place it in compliance. The Lessee shall also pay all costs and expenses relating to the surrender and clean-up in connection with the surrender of the Facility as may be required by Governmental Requirements or Insurance Requirements or which are otherwise necessary to prevent or remedy any Environmental Damages or Environmental Liabilities or to consummate the delivery of possession of the Facility to the Lessor hereunder.

        Section 17. Events of Default and Remedies.

        (a) Each of the following acts or occurrences shall constitute an "Event of Default" hereunder:

             (i) default in the payment of the Purchase Price or the Termination Value on the Cancellation Date or the Purchase Closing Date, as applicable, or in the payment of the Purchase Price or the Final Rent Payment or Completion Costs Payment, as applicable, on the Lease Termination Date; or the default in the payment when due of any Basic Rent and the continuance of such default for 5 Business Days thereafter; or the default in the payment when due of any Supplemental Rent, the amount of any Indemnified Risk or any other amount due hereunder or under any other Operative Document and the continuance of such default for 30 days thereafter; or

             (ii) any representation or warranty made or deemed made by the Lessee herein, or by the Lessee or the Guarantor in any other Operative Document or otherwise in writing in connection with or pursuant to this Lease or any other Operative Document, shall be false or misleading in any material respect on the date made or deemed made; or

             (iii) an Event of Default under the Investment Agreement;

             (iv) The Lessee shall fail to observe or perform any covenant or agreement contained in Sections 12 and 26 of this Lease; or

             (v) The Lessee shall fail to observe or perform any covenant or agreement contained or incorporated by reference in this Lease (other than those covered by subsections (i) or (iv) above), and such failure shall not have been cured within 10 days, with respect to any covenant contained in Section 14 of this Lease, and 30 days, with respect to any other provision hereof, after the earlier to occur of (A) written notice thereof has been given to the Lessee and the Guarantor by the Lessor at the request of the Majority Funding Parties or (B) the chief financial, chief operating, chief legal or chief accounting officer of the Lessee or the Guarantor otherwise becomes aware of any such failure; or

             (vi) Lessee shall abandon the Facility; provided however that for purposes of this Section 17(a)(vi), the term "abandon" shall not include the mere failure of Lessee to occupy the Facility so long as Lessee continues to perform its obligations hereunder and other Operative Documents including without limitation maintenance of the Facility, maintenance of required insurance, compliance with Governmental Requirements and Insurance Requirements and payment of all Rent.

        (b) Upon the occurrence and during the continuance of any Event of Default, as determined by the Lessor, the Lessor (acting at the direction of the Majority Funding Parties) may do any one or more of the following (without prejudice to the obligations of the Lessee under Section 15(b)(ii)):

        (i) proceed by appropriate judicial proceedings, either at law, in equity or in bankruptcy, to enforce performance or observance by the Lessee of the applicable provisions of this Lease, or to recover damages for the breach of any such provisions, or any other equitable or legal remedy, all as the Lessor shall deem necessary or advisable; and/or

             (ii) by notice to the Lessee, either (x) terminate this Lease in accordance with Section 15, whereupon the Lessee's interest and all rights of the Lessee to the use of the Facility shall forthwith terminate subject to the Lessee's rights under such Section 15 to acquire the Facility on the Purchase Closing Date as provided herein, but the Lessee shall remain liable with respect to its obligations and liabilities hereunder; or (y) terminate the Lessee's right to possession of the Facility or any part thereof; and/or

             (iii) exercise any and all other remedies available under applicable law or at equity.

        (c) After the occurrence and during the continuance of a Cancellation Event or Termination Event, in the event the Lessor elects not to terminate this Lease and the Lessee has not exercised its option under Section 15(c), this Lease shall continue in effect and the Lessor may enforce all of the Lessor's rights and remedies under this Lease, including, without limitation, the right to recover the Basic Rent and Supplemental Rent, and any Completion Costs and all other yield protection payments and other amounts with respect thereto, as it becomes due under this Lease or any other Operative Documents. For the purposes hereof, the following do not constitute a cancellation or termination of this Lease: (i) acts of maintenance or preservation of the Facility or any part thereof, (ii) efforts by the Lessor to relet the Facility or any part thereof, including, without limitation, termination of any sublease of the Facility and removal of any tenant from the Site, (iii) or the appointment of a receiver upon the initiative of the Lessor to protect the Lessor's interest under this Lease.

        (d) If (i) on the Lease Termination Date, the Facility is not acquired by the Lessee or its designee by payment of the Purchase Price, or (ii) on the Cancellation Date, the Lessee or its designee has defaulted in its obligation to acquire the Facility and pay the Purchase Price, or if applicable, the Termination Value, in accordance with Lessee's election under Section 15(b)(ii), then the Lessor shall have the immediate right of possession of the Facility and the right to enter onto the Site and to remove any and all of the Property comprising the Facility, and the Lessor may thenceforth hold, possess and enjoy the Facility free from any rights of the Lessee and any Person claiming by, through or under the Lessee. The Lessor shall be under no liability by reason of any such repossession or the Facility or entry onto the Site.

        (e) Should the Lessor elect to repossess the Facility or any part thereof upon cancellation or termination of this Lease or otherwise in the exercise of the Lessor's remedies, the Lessee shall peaceably quit and surrender the Facility or any such part thereof to the Lessor and either (i) deliver possession of the Facility to the Lessor or (ii) allow Lessor or its agents or assigns to enter onto the Facility and the Site to remove any and all of the Property comprising the Facility at the expense of the Lessee, and neither the Lessee nor any Person claiming through or under the Lessee shall thereafter be entitled to possession or to remain in possession of the Facility or any part thereof but shall forthwith peaceably quit and surrender the Facility to the Lessor.

        (f) At any time after the repossession of the Facility or any part thereof, whether or not this Lease shall have been cancelled or terminated, the Lessor may (but shall be under no obligation to) relet the Facility or the applicable part thereof without notice to the Lessee, for such term or terms and on such conditions and for such usage as the Lessor in its sole and absolute discretion may determine. The Lessor may collect and receive any rents payable by reason of such reletting, and the Lessor shall not be liable for any failure to relet the Facility or for any failure to collect any rent due upon any such reletting.

        (g) The remedies herein provided in case of an Event of Default are in addition to, and without prejudice to, the Lessee's continuing obligations under Section 15(b)(ii), and shall not be deemed to be exclusive, but shall be cumulative and shall be in addition to all other remedies existing at law, in equity or in bankruptcy. The Lessor may exercise any remedy without waiving its right to exercise any other remedy hereunder or existing at law, in equity or in bankruptcy.

        (h) No waiver by the Lessor hereunder of any Default or Event of Default shall constitute a waiver of any other or subsequent Default or Event of Default. To the extent permitted by applicable law, the Lessee waives any right it may have at any time to require the Lessor to mitigate the Lessor's damages upon the occurrence of a Default or Event of Default by taking any action or exercising any remedy that may be available to the Lessor, the exercise of remedies hereunder being at the discretion of the Lessor.

        Section 18. Change in the Lessee's Name or Structure.

        The Lessee will notify the Lessor in writing of any change in its name, identity or corporate structure (including, without limitation, by any merger, consolidation or sale of substantially all of its assets) within 10 days after the effective date of such change.

        Section 19. Inspection; Right to Enter Premises of the Lessee.

        The Lessee shall permit, and cause each of its Subsidiaries to permit, the Lessor, any Lease Participant or their respective authorized representatives but without any obligation to do so) to (i) enter upon the Facility at reasonable times upon reasonable advance notice in order to inspect the Facility (subject to compliance with applicable safety requirements of the Lessee and applicable Governmental Requirements) and (ii) examine, audit and make abstracts from any of their respective books and records and to discuss the condition, compliance with Governmental Requirements, performance of the Facility and the respective affairs, finances and accounts of the Lessee with their respective officers and independent accountants. The Lessee agrees to coordinate and assist in such visits and inspections, in each case at such reasonable times and as often as may reasonably be desired.

        Section 20. Right to Perform the Lessee's Covenants.

        Subject to Section 13, if the Lessee shall fail to make any payment or perform any act required to be made or performed by it hereunder, the Lessor, upon notice to or demand upon the Lessee but without waiving or releasing any obligation or Default or Event of Default, may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of the Lessee as, at the Lessor's sole discretion, may be necessary or appropriate therefor and, upon the occurrence and during the continuance of a Cancellation Event or Termination Event, may enter upon the Facility for such purpose and take all such action thereon as, at the Lessor's sole discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of the Lessee. All sums so paid by the Lessor and all costs and expenses (including, without limitation, reasonable attorneys' fees and expenses so incurred) shall be paid by the Lessee to the Lessor on demand as Supplemental Rent.

        Section 21. Participation by Co-Lessees or Sublessees.

        (a) Except as otherwise permitted in this Section 21 or (with respect to the Lessor) Section 11.06(b)(i) of the Investment Agreement, neither the Lessor nor the Lessee may assign its rights or obligations under this Lease without the prior consent of all of the Lease Participants. The Lessor holds the Lien under this Lease for itself and in trust for the Lease Participants. The Lessor, acting on behalf of itself and the Lease Participants, shall be entitled to exercise all of the rights, remedies, powers and privileges herein conferred upon Lessor (including, without limitation, in any bankruptcy proceeding), to give or withhold all consents required to be obtained from the Lessor hereunder, to give all notices on behalf of the Lessor including notices regarding Rent, the Final Rent Payment or Completion Costs Payment, as applicable, and Supplemental Rent due hereunder, to receive all payments to be made to the Lessor hereunder and to approve any sale of the Facility pursuant to Section 15 to a Person other than the Lessee or any designee of the Lessee or for a price less than the Termination Value; provided, however, that nothing herein shall be deemed to be a waiver or relinquishment of the right of the Lessor to receive Supplemental Rent for its out of pocket costs and expenses as described in Section 3(c)(i) or to be indemnified for any matter for which Lessor is entitled to indemnification hereunder.

        (b) The Lessor and the Lessee may from time to time, so long as no Cancellation Event or Termination Event shall have occurred and be continuing, enter into documentation amending this Lease and, as necessary, the other Operative Documents, to evidence the undertaking of a Person (a "Co-Lessee") to be responsible for all or certain obligations of the Lessee and the attendant reduction in the obligations of the Lessee hereunder, subject in every case to (i) the prior written approval of the Lessor and each Lease Participant, each acting in its sole discretion in approving said Co-Lessee and the documentation amending this Lease and the Operative Documents, it being understood that any of the Lessor or the Lease Participants may for any reason whatsoever elect not to grant such approval, in which case this Lease shall not be amended; (ii) such documentation expressly stating that such assignment is subject and subordinate to the terms of this Lease and the Liens created by the Security Instruments; and (iii) the Lessee remaining primarily liable for all obligations of the tenant of the Facility under this Lease. Any assignment made otherwise than as expressly permitted by this Section 21(b) shall be null and void and of no force and effect.

        (c) The Lessee may, from time to time, so long as no Default, Event of Default, Cancellation Event or Termination Event shall have occurred and be continuing, enter into a sublease as to the Facility and such other documentation as may be necessary with one or more Persons (each a "Sublessee"). In any event, any documentation executed by the Lessee in connection with the subletting of the Facility (i) shall expressly state that such sublease is subject and subordinate to the terms of this Lease and the Liens created by the Security Instruments and (ii) shall not provide for a sublease term ending after the then current Scheduled Lease Termination Date. The Lessee will furnish promptly to the Lessor copies of all subleases and related documentation entered into by the Lessee from time to time. No sublease permitted by the terms hereof will reduce in any respect the obligations of the Lessee hereunder, it being the intent of the Lessee and the Lessor that the Lessee be and remain directly and primarily liable as a principal for its obligations hereunder. Any sublease made otherwise than as expressly permitted by this Section 21(c) shall be null and void and of no force or effect.

        Section 22. Notices.

        Except as otherwise provided herein, all notices, requests and other communications provided for hereunder shall be in writing (including telecopier and other readable communication) and mailed by certified mail, return receipt requested, telecopied or otherwise transmitted or delivered, if to the Lessee, at 2801 Highway 280 South, Birmingham, Alabama 35223, Attention: Carl Thigpen, Telecopier: 205-868-3609; if to the Lessor, at 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, Attention: Rosalynn Ostler, Telecopier: 404-332-4432, Telephone: 404-332-1122, or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, if so mailed, telecopied or otherwise transmitted, be effective when received, if mailed, or when the appropriate answer back or other evidence of receipt is given, if telecopied or otherwise transmitted, respectively. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and the confirmation is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided, that notices to the Lessor under Section 3 shall not be effective until received. A notice received by the Lessor by telephone shall be effective if the Lessor believes in good faith that it was given by an authorized representative of the Lessee (as Lessee or as the Acquisition/Construction Agent) and acts pursuant thereto, notwithstanding the absence of written confirmation or any contradictory provision thereof.

        Section 23. Amendments and Waivers.

        The provisions of this Lease may from time to time be amended, modified or waived only if such amendment, modification or waiver is in writing and consented to by the Lessee and the Lessor (with the consent of the requisite Funding Parties, as required by the Investment Agreement).

        Section 24. Severability.

        Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

        Section 25. Federal Income Tax Considerations.

        It is the understanding of the parties that for income tax purposes this transaction will be treated as a financing and the Lessee will be treated as the owner of the Facility; and the Lessee and the Lessor agree not to take any action inconsistent with such treatment, subject to the following sentence. Notwithstanding anything in this Section to the contrary, the Lessor retains the right to assert that it is the owner of the Facility subject to this Lease for income tax purposes in the event that there is a determination (within the meaning of Section 1313 of the Internal Revenue Code of 1986, as amended, or with respect to state or local income tax, a comparable determination under state or local law) that the Lessee is not to be treated as the owner of the Facility.

        Section 26. Other Provisions.

        In order to protect the rights and remedies of the Lessor and the Lessee both during the term of this Lease and following a Default, an Event of Default, a Termination Event or a Cancellation Event, and for the purposes of Federal, state and local income and taxes, ad valorem taxes, state and local sales taxes, documentary stamp and intangible taxes and other taxes relating to or assessable as a result of the execution, delivery or recording of any of the Operative Documents and for purposes of commercial law and Title 11 of the United States Code (or any other applicable Federal, state or local insolvency, reorganization, moratorium, fraudulent conveyance or similar law now or hereafter in effect for the relief of debtors), the parties hereto intend that (a) this Lease be treated as evidence of and the agreement of the Lessee for the repayment of the Secured Amount (as hereafter defined), (b) all payments of Rent, the Purchase Price and the Termination Value be treated as payments of principal, interest and other amounts owing with respect to the Loan (as hereafter defined), respectively, (c) the Lessee should be treated as entitled to all benefits of ownership of the Facility or any part thereof, (d) this Lease be treated as (i) a mortgage (this Lease, as so treated, is the "Mortgage") from Lessee, as mortgagor, to the Lessor, as mortgagee, on that part of the Facility constituting real property and is made under those provisions of the existing laws of the State of Alabama relating to mortgages and that the Lessee, as mortgagor and grantor, hereby irrevocably grants, bargains, sells, conveys, assigns, transfers, mortgages and sets over unto the Lessor, as mortgagee and grantee, for the use and benefit of itself and in trust for the Lease Participants, Lessee's right, title and interest in and to any real property of any kind or character comprising the Facility (including the Lessee’s sub-leasehold interest in the Site and all estates, easements, and rights, and its interest in all fixtures and Improvements) and all proceeds therefrom, to have and to hold said real property and all parts, rights, members and appurtenance thereof to the use, benefit and behoof of the Lessor, for the use and benefit of itself and in trust for the Lease Participants, in fee simple forever (as to the fixtures and Improvements) and Lessee covenants that Lessee is lawfully seized and possessed of the aforesaid real property and has good right to convey its interest in the same, that the same is unencumbered except for the Permitted Liens and that Lessee does warrant and will forever defend title thereto against the claims of all persons whomsoever; and (ii) a security agreement from the Lessee, as debtor, to the Lessor, as secured party, encumbering the Lessee’s right, title and interest in the Facility, including the Lessee’s subleasehold and leasehold interest, and all personal property comprising the Facility, and that the Lessee, as debtor, hereby grants to the Lessor, for the use and benefit of the Lessor and in trust for the Lease Participants, as beneficiaries, as secured parties (collectively, the "Secured Party") a first and prior Lien on and security interest in the equipment and any and all other personal property of any kind or character and fixtures comprising the Facility (including all Related Contracts, excluding “Excluded Equipment”, as defined in Section 6 hereof), and all proceeds therefrom, in each case being effective as of the date of this Lease. In such event, the Lessor shall have all of the rights, powers and remedies of a mortgagee and a secured party available under applicable law, including, without limitation, judicial or nonjudicial foreclosure or power of sale, as and to the extent available under applicable law. The amounts secured by this Mortgage shall be as follows (collectively, the "Secured Amount"):

        1. The collective amount of the aggregate unpaid Lessor Advances and unpaid Yield, plus any other amounts owing to the Lessor or the Lease Participants under the Operative Documents (including, without limitation, Supplemental Rent, the Final Rent Payment, the Completion Costs Payment, if applicable, and all indemnification amounts);

        2. The portion of the Facility Cost funded by the Lessor representing an aggregate indebtedness in the amount of up to $75,000,000.00 (the "Loan");

        3. All future advances of the Loan which may be made after the date hereof to the same extent as if such future advances were made on the date of the execution of this Mortgage, although there may be no advance made on the date of the execution of this Mortgage, and although there may be no indebtedness outstanding under the Loan or under any other indebtedness of Lessee to Lessor at the time this Mortgage is executed or at the time any advance is made under the Loan or under any other indebtedness of Lessee to Lessor. The parties hereby acknowledge and intend that all advances under the Loan, including future advances whenever hereafter made, shall be secured by this Mortgage and, to the extent allowed by law, have priority from the time this Mortgage is recorded; and

        4. Any and all additional advances made by the Lessor or the Secured Party to protect or preserve the Collateral (as hereinafter defined) or the lien hereof on the Collateral, or for taxes, assessments or insurance premiums as hereinafter provided (whether or not the original Lessee remains the owner of the Collateral at the time of such advances).

        The filing of this Lease shall be deemed to constitute the filing of a mortgage and the filing of any financing statement in connection with this Lease shall be deemed to constitute the filing of a financing statement to perfect the mortgage lien and security interests in the Facility as aforesaid and to secure the payment of the Secured Amount. If this transaction is treated as a financing, the obligation arising hereunder shall be with full recourse to the Lessee and shall not be treated as recourse only to the Facility. To the fullest extent permitted by applicable law, the Lessor and the Lessee intend that the Facility (other than the real property constituting the Site) be and remain at all times personal property regardless of the manner or extent to which any of the Facility (other than the real property constituting the Site) may be attached or affixed to any real property. Except as required by applicable law, the Lessee shall not under any circumstances take any action or make any filing or recording which would cause the Facility (other than the real property constituting the Site) to be deemed to be real property or permit any Person to obtain any interest in the Facility (other than the real property constituting the Site) as a result of the Facility (other than the real property constituting the Site) being deemed to be in whole or in part real property.

        In order to preserve the security interest provided for herein, each of the Lessor and the Lessee agrees to abide by the following provisions with regard to the Facility (for purposes of this Section, hereinafter referred to as "Collateral"):

        (a) Change in Location of Collateral or the Lessee. The Lessee (i) will notify the Secured Party on or before the date of any change in (A) the location of the Collateral (B) the location of Lessee's chief executive office or address, (C) the name of the Lessee and (D) the corporate structure of the Lessee, and (ii) will, on or before the date of any such change, prepare and file new or amended financing statements as necessary so that the Secured Party shall continue to have a first and prior perfected Lien (subject only to Permitted Liens) in the Collateral after any such change.

        (b) Intentionally Omitted.

        (c) Sale, Disposition or Encumbrance of Collateral. Except as set forth herein and for Permitted Liens, as permitted by any of the Operative Documents or with the Secured Party's prior written consent, the Lessee will not in any way encumber any of the Collateral (or permit or suffer any of the Collateral to be encumbered) or sell, assign, lend, rent, lease or otherwise dispose of or transfer any of the Collateral to or in favor of any Person other than the Secured Party.

        (d) Proceeds of Collateral. Except as permitted by any of the Operative Documents, the Lessee will deliver to the Secured Party promptly upon receipt all proceeds delivered to the Lessee from the sale or disposition of any Collateral. This Section shall not be construed to permit sales or dispositions of the Collateral except as may be elsewhere expressly permitted by this Lease or the other Operative Documents.

        (e) Further Assurances. Upon the request of the Secured Party, Lessee shall (at Lessee's expense) execute and deliver all such mortgages, deeds of trust, deeds to secure debts, assignments, certificates, financing statements or other documents and give further assurances and do all other acts and things as the Secured Party may reasonably request to perfect the Secured Party's interest in the Collateral or to protect, enforce or otherwise effect the Secured Party's rights and remedies hereunder, all in form and substance satisfactory to the Secured Party.

        (f) Collateral Attached to Other Property. In the event that any of the Collateral is removed from the Facility and is to be attached or affixed to any real property, the Lessee hereby agrees that a financing statement which is a fixture filing may be filed for record in any appropriate real estate records. If the Lessee is not the record owner of such real property, it will provide the Secured Party with any additional security documents or financing statements necessary for the perfection of the Secured Party's Lien in the Collateral, as requested by the Secured Party.

        (g) Secured Amount. Should the Secured Amount be paid according to the tenor and effect thereof when the same becomes due and payable hereunder, and should Lessee perform all covenants contained in the Operative Documents in a timely manner, then this Mortgage shall be cancelled and surrendered.

        (h) Lease. The Lease will not be amended, supplemented or modified without the written consent of the Secured Party. All payments under the Lease shall be made only to such account as specified by the Secured Party.

        (i) Receiver and Mortgage Remedies. If an Event of Default shall have occurred and be continuing, the Lessor, at the direction of the Majority Funding Parties (subject to the provisions of Section 9.02(e) of the Investment Agreement), may exercise any one or more of the remedies set forth below:

             (1) the Lessor may demand, and upon such demand, the Lessee shall forthwith surrender to the Lessor, the actual possession of the Collateral and if, and to the extent, permitted by applicable law and the Operative Documents, the Lessor itself, or by such officers or agents as it may appoint, may enter and take possession of all the Collateral without the appointment of a receiver, or an application therefor, and may exclude the Lessee and its agents and employees wholly therefrom, and may have joint access with the Lessee to the books, papers and accounts of the Lessee pertaining to the Collateral. If the Lessee shall for any reason fail to surrender or deliver the Collateral or any part thereof after such demand by the Lessor, the Lessor may obtain a judgment or decree conferring upon the Lessor the right to immediate possession or requiring the Lessee to deliver immediate possession of the Collateral to the Lessor, to the entry of which judgment or decree the Lessee hereby specifically consents. Upon every such entering upon or taking of possession, the Lessor may hold, store, use, operate, manage and control the Collateral and conduct the business thereof, and, from time to time (i) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon and purchase or otherwise acquire additional fixtures, personalty and other property; (ii) insure or keep the Collateral insured; (iii) manage and operate the Collateral and exercise all the rights and powers of the Lessee to the same extent as the Lessee could in its own name or otherwise with respect to the same; and (iv) enter into any and all agreements with respect to the exercise by others of any of the powers herein granted the Lessor, all as the Lessor from time to time may determine to be in its best interest. The Lessor may collect and receive all the rents, issues, profits and revenues from the Collateral, including those past due as well as those accruing thereafter, and, after deducting (aa) all expenses of taking, holding, managing and operating the Collateral (including compensation for the services of all persons employed for such purposes); (bb) the cost of all such maintenance, repairs, renewals, replacements, additions, betterments, improvements, purchases and acquisitions; (cc) the cost of such insurance; (dd) such taxes, assessments and other similar charges as the Lessor may at its option pay; (ee) other proper charges upon the Collateral or any part thereof; and (ff) the reasonable compensation, expenses and disbursements of the attorneys and agents of the Lessor, the Lessor shall apply the remainder of the monies and proceeds so received by the Lessor in accordance with the terms of this Lease. Anything in this Section 26 to the contrary notwithstanding, the Lessor shall not be obligated to discharge or perform the duties of a landlord to any tenant or incur any liability as a result of the exercise by the Lessor of its rights under this Mortgage, and the Lessor shall be liable to account only for the rents, income, issues, profits and revenues actually received by the Lessor. Whenever all that is due upon such interest, deposits and principal installments and under any of the terms, covenants, conditions and agreements of this Mortgage, shall have been paid and all Events of Default made good, the Lessor shall surrender possession of the Collateral to the Lessee, its successors or assigns. The same right of taking possession, however, shall exist if any subsequent Event of Default shall occur and be continuing. In connection with any action taken by the Lessor pursuant to this Section 26, the Lessor shall not be liable for any loss sustained by the Lessee resulting from any act or omission of the Lessor in administering, managing, operating or controlling the Collateral, including a loss arising from the ordinary negligence of the Lessor, unless such loss is caused by its own gross negligence, willful misconduct or bad faith, or the gross negligence, willful misconduct or bad faith of its officers, directors, employees, agents or contractors, nor shall the Lessor be obligated to perform or discharge any obligation, duty or liability of the Lessee. The Lessee hereby assents to, ratifies and confirms any and all actions of the Lessor with respect to the Collateral taken under this Section 26.

             (2) The Lessor, upon application to a court of competent jurisdiction, shall be entitled as a matter of strict right without notice and without regard to the occupancy or value of any security for the Secured Amount secured hereby or the solvency of any party bound for its payment, to the appointment of a receiver to take possession of and to operate the portion of the Facility constituting real property (the “Real Property”) and to collect and apply the rents, issues, profits and revenues thereof. The receiver shall have all of the rights and powers permitted under the laws of the State of Alabama. Lessee will pay to Lessor upon demand all expenses, including receiver's fees, attorney's fees, costs and agent's compensation, incurred pursuant to the provisions of this Section 26; and all such expenses shall be secured hereby. Lessee agrees to the full extent permitted by law, that in case of an Event of Default on the part of Lessee hereunder, neither Lessee nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension, homestead, exemption or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure hereunder, or the absolute sale of the interests of Lessee in the Real Property, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereat, and Lessee, for itself and all who may at any time claim through or under it, hereby waives to the full extent that it may lawfully so do, the benefit of all such laws, and any and all right to have the assets comprised in the security intended to be created hereby marshalled upon any foreclosure of the lien hereof.

             (3) Lessor shall have the option (in addition to and in furtherance of Lessor's rights under this Section 26), to proceed with foreclosure in any manner permitted by the laws of the State of Alabama, including judicial foreclosure through the courts or by foreclosure under the power of sale as provided in this Mortgage with or without declaring the whole Secured Amount secured hereby due.

             (4) Lessor shall be authorized, at its option, whether or not possession of the Real Property is taken, after giving notice by publication once a week for three consecutive weeks of the time, place and terms of each such sale (including a description of the Real Property or part thereof to be sold), by publication in a newspaper published in any county wherein the Real Property or any part thereof is located, to sell the Real Property (or such part or parts thereof as Lessor may from time to time elect to sell) in front of such county's courthouse door, at public outcry, to the highest bidder for cash, such sale or sales to be held between the hours of 11:00 a.m. and 4:00 p.m. unless otherwise provided by law. Lessor, its successors and assigns, may bid at any sale or sales had under the terms hereof and may purchase the Real Property or any such part thereof, if the highest bidder therefor. The purchaser at any such sale or sales shall be under no obligation to see to the proper application of the purchase money. At any foreclosure sale, any part or all of the Real Property, real, personal or mixed, may be offered for sale in parcels or en masse for one total price, the proceeds of any such sale en masse to be accounted for in one account without distinction between the items included therein or without assigning to them any proportion of such proceeds, Lessee hereby waiving the application of any doctrine of marshalling or like proceeding. In case Lessor, in the exercise of the power of sale herein given, elects to sell the Real Property in parts or parcels, sales thereof may be held from time to time, and the power of sale granted herein shall not be fully exercised until all of the Real Property not previously sold shall have been sold or all the Secured Amount secured hereby shall have been paid in full.

             (5) Lessee hereby authorizes and empowers Lessor or the auctioneer at any foreclosure sale had hereunder, for and in the name of Lessee, to execute and deliver to the purchaser or purchasers of any of the Real Property sold at foreclosure good and sufficient deeds of conveyance or bills of sale thereto.

             (6) Lessor, in lieu of or in addition to exercising the power of sale hereinabove given, may proceed by suit to foreclose its lien on, security interest in, and assignment of, the Real Property, subject to the limitations, if any, set out herein, in the Investment Agreement, or in any other Operative Documents to sue Lessee for damages on account of or arising out of said Event of Default or breach, or for specific performance of any provision contained herein, or to enforce any other appropriate legal or equitable right or remedy.

             (7) the Lessor may, in addition to and not in abrogation of the rights covered under this Section 26, (i) exercise all rights, powers and remedies of the Lessee under this Lease and the Related Contracts, and the Lessee and any other party to any of the Related Contracts hereby is authorized and directed to render performance to and act upon the instructions of the Lessor, (ii) with respect to any personal property constituting part of the Collateral, exercise all rights, powers and remedies of a secured party under the Uniform Commercial Code as adopted in Alabama, and (iii) either with or without entry or taking possession as herein provided or otherwise, proceed by a suit or suits in law or in equity or by any other appropriate proceeding or remedy (A) to enforce payment and performance of the Secured Amount or the performance of any term, covenant, condition or agreement of this Lease or any other right and (B) to pursue any other remedy available to it, all as the Lessor at its sole discretion shall elect.

             (8) The proceeds of any sale or other exercise of rights or remedies pursuant to this Section 26 shall be applied in accordance with Section 3.05(c) of the Investment Agreement.

             (9) In the event of any such foreclosure sale, Lessee shall be deemed a tenant holding over and shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily dispossessed according to provisions of law applicable to tenants holding over.

             (10) The Lessee agrees to the full extent permitted by law, that in case of the occurrence of an Event of Default, neither the Lessee nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension, homestead, exemption or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, or the absolute sale of the Collateral or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereat, and the Lessee, for itself and all who may at any time claim through or under it, hereby waives to the full extent that it may lawfully so do, the benefit of all such laws, and any and all right to have the assets comprised in the security intended to be created hereby marshalled upon any foreclosure of the lien hereof.

             (11) The Lessee hereby waives and renounces to the full extent permitted by law all homestead and exemption rights provided for by the Constitution and the laws of the United States and of any state, in and to the Collateral as against the collection of the Secured Amount, or any part hereof.

             (12) The Lessor, at its option, is authorized to foreclose this Mortgage in equity, subject to the rights of any tenants of the Collateral, and the failure to make any such tenants parties to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by Lessee, a defense to any proceedings instituted by the Lessor to collect the Secured Amount.

             (13) In case the Lessor shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise or in the event the Lessor commences advertising of the intended exercise of the sale under power provided hereunder, and such proceeding or advertisement shall have been withdrawn, discontinued or abandoned for any reason, or shall have been determined adversely to the Lessor, then in every such case (i) the Lessee and the Lessor shall be restored to their former positions and rights, (ii) all rights, powers and remedies of the Lessor shall continue as if no such proceeding had been taken, including those with respect to each and every Event of Default declared or occurring prior or subsequent to such withdrawal, discontinuance or abandonment and (iii) neither this Mortgage, nor the Secured Amount, nor any other instrument concerned therewith, shall be or shall be deemed to have been reinstated or otherwise affected by such withdrawal, discontinuance or abandonment; and the Lessee hereby expressly waives the benefit of any statute or rule of law now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the above.

             (14) No right, power or remedy conferred upon or reserved to the Lessor by this Mortgage is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity or by statute.

             (15) If the Lessor (i) grants forbearance or an extension of time for the payment of any sums secured hereby; (ii) takes other or additional security for the payment of any sums secured hereby; (iii) waives or does not exercise any right granted herein or in the Operative Documents; (iv) releases any part of the Collateral from the lien of this Mortgage or otherwise changes any of the terms, covenants, conditions or agreements of this Mortgage or any other Operative Document; (v) consents to the filing of any map, plat or replat affecting the Collateral; (vi) consents to the granting of any easement or other right affecting the Collateral; or (vii) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Mortgage or any other of the Operative Documents or any other obligation of the Lessee or any subsequent purchaser of the Collateral or any part thereof, or any maker, co-signer, endorser, surety or guarantor; nor shall any such act or omission preclude the Lessor from exercising any right, power or privilege herein granted or intended to be granted in the event of any default then made or of any subsequent default; nor, except as otherwise expressly provided in an instrument or instruments executed by the Lessor, shall the lien of this Mortgage be altered thereby. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Collateral, the Lessor, without notice, is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Collateral or the Secured Amount secured hereby, or with reference to any of the terms, covenants, conditions or agreements hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any liabilities, obligations or undertakings.

             (16) The Lessor shall have power (a) to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or any violation of this Mortgage, (b) to preserve or protect its interest in the Collateral and in the rents, issues, profits and revenues arising therefrom, and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the security hereunder or be prejudicial to the interest of the Lessor.

             (17) In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Lessee, its creditors or its property, the Lessor, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Lessor allowed in such proceedings for the entire amount due and payable by the Lessee under this Mortgage at the date of the institution of such proceedings and for any additional amount which may become due and payable by the Lessee hereunder after such date.

        Section 27. Miscellaneous.

        (a) ENTIRE AGREEMENT. THIS LEASE AND THE OTHER OPERATIVE DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LESSEE AND THE LESSOR AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF. THIS WRITTEN LEASE AND THE OTHER OPERATIVE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

        (b) Interpretation. Captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

        (c) GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS LEASE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO RELATING TO THE FACILITY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW (OR ANY SIMILAR SUCCESSOR PROVISION THERETO) BUT EXCLUDING ALL OTHER CONFLICT-OF-LAWS RULES; EXCEPT THAT, TO THE EXTENT REQUIRED BY THE LAWS OF THE STATE IN WHICH THE FACILITY IS LOCATED, THE LAWS OF THE STATE OF ALABAMA SHALL GOVERN (I) THE CREATION AND EXISTENCE OF THIS LEASE, (II) SECTION 26 OF THIS LEASE, AND (III) THE ENFORCEMENT OF THE RIGHTS OF LESSOR TO REPOSSESS THE FACILITY FROM LESSEE AFTER THE EARLIER OF THE TERMINATION OF THIS LEASE OR THE TERMINATION OF LESSEE'S RIGHT TO POSSESSION OF THE FACILITY.

        (d) No Third Party Beneficiaries. Nothing in this Lease, express or implied, shall give to any Person, other than the parties hereto and the Lease Participants and their respective successors and permitted assigns, any benefit or any legal or equitable right, remedy or claim under this Lease including, without limitation, under any provision of this Lease regarding the priority or application of any amounts payable hereunder.

        (e) Counterparts. This Lease may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

        (f) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR TO DEFEND ANY RIGHTS UNDER THIS LEASE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

        (g) Invalidity. In the event that any one or more of the provisions contained in this Lease shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of the Lease.

        (h) Usury. Notwithstanding anything to the contrary contained in this Lease or any of the Operative Documents, the amounts which the Lessee is obliged to pay pursuant to this Lease and the other Operative Documents, and the amounts which the Lessor and the Lease Participants are entitled to receive pursuant to this Lease and the other Operative Documents, are subject to the limitations set forth in Section 11.15 of the Investment Agreement.

        (i) Time is of the Essence. Time is of the essence in connection with the payment of Rent and all other amounts payable hereunder and the performance of the Lessee's other obligations hereunder.

        (j) Lessor Recourse. No recourse shall be had against the Lessor or its successors and assigns and their directors, officers, shareholders, employees or agents for any claim based on any failure by the Lessor in the performance or observance of any of the agreements, covenants or provisions contained in this Lease or any other Operative Documents; and in the event of any such failure, recourse shall be had solely against the rights and interests of the Lessor in the Facility; provided, that the foregoing shall not relieve (i) any such director, officer or employee of personal liability for his or her fraud or intentional misconduct or (ii) Lessee from its obligation not to create or permit the existence of “Lessor Liens”, as defined in Section 16(a)(i) hereof.

        (k) Release of Excess Land.

        (1) As of the Closing Date, the Lessee had not determined the precise location of the portion of the Site to be used for the annex building portion of the Facility, and the description of the “annex parcel” in Exhibit A hereto and to the Investment Agreement (the “Original Annex Parcel”) encompasses more land than is necessary for the intended annex building portion of the Facility. At any time during the Construction Term, the Lessee (either as such or as the Acquisition/Construction Agent) shall be entitled to furnish to the Lessor: (i) a legal description of the portion of the Original Annex Parcel which the Lessee has determined will be used as the location of the annex building portion of the Facility and will be adequate for such use, satisfying all requirements of the Lease and the Operative Documents pertaining to the Facility, and the representations and warranties of the Lessee with respect thereto (both as the Lessee and as the Acquisition/Construction Agent) insofar as such requirements relate to the annex building portion thereof (the “Revised Annex Parcel”); (ii) a legal description of the portion of the Original Annex Parcel which will not be needed for the annex building (the “Excess Annex Land”); (iii) an update of the Survey identifying the Revised Annex Parcel and the Excess Annex Land; (iv) a proposed form of special warranty deed or deeds pursuant to which the Lessor will release the Excess Annex Land from the Lease and from the Ground Lease, and transfer the Excess Annex Land to the Lessee free and clear of any Lessor Liens; and (v) a certificate of the Lessee (either as such or as the Acquisition/Construction Agent) to the effect that the Revised Annex Parcel will be adequate for such use, satisfying all requirements of the Lease and the Operative Documents pertaining to the Facility, and the representations and warranties of the Lessee with respect thereto . Upon the Lessor’s reasonable satisfaction with each of the foregoing, the Lessor shall execute and return to the Lessee such deed or deeds, and thereafter, the Excess Annex Land shall not constitute part of the Site or the Facility.

        (2) As of the Closing Date, the Lessee had not determined the precise location of the portion of the Site to be used for the intended parking deck, and the description of the “parking deck parcel” in Exhibit A hereto and to the Investment Agreement (the “Original Parking Deck Parcel”) encompasses more land than is necessary for the intended parking deck. At any time during the Construction Term, the Lessee (either as such or as the Acquisition/Construction Agent) shall be entitled to furnish to the Lessor: (i) a legal description of the portion of the Original Parking Deck Parcel which the Lessee has determined will be used as the location of the parking deck portion of the Facility and will be adequate for such use, satisfying all requirements of the Lease and the Operative Documents pertaining to the Facility, and the representations and warranties of the Lessee with respect thereto (both as the Lessee and as the Acquisition/Construction Agent) insofar as such requirements relate to the parking deck portion thereof (the “Revised Parking Deck Parcel”); (ii) a legal description of the portion of the Original Parking Deck Parcel which will not be needed for the parking deck (the “Excess Parking Land”); (iii) an update of the Survey identifying the Revised Parking Deck Parcel and the Excess Parking Land; (iv) a proposed form of special warranty deed or deeds pursuant to which the Lessor will release the Excess Parking Land from the Lease and from the Ground Lease, and transfer the Excess Parking Land to the Lessee free and clear of any Lessor Liens; and (v) a certificate of the Lessee (either as such or as the Acquisition/Construction Agent) to the effect that the Revised Parking Deck Parcel will be adequate for such use, satisfying all requirements of the Lease and the Operative Documents pertaining to the Facility, and the representations and warranties of the Lessee with respect thereto. Upon the Lessor’s reasonable satisfaction with each of the foregoing, the Lessor shall execute and return to the Lessee such deed or deeds, and thereafter, the Excess Parking Land shall not constitute part of the Site or the Facility.

        IN WITNESS WHEREOF, the parties have caused this Lease to be executed by their respective officers thereunto duly authorized as of the date first above written.

                                                              LESSEE:

                                                              PROTECTIVE LIFE INSURANCE
                                                              COMPANY, a Tennessee corporation

                                                              By:     /s/ A.S. Williams III
                                                                      ------------------------------
                                                              Title:  EVP, Investments and Treasurer

                                                              Attest: /s/ Carl S. Thigpen
                                                                      ------------------------------
                                                              Title:  VP, Investments

                                                              [CORPORATE SEAL]

                                                              Mailing Address:

                                                              Protective Life Insurance Company
                                                              2801 Highway 280 South
                                                              Birmingham, Alabama 35223
                                                              Attention: Carl Thigpen,
                                                              Telecopier: 205-868-3609



                                                              LESSOR:

                                                              WACHOVIA   CAPITAL   INVESTMENTS,   INC.,  a  Georgia
                                                              corporation


                                                              By:     /s/Kevin T. McConnell
                                                                      ---------------------
                                                              Title:  Senior Vice President


                                                              Attest: /s/Rosalyn Ostler
                                                                      ---------------------
                                                              Title:  Assistant Secretary

                                                              [CORPORATE SEAL]

                                                              Mailing Address:

                                                              Wachovia Capital Investments, Inc.
                                                              191 Peachtree Street, N.E.
                                                              27th Floor
                                                              Atlanta, Georgia 30303-1757
                                                              Attention: Rosalyn Ostler
                                                              Telecopier No.: 404-332-4432
                                                              Telephone No.: 404-332-1122


                  STATE OF Alabama             §
                                               §
                  COUNTY OF Jefferson          §



                                    I, the  undersigned,  a Notary  Public in and for said  County  in said  State,
                  hereby  certify  that   A. S. Williams III,   whose  name  as  EVP, Investments and Treasurer  of
                  PROTECTIVE  LIFE  INSURANCE  COMPANY,  a  Tennessee  corporation,  is  signed  to  the  foregoing
                  instrument,  and who is known to me,  acknowledged  before me on this day that, being informed of
                  the contents of this instrument,  he as such  officer and with full authority,  executed
                  the same voluntarily for and as the act of said corporation.



                                    Given under my hand and official seal, this 27th day of  January, 2000.




                                                                                Anita L. Gann
                                                                                Notary Public

                 My Commission Expires: 10/9/02



                                                              [Notary Seal]



                  STATE OF Georgia             §
                                               §
                  COUNTY OF Fulton             §



                                    I, the  undersigned,  a Notary  Public in and for said  County  in said  State,
                  hereby certify that  Kevin T. McConnell,  whose name as Senior Vice President of WACHOVIA
                  CAPITAL INVESTMENTS,  INC., a Georgia  corporation,  is signed to the foregoing  instrument,  and
                  who is known to me,  acknowledged  before me on this day that,  being informed of the contents of
                  this  instrument,  he as such  Senior Vice President  and  with  full  authority,  executed  the  same
                  voluntarily for and as the act of said corporation.



                                    Given under my hand and official seal, this 27th day of  January, 2000.




                                                                                                Laela Kellar
                                                                                                   Notary Public

                  My Commission Expires:  November 7, 2002


                                                              [Notary Seal]

EXHIBIT A

ANNEX PARCEL

        A parcel of land situated in the S.W.1/4 of the S.E.1/4 and the S.E.1/4 of the S.W.1/4 of Section 8, and the N.W.1/4 of the N.E.1/4 of Section 17, both in Township 18 South,

Range 2 West, Jefferson County, Alabama, being more particularly described as follows: Commence at the Westernmost corner of Lot A according to Parkway Subdivision as recorded in Map Book 88, Page 38 in the office of the Judge of Probate of Jefferson County, Alabama, said point lying on the Northeasterly right-of-way of U.S. Highway #280 and also being the Southernmost corner of that parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 and the property boundary of the aforementioned parcel a distance of 27.00 feet to the POINT OF BEGINNING of the parcel herein described; thence continue along the last described course along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 231.19 feet to a point 120.00 feet Northeasterly of the T.S. (tangent to spiral) at highway Sta. 75+41.43; thence continue in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 along a line which lies 120.00 feet Northeasterly of and parallel to a spiral curve having a LS of 250.00 feet and a (theta)S of 3°07'30” a distance of 75.50 feet to a point; thence 23°06’ to the right (angle measured to chord) in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 13.50 feet to a point; thence 39°47’ to the left in a Westerly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 13.30 feet to a point; thence 46°23'41” to the right in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 48.30 feet to a point on a line that is 145.00 feet Northeasterly of and parallel to a spiral curve having a LS of 250.00 feet and a (theta)S of 3°07'30"; thence along the aforementioned line 145.00 feet Northeasterly of and parallel to said spiral curve in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 99.41 feet to a point that is 145.00 feet Northeasterly of and parallel to the S.C. (spiral to curve) at highway Sta. 77+91.43, said point lying on a curve to the right having a radius of 2146.83 feet and a central angle of 1°57'26"; thence in a Northwesterly direction along the arc of said curve and the Northeasterly right-of-way line of U.S. Highway #280 a distance of 73.34 feet to a point; thence 89°56'26” to the right (angle measured to tangent) in a Northeasterly direction a distance of 182.78 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 2.1 feet to a point; thence 90°00’ to the left in a Northeasterly direction a distance of 18.26 feet to a point; thence 90°06'28” to the right in a Southeasterly direction a distance of 123.34 feet to a point; thence 89°54'32” to the left in a Northeasterly direction a distance of 74.56 feet to a point; thence 90°10'29” to the right in a Southeasterly direction a distance of 126.91 feet to a point; thence 90°13'21” to the left in a Northeasterly direction a distance of 104.53 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 287.09 feet to a point on the boundary of a parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence 62°19'15” to the right in a Southerly direction along the boundary of said parcel a distance of 86.47 feet to a point; thence 83°17'32” to the right in a Westerly direction along the boundary of said parcel a distance of 65.00 feet to a point; thence 90°00’ to the left in a Southerly direction along the boundary of said parcel a distance of 20.26 feet to a point; thence 31°54'03” to the right in a Southwesterly direction along the boundary of said parcel a distance of 235.00 feet to the POINT OF BEGINNING.

Containing 3.9 acres, more or less.

        TOGETHER WITH, a non exclusive easement for pedestrian and vehicular ingress and egress to, upon, over and across the Protective Road, Protective Driveway and Orchid Driveway (as the same are described in that certain Reciprocal Easement Agreement by and between Orchid, L.L.C. and Protective Life Insurance Company dated as of January 19, 1996, and recorded as Instrument #9601/6971 in the Probate Office of Jefferson County, Alabama), as the same may be modified or relocated.

PARKING DECK PARCEL

A parcel of land situated in the South 1/2 of the S.E.1/4 of Section 8, Township 18 South, Range 2 West, Jefferson County, Alabama, being more particularly described as follows:

Commence at the Southwesterly corner of Lot 10-A of Parkway Subdivision as recorded in Map Book 88, Page 38 in the office of the Judge of Probate of Jefferson County, Alabama, and run in a Northerly direction along the Westerly line of said Lot 10-A a distance of 24.24 feet to the POINT OF BEGINNING of the parcel herein described, said point lying on the Northwesterly boundary of a parcel described in Real Volume 4452, Page 977; thence 124°24'34” to the left in a Southwesterly direction along the boundary of the aforementioned parcel, a distance of 328.53 feet to a point on the boundary of a parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence 87°34'08” to the right in a Northwesterly direction along the boundary of said parcel a distance of 28.37 feet to a point; thence 52°21'40” to the left in a Southwesterly direction along the boundary of said parcel a distance of 315.66 feet to a point; thence 90°00’ to the right in a Northerly direction along the boundary of said parcel a distance of 31.38 feet to a point; thence 83°24'09” to the left in a Northwesterly direction along the boundary of said parcel a distance of 144.00 feet to a point; thence 27°49'53” to the right in a Northwesterly direction a distance of 287.09 feet to a point; thence 90°00’ to the right in a Northeasterly direction a distance of 620.00 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 871.31 feet to a point; thence 110°21'49” to the right in a Southwesterly direction a distance of 107.65 feet to the POINT OF BEGINNING.

Containing 9.919 acres.

TOGETHER WITH, a non exclusive easement for pedestrian and vehicular ingress and egress to, upon, over and across the Protective Road, Protective Driveway and Orchid Driveway (as the same are described in that certain Reciprocal Easement Agreement by and between Orchid, L.L.C. and Protective Life Insurance Company dated as of January 19, 1996, and recorded as Instrument #9601/6971 in the Probate Office of Jefferson County, Alabama), as the same may be modified or relocated.

EXHIBIT B

Other Defined Terms

        "Facility": the collective reference to (i) the Lessor's leasehold interest in the Site, (ii) the Improvements, and (iii) all plans, specifications, warranties and related rights and operating, maintenance and repair manuals related thereto and all replacements of any of the above.

        “Facility Plan”: the architectural and engineering plans and specifications for the Facility and list of Facility Plan documents furnished to the Lessor pursuant to Section 6.01(f) of the Investment Agreement, as the same may be amended, supplemented or otherwise modified from time to time as provided in such Section 6.01(f) or otherwise with the consent of the Lessor.

        “Improvements”: collectively, the building and nearby parking deck to be constructed and related enhancements and improvements, including furniture, fixtures and equipment to be constructed or installed on the Site in accordance with the Facility Plan, together with all accessions thereto and replacements thereof, and together with all accessories, equipment, parts and devices necessary to achieve Completion, and all fixtures now or hereafter included in or attached to the Site, the building and such enhancements and improvements and modifications, but excluding the Site.

        “Site”: certain real property located in Birmingham, Alabama, described in greater detail on Exhibit A to the Investment Agreement and the Lease, less and except (i) the Excess Annex Land, from and after the release thereof pursuant to the provisions of Section 27(k)(1) of the Lease and (ii) the Excess Parking Land, from and after the release thereof pursuant to the provisions of Section 27(k)(2) of the Lease.

        "UCC": the Uniform Commercial Code as in effect in the State of Alabama and any other jurisdiction whose laws may be mandatorily applicable.

SCHEDULE 14

Insurance Requirements

        The Lessee will provide, or cause to be provided, insurance in accordance with the terms of this Schedule, which insurance shall be placed and maintained with Permitted Insurers. As to each of the building annex and parking deck portions of the Facility, until the issuance of a certificate of occupancy as to such portion, such insurance may be provided through the general contractor’s builder’s risk and liability coverage.

        (a) Insurance Coverages and Limits

        At all times subsequent to the Lease Commencement Date, the Lessee shall provide, or cause to be provided, the following property and liability coverages with respect to the Facility:

             (i) all-risk property coverage, with limits of coverage at least equal to the replacement cost (which limits shall be not less than $60,000,000 for the Facility, or such other amount as the Lessor may agree upon after receipt of the final Facility Plan pursuant to Section 6.01(f) of the Investment Agreement), which insurance coverage may, at the Lessee's option, be included under any "blanket" policy maintained by the Lessee so long as such "blanket" policy provides for all-risk property coverage with respect to the Facility and any other Property covered thereby, with limits of coverage at least equal to the aggregate replacement cost of the Facility (provided, however, that such insurance, in either case, shall provide for re placement cost coverage, provided that the insured property is replaced, and, provided further, that the insurance shall not have the effect of causing the Lessee or any of its Affiliates to be deemed a co-insurer), with respect to the Lessee and any Affiliate of the Lessee providing services with respect to the Facility, or if the Lessee elects to effect the coverage required by this Paragraph under a "blanket" policy, the Lessee and its Affiliates insured thereby, such insurance to include, coverage for (x) floods (if required by applicable law or regulation) , windstorms, hurricanes, tornados, collapse and other perils (including debris removal and cleanup) and such insurance to cover equipment separated from the Facility, transit of equipment and consumables to and from the Site, labor claims, in each case with respect to the Facility, and such insurance to include coverage for all other risks and occurrences customarily included under all-risk policies available with respect to Property similar in installation, location and operation to the Facility (or the Facility and all other Property insured thereby if all are covered under a "blanket" policy), and (y) "boiler and machinery" property damage insurance on a comprehensive basis with respect to damage to the machinery, plants, equipment or similar apparatus (including production machinery) included in the Facility (or the Facility and all other Property insured thereby if all are covered under a "blanket" policy), from risks and in amounts normally insured against under machinery policies.

             (ii)

                  (1) statutory workers' compensation and occupational disease insurance in accordance with applicable state and federal law, and employer's liability insurance with primary and excess coverage limits of not less than $1,000,000;

                  (2) commercial general liability insurance covering operations of the Lessee, contractual liability coverage, contingent liability coverage arising out of the operations of the Facility, cross-liabilities coverage, sudden and accidental seepage and pollution coverage, and other coverage for hazards customarily insured with respect to Property similar in construction, location, occupancy and operation to the Facility, with limits complying with the underlying requirements of the excess liability policy described in Paragraph (a)(ii)(3);

                  (3) excess commercial liability insurance in excess of the liability policies described in Paragraphs (a)(ii)(1) and (2) to bring to limits of not less than $1,000,000 for each occurrence and in the aggregate per year with respect to the Lessee and its Affiliates.

             (iii) The policy or policies providing the coverage required by paragraphs (a)(i) and (a)(ii)(2) and (a)(ii)(3) may include deductible amounts for the account of the Lessee or its Affiliates, as the case may be, not to exceed $25,000 in the aggregate for all such coverages.

        (b) Insurance Endorsements - Any insurance carried in accordance herewith shall, except as hereinafter permitted, provide or be endorsed to provide that:

             (i) the Lessor, as its interests may appear, shall be included as an additional insured or named as loss payee but only with respects coverages required by Paragraphs (a)(i), with the understanding that any obligation imposed upon the insured (including, without limitation, the liability to pay premiums) under any policy required by this Schedule shall be the obligation of the Lessee and its Affiliates) and not that of the Lessor;

             (ii) as to all policies of property insurance, a non-contributory clause or endorsement to the effect that any loss shall be payable in accordance with the terms of such policy notwithstanding any act or negligence of the Lessee or its Affiliates which might otherwise result in forfeiture of or denial of coverage with respect to such insurance;

             (iii) the insurer thereunder waives all rights of subrogation against the Lessor;

             (iv) such insurance shall be primary without right of contribution of any other insurance carried by or on behalf of the Lessor with respect to its interests in the Facility; and

             (v) if such insurance is cancelled for any reason whatsoever (including, without limitation, nonpayment of premium) or any material change is made in the coverage that affects the interests of the Lessor, such cancellation or change shall not be effective as to the Lessor for 10 days for nonpayment of premiums and otherwise for 45 days, in both cases after receipt by the Lessor (at the address provided pursuant to Section 22 of the Lease) of written notice sent by certified mail from such insurer of such cancellation or change.

        (c) Adjustment of Property Losses - After the occurrence and during the continuation of a Cancellation Event or Termination Event, the loss, if any, under any property insurance covering the Facility required to be carried by this Schedule shall be adjusted with the insurance companies or otherwise collected, including, without limitation, the filing of appropriate proceedings, by the Lessee in consultation with the Lessor.

        (d) Upon request, the Lessee will furnish the Lessor evidence of such insurance relating to the Facility.

        (e) Additional Insurance by the Lessor or the Lessee - Nothing in this Schedule shall prohibit the Lessor or the Lessee, as their respective interests may appear, from maintaining for their own account, at the expense of the Person purchasing such insurance, additional insurance on or with respect to the Facility, or any part thereof, with coverage exceeding that otherwise required under this Schedule, unless such insurance would conflict with or limit the insurance otherwise required under this Schedule.

EX-10

Exhibit 10(l)(1)

October 31, 2001

Protective Life Insurance Company
2801 Highway 280 South
Birmingham, Alabama 35223
Attention: Carl Thigpen

Re: Lease Agreement dated as of February 1, 2000 between Wachovia Capital Investments, Inc., as the Lessor, and Protective Life Insurance Company, as the Lessee, as amended (as amended, the “Lease”); and Investment and Participation Agreement dated as of February 1, 2000 by and among Protective Life Insurance Company, as the Company, Wachovia Capital Investment as Lessor, and the Lease Participants, as amended (as amended, the “Investment Agreement”)

Gentlemen:

        Capitalized terms used herein shall have the meanings attributable thereto in the Investment Agreement.

        The Company has requested that Lessor and Lease Participants consent and allow the Company to sublease a portion of the Facility. Subject to the terms and conditions set forth herein, the Lessor and each Lease Participant hereby (i) consents to the subleasing of the Facility and (ii) waives the requirement in Section 21(c) of the Lease that any sublease shall not have a sublease term ending after the then current Scheduled Lease Termination Date. Such consent and waiver shall apply only to a maximum of six (6) subleases affecting in the aggregate a maximum of 60,000 square feet of the Facility. Each sublease shall have a lease term no longer than ten (10) years. This consent and waiver is expressly conditioned upon the Lessor and one other Lease Participant approving each subtenant prior to the Company executing such sublease.

        The foregoing consent and waiver is strictly limited to its terms. By granting the foregoing consent and waiver, Lessor and each Lease Participant specifically does not consent to or waive any other provisions contained in the Lease, the Investment Agreement or any of the other Operative Documents.

        By its acknowledgment and acceptance hereinbelow, such of the Company and the Guarantor hereby (i) consents to the aforedescribed subleasing requirements and limitations, (ii) agrees to be bound thereby, and (iii) restates and reaffirms its respective obligations under the Operative Documents without defense, counterclaim or setoff.

        This letter may be executed by the parties hereto on any number of separate counterparts, each of which be an original, but all such counterparts shall together constitute but one and the same instrument.

                                                    Yours truly,



                                                     WACHOVIA CAPITAL INVESTMENTS, INC.

                                                     By: /s/Douglas N. Vestal
                                                              Name:  Douglas N. Vestal
                                                              Title: Vice President


                                                     SUNTRUST BANK

                                                     By:  /s/Natlee Bolden
                                                               Name:  Natlee Bolden
                                                               Title: Assistant Vice President



                                                     LASALLE BANK NATIONAL ASSOCIATION

                                                     By:  /s/George L. Kumis
                                                               Name:  George L. Kumis
                                                               Title: Senior Vice President



Acknowledged and Agreed:

PROTECTIVE LIFE INSURANCE COMPANY

By:/s/Carl Thigpen
        Name:  Carl Thigpen
        Title: Vice President

PROTECTIVE LIFE CORPORATION

By:/s/Carl Thigpen
        Name:  Carl Thigpen
        Title: Vice President

EX-10

Exhibit 10(m)

INVESTMENT AND PARTICIPATION AGREEMENT

Dated as of February 1, 2000


Among

PROTECTIVE LIFE INSURANCE COMPANY,

As the Company,

Wachovia Capital Investments, Inc.,

as Lessor,

and

THE LEASE PARTICIPANTS SIGNATORIES HERETO

TABLE OF CONTENTS

                                                                                                                                   Page


ARTICLE I. Defined Terms and Accounting Matters..................................................................

   Section 1.01          Terms Defined Above.....................................................................

   Section 1.02          Certain Defined Terms...................................................................

   Section 1.03          Accounting Terms and Determinations.....................................................


ARTICLE II. Commitments  2

   Section 2.01          Lessor Investments; Purchase of Ownership Interests.....................................

   Section 2.02          Fundings................................................................................

   Section 2.03          Changes of Commitments..................................................................

   Section 2.04          Certain Supplemental Rent...............................................................

   Section 2.05          Ownership Interests; Lessor as Servicing Agent; Record of Payments......................

   Section 2.06          Several Obligations.....................................................................

   Section 2.07          Applicable Funding Offices..............................................................

   Section 2.08          Acquisition and Construction of Facility................................................


ARTICLE III. Recovery of Lessor Investments; Payment of Yield and Other Amounts..................................

   Section 3.01          Recovery of Lessor Investments..........................................................

   Section 3.02          Redemptions.............................................................................

   Section 3.03          Yield on Lessor Investments; Overdue Amounts............................................

   Section 3.04          Payments by Lessor......................................................................

   Section 3.05          Applications of Payments and Proceeds...................................................


ARTICLE IV. Payments; Computations; Etc..........................................................................

   Section 4.01          Payments................................................................................

   Section 4.02          Pro Rata Treatment......................................................................

   Section 4.03          Computations............................................................................

   Section 4.04          Non-receipt of Funds by the Lessor......................................................

   Section 4.05          Sharing of Payments.....................................................................

   Section 4.06          Taxes...................................................................................


ARTICLE V. Yield Protection and Illegality.......................................................................

   Section 5.01          Basis for Determining Yield Rate Inadequate or Unfair...................................

   Section 5.02          Illegality..............................................................................

   Section 5.03          Increased Cost and Reduced Return.......................................................

   Section 5.04          Base Rate Substituted for Adjusted LIBO Rate............................................

   Section 5.05          Compensation............................................................................

   Section 5.06          Payments and Computations...............................................................


ARTICLE VI. Conditions Precedent.................................................................................

   Section 6.01          Conditions Precedent to Effectiveness of this Agreement.................................

   Section 6.02          Initial and Subsequent Advances.........................................................

   Section 6.03          Conditions Precedent for the Benefit of Funding Parties.................................

   Section 6.04          Closing.................................................................................


ARTICLE VII. Representations and Warranties......................................................................

   Section 7.01          Company Representations and Warranties..................................................


ARTICLE VIII. Covenants  30

   Section 8.01          Information.............................................................................

   Section 8.02          Maintenance and Inspection of Property, Books and Records...............................

   Section 8.03          Related Contracts.......................................................................

   Section 8.04          Consolidations, Mergers and Sales of Assets.............................................

   Section 8.05          Maintenance of Existence................................................................

   Section 8.06          Dissolution.............................................................................

   Section 8.07          Use of Proceeds.........................................................................

   Section 8.08          Compliance with Laws; Payment of Taxes..................................................

   Section 8.09          Insurance...............................................................................

   Section 8.10          Maintenance of Property.................................................................

   Section 8.11          Environmental Notices...................................................................

   Section 8.12          Environmental Matters...................................................................

   Section 8.13          Environmental Release...................................................................

   Section 8.14          Transactions with Affiliates............................................................

   Section 8.15          Further Assurances......................................................................

   Section 8.16          Completion; Etc.........................................................................

   Section 8.17          Maintenance; Etc........................................................................

   Section 8.18          Encroachments...........................................................................

   Section 8.19          Liens, Etc..............................................................................

   Section 8.20          Facility Plan...........................................................................

   Section 8.21          Change in Fiscal Year...................................................................

   Section 8.22          Intentionally Omitted...................................................................

   Section 8.23          Restrictions on Ability of Subsidiaries to Pay Dividends................................

   Section 8.24          Adjusted Consolidated Net Worth.........................................................

   Section 8.25          Ratio of Adjusted Consolidated Indebtedness to Consolidated Capitalization..............

   Section 8.26          Ratio of Unconsolidated Cash Inflow Available for Interest Expense to Adjusted Consolidated Interest Expense.
                         37

   Section 8.27          Company's Total Adjusted Capital........................................................

   Section 8.28          Restricted Payments.....................................................................


ARTICLE IX. Events of Default....................................................................................

   Section 9.01          Events of Default.......................................................................

   Section 9.02          Remedies................................................................................


ARTICLE X. The Lessor as Servicing Agent for the Lease Participants..............................................

   Section 10.01         Appointment, Powers and Immunities......................................................

   Section 10.02         Reliance by Lessor......................................................................

   Section 10.03         Defaults................................................................................

   Section 10.04         Rights as a Funding Party...............................................................

   Section 10.05         Indemnification by Lease Participants...................................................

   Section 10.06         Indemnification by Lessor...............................................................

   Section 10.07         Non-Reliance on Lessor and other Lease Participants.....................................

   Section 10.08         Failure to Act..........................................................................


ARTICLE XI. Miscellaneous........................................................................................

   Section 11.01         Amendments, Etc.........................................................................

   Section 11.02         Notices.................................................................................

   Section 11.03         Payment of Expenses, Indemnities, etc...................................................

   Section 11.04         No Waiver; Remedies.....................................................................

   Section 11.05         Right of Set-Off........................................................................

   Section 11.06         Assignments and Participations..........................................................

   Section 11.07         Invalidity..............................................................................

   Section 11.08         Entire Agreement........................................................................

   Section 11.09         References..............................................................................

   Section 11.10         Successors; Survivals...................................................................

   Section 11.11         Captions................................................................................

   Section 11.12         Counterparts............................................................................

   Section 11.13         Confidentiality.........................................................................

   Section 11.14         GOVERNING LAW; SUBMISSION TO JURISDICTION...............................................

   Section 11.15         Yield...................................................................................

   Section 11.16         Characterization........................................................................

   Section 11.17         Compliance..............................................................................

   Section 11.18         Facility................................................................................

   Section 11.19         Funding Parties.........................................................................

   Section 11.20         Waiver of Jury Trial....................................................................

   Section 11.21         Certain Acknowledgments of the Parties..................................................

   Section 11.22         Consent to Release of Excess Annex Land and Excess Parking Land.........................

EXHIBITS


Exhibit A -        Legal Description of Site

Exhibit B -        Ownership Certificate

Exhibit C -        Form of Assignment and Acceptance Agreement

Exhibit D -        Form of legal opinion of counsel to the Company and the Guarantor

Exhibit E -        Form of Compliance Certificate

Exhibit F -        Form of Guaranty


                                                               SCHEDULES

Schedule 1.02     -        Defined Terms

Schedule 1.02(b)  -        Pricing Schedule

Schedule 7.01(e)  -        Litigation

Schedule 7.01(h)  -        Subsidiaries

Schedule 7.01(n)  -        Environmental Matters

        INVESTMENT AND PARTICIPATION AGREEMENT (as the same may be amended, modified or supplemented from time to time, this “Agreement” or the “Investment Agreement”) dated as of February 1, 2000 among PROTECTIVE LIFE INSURANCE COMPANY, a Tennessee corporation (the “Company”), WACHOVIA CAPITAL INVESTMENTS, INC., as Lessor (the “Lessor”) and each of the Lease Participants that is a party hereto or becomes a party hereto as provided in Section 11.06 (individually, together with its successors and assigns, a “Lease Participant,” and collectively, together with their successors and assigns, the “Lease Participants”).

RECITALS

        WHEREAS, the Lessor has acquired, as of the date hereof, a ground lease of certain real property located in Birmingham, Alabama, described in greater detail on Exhibit A (the “Site”), and intends to construct and install on the Site an annex office building and a related parking deck and related enhancements and improvements, including furniture, fixtures and equipment; and

        WHEREAS, the Lessor has leased the Facility to the Company pursuant to the Lease; and

        WHEREAS, the Company, acting as the Lessor’s Acquisition/Construction Agent under the Agency Agreement, will, on behalf of the Lessor, complete the construction and installation of all such enhancements and improvements on the Site and provide operations, maintenance and management support; and

        WHEREAS, in order to finance the acquisition of the Lessor’s ground lease of the Site and the construction and installation of the building, related parking deck and such related enhancements and improvements on the Site for the ultimate use and benefit of the Company in accordance with the Lease, the Company has requested that the Lessor make Lessor Investments in the Facility in an aggregate principal amount of up to $75,000,000, and the Lessor has requested that the Lease Participants purchase Ownership Interests from the Lessor; and

        WHEREAS, to induce the Lessor and the Lease Participants to enter into this Agreement and other agreements relating to the transactions contemplated hereby, the Guarantor has agreed to guarantee the obligations of the Company to the Lessor, subject to certain limitations;

        WHEREAS, the Lessor has agreed to make Lessor Investments and the Lease Participants have agreed to purchase Ownership Interests from the Lessor upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

Defined Terms and Accounting Matters

        Section 1.01 Terms Defined Above. As used in this Agreement, the terms defined in the preamble and above shall have the meanings indicated above.

        Section 1.02 Certain Defined Terms. As used herein, all capitalized terms used but not otherwise defined herein shall have the meaning specified for such term in Schedule 1.02.

        Section 1.03 Accounting Terms and Determinations. Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP (except that financial statements of the Insurance Subsidiaries shall be prepared in accordance with SAP), applied on a basis consistent (except for changes concurred with by the Guarantor’s independent public accountants or otherwise required by a change in GAAP) with the most recent audited consolidated financial statements of the Guarantor and the Consolidated Subsidiaries delivered to the Funding Parties unless with respect to any such change concurred with by the Guarantor’s independent public accountants or required by GAAP or SAP, in determining compliance with any of the provisions of this Agreement or any of the other Operative Documents: (a) the Guarantor shall have objected to determining such compliance on such basis at the time of delivery of such financial statements, or (b) the Majority Funding Parties shall so object in writing within 30 days after the delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 8.01, shall mean the financial statements referred to in Section 7.01(d)).

ARTICLE II

Commitments

        Section 2.01 Lessor Investments; Purchase of Ownership Interests.

        (a) Lessor Investments. The Lessor agrees with the Company, on the terms and conditions of this Agreement, to make Lessor Investments by making Lessor Advances to the Acquisition/Construction Agent during the period from and including the Initial Funding Date up to and including the Completion Date, in an aggregate principal amount at any one time outstanding up to but not exceeding the amount of the Lessor Investment Commitment plus the amount of related Lease Participant Advances made pursuant to Section 2.01(b). All Lessor Advances shall be utilized only for items of Facility Cost, which utilization shall be evidenced to the Lessor's reasonable satisfaction simultaneously with and as a condition to each Lessor Advance. The Lessor hereby assigns to the Company all of its rights to enforce the Lease Participant Commitments, and the Lessor shall have no obligation to fund any amounts in excess of its Lessor Investment Commitment, net of the aggregate amount of Lease Participant Commitments.

        (b) Purchase of Ownership Interests. Each Lease Participant severally agrees with the Lessor and the Company, on the terms and conditions of this Agreement, up to the amount of its Lease Participant Commitment, to purchase Ownership Interests from the Lessor by making Lease Participant Advances to the Lessor during the period from and including the later of (1) the Initial Funding Date or (2) the date such Lease Participant becomes a party to this Agreement as provided in Section 11.06(b), up to and including the Completion Date, in an aggregate amount equal to such Lease Participant's Percentage Share, as shown on the most current Ownership Certificate; provided, however, that the aggregate principal amount of all Lease Participant Advances by all Lease Participants under this Section 2.01(a) at any one time outstanding shall not exceed the lesser of (y) ninety-seven percent (97%) of the Facility Cost as incurred or invoiced or (z) the sum of the aggregate Lease Participant Commitments. All Lessor Advances and Lease Participant Advances shall be made so as to satisfy the Required Percentage Composition.

        (c) Limitations on Lessor Advances and Lease Participant Advances. The aggregate amount of all Lessor Advances shall not exceed the amount of the Lessor Investment Commitment plus the aggregate amount of all Lease Participant Advances, and the aggregate amount of all Lease Participant Advances shall not exceed the amount of the aggregate Lease Participant Commitments. Lessor Advances repaid may not be readvanced to the Acquisition/Construction Agent. Lease Participant Advances repaid may not be readvanced to the Lessor. All Lessor Advances and Lease Participant Advances shall be made in such manner so as to satisfy the Required Percentage Composition. All Lessor Advances shall be utilized only for items of Facility Cost, which utilization shall be evidenced or certified to the Lessor's reasonable satisfaction simultaneously with and as a condition to each Lessor Advance as provided herein. All Lease Participant Advances shall be utilized only for the purchase from the Lessor of Ownership Interests.

        (d) Capitalized Yield during Construction Term. In order to capitalize Yield accruing during the Construction Term as contemplated in Section 3.03(a), on the last day of each Yield Period during the Construction Term and on the last day of the Construction Term, without any requirement for the giving of an Advance Notice by the Acquisition/Construction Agent pursuant to Section 2.02, the Lessor shall be deemed to have made a Lessor Advance (and each of the Lease Participants shall be deemed to have made a Lease Participant Advance to the Lessor pursuant hereto in connection therewith) in the amount of all Yield accruing on the aggregate outstanding amount of Lessor Advances as of the last day of the immediately preceding Yield Period. The Lessor shall give the notice to the Company and the Lease Participants of the amount of each such deemed Lessor Advance and each deemed Lease Participant Advance. Notwithstanding the foregoing, the aggregate amount of all Lessor Advances shall not exceed the Facility Cost.

        Section 2.02 Fundings.

        (a)

                (i) The Company, as Acquisition/Construction Agent for the Lessor, shall give the Lessor an Advance Notice (which may be telephonic if confirmed promptly in writing) of each requested funding of a Lessor Advance, which notice shall be given at least 3 Business Days before the date for such funding hereunder and shall be irrevocable and effective only upon receipt by the Lessor, and shall specify the aggregate amount and the date of the Lessor Advance to be funded. Fundings hereunder shall be made on the Initial Funding Date, which shall commence the first Yield Period, and the first day of each Yield Period thereafter during the Construction Term, with only 1 funding each calendar month. Once given, an Advance Notice may be revoked only upon payment of any amounts due to the Funding Parties under section 5.05. Not later than 12:00 noon, Atlanta, Georgia time, on the date specified for each funding hereunder, the Lessor shall make available to the Acquisition/Construction Agent, in immediately available funds, the amount of the Lessor Advance on such date at an account which the Acquisition/Construction Agent shall specify and maintain with the Lessor at its Principal Office.

                (ii) Promptly upon receipt of an Advance Notice pursuant to clause (i), the Lessor shall notify the Lease Participants thereof and of the amount of each Lease Participant's Percentage Share thereof to be funded by a Lease Participant Advance by each Lease Participant in connection therewith, having due regard for the maintenance of the Required Percentage Composition. Not later than 2:00 p.m., Atlanta, Georgia time, on the date specified for each funding hereunder, the Lease Participants shall make available to the Lessor, in immediately available funds, the amount of such Lease Participant Advances to be made by them on such date at an account which the Lessor shall specify. Promptly following the receipt of such Lease Participant Advances, the Lessor shall furnish to each Lease Participant, with a copy to the Company, a certificate in the form of Exhibit B (an "Ownership Certificate") setting forth, as of the date thereof and after giving effect to such Lessor Advance pursuant to clause (i) above and the related Lease Participant Advances pursuant to this clause (ii), as well as all "deemed" Lessor Advances and Lease Participant Advances pursuant to Section 2.01(d) since the issuance of the prior Ownership Certificate, the aggregate amount of (a) all Lessor Investments, (b) the Ownership Interests owned by the Lessor and each Lease Participant, (c) the Percentage Share of the Lessor and each Lease Participant, and (d) the percentage which the Non-Recourse Amount Ownership Interests of the Lessor bears to the total Lessor Investments.

        (b) All Lessor Advances under Section 2.02(a)(i) shall be in amounts of at least $500,000 or in integral multiples of $100,000 in excess thereof, or the remaining balance of the sum of the Lessor Investment Commitment and Lease Participant Commitments, if less.

        (c) On the Completion Date, all Lessor Advances and Lease Participant Advances shall have been funded by the Funding Parties as herein provided on a pro rata basis so that the Required Percentage Composition shall be satisfied on such date.

Section 2.03 Changes of Commitments. The Company, as Acquisition/Construction Agent for the Lessor, shall have the right to terminate or to reduce the amount of, or, prior to utilization thereof, terminate, the Lessor Investment Commitment and Lease Participant Commitments at any time or from time to time upon not less than 3 Business Days’ prior written notice to the Lessor (which shall promptly notify the Lease Participants) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which shall not be less than $1,000,000 or any multiple of $500,000 in excess thereof) and shall be irrevocable and effective only upon receipt by the Lessor. Any such reduction in the amount of the Lessor Investment Commitment and Lease Participant Commitments shall be pro rata. The Lessor Commitments and the Lease Participant Commitments, once terminated or reduced, may not be reinstated. In no event shall the Lessor Investment Commitment and Lease Participant Commitments be reduced below the outstanding amount of Lessor Advances and Lease Participant Advances. On the Completion Date, after all Lessor Advances and Lease Participant Advances required to be made hereunder have been made, the Commitments shall terminate entirely.

        Section 2.04 Certain Supplemental Rent. In addition to other Supplemental Rent payable pursuant to the Operative Documents, the Company shall pay to the Lessor the Supplemental Rent described in this Section 2.04 pursuant to the provisions hereof (and during the Construction Term, the Company shall be entitled to obtain Lessor Advances and Lease Participant Advances therefor by including such amounts in any Advance Notice).

        (a) The Company shall pay or cause to be paid to the Lessor Supplemental Rent (the "Commitment Supplemental Rent") on the daily average amount of the sum of the unused portion of the Lessor Investment Commitment and Lease Participant Commitments, for the period from and including the Closing Date, up to and including the earlier of the date the unused Lessor Investment Commitment and Lease Participant Commitments are terminated by the Company, as Acquisition/Construction Agent for the Lessor, or the Completion Date, at a rate per annum equal to 0.20%. Commitment Supplemental Rent and Yield thereon at the rate specified in the last sentence of Section 3.03(a) shall accrue for each Yield Period during the Construction Term and be payable, together with Yield thereon, on the first funding date as of which the aggregate amount of capitalized project costs funded (including capitalized project costs funded on such date) equal or exceed $1,000,000. Promptly upon receipt by the Lessor of each payment of the Commitment Supplemental Rent, it shall distribute to each Lease Participant its Percentage Share thereof.

        (b) The Company shall pay or cause to be paid to the Lessor Supplemental Rent (the "Upfront Supplemental Rent") in the amount of 0.20% of the Lessor Commitment. The Upfront Supplemental Rent and Yield thereon at the rate specified in the last sentence of Section 3.03(a) shall accrue during the Construction Term and be payable in full, together with Yield thereon, , on the first funding date as of which the aggregate amount of capitalized project costs funded (including capitalized project costs funded on such date) equal or exceed $1,000,000. Promptly upon receipt by the Lessor of such payment of the Upfront Supplemental Rent, it shall distribute to each Lease Participant its Percentage Share thereof.

        (c) The Company shall pay or cause to be paid Supplemental Rent in connection with the Lessor's role as arranger (the "Arranger's Supplemental Rent") and as the administrator (the "Administrative Supplemental Rent") of the transactions described in the Operative Documents, in each case as specified in the fee letter dated of even date herewith between the Lessor and the Company. The Arranger's Supplemental Rent and the Administrative Supplemental Rent shall accrue, together with Yield thereon at the rate specified in the last sentence of Section 3.03(a), during the Construction Term and be payable, together with Yield thereon, , on the first funding date as of which the aggregate amount of capitalized project costs funded (including capitalized project costs funded on such date) equal or exceed $1,000,000. Thereafter, the Administrative Supplemental Rent shall be paid annually in advance. The Lessor shall retain the Arranger's Supplemental Rent and the Administrative Supplemental Rent for its own account.

        Section 2.05 Ownership Interests; Lessor as Servicing Agent; Record of Payments.

        (a) The Ownership Certificates furnished by the Lessor pursuant to Section 2.02(a)(ii) shall evidence, as of the date thereof and after giving effect to such Lessor Advance pursuant to Section 2.02(a)(i) and the related Lease Participant Advances pursuant to Section 2.02(a)(ii), as well as all "deemed" Lessor Advances and Lease Participant Advances pursuant to Section 2.01(d) since the issuance of the prior Ownership Certificate, the aggregate amount of (a) all Lessor Investments, (b) the Ownership Interests owned by the Lessor and each Lease Participant, (c) the Percentage Share of the Lessor and each Lease Participant, and (d) the percentage which the Non-Recourse Amount Ownership Interests of the Lessor bears to the total Lessor Investments, and such Ownership Certificates shall be final and conclusive evidence of the amounts set forth therein, in the absence of manifest error. The sale by the Lessor to the Lease Participants of Ownership Interests shall be absolute sales, and the Lease Participants shall have no recourse to the Lessor in the event of failure of the Lessee to pay any Rent or other amounts payable pursuant to the Lease, this Agreement and the other Operative Documents which are attributable to their Ownership Interests, or right to require the Lessor to repurchase their Ownership Interests in any event.

        (b) The Lessor shall serve as the servicing agent of the Lease Participants to collect and receive all payments of Rent and other amounts payable pursuant to the Lease, this Agreement and the other Operative Documents which are attributable to their Ownership Interests, and such amounts, when received by the Lessor and until distributed to the Lease Participants pursuant to the Lease, this Agreement or the other Operative Documents, shall be held by the Lessor in trust for the Lease Participants.

        (c) The Lessor shall maintain a record of payments of Rent and all other amounts paid to the Lessor pursuant to the Lease, this Agreement and the other Operative Documents, and the amounts paid by the Lessor to the Lease Participants pursuant to this Agreement, and such record shall be final and conclusive evidence of the amounts recorded therein, absent manifest error. A copy of such record shall be made available to the Company and any Lease Participant upon its request.

        Section 2.06 Several Obligations. The failure of any Lease Participant to make any Lease Participant Advance to be made by it on the date specified therefor shall not relieve such Lease Participant of its obligation to the Company to make such Lease Participant Advance, nor shall it relieve the Lessor or any other Lease Participant of its obligation to make its own Lessor Advance (net of such amount) or Lease Participant Advance, but neither the Lessor nor any Lease Participant shall have any responsibility for such failure, or obligation to make such Lease Participant Advance on behalf of such Lease Participant.

        Section 2.07 Applicable Funding Offices. The Lessor Advances and Lease Participant Advances made by each Funding Party shall be made and maintained at such Funding Party’s Applicable Funding Office therefor.

        Section 2.08 Acquisition and Construction of Facility. The Lessor, acting solely by and through the Company as its Acquisition/Construction Agent under the Agency Agreement and subject to the provisions of this Agreement, shall, on the terms and conditions set forth in the Operative Documents, acquire the Facility, cause to be constructed the Improvements thereon, and lease the Facility to the Lessee pursuant to the Lease. The Company shall enter into and perform its obligations under the Agency Agreement, the Lease and the other Operative Documents, all in accordance with the terms thereof.

ARTICLE III.

Recovery of Lessor Investments;
Payment of Yield and Other Amounts

        Section 3.01 Recovery of Lessor Investments.

        (a) The Company will pay or cause to be paid to the Lessor all Rent and other amounts payable to the Lessor, for the account of the Lessor and the Lease Participants, as the case may be, including all Unrecovered Lessor Investments, all accrued and unpaid Yield (other than Yield capitalized during the Construction Period pursuant to Sections 2.01(d) and 3.03(a)), Supplemental Rent and other amounts owing under this Agreement and the other Operative Documents, in full on the Maturity Date, subject to Section 3.01(b).

        (b) If, on or before the Maturity Date, the Company or the Guarantor (or any of their respective Affiliates) shall exercise the option to purchase the Facility in its entirety, then the purchase price for the Facility shall be equal to the Purchase Price and the proceeds of such sale, when received by the Lessor, shall be applied by the Lessor in the order specified in Section 3.05(a). If, on the Maturity Date, no Cancellation Event shall have occurred and the Company or the Guarantor (or any of their respective Affiliates) shall elect to pay the Final Rent Payment or Completion Costs Payment, as applicable, and not to purchase the Facility, and shall pay the Final Rent Payment or Completion Costs Payment, as applicable, all amounts received by the Lessor pursuant to or in connection with the Lease, this Agreement or any other Operative Document or as proceeds of the disposition of the Facility shall be applied by the Lessor to pay the Unrecovered Lessor Investments and all accrued Yield (which shall be distributed ratably to the Funding Parties in accordance with their respective Ownership Interests), and to the Persons entitled thereto pursuant to the Operative Documents all Supplemental Rent and other amounts owing under this Agreement in the order specified in Section 3.05(b).

        Section 3.02 Redemptions.

        (a) On or after the third anniversary of the Completion Date, the Company may from time to time, upon at least 2 Business Days' notice to the Lessor which specifies the proposed date (which shall be a Business Day) and aggregate principal amount of the redemption and the Lessor Investments to be redeemed, and if such notice is given the Company shall, as specified in such notice, redeem no later than 12:00 noon, Atlanta, Georgia time, on such date, and the amount of such redemption payment, when received by the Lessor, shall be applied to redeem, the outstanding principal amounts of the Lessor Investments comprising the same Lessor Advance and related Lease Participant Advances in whole or ratably in part, together with accrued Yield to the date of such redemption on the amount redeemed (and the Lessor shall, on the same Business Day on which received, distribute to the Lease Participants which made Lease Participant Advances with respect thereto their respective Percentage Share; provided, however, that (i) each partial redemption shall be in an aggregate principal amount not less than $1,000,000 or an integral multiple of $500,000 in excess thereof, and (ii) in the event of any such redemption of Lessor Investments on any day other than the last day of the Yield Period for such Lessor Investments, the Company, as agent for the Lessor, shall be obligated to reimburse the Funding Parties in respect thereof pursuant to, and to the extent required by, Section 5.05. Any redemption pursuant to this Section 3.02 shall be allocated among the Lessor Investments to achieve or maintain the Required Percentage Composition; or if, after giving effect to such redemption, it is not possible to achieve or maintain such ratio, then such redemption will be allocated among the Lessor Investments in the manner which most closely approximates, but does not violate, the Required Percentage Composition. In no event shall any redemption be allowed which results in the Required Percentage Composition being violated. Within 5 Business Days after its receipt of such redemption amount, the Lessor, at the expense of the Company, shall execute and deliver to each of the Lease Participants a new Ownership Certificate, giving effect to such redemption and dated the date thereof.

        (b) On each date on which the Lessor Investment Commitments and Lease Participant Commitments are reduced pursuant to Section 2.03, the Company, as Acquisition/Construction Agent for the Lessor, shall redeem such principal amount of the outstanding Lessor Investments (together with Yield accrued thereon), as may be necessary so that after such payment the aggregate unpaid principal amount of the Lessor Investments does not exceed the sum of the Lessor Commitments and Lease Participant Commitments, as then reduced (and the Lessor shall distribute to the Lease Participants their respective Percentage Share thereof).

        Section 3.03 Yield on Lessor Investments; Overdue Amounts.

        (a) All Yield shall accrue and be payable at a rate per annum equal to the Adjusted LIBO Rate for the applicable Yield Period plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate. However, the Lessor and the Company have requested that Yield accruing during the Construction Term be capitalized, and the Funding Parties have agreed thereto. Therefore, all Yield accruing during the Construction Term shall be paid by the deemed making of Lessor Advances and Lease Participant Advances pursuant to Section 2.01(d).

        (b) Notwithstanding the foregoing, the Company, by the payment of additional Rent under the Lease, or otherwise, shall pay or cause to be paid to the Lessor, at the applicable Default Rate on the amount of Lessor Investments, Yield, Supplemental Rent or other amounts owing by the Lessee under this Agreement or any other Operative Document which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the due date thereof until the same is paid in full, in each case to the maximum extent permitted by applicable law (and the Lessor shall, on the day of receipt, if received prior to 2:00 p.m., Atlanta, Georgia time, or on the next succeeding Business Day, if received at or after 2:00 p.m., Atlanta, Georgia time, distribute to the Lease Participants their respective Percentage Share thereof, or to such other Person as shall be entitled thereto pursuant to the Operative Documents).

        (c) Accrued Yield on the Lessor Investments shall be payable on the last day of each Yield Period therefor (subject to the provisions of Sections 2.01(d) and 3.03(a) with respect to Yield accruing during the Construction Term) and on the Maturity Date. Yield payable at the Default Rate shall be payable from time to time on demand.

        (d) Promptly after the determination of the rate of any Yield provided for herein or any change therein, the Lessor shall notify the Lease Participants which have an Ownership Interest in such Yield and the Company of such determination or change.

        Section 3.04 Payments by Lessor. All moneys received by the Lessor pursuant to the Lease including, but not limited to, payments of Basic Rent, Supplemental Rent, the Termination Value or the Final Rent Payment or the Completion Cost Payment, as applicable, except for amounts allocable to fees and expenses of the Lessor pursuant to the Operative Documents and amounts comprising Supplemental Rent payable to third Persons, if any, shall be paid to the Funding Parties in accordance with, and to pay amounts owing pursuant to, the terms of this Agreement, including without limitation Section 4.01 and, if applicable, Section 3.05.

        Section 3.05 Applications of Payments and Proceeds.

        (a) Upon the occurrence of a Cancellation Event or a Termination Event (and the Company elects pursuant to Section 15(a) or (b) of the Lease to exercise its option to purchase the Facility for the Purchase Price or elects pursuant to Section 15(b)(ii)(B) of the Lease to pay the Termination Value), or if the Company otherwise elects to acquire the Facility for the Purchase Price, the Purchase Price or the Termination Value, as the case may be, and all other monies received by the Lessor pursuant to or in connection with the Lease, this Agreement or any other Operative Document, including, without limitation, the proceeds of any insurance or condemnation awards received as a result of any Casualty Occurrence or Loss Event, shall be applied to Lessor Investments (and the Ownership Interests of the Lease Participants) in the following order:

         i. first, to pay or reimburse all Supplemental Rent and other costs and expenses, including, without limitation, those in connection with Indemnified Risks, increased costs, or Taxes, then due and owing to the Funding Parties under the other Operative Documents, pro rata to each such Person (collectively, the "Other Transaction Expenses");

        ii. second, to pay all accrued, unpaid Yield on the Lessor Investments, to the Lessor (who shall distribute to each of the Lease Participants its Percentage Share thereof); and

        iii. third, to pay the Unrecovered Lessor Investments to the Lessor (who shall distribute to each of the Lease Participants its Percentage Share thereof).

Any monies remaining after payment in full of the foregoing amounts and all other amounts owing by the Company from time to time under the Operative Documents shall be paid to the Lessor for distribution to the Company.

        (b) If (i) a Termination Event has occurred, (ii) a Cancellation Event does not exist and (iii) the Company has not elected to purchase the Facility for the Purchase Price, and has paid the Final Rent Payment or the Completion Costs Payment, as applicable pursuant to Section 15(a) of the Lease, then the Final Rent Payment or the Completion Costs Payment, as applicable, shall be applied as follows:

        i. first, to pay or reimburse all Other Transaction Expenses;

        ii. second, to pay all accrued, unpaid Yield on the Lessor Investments to the Lessor (who shall distribute to each of the Lease Participants its Percentage Share thereof);

        iii. third, to pay the Unrecovered Lessor Investments, up to the Recourse Amount, to the Lessor (who shall distribute to each of the Lease Participants its Percentage Share thereof); and

        iv. fourth, the balance, if any, to be applied as provided in the following provisions of this paragraph (b).

In such circumstances, all other monies received by the Lessor pursuant to or in connection with the Lease, this Agreement or any other Operative Document or as proceeds of disposition of the Facility shall be applied as follows:

        (1) first, to pay to the Lessor (who shall distribute to each of the Lease Participants its Percentage Share thereof) the remaining Unrecovered Lessor Investments attributable to the Non-Recourse Amount, excluding the portion thereof attributable to the Lessor Equity Interest;

        (2) second, to pay to the Lessor, for its own account, the remaining Unrecovered Lessor Investments attributable to the Lessor Equity Interest; and

        (3) third, to reimburse the Company for Support Expenses incurred by it under the Agency Agreement.

Any monies remaining after payment in full of the foregoing amounts and all other amounts owing by the Company from time to time under the Operative Documents shall be paid to the Lessor for distribution to the Company.

        (c) If the circumstances described in Section 3.05(b)(i) and (ii) exist, but the Company has either failed to elect to exercise its option to purchase the Facility, failed to make the Final Rent Payment or Completion Costs Payment, as applicable, and/or failed to furnish to the Lessor a satisfactory update of the environmental reports initially furnished with respect to the Facility, then the Lessor will be entitled to exercise foreclosure remedies set forth in Section 26 of the Lease and all moneys received by the Lessor from the disposition of the Facility or other foreclosure action, net of enforcement costs, will be applied (i) first to payment of the Unrecovered Lessor Investments attributable to the Non-Recourse Amount, excluding the portion thereof attributable to the Lessor Equity Interest (which payment shall be distributed to each of the Lease Participants according to its Percentage Share thereof), (ii) next to the remaining Unrecovered Lessor Investments attributable to the Lessor Equity Interest (which shall be retained by the Lessor), and (iii) any remaining net proceeds shall be applied in accordance with 3.05(a) in the same manner as if the Final Rent Payment or Completion Costs Payment had been made, and in such circumstances, the Company shall remain liable for any deficiency in such remaining net proceeds to pay such amounts described in Section 3.05(a).

ARTICLE IV.

Payments; Computations; Etc.

        Section 4.01 Payments. The Company (or, in the case of the principal amount of the Lessor Investments attributable to the Non-Recourse Amount in the circumstances described in Section 3.05(b) and if the Company shall have paid the Final Rent Payment or the Completion Costs Payment, as applicable, the Lessor), shall make each payment under this Agreement, whether the amount so paid is owing to any or all of the Funding Parties, not later than 12:00 noon, Atlanta, Georgia time, without setoff, counterclaim, or any other deduction whatsoever, on the day when due in Dollars to the Lessor at its address at 191 Peachtree Street, N. E., Atlanta, Georgia, 30303, Attention: Syndication Services, Reference: Protective Life Insurance Company Facility, or at such other location designated by notice to the Company from the Lessor, in same day funds, except as otherwise expressly provided in Section 2.01(d)(i). The Lessor will promptly thereafter (on the same day received, if received by 2:00 p.m., Atlanta, Georgia, time) cause to be distributed to the other Funding Parties like funds relating to the payment of principal or Yield ratably (other than amounts payable pursuant to Section 4.06 or 11.03 or Article V) according to the respective amounts of such principal or Yield then due and owing to the Funding Parties, to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 11.06(d), from and after the effective date specified in such Assignment and Acceptance, the Lessor shall make all payments under this Agreement in respect of the interest assigned thereby to the assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. Any payments and redemptions received hereunder, other than after the occurrence and during the continuation of a Cancellation Event or Termination Event, shall be applied in accordance with the purpose for which such payment or redemption is made. All payments by the Company under any Operative Document shall be made in the manner specified in this Article IV.

        Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each Lessor Advance from the Lessor and Lease Participant Advance from the Lease Participants shall be made from them, each payment of Commitment Supplemental Rent with respect to unused portions of the Lessor Investment Commitments and Lease Participant Commitments under Section 2.04(a) shall be made to the account of the Lessor and the Lease Participants, and each termination or reduction of the Lessor Investment Commitment and Lease Participant Commitments under Section 2.03 shall be applied to the Lessor Investment Commitment and Lease Participant Commitments of each Lease Participant, pro rata according to its Percentage Share; (b) each payment of Lessor Investments received by the Lessor shall be retained by the Lessor and distributed to the Lease Participants pro rata in accordance with their respective Ownership Interests; (c) each payment of Yield received by the Lessor shall be retained by the Lessor and distributed to the Lease Participants pro rata in accordance with their respective Ownership Interests; and (d) each amount received by a setoff by any Funding Party pursuant to Section 11.05 shall be shared with all other Funding Parties so that each Funding Party receives its Percentage Share thereof.

        Section 4.03 Computations. All computations of Yield shall be made by the Lessor, on the basis of a year of 360 days (or, in the case of computations based on the Prime Rate, 365/366 days), in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such Yield is payable. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time in such case shall be included in the computation of payment of Yield; provided, however, that if such extension would cause payment of Yield on or amount of any Lessor Investment to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

        Section 4.04 Non-receipt of Funds by the Lessor. Unless the Lessor shall have received notice from the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, prior to the date on which any payment is due to the Funding Parties hereunder that the Company will not make such payment in full, the Lessor may assume that the Company, as Acquisition/Construction Agent for the Lessor, or a Lessee under the Lease, has made such payment in full to the Lessor on such date and the Lessor may, in reliance upon such assumption, but shall not be obligated to, cause to be distributed to each Lease Participant on such due date an amount equal to the amount then due such Lease Participant. If and to the extent the Lessor or the Company shall not have so made such payment in full to the Lessor, each Lease Participant shall repay to the Lessor forthwith on demand such amount distributed to such Lease Participant together with interest thereon, for each day from the date such amount is distributed to such Lease Participant until the date such Lease Participant repays such amount to the Lessor, at a rate equal to (i) until the Business Day after the Business Day on which such demand is made, the Federal Funds Rate for such day and (ii) thereafter 50 basis points above the Federal Funds Rate for such day.

        Section 4.05 Sharing of Payments. If any Funding Party shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of its Ownership Interests (other than pursuant to Section 4.06 or 11.03 or Article V) in excess of its ratable share of payments then due and owing to it in accordance with the payment orders specified in Section 3.05 or Section 4.02 on account of the Lessor Investments obtained by all the Funding Parties, such Funding Party shall forthwith purchase from the other Funding Parties participations in such Ownership Interests of the other Funding Parties, as shall be necessary to cause such purchasing Funding Party to share the excess payment ratably with each of them (or, if necessary, to cause such purchasing Funding Party to assume the payment priority specified in Section 3.05), provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Funding Party, such purchase from each Funding Party shall be rescinded and each Funding Party shall repay to the purchasing Funding Party the purchase price to the extent of such recovery together with an amount equal to such Funding Party’s Percentage share. The Company agrees that any Funding Party so purchasing a participation from another Funding Party pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including any right of set-off) with respect to such participation as fully as if such Funding Party were the direct creditor of the Company in the amount of such participation.

        Section 4.06 Taxes.

        (a) Any and all payments of principal, Yield and all other amounts to be paid to the Lessor, for itself or for distribution to any Lease Participant by the Company, for its own account or as Acquisition/Construction Agent for the Lessor hereunder, or as Lessee under the Lease, or any other Operative Document to each Indemnified Party, shall be made, in accordance with Section 4.01, without deduction for, and free from, any tax, imposts, levies, duties, deductions, or withholdings of any nature now or at any time hereafter imposed by any Governmental Authority or by any taxing authority thereof or therein, excluding in the case of each Funding Party, taxes imposed on or measured by the net income or net worth of any Funding Party, and franchise taxes imposed on such Funding Party (all such non-excluded taxes, imposts, levies, duties, deductions or withholdings of any nature being "Taxes"). In the event that the Lessor or Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, is required by applicable law to make any such withholding or deduction of Taxes with respect to any Ownership Interest or other amount, the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, shall pay such deduction or withholding to the applicable taxing authority, shall promptly furnish to any Funding Party or other Person in respect of which such deduction or withholding is made all receipts and other documents evidencing such payment and shall pay to such Funding Party or other Person additional amounts as may be necessary in order that the amount received by such Funding Party or other Person after the required deduction or withholding shall equal the amount such Funding Party would have received had no such deduction or withholding been made.

        (b) Each Lease Participant that is not chartered and organized under the laws of the United States of America or a state thereof (each a "Non-U.S. Domestic Participant") agrees, as soon as practicable after receipt by it of a request by the Lessor or the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, to do so, to file all appropriate forms and take other appropriate action to obtain a certificate or other appropriate document from the appropriate governmental authority in the jurisdiction imposing the relevant taxes, establishing that it is entitled to receive payments of principal and Yield under or in respect of this Agreement and its Ownership Interests without deduction and free from withholding of any Taxes imposed by such jurisdiction; provided, that, if it is unable, by virtue of any applicable law, rule or regulation, to establish such exemption or to file such forms and, in any event, during such period of time as such request for exemption is pending, the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, shall nonetheless remain obligated under the terms of the immediately preceding paragraph. Without limiting the foregoing, each Non-U.S. Domestic Participant agrees to deliver to the Lessor and to the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, promptly upon any request therefor from time to time, such forms, documents and other information as may be required by applicable law from time to time to establish that payment to such Non-U.S. Domestic Participant hereunder or with respect to its Ownership Interests or under the Guaranty are exempt from Taxes. Without limiting the generality of the foregoing, each Non-U.S. Domestic Participant agrees, on the date of its execution of this Agreement (or, in the case of an Eligible Assignee, on the date on which such Eligible Assignee becomes a party to this Agreement), to deliver in duplicate to the Lessor and to the Company, as Acquisition/Construction Agent for the Lessor, accurate and duly completed and executed Internal Revenue Service Form 4224 or 1001 (as applicable), together with Internal Revenue Service Forms W-8 or W-9, as appropriate, establishing that such Non-U.S. Domestic Participant is entitled to a complete exemption from all Taxes imposed by the federal government of the United States by way of withholding, including without limitation, all backup withholding ("U.S. Withholding Taxes"). Thereafter, from time to time (i) upon any change by a Non-U.S. Domestic Participant of its Applicable Funding Office, (ii) before or promptly after any event occurs (including, without limitation, the passing of time) requiring a change in or update of the most recent Form 4224 or 1001 previously delivered by such Non-U.S. Domestic Participant, or (iii) upon the reasonable request of the Lessor or the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, such Non-U.S. Domestic Participant shall deliver in duplicate to the Lessor and to the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, accurate and duly completed and executed Form 4224 or 1001 (as applicable) (together with Forms W-8 or W-9, as aforesaid) in replacement of the forms previously delivered by such Non-U.S. Domestic Participant, establishing that such Non- U.S. Domestic Participant is entitled to an exemption in whole or in part from all U.S. Withholding Taxes except to the extent that a change in law has rendered all such forms inapplicable to such Non-U.S. Domestic Participant.

        (c) If the Internal Revenue Service or any other taxation authority in the United States or in any other jurisdiction successfully asserts a claim that such Non-U.S. Domestic Participant, the Lessor or the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, did not properly withhold tax from amounts paid to or for the account of any Non-U.S. Domestic Participant or its participant (because the appropriate form was not properly executed, or because such Non-U.S. Domestic Participant failed to notify the Lessor, Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, of a change in circumstances which rendered the exemption from (or reduction in) U.S. Withholding Taxes ineffective), such Non-U.S. Domestic Participant shall indemnify the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, fully for all amounts paid, directly or indirectly, by the Lessor or the Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, as applicable, as tax or otherwise, including, without limitation, penalties and interest.

        (d) In the event any Funding Party receives a refund from the Governmental Authority to which such Taxes were paid of any Taxes paid by the Company pursuant to this Section 4.06, it will pay to the Company the amount of such refund promptly upon receipt thereof; provided, however, if at any time thereafter it is required to return such refund, the Company shall promptly repay to it the amount of such refund.

        (e) Nothing in this Section shall require any Funding Party to disclose any information about its tax affairs or interfere with, limit or abridge the right of any Funding Party to arrange its tax affairs in any manner in which it desires.

        (f) Without prejudice to the survival of any other agreement of the Company hereunder, the agreements and obligations of the Company and the Funding Parties contained in this Section 4.06 shall be applicable with respect to any Funding Party, Eligible Assignee or other transferee, and any calculations required by such provisions (i) shall be made based upon the circumstances of such Funding Party, Eligible Assignee or other transferee (subject to Section 11.06(j)), and (ii) constitute a continuing agreement and shall survive for a period of 2 years after the termination of this Agreement and the payment in full or cancellation of the Lessor Investment Commitment and the Lease Participation Commitments.

ARTICLE V.

Yield Protection and Illegality

        Section 5.01 Basis for Determining Yield Rate Inadequate or Unfair. The Lessor shall give prompt notice to the Company and the Lease Participants of the applicable Yield determined by the Lessor for purposes of Sections 3.03(a) and (b). If on or prior to the first day of any Yield Period:

        (a) the Lessor determines that deposits in Dollars (in the applicable amounts), are not being offered in the relevant market for such Yield Period, or

        (b) the Majority Funding Parties determine and give notice to the Lessor that the rates or yield determined on the basis of the LIBO Rate for any Yield Period for Lessor Advances or Lease Participant Advances will not adequately and fairly reflect the cost to Majority Funding Parties of making, funding or maintaining their respective Lessor Advances or Lease Participant Advances for such Yield Period, the Lessor shall forthwith so notify the Company and the Lease Participants, whereupon,

        (i) in the case of such notice from the Majority Funding Parties, each such Lessor Advance and Lease Participant Advance will automatically, on the last day of the then existing Yield Period, accrue Yield at a rate based upon the Base Rate plus the Applicable Margin as set forth in the Pricing Schedule.

        (ii) the obligation of the Majority Funding Parties to make Lessor Advances or Lease Participant Advances, as applicable, at the Adjusted LIBO Rate shall be suspended until the Lessor shall notify the Company and the Lease Participants that the circumstances causing such suspension no longer exist, and

        (iii) unless the Company notifies the Lessor at least 2 Business Days before the date of any Lessor Advance for which Advance Notice has previously been given that it elects not to effect a Lessor Advance, or require such Lessor Advance, as applicable, on such date, such Lessor Advance (and the related Lease Participant Advances) shall instead be made at a Yield based upon the Base Rate plus the Applicable Margin as set forth in the Pricing Schedule. Upon the written request of the Company, the Lessor shall negotiate with the Company and the relevant Lease Participants for a reasonable period of time, as determined in the Lessor's discretion, to develop a substitute interest rate basis hereunder; provided, however, (x) the Lessor, the Lease Participants and the Company make no representation, warranty or covenant that any such agreement will be made, and (y) any relevant Lease Advances and related Lease Participant Advances shall continue to have Yield accrue thereon at the Base Rate during the continuance of any such negotiations and thereafter should no alternate interest rate be agreed to by the necessary parties.

        Section 5.02 Illegality. If, after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof (any such agency being referred to as a “Banking Authority” and any such event being referred to as a “Change of Law”), or compliance by any Funding Party (or its Applicable Funding Office) with any request or directive (whether or not having the force of law) of any Banking Authority shall make it unlawful or impossible for any Funding Party (or its Applicable Funding Office) to make, maintain or fund its Lessor Advances or Lease Participant Advances based upon the Adjusted LIBO Rate and such Funding Party (if not the Lessor) shall so notify the Lessor, the Lessor shall forthwith give notice thereof to the other Funding Parties and to the Company and the Guarantor, whereupon until such Funding Party notifies the Lessor (if it is not such Funding Party), the other Funding Parties, the Company and the Guarantor that the circumstances giving rise to such suspension no longer exist, the obligation of such Funding Party to make or maintain Lessor Advances or Lease Participant Advances based upon the Adjusted LIBO Rate shall be suspended. Before giving any notice to the Lessor (or, in the case of the Lessor as a Funding Party, to the Company) pursuant to this Section, such Funding Party shall designate a different Applicable Funding Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Funding Party, be otherwise disadvantageous to such Funding Party. If such Funding Party shall determine that it may not lawfully continue to maintain and fund any of its outstanding Lessor Advances or Lease Participant Advances to maturity and shall so specify in such notice, the Company shall immediately redeem the full amount of the Lessor Advances (if such Funding Party is the Lessor) or an outstanding principal amount of the Lessor Advances in an amount equal to the Lease Participant Advances of such Funding Party other than the Lessor to the Lessor (which shall distribute such amount to such Funding Party), together with accrued Yield thereon. Provided that no Default or Event of Default shall then exist, concurrently with redeeming such Lessor Advances or a portion thereof, the Company shall obtain as a Lessor Advance (and if such Funding Party is not the Lessor, such Funding Party shall be deemed to have made a Lease Participant Advance), but without any requirement for the satisfaction of any of the other conditions precedent set forth herein, in an equal principal amount at a rate based upon the Base Rate plus the Applicable Margin, if any, as set forth in the Pricing Schedule, and the Lessor and each Lease Participant agrees to make such a Lessor Advance or Lease Participant Advance, as applicable, on the foregoing terms. At any time within 90 days after the giving of a notice by any Lease Participant pursuant to this Section 5.02, so long as no Event of Default shall be in existence, and so long as the Lessor has granted its consent (which it may grant or withhold in its sole and absolute discretion), the Company may require by written notice to that Lease Participant that (a) it assign its Lease Participant Commitment to another Lease Participant or to a bank or other financial institution selected by the Company which is willing to accept such assignment or (b) it surrender its Lease Participant Commitment and terminate its rights and obligations as a Lease Participant hereunder, concurrently with a reduction by the Company of the Lessor Commitment and the Lease Participant Commitments by an amount equal to the Lease Participant Commitment held by that Lease Participant.

        Section 5.03 Increased Cost and Reduced Return.

        (a) If after the date hereof, a Change of Law or compliance by any Funding Party (or its Applicable Funding Office) with any request or directive (whether or not having the force of law) of any Banking Authority:

        (i) shall subject any Funding Party (or its Applicable Funding Office) to any tax, duty or other charge on its Lessor Advances or Lease Participant Advances, or maintain its Lessor Advances or Lease Participant Advances or shall change the basis of taxation of payments to any Funding Party (or its Applicable Funding Office) of the principal amount of or interest on its Lessor Advances or Lease Participant Advances, or Yield thereon or any other amounts due under this Agreement or any other Operative Document in respect of its Lessor Advances or Lease Participant Advances (except for changes in the rate of any tax based on the net income, net worth or gross receipts of such Funding Party or its Applicable Funding Office); or

        (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding any such requirement included in an applicable Euro-Dollar Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Funding Party (or its Applicable Funding Office); or

        (iii) shall impose on any Funding Party (or its Applicable Funding Office) or on the United States market or the London interbank market any other condition affecting its Lessor Advances or Lease Participant Advances, or obligation to make or maintain Lessor Advances or Lease Participant Advances;

and the result of any of the foregoing is to increase the cost to such Funding Party (or its Applicable Funding Office) of making or maintaining any Lessor Advances or Lease Participant Advances, or to reduce the amount of any sum received or receivable by such Funding Party (or its Applicable Funding Office) under this Agreement or any other Operative Document with respect thereto, by an amount deemed by such Funding Party to be material, then, within fifteen (15) days after demand by such Funding Party (with a copy to the Lessor, if it is not such Funding Party), the Company shall pay to such Funding Party such additional amount or amounts as will compensate such Funding Party for such increased cost or reduction; provided, however, that no such amount may be claimed by any Funding Party which is attributable to periods prior to the date which is 180 days preceding the date on which the officer of the Funding Party having primary responsibility for asset-liability management shall have obtained actual knowledge of such Change of Law or request or directive. At any time within 90 days after payment by the Company of any material amount to any Lease Participant or Lease Participants pursuant to paragraph (a) or (b) of this Section, so long as no Event of Default shall be in existence, and so long as the Lessor has granted its consent (which it may grant or withhold in its sole and absolute discretion), the Company may require by written notice to each such Lease Participant that (i) it assign its Lease Participant Commitment to another Lease Participant or to a bank or other financial institution selected by the Company which is willing to accept such assignment or (ii) it surrender its Lease Participant Commitment and terminate its rights and obligations as a Lease Participant hereunder, concurrently with a reduction by the Company of the Lessor Commitment by an amount equal to the Lease Participant Commitment held by that Lease Participant.

        (b) If any Funding Party shall have determined that after the date hereof the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or official administration thereof, or compliance by any Funding Party (or its Applicable Funding Office) or any Person controlling such Funding Party with any request or directive regarding capital adequacy (whether or not having the force of law) of any Banking Authority, has or would have the effect of reducing the rate of return on such Funding Party's or such controlling Person's capital as a consequence of its obligations hereunder to a level below that which such Funding Party or such controlling Person could have achieved but for such adoption, change or compliance (taking into consideration such Funding Party's or such controlling Person's policies with respect to capital adequacy) by an amount deemed by such Funding Party or such controlling Person to be material, then from time to time, within 15 days after demand by such Funding Party or such controlling Person, the Company shall pay to such Funding Party such additional amount or amounts as will compensate such Funding Party or such controlling Person for such reduction, subject to the proviso at the end of Section 5.03(a).

        (c) Each Funding Party will promptly notify the Lessor (if such Funding Party is a Lease Participant) and the Company of any event of which its officer having primary responsibility for asset-liability management has knowledge, which occurs or is expected to occur after the date hereof, which will entitle such Funding Party to compensation pursuant to and subject to the limitations contained in this Section and will designate a different Applicable Funding Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Funding Party, be otherwise materially disadvantageous to such Funding Party. A certificate of any Funding Party claiming compensation under this Section and setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder shall be presumed to be correct in the absence of manifest error. In determining such amount, such Funding Party may use any reasonable averaging and attribution methods. Nothing in this Section shall require any Funding Party to disclose any information about its tax affairs or interfere with, limit or abridge the right of any Funding Party to arrange its tax affairs in any manner it desires, subject to Section 11.16(b).

        (d) The provisions of this Section 5.03 shall (i) be applicable with respect to any Funding Party, assignee or other transferee, and any calculations required by such provisions shall be made based upon the circumstances of such Funding Party, assignee or other transferee and (ii) constitute a continuing agreement and shall survive for a period of one year after the termination of this Agreement and the redemption in full of the Lessor Advances and Lease Participant Advances.

        Section 5.04 Base Rate Substituted for Adjusted LIBO Rate. If (i) the obligation of any Funding Party to make or maintain Lessor Advances or Lease Participant Advances has been suspended pursuant to Section 5.02 or (ii) any Funding Party has demanded compensation under Section 5.03, and the Company shall, by at least 5 Business Days’ prior notice to such Funding Party, with a copy to the Lessor (if it is not such Funding Party), have elected that the provisions of this Section shall apply to such Funding Party, then, unless and until such Funding Party notifies the Lessor (if it is not such Funding Party) and the Company that the circumstances giving rise to such suspension or demand for compensation no longer apply:

        (a) all Lessor Advances or Lease Participant Advances that would otherwise be made or maintained by such Funding Party (and Lessor Advances related thereto, if such Funding Party is a Lease Participant) based upon the Adjusted LIBO Rate shall be made or, from the beginning of the next Yield Period therefor, be maintained instead based upon the Base Rate, plus the Applicable Margin (in all cases Yield and principal or other amounts payable on such Lessor Advances and/or Lease Participant Advances shall be payable contemporaneously with the related or comparable amount payable in respect of the other Funding Parties), and

        (b) after each of the Lessor Advances and/or Lease Participant Advances made or maintained based upon the Adjusted LIBO Rate has been repaid, all payments of principal that would otherwise be applied to redeem such Lessor Advances and/or Lease Participant Advances shall be applied to redeem Lessor Advances and/or Lease Participant Advances made or maintained based upon the Base Rate instead.

        Section 5.05 Compensation. Upon the request of any Funding Party, delivered to the Lessor (if it is not such Funding Party) and the Company, the Company shall pay to such Funding Party such amount or amounts as shall compensate such Funding Party for any loss, cost or expense incurred by such Funding Party as a result of:

        (a) any payment, prepayment or redemption (pursuant to Section 5.02 or otherwise) of a Lessor Advance or Lease Participant Advance on a date other than the last day of the Yield Period therefor; or

        (b) any failure by the Company, as Acquisition/Construction Agent for the Lessor, to obtain or take down (other than due to a refusal by the Lessor to fund under Section 2.02(a) notwithstanding satisfaction of the conditions set forth in Article VI) a Lessor Advance on the date specified therefor in the applicable Advance Notice delivered pursuant to Section 2.02(a), including any such failure resulting from the revocation of such Advance Notice.

        Section 5.06 Payments and Computations. Each determination by the Lessor of Yield, or by any Funding Party of an increased cost or increased capital or of illegality hereunder, shall be presumed to be correct and binding for all purposes (absent manifest error) if made reasonably and in good faith, subject to Section 5.03(c).

ARTICLE VI.

Conditions Precedent

        Section 6.01 Conditions Precedent to Effectiveness of this Agreement. This Agreement shall become effective when (i) it shall have been executed by the Lessor and the Company and any Lease Participants required by the Lessor as of the Closing Date and delivered to the office of the Lessor in Atlanta, Georgia, (ii) the Lessor either shall have been notified at its office in Atlanta, Georgia by each Lease Participant which it requires to be a Lease Participant as of the Closing Date that it has executed this Agreement or shall have received at its office in Atlanta, Georgia a counterpart of this Agreement executed by such Lease Participant, and (iii) the Lessor (or the Funding Parties, as specified below) shall have received at its office in Atlanta, Georgia the following, each being in form and substance satisfactory to the Lessor and (as to this Agreement and the opinions described below) in sufficient counterparts for each Lease Participant:

        (a) Certificates of Company and Guarantor. Certificates of the Secretary or Assistant Secretary of each of the Company and the Guarantor setting forth (i) resolutions of its board of directors authorizing the execution, delivery and performance of the obligations contained in this Agreement, with respect to the Company, and the other Operative Documents to which it is a party, with respect to the Company and the Guarantor, (ii) the officers of the Company and the Guarantor specified in such Secretary's Certificates that are authorized to sign this Agreement and the other Operative Documents to which the Company or the Guarantor is a party and, until replaced by another officer or officers duly authorized for that purpose, to act as its respective representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the Operative Documents to which it is a party and (iii) true and correct copies of the articles or certificate of incorporation and the bylaws of each of the Company and the Guarantor. The parties to this Agreement may conclusively rely on such certificate until the Lessor (who shall promptly notify all other parties) receives notice in writing from the Company or the Guarantor, as the case may be, to the contrary.

        (b) Opinion of Company's and Guarantor's Counsel. Favorable opinions of Sutherland, Asbill & Brennan LLP, special counsel to the Company and the Guarantor, Balch and Bingham LLP, special Alabama counsel to the Company and the Guarantor, and Deborah Long, Esq., General Counsel of the Company and the Guarantor, in the aggregate covering the matters addressed in Exhibit D, and as to such other matters as any Funding Party, through the Lessor, may reasonably request.

        (c) Execution and Delivery of Operative Documents. Each of the other Operative Documents, including the Guaranty, duly completed and executed in sufficient number of counterparts for recording where appropriate.

        (d) Recordation of Security Instruments. The Security Instruments (to the extent filing thereof is required for perfection or otherwise under applicable law) and all related financing statements and other requisite filing documents shall have been duly filed in the appropriate offices and, to the fullest extent allowed by applicable law, all costs and taxes associated with such filing shall have been paid or provided for by the Company.

        (e) Insurance Certification. The Lessor shall have received a certificate by a firm of independent insurance brokers or consultants chosen by the Company setting forth the insurance obtained, and to be obtained pursuant to the Lease, with respect to the Facility and the Company's operations with respect thereto.

        (f) Receipt of Facility Plan. The Lessor shall have received a copy of the Facility Plan as then in effect; provided, that the Lessor and the Lease Participants agree that the Facility Plan may be revised and finalized after the Closing Date to include changes to the plans and specifications, so long as (x) such changes will not cause the total Facility Cost to exceed $75,000,000, and (y) such final Facility Plan shall be furnished to the Lessor promptly after it is so revised and finalized.

        (g) Environmental Matters. The Funding Parties shall have received an Environmental Assessment on the Site, demonstrating to their satisfaction that there is no evidence of any hazardous or toxic material or substance which has been generated, treated, stored, released or disposed of on the Site, and that there is no evidence of any violation of any Environmental Requirement and no evidence of any Environmental Damages on or pertaining to the Facility, except as are specified on Schedule 7.01(n).

        (h) Soil Tests. The Lessor shall have received the Soil Test Reports.

        (i) Survey. The Lessor shall have received the Survey of the Site.

        (j) Appraisal. The Funding Parties shall have received an Approved Appraisal of the Property, which Approved Appraisal shall be in form and substance satisfactory to the Funding Parties, and shall indicate (i) the estimated fair market value of the Facility and (ii) the projected fair market value of the Facility as of (A) the expiration of the Construction Term and (B) the end of each Rent Payment Date during the Basic Term (in each case after giving effect to the proposed Improvements to be renovated or constructed on the Site in accordance with the Plan).

        (k) Title Insurance. A title insurance company acceptable to the Lessor in its reasonable discretion shall have issued, or provided the Lessor with evidence satisfactory to the Lessor that such title insurance company is irrevocably obligated to issue immediately after closing of the acquisition of the leasehold interest in the Site by the Lessor pursuant to the Ground Lease, an owner's title policy issued to the Lessor insuring the leasehold interest of the Lessor in the Site and, in the event that the Lease is ever deemed to be a mortgage, as mortgagee of the Facility under the Lease.

        (l) Other. Such other documents as the Lessor or any Lease Participant or special counsel to the Lessor may reasonably request.

        Section 6.02 Initial and Subsequent Advances. The obligation of the Lessor to make the Initial Advance (and each Lease Participant to make the related Lease Participant Advances) and each subsequent Lessor Advance (and related Lease Participation Advance) and to continue each Lessor Advance (and related Lease Participation Advance) pursuant to this Agreement is subject to the following further conditions precedent:

        (a) Receipt of Advance Notice. The Lessor shall have received Advance Notice pursuant to a funding request with regard to the Initial Advance, and thereafter, each Lessor Advance, containing the information required by Section 2.02, which shall be true and correct and shall be duly and properly executed and completed by the Company as Acquisition/Construction Agent for the Lessor.

        (b) No Default. The fact that immediately before and after such Lessor Advance, no Default or Event of Default shall have occurred and be continuing.

        (c) Accuracy of Representations, etc. The representations and warranties of the Company contained in this Agreement, and the representations and warranties of the Company and the Guarantor contained in any other Operative Document, are true and correct in all material respects on and as of the date of such Lessor Advance (except for any representations which were correct on the date of this Agreement but are not correct on the date of any Lessor Advance because of a change permitted by the terms of this Agreement or any other Operative Document).

        (d) Title. The Lessor shall have good and marketable title to the Facility; and the Lessor shall have received executed copies of all Related Contracts requested by it.

        (e) Receipt of Applicable Permits. All Permits that are or will become Applicable Permits shall have been obtained, except Applicable Permits customarily obtained or which are permitted by Governmental Requirements to be obtained after the date of the requested Lessor Advance (in which case the Company, having completed all appropriate due diligence in connection therewith, shall have no reason to believe that such Permits will not be granted in the usual course of business prior to the date that such Permits are required by Governmental Requirements). All such obtained Permits shall be in proper form, in full force and effect and not subject to any appeal or other unsatisfied contest that may allow modification or revocation thereof.

        (f) Casualties. The Facility shall not have suffered (i) a Loss Event or (ii) a Casualty Occurrence other than a Casualty Occurrence for which a plan reasonably acceptable to the Lessor for replacing, or causing to be replaced, the portions of the Facility that are the subject of such Casualty Occurrence has been provided to the Lessor.

        (g) No Material Adverse Change or Effect. No material adverse change shall have occurred in the financial condition of the Guarantor and the Consolidated Subsidiaries on a consolidated basis since the date of the most recent Fiscal Quarter for which a financial statement of the Guarantor was delivered to the Funding Parties, and no event, act, condition or occurrence shall exist or have occurred that has had, or would reasonably be expected to have, a Material Adverse Effect.

        (h) Taxes, Filings, Recordings. All filings or recordings reasonably considered necessary by the Lessor or any Lease Participant have been completed and all taxes and fees in connection therewith, and all Impositions with respect to the Facility that are then due and payable, shall have been paid by the Company.

        (i) Additional Condition for Certain Initial Funding. With respect to the portion of the Site described in Exhibit A as the "Annex Parcel", the initial Lessor Advance (and related Lease Participation Advances) relating thereto, other than those for "soft costs" of the types included in Capitalized Expenses, shall be conditioned upon the Lessor's having received evidence reasonably satisfactory to the Lessor that all utility, storm drainage, sewer and fuel lines, facilities and/or related easements in favor of third parties have been relocated so as not to interfere in the Lessor's reasonable judgment with the location of the building and Improvements to be constructed on such Annex Parcel.

Each acceptance of a funding hereunder shall be deemed to be a representation and warranty by the Company on the date of such funding as to the facts specified in subsections (b), (c), (d), (e), (f), (g), and (h) of this Section 6.02.

        Section 6.03 Conditions Precedent for the Benefit of Funding Parties. All conditions precedent to the obligations of the Funding Parties to make any Lessor Advance or Lease Participation Advance are imposed hereby solely for the benefit of the Funding Parties, and no other Person may require satisfaction of any such condition precedent or be entitled to assume that the Funding Parties will refuse to make any Lessor Advance or Lease Participation Advance in the absence of strict compliance with such conditions precedent.

        Section 6.04 Closing. On the Closing Date (or in the case of clause (b), as soon thereafter as the applicable closing conditions shall have been satisfied), at such place as the parties hereto shall agree:

        (a) this Agreement and each of the Operative Documents shall be duly executed and delivered by the parties to such documents; and

        (b) subject to the satisfaction of the conditions precedent specified in Section 6.01 and Section 6.02 of this Agreement, the Lessor shall make the Initial Advance in the amounts set forth in the Advance Notice given by the Company, and the Lease Participants shall make related Lease Participant Advances, in immediately available funds to the account of the Lessor at such account of the Lessor as the Company, as Acquisition/Construction Agent for the Lessor, may direct.

ARTICLE VII.

Representations and Warranties

        Section 7.01 Company Representations and Warranties. The Company (and, by execution and delivery of the Guaranty, the Guarantor) represents and warrants to each Person who now is or hereafter becomes a party to this Agreement that:

        (a) Corporate Existence and Power. The Company and the Guarantor are corporations duly incorporated, validly existing and in good standing under the laws of the State of Tennessee and Delaware, respectively. The Company and the Guarantor are each duly qualified to transact business in every jurisdiction where failure to be qualified reasonably could be expected to have a Material Adverse Effect, and has all corporate powers and all government authorizations, licenses, consents and approvals required to engage in its business and operations as now conducted.

        (b) Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement and by the Guarantor of the Guaranty and the other Operative Documents to which each of them is a party (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of or filing with, any governmental body, agency or official, other than filings contemplated by the Operative Documents, (iv) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company and the Guarantor or any material agreement, judgment, injunction, order, decree or other instrument binding upon the Guarantor, the Company or any other Subsidiary and (v) do not result in the creation or imposition of any Lien on any asset of the Guarantor, the Company or any other Subsidiary or on the Facility, other than as contemplated by the Operative Documents.

        (c) Binding Effect. This Agreement and each of the other Operative Documents to which the Company or the Guarantor is a party constitutes a valid and binding agreement of the Company and/or the Guarantor, as applicable, enforceable in accordance with their respective terms, provided that the enforceability hereof and thereof is subject in each case to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditor's rights generally.

        (d) Financial Information.

        (i) The consolidated balance sheet of the Guarantor and the Consolidated Subsidiaries as of December 31, 1998, and the related consolidated statements of income, stockholders' equity and cash flows for the Fiscal Year then ended, reported on by PricewaterhouseCoopers LLP, copies of which have been delivered to the Funding Parties, fairly present in all material respects, in conformity with GAAP, the consolidated financial position of the Guarantor and the Consolidated Subsidiaries as of such date and the consolidated results of operations and cash flows for such Fiscal Year.

        (ii) Since December 31, 1998, there has been no event, act, condition or occurrence having a Material Adverse Effect.

        (e) No Litigation. Except as disclosed on Schedule 7.01(e), there is no action, suit or proceeding pending, or to the actual knowledge of the Company and the Guarantor, threatened in writing, against or affecting the Guarantor, the Company or any other Subsidiary before any court or arbitrator or any governmental body, agency or official which would reasonably be expected to have or cause a Material Adverse Effect or which in any manner draws into question the validity of or could reasonably be expected to impair the ability of the Company or the Guarantor to perform its obligations under this Agreement or any of the Operative Documents executed by the Company or the Guarantor.

        (f) Compliance with ERISA.

        Neither the Guarantor nor any member of the Controlled Group has incurred any withdrawal liability with respect to any Multiemployer Plan under Title IV of ERISA, and no such liability is expected to be incurred.

        (i) Neither the Guarantor nor any member of the Controlled Group is or has during the preceding 6 years been obligated to contribute to any Multiemployer Plan.

        (g) Compliance with Laws; Payment of Taxes. The Guarantor, the Company and each other Subsidiary is in compliance with all applicable laws, regulations and similar requirements of governmental authorities, except where such compliance is being contested in good faith through appropriate proceedings or where non-compliance would not have and could not reasonably be expected to cause a Material Adverse Effect. There have been filed on behalf of the Guarantor, the Company and each other Subsidiary, all Federal, state and material local income, excise, property and other tax returns which are required to be filed by them, except where the failure to file has not had, and would not reasonably be expected to have, a Material Adverse Effect, and all taxes due pursuant to such returns or pursuant to any assessment received by or on behalf of the Guarantor, the Company or any other Material Subsidiary have been paid or are being contested in good faith or, if unpaid and uncontested, would not have and could not reasonably be expected to cause a Material Adverse Effect. The charges, accruals and reserves on the books of the Guarantor, the Company and each other Material Subsidiary, in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. United States income tax returns of the Guarantor, the Company and each other Material Subsidiary which is a U.S. Person have been examined and closed through the Fiscal Year ended 1993.

        (h) Subsidiaries. Each of the Subsidiaries other than the Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where failure to be qualified or to have such powers, licenses, authorizations, consents or approvals would not have and could not reasonably be expected to cause a Material Adverse Effect. As of the date hereof, the Guarantor has no Subsidiaries except for the Company and those other Subsidiaries listed on Schedule 7.01(h), which accurately sets forth each such other Subsidiary's complete name and jurisdiction of incorporation.

        (i) Investment Company Act. Neither the Guarantor nor the Company is an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

        (j) Public Utility Holding Company Act. Neither the Guarantor, the Company nor any other Material Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.

        (k) Ownership of Property; Liens. The Guarantor, the Company and each of the other Consolidated Subsidiaries has title to or leasehold or other interests in its material properties sufficient for the conduct of its business, and none of such property is subject to any Lien except Permitted Liens.

        (l) No Default. Neither the Guarantor, the Company nor any of the other Subsidiaries is in default under or with respect to any agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound which has had or could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

        (m) Full Disclosure. To the best of the Company's knowledge, all written information heretofore furnished by the Guarantor, the Company, for itself and as Acquisition/Construction Agent for the Lessor, to the Lessor or any Lease Participant for purposes of or in connection with this Agreement, any of the Operative Documents, or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by the Guarantor or the Company, for itself and as Acquisition/Construction Agent for the Lessor, to the Lessor or any Lease Participant will be, true, accurate and complete in every material respect or based on reasonable estimates on the date as of which such information is stated or certified.

        (n) Environmental Matters.

        (i) Neither the Guarantor, the Company nor any other Subsidiary is subject to any Environmental Liability which has had or could reasonably be expected to have a Material Adverse Effect and neither the Guarantor, the Company nor any other Subsidiary has been designated as a potentially responsible party under CERCLA or under any state statute similar to CERCLA. None of the Properties of the Company, the Guarantor or any other Material Subsidiary has been identified on any current or proposed (i) National Priorities List under 40 C.F.R.ss.300, (ii) CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.

        (ii) No Hazardous Materials have been or are being used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed or otherwise handled at, or shipped or transported to or from the Facility or from any of the Properties owned by the Company, the Guarantor or any other Material Subsidiary or are otherwise present at, on, in or under the Facility or any of the Properties owned by the Guarantor, the Company or any other Material Subsidiary, or, to the best of the actual knowledge of the Company and the Guarantor, at or from any adjacent site or facility, except for Hazardous Materials, such as cleaning solvents, pesticides and other materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed, or otherwise handled in minimal amounts in the ordinary course of business in compliance with all applicable Environmental Requirements.

        (iii) The Guarantor, the Company and each of the other Material Subsidiaries has procured all Environmental Authorizations necessary for the conduct of its business, and is in compliance with all Environmental Requirements in connection with the operation of their respective Properties and their respective businesses, except where the failure to procure such authorizations or be in compliance has not had and could not reasonably be expected to have a Material Adverse Effect.

        (iv) Except to the extent specified on Schedule 7.01(n), (a) there are no Hazardous Materials on the Facility, other than minimal amounts of cleaning solvents, pesticides and other similar materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed, managed, or otherwise handled in the ordinary course of business or in management or maintenance of the Facility, (b) no Hazardous Material has migrated from the Facility to, upon, about or beneath other properties, (c) no Hazardous Material has migrated or threatened to migrate from other properties to, upon, about or beneath the Facility, and (d) all Hazardous Materials or solid wastes generated at the Facility have at all times been transported, treated and disposed of in compliance with Environmental Requirements.

        (v) Except to the extent specified on Schedule 7.01(n), (a) there is not, nor has there been, constructed, placed, deposited, stored, disposed of or located on the Facility any asbestos in any form, (b) no underground improvements, including treatment or storage tanks, pumps, or water wells, are or have been located on the Facility, (c) there are no polychlorinated biphenyls (PCBs) or transformers, capacitors, ballasts, machinery, fixtures or other equipment which contain PCBs constructed, placed, deposited, stored, disposed of or located on the Facility, (d) the uses and activities of, on or relating to the Facility have at all times complied in all material respects with all Environmental Requirements, and the use which the Guarantor and/or the Company, and their Affiliates, Subsidiaries and/or Sublessees make of the Facility will not result in the disposal or other Environmental Release of any Hazardous Material, (e) the Company or the Guarantor has obtained for the Facility all permits necessary under applicable Environmental Requirements, and (f) the Facility has not been, and is not now, listed on CERCLIS, the Environmental Protection Agency's list of violating facilities established pursuant to the Clean Water Act or the National Priorities List established pursuant to CERCLA.

        (vi) Except to the extent specified on Schedule 7.01(n), (a) there exists no judgment, decree, order, writ or injunction outstanding, or litigation, action, suit, claim (including citation or directive) or proceeding pending or, to the knowledge of the Guarantor, the Company or any of the other Material Subsidiaries, threatened, relating to the ownership, use, maintenance or operation of the Facility by any person or entity, or arising from any alleged violation of Environmental Requirements with respect to the Facility, or any alleged liability for Environmental Damages with respect to the Facility, (b) there are no existing facts or conditions that could give rise to any such violation or liabilities, (c) there have been no written or, to the knowledge of the Guarantor, the Company or any of the other Material Subsidiaries, oral reports of environmental investigations, audits, studies, tests, reviews or other analyses conducted by or which have been presented to or are in the possession of the Guarantor, the Company, or any of the other Material Subsidiaries, relating to the Facility, which have not been delivered to the Lessor and (d) neither the Guarantor or the Company nor, to the knowledge of the Guarantor and Company, any of the other Material Subsidiaries, any other person or entity has received any notice or other communication concerning any alleged violation of Environmental Requirements, whether or not corrected to the satisfaction of the appropriate authority, or any notice or other communication concerning alleged liability for Environmental Damages in connection with the Facility.

        (vii) From the date hereof, there shall be no actual or threatened Environmental Release of a Hazardous Material on or from the Facility caused by the Guarantor, the Company or any other Subsidiary.

        (viii) Except to the extent specified on Schedule 7.01(n), the Company: (a) has obtained all permits, licenses, and other authorizations which are required under Environmental Requirements in association with the Facility; and (b) will be in full compliance with all terms and conditions of such required permits, licenses, and other authorizations associated with the Facility.

        (ix) No permits or licenses are required to be obtained or maintained in connection with the use, operation, or ownership of the Facility arising from any portion of the Facility which constitute (i) "wetlands" under any Environmental Requirement, or (ii) habitat for species which is deemed to be endangered under any Environmental Requirement, nor are there any ongoing or continuing obligations regarding any portion of the Facility which constitute wetlands. There are no species of plants or animals located on any portion of the Facility which are classified as threatened or endangered under any Environmental Requirement. There have been no written or, to the knowledge of the Guarantor and the Company or any of the other Subsidiaries, oral wetlands delineations conducted by or which have been presented to or are in the possession of the Guarantor, the Company or any of the other Subsidiaries relating to the Facility which have not been delivered to the Lessor.

        (o) Capital Stock. All Capital Stock, debentures, bonds, notes and all other securities of the Guarantor and the Company presently issued and outstanding are validly and properly issued in accordance with all applicable laws in all material respects, including but not limited to, the "Blue Sky" laws of all applicable states and the federal securities laws, except where non-compliance has not had and would not reasonably be expected to have a Material Adverse Effect. At least a majority of the issued shares of capital stock of each of the other Consolidated Subsidiaries is owned by the Guarantor (directly or indirectly), except that only 49% of the issued shares of capital stock of Matrix Direct, Inc. is so owned.

        (p) Use of Proceeds; Margin Stock. The proceeds of the Lessor Advances are being used to finance or refinance the Facility Cost with respect to the Facility, including the enhancements and improvements to be made thereto and the design, renovation, construction and installation thereof. The Company is not engaged principally, or as one of its important activities, in the business of purchasing or carrying any Margin Stock, and no part of the proceeds of any Lessor Advance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or be used for any purpose which violates, or which is inconsistent with, the provisions of Regulations T, U or X.

        (q) Insolvency. After giving effect to the execution and delivery of the Lease, neither the Company nor the Guarantor will be "insolvent" within the meaning of such term as used in O.C.G.A.ss.18-2-22, as defined inss.101 of Title 11 of the United States Code, Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable state law pertaining to fraudulent transfers, as amended from time to time, or be unable to pay its debts generally as such debts become due, or have an unreasonably small capital to engage in any business or transaction, whether current or contemplated.

        (r) Facility Plan. Subject to the proviso contained in Section 6.01(f), the Facility Plan has been prepared in good faith on the basis of assumptions deemed reasonable by the Company and accurately reflects in all respects all material costs currently anticipated to be incurred in connection with achieving Completion. Subject to the proviso contained in Section 6.01(f), the Facility Plan sets forth the Company's good faith estimation of the schedule for achieving Completion. Subject to the proviso contained in Section 6.01(f), all agreements and instruments comprising the Facility Plan are in full force and effect and the Company is not in default of its obligations thereunder. There are no agreements, instruments, licenses or other rights necessary to own, operate, lease or use the Facility, other than the Applicable Permits, the documents and instruments comprising the Facility Plan, and the Operative Documents; and renovation, construction, ownership, operation, leasing or use of the Facility by the Company (and after the expiration or termination of the Lease, the renovation, construction, ownership, operation, leasing or use of the Facility by the Lessor or its successors or assigns) does not and will not infringe on, or otherwise violate, any patents, patent applications, trademarks (whether registered or not), trademark applications, trade names, proprietary computer software, or copyrights of any Person.

        (s) Y2K Plan. The Guarantor has met its Y2K plan milestones such that all hardware and software systems are Year 2000 Compliant and Ready.

ARTICLE VIII.

Covenants

        The Company (and, by execution and delivery of the Guaranty, the Guarantor) covenants and agrees with the Lessor and each Lease Participant to comply with the following covenants until either (i) the Facility has been purchased by the Company (or one of its Affiliates) for the Purchase Price or (ii) the Lease has been terminated, the Facility has been returned to the Lessor and the Termination Value or the Final Rent Payment or Completion Costs Payment, as the case may be, and all other amounts payable under the Lease and the other Operative Documents upon such occurrence have been paid in full:

        Section 8.01 Information. The Guarantor will deliver to the Lessor and each of the Lease Participants:

        (i) as soon as available and in any event within 120 days after the end of each Fiscal Year, a copy of the unaudited Annual Statement of the Company, and a consolidated balance sheet of the Guarantor and the Consolidated Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of income, shareholders' equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous fiscal year, all certified by PricewaterhouseCoopers LLP or other independent public accountants of nationally recognized standing, with such certification to be free of exceptions and qualifications not reasonably acceptable to the Majority Funding Parties;

        (ii) as soon as available and in any event within 60 days after the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the Guarantor and the Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related statement of income and statement of cash flows for such Fiscal Quarter and for the part of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of the previous Fiscal Year, all certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of the Guarantor;

        (iii) simultaneously with the delivery of each set of financial statements referred to in paragraphs (i) and (ii) above, a certificate, substantially in the form of Exhibit E (a "Compliance Certificate"), of the chief financial officer or the chief accounting officer of the Guarantor (x) setting forth in reasonable detail the calculations required to establish whether the Guarantor was in compliance with the requirements of Section 8.04, Section 8.19 and Sections 8.24 through 8.27, inclusive, on the date of such financial statements, (y) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Guarantor is taking or proposes to take with respect thereto and (z) certifying that the Debt Rating as of the most recent Performance Pricing Determination Date has not changed from the prior Performance Pricing Determination Date, or if it has changed, setting forth such changed Debt Rating, and the change in the Applicable Margin in effect as a result thereof;

        (iv) simultaneously with the delivery of each set of annual financial statements referred to in paragraph (i) above, a statement of the firm of independent public accountants which reported on such statements to the effect that nothing has come to their attention to cause them to believe that any Default existed on the date of such financial statements;

        (v) promptly upon the mailing thereof to the shareholders of the Guarantor generally, copies of all financial statements, reports and proxy statements so mailed;

        (vi) promptly upon the filing thereof, copies of all Forms 10Q, 10K and 8K (other than earnings press releases) which the Guarantor shall have filed with the Securities and Exchange Commission;

        (vii) if and when any member of the Controlled Group (x) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (y) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (z) receives notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such notice;

        (viii) promptly, and, in any event, within 5 Business Days after the Company or the Guarantor becomes aware of any Default or Event of Default, a certificate of the chief financial officer or the chief accounting officer of the Company or the Guarantor setting forth the details thereof and the action which the Company or the Guarantor is taking or proposes to take with respect thereto;

        (ix) promptly upon becoming aware of the occurrence of either a Loss Event or a Casualty Occurrence, or any other event or condition requiring notice under either Section 7 or Section 8 of the Lease, the Company shall give the Lessee written notice thereof, which notice shall specify the damage or loss to the Facility in reasonable detail;

        (x) from time to time such additional information regarding the financial position or business of the Company, the Guarantor and the Subsidiaries as the Lessor, at the request of any Funding Party, may reasonably request.

        Section 8.02 Maintenance and Inspection of Property, Books and Records. The Guarantor will cause the Company, and the Company agrees, to keep proper books of record and account regarding the Lease in accordance with GAAP or SAP, as applicable, which books shall include copies of all Related Contracts and any amendments thereto and the book value of the Facility and of each material item of Property comprising or included in the Facility, and shall provide copies of the foregoing to the Funding Parties from time to time on request at the Company’s expense. The Guarantor will cause the Company, and the Company agrees, to (i) keep proper books of record and account in which full, true and correct entries in conformity with GAAP and SAP, shall be made of all dealings and transactions in relation to its business and activities; and (ii) permit representatives of any Funding Party (x) at such Funding Party’s expense and upon reasonable notice prior to the occurrence of a Default and (y) at the Guarantor’s and the Company’s expense after the occurrence of a Default, to visit and inspect the Facility and any of its properties, to examine and make abstracts from any of its books and records and to discuss its affairs, finances and accounts with its officers and independent public accountants. The Guarantor and the Company agree to cooperate and assist in such visits and inspections, in each case at such reasonable times and as often as may reasonably be desired.

        Section 8.03 Related Contracts. The Company, as Acquisition/Construction Agent for the Lessor, will comply with, maintain execution counterparts of, and promptly upon request by the Lessor from time to time deliver copies of, or after the occurrence of an Event of Default, originals of, all Related Contracts.

        Section 8.04 Consolidations, Mergers and Sales of Assets. The Guarantor and the Company will not, nor will the Guarantor or the Company permit any other Subsidiary to, consolidate or merge with or into, or sell, lease or otherwise transfer all or any substantial part of its assets to, any other Person, provided that (a) the Guarantor, or the Company or a Subsidiary may merge with another Person if (i) such Person was organized under the laws of the United States of America or one of its states, (ii) the Company, the Guarantor or a Subsidiary is the corporation surviving such merger (provided that in any merger of the Guarantor or the Company and a Subsidiary, the Guarantor or the Company shall be the corporation surviving such merger) and (iii) immediately after giving effect to such merger, no Default shall have occurred and be continuing, (b) Subsidiaries (other than the Company) may merge with one another or into the Company or the Guarantor, (c) the foregoing limitation on the sale, lease or other transfer of assets shall not prohibit sales of investment assets in the ordinary course of business, and (d) the foregoing limitation on merger and consolidation and the sale, lease or other transfer of assets shall not prohibit, during any Fiscal Quarter, a merger, consolidation or transfer of assets (in a single transaction or in a series of related transactions) unless the aggregate assets that are the subject of such merger or consolidation or to be so transferred, when combined with all other assets transferred (including as the result of a merger or consolidation) during such Fiscal Quarter and the immediately preceding 3 Fiscal Quarters, constituted more than 15% of Consolidated Total Assets at the end of the most recent Fiscal Year.

        Section 8.05 Maintenance of Existence. The Guarantor and the Company shall, and the Guarantor and the Company shall cause each other Material Subsidiary to, maintain its existence and carry on the major part of its business in substantially the same manner as such business is now carried on and maintained, except as permitted by Section 8.04.

        Section 8.06 Dissolution. The Guarantor and the Company shall not, and the Guarantor and the Company shall cause each other Material Subsidiary to not, suffer or permit dissolution or liquidation either in whole or in part or redeem or retire any shares of its own stock, except through corporate reorganization to the extent permitted by Section 8.04.

        Section 8.07 Use of Proceeds. The proceeds of the Lessor Advances will be used to fund the Facility Cost. Without limiting the generality of the foregoing, no portion of the proceeds of the Lessor Advances will be used by the Company (i) in connection with, whether directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation, except in a negotiated, consensual transaction, (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock or (iii) for any purpose in violation of any applicable Governmental Requirement.

        Section 8.08 Compliance with Laws; Payment of Taxes. The Guarantor and the Company shall, and the Company shall cause each other Subsidiary to, comply with applicable laws (including but not limited to ERISA), regulations and similar requirements of governmental authorities (including but not limited to PBGC), except where the necessity of such compliance is being contested in good faith through appropriate proceedings or where non-compliance would not have and could not reasonably be expected to cause a Material Adverse Effect. The Guarantor and the Company shall, and the Guarantor and the Company shall cause each other Material Subsidiary to, pay, prior to the date on which penalties attach thereto, all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become a Lien against the Facility or against Property of the Guarantor, the Company or any other Material Subsidiary, except for liabilities being contested in good faith and against which, if requested by the Lessor, the Guarantor, the Company or such other Subsidiary will set up reserves in accordance with GAAP and except for Permitted Liens.

        Section 8.09 Insurance. The Guarantor and the Company shall, and the Guarantor and the Company shall cause each other Material Subsidiary to, maintain (either in the name of the Lessor, the Guarantor or the Company, as applicable), with financially sound and reputable insurance companies, insurance on such of its property in at least such amounts, and with such deductibles, and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or similar businesses. Without limitation of the foregoing, the Company shall maintain or cause to be maintained, with Permitted Insurers, insurance with respect to the Facility and its business in connection therewith of the types and in the amounts specified in the Lease. The Company will deliver or cause to be delivered to the Lessor promptly upon request of the Lessor, and in any event on or prior to January 1st of each calendar year, commencing with January 1, 2001, a certificate by a firm of independent insurance brokers or consultants chosen by the Company and acceptable to the Lessor setting forth the insurance or self-insurance obtained pursuant to the Lease, including, without limitation, the amounts thereof, the names of the insurers and the property, hazards and risks covered thereby, and certifying that the same comply with the requirements of the Lease, that all premiums then due and payable thereon have been paid and that the same are in full force and effect, that the Lessor has been named as additional insured and loss payee, as its interests may appear, under each such policy, and is not liable for payment of premiums thereunder, that such policies may not be cancelled without at least 30 days prior notice to the Lessor with an opportunity to cure any default thereunder. The Lessor shall be entitled to rely on such reports without further investigation of the facts and circumstances set forth therein.

        Section 8.10 Maintenance of Property. The Company shall maintain and preserve the Facility in accordance with the requirements of the Lease. The Guarantor and the Company shall maintain and preserve all of their other properties and assets, in good condition, repair and working order, ordinary wear and tear excepted, except to the extent of any failure which would not have and could not reasonably be expected to cause a Material Adverse Effect.

        Section 8.11 Environmental Notices. The Company, for itself and as Acquisition/Construction Agent for the Lessor, shall furnish to the Lessor prompt written notice of all Environmental Liabilities, pending or threatened Environmental Proceedings, Environmental Notices, Environmental Judgments and Orders, and Environmental Releases at, on, in, under or in any way affecting the Facility or any of the Properties of the Guarantor, the Company or any other Material Subsidiary, or any adjacent property, except, as to Properties other than the Facility, as to matters which would not have and could not reasonably be expected to cause a Material Adverse Effect, and all facts, events, or conditions actually known to the Company that could reasonably be expected to lead to any of the foregoing.

        Section 8.12 Environmental Matters. The Guarantor and the Company shall not, and the Guarantor and the Company shall cause each other Material Subsidiary to not, and shall not permit any Third Party to, use, produce, manufacture, process, treat, recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or transport to or from the Facility or the Properties any Hazardous Materials except for Hazardous Materials such as cleaning solvents, pesticides and other similar materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed, or otherwise handled in minimal amounts in the ordinary course of business or of management or maintenance of the Facility or the Properties in material compliance with all applicable Environmental Requirements, except in each case, as to Properties other than the Facility, as to matters which would not have and could not reasonably be expected to cause a Material Adverse Effect.

        Section 8.13 Environmental Release. The Company agrees that upon the occurrence of an Environmental Release at or on the Facility or any of the Properties it will act immediately to investigate the extent of, and to take appropriate remedial action to eliminate, such Environmental Release, whether or not ordered or otherwise directed to do so by any Environmental Authority, except, as to Properties other than the Facility, as to matters which would not have and could not reasonably be expected to cause a Material Adverse Effect.

        Section 8.14 Transactions with Affiliates. Neither the Guarantor, nor the Company, nor any of the other Material Subsidiaries shall enter into, or be a party to, any transaction with any Affiliate of the Guarantor, the Company or such other Material Subsidiary (which Affiliate is not the Guarantor or the Company or a Wholly Owned Subsidiary), except (a) as permitted by law and in the ordinary course of business and pursuant to reasonable terms which are no less favorable to Guarantor, the Company or such other Material Subsidiary than would be obtained in a comparable arm’s length transaction with a Person which is not an Affiliate and (b) any such transaction that could not reasonably be expected to have a Material Adverse Effect.

        Section 8.15 Further Assurances. The Guarantor and the Company will cure promptly any defects in the due execution and delivery by it of the Operative Documents, including this Agreement. The Guarantor and the Company at their expense will promptly execute and deliver to the Lessor upon request all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of the Guarantor and the Company in the Operative Documents, including this Agreement, or to further evidence and more fully describe the collateral relating to the Facility intended as security for the Lessor Advances and Lease Participant Advances, or to correct any item that the Company and the Lessor agree constitutes an omission or error in the Operative Documents, or more fully to state the existing security obligations set out herein or in any of the Operative Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Operative Documents, or to make any recordings, to file any notices, or obtain any consents required by the terms of the Operative Documents, all as may be necessary or appropriate in connection therewith.

        Section 8.16 Completion; Etc. The Company, as Acquisition/Construction Agent for the Lessor, will use the proceeds of the Lessor Advances for the purposes specified in Section 7.01(p) and will proceed to achieve Completion on or prior to the Completion Date. The Company, as Acquisition/Construction Agent for the Lessor, will perform and observe its obligations under the agreements and instruments comprising the Facility Plan and all Applicable Permits. The Company, as Acquisition/Construction Agent for the Lessor, will preserve, protect and maintain in effect all Applicable Permits.

        Section 8.17 Maintenance; Etc. The Company shall, as Acquisition/Construction Agent for the Lessor, preserve, protect and maintain in accordance with prudent industry practices their rights in and to the Applicable Permits used in the ordinary course of business of the Facility that are necessary for and material to the operation of the Facility; and the Company shall defend and hold harmless the Lessor and each Lease Participant from and against any cost, liability or expense arising from any claim of infringement, misuse or misappropriation of any of the foregoing.

        Section 8.18 Encroachments. The Facility, when completed, shall be situated wholly within the boundary lines of the Site and shall not encroach upon any contiguous or adjoining Property (other than those portions of the Facility for which the Lessor has the right to locate and operate such portions pursuant to use or operating agreements); and the Facility shall not violate any other easements, rights-of-way, licenses or other agreements affecting the Site.

        Section 8.19 Liens, Etc. The Guarantor and the Company shall not, and the Guarantor and the Company shall cause each other Material Subsidiary to not, create, assume or suffer to exist, any Liens upon any Property now owned or hereafter acquired by it or upon the Facility, except Permitted Liens.

        Section 8.20 Facility Plan. Subject to the proviso contained in Section 6.01(f), the Company shall not amend or revise the Facility Plan in any manner which would materially and adversely affect the operation, design or capacity of the Facility without the prior written consent of the Majority Funding Parties, which will not be unreasonably withheld. The Company shall not under any circumstance undertake to operate or use or otherwise initiate the operations at or use of the Facility except in accordance in all material respects with the Facility Plan and except for the Permitted Use. The Company shall be fully and solely responsible for funding all costs in connection with the acquisition, development, renovation, construction and installation of the Facility in excess of the limits contained in Section 2.01, it being understood and agreed that neither the Lessor nor any Lease Participant shall under any circumstances whatsoever be obligated to fund any amount for any of the Facility Cost in excess of the limits contained in Section 2.01.

        Section 8.21 Change in Fiscal Year. The Guarantor and the Company shall not, and the Guarantor and the Company shall cause each other Consolidated Subsidiary to not, change its Fiscal Year without the consent of the Lessor (acting at the direction of the Majority Funding Parties).

        Section 8.22 Intentionally Omitted.

        Section 8.23 Restrictions on Ability of Subsidiaries to Pay Dividends. Except in accordance with any applicable regulatory requirements, the Company shall not, and the Guarantor and the Company shall not permit any Material Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction not in existence on the Closing Date on the ability of the Company or any such other Subsidiary to (i) pay any dividends or make any other distributions on its Capital Stock or any other interest or (ii) make or repay any loans or advances to the Guarantor, the Company or the other direct parent of such Subsidiary.

        Section 8.24 Adjusted Consolidated Net Worth. The Guarantor will maintain at all times Adjusted Consolidated Net Worth equal to not less than the sum of (i) $910,000,000 plus (ii) 25% of the Guarantor’s cumulative Consolidated Net Income, if positive, earned after March 31, 1999, through the last day of the most recent fiscal quarter for which statements were delivered or required to have been delivered to the Lessor and the Lease Participants pursuant to Section 8.01(i) or (ii), taken as one accounting period, minus (iii) the Guarantor’s consolidated allowance for potential future losses on investments at the end of such fiscal quarter.

        Section 8.25 Ratio of Adjusted Consolidated Indebtedness to Consolidated Capitalization. The Guarantor will maintain at all times a ratio of Adjusted Consolidated Indebtedness to Consolidated Capitalization of not more than 0.5 to 1.00.

        Section 8.26 Ratio of Unconsolidated Cash Inflow Available for Interest Expense to Adjusted Consolidated Interest Expense.The Guarantor will maintain, for each fiscal quarter, a ratio of Unconsolidated Cash Inflow Available for Interest Expense to Adjusted Consolidated Interest Expense, in each case calculated for such fiscal quarter, of not less than 1.75 to 1.00.

        Section 8.27 Company’s Total Adjusted Capital. The Company will maintain at all times Total Adjusted Capital in an amount not less than 3.6 times the Company’s Authorized Control Level Risk-Based Capital. As used herein the terms “Total Adjusted Capital” and “Authorized Control Level Risk-Based Capital” have the meanings attributed thereto in the Risk-Based Capital (RBC) for Life and/or Health Insurers Model Act adopted by the NAIC in December 1992, as the same may be modified, supplemented or amended from time to time.

        Section 8.28 Restricted Payments. The Guarantor will not declare or make any Restricted Payment during any Fiscal Year unless it has first provided for payment of all current principal payments on long-term Indebtedness; provided, that after giving effect to the payment of any such Restricted Payments, no Default shall be in existence or be created thereby.

ARTICLE IX.

Events of Default

        Section 9.01 Events of Default. The occurrence and continuation of any one or more of the following events shall constitute an "Event of Default".

        (a) The Company, as Acquisition/Construction Agent for the Lessor, or as Lessee under the Lease, shall default in the payment of the principal amount of any Lessor Advance when due; or default in the payment of any Yield on any Lessor Advance when due; or default in the payment of any other amounts payable by it hereunder or under the Operative Documents, to the Funding Parties when due and the continuance of such default for 5 Business Days thereafter; or default in the payment of any other amounts payable hereunder or under any other Operative Documents to agents, attorneys and consultants of the Lessor or any Lease Participant when due and the continuance of such nonpayment for 30 days thereafter; or

        (b) Any representation, warranty, certification or statement made by the Guarantor or the Company in Article VII of this Agreement or in any other Operative Document or in any certificate, financial statement or other document delivered pursuant to this Agreement or any other Operative Document shall prove to have been incorrect or misleading in any material respect when made or reaffirmed (or deemed made or reaffirmed); or

        (c) The Guarantor or the Company shall fail to observe or perform any covenant or agreement contained in clause (iii) of Section 8.01, in clause (ii) of Section 8.02, or in Sections 8.04 through 8.07 inclusive, or in 8.23 through 8.28, inclusive, of this Agreement; or

        (d) The Company shall fail to observe or perform any covenant or agreement contained or incorporated by reference in this Agreement (other than those covered by paragraphs (a) and (c) above), or the Guarantor shall fail to observe or perform any other covenant or agreement contained or incorporated by reference in the Guaranty, and in either case such failure shall not have been cured within 30 days after the earlier to occur of (i) written notice thereof has been given to the Guarantor and the Company by the Lessor at the request of the Majority Funding Parties or (ii) either the Vice President-Investments or the Controller (or if no person has such title, any other officer having similar functions, regardless of title) of the Guarantor or the Company otherwise becomes aware of any such failure; or

        (e) An "Event of Default" under or as defined in (i) the Lease or (ii) any other Operative Document or (iii) the Revolving Credit Agreement shall occur; or

        (f) The Guarantor, the Company or any other Consolidated Subsidiary shall fail to make any payment in respect of Indebtedness outstanding in an aggregate principal amount equal to or greater than $25,000,000 (excluding Indebtedness incurred pursuant hereto) after the expiry of any applicable grace period; or

        (g) Any other event or condition shall occur which (i) results in the acceleration of the maturity of Indebtedness (other than Indebtedness which would not constitute a "liability" in accordance with GAAP) outstanding of the Guarantor, the Company or any other Consolidated Subsidiary in an aggregate principal amount equal to or greater than $25,000,000 (including, without limitation, any required mandatory prepayment or "put" of such Indebtedness to the Guarantor (other than a "put" which is not predicated solely on the basis of a breach or other default by the Guarantor, the Company or any other Consolidated Subsidiary), the Company or any other Consolidated Subsidiary) or (ii) enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Indebtedness or any Person acting on such holders' behalf to accelerate the maturity thereof (including, without limitation, any required mandatory prepayment or any such "put" of such Indebtedness to the Guarantor, the Company or any other Consolidated Subsidiary); or

        (h) The Guarantor, the Company or any other Consolidated Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or

        (i) An involuntary case or other proceeding shall be commenced against the Guarantor, the Company or any other Consolidated Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Guarantor, the Company or any other Consolidated Subsidiary under the federal bankruptcy laws as now or hereafter in effect; or

        (j) The Guarantor, the Company or any member of the Controlled Group shall fail to pay when due any material amount which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be filed under Section 4041(c) of ERISA by the Company, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated, if the PBGC gives notice of its intention to seek or takes any action seeking to obtain such a decree; or

        (k) One or more judgments or orders for the payment of money in an aggregate amount in excess of $25,000,000 (exclusive of amounts fully covered by insurance) shall be rendered against the Guarantor, the Company or any other Consolidated Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 60 days; or

        (l) A federal tax lien shall be filed against the Guarantor, the Company or any other Consolidated Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be filed against the Guarantor, the Company or any other Consolidated Subsidiary under Section 4068 of ERISA and if in either case the amount involved is in an aggregate amount in excess of 25,000,000 and such lien shall remain undischarged for a period of 60 days after the date of filing;

        (m) Any of the Operative Documents shall cease, for any reason, to be in full force and effect or the Guarantor or the Company shall so assert;

        (n) The Company shall abandon the Facility or the renovation or construction and development thereof, or Completion shall not have occurred on or before the Completion Date.

        Section 9.02 Remedies. Upon the occurrence and continuation of any Event of Default:

        (a) in the case of an Event of Default (other than one referred to in Sections 9.01(h) or (i)), the Lessor may and, upon request of the Majority Funding Parties, shall, by notice to the Guarantor and the Company, cancel the Lessor Commitment (and upon cancellation of the Lessor Commitment pursuant to this Section 9.02, the Lease Participant Commitments also shall terminate) and/or declare the principal amount then unrecovered of and the accrued Yield on the Lessor Advances and all other amounts payable by the Company hereunder and under the other Operative Documents, to be forthwith due and payable, whereupon such amounts (and the Lease Participant Advances and all accrued Yield thereon) shall be immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company; and

        (b) in the case of the occurrence of an Event of Default referred to in Sections 9.01(h) or (i), the Lessor Commitment shall be automatically cancelled and the principal amount then unrecovered of and the accrued Yield (including without limitation all Yield accruing during the Construction Term) on the Lessor Advances and all other amounts payable by the Company hereunder and under the other Operative Documents (and the Lease Participant Advances and all accrued Yield thereon), shall become automatically immediately due and payable without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby expressly waived by the Company.

        (c) Notwithstanding Sections 9.02(a) and (b), the Guarantor or the Company may cure any Default or Event of Default under Section 9.01 by paying the Termination Value or purchasing the Facility as provided in Section 15(c) of the Lease for the Purchase Price.

        (d) No Lease Participant may initiate or pursue remedies unless and until the Lessor initiated remedies against the Facility, the Guarantor or the Company. In the event the Lessor has initiated remedies, the Lease Participants may join in enforcement of remedies against the Facility, the Guarantor or the Company.

        (e) If the Majority Funding Parties shall have instructed the Lessor to sell or foreclose on the Facility and other collateral in accordance with the Security Instruments and the Lease, then (i) the net cash sales or foreclosure proceeds to be received must at least equal an amount equal to the Funded Amount, plus all other amounts then owing to the Funding Parties hereunder and under the other Operative Documents; and (ii) the Majority Funding Parties may not, without the consent of the Lessor, instruct the Lessor to sell the Facility or any portion thereof for an amount less than sufficient to pay in full the Unrecovered Lessor Investments pursuant to Section 3.05, or instruct the Lessor to foreclose on the Facility in accordance with the Security Instruments and the Lease for a cash bid which is not sufficient to pay in full the Unrecovered Lessor Investments.

        (f) The Funding Parties agree not to exercise their remedies against the Facility under the Security Instruments unless an Event of Default has occurred and is continuing hereunder and the Lease has terminated and the Guarantor or the Company (or any Affiliate thereof) shall not have purchased the Facility on or before the Cancellation Date.

ARTICLE X.

The Lessor as Servicing Agent for the Lease Participants

        Section 10.01 Appointment, Powers and Immunities. Each Lease Participant hereby appoints and authorizes the Lessor to take such action as servicing agent on its behalf and to exercise such powers under this Agreement as are delegated to the Lessor by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement or collection of the Lessor Investments), the Lessor shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Funding Parties, and such instructions shall be binding upon all Lease Participants; provided, however, that the Lessor shall not be required to take any action which exposes the Lessor to personal liability or which is contrary to this Agreement or applicable law. The Lessor agrees to give to each Lease Participant prompt notice of each notice given to it by the Guarantor or the Company pursuant to the terms of this Agreement or any of the Operative Documents.

        Section 10.02 Reliance by Lessor. Neither the Lessor nor any of its respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct, or its failure to pay to any Lease Participant its Percentage Share of any Rent or other amounts in which such Lease Participant has an Ownership Interest which the Lessor actually has received. Without limitation of the generality of the foregoing, the Lessor: (a) may treat any Lease Participant as the owner of its Ownership Interest until the Lessor receives and accepts an Assignment and Acceptance entered into by such Lease Participant, as assignor, and an Eligible Assignee, as assignee, as provided in Section 11.06; (b) may consult with legal counsel (including counsel for the Guarantor or the Company), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lease Participant and shall not be responsible to any Lease Participant for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or any of the other Operative Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any of the other Operative Documents on the part of the Guarantor or the Company or to inspect the Facility or the property (including the books and records) of the Guarantor or the Company; (e) shall not be responsible to any Lease Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Operative Documents or any other instrument or document furnished pursuant hereto; (f) shall incur no liability under or in respect of this Agreement or the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopier, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties; and (g) shall act or refrain from acting, and shall be fully protected in acting or refraining from acting, in selling or otherwise disposing of the Facility in accordance with the Security Instruments, upon receiving instructions signed by the Majority Funding Parties.

        Section 10.03 Defaults. The Lessor shall not be deemed to have knowledge of the occurrence of a Default (other than the non-payment of Rent) unless the Lessor has received notice from a Lease Participant or the Company specifying such Default and stating that such notice is a “Notice of Default.” In the event that the Lessor receives such a notice of the occurrence of a Default, the Lessor shall give prompt notice thereof to the Lease Participants (and shall give each Lease Participant prompt notice of each such non-payment). The Lessor shall (subject to Section 10.07) take such action with respect to such Default as shall be directed by the Majority Funding Parties, as provided in Section 10.02, provided that, unless and until the Lessor shall have received such directions, the Lessor may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Funding Parties.

        Section 10.04 Rights as a Funding Party. With respect to its Lessor Commitment and its Ownership Interests, the Lessor shall have the same rights and powers under this Agreement as any other Funding Party (except to the extent the rights and obligations of the Lessor as such are different from the rights of the Lease Participants as such) and may exercise the same as though it were not acting as the agent of the Lease Participants as provided herein; and the term “Funding Party” or “Funding Parties” shall, unless otherwise expressly indicated, include the Lessor in its individual capacity. The Lessor and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Guarantor, the Company, any of the other Subsidiaries and any Person who may do business with or own securities of the Guarantor or any of the Subsidiaries, all as if the Lessor were not the agent of the Lease Participants pursuant hereto and without any duty to account therefor to the Lease Participants.

        Section 10.05 Indemnification by Lease Participants. The Lease Participants agree to indemnify the Lessor (to the extent not reimbursed by the Company), ratably according to their respective Ownership Interests, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, orders, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Lessor in any way relating to or arising out of this Agreement or any of the Operative Documents or any action taken or omitted by the Lessor under this Agreement or any of the Operative Documents, provided that no Lease Participant shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, orders, suits, costs, expenses or disbursements resulting from the Lessor’s gross negligence or willful misconduct, or its failure to pay to any Lease Participant its Percentage Share of any Rent or other amounts in which such Lease Participant has an Ownership Interest which the Lessor actually has received. Without limitation of the foregoing, each Lease Participant agrees to reimburse the Lessor promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Lessor in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or the other Operative Documents, to the extent that the Lessor is not reimbursed for such expenses by the Guarantor or the Company.

        Section 10.06 Indemnification by Lessor. Solely to the limited extent, if any, monies are received by Lessor from Lessee with respect to the Lessor Indemnified Risks and without recourse to the Lessor except with respect to such monies received, the Lessor agrees to indemnify and save harmless each Lease Participant Indemnified Party, from and against all liabilities, Liens, Taxes, losses, obligations, claims, damages (including, without limitation, penalties, fines, court costs and administrative service fees), penalties, demands, causes of action, suits, proceedings (including any investigations, litigation or inquiries), judgments, orders, sums paid in settlement of claims, and costs and expenses of any kind or nature whatsoever, including, without limitation, reasonable attorneys’ fees and expenses and all other expenses incurred, suffered or realized in connection with investigating, defending or preparing to defend any cause of action, suit or proceeding (including any investigations, litigation or inquiries) or claim which may be incurred by or asserted against or involve any of them (whether or not any of them is named as a party thereto) as a result of, arising directly or indirectly out of or in any way related to any of the Lessor Indemnified Risks.

        Section 10.07 Non-Reliance on Lessor and other Lease Participants. Each Lease Participant acknowledges that it has, independently and without reliance upon the Lessor or any other Lease Participant and based on the financial statements referred to in Section 7.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lease Participant also acknowledges that it will, independently and without reliance upon the Lessor or any other Lease Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Except for notices, reports and other documents and information expressly required to be furnished to the Lease Participants by the Lessor hereunder, the Lessor shall not have any duty or responsibility to provide any Lease Participant with any credit or other information concerning the affairs, financial condition or business of the Guarantor, the Company or any affiliates thereof, which may come into the possession of the Lessor or any of its affiliates.

        Section 10.08 Failure to Act. The Lessor shall in all cases be fully justified in failing or refusing to act hereunder or under the Operative Documents unless it shall be indemnified to its satisfaction by the Lease Participants against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action.

ARTICLE XI.

Miscellaneous

        Section 11.01 Amendments, Etc. The parties hereby agree that: (1) no amendment, modification or waiver of any provision of this Agreement, and no consent to any departure by the Guarantor or the Company therefrom, shall be effective against the Guarantor and/or the Company, as applicable, the Lessor or the Lease Participants unless it shall be in writing and signed by the Guarantor and/or the Company, as applicable, and the Majority Funding Parties; (2) no amendment, modification or waiver of any provision of the Guaranty, and no consent to any departure by the Guarantor therefrom, shall be effective against the Guarantor, the Lessor or the Lease Participants, unless signed by the Guarantor and the Lessor, with the consent of all of the Lease Participants; and (3) no amendment, modification or waiver of any provision of any other Operative Documents, and no consent to any departure by the Company or the Guarantor, as applicable, therefrom, shall be effective against the Guarantor or the Company, as applicable, or the Lessor or the Lease Participants unless signed by the Persons executing such Operative Document, the Guarantor and/or the Company, as applicable, and the Lessor, with the consent of the Majority Funding Parties, and in any of the foregoing events, any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that:

        (i) no such amendment, waiver or consent shall, unless in writing and signed by the Company and all the Funding Parties, be effective to: (a) amend this Section 11.01, (b) except as otherwise permitted in this Agreement or the other Operative Documents, permit the creation of any Lien (other than Permitted Liens) on the Collateral equal to or prior to the interests of the Funding Parties or sell or otherwise dispose of any portion of the Collateral or release any Lien created under the Operative Documents, (c) waive the terms of any payment obligation or amend or modify the order of application of payments and proceeds, or (d) change the requirements set forth in Schedule 1.3 to the Agency Agreement necessary to achieve Completion;

        (ii) no such amendment, waiver or consent shall, unless in writing and signed by all the Funding Parties, be effective to: (a) increase the Lessor Commitment or subject the Funding Parties to any additional obligations, (b) reduce the unrecovered principal of, or Yield on the Lessor Advances or any Commitment Supplemental Rent hereunder, (c) postpone any date fixed for any payment of principal of or Yield on the Lessor Advances or any Commitment Supplemental Rent hereunder, (d) change the definition of Majority Funding Parties or the percentage of the aggregate Ownership Interests which shall be required for the Lessor to take any action under this Agreement, (f) waive any of the conditions specified in Article VI, or (g) affect the rights or duties of the Lessor as agent for the Lease Participants under this Agreement; and

        (iii) no such amendment, waiver or consent shall increase the Lease Participant Commitment of any Lease Participant hereunder, unless signed by such Lease Participant.

        Section 11.02 Notices. Except as otherwise provided in Article II or Article V, all notices and other communications provided for hereunder shall be in writing (including by telecopier and other readable communication) and mailed by certified mail, return receipt requested, telecopied or otherwise transmitted or delivered, for the Guarantor, at 2801 Highway 280 South, Birmingham, Alabama 35223, Attention: Carl Thigpen, Telecopier: 205-868-3609, for any party hereto, at its address set forth under its name on its signature page hereto or, as to a Lease Participant that is not a party hereto as of the date hereof, in an Assignment and Acceptance, or as to each party at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, if so mailed, telecopied or otherwise transmitted, be effective when received, if mailed, or when the appropriate answer back or other evidence of receipt is given, if telecopied or otherwise transmitted, respectively. A notice received by the Lessor by telephone pursuant to Article II or Article V shall be effective if the Lessor believes in good faith that it was given by an authorized representative of the Company and acts pursuant thereto, notwithstanding the absence of written confirmation or any contradictory provision thereof.

        Section 11.03 Payment of Expenses, Indemnities, etc.

        (a) The Company agrees to pay on demand (i) all reasonable fees and out-of-pocket expenses of counsel for the Lessor in connection with the preparation, execution and delivery of this Agreement, the other Operative Documents and the other documents to be delivered hereunder and the fulfillment or attempted fulfillment of conditions precedent hereunder, (ii) all reasonable costs and expenses incurred by Wachovia Capital Investments, Inc. and its Affiliates in initially syndicating to Lease Participants all or any portion of the Lessor Investments hereunder, including, without limitation, the related reasonable fees and out-of-pocket expenses of counsel for Wachovia Capital Investments, Inc. or its Affiliates, travel expenses, duplication and printing costs and courier and postage fees, and excluding any syndication fees paid to other parties joining the syndicate and (iii) all out-of-pocket costs and expenses, if any, incurred by the Lessor and the Lease Participants in connection with the enforcement (whether through negotiations, legal proceedings in bankruptcy or insolvency proceedings, or otherwise) of this Agreement, the other Operative Documents and the other documents to be delivered hereunder and thereunder, including the reasonable fees and out-of-pocket expenses of counsel. In furtherance of and not in limitation of the foregoing, the Company shall pay all fees, costs and expenses incurred in obtaining the Facility Plan, the Approved Appraisal, the Environmental Assessment, the title policy referred to in Section 6.01(k), the Surveys and the Related Contracts. The Company shall indemnify the Lessor and each Lease Participant against any transfer taxes, documentary taxes, assessments or charges made by any Governmental Authority by reason of the execution and delivery of any of the Operative Documents.

        (b) The Company (in its capacity as Lessee and in its capacity as Acquisition/Construction Agent ) agrees, in addition to any other indemnity obligations set forth in any Operative Document, to indemnify and save harmless (1) as to the Lessor Indemnified Risks, each Lessor Indemnified Party, and (2) as to the Lease Participant Indemnified Risks, each Lease Participant Indemnified Party, from and against all liabilities, Liens, Taxes, losses, obligations, claims, damages (including, without limitation, penalties, fines, court costs and administrative service fees), penalties, demands, causes of action, suits, proceedings (including any investigations, litigation or inquiries), judgments, orders, sums paid in settlement of claims, and costs and expenses of any kind or nature whatsoever, including, without limitation, reasonable attorneys' fees and expenses and all other expenses incurred, suffered or realized in connection with investigating, defending or preparing to defend any cause of action, suit or proceeding (including any investigations, litigation or inquiries) or claim which may be incurred by or asserted against or involve any of them (whether or not any of them is named as a party thereto) as a result of, arising directly or indirectly out of or in any way related to any of the following:

        (i) as to all Indemnified Parties: (A) the failure of the Guarantor or the Company to perform or caused to be performed, or the inadequacy of, the environmental due diligence required under Article IV of the Agency Agreement, (B) the breach of any representation, warranty or agreement set forth under the Operative Documents regarding Environmental Requirements or relating to environmental matters, (C) the failure of the Guarantor or the Company to perform any obligation required to be performed under the Operative Documents pursuant to Environmental Requirements or relating to environmental matters, (D) the failure of the Guarantor or the Company to obtain any Environmental Authorizations required in the management, maintenance and operation of the Facility, or the operation of any business on or related to the Facility or the Site, and (E) any Environmental Damages, Environmental Liabilities and Environmental Proceedings relating to the Facility; provided, however, that no Indemnified Party shall be entitled to indemnity (or any other payment or reimbursement) for any Indemnified Risks pursuant to this clause (i) to the extent such Indemnified Risks result from or arise out of the willful misconduct or gross negligence of such Indemnified Party;

        (ii) as to the Lessor Indemnified Parties only: (A) all acts or omissions by or on behalf of the Company, its contractors, employees, agents, licensees, representatives or any other Person for whose conduct the Company is responsible in connection with this Agreement, any Related Contract or under any Operative Document (individually and collectively, as the context shall require, the "Company Agents"); (B) the breach or failure to perform by the Company (directly or by any of the Company Agents) of any provisions of this Agreement or under any Operative Document, but in each case subject, as to the failure to cause Completion to occur on or before the Completion Date, to the Completion Costs Payment Limitation; (C) any actual or proposed use by the Company of the proceeds of any of the Lessor Advances; (D) the operations of the business of the Company ; (E) the failure of the Company (directly or by any of the Company Agents) to comply with any Governmental Requirement (including, without limitation, design, construction, manufacture, engineering, assembly, installation, use, operation or ownership of the Facility or any portion thereof); (F) the failure of the Company (directly or by any of the Company Agents) to pay any amount required to be paid hereunder or under the Lease or any other Operative Document, including, without limitation (and without duplication), the Lessor Advances and Yield thereon (whether or not the Lease has terminated) and Rent; (G) the Lessor's ownership and leasing of the Facility pursuant to the Lease (other than taxes excluded from the definition of Taxes); (H) the sale of any portion of the Facility either to the Company or any other Person pursuant to the provisions of the Lease; (I) any Imposition, Lien, judgment, order, tax, or other payment owing in respect of the Facility or which the Company is obligated to discharge or pay to any Person; (J) the renovation, construction, leasing, subleasing, operation, occupancy, possession, use or non-use by the Company of the Facility or any portion thereof, or the condition of the Facility or any portion thereof; (K) any Default or Event of Default under the Lease or this Agreement; (L) any act or omission of the Company (directly or by any of the Company Agents) relating to, or in connection with, the ownership, renovation, construction, leasing, subleasing, operation, management, maintenance, occupancy, possession, use, non-use or condition of the Facility or any portion thereof; (M) performance of any labor or services or furnishing of any materials or other Property in respect of the Facility or any portion thereof; (N) any permitted contest referred to in Section 15 of the Lease; or (O) any claims for patent, trademark, trade name or copyright infringement; provided, however, that no Lessor Indemnified Party shall be entitled to indemnity (or any other payment or reimbursement) for any Lessor Indemnified Risks pursuant to this clause (ii) to the extent such Lessor Indemnified Risks result from or arise out of (i) the willful misconduct or gross negligence of such Lessor Indemnified Party or (ii) for any risks arising from any third-party damage claims arising from acts or omissions occurring during the Construction Term, other than third-party damage claims caused by or resulting from the Company's (or any of the Company Agents') own actions or failures to act while in possession or control of the Facility or for any risks beyond the control of the Company during the Construction Term (directly or through the Company Agents), including acts of God, casualty losses and condemnations.

        (c) The risks identified in both clauses (i) and (ii) in this Section 11.03 (b) above are referred to in this Agreement, individually and collectively, as the context shall require, as the "Lessor Indemnified Risks," and the risks identified in clause (ii) in this Section 11.03 (b) above are referred to in this Agreement, individually and collectively, as the context shall require, as the "Lease Participant Indemnified Risks." The Lessor and its successors and assigns, and its officers, directors, incorporators, shareholders, employees, agents, partners, attorneys, affiliates, contractors, subcontractors and servants are referred to in this Agreement individually as a "Lessor Indemnified Party" and collectively as the "Lessor Indemnified Parties." Each Lease Participant and any of their successors and assigns, and their respective officers, directors, incorporators, shareholders, employees, agents, partners, attorneys, affiliates, contractors, subcontractors and servants are referred to in this Agreement individually a "Lease Participant Indemnified Party" and collectively as the "Lease Participant Indemnified Parties." The Lessor Indemnified Risks and the Lease Participant Indemnified Risks sometimes are referred to individually and collectively, as the context shall require, but limited, as to the Lease Participant Indemnified Parties, to the Lease Participant Risks, as the "Indemnified Risks", and the Lease Participant Indemnified Parties and the Lessor Indemnified Parties sometimes are sometimes referred to individually or collectively, as the context shall require, but limited, as to the Lease Participant Indemnified Parties, to the Lease Participant Indemnified Risks, as the "Indemnified Parties."

        (d) If any cause of action, suit, proceeding or claim arising from any of the foregoing is brought against any Indemnified Party, whether such action, suit, proceeding, or claim shall be actual or threatened, or in preparation therefor, the Company will have the right, at its expense, to assume the resistance and defense of such cause of action, suit, proceeding or claim or cause the same to be resisted and defended; provided that such Indemnified Party shall be entitled (but not obligated) to participate jointly in such defense, in which case such Indemnified Party will be responsible for its own legal fees or other expenses, if any, related to such defense incurred subsequent to the joint participation by such party in such defense. Notwithstanding the foregoing, if any Indemnified Party shall have been advised by counsel chosen by it that there may be one or more legal defenses available to such Indemnified Party that are different from or additional to those available to the Company, the Indemnified Party may assume the defense of such action, suit, proceeding, or claim and the Company agrees to reimburse such Indemnified Party on demand for the reasonable fees and expenses of any counsel retained by the Indemnified Party. The Company may settle any action which it defends hereunder on such terms as it may deem advisable in its sole discretion, subject to its ability promptly to perform in full the terms of such settlement. No Indemnified Party may seek indemnification or other reimbursement or payment, including attorneys' fees or expenses, from the Company for any cause of action, suit, proceeding or claim settled, compromised or in any way disposed of by the Indemnified Party without the Company's prior written consent, which will not be unreasonably withheld.

        (e) The obligations of the Company under this Section 11.03 shall survive the expiration or any termination of this Agreement (whether by operation of law or otherwise) and the payment of amounts owed by the Company under this Agreement and the other Operative Documents, and shall also expressly survive any sale, transfer or conveyance of the Facility made by the Lessor pursuant to the Lease for a period of 2 years after the termination of this Agreement and any such sale, transfer or conveyance, except for indemnification obligations of the Company, which shall continue to survive thereafter.

        (f) Upon demand for payment by any Indemnified Party of any Indemnified Risks incurred by it for which indemnification is sought, the Company shall pay when due and payable the full amount of such Indemnified Risks to the appropriate party, unless and only so long as: (i) the Company shall have assumed the defense of such action and is diligently prosecuting the same; (ii) the Company is financially able to pay all its obligations outstanding and asserted against the Company at that time, including the full amount of the Indemnified Risks; and (iii) the Company has taken all action as may be reasonably necessary to prevent (1) the collection of such Indemnified Risks from, or the assertion of any Lien in respect thereof against, the Indemnified Party or its property or assets; (2) the sale, forfeiture or loss of the Facility or any portion thereof, or any property or assets of such Indemnified Party during such defense of such action; and (3) the imposition of any civil or criminal liability for failure to pay such Indemnified Risks when due and payable.

        (g) The Company acknowledges and agrees, subject to the limitations contained in paragraph (b), that its obligations under this Section 11.03 are intended to include and extend to any and all liabilities, Liens, Taxes, losses, obligations, claims, damages (including, without limitation, penalties, fines, court costs and administrative service fees), penalties, demands, causes of action, suits, proceedings (including any investigations, litigation or inquiries), judgments, orders, sums paid in settlement of claims, costs and expenses (including, without limitation, response and remediation costs, stabilization costs, encapsulation costs, and treatment, storage or disposal costs), imposed upon or incurred by or asserted at any time against any Indemnified Party (whether or not indemnified against by any other party) as a result of, arising directly or indirectly out of or in any way related to (A) the treatment, storage, disposal, generation, use, transport, movement, presence, release, threatened release, spill, installation, sale, emission, injection, leaching, dumping, escaping or seeping of any alleged Hazardous Materials at, under, onto, above, within or from the Facility or any part thereof or any business conducted on or related to the Facility or the Site; (B) the violation or alleged violation of any Environmental Requirements relating to or in connection with the Facility or any part thereof or any acts or omissions thereon or relating thereto; (C) all other federal, state and local laws designed to protect the environment or persons or property therein, whether now existing or hereinafter enacted, promulgated or issued by any governmental authority relating to or in connection with the Facility or any part thereof or any acts or omissions thereon or relating thereto; (D) the Company's failure to comply with its obligations under Section 7 of the Lease; and (E) any abandonment of the Facility by the Company.

        (h) Without limiting the generality of the foregoing provisions of this Section 11.03, the Company agrees to pay or reimburse, promptly upon demand, and protect, indemnify and save harmless, the Lessor following the occurrence of a Termination Event, from any action by any Sublessee or other owner of an interest in the Facility (other than a Co-Lessee) which causes the Lessor any delay in exercising its remedies, or results in the reduction of the Lessor's remedies, under the Lease.

        (i) In case any action shall be brought against any Indemnified Party in respect of which indemnity may be sought against the Company, such Indemnified Party shall promptly notify the Company in writing, but the failure to give such prompt notice shall not relieve the Company from liability hereunder, except to the extent such failure deprives the Company of any material defense otherwise available to the Company in connection therewith.

        Section 11.04 No Waiver; Remedies. No failure on the part of any Funding Party to exercise, and no delay in exercising, any right hereunder or under any Operative Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder or under any Operative Document preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

        Section 11.05 Right of Set-Off. Upon the declaration of the principal amount then unrecovered of and the accrued Yield on the Lessor Advances and all other amounts payable by the Company hereunder and under the other Operative Documents, to be due and payable pursuant to the provisions of Section 9.02, each Funding Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Funding Party to or for the credit or the account of the Company against any and all of the obligations of the Company now or hereafter existing under this Agreement held as part of its Ownership Interests by such Funding Party, irrespective of whether or not such Funding Party shall have made any demand under this Agreement and although such obligations may be unmatured. Each Funding Party agrees promptly to notify the Company after any such set-off and application made by such Funding Party, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Funding Party under this Section 11.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Funding Party may have. All amounts received by any Funding Party pursuant to this Section 11.05 shall be shared with the other Funding Parties pursuant to Section 4.02(d).

        Section 11.06 Assignments and Participations.

        (a) The Company may not assign its rights or obligations hereunder or under any other Operative Document without the prior consent of all of the Funding Parties.

        (b)

        (i) The Lessor shall have the right at any time to sell Ownership Interests to Lease Participants without the prior consent of the other Lease Participants, but (unless a Default or Event of Default is in existence) subject to the consent of the Lessee, which consent shall not be unreasonably withheld or delayed. The Lessor shall not have the right to assign its Lessor Commitment or its rights and obligations as Lessor hereunder and under the Lease and the other Operative Documents except with the prior written consent of the Lease Participants and (unless a Default or Event of Default is in existence), the Lessee, which consent in either case shall not be unreasonably withheld or delayed, to an Eligible Lessor Assignee (and such Eligible Lessor Assignee shall expressly assume in writing the Lessor Commitment and all such rights and obligations). Upon such assignment, from and after the effective date thereof, (A) the assignee thereunder shall be the Lessor hereunder and have the rights and obligations of the Lessor hereunder (including, without limitation, the obligations with respect to the Lessor Commitment) and (B) the assigning Lessor shall relinquish its rights and be released from its Lessor Commitment under this Agreement, and such assigning Lessor shall cease to be a party hereto).

        (ii) With the prior written consent of the Lessor (which consent shall not be unreasonably withheld or delayed) and, unless a Default or Event of Default is in existence, the Lessee (which consent shall not be unreasonably withheld or delayed), each Lease Participant may at any time assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Lease Participant Commitment and Ownership Interests), and the assignee thereof shall assume all such rights and obligations pursuant to an Assignment and Acceptance executed by such assignee, such assigning Lease Participant and the Lessor); provided, however, that (1) each such assignment shall be of a constant, and not a varying, percentage of its Lease Participant Commitment and Ownership Interests, (2) no interest may be sold by a Lease Participant pursuant to this Section 11.06(b) unless the assignee shall agree to assume ratably equivalent portions of the assigning Lease Participant's Lease Participant Commitment, (3) the amount of the Lease Participant Commitment and Ownership Interests of the assigning Lease Participant being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, or integral multiples of $1,000,000 in excess thereof (or, if less, in either case, the entire Lease Participant Commitment and Ownership Interests of the assigning Lease Participant), (4) each such assignment shall be to an Eligible Assignee, (5) a Lease Participant may not have more than 2 assignees that are not then Lease Participants at any one time and (6) the parties to each such assignment shall execute and deliver to the Lessor, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and shall send to the Lessor an executed counterpart of such Assignment and Acceptance, with a copy to the Company. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lease Participant hereunder and (B) the assigning Lease Participant thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its Lease Participant Commitment under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lease Participant's Lease Participant Commitment and Ownership Interests, such Lease Participant shall cease to be a party hereto).

        (c) By executing and delivering an assignment by the Lessor or an Assignment and Acceptance by a Lease Participant, each assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in assignment by the Lessor or such Assignment and Acceptance by a Lease Participant, such assigning Lessor or Lease Participant makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lessor or Lease Participant makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantor or the Company or the performance or observance by the Company of any of its obligations under this Agreement or any other Operative Document or by the Guarantor under the Guaranty; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 7.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into assignment or such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Lessor (if it is an assignee of a Lease Participant), such assigning Lessor or Lease Participant or any other Lease Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Lessor Assignee or Eligible Assignee, as applicable; (vi) such assignee appoints and authorizes the Lessor (if it is not an assignee of a Lease Participant) to take such action as agent for the Lease Participants on its behalf and to exercise such powers under this Agreement as are delegated to the Lessor by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as either the Lessor or a Lease Participant, as the case may be.

        (d) The Lessor shall maintain at its address referred to in Section 11.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lease Participants and the Lease Participant Commitment of, and principal amount of the Lease Participant Advances owing to, each Lease Participant from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Guarantor, the Company, the Lessor and the other Lease Participants may treat each Person whose name is recorded in the Register as a Lease Participant hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Guarantor, the Company or any Lease Participant at any reasonable time and from time to time upon reasonable prior notice. Upon the acceptance of any Assignment and Acceptance for recordation in the Register, Exhibit E hereto shall be deemed to be amended to reflect the revised Lease Participant Commitments of the parties to such Assignment and Acceptance as well as administrative information with respect to any new Lease Participant as such information is recorded in the Register.

        (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lease Participant and an assignee representing that it is an Eligible Assignee, the Lessor shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit E hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Guarantor, the Company, the other Lease Participants. Within 5 Business Days after its receipt of such notice and its receipt of an executed counterpart of such Assignment and Acceptance, the Lessor, at the expense of the Company, shall execute and deliver to each of the Lease Participants a new Ownership Certificate, giving effect to such Assignment and Acceptance and dated the date thereof.

        (f) Each Lease Participant may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Lease Participant Commitment and its Ownership Interests); provided, however, that (i) such Lease Participant's obligations under this Agreement (including, without limitation, its Lease Participant Commitment to the Lessor hereunder) shall remain unchanged, (ii) such Lease Participant shall remain solely responsible to the Lessor for the performance of such obligations, (iii) such Lease Participant shall remain the owner of its Ownership Interests for all purposes of this Agreement, (iv) the Guarantor, the Company, the Lessor and the other Lease Participants shall continue to deal solely and directly with such Lease Participant in connection with its rights and obligations under this Agreement and the other Operative Documents, (v) such Lease Participant shall continue to be able to agree to any modification or amendment of this Agreement or any waiver hereunder without the consent, approval or vote of any such participant or group of participants, other than modifications, amendments and waivers which (A) postpone any date fixed for any payment of, or reduce any payment of, principal of or Yield on the Lessor Advances or (B) increase the amount of such Lease Participant's Lease Participant Commitment in a manner which would have the effect of increasing the amount of a participant's participation, or (C) reduce the Yield payable under this Agreement and such Lease Participant's Ownership Interests, or (D) consent to the assignment or the transfer by the Company or the Lessor of any of its rights and obligations as the Company or the Lessor, respectively, under this Agreement (to the extent such consent is required pursuant to the Agreement) and (vi) except as contemplated by the immediately preceding clause (v), no participant shall be deemed to be or to have any of the rights or obligations of a "Lease Participant" hereunder.

        (g) The Lessor or any Lease Participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 11.06, disclose to the assignee or participant or proposed assignee or participant any information relating to the Guarantor or the Company furnished to the Lessor or such Lease Participant by or on behalf of the Company or the Guarantor; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree in writing for the benefit of the Guarantor and the Company to preserve the confidentiality of any confidential information relating to the Guarantor or the Company received by it from the Lessor or such Lease Participant in a manner consistent with Section 11.13.

        (h) Anything in this Agreement to the contrary notwithstanding, any Lease Participant may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, its Ownership Interests) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System (or any successor regulation) and the applicable operating circular of such Federal Reserve Bank.

        (i) Notwithstanding any other provision of this Agreement or any other Operative Document, neither the Guarantor or the Company nor any of their Affiliates (i) may acquire any of the Ownership Interests unless the Guarantor or the Company or such Affiliate acquires all of the Ownership Interests in a single transaction and thereby becomes bound by the provisions hereof; and unless the Guarantor or the Company or such Affiliate shall have acquired all of the Ownership Interests, it shall not be entitled to exercise any rights or remedies of a Funding Party under any of the Operative Documents.

        (j) Notwithstanding any other provision of this Agreement to the contrary, no assignee or participant shall be entitled to receive any greater payment under Section 4.06 or 5.03 than the transferor Funding Party would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 5.02 or 5.03 hereof requiring such Funding Party to designate a different Applicable Funding Office under certain circumstances or at a time when the circumstances giving rise to such a greater payment did not exist.

        Section 11.07 Invalidity. In the event that any one or more of the provisions contained in this Agreement or in any other Operative Document shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other Operative Document.

        Section 11.08 Entire Agreement. This Agreement and the other Operative Documents embody the entire agreement and understanding among the Lessor, the Lease Participants, the Guarantor and the Company and supersede all other agreements and understandings among such parties relating to the subject matter hereof and thereof. This written Agreement and the other Operative Documents represent the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties.

        Section 11.09 References. The words “herein,” “hereof,” “hereunder” and other words of similar import when used in this Agreement refer to this Agreement as a whole, and not to any particular article, section or subsection. Any reference herein to an Article or Section shall be deemed to refer to the applicable Article or Section of this Agreement unless otherwise stated herein. Any reference herein to an exhibit or schedule shall be deemed to refer to the applicable exhibit or schedule attached hereto unless otherwise stated herein.

        Section 11.10 Successors; Survivals. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The obligations of the Company under Section 4.06, Article V, and Section 11.03 shall survive the redemption of the Lessor Investments and Lease Participant Advances and the termination of the Lessor Commitment and the Lease Participant Commitments.

        Section 11.11 Captions. Captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

        Section 11.12 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery to the Lessor of a counterpart executed by a Lease Participant shall constitute delivery of such counterpart to all of the Lease Participants. This Agreement may be delivered by facsimile transmission of the relevant signature pages hereof.

        Section 11.13 Confidentiality. Each Funding Party agrees to exercise commercially reasonable efforts to keep any information delivered or made available by the Company or the Guarantor to it which is clearly indicated or stated to be confidential information (or when the circumstances under which such information is delivered or when the content thereof would cause a reasonable person to believe that such information is confidential) confidential from anyone other than Persons employed or retained by such Funding Party who are or are expected to become engaged in evaluating, approving, structuring or administering the Lessor Advances, the Lease Participant Advances, the Ownership Interests or the Operative Documents (such Persons to likewise be under similar obligations of confidentiality with respect to such information); provided, however, that nothing herein shall prevent any Funding Party from disclosing such information (a) to any other Funding Party, (b) upon the order of any court or administrative agency, (c) upon the request or demand of any regulatory agency or authority having jurisdiction over such Funding Party, (d) which has been publicly disclosed, (e) to the extent reasonably required in connection with any litigation to which any Funding Party or its respective affiliates may be a party, (f) to the extent reasonably required in connection with the exercise of any remedy hereunder, (g) to such Funding Party’s legal counsel and independent auditors, (h) to any actual or proposed Eligible Lessor Assignee, Eligible Assignee or other participant in all or part of its rights hereunder which has agreed in writing to be bound by the provisions of this Section 11.13; provided that should disclosure of any such confidential information be required by virtue of clause (b), (c) or (e) of the immediately preceding sentence, any relevant Funding Party shall, to the extent permitted by applicable law, rule or regulations, promptly notify the Company or the Guarantor of same so as to allow the Company and the Guarantor to seek a protective order or to take any other appropriate action; provided, further, that no Funding Party shall be required to delay compliance with any directive to disclose beyond the last date such delay is legally permissible any such information so as to allow the Company and the Guarantor to effect any such action.

        Section 11.14 GOVERNING LAW; SUBMISSION TO JURISDICTION.

        (a) This Agreement (including, but not limited to, the validity and enforceability hereof and thereof) shall be governed by, and construed in accordance with, the laws of the State of New York, other than the conflict of laws rules thereof, except to the extent that the laws of the State of Alabama mandatorily apply.

        (b) The Company hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in New York City and any appellate court from any thereof in any action or proceeding by the Lessor or any Lease Participant in respect of, but only in respect of, any claims or causes of action arising out of or relating to this Agreement or the other Operative Documents (such claims and causes of action, collectively, being "Permitted Claims"), and the Company hereby irrevocably agrees that all Permitted Claims may be heard and determined in such New York State court or in such Federal court. The Company hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any aforementioned court in respect of Permitted Claims. The Company hereby irrevocably agrees that service of copies of the summons and complaint and any other process which may be served by the Lessor or the Lease Participants in any such action or proceeding in any aforementioned court in respect of Permitted Claims may be made by delivering a copy of such process to the Company by courier and by certified mail (return receipt requested), fees and postage prepaid, at the Company's address specified pursuant to Section 11.02. The Company agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

        (c) Nothing in this Section 11.14: (i) shall affect the right of any Lease Participant or the Lessor to serve legal process in any other manner permitted by law or affect any right otherwise existing of any Lease Participant or the Lessor to bring any action or proceeding against the Company or its property in the courts of other jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in any particular court or a general waiver of any defense or a consent to jurisdiction of the courts expressly referred to in subsection (a) above in any action or proceeding in respect of any claim or cause of action other than Permitted Claims.

        Section 11.15 Yield. It is the intention of the parties hereto that each Funding Party shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Funding Party under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to such Participant notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in this Agreement or in any other Operative Document or any other agreement entered into in connection with or as security for the Ownership Interests, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to any Funding Party that is contracted for, taken, reserved, charged or received by such Funding Party under this Agreement or under any of the other aforesaid Operative Documents or other agreements or otherwise in connection with the Ownership Interests shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be cancelled automatically and if theretofore paid shall be credited by such Funding Party on the principal amount of its Ownership Interests (or, to the extent that the principal amount of its Ownership Interests shall have been or would thereby be redeemed in full, refunded by such Lease Participant to the Lessor and by the Lessor to the Lessee); and (ii) in the event that the maturity of the Ownership Interests is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted redemption, then such consideration that constitutes interest under law applicable to any Funding Party may never include more than the maximum amount allowed by such applicable law, and excess Yield, if any, provided for in this Agreement or otherwise shall be cancelled automatically by such Funding Party as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Funding Party on the principal amount of its Ownership Interests (or, to the extent that the principal amount of the Ownership Interests shall have been or would thereby be redeemed in full, refunded by such Lease Participant to the Lessor and by the Lessor to the Lessee). All sums paid or agreed to be paid to any Funding Party for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Funding Party, be amortized, prorated, allocated and spread in equal parts throughout the full term of the Ownership Interests, until payment in full, so that the rate or amount of Yield on account of any Ownership Interests hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of Yield payable to any Funding Party on any date shall be computed at the Highest Lawful Rate applicable to such Funding Party pursuant to this Section 11.15 and (ii) in respect of any subsequent Yield computation period the amount of Yield otherwise payable to such Funding Party would be less than the amount of Yield payable to such Funding Party computed at the Highest Lawful Rate applicable to such Funding Party, then the amount of Yield payable to such Funding Party in respect of such subsequent Yield computation period shall continue to be computed at the Highest Lawful Rate applicable to such Funding Party until the total amount of Yield payable to such Funding Party shall equal the total amount of Yield which would have been payable to such Funding Party if the total amount of Yield had been computed without giving effect to this Section.

        Section 11.16 Characterization.

        (a) In order to protect the rights and remedies of the Funding Parties following a Termination Event or a Cancellation Event, and for the purposes of commercial law and Federal, state and local income and ad valorem taxes and Title 11 of the United States Code (or any other applicable Federal, state or local insolvency, reorganization, moratorium, fraudulent conveyance or similar law now or hereafter in effect for the relief of debtors), the parties hereto intend that (i) the Lease be treated as the repayment and security provisions of a loan by the Lessor to the Company in the amount of the Facility Cost, (ii) all payments of Basic Rent, Supplemental Rent, the Final Rent Payment, the Completion Costs Payment, the Termination Value and the Purchase Price be treated as payments of principal, interest and other amounts owing with respect to such loan and (iii) the Company be treated as entitled to all benefits of ownership of the Facility or any part thereof. In addition, the parties acknowledge that after payment in full of the Ownership Interests, the Yield accrued thereon and any other obligations of the Company under the Operative Documents, any remaining proceeds of the Facility shall be distributed to the Company.

        (b) The Company agrees that neither it nor any of its Affiliates (whether or not consolidated or combined returns are filed for any such Affiliate and the Company for federal, state or local income tax purposes) will at any time take any action, directly or indirectly, or file any return or other document inconsistent with the intended income tax treatment set forth in the preceding clause (a), and the Company agrees that the Company and any such Affiliates will file such returns, maintain such records, take such action and execute such documents (as reasonably requested by the Lessor or the Lease Participants from time to time) as may be appropriate to facilitate the realization of such intended income tax treatment. Each of the Lessor and the Lease Participants agrees that neither it nor any affiliate (whether or not consolidated or combined returns are filed for such affiliate and the Lessor or any Lease Participant, as the case may be, for federal, state or local income tax purposes) will at any time take any action, directly or indirectly, or file any return or other document claiming, or asserting that it is entitled to, the income tax benefits, deductions and/or credits which, pursuant to the intended income tax treatment set forth herein, would otherwise be claimed or claimable by the Company, and that it and any such affiliates will file such returns, maintain such records, take such actions, and execute such documents (as reasonably requested by the Company from time to time) as may be appropriate to facilitate the realization of, and as shall be consistent with, such intended income tax treatment, and if any such filing, maintenance, action or execution requested by the Company or the Guarantor would result in any additional income tax liability payable by it or any affiliate, or could reasonably be expected to result in liability payable by it or any affiliate, unrelated to the intended income tax treatment set forth herein, then the Company will provide an indemnity against such unrelated income tax liability satisfactory to the Lessor or any Lease Participant, as the case may be, in its sole opinion.

        (c) The Company acknowledges that no Lease Participant, the Lessor or any Affiliate of any of the foregoing thereof is making any representation, nor is it required to make any disclosure, now or in the future, with respect to the parties' tax or accounting treatment of the Facility or the financing thereof, nor is any Lease Participant, the Lessor or any Affiliate or any of the foregoing responsible, nor will it be responsible in the future, for tax and accounting advice with respect to the Facility or the financing thereof, and the Company has had or will have the benefit of the advice of its own independent tax and accounting advisors with respect to such matters.

        Section 11.17 Compliance. Neither the Lessor nor any Lease Participant has any responsibility for compliance by the Facility or the Company with any Governmental Requirement or other matters. The Company expressly assumes such responsibilities and shall indemnify and hold harmless the Lessor and the Lease Participants with respect thereto in the manner provided in the Lease.

        Section 11.18 Facility. Upon payment by the Company of the Purchase Price Value in connection with its purchase of all of the Facility in accordance with the Lease or the Agency Agreement, or the repayment in full of all amounts then due and owing by the Company under the Operative Documents, and promptly upon the request of the Company, the Lessor shall convey the Facility to the Company or its designee, free and clear of any Lien or other adverse interest of any kind created by the Lessor or any Person claiming by, through or under the Lessor, including, without limitation, the Lessor and the Lease Participants (except as consented to by the Company).

        Section 11.19 Funding Parties. No recourse under any obligation, covenant or agreement of any Funding Party contained in this Agreement, any Operative Document or any agreement or document executed in connection herewith or therewith or the transactions contemplated hereby or thereby shall be had against any shareholder, employee, officer, director, affiliate or incorporator of the Funding Parties. The obligations, covenants and agreements of the Funding Parties under any of the foregoing agreements and documents are solely the corporate obligations of the Funding Parties, and the Lessor (with respect to the Lease Participants) and the Company and the Lease Participants (with respect to the Lessor) agree to look solely to the Lease Participants or the Lessor, as applicable, for payment of all obligations, including, without limitation, any fees or other amounts due hereunder or thereunder, and claims arising out of or relating to any of the foregoing agreements and documents. The provisions of this Section shall survive the termination of this Agreement.

        Section 11.20 Waiver of Jury Trial. Each of the parties hereto waives, to the fullest extent permitted by applicable law, any right to a trial by jury in any action or proceeding to enforce or to defend any rights under this Agreement or any other Operative Document or under amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or therewith or arising from any relationship existing in connection with this Agreement or any other Operative Document, and agrees that any such action or proceeding shall be tried before a court and not before a jury.

        Section 11.21 Certain Acknowledgments of the Parties. Each of the parties hereto hereby acknowledges and agrees that (i) this Agreement and the other Operative Documents have not been negotiated by the Lessor or any of the Lease Participants in the State of Alabama, (ii) the closing of the transactions contemplated by this Agreement and the other Operative Documents shall take place at the office of the Lessor in Atlanta, Georgia, and (iii) in addition to the satisfaction of other conditions set forth in Section 6.01 of this Agreement, this Agreement shall not be effective until the Lessor has received at its office in Atlanta, Georgia the documents described in the first sentence of Section 6.01.

        Section 11.22 Consent to Release of Excess Annex Land and Excess Parking Land. Each of the Lease Participants hereto hereby acknowledges that: (i) a portion of the Site pertaining to the annex office building parcel constitutes Excess Annex Land, and is subject to release from the Ground Lease and the Lease at any time upon the request of the Lessee, pursuant to the provisions of Section 27(k)(1) of the Lease, and the Lease Participants hereby consent thereto; and (ii) a portion of the Site pertaining to the parking deck to be constructed thereon constitutes Excess Parking Land, and is subject to release from the Ground Lease and the Lease at any time upon the request of the Lessee, pursuant to the provisions of Section 27(k)(2) of the Lease, and the Lease Participants hereby consent thereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

The Company:                        PROTECTIVE LIFE INSURANCE COMPANY


                                    By:/s/A. S. Williams, III
                                            Name:  A. S. Williams, III
                                            Title: EVP, Investments and Treasurer

                                    Principal Place of Business and Chief Executive Office:

                                    2801 Highway 280 South
                                    Birmingham, Alabama 35223
                                    Attention: Carl Thigpen,
                                    Telecopier: 205-868-3609



Lessor:                             Wachovia Capital Investments, Inc.

Lessor
Commitment: $30,000,000             By:/s/Kevin T. McConnell
                                            Name:  Kevin T. McConnell
                                            Title: Senior Vice President

                                    Applicable Funding Office for
                                    Lessor Advances and Address for Notices:

                                    Wachovia Capital Investments, Inc.
                                    191 Peachtree Street, N.E.
                                    27th Floor
                                    Atlanta, Georgia 30303-1757
                                    Attention: Rosalyn Ostler
                                    Telecopier No.: 404-332-4432
                                    Telephone No.: 404-332-1122




Lease Participants:

Lease Participant                   SUNTRUST BANK

Commitment: $25,000,000             By:/s/John Frazer
                                            Name:  John Frazer
                                            Title:  Vice President



                                    Applicable Funding Office for
                                    Lease Participant Advances and Address for Notices:

                                    SunTrust Bank
                                    25 Park Place, 21st Floor
                                    Center Code 1944
                                    Atlanta, Georgia 30308
                                    Attention: John Frazer
                                    Telecopier No.: 404-658-4906
                                    Telephone No.: 404-724-3751







Lease Participant          LASALLE BANK NATIONAL ASSOCIATION

Commitment: $20,000,000             By:George L. Kumis
                                            Name:    George L. Kumis
                                            Title:   Senior Vice President

                                    Applicable Funding Office for
                                    Lease Participant Advances and Address for Notices:

                                    LaSalle Bank National Association
                                    135 South LaSalle Street
                                    Suite 216
                                    Chicago, Illinois 60603
                                    Attention:  Genny Padilla
                                    Telecopier No.: 312-904-6189
                                    Telephone No.: 312-904-8121

EXHIBIT A

Description of Site

ANNEX PARCEL

A parcel of land situated in the S.W.1/4 of the S.E.1/4 and the S.E.1/4 of the S.W.1/4 of Section 8, and the N.W.1/4 of the N.E.1/4 of Section 17, both in Township 18 South,

Range 2 West, Jefferson County, Alabama, being more particularly described as follows: Commence at the Westernmost corner of Lot A according to Parkway Subdivision as recorded in Map Book 88, Page 38 in the office of the Judge of Probate of Jefferson County, Alabama, said point lying on the Northeasterly right-of-way of U.S. Highway #280 and also being the Southernmost corner of that parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 and the property boundary of the aforementioned parcel a distance of 27.00 feet to the POINT OF BEGINNING of the parcel herein described; thence continue along the last described course along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 231.19 feet to a point 120.00 feet Northeasterly of the T.S. (tangent to spiral) at highway Sta. 75+41.43; thence continue in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 along a line which lies 120.00 feet Northeasterly of and parallel to a spiral curve having a LS of 250.00 feet and a (theta)S of 3°07'30” a distance of 75.50 feet to a point; thence 23°06’ to the right (angle measured to chord) in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 13.50 feet to a point; thence 39°47’ to the left in a Westerly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 13.30 feet to a point; thence 46°23'41” to the right in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 48.30 feet to a point on a line that is 145.00 feet Northeasterly of and parallel to a spiral curve having a LS of 250.00 feet and a (theta)S of 3°07'30"; thence along the aforementioned line 145.00 feet Northeasterly of and parallel to said spiral curve in a Northwesterly direction along the Northeasterly right-of-way line of U.S. Highway #280 a distance of 99.41 feet to a point that is 145.00 feet Northeasterly of and parallel to the S.C. (spiral to curve) at highway Sta. 77+91.43, said point lying on a curve to the right having a radius of 2146.83 feet and a central angle of 1°57'26"; thence in a Northwesterly direction along the arc of said curve and the Northeasterly right-of-way line of U.S. Highway #280 a distance of 73.34 feet to a point; thence 89°56'26” to the right (angle measured to tangent) in a Northeasterly direction a distance of 182.78 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 2.1 feet to a point; thence 90°00’ to the left in a Northeasterly direction a distance of 18.26 feet to a point; thence 90°06'28" to the right in a Southeasterly direction a distance of 123.34 feet to a point; thence 89°54'32” to the left in a Northeasterly direction a distance of 74.56 feet to a point; thence 90°10'29” to the right in a Southeasterly direction a distance of 126.91 feet to a point; thence 90°13'21” to the left in a Northeasterly direction a distance of 104.53 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 287.09 feet to a point on the boundary of a parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence 62°19'15” to the right in a Southerly direction along the boundary of said parcel a distance of 86.47 feet to a point; thence 83°17'32” to the right in a Westerly direction along the boundary of said parcel a distance of 65.00 feet to a point; thence 90°00’ to the left in a Southerly direction along the boundary of said parcel a distance of 20.26 feet to a point; thence 31°54'03” to the right in a Southwesterly direction along the boundary of said parcel a distance of 235.00 feet to the POINT OF BEGINNING.

Containing 3.9 acres, more or less.

        TOGETHER WITH, a non exclusive easement for pedestrian and vehicular ingress and egress to, upon, over and across the Protective Road, Protective Driveway and Orchid Driveway (as the same are described in that certain Reciprocal Easement Agreement by and between Orchid, L.L.C. and Protective Life Insurance Company dated as of January 19, 1996, and recorded as Instrument #9601/6971 in the Probate Office of Jefferson County, Alabama), as the same may be modified or relocated.

PARKING DECK PARCEL

A parcel of land situated in the South 1/2 of the S.E.1/4 of Section 8, Township 18 South, Range 2 West, Jefferson County, Alabama, being more particularly described as follows:

Commence at the Southwesterly corner of Lot 10-A of Parkway Subdivision as recorded in Map Book 88, Page 38 in the office of the Judge of Probate of Jefferson County, Alabama, and run in a Northerly direction along the Westerly line of said Lot 10-A a distance of 24.24 feet to the POINT OF BEGINNING of the parcel herein described, said point lying on the Northwesterly boundary of a parcel described in Real Volume 4452, Page 977; thence 124°24'34” to the left in a Southwesterly direction along the boundary of the aforementioned parcel, a distance of 328.53 feet to a point on the boundary of a parcel of land described in a Warranty Deed recorded in Instrument #9601/6969; thence 87°34'08” to the right in a Northwesterly direction along the boundary of said parcel a distance of 28.37 feet to a point; thence 52°21'40” to the left in a Southwesterly direction along the boundary of said parcel a distance of 315.66 feet to a point; thence 90°00’ to the right in a Northerly direction along the boundary of said parcel a distance of 31.38 feet to a point; thence 83°24'09” to the left in a Northwesterly direction along the boundary of said parcel a distance of 144.00 feet to a point; thence 27°49'53” to the right in a Northwesterly direction a distance of 287.09 feet to a point; thence 90°00’ to the right in a Northeasterly direction a distance of 620.00 feet to a point; thence 90°00’ to the right in a Southeasterly direction a distance of 871.31 feet to a point; thence 110°21'49” to the right in a Southwesterly direction a distance of 107.65 feet to the POINT OF BEGINNING.

        Containing 9.919 acres.

        TOGETHER WITH, a non exclusive easement for pedestrian and vehicular ingress and egress to, upon, over and across the Protective Road, Protective Driveway and Orchid Driveway (as the same are described in that certain Reciprocal Easement Agreement by and between Orchid, L.L.C. and Protective Life Insurance Company dated as of January 19, 1996, and recorded as Instrument #9601/6971 in the Probate Office of Jefferson County, Alabama), as the same may be modified or relocated.

EXHIBIT B

OWNERSHIP CERTIFICATE

EFFECTIVE DATE OF OWNERSHIP CERTIFICATE: ,

THIS OWNERSHIP CERTIFICATE WAS ISSUED PURSUANT TO SECTION 2.02(a)(ii), SECTION 3.02 OR SECTION 11.06 OF THE INVESTMENT AND PARTICIPATION AGREEMENT DATED AS OF FEBRUARY 1, 2000 , AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME (THE "INVESTMENT AGREEMENT"), AMONG PROTECTIVE LIFE INSURANCE COMPANY, AS THE COMPANY, WACHOVIA CAPITAL INVESTMENTS, INC., AS THE LESSOR, AND THE LEASE PARTICIPANTS PARTIES THERETO FROM TIME TO TIME, AND WAS ISSUED BY THE LESSOR THEREUNDER. EACH OWNERSHIP CERTIFICATE WHICH IS ISSUED BY THE LESSOR SUPERSEDES AND REPLACES ALL PRIOR OWNERSHIP CERTIFICATES, AND REFERENCE SHOULD BE MADE TO THE BOOKS AND RECORDS OF THE LESSOR MAINTAINED AT 191 PEACHTREE STREET, N.E., ATLANTA, GEORGIA 30303-1757, ATTENTION: SYNDICATION SERVICES, TELEPHONE: 404-332-4008, FACSIMILE: 404-332-5019, FOR A DETERMINATION AS TO THE OWNERSHIP CERTIFICATE CURRENTLY IN EFFECT AT ANY TIME. CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION HAVE THE MEANINGS SET FORTH IN SCHEDULE 1.02 TO THE INVESTMENT AGREEMENT.

I. TOTAL LESSOR INVESTMENTS(1): $

II. OWNERSHIP INTERESTS AND PERCENTAGE SHARES:

                                                     AMOUNT OF
                                                     OWNERSHIP                        PERCENTAGE
         FUNDING PARTY                               INTEREST                           SHARE
         -------------                               --------                         ----------
         Lessor                                      $                                  ___%

         Lease Participants:

                                                     $                                  ___%

                                                     $                                  ___%

         Total Percentage
         Ownership Interests:                        $

         Lessor's Non-Recourse Amount
         Ownership Interests as
         Percentage of Total
         Lessor Investments                          %(2)



                                            Wachovia Capital Investments, Inc.,
                                            as Lessor



                                            By:
                                                     Name:
                                                     Title:

 -------------------------------
(1)  Include all "deemed" Lessor Advances and Lease Participant Advances pursuant to Section
2.01 (d) since the issuance of the prior Ownership Certificate.

(2)  Must be at least 3%.

EXHIBIT C

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT


ASSIGNMENT AND ACCEPTANCE

Dated ___________, _____

        Reference is made to the Investment and Investment Agreement, dated as of February 1, 2000 (as the same may be amended, supplemented or otherwise modified from time to time, the “Investment Agreement”) among Protective Life Insurance Company, a Tennessee corporation (the “Company”), the Lease Participants parties thereto (the “Lease Participant”), and Wachovia Capital Investments, Inc., as Lessor (the “Lessor”). Terms defined in the Investment Agreement are used herein with the same meaning.

        ______________________________ (the "Assignor") and _______________________ (the "Assignee") agree as follows:

The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that Ownership Interest in and to all of the Assignor’s rights and obligations under the Investment Agreement as of the date hereof which represents the Percentage Share specified on Schedule 1 of all outstanding rights and obligations under the Investment Agreement, including without limitation, such Ownership Interest in the Assignor’s Lease Participant Commitment and Lease Participant Advances made by it. After giving effect to such sale and assignment, Assignor’s Ownership Interest in the Lease Participant Commitments and the Lease Participant Advances will be as set forth in Section 2 of Schedule 1.

The Assignor (i) represents and warrants that it is the legal and beneficial owner of the Ownership Interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Investment Agreement or any other Operative Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Investment Agreement or any other Operative Document or other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantor or the Company, or the performance or observance by the Guarantor or the Company of any of their obligations under the Investment Agreement or any other Operative Document or other instrument or document furnished pursuant thereto.

The Assignee (i) confirms that it has received a copy of the Investment Agreement and each other Operative Document, together with copies of the financial statements referred to in Section 8.01 of the Investment Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Lessor, the Assignor or any other Lease Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Investment Agreement or any other Operative Document; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Lessor as its agent to take such action as agent on its behalf and to exercise such powers under the Investment Agreement and the other Operative Documents as are delegated to the Lessor by the terms thereof, together with such powers as are reasonably incidental thereto; (v) assumes the Lease Participant Commitment of the Assignor to the extent of the Ownership Interest assigned to it pursuant hereto and agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Investment Agreement are required to be performed by it as a Lease Participant; [and] (vi) specifies as its address for notices the address set forth beneath its name on the signatures pages hereof [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Investment Agreement, or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty].(3)

Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Lessor for the consent and recording by the Lessor. The effective date of this Assignment and Acceptance shall be the date of consent hereto by the Lessor, unless otherwise specified on Schedule 1 hereto (the “Effective Date”). If the Lessor refuses to consent to this Assignment and Acceptance (which it has the right to do, in its sole discretion), this Assignment and Acceptance shall be null and void.

Upon such consent hereto and recording by the Lessor, as of the Effective Date, (i) the Assignee shall be a party to the Investment Agreement as a Lease Participant and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of Lease Participant thereunder and under the other Operative Documents, and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and obligations and be released from its Ownership Interests (including its Lease Participant Commitment and Lessor Advances) under the Investment Agreement and the other Operative Documents.

Upon such consent and recording by the Lessor, from and after the Effective Date, the Lessor shall make all payments under the Investment Agreement in respect of the Ownership Interest assigned hereby (including, without limitation, all payments of Rent, principal and Yield with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Investment Agreement for periods prior to the Effective Date directly between themselves.

This Assignment and Acceptance shall be governed by, and construed in accordance with, the LAWS of the State of New York.

        IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto.

Assignor:                                   ________________________



                                            By:
                                               Name:
                                               Title:



Assignee:                                   ________________________



                                            By:
                                              Name:
                                              Title:





- ------------------------------
(3) If the Assignee is organized under the laws of a jurisdiction outside the United States.

                                                              Schedule 1
                                                                  to
                                                       Assignment and Acceptance
                                                        Dated ___________, ____

Section 1.

         Percentage Share assigned to Assignee       _______%
         Lease Participant Commitment: assigned to Assignee   $_______
         Aggregate Outstanding Principal Amount of Lessor
          Advances assigned to Assignee     $_______]


Section 2.


         Percentage Share retained by Assignor       _______%
         Lease Participant Commitment: retained by Assignor   $_______
         Aggregate Outstanding Principal Amount of  Lessor
          Advances retained by Assignor     $_______]


Section 3*.

Effective Date:_________, ____

[NAME OF ASSIGNOR]                                   [NAME OF ASSIGNEE]

By:                                                                    By:
Title:                                                                 Title:
                                                                       Address for notices:
                                                                       [Address]


                                                                       Applicable Funding Office:
                                                                       [Address]


Consented to:


[Name of Company]                                             Wachovia Capital Investments, Inc.,  as Lessor
[If required by Investment Agreement]





By:                                                           By:
         Title:                                                        Title:

EXHIBIT D


FORM OF LEGAL OPINION OF COUNSEL

TO THE COMPANY AND THE GUARANTOR

[NOTE: RATHER THAN SUTHERLAND, ASBILL & BRENNAN’S FURNISHING A COMPREHENSIVE OPINION IN RELIANCE ON ATTACHED OPINIONS OF DEBORAH LONG AND BALCH & BINGHAM, THIS OPINION MAY BE SPLIT INTO SEVERAL OPINIONS, WITH EACH OF THE FOREGOING COUNSEL FURNISHING OPINIONS AS TO DISCRETE PARTS.]

February 1, 2000

To the Lessor and the Lease
Participants Referred to Below
c/o Wachovia Capital Investments, Inc.,
as Lessor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757

Dear Sirs:

      We are special counsel for Protective Life Corporation, a Delaware corporation (the “Guarantor”), and Protective Life Insurance Company, a Tennessee corporation (the “Company”; the Guarantor and the Company sometimes being collectively referred to herein as the “Obligors”). This opinion is being delivered pursuant to Section 6.01(b) of the Investment and Investment Agreement dated as of even date herewith (the “Investment Agreement”), among the Company, the Lease Participants listed on the signature pages thereof, and Wachovia Capital Investments, Inc., as Lessor (the “Lessor”), and in connection with the execution and delivery of the other Operative Documents (as defined in the Investment Agreement). Terms defined in the Investment Agreement or in Schedule 1.02 to the Investment Agreement are used herein as therein defined, unless otherwise indicated.

      We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. In addition, we have reviewed the following documents (collectively, the “Subject Documents”):

      i. the Investment Agreement;

      ii. the Lease;

      iii. the Agency Agreement;

      iv. the financing statements (executed by the Company in connection with the Lease (the "Financing Statements");

      v. the Ground Lease; and

      vi. the Guaranty.

The documents referred to in i through v above are referred to herein collectively as the “Company Documents.”

      Upon the basis of the foregoing, we are of the opinion that:

      (1) Each of the Company and the Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Tennessee and Delaware, respectively, and has all corporate powers required to carry on its business as it is now conducted.

      (2) The execution, delivery and performance by the Company of the Company Documents and the other Operative Documents to which the Company is a party, and by the Guarantor of the Guaranty (a) are within each the such Obligor's corporate powers, (b) have been duly authorized by all necessary corporate action, (c) require no action by or in respect of, or filing with, any governmental body, agency or official, (d) do not contravene, or constitute a default under, any provision of any applicable law, statute, rule or regulation or of the certificate of incorporation or by-laws of either of the Obligors or of any material agreement, judgment, injunction, order, decree or other instrument relating to Indebtedness which is binding upon either of the Obligors and (e) except as provided in the Operative Documents, do not result in the creation or imposition of any Lien on any asset of either of the Obligors.

      (3) The Company Documents constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, and the Guaranty constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, in each case except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (b) general principles of equity (including, without limitation, the availability or non- availability of equitable remedies), whether considered in a proceeding at law or in equity.

      (4) In the course of our representation of the Obligors, no facts have come to our attention that would cause us to believe that there is any action, suit or proceeding pending, or threatened, against or affecting either of the Obligors or any of the Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Guarantor, the Company and the other Consolidated Subsidiaries, considered as a whole, or which in any manner questions the validity or enforceability of any of the Operative Documents.

      (5) Neither of the Obligors is an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

      (6) Neither of the Obligors nor any of the other Material Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," as such terms are defined in the Public Utility Company Act of 1935, as amended.

      (7) The obligations of the Company under the Lease with respect to the payment of Basic Rent, the Final Rent Payment, the Completion Costs Payment and the Supplemental Rent under the Lease and all other payment obligations of the Company under the Lease including without limitation the payment of the Termination Value or the Purchase Price by the Company or its designee pursuant to the exercise or deemed exercise of the Company's option under Section 15 of the Lease or pursuant to any other provisions of the Lease would constitute the valid and binding obligations of the Company and would be enforceable against the Company in accordance with the terms of the Lease, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights and general principles of equity.

      (8) If a court of the State of Alabama (the "State") held the Lease to be a financing transaction instead of a true lease, (a) the Lease would constitute the valid and binding obligations of the Company and would be enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights and general principles of equity, (b) the obligations of the Company under the Lease with respect to the payment of Basic Rent, the Final Rent Payment or the Completion Costs Payment, as applicable, and Supplemental Rent under the Lease and all other payment obligations of the Company under the Lease including without limitation the payment of the Termination Value or the Purchase Price by the Company or its designee pursuant to the exercise of the Company's option under Section 15 of the Lease or pursuant to any other provision of the Lease would constitute the valid and binding obligations of the Company and would be enforceable against the Company in accordance with the terms of the Lease, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights and general principles of equity, (c) the "loan" to the Company evidenced by the Lease and the Investment Agreement would not be contractually usurious under the laws of the State and (d) the Lease would be enforceable as a mortgage under the laws of the State and the Lessor would be entitled to foreclose the Liens granted under the Lease following an Event of Default in accordance with the power of sale and foreclosure provisions therein granted.

      (9) Upon the recordings and filings as provided in paragraph (j) below, the Lease is effective to convey in favor of the Lessor, for the repayment of the aggregate unpaid Lessor Investments and all Yield with respect thereto and (without duplication) all Rent and other amounts payable pursuant to the Operative Documents, a valid security title in and to all of the Company's right, title and interest, if any, in and to the Site, the Improvements and any other portion of the Facility constituting real property and a perfected security interest in all of the Company's right, title and interest, if any, in and to the portion of the Facility constituting personal property.

      (10) The Lease, including the acknowledgements thereto, are in form satisfactory for recording. The Financing Statements comply with all applicable provisions of the Uniform Commercial Code of the State (the "UCC") and are in appropriate form for filing. The property descriptions of the real property contained in the Lease, if accurate and complete, are in the proper form for the purposes of applicable recording and filing laws. Except as set forth in paragraph 11, the recording of the Lease, to the extent the Lease would be characterized as a "financing transaction," in the public records of Jefferson County, Alabama (the "Recording Office") against the name of the Company and the filing of the Financing Statements executed by the Company in the Recording Office and in the office of the Secretary of State of Tennessee against the Company are the only recordings, registrations or filings which are required for the perfection of the Liens created by the Lease on the property described in paragraph 9 above.

      (11) After the recordings and filings specified in paragraph 10 have occurred, no instrument need be recorded, registered or filed or re-recorded, re-registered or re-filed in any public office in the State in order to maintain the perfection of the liens and security interests created by the Lease, other than continuation statements as required by the UCC.

      (12) No state or local recording tax, documentary stamp tax, intangibles tax or other similar fee, tax or governmental charge (other than statutory filing and recording fees and intangibles taxes to be paid upon the filing of the Lease for record and the filing of the Financing Statements as reflected in the closing disbursement statement executed by the Company bearing even date herewith) is required to be paid to the State in connection with the filing and recording of the Lease and the Financing Statements.

      (13) The execution, delivery and performance by the Guarantor of the Guaranty, and the execution, delivery and performance by the Company of the Company Documents do not conflict with or result in a violation of any law, statute, rule or regulation of the State or the State of Tennessee (or any subdivision thereof), or, except as contemplated by paragraph 10 above, require any consent of or filing or registration with an Governmental Authority of the State (or any subdivision thereof) which has not been obtained and which is necessary for the validity and enforceability thereof.

      We are duly admitted and qualified to practice law in the State and do not purport to be expert on, or admitted to practice in, any other state. As to paragraphs 2 and 4, we are relying solely on the opinion of Deborah Long, General Counsel of the Obligors, a copy of which is attached hereto, and as to paragraphs 7 through 10, and as to paragraphs 13 and 14 with respect to the State, we are relying solely on the opinions of Balch & Bingham LLP, special State counsel to the Obligors, a copy of which is attached hereto. For purposes of paragraph 3, insofar as the laws of the State of Tennessee are applicable, we are assuming that the laws of the State of Tennessee are the same as those of the State of Delaware. Except as set forth in the immediately preceding sentence, we are opining herein only as to the effect on the subject transactions of the General Corporation Law of the State of Delaware and the federal laws of the United States of America. We are not opining as to the effect on any of the matters covered herein of the laws of any other jurisdiction.

      In rendering the opinions above, we have assumed, with your permission, that each of the Operative Documents has been duly authorized, executed and delivered by each party thereto other than the Obligors and, to the extent provided therein, constitutes the legal, valid and binding obligation of each such party enforceable in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (including, without limitation, the availability or non-availability of equitable remedies), whether considered in a proceeding at law or in equity.

      This opinion is delivered to you at the request of the Obligors in connection with the transaction referenced above and may not, without our prior written consent, be communicated to or relied upon by anyone other than you, your successors and assigns, except that it may be relied upon by and may be communicated to Jones, Day, Reavis & Pogue, as the Lessor’s special counsel.

      This opinion speaks only as of the date hereof, and we do not undertake any duty to advise you of any change herein.

                                                                                                                         Very truly yours

EXHIBIT E

FORM OF COMPLIANCE CERTIFICATE

        Reference is made to the Investment and Participation Agreement dated as of February 1, 2000 (as modified and supplemented and in effect from time to time, the “Investment Agreement”) by and among Protective Life Insurance Company, as the Company, the Lease Participants from time to time parties thereto, and Wachovia Capital Investments, Inc., as Lessor. Capitalized terms used herein shall have the meanings ascribed thereto in the Investment Agreement; all amounts shown herein, unless expressly set forth to the contrary, shall be without duplication.

        Pursuant to Section 8.01(iii) of the Investment Agreement, _____________, the duly authorized __________ of the Guarantor, hereby (i) certifies to the Lessor and the Lease Participants that the information contained in Schedule 1 attached hereto is true, accurate and complete as of _________, _____, and that, to the best of our knowledge, no Default is in existence on and as of the date hereof, (ii) restates and reaffirms that the representations and warranties contained in Article VII of the Investment Agreement are true on and as of the date hereof as though restated on and as of this date (except to the extent any such representation or warranty is expressly made as of a prior date) and (iii) certifies that the Debt Rating as of the date of this Compliance Certificate [has not changed from the prior Performance Pricing Determination Date] [has changed to ____ by Moody’s and ___ by S&P and the Applicable Margin in effect as a result thereof is ___%] .

PROTECTIVE LIFE CORPORATION

a Delaware corporation

By:

Its:

SCHEDULE I TO COMPLIANCE CERTIFICATE

                                             Schedule of Compliance as of ________________
                               with provisions of 8.04, 8.19, 8.24, 8.25, 8.26 and 8.27 of the Agreement

1.       Section 8.04 - Sales of Assets

      A. Aggregate amount of assets sold during fiscal quarter just
         ended                                                                                  ______________
      B.  Aggregate amount of assets sold during 3 prior fiscal
         quarters                                                                               ______________
      C. Sum of A and B                                                                         ______________
      D. Consolidated Total Assets                                                              ______________
      E. 15% of D                                                                               ______________
           Limitation: C may not exceed  E
      Complies ________  Does Not Comply


2.       Section 8.19 - Liens on Properties other than the Facility

      A. Amount secured by Liens not permitted by items (a) through
         (l) of clause (ii) of the definition of Permitted Liens                                ______________
      B. Adjusted Consolidated Net Worth (from line C of Paragraph 3
         below)                                                                                 ______________
      C. 15% of B                                                                               ______________
            Limitation: A may not exceed C
           Complies ________  Does Not Comply


3. Section 8.24 - Adjusted Consolidated Net Worth

      A. Consolidated Net Worth                                                                 ______________
      B. Adjustments, if any, for unrealized net gains and losses on
         assets held for sale pursuant to SFAS No. 115 and other
         accumulated comprehensive income pursuant to SFAS No. 133                              ______________
      C. Adjusted Consolidated Net Worth (A excluding B)
                                                                                                ______________
      D. $910,000,000                                                                             $910,000,000
      E. Cumulative Consolidated Net Income earned after March 31,
         1999 (if positive)
                                                                                                _______________
      F. 25% of E                                                                               _______________
      G. Consolidated allowance for uncollectible amounts on
         investments                                                                            _______________
      H. D plus F minus G                                                                       _______________
      I. C minus H
         (Must be greater than or equal to 0)                                                   _______________
             Complies ______________                  Does not comply _____________

4. Section 8.25 - Ratio of Adjusted Consolidated Indebtedness
     to Consolidated Capitalization

      A. Consolidated Indebtedness                                                              _______________
         1. Borrowed money, obligations secured by liens and obligations           _____________
              evidenced by notes acceptances, and other instruments
         2. Deferred purchase of property or services                      _____________________
         3. Capitalized Lease Obligations                                  _____________________
         4. Synthetic Lease Obligations                                    _____________________
         5. Letters of Credit                                              _____________________
         6. Guaranteed Obligations                                         _____________________
      B. Short-Term Indebtedness for advance fundings of guaranteed
         investment contracts, annuities and other similar insurance
         and investment products                                                                _______________
      C. Adjusted Consolidated Indebtedness
         (A minus B)                                                                            _______________
      D. Consolidated Capitalization
         1. Adjusted Consolidated Net Worth                                                     _______________
         2. Adjusted Consolidated Indebtedness
                                                                                                _______________
         3. Sum of  D.1 and D.2                                                                 _______________
      E. Ratio of C to D.3                                                                      ___ : 1.0
      F. Permitted Ratio                                                                        Less than 0.5 : 1.0
           Complies __________       Does not comply _____________

5. Section 8.26 - Ratio of Unconsolidated Cash Inflow Available
     for Interest Expense to Adjusted Consolidated Interest Expense

      A. Unconsolidated Cash Inflow Available for Interest Expense
         (for most recent fiscal quarter)
         1. Interest and principal received by Guarantor from
            Subsidiaries during quarter                                                 ______________________
            i.  Interest                                     _____________________
            ii. Principal                                    _____________________
         2. Gross management fees received by Guarantor from
            Subsidiaries during quarter
                                                                                         ______________________
         3. Guarantor's operating and administrative expenses during
            quarter (excluding interest expense)

                                                                                         ______________________
         4. Net management fees received by Guarantor from Subsidiaries
            during quarter (2 minus 3)
                                                                                         ______________________
         5. Dividends available to be distributed by Subsidiaries to
            Guarantor during this year (see attached Exhibit A)

                                                                                         ______________________
         6. A.5 divided by 4                                                             ______________________
         7. Other income (investment income - $_____ Miscellaneous -
            $____                                                                        ______________________
         8. Sum of A.1, A.4, A.6 and A.7                                                 ______________________
      B. Consolidated Interest Expense                                                   ______________________
      C. Interest on Short-Term Indebtedness for advance fundings of
         guaranteed investment contracts, annuities and other similar
         insurance and investment products
                                                                                         ______________________
      D. Adjusted Consolidated Interest Expense (B minus C)
                                                                                         ______________________
      E. Ratio of A.8 to D                                                                      __ : 1.0
      F. Permitted Ratio                                                                     Greater than 1.75 : 1.0
            Complies __________      Does not comply _____________

6. Section 8.27 - Company's Total Adjusted Capital

      A. Company's Total Adjusted Capital
         (See attached Exhibit B)                                                        ______________________
      B. Company's Authorized Control Level Risk-Based Capital
                                                                                         ______________________
      C. 3.6 times B                                                                     ______________________
      D. A minus C (must be greater than or equal to 0)
                                                                                         ______________________
                   Complies __________      Does not comply _____________

EXHIBIT A

                                                                                                 [Quarter end date]
Dividends Available to be Distributed

   Protective Life Insurance Company
Prior Year Stat Net Gain from Operations                                                        $___________
Prior Year End 10% of Policyholder Surplus                                                      $___________
Greater of Above                                                                                $___________

Year-to-Date Dividends Actually Distributed
                                                                                                $___________
   Protective Life Insurance Company
   Protective Life and Annuity Insurance Company                                                $___________
   Investment Distributors Advisory Services, Inc.                                              $___________
   National Health Care Systems, Inc.                                                           $___________
   United Dental Care Inc.                                                                      $___________

EXHIBIT B

                                                                                             [Quarter end date]
Total Adjusted Capital

Protective Life Insurance Company
   Capital and Surplus                                                                         $____________
   Asset Valuation Reserve                                                                      ____________

American Foundation Life Insurance Company
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Empire General Life Assurance Corporation
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Wisconsin National Life Insurance Company
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Protective Life Insurance Company of Kentucky
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Capital Investors Life Insurance Company
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Western Diversified
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

West Coast Life Insurance Company
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________

Protective Life Insurance Co of Ohio
   Capital and Surplus                                                                          ____________
   Asset Valuation Reserve                                                                      ____________
                                                                                                ____________
Eliminate life subsidiary capital included in Company capital
                                                                                               $____________

EXHIBIT F

GUARANTY

        THIS GUARANTY (this “Guaranty”) is made as of February 1, 2000 by PROTECTIVE LIFE CORPORATION, a Delaware corporation (the “Guarantor”), in favor of Wachovia Capital Investments, Inc. (the “Lessor”), for the ratable benefit of the Lessor and the Lease Participants.

RECITALS

        WHEREAS, the Lessor has acquired a ground lease of the Site, and intends to construct on the Site a building, nearby parking deck and related enhancements and improvements (including furniture, fixtures and equipment), which, with the Site, will comprise the Facility; and

        WHEREAS, the Lessor has leased the Facility to Protective Life Insurance Company (together with any successor or permitted assign under the terms of the Participation Agreement, the Lease or any other applicable Operative Document (as defined in Schedule 1.02 to the Investment Agreement), the “Company”), pursuant to a Lease Agreement of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the “Lease”); and

        WHEREAS, the Company, acting as the Lessor’s Acquisition/Construction Agent under an Acquisition, Agency, Indemnity and Support Agreement dated of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the “Agency Agreement”), will, on behalf of the Lessor, complete the construction and installation of all such enhancements and improvements on the Site and provide operations, maintenance and management support for the Facility; and

        WHEREAS, in order to finance the acquisition of the Lessor’s ground lease of the Site and the construction of the building, nearby parking deck and related enhancements and improvements (including furniture, fixtures and equipment) on the Site for the ultimate use and benefit of the Company in accordance with the Lease, the Company, the Lessor and the Lease Participants parties thereto have entered into a certain Investment and Participation Agreement of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the “Investment Agreement”), whereby the Company has requested that the Lessor make Lessor Advances to the Company in an aggregate principal amount of up to $75,000,000, and the Lessor has requested that the Lease Participants purchase Ownership Interests from the Lessor in an aggregate principal amount of up to $50,000,000; and

        WHEREAS, to induce the Lessor and the Lease Participants to enter into the Investment Agreement and the other Operative Documents, the Guarantor has agreed to guarantee the obligations of the Company to the Lessor under the Investment Agreement, the Lease, the Agency Agreement and the other Operative Documents; and

        WHEREAS, the Lease Participants have agreed to purchase Ownership Interests from the Lessor upon the terms and conditions set forth in the Investment Agreement;

        NOW, THEREFORE, in consideration of the premises and the covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as follows:

        SECTION 1. Definitions. Terms defined in the Investment Agreement or in Schedule 1.02 to the Investment Agreement and not otherwise defined herein have, as used herein, the respective meanings provided for therein.

        SECTION 2. Incorporation of Representations, Warranties and Covenants. The representations, warranties and covenants of the Guarantor contained in Articles VII and VIII of the Investment Agreement are incorporated herein by reference, and the Guarantor shall be bound thereby as fully as if they were set forth herein.

        SECTION 3. The Guaranty. The Guarantor, as primary obligor and not merely as surety, hereby irrevocably and unconditionally guarantees  the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) when due of all obligations of, and all amounts owing by, the Company (but not of the Lessor) under the Lease, the Investment Agreement, the Agency Agreement and all other Operative Documents, including, without limitation:

        (a) all obligations to pay Rent, Impositions, Taxes, Other Taxes, Support Expenses, the Termination Value where the Company has not elected to acquire the Facility by payment of the Purchase Price upon the occurrence of a Cancellation Event, the Purchase Price where the Company elects to acquire the Facility, increased costs and compensation for reduced returns under Section 5.03 of the Investment Agreement, compensation under Section 5.05 of the Investment Agreement, expenses and indemnities under Section 11.03 of the Investment Agreement and Article 5 of the Agency Agreement and otherwise, and Yield or interest at the Default Rate in respect of overdue Rent, Yield and all other amounts owing or payable of whatever nature, and

        (b) the full and punctual performance when due of all obligations and agreements of the Company to or in favor of the Lessor or the Lease Participants under the Lease, the Investment Agreement, the Agency Agreement and all other Operative Documents, including, without limitation, all obligations of the Company to cause Completion to occur in accordance with the terms of the Agency Agreement and the other Operative Documents and the Company's obligation to return the Facility to the Lessor in accordance with Section 16 of the Lease if the Company has not elected to acquire the Facility (all of the foregoing obligations in clauses (a) and (b) above being referred to collectively as the "Guaranteed Obligations"; provided, that notwithstanding anything herein to the contrary, if no Cancellation Event has occurred, and the Company has elected to pay the Final Rent Payment or the Completion Costs Payment, as applicable, in accordance with Section 15(a)(ii)(B) of the Lease, the Company shall have no obligation to pay the Non-Recourse Amount, which under such circumstances shall not constitute a part of the Guaranteed Obligations), and agrees to pay any and all expenses (including reasonable attorneys' fees and expenses) incurred by the Lessor, the Lease Participants and their respective successors, transferees and assigns in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to the Lessor or the Lease Participants but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar case or proceeding involving the Company. For purposes of determining when an obligation is "due" for purposes of this Guaranty, such term shall be interpreted to mean due in accordance with the terms of this Guaranty and without regard to the amendment, modification or rejection of any Guaranteed Obligation in any bankruptcy or other reorganization case or proceeding.

        SECTION 4. Guaranty Unconditional The Guarantor guarantees that the Guaranteed Obligations will be paid and performed strictly in accordance with their terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Company with respect thereto. The obligations of the Guarantor under this Guaranty are independent of the Guaranteed Obligations and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Company or any of its Affiliates or whether the Company or any of its Affiliates is joined in any such action or actions. The obligations of the Guarantor hereunder shall be irrevocable, unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

        (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under the Lease, the Investment Agreement, the Agency Agreement or any other Operative Document, by operation of law or otherwise or any obligation of any other guarantor of any of the Guaranteed Obligations;

        (b) any modification or amendment of or supplement to the Lease, the Investment Agreement, or any other Operative Document;

        (c) any release, nonperfection or invalidity of any direct or indirect security for any obligation of the Company under the Lease, the Investment Agreement, the Agency Agreement, any other Operative Document or any obligations of any other guarantor of any of the Guaranteed Obligations;

        (d) any change in the corporate existence, structure or ownership of the Company, or any other guarantor of any of the Guaranteed Obligations, or any insolvency, bankruptcy, reorganization or other similar case or proceeding affecting the Company, or any other guarantor of the Guaranteed Obligations, or its assets or any resulting release or discharge of any obligation of the Company, or any other guarantor of any of the Guaranteed Obligations;

        (e) the existence of any claim, set-off or other rights which the Guarantor may have at any time against the Company, any other guarantor of any of the Guaranteed Obligations, the Lessor, any Lease Participant or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

        (f) any invalidity or unenforceability relating to or against the Company, or any other guarantor of any of the Guaranteed Obligations, for any reason related to the Investment Agreement, the Agency Agreement, any other Operative Document or any other guaranty of the Guaranteed Obligations, or any provision of applicable law or regulation purporting to prohibit the payment by the Company, or any other guarantor of the Guaranteed Obligations, of amounts due under the Lease or any other amount payable by the Company under the Investment Agreement, the Agency Agreement or any other Operative Document, or purporting to limit the claim of the Lessor against the Company under the Lease; or

        (g) any other act or omission to act or delay of any kind by the Company, any other guarantor of the Guaranteed Obligations, the Lessor or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the Guarantor's obligations hereunder, including, without limitation, any failure, omission, delay or inability on the part of the Lessor or the Lease Participants to enforce, assert or exercise any right, power or remedy conferred on the Lessor or the Lease Participants under the Lease, the Investment Agreement, the Agency Agreement or any other Operative Document.

        SECTION. 5 Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances. The Guarantor's obligations hereunder shall remain in full force and effect until all Guaranteed Obligations shall have been paid in full and the Commitments under the Investment Agreement shall have terminated or expired. If at any time any payment of Rent or Yield or any other amount payable by the Company under the Investment Agreement, the Agency Agreement, or any other Operative Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Guarantor's obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

        SECTION 6. Waiver of Notice by the Guarantor. The Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company, any other guarantor of the Guaranteed Obligations or any other Person. The Lessor shall, to the extent reasonably practicable, provide prior written notice to the Guarantor of any intentional action (or, in the case of an unintentional action, such notice shall be provided upon discovery thereof by the Lessor) taken by the Lessor referred to in Section 3, provided, however, that the failure to provide such notice shall not affect the Guarantor’s obligations under this Guaranty.

        SECTION 7. Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Company under the Lease, the Agency Agreement, the Investment Agreement or any other Operative Document is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of the Lease, the Agency Agreement, the Investment Agreement or any other Operative Document shall nonetheless be payable by the Guarantor hereunder forthwith on demand by the Lessor.

        SECTION 8. Notices. All notices and other communications provided for hereunder shall be given in accordance with the provisions of Section 11.02 of the Investment Agreement.

        SECTION 9. No Waivers. No failure or delay by the Lessor in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Guaranty, the Lease, the Agency Agreement, the Investment Agreement and the other Operative Documents shall be cumulative and shall not be exclusive of any other rights or remedies provided by law.

        SECTION 10. Successors and Assigns. This Guaranty is for the benefit of the Lessor and its successors and assigns, including the Lease Participants, to the extent of their Ownership Interests. This Guaranty may not be assigned by the Guarantor without the prior written consent of the Lessor and each Lease Participant and shall be binding upon the Guarantor and its successors and permitted assigns.

        SECTION 11. Changes in Writing. Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated orally, but only in writing signed by the Guarantor and the Lessor (with the consent of all of the Funding Parties).

        SECTION 12. GOVERNING LAW; SUBMISSION TO JURISDICTION.

        (a) This Guaranty (including, but not limited to, the validity and enforceability hereof) shall be governed by, and construed in accordance with, the laws of the State of New York, other than the conflict of laws rules thereof.

        (b) The Guarantor hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in New York City and any appellate court from any thereof in any action or proceeding by the Lessor in respect of, but only in respect of, any claims or causes of action arising out of or relating to this Guaranty or the other Operative Documents (such claims and causes of action, collectively, being "Permitted Claims"), and the Guarantor hereby irrevocably agrees that all Permitted Claims may be heard and determined in such New York State court or in such Federal court. The Guarantor hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any aforementioned court in respect of Permitted Claims. The Guarantor hereby irrevocably agrees that service of copies of the summons and complaint and any other process which may be served by the Lessor in any such action or proceeding in any aforementioned court in respect of Permitted Claims may be made by delivering a copy of such process to the Guarantor by courier and by certified mail (return receipt requested), fees and postage prepaid, at the Guarantor's address determined pursuant to Section 8. The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

        (c) Nothing in this Section 12: (i) shall affect the right of the Lessor to serve legal process in any other manner permitted by law or affect any right otherwise existing of the Lessor to bring any action or proceeding against the Guarantor or its property in the courts of other jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in any particular court or a general waiver of any defense or a consent to jurisdiction of the courts expressly referred to in Subsection (a) above in any action or proceeding in respect of any claim or cause of action other than Permitted Claims.

        SECTION 13. Taxes, Etc. All payments required to be made by the Guarantor hereunder shall be made without set-off or counterclaim and free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties or other charges of whatsoever nature imposed by any government or any political or taxing authority as required pursuant to Section 4.06 of the Investment Agreement.

        SECTION 14. Subrogation. The Guarantor hereby agrees that it will not exercise any rights which it may acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, unless and until all of the Guaranteed Obligations shall have been paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the benefit of the Lessor and shall forthwith be paid to the Lessor to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Investment Agreement.

        SECTION 15. Waiver of Jury Trial. Each of the Guarantor and the Lessor waives, to the fullest extent permitted by applicable law, any right to a trial by jury in any action or proceeding to enforce or to defend any rights under this Guaranty or any other Operative Document or under amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or therewith or arising from any relationship existing in connection with this Guaranty or any other Operative Document, and agrees that any such action or proceeding shall be tried before a court and not before a jury.

        IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed, under seal, by its authorized officer as of the date first above written.

        [SEAL]

PROTECTIVE LIFE CORPORATION

a Delaware corporation

By:

Name:

SCHEDULE 1.02

Defined Terms

The following terms shall have the following meanings when used in the “Investment Agreement”, the “Lease”, the “Agency Agreement” and all other “Operative Documents” (all terms defined in the singular to have the same meanings when used in the plural and vice versa):

        “Acquisition/Construction Agent”: the Company, as acquisition and construction agent for the Lessor with respect to the Facility pursuant to the Agency Agreement.

        “Adjusted Consolidated Indebtedness”: (i) Consolidated Indebtedness, less (ii) Short-Term Indebtedness for advance fundings of guaranteed investment contracts, annuities and other similar insurance and investment products.

        “Adjusted Consolidated Interest Expense”: for any period of calculation, (i) Consolidated Interest Expense, less (ii) interest on Short-Term Indebtedness for advance fundings of guaranteed investment contracts, annuities and other similar insurance and investment products.

        “Adjusted Consolidated Net Worth”: at any date of determination, Consolidated Net Worth excluding all unrealized net losses and gains on assets held for sale pursuant to SFAS 115 and other accumulated comprehensive income pursuant to SFAS No. 133, to the extent such unrealized net losses and gains have been taken into account in determining Consolidated Net Worth.

        “Adjusted LIBO Rate”: with respect to any Yield Period, a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable LIBO Rate for such Yield Period by (ii) 1.00 minus the Eurodollar Reserve Percentage.

        "Administrative Supplemental Rent": as defined in Section 2.04(c) of the Investment Agreement.

        “Advance Notice”: in connection with any Lessor Advance, notice given by telecopy or telephone (and if by telephone, confirmed promptly by telecopier) to be received by the Lessor not later than 12:00 noon, Atlanta, Georgia time, on the 3rd Business Day before the requested date of such Lessor Advance or continuation.

        “Affiliate”: with respect to the Guarantor or the Company, as the case may be, (i) any Person that, directly or indirectly, through one or more intermediaries, controls the Guarantor or the Company, as the case may be (a “Controlling Person”), (ii) any Person (other than the Guarantor, the Company or another Subsidiary) which is controlled by or is under common control with a Controlling Person, or (iii) any Person (other than a Subsidiary) of which the Guarantor owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

        “Agency Agreement”: the Acquisition, Agency, Indemnity and Support Agreement, of even date with the Investment Agreement, between the Lessor and the Company, as Acquisition/Construction Agent, as amended, supplemented or otherwise modified from time to time.

        “Aggregate Construction Costs”: the aggregate amount of all Facility Costs, including all acquisition costs for the Improvements and Capitalized Expenses, excluding, however, the cost of the acquisition of the Site; provided, however, that only for purposes of this definition and the calculation of the Completion Costs Payment Limitation, “Aggregate Construction Costs” shall include individual items included in Capitalized Expenses only to the extent such items are required to be capitalized in accordance with GAAP.

        “Annual Statement” means the annual statutory financial statement of any Insurance Subsidiary required to be filed with the insurance commissioner (or similar authority) of its jurisdiction of incorporation, which statement shall be in the form required by such Insurance Subsidiary’s jurisdiction of incorporation or, if no specific form is so required, in the form of financial statements recommended by the NAIC to be used for filing annual statutory financial statements and shall contain the type of information recommended by the NAIC to be disclosed therein, together with all exhibits or schedules filed therewith.

        “Applicable Funding Office”: for each Funding Party, the funding office of such Funding Party (or an affiliate of such Funding Party) designated for any Lessor Advance or Lease Participant Advance on the signature pages of the Investment Agreement (or in an Assignment and Acceptance executed by a Lease Participant pursuant to Section 11.06 of the Investment Agreement) or such other offices of such Funding Party (or of an affiliate of such Funding Party) as such Funding Party may from time to time specify to the Lessor (if it is not such Funding Party) and the Company as the office by which its Lessor Advances or Lease Participant Advances, as applicable, are to be made and maintained.

        "Applicable Margin": with respect to the Lessor Advances, the applicable rate per annum determined in accordance with the Pricing Schedule.

        “Applicable Permit”: any Permit that is or may be necessary to own, renovate, construct, install, start-up, test, maintain, modify, expand, remove, operate, lease or use all or any part of the Facility (including, without limitation, the Site or any business conducted on or related to the Facility or the Site) in accordance with the Operative Documents, and the failure to obtain or maintain which would have a Material Adverse Effect.

        “Approved Appraisal”: any appraisal, ordered by the Lessor, but at the Company’s cost, from an appraiser or appraisers reasonably acceptable to the Lessor, which: (i) complies with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, 12 U.S.C. 3331, et seq., and The Regulations and Statements of General Policy on Appraisals promulgated by the Federal Deposit Insurance Corporation, 12 C.F.R. Part 32, as amended, (ii) is performed by a state-certified real estate appraiser certified under the laws of any State, (iii) reflects the Market Value of the Facility on an “as completed” basis and (iv) estimates the Market Value of the Facility as of the expiration of the Basic Term.

        "Arranger's Supplemental Rent": as defined in Section 2.04(c) of the Investment Agreement.

        "Assignment and Acceptance": an Assignment and Acceptance Agreement, in the form of Exhibit C to the Investment Agreement entered into by a Lease Participant and an Eligible Assignee.

        “Authorized Officers”: with respect to the Guarantor or the Company, the officers whose signatures and incumbency shall have been certified to the Lessor in a certificate certified by the Secretary or an Assistant Secretary of the Guarantor or the Company, as applicable, in form and substance reasonably satisfactory to the Lessor that are authorized to sign the Lease and the other Operative Documents to which the Lessee is a party and, until replaced by another Authorized Officer duly authorized for that purpose, to act as its respective representative for the purposes of signing documents and giving notices and other communications in connection with the Lease and the Operative Documents to which it is a party.

        "Banking Authority": as defined in Section 5.02 of the Investment Agreement.

        “Base Rate”: for any day, the rate per annum equal to the higher as of such day of (I) the Prime Rate, and (II) one-half of one percent above the Federal Funds Rate. For purposes of determining the Base Rate for any day, changes in the Prime Rate shall be effective on the date of each such change.

        “Basic Rent”: with respect to: (i) any Yield Period during the Construction Term, the amount of Yield accruing during the Construction Term which is payable by the deemed making of Lessor Advances and Lease Participant Advances pursuant to Sections 2.01(d) and 3.03(a); and (ii) any Rental Period during the Basic Term, for each day during such Rental Period (whether or not a Business Day), the amount of all Yield (excluding Yield on Supplemental Rent payable pursuant to Section 2.04) accruing for such day pursuant to and in accordance with the Investment Agreement.

        “Basic Term”: with respect to the Lease, and subject to the terms and conditions set forth therein and in the other Operative Documents, the period commencing on the Completion Date and ending on the earlier to occur of (i) the Option Date, (ii) the Cancellation Date, or (iii) the Scheduled Lease Termination Date.

        “Business Day”: (i) for all purposes other than as set forth in clause (ii) below, any day except Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia or Birmingham, Alabama are authorized or required by law or other government action to close, and (ii) with respect to all notices and determinations in connection with, and payments of principal of and interest on, the Lessor Advances, and notices and determinations in connection with and payments of Basic Rent, any day that is a Business Day described in clause (i) above and that is also a day for trading by and between banks in the London interbank eurodollar market.

        "Cancellation Date": as defined in Section 15(b) of the Lease.

        "Cancellation Event": as defined in Section 15(b) of the Lease, and shall include a Loss Event.

        “Capitalized Expenses”: all acquisition, design and construction costs and all legal, architectural, engineering and other professional fees and expenses, brokerage fees, appraisal fees, environmental assessment fees, title insurance, survey expenses, mortgage recording fees and taxes, intangibles taxes, and other “soft costs” of a nature ordinarily and reasonably incurred in connection with the acquisition, design, engineering, construction, assembly, installation, testing, improvement and completion of property substantially similar to the Facility (including soft and hard costs previously incurred as mutually agreed, not to exceed 10% of all Facility Cost) and all Basic Rent and Yield capitalized pursuant to the Operative Documents, and Commitment Supplemental Rent and other Supplemental Rent accrued prior to the Completion Date.

        “Capitalized Lease Obligations”: of a Person means the amount of the obligations of such Person under leases that would be shown as a liability on a balance sheet such Person prepared in accordance with GAAP, including obligations under the Lease.

        “Capital Stock” means any nonredeemable capital stock, membership interests or partnership interests of the Guarantor or any Consolidated Subsidiary (to the extent issued to a Person other than the Guarantor), whether common or preferred.

        “Casualty Occurrence”: any of the following events in respect of the Facility, (i) any material loss of the Facility or material loss of use thereof which does not constitute a Loss Event, or (ii) the condemnation, confiscation or seizure of, or requisition of title to or use of, any material part of the Facility which action does not constitute a Loss Event.

        "CERCLA": the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.ss.9601 et. seq., and its implementing regulations and amendments.

        "CERCLIS": the Comprehensive Environmental Response Compensation and Liability Inventory System established pursuant to CERCLA.

        “Change of Control”: the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 35% or more of the outstanding shares of voting stock of the Guarantor.

        "Change of Law": as defined in Section 5.02 of the Investment Agreement.

        "Closing Date": February 1, 2000.

        "Code": the Internal Revenue Code of 1986, as amended, and any successor Federal tax code.

        "Collateral": as defined in Section 26 of the Lease.

        "Co-Lessee": as defined in Section 21(b) of the Lease.

        "Commitment": as to the Lessor, its Lessor Commitment, and as to each Lease Participant, an amount equal to such Lease Participant's Lease Participant Commitment, then in effect.

        "Commitment Supplemental Rent": as defined in Section 2.04(a) of the Investment Agreement.

        “Company”: Protective Life Insurance Company, a Tennessee corporation, and its successors, and such term shall refer to it, as the context shall require, as (i) the Company hereunder, (ii) the Acquisition/Construction Agent for the Lessor under the Agency Agreement, or (iii) as the Lessee under the Lease.

        "Company Agents": as defined in Section 11.03(b)(ii) of the Investment Agreement.

        "Completion": the occurrence and satisfaction of all of the events and conditions described on Schedule 1.3 to the Agency Agreement on a single date to the reasonable satisfaction of the Majority Funding Parties.

        "Completion Certificate": a certificate of the Acquisition/Construction Agent in substantially the form of Exhibit A to the Agency Agreement, certifying that Completion of the Facility has occurred.

        “Completion Costs”: at any time the sum of (x) the Aggregate Construction Costs (including acquisition costs, except with respect to the Site, and soft costs) expended or incurred as of the time of a Non-Completion Event and which it will be necessary thereafter to expend in order to achieve Completion, plus (y) all Impositions thereon.

        “Completion Costs Payment”: an amount, which is payable upon the occurrence of a Non-Completion Event, equal to the sum of (i) the acquisition cost of the leasehold interest in the Site, (ii) the aggregate amount of all Completion Costs, up to but not in excess of the Completion Costs Payment Limitation, and (iii) all Supplemental Rent and other amounts owing by the Company under the Operative Documents (other than any Completion Costs in excess of the Completion Costs Payment Limitation).

        “Completion Costs Payment Limitation” means an amount, determined as of a time of the Non-Completion Event, equal to 89% of the difference between (i) Aggregate Construction Costs less (ii) all Rent payments which have actually been paid in cash.

        “Completion Date”: the earlier to occur of (i) the date on which the Company, as Acquisition/Construction Agent for the Lessor, delivers the Completion Certificate and (ii) February 1, 2002 (or, in the event of a Casualty Occurrence during the Construction Term and the Lessee is exercising its replacement rights pursuant to Section 14(d) of the Lease, July 1, 2002).

        “Compliance Certificate" : as defined in Section 8.01(iii) of the Investment Agreement.

        “Consolidated Capitalization”: at any date of determination, the sum of (i) Adjusted Consolidated Net Worth as at such date plus (ii) Adjusted Consolidated Indebtedness as at such time.

        “Consolidated Indebtedness”: the Indebtedness of the Guarantor and the Subsidiaries determined on a consolidated basis in accordance with GAAP, including, without limitation, Synthetic Lease Obligations.

        “Consolidated Interest Expense”: for any period of calculation, interest expense, whether paid or accrued, of the Guarantor and the Subsidiaries calculated on a consolidated basis in accordance with GAAP.

        "Consolidated Net Income": for any period of calculation, the net income of the Guarantor and the Subsidiaries calculated on a consolidated basis in accordance with GAAP.

        "Consolidated Net Worth": at any date of determination, the amount of consolidated common shareholders' equity of the Guarantor and the Subsidiaries, determined as at such date in accordance with GAAP (or SAP, with respect to the Insurance Subsidiaries).

        "Consolidated Operating Profits": for any period, the Operating Profits of the Guarantor and the Consolidated Subsidiaries.

        “Consolidated Subsidiary”: a Subsidiary, the accounts of which are customarily consolidated with those of the Guarantor, for the purpose of reporting to stockholders of the Guarantor, or to the Lessor and each of the Lease Participants, or, in the case of a recently acquired Subsidiary, the accounts of which would, in accordance with the Guarantor’s regular practice, be so consolidated for that purpose.

        “Consolidated Total Assets”: at any time, the total assets of the Guarantor and the Consolidated Subsidiaries, determined on a consolidated basis, as set forth or reflected on the most recent consolidated balance sheet of the Guarantor and the Consolidated Subsidiaries, prepared in accordance with GAAP and delivered to the Lessor and the Lease Participants pursuant to Section 8.01(i) or (ii) of the Investment Agreement.

        "Construction Term": the period commencing on the Lease Commencement Date and ending on the Completion Date.

        “Controlled Group”: all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Guarantor, are treated as a single employer under Section 414 of the Code.

        “Debt Rating”: at any time whichever is the higher of the rating of the Guarantor’s senior unsecured, unenhanced debt (or, if no such debt exists, its issuer credit rating for debt of such type) by Moody’s or S&P  (provided, that in the event of a double or greater split rating, the rating immediately above the lowest rating shall apply), or if only one of them rates the Guarantor’s senior unsecured, unenhanced debt, such rating.

        “Default”: any condition or event that constitutes an Event of Default or that with the giving of notice or the lapse of time or both would, unless cured or waived, become an Event of Default.

        “Default Rate”: with respect to any Lessor Advance, Rent or any other amount payable under any Operative Document, on any day, the sum of 2% plus the Adjusted LIBO Rate.

        “Dollars” and “$": dollars in lawful currency of the United States of America.

        “Eligible Assignee”: with respect to any particular assignment under Section 11.06 of the Investment Agreement, any bank or other financial institution consented to by the Company and the Lessor if such bank or other financial institution is not already a Lease Participant or an affiliate of a Lease Participant; provided that (i) the Lessor’s consent may be granted or withheld in its sole and absolute discretion, and (ii) the Company’s consent shall not be unreasonably withheld and, provided, further, that such consent of the Company shall not be required if a Default or Event of Default is in existence.

        “Eligible Lessor Assignee”: means a commercial bank or other financial institution, or an affiliate of either, which: (i) is a diversified company which has (x) significant assets and significant activities other than its Ownership Interests, and (y) has and is reasonably expected to continue to have, during the period it holds its Ownership Interests, significant equity (in any case in excess of 3%) in relationship to its Indebtedness; (ii) is not a “special-purpose entity” for purposes of EITF Issue No. 90-15, “Impact of Nonsubstantive Lessors, Residual Value Guarantees, and Other Provisions in Leasing Transactions”, EITF Issue No. 96-21, “Implementation Issues in Accounting for Leasing Transactions Involving Special-Purpose Entities”, or EITF Issue No. 97-1, “Implementation Issues in Accounting for Lease Transactions, including Those involving Special-Purposed Entities”, of the Emerging Issues Task Force of the Financial Accounting Standards Board of the Financial Accounting Foundation (the “FASB”), and (iii) agrees in writing not to pledge its Ownership Interests.

        “Environmental Assessment”: collectively, a Phase 1 report conducted by an independent engineering firm reasonably acceptable to the Lessor in scope and substance satisfactory to the Lessor, and in any event satisfying the minimum standards set forth in ASTME 1527-94 (and, if recommended in or indicated by the Phase 1 report, a Phase 2, environmental soil test or other environmental report or reports), reflecting compliance of the Facility in all material respects with all applicable Environmental Requirements.

        “Environmental Authority”: any foreign, federal, state, local or regional Governmental Authority that exercises any form of jurisdiction or authority under any Environmental Requirement.

        “Environmental Authorizations”: all licenses, permits, orders, approvals, notices, registrations or other legal prerequisites for conducting the business of the Guarantor, the Company or any other Subsidiary, or for the uses and activities of, on or relating to the Facility, required by any Environmental Requirement.

        “Environmental Damages”: any and all claims, losses, costs, damages, penalties and expenses which are incurred at any prior or subsequent time as a result of the existence or release of Hazardous Materials upon, about or beneath the Facility or migrating or threatening to migrate to or from the Facility, or the existence of a violation of Environmental Requirements pertaining to the Facility, regardless of whether the existence of such Hazardous Materials or the violation of Environmental Requirements arose prior to the present ownership or operation of the Facility.

        “Environmental Judgments and Orders”: all Judgments, arising from or in any way associated with any Environmental Requirements, whether or not entered upon consent or written agreements with an Environmental Authority or other entity arising from or in any way associated with any Environmental Requirement, whether or not incorporated in a Judgment.

        "Environmental Liabilities": any liabilities or Liens, whether accrued, contingent or otherwise, arising from and in any way associated with any Environmental Requirements.

        “Environmental Notices”: written notice from any Environmental Authority or by any other Person, of possible or alleged noncompliance with or liability under any Environmental Requirement, including without limitation any complaints, citations, demands or requests from any Environmental Authority or from any other person or entity for correction of any violation of any Environmental Requirement or any investigations concerning any violation of any Environmental Requirement.

        "Environmental Proceedings": any judicial or administrative proceedings arising from or in any way associated with any Environmental Requirement.

        "Environmental Release": any actual or threatened release defined in CERCLA or under any state or local environmental law or regulation.

        "Environmental Requirements": any statue, rule, regulation, ordinance, permit, license administration or judicial decision or order (whether by consent or otherwise) or the requirement of law with respect to: (i) the protection of human health and/or the environment; (ii) the existence, handling, use, generation, treatment, storage, packaging, labeling, removal or Environmental Release of Hazardous Materials on, under, about and/or from any real property, including the Facility; and (iii) the effects on the environment of any activity now, previously, or hereinafter conducted on any real property, including the Facility. The Environmental Requirements shall include, but not be limited to, the following: CERCLA; the Superfund Amendments and Reauthorization Act, Public Law 99-499, 100 Stat. 1613; the Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.6901, et seq.; the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601, et seq.; the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1251, et seq.; the Clean Air Act, 42 U.S.C.ss.ss.7401, et seq.; the Occupational Safety and Health Act, 29 U.S.C.ss.ss.651, et seq.; the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C.ss.ss.11001, et seq.; the state and local analogies thereto, all as amended or superseded from time to time; and any common-law doctrine, including but not limited to, negligence, nuisance, strict liability, trespass, personal injury, or property damage related to or arising out of the presence, Environmental Release or exposure to a Hazardous Material; and all federal, state and local ordinances, regulations, orders, writs and decrees.

        “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law and the regulations promulgated and rulings issued from time to time thereunder. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof.

        "Eurocurrency Liabilities": as defined in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

        “Eurodollar Reserve Percentage”: for any day the percentage (expressed as a decimal) that is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in respect of Eurocurrency Liabilities (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on loans made at the LIBO Rate is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Funding Party to United States residents). The Adjusted LIBO Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.

        "Event of Default": as defined in Section 9.01 of the Investment Agreement or in Section 17 of the Lease.

        "Excess Parking Land": as defined in Section 27(k)(2) of the Lease.

        "Facility": the collective reference to (i) the Lessor's leasehold interest in the Site, (ii) the Improvements, and (iii) all plans, specifications, warranties and related rights and operating, maintenance and repair manuals related thereto and all replacements of any of the above.

        "Facility Cost": an aggregate amount equal to the lesser of: (i) the sum (without duplication) of (a) all costs associated with the Lessor's acquisition of a ground lease of the Site and any refinancing thereof, and (b) all Capitalized Expenses to be provided by the Lessor and the Lease Participants; and (ii) $75,000,000.

        “Facility Plan”: the architectural and engineering plans and specifications for the Facility and list of Facility Plan documents furnished to the Lessor pursuant to Section 6.01(f) of the Investment Agreement, as the same may be amended, supplemented or otherwise modified from time to time as provided in such Section 6.01(f) or otherwise with the consent of the Lessor.

        “Federal Funds Rate”: for any day, the rate per annum (rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate charged to the Lessor on such day on such transactions, as determined by the Lessor.

        “Final Rent Payment”: an amount equal to the sum of (i) the aggregate amount of the Unrecovered Lessor Investments, excluding the Non-Recourse Amount, plus (ii) all accrued, unpaid Supplemental Rent through the end of the Lease Term, plus (iii) all accrued, unpaid Yield on the Lessor Investments through the end of the Lease Term, plus (iv) all other amounts owing by the Company under the Operative Documents (other than the Unrecovered Lessor Investments attributable to the Non-Recourse Amount).

        "Fiscal Quarter": any fiscal quarter of the Guarantor or the Company, as the case may be.

        "Fiscal Year": any fiscal year of the Guarantor or the Company, as the case may be.

        “Funded Amount”: the aggregate amount of Lessor Investments, Yield thereon, Supplemental Rent pursuant to Section 2.04, expenses and indemnities owing or to be owing to the Lessor and the Lease Participants, and (without duplication) all other amounts owing by the Company to the Lessor or the Lease Participants pursuant to the Investment Agreement or any other Operative Document.

        “Funding Party”: Any one, or more, or all, as the context shall require, of the Lessor and the Lease Participants collectively, the “Funding Parties”.

        “GAAP”: generally accepted accounting principles in the United States of America applied on a basis consistent with those which, in accordance with Section 1.03 of the Investment Agreement, are to be used in making the calculations for purposes of determining compliance by the Guarantor with the provisions of the Operative Documents applicable thereto.

        “Governmental Authority”: to include the country, state, county, city and political subdivisions in which any Person or any such Person’s property is located or that exercises valid jurisdiction over any such Person or any such Person’s property, and any court, agency, department, commission, board, bureau or instrumentality of any of them including monetary authorities that exercise valid jurisdiction over any such Person or any such Person’s property. Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, the Guarantor, the Company, the Site, the Facility, the Lessor, any Lease Participant, any Applicable Funding Office or any Operative Document.

        “Governmental Requirement”: any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, writ, order, injunction, franchise, permit, certificate, license, authorization or other direction or requirement (whether or not having the force of law), including, without limitation, Environmental Requirements, and occupational, safety and health standards or controls, of any Governmental Authority.

        “Guaranteed Obligations”: of a Person, without limitation, such Person’s guaranties, endorsements, assumptions and other contingent obligations with respect to, or to purchase or to otherwise pay or acquire, Indebtedness of others.

        "Guarantor": Protective Life Corporation, a Delaware corporation, and its successors.

        “Guaranty”: the Guaranty, in the form of Exhibit F, of even date with the Investment Agreement, from the Guarantor to the Lessor for the benefit of the Lessor and the Lease Participants, pursuant to which the Guarantor, as primary obligor, guarantees and is liable for all of the Lessee’s obligations under all Operative Documents, as amended, supplemented or otherwise modified from time to time.

        “Hazardous Materials”: to include, without limitation, (i) solid or hazardous waste, as defined in the Resource Conservation and Recovery Act of 1980, 42 U.S.C. § 6901 et seq., and its implementing regulations and amendments, or in any applicable state or local law or regulation, (ii) “hazardous substance”, “pollutant”, or “contaminant” as defined in CERCLA, or in any applicable federal, state or local law or regulation, (iii) gasoline, or any other petroleum product or by-product, including crude oil or any fraction thereof, (iv) insecticides, fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable federal, state or local law or regulation, as each such Act, statute or regulation may be amended from time to time, or (v) any toxic or hazardous materials, wastes, polychlorinated biphenyls (“PCBs”), lead-containing materials, asbestos or asbestos-containing materials, urea formaldehyde, radioactive materials, pesticides, the discharge of sewage or effluent, or any other materials or substances defined as or included in the definition of “hazardous materials,” “hazardous waste,” “contaminants” or similar terms under any Environmental Requirement.

        “Highest Lawful Rate”: with respect to each Funding Party, the maximum non-usurious Yield that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Lessor Advances and the Lease Participant Advances or on other amounts owing hereunder under laws applicable to such Funding Party which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious Yield rate than applicable laws now allow.

        “Impositions”: without duplication, as to any Person, (i) all Taxes, assessments, levies, fees, water and sewer rents and charges, inspection fees and other authorization fees and all other governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of every character (including all penalties and interest thereon) that, at any time prior or subsequent to the Closing Date, are imposed or levied upon or assessed against or may be or constitute a Lien upon such Person or such Person’s Property, or that arise in respect of the ownership, operation, occupancy, possession, use, non-use, condition, leasing or subleasing of such Person’s Property; (ii) all charges, levies, fees, rents or assessments for or in respect of utilities, communications and other services rendered or used on or about such Person’s Property; (iii) payments required in lieu of any of the foregoing; but excluding any penalties or fines imposed on any Funding Party for violation by it of any banking laws or securities law; and (iv) any and all taxes, recording fees and other charges (including penalties and interest) relating to or arising out of the execution, delivery or recording of any of the Operative Documents for the amounts evidenced, secured or referred to be paid thereby, including without limitation, documentary stamp taxes, intangible taxes, recording fees and sales and rent taxes.

        “Improvements”: collectively, the building and nearby parking deck to be constructed and related enhancements and improvements, including furniture, fixtures and equipment to be constructed or installed on the Site in accordance with the Facility Plan, together with all accessions thereto and replacements thereof, and together with all accessories, equipment, parts and devices necessary to achieve Completion, and all fixtures now or hereafter included in or attached to the Site, the building and such enhancements and improvements and modifications, but excluding the Site.

        “Indebtedness”: of a Person means, without duplication, such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations evidenced by notes, acceptances or other instruments, (v) Capitalized Lease Obligations, (vi) obligations for reimbursement of drafts drawn or available to be drawn under letters of credit, (vii) Synthetic Lease Obligations and (viii) Guaranteed Obligations.

        "Indemnified Party": as defined in Section 11.03(c) of the Investment Agreement.

        "Indemnified Risks": as defined in Section 11.03(c) of the Investment Agreement.

        “Initial Funding Date”: March 1, 2000, or, at the option of the Company, on the first day of any calendar month thereafter (or the next succeeding Business Day, if such day is not a Business Day), provided that the conditions precedent set forth in Sections 6.01 and 6.02 of the Investment Agreement have been satisfied.

        "Initial Advance": the initial Lessor Advance made pursuant to Section 2.01 of the Investment Agreement on or after the Initial Funding Date.

        “Insurance Requirements”: all terms of any insurance policy (including, without limitation, casualty and general liability) covering or applicable to the Facility or any portion thereof maintained in accordance with Section 14 of the Lease and all requirements of the issuer of any such policy.

        "Insurance Subsidiary": any Subsidiary that is engaged in the business of insuring risk, including the Company.

        “Investment”: any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise.

        “Investment Agreement”: the Investment and Participation Agreement, dated as of the Closing Date, among the Company, the Lessor and the Lease Participants, as amended, supplemented, renewed, extended or otherwise modified from time to time.

        “Judgment”: any judgment, decree, writ, order, determination, injunction, rule or other direction or requirement of any arbitrator or any court, tribunal or other Governmental Authority.

        “Lease”: the Lease Agreement, dated as of the Closing Date, as amended, supplemented or otherwise modified from time to time, pursuant to which the Company, as Lessee, has agreed to lease the Facility on and after the Lease Commencement Date for the Permitted Use in accordance with the terms and conditions set forth in the Lease.

        "Lease Commencement Date": the Closing Date.

        "Lease Participant": any Person who is listed as a Lease Participant on the signature pages of the Investment Agreement, or who from time to time becomes a Lease Participant pursuant to an Assignment and Acceptance; collectively, the "Lease Participants".

         "Lease Participant Advance": Each funding of a purchase from the Lessor of Ownership Interests by a Lease Participant pursuant to Section 2.01(b) of the Investment Agreement.

        “Lease Participant Commitment”: For each Lease Participant, the amount set forth as such on the signature pages of the Investment Agreement next to the signature of such Lease Participant, or in an Assignment and Acceptance, and in the most recent Ownership Certificate as the same may be reduced in accordance with Section 2.03 of the Investment Agreement.

        "Lease Participant Indemnified Party": as defined in Section 11.03(c) of the Investment Agreement.

        "Lease Participant Indemnified Risks": as defined in Section 11.03(c) of the Investment Agreement.

        "Lease Term": the period of time commencing on the Lease Commencement Date and ending on the Lease Termination Date.

        "Lease Termination Date": the earlier to occur of (i) the Option Date, (ii) the Cancellation Date (iii) the date of termination as a result of a Termination Event and (iv) the Scheduled Lease Termination Date.

        "Lessee": the Company in its capacity as Lessee under the Lease and any successor or permitted assign in such capacity.

        "Lessor": the Lessor and any successor or Eligible Lessor Assignee permitted by the terms of the Investment Agreement and the Lease.

        "Lessor Advance": Each funding of Facility Cost made by the Lessor as a Lessor Investment pursuant to Section 2.01(a) of the Investment Agreement.

        “Lessor Equity Interest”: Unrecovered Lessor Investments consisting of the portion of the Non-Recourse Amount which is attributable to the 3% of the aggregate Ownership Interests owned and retained by the Lessor as Non-Recourse Amount Ownership Interests and referred to in clauses (i) and (iii) of the definition of “Required Percentage Composition”.

        "Lessor Indemnified Party": as defined in Section 11.03(b) of the Investment Agreement.

        "Lessor Indemnified Risks": as defined in Section 11.03(b) of the Investment Agreement.

        "Lessor Investments": The aggregate of all amounts of Facility Cost funded by the Lessor or capitalized as part of Facility Cost pursuant to the Investment Agreement.

        “Lessor Investment Commitment”: The amount set forth as such on the signature pages of the Investment Agreement next to the signature of the Lessor, as the same may be reduced by the sale of Ownership Interests to the Lease Participants or at the request of the Company in accordance with Section 2.03 of the Investment Agreement (which amount is net of the aggregate amount of the Lease Participant Commitments).

        “LIBO Rate”: with respect to any Lessor Advance or the Lessor Investments for the applicable Yield Period therefor, or any other amount, the rate per annum determined on the basis of the offered rate for deposits of three months in Dollars of amounts equal or comparable to the principal amount of such Lessor Advance or the Lessor Investments, or any such other amount, as applicable, which rates appear on Dow Jones Markets, Inc. Page 3750 as of 11:00 A.M., London time, two Business Days prior to the first day of such Yield Period, provided that will be the arithmetic average (rounded upward, if necessary, to the next higher 1/16th of 1%) of such offered rates; (b) if no such offered rates appear on such page, the “LIBO Rate” for such Yield Period, as applicable, will be the arithmetic average (rounded upward, if necessary, to the next higher 1/16th of 1%) of rates quoted by not less than two major banks in New York City, selected by the Lessor, at approximately 10:00 A.M., New York City time, two Business Days prior to the first day of such Yield Period, as applicable, for deposits in Dollars offered to leading European banks for a period comparable to such Yield Period, in an amount comparable to the principal amount of such Lessor Advance or the Lessor Investments, or any such other amount.

        “Lien”: with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, security interest, security title, preferential arrangement which has the practical effect of constituting a security interest or encumbrance, or encumbrance or servitude of any kind in respect of such asset to secure or assure payment of any Indebtedness or a Guarantee, whether by consensual agreement or by operation of statute or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of this definition, each of the Company, the Guarantor, and any Subsidiary thereof shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

        “Loss Event”: any of the following events in respect of the Facility: (i) the total loss of the Facility or the total loss of use thereof due to theft, disappearance, destruction, damage beyond repair or rendition of the Facility permanently unfit for normal use for any reason whatsoever; (ii) any damage to the Facility which results in an insurance settlement with respect to the Facility on the basis of a total loss; (iii) the permanent condemnation, confiscation or seizure of, or requisition of title to or use of, all or substantially all of the Facility including, but not limited to, a permanent taking by eminent domain of such scope that the untaken part of the Facility is insufficient to permit the restoration of the Facility for continued use in the Company’s business or that causes the remaining part of the Facility to be incapable of being restored to a condition that would permit the remaining portion of the Facility (without the portion of the Facility taken by eminent domain) to continue to have the capacity and functional ability to perform on a continuing basis (subject to normal interruptions in the ordinary course of business for maintenance, inspection, service, repair and testing) and in commercial operation, the function for which the Facility (as a whole) was designed as specified in the Facility Plan or a temporary taking of such nature for a period exceeding 180 consecutive days; or (iv) the occurrence of any event or the discovery of any condition in, on, beneath or involving the Facility or any portion thereof (including, but not limited to the presence of hazardous substances or the violation of any applicable Environmental Requirement) that would have a material adverse effect on the use, occupancy, possession, condition, value or operation of the Facility or any portion thereof, which event or condition requires remediation (A) the cost of which is anticipated, in the opinion of the Lessor, in consultation with an independent environmental engineering firm, to exceed 15% of the Termination Value, and (B) that could not reasonably be expected to be completed substantially in its entirety prior to the date that is 30 days prior to the then-applicable Scheduled Lease Termination Date or is not actually completed substantially in its entirety on or before the date that is 30 days prior to the then-applicable Scheduled Lease Termination Date.

        “Majority Funding Parties”: at any time Funding Parties owning at least 51% of the aggregate amount of the Ownership Interests (without regard to any sale by a Lease Participant of a participation in its Ownership Interest under Section 11.06(f) of the Investment Agreement).

        “Margin Stock”: “margin stock” as defined in Regulations U or G of the Board of Governors of the Federal Reserve System, as in effect from time to time.

        “Market Value”: as defined in Section 323.2(f) of the Regulations and Statements of General Policy on Appraisals promulgated by the Federal Deposit Insurance Corporation, 12 C.F.R. § 323.2(f), as amended from time to time.

        “Material Adverse Effect”: with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon, any of (i) the financial condition, operations, business, or properties of the Guarantor and the Consolidated Subsidiaries taken as a whole, (ii) the rights and remedies of the Funding Parties under the Operative Documents, or the ability of the Company or the Guarantor to perform its obligations under the Operative Documents to which it is a party, (iii) the legality, validity or enforceability of any Operative Document, or (iv) the use, occupancy, possession, condition, value or operation of the Facility.

        "Material Subsidiary": any Subsidiary the assets of which constitute 15% or more of Consolidated Total Assets.

        “Maturity Date”: the earlier of (a) the Completion Date, in the event the Basic Term does not commence for any reason, or (b) following the commencement of the Basic Term, the earlier to occur of (i) the Option Date, (ii) the Cancellation Date, or (iii) the Lease Termination Date.

        "Moody's": means Moody's Investor Service, Inc.

        "Multiemployer Plan": has the meaning set forth in Section 4001(a)(3) of ERISA.

        “NAIC”: the National Association of Insurance Commissioners or any successor thereto, or in lieu thereof, any other association, agency or other organization performing advisory, coordination or other like functions among insurance departments, insurance commissions and similar Governmental Authorities of the various states of the United States of America toward the promotion of uniformity in the practices of such Governmental Authorities.

        “Non-Completion Event”: the failure of both (i) Completion and (ii) the commencement of the Basic Term to occur on or before the Completion Date.

        “Non-Recourse Amount” means at any time an amount of Facility Cost equal to a percentage of the aggregate original Facility Cost, and Ownership Interests, Lessor Advances, Lessor Investments and Lease Participant Investments attributable thereto, which shall be not less than 12% nor more than 19%, which percentage shall be determined by the Lessor (in consultation with the Company) and notified to the Company and the Lease Participants on or promptly after the Completion Date, after identification of the aggregate amount of the Facility Cost as of such time, and which will be the minimum percentage permitted for classification of the Lease as an operating lease under Statement of Financial Accounting Standards No. 13, Accounting for Leases, and other applicable accounting rules.

        “Non-Recourse Amount Ownership Interests” means that portion of the Ownership Interests, Lessor Advances, Lessor Investments and Lease Participant Advances attributable to the Non-Recourse Amount.

        "Non-U.S. Domestic Participant": as defined in Section 4.06(b) of the Investment Agreement.

        "Operating Profits": as applied to any Person for any period, the operating income of such Person for such period, as determined in accordance with GAAP.

        “Operative Documents”: collectively, the Investment Agreement, the Lease, the Agency Agreement, the Guaranty, and the other Security Instruments and any and all other agreements or instruments now or hereafter executed and delivered, or required to be executed and delivered, by the Company or the Guarantor in connection with the Investment Agreement or the other Operative Documents, as such agreements or instruments may be amended, supplemented, renewed, extended, increased or otherwise modified from time to time.

        "Option Date": as defined in Section 15(c) of the Lease.

        “Other Taxes”: all taxes (other than Taxes), assessments, levies, fees, water and sewer rents and charges, inspection fees and other authorization fees and all other governmental charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of every character (including all penalties and interest thereon) and all recording fees and other charges (including penalties and interest) relating to or arising out of (i) the execution, delivery, recording or enforcement of any of the Operative Documents, whether for the amounts evidenced, secured or referred to be paid thereby, or otherwise, or (ii) to the ownership, use, operation or transfer of the Facility or any other Property or (iii) any other event or circumstance, including without limitation, transfer taxes, documentary stamp taxes, intangible taxes, recording fees and sales, use and rent taxes.

        "Other Transaction Expenses": as defined in Section 3.05(a)(i) of the Investment Agreement.

        "Ownership Certificate": as defined in Section 2.02(a)(ii) of the Investment Agreement.

        “Ownership Interest”: an undivided ownership interest, in an amount equal to its Percentage Share, in the Lessor’s rights in Lessor Advances and Lessor Investments, and in all rights to payments of Rent, Yield, the Commitment Supplemental Rent, the Upfront Supplemental Rent (but not the Arranger’s Supplemental Rent or the Administrative Supplemental Rent) and other amounts payable with respect thereto under the Agreement, the Lease and the other Operative Documents, and with reference to the Lessor and each Lease Participant, its Ownership Interest in the Lessor Advances, Lessor Investments, and such rights to payment, after giving effect to the sale by the Lessor to, and the purchase by such Lease Participant of, an Ownership Interest pursuant to Section 2.01(b), or to the assignment by a Lease Participant pursuant to an Assignment and Acceptance, in each case as set forth in the most recent Ownership Certificate. The title of the Lessor in and to the Facility shall be held in trust by the Lessor for the Lease Participants, to the extent of their respective Ownership Interests, subject to the Lease, and in the event the Facility is sold (either to the Lessee or a third party, pursuant to Section 15 of the Lease or upon the exercise by the Lessor of rights and remedies pursuant to Section 26 of the Lease), the net sale proceeds thereof also shall be held in trust by the Lessor for the Lease Participants, to the extent of their respective Ownership Interests attributable to the Non-Recourse Amount.

        "PBGC": the Pension Benefit Guaranty Corporation or any successor thereto.

        “Percentage Share”: (i) until the Commitments have terminated entirely pursuant to Section 2.03 or 9.02, (x) with respect to the Lessor, the percentage which the sum of its Lessor Commitment, less the aggregate Lease Participant Commitments, bears to the Lessor Commitment, and, (y) with respect to each Lease Participant, the percentage which its Lease Participant Commitment bears to the Lessor Commitment; and (ii) thereafter, for the Lessor and each Lease Participant, the percentage which its Ownership Interest bears to all of the Ownership Interests.

        “Performance Pricing Determination Date” means each date on which the Debt Rating changes.

        “Permit”: any approval, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from any Governmental Authority or other Person.

        “Permitted Insurers”: insurers with ratings of A or better and Class VIII or better according to Best’s Insurance Reports, or other insurers acceptable to the Lessor.

        “Permitted Liens”: (i) with respect to the Lease or the Facility (including without limitation, the Site) or any Property included in or comprising the Facility or any portion thereof, any of the following:

        (a) rights reserved to or vested in any Governmental Authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting the Facility to (1) terminate, or take any other action which has the effect of modifying, such right, power, franchise, grant, license, permit or provision of law, provided that such termination or other action, when taken, shall not have resulted in a Loss Event and shall not have had a Material Adverse Effect, or (2) purchase, condemn, appropriate or recapture, or designate a purchaser of, the Facility;

        (b) any Liens thereon for Impositions or taxes and any Liens of mechanics, materialmen and laborers for work or services performed or materials furnished which (i) are not overdue, or (ii) are being contested in good faith in the manner described in Section 13 of the Lease;

        (c) Liens of mechanics, materialmen and laborers for work or services performed or materials furnished during the Construction Term;

        (d) rights reserved to or vested in any Governmental Authority to control or regulate the use of such Property or to use the Facility in any manner;

        (e) in the case of the Site, encumbrances, easements, and other similar rights existing on the Closing Date the existence or exercise of which do not have a Material Adverse Effect; and

        (f) any Liens created under the Operative Documents and any financing statements filed in connection therewith;

and

        (ii), with respect to any other Property, any of the following:

        (a) Liens existing on the Closing Date securing Indebtedness outstanding on the Closing Date in an aggregate principal amount with respect to Indebtedness for borrowed money and capital leases not exceeding $3,000,000;

        (b) any Lien existing on any asset of any (a) corporation or partnership at the time such corporation or such partnership becomes a Consolidated Subsidiary, or (b) Subsidiary at the time it becomes a Subsidiary, and in either case not created in contemplation of such event;

        (c) any Lien on any asset securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such asset concurrently with or within 18 months after the acquisition or completion of construction thereof;

        (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or the Guarantor or a Consolidated Subsidiary and not created in contemplation of such event;

        (e) any Lien existing on any asset prior to the acquisition thereof by the Guarantor, the Company or another Consolidated Subsidiary and not created in contemplation of such acquisition;

        (f) Liens securing Indebtedness owing by any Subsidiary to the Guarantor or the Company;

        (g) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing clauses of this subsection (ii), provided that (a) such Indebtedness is not secured by any additional assets, and (ii) the amount of such Indebtedness secured by any such Lien is not increased;

        (h) Liens incidental to the conduct of the business of the Guarantor, the Company or any of the Subsidiaries or the ownership of their respective assets which (a) do not secure Indebtedness and (b) do not in the aggregate materially detract from the value of their respective assets or materially impair the use thereof in the operation of their respective businesses;

        (i) any Lien on Margin Stock;

        (j) Liens for Impositions or Taxes either not yet delinquent or which are being contested in good faith by appropriate proceedings;

        (k) Liens not securing Indebtedness which are created by or relate to any legal proceedings which at the time are being contested in good faith by appropriate proceedings;

        (l) any other statutory or inchoate Lien securing amounts other than Indebtedness which are not delinquent; and

        (m) Liens not otherwise permitted by the foregoing paragraphs of this subsection (ii) securing Indebtedness and other obligations in an aggregate principal amount at any time outstanding not to exceed 15% of Adjusted Consolidated Net Worth.

        “Permitted Use”: with respect to the Facility, the occupation and use of the Site and the Improvements as a corporate office building in compliance with all applicable Governmental Requirements and Insurance Requirements.

        “Person”: an individual, a corporation, a partnership, a limited liability company, an unincorporated association, a trust or any other entity or organization, including, but not limited to, a government or political subdivision or other Governmental Authority.

        “Phase 1 Environmental Assessment”: an investigation conducted by an independent engineering firm reasonably acceptable to the Lessor in scope and substance satisfactory to the Lessor and in any event satisfying the minimum standards set forth in ASTME 1527-94, reflecting compliance of the Facility in all material respects with all applicable Environmental Requirements.

        “Plan”: at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding 5 plan years made contributions.

        "Pricing Schedule": the Pricing Schedule attached as Schedule 1.02(b) to the Investment Agreement.

        “Prime Rate”: that rate of interest so denominated and set by Wachovia Bank from time to time as an interest rate basis for borrowings. The Prime Rate is but one of several interest rate bases used by Wachovia Bank, and is set by Wachovia Bank as a general reference rate of interest, taking into account such factors as Wachovia Bank may deem appropriate, it being understood that many of Wachovia Bank’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Wachovia Bank may make various commercial or other loans at rates of interest having no relationship to such rate.

        "Principal Office": the principal office of the Lessor presently located at 191 Peachtree Street, N. E., Atlanta, Georgia 30303 or any other office designated by the Lessor.

        "Property": any kind of property or asset, whether real, personal or mixed, or tangible or intangible, and any interest therein.

        "Purchase Closing Date": as defined in Section 15(e) of the Lease.

        “Purchase Price”: at any time of determination, an amount equal to the sum, as of the purchase date of (i) the aggregate amount of the Unrecovered Lessor Investments, plus (without duplication) (ii) all accrued, unpaid Supplemental Rent through the end of the Lease Term, plus (iii) all accrued, unpaid Yield on the Lessor Investments through the end of the Lease Term, plus (iv) all other amounts owing by the Company under the Operative Documents).

        "Real Property": as defined in Section 26(i)(2) of the Lease.

        “Recourse Amount”: at any time that portion of the Ownership Interests, Lessor Advances, Lessor Investments and Lease Participant Advances attributable to Facility Cost equal to the excess of (i) the Unrecovered Facility Cost over (ii) the Non-Recourse Amount.

        “Redeemable Preferred Stock”: of any Person means any preferred stock issued by such Person (i) required (by the terms of the governing instruments or at the option of the holder thereof) to be mandatorily redeemed for cash at any time prior to the Maturity Date (by sinking fund or similar payments or otherwise) or (ii) redeemable at the option of the holder thereof at any time prior to the Maturity Date.

        "Register": as defined in Section 11.06(d) of the Investment Agreement.

        “Regulation A”: Regulation A of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

        “Regulation D”: Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

        “Regulation T”: Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

        “Regulation U”: Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

        “Regulation X”: Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

        “Related Contract”: any agreement, contract, bill of sale, receipt or Vendor’s warranty relating to or for the purchase, acquisition, design, engineering, testing, manufacture, renovation, assembly, construction or installation of the Facility or any portion thereof or the provision of enhancements and improvements to the Facility, or otherwise in connection with the acquisition, ownership, use, operation or sale or other disposition of the Facility, made, entered into or received by the Acquisition/Construction Agent on behalf of the Lessor pursuant to the Agency Agreement or by the Guarantor or the Company and assigned to the Lessor pursuant to the Agency Agreement, with or from one or more Vendors or other Persons.

        "Rent": Basic Rent, Supplemental Rent and the Final Rent Payment, collectively.

        “Rent Payment Date”: with respect to Basic Rent, each March 31st, June 30th, September 30th and December 31st of each year, commencing on the first such date occurring after the Completion Date, and the Lease Termination Date.

        “Rental Period”: with respect to Basic Rent, the period beginning on the Completion Date and ending on the first Rent Payment Date occurring after the Completion Date and, thereafter, each subsequent period commencing on the day following each Rent Payment Date and ending on the next Rent Payment Date or on the Lease Termination Date.

        “Required Percentage Composition”: (i) with respect to the Lessor’s Ownership Interests, a requirement that (x) at all times, not less than 3% of the aggregate amount of the Ownership Interests be owned by the Lessor (and not sold to Lease Participants) as Non-Recourse Amount Ownership Interests and (y) during the Construction Term and the Lease Term, a requirement that not less than 3% of Facility Cost, and not less than 3% of Ownership Interests, be funded and owned by the Lessor (and not sold to Lease Participants) as Non-Recourse Amount Ownership Interests; (ii) with respect to each Lessor Advance and related Lease Participant Advance, a requirement that after giving effect thereto, the aggregate outstanding amount of Lessor Advances shall not exceed the sum of the Lessor Investment Commitment and Lease Participant Commitments; and (iii) with respect to the Completion Date, a requirement that on such date, after giving effect to all Lessor Advances and Lease Participant Advances to be made and outstanding at the close of business on such date, 3% of the aggregate amount of the Ownership Interests be owned by the Lessor (and not sold to Lease Participants) as Non-Recourse Amount Ownership Interests.

        "Reported Net Income": for any period, the Net Income of the Guarantor and the Consolidated Subsidiaries determined on a consolidated basis.

        “Restricted Payment”: (i) any dividend or other distribution on any shares of the Guarantor’s Capital Stock (except dividends payable solely in shares of its Capital Stock or additional rights to acquire its Capital Stock) or (ii) any payment on account of the purchase, redemption, retirement or acquisition of (a) any shares of the Guarantor’s Capital Stock (except shares acquired upon the conversion thereof into other shares of its Capital Stock) or (b) any option, warrant or other right to acquire shares of the Guarantor’s Capital Stock.

        “Revolving Credit Agreement”: The Credit Agreement dated as of July 30, 1993 among the Guarantor, as the Borrower, and AmSouth Bank N.A., Central Bank of the South, First Alabama Bank, First Commercial Bank, SouthTrust Bank of Alabama, N.A., Third National Bank in Nashville, as the Lenders, and AmSouth Bank N.A., as the Agent, as amended or supplemented from time to time.

        "S & P": means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.

        "SAP": with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the insurance commissioner (or other similar authority) as of the Closing Date in the jurisdiction of incorporation of such Insurance Subsidiary for the preparation of annual statements and other financial reports by insurance companies of the same type as such Insurance Subsidiary.

        "Scheduled Lease Termination Date": the date that is 5 years after the Completion Date.

        "Secured Amount": as defined in Section 26 of the Lease.

        "Secured Party": as defined in Section 26 of the Lease.

        “Security Instruments”: collectively, the Lease and any and all agreements or instruments, including, without limitation, financing statements, now or hereafter executed and delivered by the Company as security for the payment or performance of the Secured Amount, as such agreements or instruments may be amended, supplemented or otherwise modified from time to time.

        “Short-Term Indebtedness”: all Indebtedness that by its terms matures within one year from, and that is not renewable at the option of the obligor to a date later than one year after, the date such Indebtedness was incurred. Any Indebtedness which is extended or renewed (other than pursuant to the option of the obligor) shall be deemed to have been incurred at the date of such extension or renewal.

        “Site”: certain real property located in Birmingham, Alabama, described in greater detail on Exhibit A to the Investment Agreement and the Lease, less and except (i) the Excess Annex Land, from and after the release thereof pursuant to the provisions of Section 27(k)(1) of the Lease and (ii) the Excess Parking Land, from and after the release thereof pursuant to the provisions of Section 27(k)(2) of the Lease.

        “Soil Test Reports”: soil test reports as to soil borings on the Site by a soil testing firm satisfactory to the Lessor, including (a) the number and location of such borings shall be in accordance with the recommendations of the soil testing firm and also satisfactory to the Lessor and (b) the recommendations of the soil testing firm as to the preparation of the soil needed to adequately support the Facility.

        “Stockholders’ Equity”: at any time, the stockholders’ equity of the Guarantor and the Consolidated Subsidiaries, as set forth or reflected on the most recent consolidated balance sheet of the Guarantor and the Consolidated Subsidiaries prepared in accordance with GAAP; but excluding any Redeemable Preferred Stock of the Guarantor or any of the Consolidated Subsidiaries. Stockholders’ Equity generally would include, but not be limited to: (i) the par or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various deductions such as (a) purchases of treasury stock, (b) valuation allowances, (c) receivables due from an employee stock ownership plan, (d) employee stock ownership plan debt guarantees and (e) translation adjustments for foreign currency transactions.

        "Sublessee": as defined in Section 21(c) of the Lease.

        “Subsidiary”: any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Guarantor. A separate account established pursuant to SAP or any applicable insurance regulatory requirement shall be deemed not to be a Subsidiary.

        "Supplemental Rent": as defined in Section 3(c) of the Lease.

        "Support Expenses": as defined in Section 3.2(k) of the Agency Agreement.

        “Surplus Note”: a promissory note executed by an Insurance Subsidiary to the Guarantor of the type generally described in the insurance industry as a “surplus note”, the principal amount of which is properly recorded by the issuer as an addition to capital and surplus rather than as a liability in accordance with SAP.

        “Survey”: a current ALTA-ACSM boundary survey of the Site and existing improvements in form and substance satisfactory to the Lessor, and containing such certifications as the Lessor may request.

        “Synthetic Lease Obligations”: of a Person means the amount of the obligations of such Person under any lease that would not be shown as a liability, but would be treated as an operating lease, in accordance with GAAP, but which arise under a transaction in which the property subject to such lease is owned by the lessee for purposes of the Code. Obligations under the Lease are Synthetic Lease Obligations.

        "Taxes": as defined in Section 4.06(a) of the Investment Agreement.

        "Termination Event": as defined in Section 15(a) of the Lease.

        "Termination Value": at any time will be an amount equal to the sum of (i) the Final Rent Payment, plus (ii) the Unrecovered Lessor Investments attributable to the Non-Recourse Amount.

        "Third Party": any Person other than (i) the Lessor, (ii) the Company, (iii) the Guarantor, or (iv) any Affiliate of any of the foregoing.

        "UCC": the Uniform Commercial Code as in effect in the State of Alabama and any other jurisdiction whose laws may be mandatorily applicable.

        “Unconsolidated Cash Inflow Available for Interest Expense”: for any period of calculation, the sum (without duplication) of (a) all amounts received by the Guarantor from the Subsidiaries during such period as (i) interest and principal on Indebtedness (including but not limited to Surplus Notes) and (ii) management fees (net of expenses incurred in providing the services for which such management fees were paid), (b) all amounts that the Subsidiaries were permitted, under applicable laws and regulations, to distribute to the Guarantor during such period as dividends, whether or not so distributed, and (c) other income.

        “Unrecovered Facility Cost”: at any time the sum of (i) the aggregate original Facility Cost, less (ii) the aggregate amount of any voluntary prepayments of Facility Cost and casualty and condemnation proceeds received by the Lessor.

        "Unrecovered Lessor Investments": at any time an amount equal to the Unrecovered Facility Cost at such time.

        "Upfront Supplemental Rent": as defined in Section 2.04(b) of the Investment Agreement.

        "Vendor": any designer, supplier, manufacturer or installer of, or provider of Property or services with respect to, the Facility or any Property included therein or any part thereof.

        "Wachovia Bank": Wachovia Bank, N.A., a national banking association, in its individual capacity, and its successors.

        "Wholly Owned Subsidiary": any Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Guarantor.

        “Year 2000 Compliant and Ready” means that (a) the Company’s and the Consolidated Subsidiaries’ hardware and software systems with respect to the operation of its business and its general business plan are able to do each of the following, except in each case where the inability to do any of them does not have and could not reasonably be expected to cause a Material Adverse Effect: (i) process date information involving any and all dates before, during and/or after January 1, 2000, including accepting input, providing output and performing date calculations in whole or in part; (ii) operate, accurately without interruption on and in respect of any and all dates before, during and/or after January 1, 2000 and without any deterioration in performance of the functions critical to normal business operations; (iii) store and provide date input information without creating any ambiguity as to the century and; (b) the Guarantor has developed alternative plans to ensure business continuity in the event of the failure of any or all of items (i) through (iii) in clause (a) above in this definition.

        “Yield”: all yield accruing from time to time with respect to the Lessor Investments, Yield to include without limitation all Yield accrued during the Construction Term on Yield which has previously been capitalized by the deemed making of Lessor Advances and Lease Participant Advances pursuant to Sections 2.01(d) and 3.03(a) and, with respect to Supplemental Rent accruing during the Construction Term pursuant to Section 2.04 of the Investment Agreement, all yield accruing from time to time with respect to such Supplemental Rent.

        “Yield Period”: with respect to each Lessor Advance or the Lessor Investments, and with respect to Yield on Supplemental Rent which accrues during the Construction Term pursuant to Section 2.04 of the Investment Agreement: (1) during the Construction Term, the period beginning on the date of such Lessor Advance (or, with respect to Supplemental Rent which accrues during the Construction Term pursuant to Section 2.04 of the Investment Agreement, on the Initial Funding Date) and ending on the numerically corresponding date (or, if applicable, last calendar date) one month thereafter and, thereafter, each subsequent period commencing on the last day of the immediately preceding Yield Period and ending on the numerically corresponding date (or, if applicable, last calendar date) one month (or, if applicable, last calendar date) thereafter; and (2) during the Basic Term, each Rental Period; provided, however, that:

        (i) the duration of any Yield Period that commences before the Scheduled Lease Termination Date and would otherwise end after the Scheduled Lease Termination Date shall end on the Scheduled Lease Termination Date;

        (ii) the duration of the last Yield Period with respect to each Lessor Advance which commenced just prior to the Completion Date shall end on the Completion Date; and

        (iii) if the last day of such Yield Period would otherwise occur on a day that is not a Business Day, such last day shall be extended to the next succeeding Business Day, except if such extension would cause such last day to occur in a new calendar month, then such last day shall occur on the next preceding Business Day.

SCHEDULE 1.02(b)


Pricing Schedule

        The terms "Applicable Margin" means, for any day, the rate per annum set forth below corresponding to the Pricing Level that applies on such day:

- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
            Pricing Level                 Level I     Level II     Level III     Level IV      Level V     Level VI
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
Applicable Margin for Lessor Advances
and Lessor Investments on:
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
   1.  Adjusted LIBO Rate basis           0.625%       0.750%        0.875%       1.000%       1.250%       1.750%
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
   2.  Base Rate basis                     0.00%        0.00%        0.00%         0.00%        0.00%        0.00%
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------

        For purposes of this Pricing Schedule, the following terms have the following meanings:

        “Level I Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to or better than A+ or A1.

        “Level II Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to A or A2.

        “Level III Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to A- or A3.

        “Level IV Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to or less than BBB+ or Baa3, but greater than BBB- or Baa3.

        “Level V Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to BBB- or Baa3.

        “Level VI Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was less than BBB- or Baa3 or if there is no Debt Rating.

All determinations hereunder shall be made by the Lessor unless the Majority Funding Parties shall object to any such determination. The Guarantor shall promptly notify the Lessor of any change in the Debt Rating.

SCHEDULE 7.01(e)


Litigation

NONE

The following is disclosed as a matter of information, but the Company does not believe that it would have or cause a Material Adverse Effect.

        A number of civil jury verdicts have been returned against insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments against the insurer that are disproportionate to the actual damages, including material amounts of punitive damages. In addition, in some class action and other lawsuits involving insurers' sales practices, insurers have made material settlement payments. In some states, including Alabama (where the Company maintains its headquarters), juries have substantial discretion in awarding punitive and non-economic compensatory damages, which creates the potential for unpredictable material adverse judgments in any given lawsuit. The Company, like other insurers, in the ordinary course of business, is involved in such litigation or alternatively in arbitration. The outcome of any such litigation or arbitration cannot be predicted with certainty.

SCHEDULE 7.01(n)


Environmental Matters

NONE.

EX-10

Exhibit 10(m)(1)

FIRST AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT

        THIS FIRST AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT AND LEASE AGREEMENT (this “First Amendment”) is dated as of the 30th day of November, 2000 among PROTECTIVE LIFE INSURANCE COMPANY. (the “Company”), WACHOVIA CAPITAL INVESTMENTS, INC. (the “Lessor”) and SUNTRUST BANK and LASALLE BANK NATIONAL ASSOCIATION (individually and collectively, as the context shall require, the “Lease Participants”);

W I T N E S S E T H :

        WHEREAS, the Company, the Lessor and the Lease Participants executed and delivered that certain Investment and Participation Agreement, dated as of February 1, 2000 (the “Investment Agreement”), and the Company, as “Lessee”, and the Lessor, as “Lessor”, executed and delivered that certain Lease Agreement dated as of February 1, 2000 (the “Lease”);

        WHEREAS, the Company has requested and the Lessor and the Lease Participants have agreed to certain amendments to the Investment Agreement and the Lease, subject to the terms and conditions hereof, on account of unforseen delays incurred in connection with construction of the Improvements to the Facility;

        NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Company, the Lessor and the Lease Participants hereby covenant and agree as follows:

        1. Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in Schedule 1.02 to the Investment Agreement shall have the meaning assigned to such term in Schedule 1.02 to the Investment Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Investment Agreement shall from and after the date hereof refer to the Investment Agreement as amended hereby.

        2. Amendment to Schedule 1.02 to the Investment Agreement. Schedule 1.02 to the Investment Agreement hereby is amended by deleting the definitions of "Completion Date" and "Scheduled Lease Termination Date" and substituting the following therefor:

“Completion Date”: the earlier to occur of (i) the date on which the Company, as Acquisition/Construction Agent for the Lessor, delivers the Completion Certificate and (ii) August 1, 2002 (or, in the event of a Casualty Occurrence during the Construction Term and the Lessee is exercising its replacement rights pursuant to Section 14(d) of the Lease, December 1, 2002).

                        "Scheduled Lease Termination Date": the date that is 5 years after the earlier of the Completion Date and February 1, 2002.

        3. Amendment to Schedule 1.02(b) to the Investment Agreemen. Schedule 1.02(b) to the Investment Agreement (the Pricing Schedule) hereby is amended by deleting it in its entirety and by substituting therefor Schedule 1.02(b) attached hereto.

        4. Amendment to Section 14(d) of the Lease. Section 14(d) of the Lease hereby is amended by deleting the date "May 1, 2002" in the seventh line thereof and substituting the following therefor the date "October 1, 2002".

        5. Restatement of Representations and Warranties. The Company hereby restates and renews each and every representation and warranty heretofore made by it in the Investment Agreement, the Lease and the other Operative Documents as fully as if made on the date hereof and with specific reference to this First Amendment, the Lease and all other Operative Documents executed and/or delivered in connection herewith.

        6. Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Investment Agreement, the Lease and the other Operative Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Company. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein.

        7. Ratification. The Company hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Investment Agreement, the Lease and the other Operative Documents effective as of the date hereof.

        8. Counterparts. This First Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered (which may effected by facsimile) shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

        9. Section References. Section titles and references used in this First Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.

        10. No Default. To induce the Lessor and the Lease Participants to enter into this First Amendment and to continue to make advances pursuant to the Investment Agreement, the Company hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Company arising out of or with respect to any of the Lessor Advances or Participant Advances or other obligations of the Company owed to the Lessor or the Lease Participants under the Investment Agreement or the Lease.

        11. Further Assurances. The Company agrees to take such further actions as the Lessor shall reasonably request in connection herewith to evidence the amendments herein contained.

        12. Governing Law. This First Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of New York.

        13. Conditions Precedent. This First Amendment shall become effective only upon execution and delivery (which may be by facsimile) (i) of this First Amendment by each of the parties hereto, and (ii) of the Consent and Reaffirmation of Guarantor at the end hereof by Protective Life Corporation.

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        IN WITNESS WHEREOF, the Company, the Lessor and each of the Lease Participants has caused this First Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written.

                                    PROTECTIVE LIFE INSURANCE COMPANY,
                                    as the Company and the Lessee



                                    By:/s/Carl Thigppen
                                            Name:  Carl Thigpen
                                            Title: Vice President


                                    WACHOVIA CAPITAL INVESTMENTS, INC.,
                                    as the Lessor


                                    By:/s/Claire Flaury
                                            Name:  Claire Flaury
                                            Title: Senior Vice President


                                    SUNTRUST BANK,
                                    as a Lease Participant


                                    By:/s/Nathan Bickford
                                            Name:  Nathan Bickford
                                            Title: Assistant Vice President


                                    LASALLE BANK NATIONAL ASSOCIATION,
                                    as a Lease Participant


                                    By:/s/George L. Kumis
                                            Name:  George L. Kumis
                                            Title: Senior Vice President

SCHEDULE 1.02(b)

Pricing Schedule

The terms “Applicable Margin” means, for any day, the rate per annum set forth below corresponding to the Pricing Level that applies on such day:

- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
            Pricing Level                 Level I     Level II     Level III     Level IV      Level V     Level VI
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
Applicable Margin for Lessor Advances
and Lessor Investments on:
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
   1.  Adjusted LIBO Rate basis           0.625%       0.750%        0.875%       1.000%       1.250%       1.750%
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
   2.  Base Rate basis                     0.00%        0.00%        0.00%         0.00%        0.00%        0.00%
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------

        For purposes of this Pricing Schedule, the following terms have the following meanings:

        “Level I Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to or better than A+ or A1.

        “Level II Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to A or A2.

        “Level III Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to A- or A3.

        “Level IV Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to or less than BBB+ or Baa1, but greater than BBB- or Baa3.

        “Level V Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was equal to BBB- or Baa3.

        “Level VI Pricing” applies if the Debt Rating at the most recent Performance Pricing Determination Date was less than BBB- or Baa3 or if there is no Debt Rating. All determinations hereunder shall be made by the Lessor unless the Majority Funding Parties shall object to any such determination. The Guarantor shall promptly notify the Lessor of any change in the Debt Rating.

CONSENT AND REAFFIRMATION OF GUARANTOR

        The undersigned (i) acknowledges receipt of the foregoing First Amendment to Investment Agreement and Lease Agreement (the “First Amendment”), (ii) consents to the execution and delivery of the First Amendment by the parties thereto and (iii) reaffirms all of its obligations and covenants under the Guaranty Agreement dated as of February 1, 2000 executed by it, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the First Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

                                                         PROTECTIVE LIFE CORPORATION (SEAL)
                                                         as Guarantor


                                                         By:/s/ Carl Thigpen
                                                                 Name:  Carl Thigpen
                                                                 Title: Vice President

EX-10

Exhibit 10(m)(2)

SECOND AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT

        THIS SECOND AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT (this “Second Amendment”) is dated as of the 11th day of March, 2002 among PROTECTIVE LIFE INSURANCE COMPANY. (the “Company”), WACHOVIA CAPITAL INVESTMENTS, INC. (the “Lessor”) and SUNTRUST BANK and LASALLE BANK NATIONAL ASSOCIATION (individually and collectively, as the context shall require, the “Lease Participants”);

W I T N E S S E T H :

        WHEREAS, the Company, the Lessor and the Lease Participants executed and delivered that certain Investment and Participation Agreement, dated as of February 1, 2000, as amended by First Amendment to Investment and Participation Agreement dated as of November 30, 2000 (as so amended, the “Investment Agreement”);

        WHEREAS, the Company has requested and the Lessor and the Lease Participants have agreed to certain amendments to the Investment Agreement, subject to the terms and conditions hereof, to conform in certain respects the definition of “Lien” to the definition thereof contained in the Revolving Credit Agreement;

        NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Company, the Lessor and the Lease Participants hereby covenant and agree as follows:

        1. Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in Schedule 1.02 to the Investment Agreement shall have the meaning assigned to such term in Schedule 1.02 to the Investment Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Investment Agreement shall from and after the date hereof refer to the Investment Agreement as amended hereby.

        2. Amendment to Schedule 1.02 to the Investment Agreement. Schedule 1.02 to the Investment Agreement hereby is amended by deleting the definition of "Lien" and substituting the following therefor:

“Lien”: with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, security interest, security title, preferential arrangement which has the practical effect of constituting a security interest or encumbrance, or encumbrance or servitude of any kind in respect of such asset to secure or assure payment of any Indebtedness or a Guarantee, whether by consensual agreement or by operation of statute or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of this definition, each of the Company, the Guarantor, and any Subsidiary thereof shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset; provided, that notwithstanding the foregoing, the term “Lien” shall not include (i) obligations or arrangements arising out of or related to reinsurance arrangements entered into by the Company, the Guarantor or any of their Subsidiaries or (ii) any short-term obligation or arrangement incurred for the pre-funding of anticipated policy obligations or anticipated investment cashflow.

        3. Restatement of Representations and Warranties. The Company hereby restates and renews each and every representation and warranty heretofore made by it in the Investment Agreement, the Lease and the other Operative Documents as fully as if made on the date hereof and with specific reference to this Second Amendment, the Lease and all other Operative Documents executed and/or delivered in connection herewith.

        4. Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Investment Agreement, the Lease and the other Operative Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Company. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein.

        5. Ratification. The Company hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Investment Agreement, the Lease and the other Operative Documents effective as of the date hereof.

        6. Counterparts. This Second Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered (which may effected by facsimile) shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

        7. Section References. Section titles and references used in this Second Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.

        8. No Default. To induce the Lessor and the Lease Participants to enter into this Second Amendment and to continue to make advances pursuant to the Investment Agreement, the Company hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Company arising out of or with respect to any of the Lessor Advances or Participant Advances or other obligations of the Company owed to the Lessor or the Lease Participants under the Investment Agreement or the Lease.

        9. Further Assurances. The Company agrees to take such further actions as the Lessor shall reasonably request in connection herewith to evidence the amendments herein contained.

        10. Governing Law. This Second Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of New York.

        11. Conditions Precedent. This Second Amendment shall become effective only upon execution and delivery (which may be by facsimile) (i) of this Second Amendment by each of the parties hereto, and (ii) of the Consent and Reaffirmation of Guarantor at the end hereof by Protective Life Corporation.

[SIGNATURES CONTAINED ON NEXT PAGE]

        IN WITNESS WHEREOF, the Company, the Lessor and each of the Lease Participants has caused this Second Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written.

                                    PROTECTIVE LIFE INSURANCE COMPANY,
                                    as the Company and the Lessee



                                    By:/s/Carl Thigppen
                                            Name:  Carl Thigpen
                                            Title: Vice President


                                    WACHOVIA CAPITAL INVESTMENTS, INC.,
                                    as the Lessor


                                    By:/s/Kevin T. McConnell
                                            Name:  Kevin T. McConnell
                                            Title: Senior Vice President


                                    SUNTRUST BANK,
                                    as a Lease Participant


                                    By:/s/Nathan Bickford
                                            Name:  Nathan Bickford
                                            Title: Assistant Vice President


                                    LASALLE BANK NATIONAL ASSOCIATION,
                                    as a Lease Participant


                                    By:/s/George L. Kumis
                                            Name:  George L. Kumis
                                            Title: Senior Vice President

CONSENT AND REAFFIRMATION OF GUARANTOR

        The undersigned (i) acknowledges receipt of the foregoing Second Amendment to Investment Agreement and Lease Agreement (the “Second Amendment”), (ii) consents to the execution and delivery of the Second Amendment by the parties thereto and (iii) reaffirms all of its obligations and covenants under the Guaranty Agreement dated as of February 1, 2000 executed by it, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the Second Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

                                                         PROTECTIVE LIFE CORPORATION (SEAL)
                                                         as Guarantor


                                                         By:/s/ Carl Thigpen
                                                                 Name:  Carl Thigpen
                                                                 Title: Vice President

EX-10

Exhibit 10(m)(3)

THIRD AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT

        THIS THIRD AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT AND LEASE AGREEMENT (this “Third Amendment”) is dated as of the 22nd day of July, 2002 among PROTECTIVE LIFE INSURANCE COMPANY. (the “Company”), WACHOVIA CAPITAL INVESTMENTS, INC. (the “Lessor”) and SUNTRUST BANK and LASALLE BANK NATIONAL ASSOCIATION (individually and collectively, as the context shall require, the “Lease Participants”);

W I T N E S S E T H :

        WHEREAS, the Company, the Lessor and the Lease Participants executed and delivered that certain Investment and Participation Agreement, dated as of February 1, 2000, as amended by First Amendment to Investment and Participation Agreement and Lease Agreement dated as of November 30, 2000 and Second Amendment to Investment and Participation Agreement dated as of March 11, 2002 (as so amended, the “Investment Agreement”), and the Company, as “Lessee”, and the Lessor, as “Lessor”, executed and delivered that certain Lease Agreement dated as of February 1, 2000, as amended by First Amendment to Investment and Participation Agreement and Lease Agreement dated as of November 30, 2000 (as so amended, the “Lease”);

        WHEREAS, the Company has requested and the Lessor and the Lease Participants have agreed to certain amendments to the Investment Agreement and the Lease, subject to the terms and conditions hereof, on account of unforseen delays incurred in connection with construction of the Improvements to the Facility;

        NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Company, the Lessor and the Lease Participants hereby covenant and agree as follows:

        1. Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in Schedule 1.02 to the Investment Agreement shall have the meaning assigned to such term in Schedule 1.02 to the Investment Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Investment Agreement shall from and after the date hereof refer to the Investment Agreement as amended hereby.

        2. Amendment to Schedule 1.02 to the Investment Agreement. Schedule 1.02 to the Investment Agreement hereby is amended by deleting the definition of "Completion Date" and substituting the following therefor:

        “Completion Date”: the earlier to occur of (i) the date on which the Company, as Acquisition/Construction Agent for the Lessor, delivers the Completion Certificate and (ii) February 1, 2003 (or, in the event of a Casualty Occurrence during the Construction Term and the Lessee is exercising its replacement rights pursuant to Section 14(d) of the Lease, June 1, 2003).

        3. Amendment to Section 14(d) of the Lease. Section 14(d) of the Lease hereby is amended by deleting the date "October 1, 2002" in the seventh line thereof and substituting the following therefor the date "April 1, 2003".

        4. Restatement of Representations and Warranties. The Company hereby restates and renews each and every representation and warranty heretofore made by it in the Investment Agreement, the Lease and the other Operative Documents as fully as if made on the date hereof and with specific reference to this Third Amendment, the Lease and all other Operative Documents executed and/or delivered in connection herewith.

        5. Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Investment Agreement, the Lease and the other Operative Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Company. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein.

        6. Ratification. The Company hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Investment Agreement, the Lease and the other Operative Documents effective as of the date hereof.

        7. Counterparts. This Third Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered (which may effected by facsimile) shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

        8. Section References. Section titles and references used in this Third Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.

        9. No Default. To induce the Lessor and the Lease Participants to enter into this Third Amendment and to continue to make advances pursuant to the Investment Agreement, the Company hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default and (ii) no right of offset, defense, counterclaim, claim or objection in favor of the Company arising out of or with respect to any of the Lessor Advances or Participant Advances or other obligations of the Company owed to the Lessor or the Lease Participants under the Investment Agreement or the Lease.

        10. Further Assurances. The Company agrees to take such further actions as the Lessor shall reasonably request in connection herewith to evidence the amendments herein contained.

        11. Governing Law. This Third Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of New York.

        12. Conditions Precedent. This Third Amendment shall become effective only upon execution and delivery (which may be by facsimile) (i) of this Third Amendment by each of the parties hereto, (ii) of the Consent and Reaffirmation of Guarantor at the end hereof by Protective Life Corporation and (iii) payment to the Lessor of an amendment fee in an amount equal to 0.05% of the Lessor Commitment (and the Lessor shall distribute to each Lease Participant its Percentage Share thereof).

[SIGNATURES CONTAINED ON NEXT PAGE]

        IN WITNESS WHEREOF, the Company, the Lessor and each of the Lease Participants has caused this Third Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written.

                                    PROTECTIVE LIFE INSURANCE COMPANY,
                                    as the Company and the Lessee



                                    By:/s/Carl S. Thigppen
                                            Name:  Carl Thigpen
                                            Title: Senior Vice President


                                    WACHOVIA CAPITAL INVESTMENTS, INC.,
                                    as the Lessor


                                    By:/s/Donna M. Harris
                                            Name:  Donna M. Harris
                                            Title: Senior Vice President


                                    SUNTRUST BANK,
                                    as a Lease Participant


                                    By:/s/Nathan Bickford
                                            Name:  Nathan Bickford
                                            Title: Vice President


                                    LASALLE BANK NATIONAL ASSOCIATION,
                                    as a Lease Participant


                                    By:/s/Andrew C. Haak
                                            Name:  Andrew C. Haak
                                            Title: First Vice President

CONSENT AND REAFFIRMATION OF GUARANTOR

        The undersigned (i) acknowledges receipt of the foregoing Third Amendment to Investment Agreement and Lease Agreement (the “Third Amendment”), (ii) consents to the execution and delivery of the Third Amendment by the parties thereto and (iii) reaffirms all of its obligations and covenants under the Guaranty Agreement dated as of February 1, 2000 executed by it, and agrees that none of such obligations and covenants shall be affected by the execution and delivery of the Third Amendment. This Consent and Reaffirmation may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

                                                         PROTECTIVE LIFE CORPORATION (SEAL)
                                                         as Guarantor


                                                         By:/s/ Carl Thigpen
                                                                 Name:  Carl Thigpen
                                                                 Title: Senior Vice President

EX-13

Exhibit 13

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Protective Life Corporation (the Company) is a holding company whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. The Company operates five business segments, each having a strategic focus which can be grouped into one of three general categories: life insurance, retirement savings and investment products, and specialty insurance products. The life insurance category includes the Life Marketing and the Acquisitions segments. The retirement savings category includes the Stable Value Products and Annuities segments, and the specialty insurance products category includes the Asset Protection segment. In addition, the Company has another business segment referred to as the Corporate and Other segment.

FORWARD-LOOKING STATEMENTS -
CAUTIONARY LANGUAGE

This report reviews the Company’s financial condition and results of operations including its liquidity and capital resources. Historical information is presented and discussed. Where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements made in this report include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that may predict, forecast, indicate or imply future results, performance or achievements instead of historical facts and may contain words like “believe,” “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “plan,” “will,” “shall,” and other words, phrases, or expressions with similar meaning. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from the results contained in the forward-looking statements, and the Company cannot give assurances that such statements will prove to be correct. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Please refer to “Known Trends and Uncertainties” and “Other Developments” herein for more information about factors which could affect future results.

CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies inherently require the use of judgments relating to a variety of assumptions and estimates, in particular expectations of current and future mortality, morbidity, persistency, expenses, and interest rates. Because of the inherent uncertainty when using the assumptions and estimates, the effect of certain accounting policies under different conditions or assumptions could be materially different from those reported in the consolidated financial statements. A discussion of the various critical accounting policies is presented below.

The Company incurs significant costs in connection with acquiring new insurance business. These costs, which vary with and are primarily related to the production of new business and coinsurance of blocks of policies, are deferred. The recovery of such costs is dependent on the future profitability of the related policies. The amount of future profit is dependent principally on investment returns, mortality, morbidity, persistency, and expenses to administer the business and certain economic variables, such as inflation. These factors enter into management’s estimates of future profits which generally are used to amortize certain of such costs. Accounting for other intangible assets such as goodwill also requires an estimate of the future profitability of the associated lines of business. Revisions to estimates result in changes to the amounts expensed in the reporting period in which the revisions are made and could result in the impairment of the asset and a charge to income if estimated future profits are less than the unamortized deferred amounts.

The Company has a deferred policy acquisition costs asset of approximately $89 million related to its variable annuity product line with an account balance of $1.7 billion at December 31, 2002. The Company monitors the rate of amortization of the deferred policy acquisition costs associated with its variable annuity product line. The methodologies employ varying assumptions about how much and how quickly the stock markets will recover from their current depressed levels. The primary assumptions used to project future profits as part of the analysis include: a long-term equity market growth rate of 8%, reversion to the mean methodology with a reversion to the mean cap rate of 13%, reversion to the mean period of 5 years, and an amortization period of 20 years. A recovery in equity markets, or methodologies and assumptions that anticipate a recovery, results in lower amounts of amortization, and a worsening of equity markets results in higher amounts of amortization.

Establishing an adequate liability for the Company’s obligations to its policyholders requires the use of assumptions. Liabilities for future policy benefits on traditional life insurance products require the use of assumptions relative to future investment yields, mortality, persistency and other assumptions based on the Company’s historical experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation.

The Company also establishes liabilities for guaranteed minimum death benefits (GMDB) on its variable annuity products. The methods used to estimate the liabilities employs assumptions about mortality and the performance of equity markets. The Company assumes mortality of 60% of the National Association of Insurance Commissioners 1994 Variable Annuity GMDB Mortality Table to reflect improvements in mortality since the table was derived and other factors. Future declines in the equity market would increase the Company’s GMDB liability. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. The Company’s GMDB at December 31, 2002, are subject to a dollar-for-dollar reduction upon withdrawal of related annuity deposits.

Determining whether a decline in the current fair value of invested assets is an other-than-temporary decline in value can involve a variety of assumptions and estimates, particularly for investments that are not actively traded in established markets. For example, assessing the value of certain investments requires the Company to perform an analysis of expected future cash flows or rates of prepayments. Other investments, such as collateralized mortgage or bond obligations, represent selected tranches of a structured transaction, supported overall by underlying investments in a wide variety of issuers. The Company’s specific accounting policies related to its invested assets are discussed in the notes to the consolidated financial statements.

The Company utilizes derivative transactions primarily in order to reduce its exposure to interest rate risk as well as currency exchange risk. Assessing the effectiveness of these hedging programs and evaluating the carrying values of the related derivatives often involve a variety of assumptions and estimates. The Company employs a variety of methods for determining the fair value of its derivative instruments. The fair values of interest rate swaps, interest rate swaptions, total return swaps and put or call options are based upon industry standard models which present-value the projected cash flows of the derivatives using current and implied future market conditions.

Determining the Company’s obligations to employees under its defined benefit pension plan and stock-based compensation plans requires the use of estimates. The calculation of the liability related to the Company’s defined benefit pension plan requires assumptions regarding the appropriate weighted average discount rate, estimated rate of increase in the compensation of its employees and the expected long-term rate of return on the plan’s assets. Accounting for other stock-based compensation plans may require the use of option pricing models to estimate the Company’s obligations. Assumptions used in such models relate to equity market volatility, the risk-free interest rate at the date of grant, as well as the expected exercise date.

The assessment of potential obligations for tax, regulatory, and litigation matters inherently involve a variety of estimates of potential future outcomes. The Company makes such estimates after consultation with its advisors and a review of available facts.

RESULTS OF OPERATIONS

PREMIUMS AND POLICY FEES

The following table sets forth for the periods shown the amount of premiums and policy fees, net of reinsurance (premiums and policy fees), and the percentage change from the prior period:

                                                            PERCENTAGE
  YEAR ENDED                   AMOUNT                        INCREASE
  DECEMBER 31              (IN THOUSANDS)                   (DECREASE)
- ------------------------------------------------------------------------
    2000                      $489,790                        22.8%
    2001                       618,669                        26.3
    2002                       783,132                        26.6
- ------------------------------------------------------------------------

Premiums and policy fees were $618.7 million for 2001, an increase of $128.9 million or 26.3% from the $489.8 million reported for 2000. Premiums and policy fees in the Life Marketing segment increased $21.2 million due to increased sales. Premiums and policy fees in the Acquisitions segment are expected to decline with time (due to the lapsing of policies resulting from deaths of insureds or terminations of coverage) unless new acquisitions are made. In January 2001, the Acquisitions segment coinsured a block of individual life insurance policies from Standard Insurance Company (Standard), and in October 2001, acquired Inter-State Assurance Company (Inter-State) and First Variable Life Insurance Company (First Variable) from Irish Life & Permanent plc. These transactions resulted in an $86.8 million increase in premium and policy fees. Premiums and policy fees from older acquired blocks declined $7.2 million in 2001. The decrease in premiums and policy fees from the Annuities segment was $2.0 million due to a decline in variable annuity management fees caused by the general decline in the equity markets. Premiums and policy fees from the Asset Protection segment increased $29.6 million primarily due to increased sales in its service contracts. Premiums and policy fees relating to various health insurance lines in the Corporate and Other segment increased $0.6 million.

Premiums and policy fees were $783.1 million in 2002, an increase of $164.4 million, or 26.6% from the $618.7 million reported for 2001. During 2002, the Company discovered that it had overpaid the reinsurance premiums due on certain life insurance policies over a period of 10 years. The Company has recorded cash and receivables totaling $69.7 million, and a corresponding increase in premiums and policy fees, which reflects its current estimate of amounts to be recovered. Excluding this increase, premiums and policy fees in the Life Marketing segment increased $29.5 million due to an increase in sales. In June 2002, the Company coinsured a block of insurance policies from Conseco Variable Insurance Company (Conseco). This transaction resulted in an increase in premiums and policy fees of $21.4 million. The acquisition of Inter-State and First Variable resulted in a $38.9 million increase in premium and policy fees. Premiums and policy fees from older acquired blocks decreased $3.7 million. Premiums and policy fees from the Annuities segment declined $2.3 million due to a decline in variable annuity management fees caused by the general decline in the equity markets. Premiums and policy fees related to the Asset Protection segment increased $12.0 million due to continued higher sales in its service contracts and residual value lines. Lower sales in other Asset Protection lines during 2002 were more than offset by a decline in the amount of reinsurance ceded. The decline in reinsurance ceded was primarily due to a change in the form of a credit reinsurance agreement in 2002. Premiums and policy fees relating to various health insurance lines in the Corporate and Other segment decreased $0.9 million.

NET INVESTMENT INCOME

The following table sets forth for the periods shown the amount of net investment income, the percentage change from the prior period, and the percentage earned on average cash and investments:

                                                                         PERCENTAGE
                                                                           EARNED
                                                                         ON AVERAGE
  YEAR ENDED               AMOUNT               PERCENTAGE                CASH AND
  DECEMBER 31          (IN THOUSANDS)            INCREASE                INVESTMENTS
- --------------------------------------------------------------------------------------
    2000                  $730,149                 9.3%                      7.6%
    2001                   884,041                21.1                       7.3
    2002                 1,031,204                16.6                       7.0
- --------------------------------------------------------------------------------------

Net investment income in 2001 increased $153.9 million or 21.1% over 2000, and in 2002 increased $147.2 million or 16.6% over 2001, primarily due to increases in the average amount of invested assets. Invested assets have increased primarily due to acquisitions, receiving stable value and annuity deposits, and the asset growth that results from the sale of various insurance products. The Standard coinsurance transaction and the acquisition of Inter-State and First Variable resulted in an increase in investment income of $66.4 million in 2001. The acquisition of Inter-State and First Variable and the Conseco coinsurance transaction resulted in an increase in investment income of $57.5 million in 2002.

The percentage earned on average cash and investments was 7.3% in 2001 and 7.0% in 2002.

REALIZED INVESTMENT GAINS (LOSSES)

The Company generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash flow needs.

The following table sets forth realized investment gains (losses) relating to derivative financial instruments and all other investments for the periods shown:

                                                            DERIVATIVE
                               FINANCIAL                     ALL OTHER
  YEAR ENDED                  INSTRUMENTS                   INVESTMENTS
  DECEMBER 31               (IN THOUSANDS)                (IN THOUSANDS)
- --------------------------------------------------------------------------
    2000                        $9,013                       $(16,056)
    2001                       (11,431)                        (8,740)
    2002                         5,236                            910
- --------------------------------------------------------------------------

Realized investment gains and losses related to derivative financial instruments primarily represent changes in the fair values of certain derivative financial instruments.

The sales of investments that have occurred generally result from portfolio management decisions to maintain proper matching of assets and liabilities. Realized investment losses in 2001 of $38.4 million were largely offset by realized investment gains of $29.7 million. Realized investment gains related to all other investments in 2002 of $80.1 million were largely offset by realized investment losses of $79.2 million. During 2001 and 2002, the Company recorded other-than-temporary impairments in its investments of $12.6 million and $30.2 million, respectively.

Each quarter the Company reviews investments with material unrealized losses and tests for other-than-temporary impairments. Management analyzes various factors to determine if any specific other than temporary asset impairments exist. Once a determination has been made that a specific other-than-temporary impairment exists, a realized loss is recognized and the cost basis of the impaired asset is adjusted to its fair value. An other-than-temporary impairment loss is recognized based upon all relevant facts and circumstances for each investment. With respect to unrealized losses due to issuer-specific events, the Company considers the creditworthiness and financial performance of the issuer and other available information. With respect to unrealized losses that are not due to issuer-specific events, such as losses due to interest rate fluctuations, general market conditions or industry-related events, the Company considers its intent and ability to hold the investment to allow for a market recovery or to maturity together with an assessment of the likelihood of full recovery. See also “Liquidity and Capital Resources – Investments” included herein.

OTHER INCOME

The following table sets forth other income for the periods shown:

  YEAR ENDED                                   AMOUNT
  DECEMBER 31                              (IN THOUSANDS)
- ----------------------------------------------------------
    2000                                      $151,833
    2001                                       120,647
    2002                                       100,196
- ----------------------------------------------------------

Other income consists primarily of revenues of the Company's broker-dealer subsidiary, direct response businesses, service contract businesses, investment advisory fees from variable insurance products, and revenues of the Company's noninsurance subsidiaries.

In March 2000, the Company completed the sale of its Hong Kong affiliate, resulting in $24.8 million of other income. In 2001, revenues from the Company's direct response businesses decreased $1.9 million and service contract businesses increased $3.3 million. Revenue from the Company's broker-dealer subsidiary decreased $9.1 million in 2001 due to the general downturn in the equity markets. Other income from all other sources increased $1.3 million. In 2002, revenues from the Company's broker-dealer subsidiary increased $1.8 million. Revenues from the Company's direct response businesses decreased $6.7 million due to reduced emphasis on selling other companies' products. Revenues from the service contract businesses decreased $10.0 million due to lower sales caused by general economic conditions. Other income from all other sources decreased $5.5 million.

INCOME BEFORE INCOME TAX

Management evaluates the results of the Company's segments on a before-income-tax basis as adjusted for certain items which management believes are not indicative of the Company's core operations. Segment operating income (loss) excludes net realized investment gains and losses and the related amortization of deferred policy acquisition costs and gains (losses) on derivative instruments because fluctuations in these items are due to changes in interest rates and other financial market factors instead of mortality and morbidity. Also, operating segment income (loss) excludes any net gains or losses on disposals of businesses, discontinued operations, extraordinary items, the cumulative effect of accounting changes, and any other items, that, in each case, are neither normal nor recurring. Although the items excluded from segment operating income (loss) may be significant components in understanding and assessing the Company's overall financial performance, management believes that operating segment income (loss) enhances an investor's understanding of the Company's results of operations by highlighting the income (loss) attributable to the normal, recurring operations of the insurance business (i.e., mortality and morbidity), consistent with industry practice. However, the Company's segment income (loss) measures may not be comparable to similarly titled measures reported by other companies. Segment income (loss) should not be construed as a substitute for net income (loss) determined in accordance with accounting principles generally accepted in the United States of America (GAAP). "Total income from continuing operations before income tax" is a GAAP measure to which the non-GAAP measure "total operating income" may be compared. Unlike total operating income, total income before income tax includes net realized investment gains and losses, the related amortization of deferred policy acquisition costs and gains (losses) on derivative instruments.

The table below sets forth operating income or loss and income or loss before income tax by business segment for the periods shown:

                                                                    YEAR ENDED DECEMBER 31
                                                      ------------------------------------------------
Amount (in thousands)                                   2002                2001              2000
- ------------------------------------------------------------------------------------------------------
Operating Income(1)
LIFE INSURANCE
      Life Marketing                                  $125,550              $89,574          $76,597
      Acquisitions                                      95,097               68,040           52,762
RETIREMENT SAVINGS AND INVESTMENT PRODUCTS
      Stable Value Contracts                            42,272               33,150           31,208
      Annuities                                         15,694               16,934           15,171
SPECIALTY INSURANCE PRODUCTS
      Asset Protection                                 (23,378)              33,960           32,191
Corporate and Other                                      7,803              (10,895)          11,199
- ------------------------------------------------------------------------------------------------------
Total operating income                                 263,038              230,763          219,128
- ------------------------------------------------------------------------------------------------------
Realized investment gains (losses)
      Stable Value Contracts                            (7,061)               7,218           (6,556)
      Annuities                                          2,277                1,139              410
      Unallocated                                       10,930              (28,528)            (897)
Related amortization of deferred policy acquisition
      costs Annuities                                   (1,981)                (996)            (410)
- ------------------------------------------------------------------------------------------------------
Total realized investment gains
(losses), net                                            4,165              (21,167)          (7,453)
- ------------------------------------------------------------------------------------------------------
Income Before Income Tax
LIFE INSURANCE
      Life Marketing                                   125,550               89,574           76,597
      Acquisitions                                      95,097               68,040           52,762
RETIREMENT SAVINGS AND INVESTMENT PRODUCTS
      Stable Value Contracts                            35,211               40,368           24,652
      Annuities                                         15,990               17,077           15,171
Specialty Insurance Products
      Asset Protection                                 (23,378)              33,960           32,191
Corporate and Other                                      7,803              (10,895)          11,199
Unallocated realized investment
gains (losses)                                          10,930              (28,528)            (897)
- ------------------------------------------------------------------------------------------------------
Total income from continuing
operations before income tax                          $267,203             $209,596         $211,675
- ------------------------------------------------------------------------------------------------------

(1) Income (loss) from continuing operations before income tax excluding realized investment gains and losses and related amortization
of deferred policy acquisition costs.

The Life Marketing segment’s 2001 pretax operating income was $89.6 million, $13.0 million above 2000. This increase is primarily due to growth in sales. The segment’s 2002 pretax operating income was $125.6 million, $36.0 million above 2001. An increase of $7.2 million is attributable to favorable mortality experience. An increase of $21.6 million can be attributed to growth through sales.

In the second quarter of 2002, the Company discovered that it had overpaid the reinsurance premiums due on certain life insurance policies, and indicated that it would be seeking recovery of approximately $94.6 million from several reinsurance companies.

The Company continues to make progress toward recovery of the overpayments. Approximately $36.6 million had been received as of February 28, 2003. The Company is continuing to work with the reinsurers in an effort to collect the entire overpayment, plus interest where appropriate. With respect to one reinsurer, arbitration proceedings are currently pending. At December, 31, 2002, the Company had recorded cash and receivables totaling $69.7 million, which reflects the amounts received and the Company’s current estimate of amounts to be recovered in the future, based upon the information available.

The corresponding increase in premiums and policy fees resulted in $62.5 million of additional amortization of deferred policy acquisition costs in 2002. The amortization of deferred policy acquisition costs takes into account the amortization relating to the increase in premiums and policy fees as well as the additional amortization required should the remainder of the overpayment not be collected. The Life Marketing segment’s pretax operating income thereby increased $7.2 million (in addition to the increase noted above), which is the difference between the premiums recorded and the amount of such additional amortization.

Because the overpayments were made over a period of 10 years beginning in 1992, and had the effect of reducing the amortization of deferred policy acquisition costs during that period, the Company believes that no prior period results were materially understated and that no operating trends were materially affected as a result.

The recorded amounts that reflect overpayments to be recovered in the future are estimates. Therefore, new information relating to the recovery of such amounts could result in the Company increasing (decreasing) its estimates of the amounts to be recovered, or the Company could receive more (less) than the recorded amounts, which, in either event, could result in an additional positive (negative) effect on future income.

In the ordinary course of business, the Acquisitions segment regularly considers acquisitions of blocks of policies or smaller insurance companies. Policies acquired through the segment are usually administered as “closed” blocks; i.e., no new policies are being marketed. Therefore, earnings from the Acquisitions segment are normally expected to decline over time (due to the lapsing of policies resulting from deaths of insureds or terminations of coverage) unless new acquisitions are made.

In 2001, the Acquisition segment’s pretax operating income was $68.0 million, $15.3 million above 2000. The Standard coinsurance transaction and the acquisition of Inter-State and First Variable resulted in a $15.9 million increase in earnings. Earnings on older acquired blocks of policies declined $0.6 million. In 2002, the segment’s pretax operating income was $95.1 million, $27.1 million above 2001. The Conseco and Standard coinsurance transactions and the acquisition of Inter-State and First Variable resulted in a $24.7 million increase in earnings in 2002. Earnings on older acquired blocks of policies increased $2.4 million.

The Stable Value Contracts segment had 2001 pretax operating income of $33.2 million, $2.0 million above 2000. This increase is primarily due to an increase in average account balances of $523 million. Operating spreads in 2001 were 10 basis points lower than 2000 due to lower investment income. Realized investment losses associated with this segment in 2000 were $6.6 million as compared to gains of $7.2 million in 2001. As a result, income before income tax was $24.7 million in 2000 and $40.4 million in 2001. The Stable Value Contracts segment’s 2002 pretax operating income was $42.3 million, $9.1 million above 2001. This increase is due primarily to higher account balances and operating spreads. Average account balances were $3.9 billion in 2002 as compared to $3.5 billion in 2001. Operating spreads averaged 107 basis points in 2002 compared to an average of 90 basis points in 2001. Realized investment gains associated with this segment in 2001 were $7.2 million as compared to losses of $7.1 million in 2002. As a result, total income before income tax was $40.4 million in 2001 and $35.2 million in 2002.

The Annuities segment’s 2001 pretax operating income was $16.9 million, $1.7 million above 2000. The 2001 results include a tax benefit of approximately $3.0 million related to the segment’s variable annuities which was partially offset by an increase in reserves related to minimum death benefit guarantees of $0.7 million. The segment’s pretax operating income for 2002 was $15.7 million as compared to $16.9 million in 2001. Fixed annuity earnings increased $1.2 million due to higher account balances. This increase was more than offset by a decline in variable annuity earnings of $2.4 million due to the general decline in the equity markets. The segment had $0.1 million realized investment gains (net of related amortization of deferred policy acquisition costs) in 2001 and a $0.3 million gain in 2002. As a result, total pretax income was $17.1 million in 2001 and $16.0 million in 2002. The Annuities segment’s future results may be negatively affected by a slow economy. Volatile equity markets could negatively affect sales of variable annuities and the fees the segment assesses on variable annuity contracts. Lower interest rates could negatively affect sales of fixed annuities. In this segment, equity market volatility may create uncertainty regarding the level of future profitability in the variable annuity business and the related rate of amortization of deferred policy acquisition cost.

The Company offers a guaranteed minimum death benefit feature (GMDB) on its variable annuity products. The Company’s accounting policy has been to calculate its total exposure to GMDB, and then apply a mortality factor to determine the amount of claims that could be expected to occur in the coming twelve months. The Company then accrues to that amount over four quarters. At December 31, 2002, the total GMDB reserve was $5.6 million, an increase of $1.6 million from December 31, 2001. At December 31, 2002, the total guaranteed amount payable under the GMDB feature based on variable annuity account balances at December 31, 2002, was $539.0 million, compared to $295.0 million at December 31, 2001. Based on variable annuity account balances as of January 31, 2003, the total guaranteed dollar amount payable under the GMDB feature was approximately $561.0 million.

In accordance with statutory accounting practices prescribed or permitted by regulatory authorities (which require the assumption that equity markets will significantly worsen), the Company’s insurance subsidiaries reported GMDB related policy liabilities and accruals of $24.7 million at December 31, 2002.

The Asset Protection segment’s core lines of business are credit insurance and vehicle and marine service contracts. The results of the Asset Protection segment are being significantly affected by general economic conditions and conditions in the automobile industry. The segment’s claims and corresponding loss ratios have increased in the current economic environment. In addition, the segment is exiting certain ancillary lines of business, which are not core to either the credit insurance or service contract businesses.

In view of the negative trends recently experienced in this segment, the Company performed claims experience studies in 2002 and other analyses and determined that it should increase its estimates of policy liabilities and accruals and write off certain deferred policy acquisition costs and receivables which resulted in a pretax charge of $30.9 million in 2002. Examples of the negative trends affecting the segment are lower used vehicle prices resulting from new vehicle sales incentives and an increase in service contract claims. Claims experience studies are necessarily complex and involve analyzing and interpreting large quantities of data to deduce whether the trends appear to be temporary and likely to reverse, or not. Any adverse development in the trends of used vehicle prices or in service contract claims could have a material adverse effect on the Company.

The Asset Protection segment’s 2001 pretax operating income was $34.0 million, $1.8 million above 2000. Higher loss ratios in the segment’s ancillary lines reduced income by $6.5 million in 2001. This decline was offset by a change in estimate of $6.7 million with respect to reserves in certain credit lines. The segment’s 2001 results also include income of approximately $2.0 million from the sale of a small insurance subsidiary’s charter. All other items reduced 2001 operating income by $0.4 million.

The Asset Protection segment had a pretax operating loss of $23.4 million in 2002, $57.4 million lower than 2001. The decrease included the $30.9 million charge discussed above. The segment also experienced lower service contract administration fees of $2.8 million and lower earned credit premium that reduced income $5.8 million. Higher loss ratios in the vehicle service contract line lowered earnings $2.8 million. Also, higher loss ratios in the segment’s ancillary lines led to higher losses of $6.1 million in 2002. Included in the segment’s pretax loss for 2002 was $2.7 million of income-related to the sale of the inactive charter of a small subsidiary compared to $2.0 million for a charter sale in 2001. In addition, the 2001 reserve estimate change did not recur in 2002. All other items decreased 2002 operating income by $3.0 million.

The Corporate and Other segment consists primarily of net investment income on unallocated capital, interest expense on substantially all debt, several lines of business that the Company is not actively marketing (mostly health insurance), earnings from various investment-related transactions, and the operations of several small subsidiaries. In 2001, the segment had pretax operating losses of $10.9 million compared to operating income of $11.2 million in 2000. Excluding the sale of the Company’s Hong Kong affiliate in 2000, the Corporate and Other business segment had a 2001 pretax operating loss of $10.9 million compared to a loss of $13.6 million in 2000. The improvement in operating results primarily relates to $1.3 million less interest expense and $1.4 million lower corporate expenses. In 2002, the segment had pretax operating income of $7.8 million, $18.7 million higher than 2001. The increase primarily relates to $7.1 million less interest expense, $0.6 million lower corporate expenses and a $15.3 million increase in investment income allocated to the segment, which was partially offset by $4.3 million less income from the cancer line of business.

INCOME TAX EXPENSE

The following table sets forth the effective income tax rates relating to continuing operations for the periods shown:

  YEAR ENDED                      EFFECTIVE INCOME
  DECEMBER 31                         TAX RATES
- ----------------------------------------------------
    2000                                35.1%
    2001                                32.7
    2002                                33.1
- ----------------------------------------------------

Management’s current estimate of the effective income tax rate for 2003 is approximately 33.9%.

DISCONTINUED OPERATIONS

On December 31, 2001, the Company completed the sale to Fortis, Inc. of substantially all of its Dental Benefits Division (Dental Division) and discontinued certain other remaining Dental Division related operations, primarily other health insurance lines. In 2001, the loss from discontinued operations was $10. .0 million (primarily due to the non-performance of reinsurers) and the loss from sale of discontinued operations was $20.5 million, both net of income tax.

EXTRAORDINARY LOSS

On October 25, 2002, the Company caused PLC Capital Trust I, a special purpose finance subsidiary of the Company, to redeem $75 million of 8.25% Trust Originated Preferred Securities it issued in 1997. In a related transaction, the Company redeemed its subordinated debentures which were held by PLC Capital Trust I. The redemption of the subordinated debentures resulted in an extraordinary loss of $1.4 million or $0.02 per share on both a basic and diluted basis. The extraordinary loss was comprised primarily of unamortized deferred debt issue costs, net of an income tax benefit of $0.8 million.

CHANGE IN ACCOUNTING PRINCIPLE

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The adoption of SFAS No. 133 resulted in a cumulative $7.6 million charge to net income, net of $4.1 million income tax, or $0.11 per share on both a basic and diluted basis.

NET INCOME

The following table sets forth net income from continuing operations before extraordinary loss and cumulative effect of change in accounting principle and related per share information for the periods shown:

                                                                                    PERCENTAGE
   YEAR ENDED                  AMOUNT                        PER SHARE               INCREASE/
   DECEMBER 31             (IN THOUSANDS)                     DILUTED               (DECREASE)
- ------------------------------------------------------------------------------------------------
     2000                     $137,354                         $2.08                   4.5%
     2001                      141,058                          2.01                  (3.4)
     2002                      178,759                          2.54                  26.4
- ------------------------------------------------------------------------------------------------

Net income from continuing operations before extraordinary loss and cumulative effect of change in accounting principle per share – diluted in 2001 of $2.01 reflects improved operating earnings in all segments, partially offset by higher realized investment losses. Net income from continuing operations before extraordinary loss and cumulative effect of change in accounting principle per share – diluted in 2002 of $2.54 reflects improved operating earnings in the Life Marketing, Acquisitions, Stable Value Contracts and Corporate and Other segments and higher realized investment gains, which were partially offset by lower operating earnings in the Annuities and Asset Protection segments.

KNOWN TRENDS AND UNCERTAINTIES

The operating results of companies in the insurance industry have historically been subject to significant fluctuations. The factors which could affect the Company’s future results include, but are not limited to, general economic conditions and the known trends and uncertainties which are discussed more fully below. Please also refer to “Other Developments” herein.

o The Company is exposed to many types of risks that could negatively affect its business. There are many types of risks that the Company is exposed to in its businesses. For example, the Company is exposed to the risks of natural disasters, malicious and terrorist acts, computer viruses, and other perils that could adversely affect the Company’s operations. While the Company has obtained insurance, implemented risk management and contingency plans, and taken preventive measures and other precautions, no predictions of specific scenarios can be made nor can assurance be given that there are not scenarios that could have an adverse effect on the Company. A natural disaster or an outbreak of an easily communicable disease could adversely affect the mortality or morbidity experience of the Company or its reinsurers. Similarly, a computer virus could affect the data processing systems of the Company or its business partners, destroying valuable data or making it difficult to conduct their business. Additionally there are scenarios that could have an adverse effect on general economic conditions, and thus on the Company.

o The Company operates in a mature, highly competitive industry, which could limit its ability to gain or maintain its position in the industry. Life and health insurance is a mature industry. In recent years, the industry has experienced little growth in life insurance sales, though the aging population has increased the demand for retirement savings products. Life and health insurance is a highly competitive industry. The Company encounters significant competition in all lines of business from other insurance companies, many of which have greater financial resources than the Company, as well as competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products.

The insurance industry is consolidating, with larger, potentially more efficient organizations emerging from consolidation. Participants in certain of the Company’s independent distribution channels are also consolidating into larger organizations. Some mutual insurance companies are converting to stock ownership, which will give them greater access to capital markets. Additionally, commercial banks, insurance companies, and investment banks may now combine, provided certain requirements are satisfied. The ability of banks to increase their securities-related business or to affiliate with insurance companies may materially and adversely affect sales of all of the Company’s products by substantially increasing the number and financial strength of potential competitors.

The Company’s ability to compete is dependent upon, among other things, its ability to attract and retain distribution channels to market its insurance and investment products, its ability to develop competitive and profitable products, its ability to maintain low unit costs, and its maintenance of strong ratings from rating agencies.

o A ratings downgrade could adversely affect the Company’s ability to compete. Rating organizations periodically review the financial performance and condition of insurers, including the Company’s subsidiaries. A downgrade in the ratings of the Company’s subsidiaries could adversely affect the Company’s ability to sell its products, retain existing business, and compete for attractive acquisition opportunities.

Rating organizations assign ratings based upon several factors. While most of the factors relate to the rated company, some of the factors relate to the views of the rating organization, general economic conditions and circumstances outside the rated company’s control. The Company cannot predict what actions the rating organizations may take, or what actions the Company may be required to take in response to the actions of the rating organizations, which could adversely affect the Company.

o The Company’s policy claims fluctuate from period to period, and actual results could differ from its expectations. The Company’s results may fluctuate from period to period due to fluctuations in policy claims received by the Company. Certain of the Company’s businesses may experience higher claims if the economy is growing slowly or in recession, or equity markets decline.

Mortality, morbidity, and casualty expectations incorporate assumptions about many factors, including for example, how a product is distributed, persistency and lapses, and future progress in the fields of health and medicine. Actual mortality, morbidity, and casualty claims could differ from expectations if actual results differ from those assumptions.

o The Company’s results may be negatively affected should actual experience differ from management’s assumptions and estimates. In the conduct of business, the Company makes certain assumptions regarding the mortality, persistency, expenses and interest rates, or other factors appropriate to the type of business it expects to experience in future periods. These assumptions are also used to estimate the amounts of deferred policy acquisition costs, policy liabilities and accruals, and various other components of the Company’s balance sheet. The Company’s actual experience, as well as changes in estimates, is used to prepare the Company’s statements of income.

The calculations the Company uses to estimate various components of its balance sheet and statements of income are necessarily complex and involve analyzing and interpreting large quantities of data. The Company currently employs various techniques for such calculations and it from time to time will develop and implement more sophisticated administrative systems and procedures capable of facilitating the calculation of more precise estimates.

Assumptions and estimates involve judgment, and by their nature are imprecise and subject to changes and revision over time. Accordingly, the Company’s results may be affected, positively or negatively, from time to time, by actual results differing from assumptions, by changes in estimates, and by changes resulting from implementing more sophisticated administrative systems and procedures that facilitate the calculation of more precise estimates.

o The use of reinsurance introduces variability in the Company’s statement of income. The timing of premium payments to, and receipt of expense allowances from, reinsurers may differ from the Company’s receipt of customer premium payments and incurrence of expenses. These timing differences introduce variability in certain components of the Company’s statements of income, and may also introduce variability in the Company’s quarterly results.

o The Company could be forced to sell investments at a loss to cover policyholder withdrawals. Many of the products offered by the Company and its insurance subsidiaries allow policy-holders and contract holders to withdraw their funds under defined circumstances. The Company and its insurance subsidiaries manage their liabilities and configure their investment portfolios so as to provide and maintain sufficient liquidity to support anticipated withdrawal demands and contract benefits and maturities. While the Company and its life insurance subsidiaries own a significant amount of liquid assets, a certain portion of their assets are relatively illiquid. If the Company or its subsidiaries experience unanticipated withdrawal or surrender activity, the Company or its subsidiaries could exhaust their liquid assets and be forced to liquidate other assets, perhaps on unfavorable terms. If the Company or its subsidiaries are forced to dispose of assets on unfavorable terms, it could have an adverse effect on the Company’s financial condition.

o Interest-rate fluctuations could negatively affect the Company’s spread income or otherwise impact its business. Significant changes in interest rates expose insurance companies to the risk of not earning anticipated spreads between the interest rate earned on investments and the credited interest rates paid on outstanding policies and contracts. Both rising and declining interest rates can negatively affect the Company’s spread income. While the Company develops and maintains asset/ liability management programs and procedures designed to preserve spread income in rising or falling interest rate environments, no assurance can be given that changes in interest rates will not affect such spreads.

From time to time, the Company has participated in securities repurchase transactions that have contributed to the Company’s investment income. Such transactions involve some degree of risk that the counterparty may fail to perform its obligations to pay amounts owed and the collateral has insufficient value to satisfy the obligation. No assurance can be given that such transactions will continue to be entered into and contribute to the Company’s investment income in the future.

Changes in interest rates may also impact its business in other ways. Lower interest rates may result in lower sales of certain of the Company’s insurance and investment products. In addition, certain of the Company’s insurance and investment products guarantee a minimum credited interest rate, and the Company could become unable to earn its spread income should interest rates decrease significantly.

Higher interest rates may create a less favorable environment for the origination of mortgage loans and decrease the investment income the Company receives in the form of prepayment fees, make-whole payments, and mortgage participation income. Higher interest rates may also increase the cost of debt and other obligations having floating rate or rate reset provisions and may result in lower sales of variable products.

Additionally, the Company’s asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve) and relationships between risk-adjusted and risk-free interest rates, market liquidity, and other factors. The effectiveness of the Company’s asset/liability management programs and procedures may be negatively affected whenever actual results differ from these assumptions.

In general terms, the Company’s results are improved when the yield curve is positively sloped (i.e., when long-term interest rates are higher than short-term interest rates), and will be adversely affected by a flat or negatively sloped curve.

o Equity market volatility could negatively impact the Company’s business. The amount of policy fees received from variable products is affected by the performance of the equity markets, increasing or decreasing as markets rise or fall. Equity market volatility can also affect the profitability of variable products in other ways.

The amortization of deferred policy acquisitions costs relating to variable products and the estimated cost of providing guaranteed minimum death benefits incorporate various assumptions about the overall performance of equity markets over certain time periods. The rate of amortization of deferred policy acquisition costs and the estimated cost of providing guaranteed minimum death benefits could increase if equity market performance is worse than assumed.

o A deficiency in the Company’s systems could result in over- or underpayments of amounts owed to or by the Company and/or errors in the Company’s critical assumptions or reported financial results. The business of insurance necessarily involves the collection and dissemination of large amounts of data using systems operated by the Company. Examples of data collected and analyzed include policy information, policy rates, expenses, mortality and morbidity experience. To the extent that data input errors, systems errors, or systems failures are not identified and corrected by the Company’s internal controls, the information generated by the systems and used by the Company and/or supplied to business partners, policyholders, and others may be incorrect and may result in an overpayment or underpayment of amounts owed to or by the Company and/or the Company using incorrect assumptions in its business decisions or financial reporting.

In the second quarter of 2002, the Company discovered that the rates payable on certain life insurance policies were incorrectly entered into its reinsurance administrative system in 1991. As a result, the Company overpaid to several reinsurance companies the reinsurance premiums related to such policies of approximately $94.6 million over a period of 10 years beginning in 1992. Although the recoverability of amounts overpaid cannot be assured, the Company is seeking recovery of the overpayments and has already received refunds from some of the reinsurance companies.

o Insurance companies are highly regulated. The Company and its insurance subsidiaries are subject to government regulation in each of the states in which they conduct business. Such regulation is vested in state agencies having broad administrative power dealing with many aspects of the insurance business, which may include premium rates, marketing practices, advertising, policy forms, and capital adequacy, and is concerned primarily with the protection of policyholders rather than share owners. From time to time, regulators raise issues during examinations or audits of the Company’s subsidiaries that could, if determined adversely, have a material impact on the Company, and the Company cannot predict whether or when regulatory actions may be taken that could adversely affect the Company or its operations.

The Company and its insurance subsidiaries may be subject to regulation by the United States Department of Labor when providing a variety of products and services to employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Severe penalties are imposed for breach of duties under ERISA.

Certain policies, contracts, and annuities offered by the Company and its insurance subsidiaries are subject to regulation under the federal securities laws administered by the Securities and Exchange Commission. The federal securities laws contain regulatory restrictions and criminal, administrative, and private remedial provisions.

Other types of regulation that could affect the Company and its subsidiaries include insurance company investment laws and regulations, state statutory accounting practices, state anti-trust laws, minimum solvency requirements, and – because the Company owns and operates real property – state, federal, and local environmental laws. The Company cannot predict what form any future changes in these or other areas of regulation affecting the insurance industry might take or what effect, if any, such proposals might have on the Company if enacted into law.

o Changes to tax law or interpretations of existing tax law could adversely affect the Company and its ability to compete with non-insurance products or reduce the demand for certain insurance products. Under the Internal Revenue Code of 1986, as amended (the “Code”), income tax payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. This favorable tax treatment may give certain of the Company’s products a competitive advantage over other non-insurance products. To the extent that the Code is revised to reduce the tax-deferred status of life insurance and annuity products or to increase the tax-deferred status of competing products, all life insurance companies, including the Company and its subsidiaries, would be adversely affected with respect to their ability to sell such products, and, depending upon grandfathering provisions, would be affected by the surrenders of existing annuity contracts and life insurance policies. For example, changes in laws or regulations could restrict the ability of some companies to purchase certain corporate or bank-owned life insurance products. Additionally, changes in tax law based on recent proposals to reduce or eliminate federal income tax on corporate dividends and to establish new tax advantaged retirement and life savings plans could, if enacted, reduce the tax advantage of investing in certain life insurance or annuity products. In addition, life insurance products are often used to fund estate tax obligations. Legislation has recently been enacted that would, over time, reduce and eventually eliminate the estate tax. If the estate tax is significantly reduced or eliminated, the demand for certain life insurance products could be adversely affected. Additionally, the Company is subject to the federal corporation income tax. The Company cannot predict what changes to tax law or interpretations of existing tax law could adversely affect the Company.

o Financial services companies are frequently the targets of litigation, including class action litigation, which could result in substantial judgments. A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or other persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages, which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial services companies, in the ordinary course of business is involved in such litigation or, alternatively, arbitration. The Company cannot predict the outcome of any such litigation or arbitration.

o The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency of existing business. The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency (continuation or renewal) of existing business. A decrease in sales or persistency without a corresponding reduction in expenses may result in higher unit costs.

Additionally, a decrease in persistency may result in higher or more rapid amortization of deferred policy acquisition costs and thus higher unit costs, and lower reported earnings. Although many of the Company’s products contain surrender charges, the charges decrease over time and may not be sufficient to cover the unamortized deferred policy acquisition costs with respect to the insurance policy or annuity contract being surrendered. Some of the Company’s products do not contain surrender charge features and such products can be surrendered or exchanged without penalty. A decrease in persistency may also result in higher claims.

o The Company’s investments are subject to market and credit risks. The Company’s invested assets and derivative financial instruments are subject to customary risks of credit defaults and changes in market values. The value of the Company’s commercial mortgage loan portfolio depends in part on the financial condition of the tenants occupying the properties which the Company has financed. Factors that may affect the overall default rate on, and market value of, the Company’s invested assets, derivative financial instruments, and mortgage loans include interest rate levels, financial market performance, and general economic conditions as well as particular circumstances affecting the businesses of individual borrowers and tenants.

o The Company may not realize its anticipated financial results from its acquisitions strategy. The Company’s acquisitions have increased its earnings in part by allowing the Company to enter new markets and to position itself to realize certain operating efficiencies. There can be no assurance, however, that suitable acquisitions, presenting opportunities for continued growth and operating efficiencies, or capital to fund acquisitions will continue to be available to the Company, or that the Company will realize the anticipated financial results from its acquisitions.

Additionally, in connection with its acquisitions, the Company assumes or otherwise becomes responsible for the obligations of policies and other liabilities of other insurers. Any regulatory, legal, financial, or other adverse development affecting the other insurer could also have an adverse effect on the Company.

o The Company is dependent on the performance of others. The Company’s results may be affected by the performance of others because the Company has entered into various arrangements involving other parties. For example, most of the Company’s products are sold through independent distribution channels, and variable annuity deposits are invested in funds managed by third parties. Additionally, the Company’s operations are dependent on various technologies, some of which are provided and/or maintained by other parties.

Certain of these other parties may act on behalf of the Company or represent the Company in various capacities. Consequently, the Company may be held responsible for obligations that arise from the acts or omissions of these other parties.

As with all financial services companies, its ability to conduct business is dependent upon consumer confidence in the industry and its products. Actions of competitors and financial difficulties of other companies in the industry could undermine consumer confidence and adversely affect retention of existing business and future sales of the Company’s insurance and investment products.

o Our reinsurers could fail to meet assumed obligations, increase rates or be subject to adverse developments that could affect the Company. The Company and its insurance subsidiaries cede material amounts of insurance and transfer related assets to other insurance companies through reinsurance. The Company may enter into third-party reinsurance arrangements under which the Company will rely on the third party to collect premiums, pay claims, and/or perform customer service functions. However, the Company remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by it.

The cost of reinsurance is, in some cases, reflected in the premium rates charged by the Company. Under certain reinsurance agreements, the reinsurer may increase the rate it charges the Company for the reinsurance, though the Company does not anticipate increases to occur. Therefore, if the cost of reinsurance were to increase or if reinsurance were to become unavailable, or if a reinsurer should fail to meet its obligations, the Company could be adversely affected.

Recently, certain commentators on the insurance industry have speculated that reinsurance might become more costly or less available in the future, which could have a negative effect on the Company’s ability to compete.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 revises the standards for accounting for acquired goodwill and other intangible assets. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.

The Company adopted SFAS No. 142 effective January 1, 2002. The Company performed an impairment test and determined that its goodwill was not impaired at January 1, or October 31, 2002. The following table illustrates adjusted income from continuing operations before cumulative effect of change in accounting principle as if this pronouncement was adopted as of January 1, 2000:

                                                                                  YEAR ENDED DECEMBER 31
                                                                         --------------------------------------
Amount (in thousands)                                                       2002           2001         2000
- ---------------------------------------------------------------------------------------------------------------
  Adjusted net income:
    Income from continuing operations before
        extraordinary loss and cumulative effect
        of change in accounting principle                                 $178,759       $141,058     $137,354
        Add back amortization of goodwill, net of income tax                                2,311        2,023
- ---------------------------------------------------------------------------------------------------------------
    Adjusted income from continuing operations before
        extraordinary loss and cumulative effect
        of change in accounting principle                                  178,759        143,369      139,377
    Income (loss) from discontinued operations,
        net of income tax                                                                  (9,977)      16,122
    Loss from sale of discontinued operations,
        net of income tax                                                                 (20,545)
- ---------------------------------------------------------------------------------------------------------------
    Adjusted net income before cumulative effect
        of change in accounting principle and extraordinary loss           178,759        112,847      155,499
    Cumulative effect of change in accounting principle, net of income tax                 (7,593)
    Extraordinary loss, net of income tax                                   (1,404)
- ---------------------------------------------------------------------------------------------------------------
Adjusted net income                                                       $177,355       $105,254     $155,499
- ---------------------------------------------------------------------------------------------------------------

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires that companies record the fair value of a liability for an asset retirement obligation in the period in which the liability is incurred. The Statement is effective for fiscal years beginning after June 15, 2002. The Company does not expect the adoption of SFAS No. 143 to have a material effect on the Company’s financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires that the same accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, expands the use of discontinued operations accounting to include more types of transactions and changes the timing of when discontinued operation accounting is applied. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS No. 144 did not have a material effect on the Company’s financial position or results of operations when adopted on January 1, 2002.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002.” SFAS No. 145 rescinds SFAS No. 4, which required companies to treat the extinguishment of debt as an extraordinary item. SFAS No. 145 requires companies to apply APB Opinion 30 when determining the accounting for the extinguishment of debt. The statement also rescinds and amends other statements to make various technical corrections and clarifications. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002, and will require the Company to restate previously issued financial statements to reclassify losses related to the early extinguishment of debt from extraordinary losses to operating expenses. As previously discussed under the caption “Extraordinary Loss”, the Company reported an extraordinary loss of $1.4 million related to the extinguishment of debt in 2002. Thus the Company’s 2002 financial statements will be restated to reflect the requirements of this accounting standard in 2003.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires companies to record a liability for a cost associated with an exit or disposal activity when the liability is incurred. The statement is effective for exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of SFAS No. 146 to have a material effect on the Company’s financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123.” SFAS No. 148 amends SFAS No. 123 to offer alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company adopted the fair value based method prescribed by SFAS No. 123 in 1995, therefore SFAS No. 148 will have no effect on the Company’s financial position or results of operations.

In November, 2002, the FASB issued FASB Interpretation No. (FIN) 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Others.” FIN 45 clarifies the requirements of SFAS No. 5 “Accounting for Contingencies” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company does not expect FIN 45 to have a material effect on the Company’s financial position or results of operations.

In January, 2003, the FASB issued FIN 46 “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated support from other parties. The Company is currently assessing the impact that FIN 46 will have on its financial condition and results of operations. FIN 46 potentially will affect the accounting related to a special purpose vehicle (SPV) whose investments are managed by the Company and a lease arrangement currently accounted for as an operating lease that also involves an SPV. Although the Company does not expect the provisions of FIN 46 to have a material impact on its results of operations, had the provision been effective at December 31, 2002, the Company’s reported assets and liabilities would have increased by approximately $489 million.

In July 2002, the American Institute of Certified Public Accountants proposed a new Statement of Position (SOP), “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” Among other things, the SOP would establish the preferred method for estimating the GMDB-related policy liabilities and accruals. Based on information available at December 31, 2002, the Company believes its adoption of the SOP as proposed would result in an after tax cumulative effect of a change in accounting principle of approximately $5 million.

In May 2002, the Derivatives Implementation group of the FASB exposed for comment issue No. B36, “Bifurcation of Embedded Credit Derivatives” (DIG B36). DIG B36 would require the bifurcation of potential embedded derivatives within modified coinsurance and funds withheld coinsurance arrangements in which the terms require the future payment of a principal amount plus a return based on a specified proportion of the ceding company’s return on either its general account assets or a specified block of those assets. The proposed effective date of the implementation guidance in DIG B36 is for the first fiscal quarter beginning after June 15, 2003 and would be applied on a prospective basis. The Company is currently evaluating the impact of this pronouncement on its financial statements but does not anticipate a material impact on its financial condition or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s operations usually produce a positive cash flow. This cash flow is used to fund an investment portfolio to finance future benefit payments. Since future benefit payments largely represent medium- and long-term obligations reserved using certain assumed interest rates, the Company’s investments are predominantly in medium- and long-term, fixed-rate investments such as bonds and mortgage loans.

INVESTMENTS

The Company generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash flow needs. However, the Company may sell any of its investments to maintain proper matching of assets and liabilities. Accordingly, the Company has classified its fixed maturities and certain other securities as “available for sale.”

The Company’s investments in debt and equity securities are reported at market value, and investments in mortgage loans are reported at amortized cost. At December 31, 2002, the Company’s fixed maturity investments (bonds and redeemable preferred stocks) had a market value of $11.7 billion, which is 3.9% above amortized cost of $11.2 billion. The Company had $2.5 billion in mortgage loans at December 31, 2002. While the Company’s mortgage loans do not have quoted market values, at December 31, 2002, the Company estimates the market value of its mortgage loans to be $2.8 billion (using discounted cash flows from the next call date), which is 12.2% above amortized cost. Most of the Company’s mortgage loans have significant prepayment fees. These assets are invested for terms approximately corresponding to anticipated future benefit payments. Thus, market fluctuations are not expected to adversely affect liquidity.

At December 31, 2001, the Company’s fixed maturity investments had a market value of $9.8 billion, which was 1.0% above amortized cost of $9.7 billion. The Company estimated the market value of its mortgage loans to be $2.7 billion at December 31, 2001, which was 6.3% above amortized cost of $2.5 billion.

The following table sets forth the estimated market values of the Company’s fixed maturity investments and mortgage loans resulting from a hypothetical immediate 1 percentage point increase in interest rates from levels prevailing at December 31, and the percent change in market value the following estimated market values would represent.

                                           AMOUNT                    PERCENT
  AT DECEMBER 31                        (IN MILLIONS)                CHANGE
- ------------------------------------------------------------------------------
  2001
- ------------------------------------------------------------------------------
          Fixed maturities                  $9,395.4                 (4.5)%
          Mortgage loans                     2,550.9                 (4.5)
==============================================================================
  2002
- ------------------------------------------------------------------------------
          Fixed maturities                 $11,092.5                 (4.9)%
          Mortgage loans                     2,690.5                 (4.8)
==============================================================================

Estimated market values were derived from the durations of the Company’s fixed maturities and mortgage loans. Duration measures the relationship between changes in market value to changes in interest rates. While these estimated market values generally provide an indication of how sensitive the market values of the Company’s fixed maturities and mortgage loans are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

During 2002, the Company recorded pretax other than temporary impairments in its investments of $30.2 million.

The Company’s management considers a number of factors when determining the impairment status of individual securities. These include the economic condition of various industry segments and geographic locations and other areas of identified risks. Although it is possible for the impairment of one investment to affect other investments, the Company engages in ongoing risk management to safeguard against and limit any further risk to its investment portfolio. Special attention is given to correlative risks within specific industries, related parties and business markets.

Once management has determined that a particular investment has suffered an other-than-temporary impairment, the asset is written down to its estimated fair value. The Company generally considers a number of factors in determining whether the impairment is other than temporary. These include, but are not limited to: 1) actions taken by rating agencies, 2) default by the issuer, 3) the significance of the decline, 4) the intent and ability of the Company to hold the investment until recovery, 5) the time period during which the decline has occurred, 6) an economic analysis of the issuer’s industry, and 7) the financial strength, liquidity, and recoverability of the issuer. Management performs a security by security review each quarter in evaluating the need for any other-than-temporary impairments. Although no set formula is used in this process, the investment performance, collateral position and continued viability of the issuer are significant measures.

The Company generally considers a number of factors relating to the issuer in determining the financial strength, liquidity, and recoverability of an issuer. These include but are not limited to: available collateral, tangible and intangible assets that might be available to repay debt, operating cash flows, financial ratios, access to capital markets, quality of management, market position, exposure to litigation or product warranties, and the effect of general economic conditions on the issuer.

There are certain risks and uncertainties associated with determining whether declines in market values are other than temporary. These include significant changes in general economic conditions and business markets, trends in certain industry segments, interest rate fluctuations, rating agency actions, changes in significant accounting estimates and assumptions, commission of fraud and legislative actions. The Company continuously monitors these factors as they relate to the investment portfolio in determining the status of each investment. Provided below are additional facts concerning the potential effect upon the Company’s earnings should circumstances lead management to conclude that some of the current declines in market value are other than temporary.

Market values for private, non-traded securities are determined as follows: 1) the Company obtains estimates from independent pricing services or 2) the Company estimates market value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics. The market value of private, non-traded securities was $1,968.1 million at December 31, 2002, representing 12.7% of the Company’s total invested assets.

The majority of unrealized losses can be attributed to interest rate fluctuations and are, therefore, deemed temporary. As indicated above, when the Company’s investment management deems an investment’s market value decline as other than temporary, it is written down to estimated market value. In all cases, management will continue to carefully review and monitor each security.

The information presented below relates to investments at a certain point in time and is not necessarily indicative of the status of the portfolio at any time after December 31, 2002, the balance sheet date. Furthermore, since the timing of recognizing realized gains and losses is largely based on management’s decisions as to the timing and selection of investments to be sold, the tables and information provided below should be considered within the context of the overall unrealized gain (loss) position of the portfolio. At December 31, 2002, the Company had an overall net unrealized gain of $440.4 million.

For traded and private fixed maturity and equity securities held by the Company that are in an unrealized loss position at December 31, 2002, the estimated market value, amortized cost, unrealized loss and total time period that the security has been in an unrealized loss position are presented in the table below.

                                 ESTIMATED                     AMORTIZED   % AMORTIZED    UNREALIZED  % UNREALIZED
(DOLLARS IN THOUSANDS)         MARKET VALUE  % FAIR VALUE        COST          COST          LOSS          LOSS
- ------------------------------------------------------------------------------------------------------------------
<= 90 days                       $573,124         41.6%        $623,675         39.9%      $(50,551)       27.7%
>90 days but <= 180 days          296,957         21.5          329,360         21.1        (32,403)       17.7
>180 days but <= 270 days          40,969          3.0           48,783          3.1         (7,814)        4.3
>270 days but <= 1 year            83,198          6.0           94,580          6.1        (11,382)        6.2
>1 year                           384,765         27.9          465,460         29.8        (80,695)       44.1
- ------------------------------------------------------------------------------------------------------------------
Totals                         $1,379,013        100.0%      $1,561,858        100.0%     $(182,845)      100.0%
==================================================================================================================

The Company has no material concentrations of issuers or guarantors of fixed maturity securities. The industry segment composition of all securities in an unrealized loss position held by the Company at December 31, 2002, is presented in the following table.

                              ESTIMATED                    AMORTIZED   % AMORTIZED      UNREALIZED  % UNREALIZED
(DOLLARS IN THOUSANDS)       MARKET VALUE % FAIR VALUE       COST          COST            LOSS          LOSS
- -----------------------------------------------------------------------------------------------------------------
Agency mortgages                   $52         0.0%             $52        0.0%              $(0)        0.0%
Banks                           83,966         6.1           87,184         5.6           (3,218)         1.8
Basic industrial               121,092         8.8          139,032         8.9          (17,940)         9.8
Brokerage                        2,717         0.2            2,723         0.2               (6)         0.0
Capital goods                   60,242         4.4           68,815         4.4           (8,573)         4.7
Communications                  49,424         3.6           56,073         3.6           (6,649)         3.6
Consumer-cyclical               60,544         4.4           67,191         4.3           (6,647)         3.6
Consumer-noncyclical            23,517         1.7           28,924         1.9           (5,407)         3.0
Electric                       244,549        17.7          304,561        19.4          (60,012)        32.8
Energy                          73,715         5.3           75,197         4.8           (1,482)         0.8
Finance companies               47,393         3.4           48,972         3.1           (1,579)         0.9
Insurance                       43,520         3.2           46,869         3.0           (3,349)         1.8
Municipal agencies               2,058         0.1            2,077         0.1              (19)         0.0
Municipal mortgages             43,076         3.1           43,452         2.8             (376)         0.2
Natural gas                    133,710         9.7          153,937         9.9          (20,227)        11.1
Other finance                  140,785        10.2          153,095         9.8          (12,310)         6.7
Other industrial                 4,884         0.4            4,970         0.3              (86)         0.0
Other mortgage banks           135,840         9.9          153,861         9.9          (18,021)         9.9
Other utility                       21         0.0               44         0.0              (23)         0.0
Technology                      42,616         3.1           43,265         2.8             (649)         0.4
Transportation                  65,292         4.7           78,673         5.0          (13,381)         7.3
U.S. Government                      0         0.0            2,891         0.2           (2,891)         1.6
- ----------------------------------------------------------------------------------------------------------------
Total                       $1,379,013       100.0%    $  1,561,858       100.0%       $(182,845)       100.0%
================================================================================================================

At December 31, 2002, 64.1% of total securities in an unrealized loss position were rated as investment grade. The Company generally purchases its investments with the intent to hold to maturity, therefore, the Company does not consider this an other-than-temporary impairment. Securities in an unrealized loss position that were rated as below investment grade represented 35.9% of the total market value and 58.3% of the total unrealized loss. The range of maturity dates for these securities varies, with 26.0% maturing in less than 5 years, 16.3% maturing between 5 and 10 years, and 57.7% maturing after 10 years. Other than temporary impairments are generally taken when an investment meets certain previously discussed conditions.

During the year ended December 31, 2002, the Company sold securities in an unrealized loss position at December 31, 2001 with a market value of $1,433.7 million resulting in a realized loss of $12.6 million. As discussed above, the Company’s management considers several factors when determining other than temporary impairments. Although the Company generally intends to hold securities until maturity, the Company may change its position as a result of a change in circumstances. Any such decision is consistent with the Company’s classification of its investment portfolio as available for sale. For such securities sold during the year ended December 31, 2002, the proceeds, realized loss and total time period that the security had been in an unrealized loss position are presented in the table below.

(DOLLARS IN THOUSANDS)                       PROCEEDS       % PROCEEDS    % REALIZED LOSS    % REALIZED LOSS
- ---------------------------------------------------------------------------------------------------------------
<= 90 days                                   $53,858           3.8%             $2,958             23.5%
>90 days but <= 180 days                     221,250          15.4               1,768             14.1
>180 days but <= 270 days                     80,206           5.6               1,158              9.2
>270 days but <= 1 year                    1,046,967          73.0               3,065             24.4
> 1 year                                      31,379           2.2               3,615             28.8
- ---------------------------------------------------------------------------------------------------------------
Totals                                    $1,433,660         100.0%            $12,564            100.0%
===============================================================================================================

For several years the Company has offered a type of commercial mortgage loan under which the Company will permit a slightly higher loan-to-value ratio in exchange for a participating interest in the cash flows from the underlying real estate. As of December 31, 2002, approximately $475.5 million of the Company’s mortgage loans have this participation feature.

At December 31, 2002, delinquent mortgage loans and foreclosed properties were 0.1% of invested assets. Bonds rated less than investment grade were 5.6% of invested assets. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities.

Policy loans at December 31, 2002, were $543.2 million, an increase of $21.3 million from December 31, 2001. The Conseco coinsurance arrangement resulted in an increase in policy loans of $47.0 million. Policy loan rates are generally in the 4.5% to 8.0% range. Such rates at least equal the assumed interest rates used for future policy benefits.

In the ordinary course of its commercial mortgage lending operations, the Company will commit to provide a mortgage loan before the property to be mortgaged has been built or acquired. The mortgage loan commitment is a contractual obligation to fund a mortgage loan when called upon by the borrower. The commitment is not recognized in the Company’s financial statements until the commitment is actually funded. The mortgage loan commitment contains terms, including the rate of interest which may be less than prevailing interest rates.

At December 31, 2002, the Company had outstanding mortgage loan commitments of $455.7 million with an estimated fair value of $494.1 million (using discounted cash flows from the first call date). At December 31, 2001, the Company had outstanding commitments of $406.3 million with an estimated fair value of $429.3 million. The following table sets forth the estimated fair value of the Company’s mortgage loan commitments resulting from a hypothetical immediate 1 percentage point increase in interest rate levels prevailing at December 31, and the percent change in fair value the following estimated fair values would represent.

                                   AMOUNT                     PERCENT
  AT DECEMBER 31                (IN MILLIONS)                 CHANGE
- -----------------------------------------------------------------------
     2001                          $410.8                     (4.3)%
     2002                           468.4                     (5.2)
- -----------------------------------------------------------------------

The estimated fair values were derived from the durations of the Company’s outstanding mortgage loan commitments. While these estimated fair values generally provide an indication of how sensitive the fair value of the Company’s outstanding commitments are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

LIABILITIES

Many of the Company’s products contain surrender charges and other features that reward persistency and penalize the early withdrawal of funds. Certain stable value and annuity contracts have market-value adjustments that protect the Company against investment losses if interest rates are higher at the time of surrender than at the time of issue.

At December 31, 2002, the Company had policy liabilities and accruals of $9.1 billion. The Company’s life insurance products have a weighted average minimum credited interest rate of approximately 4.5%.

At December 31, 2002, the Company had $4.0 billion of stable value account balances with an estimated fair value of $4.1 billion (using discounted cash flows), and $3.7 billion of annuity account balances with an estimated fair value of $3.8 billion (using surrender values).

At December 31, 2001, the Company had $3.7 billion of stable value account balances with an estimated fair value of $3.8 billion, and $3.2 billion of annuity account balances with an estimated fair value of $3.2 billion.

The following table sets forth the estimated fair values of the Company’s stable value and annuity account balances resulting from a hypothetical immediate 1 percentage point decrease in interest rates from levels prevailing at December 31 and the percent change in fair value the following estimated fair values would represent.

                                                       AMOUNT             PERCENT
  AT DECEMBER 31                                    (IN MILLIONS)         CHANGE
- -----------------------------------------------------------------------------------
  2001
- -----------------------------------------------------------------------------------
           Stable value account balances             $3,887.0              1.7%
           Annuity account balances                   3,308.6              4.5
===================================================================================
  2002
- -----------------------------------------------------------------------------------
           Stable value account balances             $4,198.4              1.8%
           Annuity account balances                   3,966.6              4.5
===================================================================================

Estimated fair values were derived from the durations of the Company’s stable value and annuity account balances. While these estimated fair values generally provide an indication of how sensitive the fair values of the Company’s stable value and annuity account balances are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

Approximately 20% of the Company’s liabilities relate to products (primarily whole life insurance), the profitability of which could be affected by changes in interest rates. The effect of such changes in any one year is not expected to be material.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses a risk management strategy that incorporates the use of derivative financial instruments, primarily to reduce its exposure to interest rate risk as well as currency exchange risk.

Combinations of interest rate swap contracts, options and futures contracts are sometimes used as hedges against changes in interest rates for certain investments, primarily outstanding mortgage loan commitments and mortgage-backed securities. Interest rate swap contracts generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. Interest rate futures generally involve exchange traded contracts to buy or sell treasury bonds and notes in the future at specified prices. Interest rate options represent contracts that allow the holder of the option to receive cash or purchase, sell or enter into a financial instrument at a specified price within a specified period of time. The Company used interest rate swap contracts, swaptions (options to enter into interest rate swap contracts), caps, and floors to modify the interest characteristics of certain investments, its Senior Notes, Medium-Term Notes, and TOPrS. Swap contracts are also used to alter the effective durations of assets and liabilities. The Company uses foreign currency swaps to reduce its exposure to currency exchange risk on certain stable value contracts denominated in foreign currencies, primarily the European euro and the British pound.

Derivative instruments expose the Company to credit and market risk. The Company minimizes its credit risk by entering into transactions with highly rated counterparties. The Company manages the market risk associated with interest rate and foreign exchange contracts by establishing and monitoring limits as to the types and degrees of risk that may be undertaken.

The Company monitors its use of derivatives in connection with its overall asset/liability management programs and procedures. The Company’s asset/liability committee is responsible for implementing various hedging strategies that are developed through its analysis of data from financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into the Company’s overall interest rate and currency exchange risk management strategies.

In September 2000, the Company entered into a transaction to facilitate the Company’s possible entry into the institutional money management business involving a total return swap with respect to $400 million – of a portfolio of approximately $413 million of investments held by an unrelated special purpose vehicle – that are managed by the Company. The Company, in effect, has retained the investment risk with respect to the $400 million. The swap is recorded on the Company’s balance sheet at fair value.

At December 31, 2002, contracts with a notional amount of $7.1 billion were in a $89.9 million net gain position. At December 31, 2001, contracts with a notional amount of $5.5 billion were in a $23.8 million net loss position. The Company recognized $5.2 million of realized investment gains and $11.4 million of realized investment losses related to derivative financial instruments in 2002 and 2001, respectively.

The following table sets forth the December 31 notional amount and fair value of the Company’s interest rate risk related derivative financial instruments, and the estimated gains and losses resulting from a hypothetical immediate plus and minus one percentage point change in interest rates from levels prevailing at December 31.

                                                                                          GAIN (LOSS)
                                                                                        RESULTING FROM
                                                                                         AN IMMEDIATE
                                                                                       +/-1 POINT CHANGE
                               NOTIONAL               FAIR VALUE AT                    IN INTEREST RATES
(IN MILLIONS)                   AMOUNT                 DECEMBER 31                      +1%          -1%
- --------------------------------------------------------------------------------------------------------------
2001
Options
      Puts                       $775.0                    $0.1                    $1.3                 $0.0
      Calls                     1,400.0                     0.3                     0.0                  5.4
Futures                           100.0                     1.1                     6.9                 (6.4)
Fixed to
      floating
      Swaps                     1,654.3                     0.6                   (49.7)                15.1
      Swaptions                    35.0                     0.0                     0.0                  0.0
      Caps                        175.0                     0.0                     0.0                  0.0
Floating to
      fixed
      Swaps                       460.0                   (12.8)                   (4.5)               (20.4)
      Caps                        300.0                     0.0                     0.0                  0.0
      Floors                      300.0                    (1.9)                   (2.7)                (1.1)
- --------------------------------------------------------------------------------------------------------------
                               $5,199.3                  $(12.6)                 $(48.7)               $(7.4)
==============================================================================================================
2002
Options
      Puts                     $4,000.0                    $1.2                    $2.5                 $0.0
Futures                           570.0                   (11.9)                    8.3                (30.9)
Fixed to
      floating
      Swaps                     1,550.5                    44.2                    12.1                 77.8
      Swaptions                    25.0                    (0.1)                   (1.6)                 0.3
Floating to
      fixed
      Swaps                       385.0                   (19.0)                  (13.5)               (24.6)
- --------------------------------------------------------------------------------------------------------------
                               $6,530.5                   $14.4                    $7.8                $22.6
==============================================================================================================

The Company is also subject to foreign exchange risk arising from stable value contracts denominated in foreign currencies and related foreign currency swaps. At December 31, 2002, stable value contracts of $539.2 million had a foreign exchange loss of approximately $86.5 million and the related foreign currency swaps had a net unrealized gain of approximately $78.4 million. At December 31, 2001, stable value contracts of $275.8 million had a foreign exchange gain of approximately $7.2 million and the related foreign currency swaps had a net unrealized loss of approximately $9.3 million.

The following table sets forth the notional amount and fair value of the funding agreements and related foreign currency swaps at December 31, and the estimated gains and losses resulting from a hypothetical 10% change in quoted foreign currency exchange rates from levels prevailing at December 31.

                                                                                       GAIN (LOSS)
                                                                                     RESULTING FROM
                                                                                      AN IMMEDIATE
                                                                                    +/-10% CHANGE IN
                                                                                    FOREIGN CURRENCY
                               NOTIONAL               FAIR VALUE AT                  EXCHANGE RATES
(IN MILLIONS)                   AMOUNT                DECEMBER 31                     +10%        -10%
- --------------------------------------------------------------------------------------------------------
2001
Stable Value
      Contracts                  $275.8                  $7.2                 $(19.6)            $34.1
Foreign
      Currency
      Swaps                       275.8                  (9.3)                  19.2             (37.8)
- --------------------------------------------------------------------------------------------------------
                                 $551.6                 $(2.1)                 $(0.4)            $(3.7)
========================================================================================================
2002
Stable Value
      Contracts                  $539.2                $(86.5)               $(149.1)           $(24.0)
Foreign
      Currency
      Swaps                       539.2                  78.4                  124.5              32.3
- --------------------------------------------------------------------------------------------------------
                               $1,078.4                 $(8.1)                $(24.6)             $8.3
========================================================================================================

Estimated gains and losses were derived using pricing models specific to derivative financial instruments. While these estimated gains and losses generally provide an indication of how sensitive the Company’s derivative financial instruments are to changes in interest rates and foreign currency exchange rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

The Company is exploring other uses of derivative financial instruments.

ASSET/LIABILITY MANAGEMENT

The Company’s asset/liability management programs and procedures involve the monitoring of asset and liability durations for various product lines; cash flow testing under various interest rate scenarios; and the continuous rebalancing of assets and liabilities with respect to yield, risk, and cash flow characteristics. It is the Company’s policy to generally maintain asset and liability durations within one-half year of one another, although, from time to time, a broader interval may be allowed.

The Company believes its asset/liability management programs and procedures and certain product features provide protection for the Company against the effects of changes in interest rates under various scenarios. Additionally, the Company believes its asset/liability management programs and procedures provide sufficient liquidity to enable it to fulfill its obligation to pay benefits under its various insurance and deposit contracts. However, the Company’s asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve), relationships between risk-adjusted and risk-free interest rates, market liquidity and other factors, and the effectiveness of the Company’s asset/liability management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

Cash outflows related to stable value contracts (primarily maturing contracts, scheduled interest payments, and expected withdrawals) were approximately $1,047.0 million during 2002. Cash outflows related to stable value contracts are estimated to be approximately $1,091.5 million in 2003. The Company’s asset/liability management programs and procedures take into account maturing contracts and expected withdrawals. Accordingly, the Company does not expect stable value contract related cash outflows to have an unusual effect on the future operations and liquidity of the Company.

The life insurance subsidiaries were committed at December 31, 2002, to fund mortgage loans in the amount of $455.7 million. The Company’s subsidiaries held $549.7 million in cash and short-term investments at December 31, 2002. Protective Life Corporation had an additional $0.7 million in cash and short-term investments available for general corporate purposes.

While the Company generally anticipates that the cash flow of its subsidiaries will be sufficient to meet their investment commitments and operating cash needs, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has arranged sources of credit for its insurance subsidiaries to use when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Additionally, the Company may, from time to time, sell short-duration stable value products to complement its cash management practices.

The Company has also used securitization transactions involving its commercial mortgage loans to increase its liquidity.

CAPITAL

At December 31, 2002, Protective Life Corporation had $30.0 million outstanding under its $200 million revolving lines of credit.

Protective Life Corporation’s cash flow is dependent on cash dividends and payments on surplus notes from its subsidiaries; revenues from investment, data processing, legal and management services rendered to subsidiaries; and investment income. At December 31, 2002, approximately $543.6 million of consolidated share-owners’ equity, excluding net unrealized investment gains and losses, represented net assets of the Company’s insurance subsidiaries that cannot be transferred to Protective Life Corporation. In addition, the states in which the Company’s insurance subsidiaries are domiciled impose certain restrictions on the insurance subsidiaries’ ability to pay dividends to Protective Life Corporation.

The Company plans to retain substantial portions of the earnings of its insurance subsidiaries in those companies primarily to support their future growth. Protective Life Corporation’s cash disbursements have, from time to time, exceeded its cash receipts, and these shortfalls have been funded through various external financings. Therefore, Protective Life Corporation may, from time to time, require additional external financing.

To give the Company flexibility in connection with future acquisitions and other growth opportunities, the Company plans to register debt securities, preferred and common stock, and stock purchase contracts of Protective Life Corporation, and additional preferred securities of special purpose finance subsidiaries under the Securities Act of 1933 on a delayed (or shelf) basis.

In March 2000, the Company issued Senior Notes totaling $125 million with 10-, 15-, and 30-year maturities. Interest rates range from 8.00% to 8.25%. The proceeds were used to repay bank borrowings of which $55 million had been used to redeem the Monthly Income Preferred Securities in 1999.

In December 2000, the Company issued $60 million of 7.5% Senior Notes, with a 15-year maturity. The proceeds were used to repay bank borrowings and to partially fund the January 2001 coinsurance of a block of individual life insurance policies from Standard.

In February 2001, the Company issued 3.9 million shares of its Common Stock under stock purchase contracts relating to its 6.5% FELINE PRIDES. In the transaction, substantially all of the preferred securities comprising part of the FELINE PRIDES and the underlying subordinated debt were redeemed.

In February 2001, the Company issued $100 million of Floating Rate Senior Notes. The proceeds were used to invest in the Company’s insurance subsidiaries – which included completing the funding of the Standard transaction – and for general corporate purposes. The Floating Rate Notes, as scheduled, were redeemed on February 28, 2003.

On August 17, 2001, a special purpose finance subsidiary of the Company, PLC Capital Trust III, issued $100 million of 7.5% Trust Originated Preferred Securities (“TOPrSSM”). The 7.5% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 7.5% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust III’s obligations with respect to the 7.5% TOPrS.

PLC Capital Trust III was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust III are $103.1 million of Protective Life Corporation 7.5% Subordinated Debentures due 2031, Series D. The proceeds of the Company’s subordinated debentures were used to repay outstanding bank indebtedness and the balance was used for general corporate purposes. The Company has the right under the subordinated debentures to extend interest payment periods up to five consecutive years, and, as a consequence, dividends on the 7.5% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust III during any such extended interest payment period. The 7.5% TOPrS are redeemable by PLC Capital Trust III at any time on or after August 22, 2006.

On September 25, 2002, a special purpose finance subsidiary of the Company, PLC Capital Trust IV, issued $115 million of 7.25% TOPrS. The 7.25% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 7.25% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust IV’s obligations with respect to the 7.25% TOPrS.

PLC Capital Trust IV was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust IV are $118.6 million of Protective Life Corporation 7.25% Subordinated Debentures due 2032, Series E. The Company has the right under the subordinated debentures to extend interest payment periods up to five consecutive years, and, as a consequence, dividends on the 7.25% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust IV during any such extended interest payment period. The 7.25% TOPrS are redeemable by PLC Capital Trust IV at any time on or after September 25, 2007.

On October 25, 2002, the Company caused PLC Capital Trust I, a special purpose finance subsidiary of the Company, to redeem $75 million of 8.25% Trust Originated Preferred Securities it issued in 1997. In a related transaction the Company redeemed its subordinated debentures which were held by PLC Capital Trust I. The redemption of the subordinated debentures resulted in an extraordinary loss of $1.4 million ($0.02 per share on both a diluted and basic basis) due to early extinguishment of debt. The loss is comprised primarily of unamortized deferred debt issue costs, net of an income tax benefit of $0.8 million.

A life insurance company’s statutory capital is computed according to rules prescribed by the National Association of Insurance Commissioners (NAIC), as modified by the insurance company’s state of domicile. Statutory accounting rules are different from accounting principles generally accepted in the United States of America and are intended to reflect a more conservative view by, for example, requiring immediate expensing of policy acquisition costs. The NAIC’s risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. The achievement of long-term growth will require growth in the statutory capital of the Company’s insurance subsidiaries. The subsidiaries may secure additional statutory capital through various sources, such as retained statutory earnings or equity contributions by the Company.

CONTRACTUAL OBLIGATIONS

The table below sets forth future maturities of long-term debt, guaranteed preferred beneficial interests in the Company’s subordinated debentures (guaranteed preferred beneficial interests), operating lease obligation and stable value contracts.

(IN THOUSANDS)             2003            2004-2005       2006-2007      AFTER 2007
- --------------------------------------------------------------------------------------
Long-term
      debt               $100,000          $105,000                        $201,110
Guaranteed
      preferred
      beneficial
      interests                                                             215,000
Stable value
      contracts         1,091,525         1,619,154         $1,248,712       59,161
Operating
      lease
      obligation            1,598             3,196             68,481
Notes
      payable                                 2,264
- --------------------------------------------------------------------------------------

OTHER DEVELOPMENTS

Under insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. The Company does not currently believe that any such assessments will be materially different from amounts already reflected in the financial statements.

A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or other persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages, which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial services companies, in the ordinary course of business is involved in such litigation or, alternatively, in arbitration. As stated above, the Company is currently in arbitration with one reinsurer with respect to amounts overpaid by the Company and the reinsurer has indicated the intent to raise defenses and possible counterclaims. Although the outcome of any such litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.

The Company and its subsidiaries from time to time are subject to examination, review, and investigation by regulatory authorities, including insurance and securities regulators, and tax authorities. Among other actions, a state insurance department is currently investigating the Company’s management of a small block of the health insurance business in a discontinued line of business, apparently as part of a larger inquiry related to the overall health insurance industry. Although the Company cannot predict what actions may be taken by any regulatory authority, the Company does not believe that this or any other matter currently under examination, review, or investigation or any other pending or threatened regulatory or tax-related action with respect to the Company or any of its subsidiaries is reasonably likely to have a material effect on the Company.

In connection with a review of a Registration Statement a Company subsidiary filed with the Securities and Exchange Commission (SEC), the staff of the SEC has commented on several matters included in the Annual Report on Form 10-K of the Company’s principal subsidiary for the year ended December 31, 2001. The comments include a request for information concerning certain below investment grade securities having unrealized losses and the Company’s determination that these securities did not have other than temporary impairments. The Company believes that its process to determine that the securities did not have an other than temporary impairment is consistent with the relevant accounting literature. The aggregate amount of the unrealized losses related to these securities was approximately $41.7 million and $34.3 million for the years ended December 31, 2001 and 2000, respectively. Unrealized losses associated with temporary impairments, net of income tax, are recognized as an adjustment to share-owners’ equity through accumulated other comprehensive income. Unrealized losses deemed to be other than temporary impairments are recognized in the Company’s net income as realized investment losses, net of income tax. The Company is continuing to discuss these issues with the staff of the SEC, and no final determinations will be made until the conclusion of those discussions.

Legislation has been enacted that permits commercial banks, insurance companies and investment banks to combine, provided certain requirements are satisfied. While the Company cannot predict the impact of this legislation, it could cause the Company to experience increased competition as larger, potentially more efficient organizations emerge from such combinations.

Legislation has been enacted that would, over time, reduce and ultimately eliminate the estate tax. Life insurance products are often used to fund estate tax obligations. If the estate tax is significantly reduced or eliminated, the demand for certain life insurance products would be adversely affected.

The Company’s Life Marketing segment is currently developing and implementing a more sophisticated administrative system capable of facilitating the calculation of more precise estimates of the segment’s deferred policy acquisition costs, policy liabilities and accruals, and various other components of the segment’s balance sheet. The segment’s future results may be affected, positively or negatively, by changes in such estimates arising from the implementation of this system.

The tragic events of September 11, 2001, had little direct effect on the Company’s operations or financial strength. However, many of the Company’s businesses and the performance of the Company’s investment portfolio are affected by general economic conditions, therefore a downturn in the general economy could have a negative effect on the Company’s operations and financial strength.

The Company’s ability to grow depends in large part upon the continued availability of capital. The Company has recently deployed significant amounts of capital to support its sales and acquisitions efforts. Capital has also been consumed as the Company has incurred realized and unrealized losses on its invested assets, and to increase its GMDB related policy liabilities and accruals in accordance with statutory accounting practices. In recent years, most financial services companies, including the Company, experienced a decrease in the market price of their common stock. A lower stock price may limit the Company’s ability to raise capital to fund growth opportunities and acquisitions. Although the Company believes it has sufficient capital to fund its immediate growth and capital needs, the amount of capital available can vary significantly from period to period due to a variety of circumstances, some of which are neither predictable nor foreseeable, nor within the Company’s control. A lack of sufficient capital could impair the Company’s ability to grow.

IMPACT OF INFLATION

Inflation increases the need for life insurance. Many policyholders who once had adequate insurance programs may increase their life insurance coverage to provide the same relative financial benefit and protection. Higher interest rates may result in higher sales of certain of the Company’s investment products.

The higher interest rates that have traditionally accompanied inflation could also affect the Company’s operations. Policy loans increase as policy loan interest rates become relatively more attractive. As interest rates increase, disintermediation of stable value and annuity account balances and individual life policy cash values may increase. The market value of the Company’s fixed-rate, long-term investments may decrease, the Company may be unable to implement fully the interest rate reset and call provisions of its mortgage loans, and the Company’s ability to make attractive mortgage loans, including participating mortgage loans, may decrease. In addition, participating mortgage loan income may decrease. The difference between the interest rate earned on investments and the interest rate credited to life insurance and investment products may also be adversely affected by rising interest rates.

MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Protective Life Corporation and its subsidiaries has prepared, and is responsible for, the integrity and objectivity of the financial statements and other financial information included in this Annual Report. The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America applied on a consistent basis. The financial statements and other financial information include amounts that are based on management’s best estimates and judgments and, to the best of our knowledge, are not misstated due to material fraud or error. The Company’s financial statements have been audited by PricewaterhouseCoopers LLP, independent certified public accountants, recommended by the Audit Committee, appointed by the Board of Directors, and ratified by an affirmative vote of share owners at the Company’s Annual Meeting. Management has made available to PricewaterhouseCoopers LLP all the Company’s financial records and related data, including minutes of share-owners’ and directors’ meetings. Furthermore, management believes that all representations made to PricewaterhouseCoopers LLP during its audit were valid and appropriate. Management has established and maintains a system of internal control that provides reasonable assurance as to the integrity and reliability of the financial statements, the protection of assets from unauthorized use or disposition, and the prevention and detection of fraudulent financial reporting. The system of internal control provides for appropriate division of responsibility and is documented by written policies and procedures that are communicated to employees with significant roles in the financial reporting process. Management continually monitors the system of internal control for compliance. The Company maintains an internal auditing program that independently assesses the effectiveness of the internal controls and recommends possible improvements thereto. There are limits inherent in all systems of internal control based on the recognition that the costs of such systems should not exceed the benefits to be derived. The Company’s system of internal control takes into consideration this appropriate balance. Management believes that the Company’s system of internal control is adequate to accomplish the objectives described herein. The Company maintains a code of corporate conduct, which is publicized throughout the Company. The code of conduct addresses, among other things, the necessity of ensuring open communication within the Company; potential conflicts of interest; compliance with all laws, including those relating to financial disclosure; and the confidentiality of proprietary information. The Company maintains a systematic program to assess compliance with these policies.

/s/John D. Johns
John D. Johns
Chairman, President and Chief Executive Officer

/s/Allen W. Ritchie
Allen W. Ritchie
Executive Vice President and Chief Financial Officer

Consolidated statements of income

YEAR ENDED DECEMBER 31
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)                                    2002            2001             2000
- --------------------------------------------------------------------------------------------------------------------------
Revenues

Premiums and policy fees                                                       $1,543,350       $1,389,820     $1,175,898
Reinsurance ceded                                                                (760,218)        (771,151)      (686,108)
- --------------------------------------------------------------------------------------------------------------------------
Net of reinsurance ceded                                                          783,132          618,669        489,790

Net investment income                                                           1,031,204          884,041        730,149
Realized investment gains (losses)
     Derivative financial instruments                                               5,236          (11,431)          9,013
     All other investments                                                            910           (8,740)       (16,056)
Other income                                                                      100,196          120,647        151,833
- --------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                             1,920,678        1,603,186      1,364,729
- --------------------------------------------------------------------------------------------------------------------------

Benefits and expenses

Benefits and settlement expenses (net of reinsurance ceded:
     2002 - $712,866; 2001 - $609,996; 2000 - $538,291)                         1,162,231          972,624        760,778
Amortization of deferred policy acquisition costs                                 239,490          147,058        143,180
Amortization of goodwill                                                                0            3,555          3,113
Other operating expenses (net of reinsurance ceded:
     2002 - $176,871; 2001 - $167,243; 2000 - $223,498)                           251,754          270,353        245,983
- --------------------------------------------------------------------------------------------------------------------------
     Total benefits and expenses                                                1,653,475        1,393,590      1,153,054
- --------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income tax                               267,203          209,596        211,675
- --------------------------------------------------------------------------------------------------------------------------

Income tax expense

     Current                                                                       52,003           64,667         11,947
     Deferred                                                                      36,441            3,871         62,374
- --------------------------------------------------------------------------------------------------------------------------
     Total income tax expense                                                      88,444           68,538         74,321
- --------------------------------------------------------------------------------------------------------------------------

Net income from continuing operations before extraordinary loss and
     cumulative effect of change in accounting principle                          178,759          141,058        137,354
Income (loss) from discontinued operations, net of income tax                           0           (9,977)        16,122
Loss from sale of discontinued operations, net of income tax                            0          (20,545)             0
- --------------------------------------------------------------------------------------------------------------------------

Net income before extraordinary loss and cumulative effect of change
     in accounting principle                                                      178,759          110,536        153,476
Extraordinary loss on early extinguishment of debt, net of income tax              (1,404)               0              0
Cumulative effect of change in accounting principle, net of income tax                  0           (7,593)             0
- --------------------------------------------------------------------------------------------------------------------------
Net income                                                                       $177,355         $102,943       $153,476
==========================================================================================================================

Net income from continuing operations before extraordinary loss and
     cumulative effect of change in accounting principle per share - basic          $2.56            $2.02          $2.09
Net income per share - basic                                                        $2.54            $1.48          $2.33
Net income from continuing operations before extraordinary loss and
     cumulative effect of change in accounting principle per share - diluted        $2.54            $2.01          $2.08
Net income per share - diluted                                                      $2.52            $1.47          $2.32
Cash dividends paid per share                                                        $.59             $.55           $.51
==========================================================================================================================


See Notes to Consolidated Financial Statements.

Consolidated balance sheets

DECEMBER 31
(DOLLARS IN THOUSANDS)                                                                            2002          2001
- ----------------------------------------------------------------------------------------------------------------------------
Assets
Investments:
     Fixed maturities, at market (amortized cost: 2002 - $11,221,365; 2001 - $9,745,057)      $11,664,065    $9,838,091
     Equity securities, at market (cost: 2002 - $66,820; 2001 - $78,332)                           64,523        76,774
     Mortgage loans                                                                             2,518,152     2,512,844
     Investment real estate, net of accumulated depreciation (2002 - $1,137; 2001 - $1,466)        20,711        26,349
     Policy loans                                                                                 543,161       521,841
     Other long-term investments                                                                  222,490       104,624
     Short-term investments                                                                       448,399       237,155
- ----------------------------------------------------------------------------------------------------------------------------
     Total investments                                                                         15,481,501    13,317,678
Cash                                                                                              101,953       126,558
Accrued investment income                                                                         181,966       159,866
Accounts and premiums receivable, net of allowance for uncollectible amounts
     (2002 - $2,825; 2001 - $3,025)                                                                61,425        64,410
Reinsurance receivables                                                                         2,416,491     2,241,661
Deferred policy acquisition costs                                                               1,681,223     1,532,683
Goodwill                                                                                           47,312        48,162
Property and equipment                                                                             41,324        51,307
Other assets                                                                                      307,291       184,689
Assets related to separate accounts
     Variable annuity                                                                           1,513,824     1,873,195
     Variable universal life                                                                      114,364       114,618
     Other                                                                                          4,330         3,997
- ----------------------------------------------------------------------------------------------------------------------------





                                                                                              $21,953,004   $19,718,824
============================================================================================================================
See Notes to Consolidated Financial Statements.

DECEMBER 31
(DOLLARS IN THOUSANDS)                                                                  2002                  2001
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities
Policy liabilities and accruals
     Future policy benefits and claims                                               $8,317,057           $6,971,792
     Unearned premiums                                                                  813,798              904,374
- ----------------------------------------------------------------------------------------------------------------------------
     Total policy liabilities and accruals                                            9,130,855            7,876,166
Stable value contract account balances                                                4,018,552            3,716,530
Annuity account balances                                                              3,744,000            3,248,217
Other policyholders' funds                                                              140,811              131,040
Other liabilities                                                                       698,677              498,579
Accrued income taxes                                                                      3,186               60,897
Deferred income taxes                                                                   242,593              127,230
Securities sold under repurchase agreements                                                   0              117,000
Long-term debt                                                                          406,110              376,211
Guaranteed Preferred Beneficial Interests in Company's Subordinated Debentures
     8.25% Trust Originated Preferred Securities                                              0               75,000
     7.5% Trust Originated Preferred Securities                                         100,000              100,000
     7.25% Trust Originated Preferred Securities                                        115,000                    0
Liabilities related to separate accounts
     Variable annuity                                                                 1,513,824            1,873,195
     Variable universal life                                                            114,364              114,618
     Other                                                                                4,330                3,997
- ----------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                               20,232,302           18,318,680
============================================================================================================================
     Commitments and contingent liabilities - Note 6


Share-owners' equity
Preferred Stock, $1 par value
     Shares authorized: 3,600,000
     Issued: none
Junior Participating Cumulative
     Preferred Stock, $1 par value
     Shares authorized: 400,000
     Issued: none
Common Stock, $.50 par value
     Shares authorized: 2002 and 2001 - 160,000,000
     Issued: 2002 and 2001 - 73,251,960                                                  36,626               36,626
Additional paid-in capital                                                              408,397              405,420
Treasury stock, at cost (2002 - 4,576,066 shares; 2001 - 4,696,788 shares)              (16,402)             (15,895)
Stock held in trust (2002 - 79,632 shares; 2001 - 55,785 shares)                         (2,417)              (1,535)
Unallocated stock in Employee Stock Ownership Plan (2002 - 838,401 shares;
     2001 - 1,001,401 shares)                                                            (2,777)              (3,317)
Retained earnings                                                                     1,061,361              924,517
Accumulated other comprehensive income
     Net unrealized gains on investments
     (net of income tax: 2002 - $128,145; 2001 - $ 29,254)                              237,983               54,328
     Accumulated loss - hedging (net of income tax: 2002 - $(1,114))                     (2,069)                   0
- ----------------------------------------------------------------------------------------------------------------------------
     Total share-owners' equity                                                       1,720,702            1,400,144
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                    $21,953,004          $19,718,824
============================================================================================================================

See Notes to Consolidated Financial Statements.

Consolidated statements of share-owners' equity

                                                                                                      NET      ACCUMULATED  TOTAL
                                          ADDITIONAL               STOCK   UNALLOCATED            UNREALIZED      GAIN/    SHARE-
                                 COMMON     PAID-IN    TREASURY   HELD IN   STOCK IN  RETAINED  GAINS (LOSSES)   (LOSS)    OWNERS'
(DOLLARS IN THOUSANDS)            STOCK     CAPITAL      STOCK     TRUST      ESOP    EARNINGS  ON INVESTMENTS   HEDGING   EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999      $34,667   $256,057  $ (12,960)     $(621)  $(4,043)  $ 738,204  $ (146,081)       $0    $865,223
                                                                                                                       ----------
    Net income for 2000                                                                153,476                           153,476
    Change in net unrealized
       gains/losses on
       investments (net of
       income tax - $48,532)                                                                        90,130                90,130
    Reclassification adjustment
       for amounts included
       in net income (net of
       income tax - $2,465)                                                                          4,578                 4,578
                                                                                                                       ----------
    Comprehensive income
       for 2000                                                                                                          248,184
                                                                                                                       ----------
    Cash dividends ($0.51 per share)                                                   (32,919)                          (32,919)
    Purchase of common stock                                        (697)                                                   (697)
    Stock-based compensation                33,535        120                                                             33,655
    Reissuance of treasury
       stock to ESOP                           227         28                 (255)                                            0
    Allocation of stock to
       employee accounts                                                       612                                           612
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000       34,667    289,819    (12,812)    (1,318)   (3,686)    858,761     (51,373)        0   1,114,058
                                                                                                                       ----------
    Net income for 2001                                                                102,943                           102,943
    Change in net unrealized
       gains/losses on
       investments (net of
       income tax - $51,729)                                                                        96,069                96,069
    Reclassification adjustment
       for amounts included
       in net income (net of
       income tax - $3,059)                                                                          5,681                 5,681
    Transition adjustment
       on derivative financial
       instruments (net of
       income tax - $2,127)                                                                          3,951                 3,951
                                                                                                                       ----------
    Comprehensive income
       for 2001                                                                                                          208,644
                                                                                                                       ----------
    Cash dividends ($0.55 per share)                                                   (37,187)                          (37,187)
    Redemption of FELINE PRIDES   1,959    111,455                                                                       113,414
    Purchase of common stock                                        (217)                                                   (217)
    Purchase of treasury stock                         (3,405)                                                            (3,405)
    Stock-based compensation                 3,349        240                                                              3,589
    Reissuance of treasury
       stock to ESOP                           797         82                 (879)                                            0
    Allocation of stock to
       employee accounts                                                     1,248                                         1,248
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001       36,626    405,420    (15,895)    (1,535)   (3,317)    924,517      54,328        0    1,400,144
                                                                                                                       ----------
    Net income for 2002                                                                177,355                           177,355
    Change in net unrealized
       gains/losses on investments
       (net of income tax - $99,209)                                                               184,246               184,246
    Reclassification adjustment
       for amounts included in
       net income (net of income
       tax - $(318))                                                                                  (591)                 (591)
    Change in accumulated
       gain (loss) hedging (net of
       income tax - $(1,114))                                                                                (2,069)      (2,069)
                                                                                                                       ----------
    Comprehensive income for 2002                                                                                        358,941
                                                                                                                       ----------
    Cash dividends ($0.59 per share)                                                   (40,511)                          (40,511)
    Purchase of common stock                                        (882)                                                   (882)
    Purchase of treasury stock                           (828)                                                              (828)
    Stock-based compensation                 2,928        311                                                              3,239
    Reissuance of treasury stock
       to ESOP                                  49         10                  (59)                                            0
    Allocation of stock to
       employee accounts                                                       599                                           599
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002 -
    Note 7                      $36,626   $408,397   $(16,402)   $(2,417)  $(2,777) $1,061,361    $237,983  $(2,069)  $1,720,702
=================================================================================================================================

See Notes to Consolidated Financial Statements.

Consolidated statements of cash flows

YEAR ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)                                                                   2002           2001          2000
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net income                                                                            $177,355      $ 102,943     $ 153,476
Adjustments to reconcile net income to net cash provided
     by operating activities:
         Realized investment (gains) losses                                             (6,146)        20,171         7,043
         Extraordinary loss on early extinguishment of debt, net of income tax          (1,404)             0             0
         Amortization of deferred policy acquisition costs                             239,490        154,384       149,574
         Capitalization of deferred policy acquisition costs                          (435,324)      (317,627)     (338,685)
         Depreciation expense                                                           11,015         12,110        10,421
         Deferred income taxes                                                          36,441          6,856        67,949
         Accrued income taxes                                                          (57,711)        98,476       (30,813)
         Amortization of goodwill                                                            0          9,056         8,525
         Loss from sale of discontinued operations                                           0         20,545             0
         Interest credited to universal life and investment products                   900,930        944,098       766,004
         Policy fees assessed on universal life and investment products               (268,191)      (222,415)     (197,581)
         Change in accrued investment income and other receivables                    (272,362)      (241,517)     (149,778)
         Change in policy liabilities and other policyholders' funds of traditional
             life and health products                                                  528,122        442,193       500,254
         Change in other liabilities                                                    98,504        157,529       (38,674)
         Other, net                                                                    (48,574)        (5,501)      (31,056)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                              902,145      1,181,301       876,659
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Maturities and principal reductions of investments:
         Investments available for sale                                             12,836,525      3,260,107    13,037,876
         Other                                                                         486,006        283,640       135,058
Sale of investments:
         Investments available for sale                                             23,200,390      9,095,873       810,716
         Other                                                                          16,756          1,363         5,222
Cost of investments acquired:
         Investments available for sale                                            (37,532,147)   (14,019,243)  (14,523,312)
         Corporate-owned life insurance                                                      0       (100,000)            0
         Other                                                                        (474,775)      (378,520)     (464,779)
Acquisitions and bulk reinsurance assumptions                                          130,515       (124,027)     (162,413)
Sale of discontinued operations, net of cash transferred                                     0        216,031             0
Purchase of property and equipment                                                     (10,928)       (12,282)       (5,861)
Sale of property and equipment                                                              48             70             0
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                               (1,347,610)    (1,776,988)   (1,167,493)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Borrowings under line of credit arrangements and long-term debt                      2,119,772      2,738,763     2,434,879
Principal payments on line of credit arrangements and long-term debt                (2,206,874)    (2,551,677)   (2,364,779)
Payment of guaranteed preferred beneficial interests                                   (75,000)             0             0
Dividends to share owners                                                              (40,511)       (37,187)      (32,919)
Issuance of guaranteed preferred beneficial interests                                  115,000        100,000             0
Purchase of common stock held in trust                                                    (882)          (217)         (697)
Purchase of treasury stock                                                                (828)        (3,405)            0
Investment product deposits and change in universal life deposits                    1,687,213      1,735,653     1,811,484
Investment product withdrawals                                                      (1,177,030)    (1,315,179)   (1,553,282)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                              420,860        666,751       294,686
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash                                                            (24,605)        71,064         3,852
Cash at beginning of year                                                              126,558         55,494        51,642
- -----------------------------------------------------------------------------------------------------------------------------
Cash at end of year                                                                   $101,953       $126,558       $55,494
=============================================================================================================================

See Notes to Consolidated Financial Statements.

Notes to consolidated financial statements

All dollar amounts in tables are in thousands except per share amounts

1. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of Protective Life Corporation and subsidiaries (the Company) are prepared on the basis of accounting principles generally accepted in the United States of America. Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities. (See also Note 9.)

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make various estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, as well as the reported amounts of revenues and expenses. Actual results could differ from these estimates.

Entities Included

The consolidated financial statements include the accounts, after intercompany eliminations, of Protective Life Corporation and its wholly owned subsidiaries. The consolidated financial statements also include the accounts of special trusts or entities that do not have substantive residual equity holders which bear risks and rewards of ownership, formed to purchase funding agreements issued by the Company.

Nature of Operations

Protective Life Corporation is a holding company whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate division devoted to the acquisition of insurance policies from other companies. Founded in 1907, Protective Life Insurance Company (Protective Life) is the Company’s largest operating subsidiary.

The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors.

Recently Issued Accounting Standards

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 133, as amended by SFAS Nos. 137 and 138, requires the Company to record all derivative financial instruments, at fair value on the balance sheet. Changes in fair value of a derivative instrument are reported in net income or other comprehensive income, depending on the designated use of the derivative instrument. The adoption of SFAS No. 133 resulted in a cumulative charge to net income, net of income tax, of $7.6 million ($0.11 per share on both a basic and diluted basis) and a cumulative after-tax increase to other comprehensive income of $4.0 million on January 1, 2001. The charge to net income and increase to other comprehensive income primarily resulted from the recognition of derivative instruments embedded in the Company’s corporate bond portfolio. In addition, the charge to net income includes the recognition of the ineffectiveness on existing hedging relationships including the difference in spot and forward exchange rates related to foreign currency swaps used as an economic hedge of foreign-currency-denominated stable value contracts. Prospectively, the adoption of SFAS No. 133 may introduce volatility into the Company’s reported net income and other comprehensive income depending on future market conditions and the Company’s hedging activities.

In June, 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 revises the standards for accounting for acquired goodwill and other intangible assets. The standard replaces the requirement to amortize goodwill with one that calls for an annual impairment test, among other provisions. The Company adopted SFAS No. 142 in the first quarter of 2002. The Company has performed an impairment test and determined that its goodwill was not impaired at January 1, or October 31, 2002. The following table illustrates adjusted income from continuing operations before cumulative effect of change in accounting principle as if this pronouncement was adopted as of January 1, 2000:

YEAR ENDED
DECEMBER 31                                                                 2002           2001           2000
- -------------------------------------------------------------------------------------------------------------------
Adjusted net income:
       Income from continuing operations before extraordinary loss and
           cumulative effect of change in accounting principle              $178,759     $141,058       $137,354
       Add back amortization of goodwill, net of income tax                                 2,311          2,023
- -------------------------------------------------------------------------------------------------------------------
Adjusted income from continuing operations before extraordinary
       loss and cumulative effect of change in accounting principle          178,759      143,369        139,377
Income (loss) from discontinued operations, net of income tax                              (9,977)        16,122
Loss from sale of discontinued operations, net of income tax                              (20,545)
- -------------------------------------------------------------------------------------------------------------------
Adjusted net income before cumulative effect of change in
       accounting principle and extraordinary loss                           178,759      112,847        155,499
Cumulative effect of change in accounting principle, net of income tax                     (7,593)
Extraordinary loss, net of income tax                                         (1,404)
- -------------------------------------------------------------------------------------------------------------------
       Adjusted net income                                                  $177,355     $105,254       $155,499
===================================================================================================================

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. SFAS No. 143 requires that companies record the fair value of a liability for an asset retirement obligation in the period in which the liability is incurred. The Statement is effective for fiscal years beginning after June 15, 2002. The Company does not expect the adoption of SFAS No. 143 to have a material effect on the Company’s financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires that the same accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, expands the use of discontinued operations accounting to include more types of transactions and changes the timing of when discontinued operations accounting is applied. The Company adopted SFAS No. 144 on January 1, 2002, and the adoption did not have a material effect on the Company’s financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002.” SFAS No. 145 rescinds SFAS No. 4, which required companies to treat the extinguishment of debt as an extraordinary item. SFAS No. 145 requires companies to apply APB Opinion 30 when determining the accounting for the extinguishment of debt. The statement also rescinds and amends other statements to make various technical corrections and clarifications. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002, and will require the Company to restate previously issued financial statements to reclassify losses related to the early extinguishment of debt from extraordinary losses to operating expenses. As discussed in Note 4, the Company reported an extraordinary loss of $1.4 million related to the extinguishment of debt in 2002. Thus the Company’s 2002 financial statements will be restated to reflect the requirements of this accounting standard in 2003.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires companies to record a liability for a cost associated with an exit or disposal activity when the liability is incurred. The statement is effective for exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of SFAS No. 146 to have a material effect on the Company’s financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123.” SFAS No. 148 amends SFAS No. 123 to offer alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company adopted the fair value based method prescribed by SFAS No. 123 in 1995, therefore SFAS No. 148 will have no effect on the Company’s financial position or results of operations.

In November, 2002, the FASB issued FASB Interpretation No. (FIN) 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Others.” FIN 45 clarifies the requirements of SFAS No. 5 “Accounting for Contingencies” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company does not expect FIN 45 to have a material effect on the Company’s financial position or results of operations.

In January, 2003, the FASB issued FIN 46 “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated support from the other parties. The Company is currently assessing the impact that FIN 46 will have on its financial condition and results of operations. FIN 46 potentially will affect the accounting related to a special purpose vehicle (SPV) whose investments are managed by the Company and a lease arrangement currently accounted for as an operating lease that also involves an SPV. Although the Company does not expect the provisions of FIN 46 to have a material impact on its results of operations, had the provision been effective at December 31, 2002, the Company’s reported assets and liabilities would have increased by approximately $489 million.

In May 2002, the Derivatives Implementation group of the FASB exposed for comment issue No. B36, “Bifurcation of Embedded Credit Derivatives” (DIG B36). DIG B36 would require the bifurcation of potential embedded derivatives within modified coinsurance and funds withheld coinsurance arrangements in which the terms require the future payment of a principal amount plus a return based on a specified proportion of the ceding company’s return on either its general account assets or a specified block of those assets. The proposed effective date of the implementation guidance in DIG B36 is for the first fiscal quarter beginning after June 15, 2003 and would be applied on a prospective basis. The Company is currently evaluating the impact of this pronouncement on its financial statements but does not anticipate a material impact on its financial condition or results of operations.

Investments

The Company has classified all of its investments in fixed maturities, equity securities, and short-term investments as “available for sale.”

Investments are reported on the following bases less allowances for uncollectible amounts on investments, if applicable:

o Fixed maturities (bonds and redeemable preferred stocks) – at current market value. Where market values are unavailable, the Company obtains estimates from independent pricing services or estimates market value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics.

o Equity securities (common and nonredeemable preferred stocks) – at current market value.

o Mortgage loans – at unpaid balances, adjusted for loan origination costs, net of fees, and amortization of premium or discount.

o Investment real estate – at cost, less allowances for depreciation computed on the straight-line method. With respect to real estate acquired through foreclosure, cost is the lesser of the loan balance plus foreclosure costs or appraised value.

o Policy loans - at unpaid balances.

o Other long-term investments – at a variety of methods similar to those listed above, as deemed appropriate for the specific investment.

o Short-term investments – at cost, which approximates current market value.

Estimated market values were derived from the durations of the Company’s fixed maturities and mortgage loans. Duration measures the relationship between changes in market value to changes in interest rates. While these estimated market values generally provide an indication of how sensitive the market values of the Company’s fixed maturities and mortgage loans are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

Substantially all short-term investments have maturities of three months or less at the time of acquisition and include approximately $0.6 million in bank deposits voluntarily restricted as to withdrawal.

As prescribed by generally accepted accounting principles, certain investments are recorded at their market values with the resulting unrealized gains and losses reduced by a related adjustment to deferred policy acquisition costs, net of income tax, reported as a component of share-owners’ equity. The market values of fixed maturities increase or decrease as interest rates fall or rise.

The Company believes that an insurance company’s balance sheet may be difficult to analyze without disclosing the effects of recording accumulated other comprehensive income (including unrealized gains and losses on investments). The carrying value of the Company’s investments, deferred policy acquisition costs, deferred income taxes and share-owners’ equity are all affected by recording unrealized gains and losses on investments, therefore these items are separately identified in the table below. The captions “all other assets” and “all other liabilities” represent the assets and liabilities unaffected by recording unrealized gains and losses on investments. The Company’s balance sheets at December 31, adjusted for the effects of recording accumulated other comprehensive income (including unrealized gains and losses on investments), are as follows:

                                                    2002                         2001
- ------------------------------------------------------------------------------------------

  Total investments                              $15,024,245                 $13,212,993
  Deferred policy
        acquisition costs                          1,774,420                   1,553,786
  All other assets                                 4,790,280                   4,868,463
- ------------------------------------------------------------------------------------------
                                                 $21,588,945                 $19,635,242
- ------------------------------------------------------------------------------------------
  Deferred income taxes                             $114,448                     $97,976
  All other liabilities                           19,989,709                  18,191,450
- ------------------------------------------------------------------------------------------
                                                  20,104,157                  18,289,426
  Share-owners' equity                             1,484,788                   1,345,816
- ------------------------------------------------------------------------------------------
                                                 $21,588,945                 $19,635,242
==========================================================================================

Realized gains and losses on sales of investments are recognized in net income using the specific identification basis.

Derivative Financial Instruments

The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments, primarily to reduce its exposure to interest rate risk as well as currency exchange risk.

Combinations of interest rate swap contracts, options and futures contracts are sometimes used as hedges against changes in interest rates for certain investments, primarily outstanding mortgage loan commitments and mortgage-backed securities. Interest rate swap contracts generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. Interest rate futures generally involve exchange traded contracts to buy or sell treasury bonds and notes in the future at specified prices. Interest rate options represent contracts that allow the holder of the option to receive cash or purchase, sell or enter into a financial instrument at a specified price within a specified period of time. The Company uses interest rate swap contracts, swaptions (options to enter into interest rate swap contracts), caps, and floors to modify the interest characteristics of certain investments, and its Senior Notes, Medium-Term Notes, and TOPrS. Swap contracts are also used to alter the effective durations of assets and liabilities. The Company uses foreign currency swaps to reduce its exposure to currency exchange risk on certain stable value contracts denominated in foreign currencies, primarily the European euro and the British pound.

Derivative instruments expose the Company to credit and market risk. The Company minimizes its credit risk by entering into transactions with highly rated counterparties. The Company manages the market risk associated with interest rate and foreign exchange contracts by establishing and monitoring limits as to the types and degrees of risk that may be undertaken.

The Company monitors its use of derivatives in connection with its overall asset/liability management programs and procedures. The Company’s asset/liability committee is responsible for implementing various hedging strategies that are developed through its analysis of data from financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into the Company’s overall interest rate and currency exchange risk management strategies.

All derivatives are recognized on the balance sheet (in “other long-term investments” or “other liabilities”) at their fair value (primarily estimates from independent pricing services). On the date the derivative contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair-value” hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash-flow” hedge), or (3) as a derivative either held for investment purposes or held as a natural hedging instrument designed to act as an economic hedge against the changes in value or cash flows of a hedged item (“other” derivative). Changes in the fair value of a derivative that is highly effective as – and that is designated and qualifies as – a fair-value hedge, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on firm commitments), are recorded in current-period earnings. Changes in the fair value of a derivative that is highly effective as – and that is designated and qualified as – a cash-flow hedge are recorded in other comprehensive income, until earnings are affected by the variability of cash flows. Changes in the fair value of other derivatives are recognized in current earnings and reported in “Realized Investment Gains (Losses) – Derivative Financial Instruments” in the Company’s consolidated condensed statements of income.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair-value or cash-flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively, as discussed below.

The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including firm commitments or forecasted transactions); (2) the derivative expires or is sold, terminated, or exercised; (3) the derivative is designated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; (4) because a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designation of the derivative as a hedge instrument is no longer appropriate.

When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the derivative will continue to be carried on the balance sheet at its fair value, and the hedged asset or liability will no longer be adjusted for changes in fair value. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the derivative will continue to be carried on the balance sheet at its fair value, and any asset or liability that was recorded pursuant to recognition of the firm commitment will be removed from the balance sheet and recognized as a gain or loss in current-period earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income will remain therein until such time as they are reclassified to earnings as originally forecasted to occur. In all situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with changes in its fair value recognized in current-period earnings.

Fair-Value Hedges. The Company has designated, as a fair value hedge, callable interest rate swaps used to modify the interest characteristics of certain callable Medium-Term Notes and stable value contracts. In assessing hedge effectiveness, the Company excludes the embedded call option’s time value component from each derivative’s total gain or loss. In 2002 and 2001, total measured ineffectiveness for the fair value hedging relationships was insignificant while the excluded time value component resulted in a pre-tax gain of $0 and $1.3 million, respectively. Both the measured ineffectiveness and the excluded time value component are reported in “Realized Investment Gains (Losses) – Derivative Financial Instruments” in the Company’s consolidated statements of income.

Cash-Flow Hedges. The Company has entered into a foreign currency swap to hedge the risk of changes in the value of interest and principal payments to be made on certain of its foreign-currency-based stable value contracts. Under the terms of the swap, the Company pays a fixed U.S.-dollar-denominated rate and receives a fixed foreign-currency-denominated rate. Effective July 1, 2002, the Company designated this swap as a cash flow hedge and therefore recorded the change in the fair value of the swap during the period in accumulated other comprehensive income. During 2002, a pretax loss of $19.8 million representing the change in fair value of the hedged contracts, and a gain of like amount representing the application of hedge accounting to this transaction, were recorded in “Realized Investment Gains (Losses) – Derivative Financial Instruments” in the Company’s consolidated condensed statements of income. For the year ended December 31, 2002, the amount of the hedge’s ineffectiveness reported as a loss was insignificant. Additionally, as of December 31, 2002, the Company reported a reduction to accumulated other comprehensive income of $2.1 million (net of income tax of $1.1 million) related to its derivative designated as a cash flow hedge. During 2003, the Company expects to reclassify out of accumulated other comprehensive income and into earnings, as a reduction of interest expense, approximately $0.9 million.

Other Derivatives. The Company uses certain interest rate swaps, caps, floors, swaptions, options and futures contracts as economic hedges against the changes in value or cash flows of outstanding mortgage loan commitments and certain owned investments as well as certain debt and preferred security obligations of the Company. In 2002 and 2001, the Company recognized total pre-tax gains of $23.7 million and total pre-tax losses of $10.8 million, respectively, representing the change in fair value of these derivative instruments as well as a realized gain or loss on contracts closed during the period.

On its foreign currency swaps, the Company recognized a $70.8 million pre-tax gain in 2002 while recognizing a $74.9 million foreign exchange pre-tax loss on the related foreign-currency-denominated stable value contracts. In 2001, the Company recognized an $8.2 million pre-tax loss on its foreign currency swaps while recognizing an $11.2 million foreign exchange pre-tax gain on the related foreign-currency-denominated stable value contracts. The net loss and net gain in 2002 and 2001, respectively, primarily results from the difference in the forward and spot exchange rates used to revalue the currency swaps and the stable value contracts, respectively. This net loss and net gain is reflected in “Realized Investment Gains (Losses) – Derivative Financial Instruments” in the Company’s consolidated condensed statements of income.

The Company has entered into asset swap arrangements to, in effect, sell the equity options embedded in owned convertible bonds in exchange for an interest rate swap that converts the remaining host bond to a variable rate instrument. In 2002 and 2001, the Company recognized a $2.0 million and $12.2 million pre-tax gain, respectively, for the change in the asset swaps’ fair value and recognized a $7.8 million and $16.9 million pre-tax loss, respectively, to separately record the embedded equity options at fair value.

The Company has also entered into a total return swap in connection with a portfolio of investment securities managed by the Company for an unrelated party. The Company recognized an $8.5 million and $0.3 million pre-tax loss in 2002 and 2001, respectively, for the change in the total return swap’s fair value.

At December 31, 2002, contracts with a notional amount of $7.1 billion were in a $89.9 million net gain position. At December 31, 2001, contracts with a notional amount of $5.5 billion were in a $23.8 million net loss position.

The Company’s derivative financial instruments are with highly rated counterparties.

Cash

Cash includes all demand deposits reduced by the amount of outstanding checks and drafts. The Company has deposits with certain financial institutions which exceed federally insured limits. The Company has reviewed the creditworthiness of these financial institutions and believes there is minimal risk of a material loss.

Deferred Policy Acquisition Costs

Commissions and other costs of acquiring traditional life and health insurance, credit insurance, universal life insurance, and investment products that vary with and are primarily related to the production of new business, have been deferred. Traditional life and health insurance acquisition costs are amortized over the premium-payment period of the related policies in proportion to the ratio of annual premium income to the present value of the total anticipated premium income. Credit insurance acquisition costs are being amortized in proportion to earned premium. Acquisition costs for universal life and investment products are amortized over the lives of the policies in relation to the present value of estimated gross profits before amortization. Under SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments,” the Company makes certain assumptions regarding the mortality, persistency, expenses, and interest rates (equal to the rate used to compute liabilities for future policy benefits; currently 3.0% to 9.4%) it expects to experience in future periods. These assumptions are to be best estimates and are to be periodically updated whenever actual experience and/or expectations for the future change from that assumed. Additionally, relating to SFAS No. 115, these costs have been adjusted by an amount equal to the amortization that would have been recorded if unrealized gains or losses on investments associated with the Company’s universal life and investment products had been realized.

The cost to acquire blocks of insurance, representing the present value of future profits from such blocks of insurance, is also included in deferred policy acquisition costs. The Company amortizes the present value of future profits over the premium payment period, including accrued interest of up to approximately 8%. The unamortized present value of future profits for all acquisitions was approximately $542.5 million and $523.4 million at December 31, 2002 and 2001, respectively. During 2002, $62.5 million of present value of future profits was capitalized (relating to acquisitions and adjustments made during the year), a $2.1 million reduction came from the sale of a small subsidiary, and $41.3 million was amortized. During 2001, $221.9 million of present value of future profits was capitalized and $42.1 million was amortized.

The expected amortization of the present value of future profits for the next five years is as follows:

  YEAR                EXPECTED AMORTIZATION
- ---------------------------------------------
  2003                     $33,600
  2004                      32,400
  2005                      30,500
  2006                      29,100
  2007                      28,100

Goodwill

The goodwill balance at December 31, 2002 and 2001 was $47.3 million and $48.2 million, respectively. The decrease of $0.9 million in 2002 relates to the sale of a small subsidiary in the first quarter. At October 31, 2002, the Company evaluated its goodwill and determined that fair value had not decreased below carrying value and no adjustment to impair goodwill was necessary in accordance with SFAS No. 142.

Property and Equipment

Property and equipment are reported at cost. The Company primarily uses the straight-line method of depreciation based upon the estimated useful lives of the assets. The Company’s Home Office building is depreciated over a thirty-nine year useful life, furniture is depreciated over a ten year useful life, office equipment and machines are depreciated over a five year useful life, and software and computers are depreciated over a three year useful life. Major repairs or improvements are capitalized and depreciated over the estimated useful lives of the assets. Other repairs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or retired are removed from the accounts, and resulting gains or losses are included in income.

Property and equipment consisted of the following at December 31:

                                               2002                2001
- --------------------------------------------------------------------------
  Home Office building                       $45,297             $45,845
  Data processing equipment                   31,844              34,100
  Other, principally furniture
         and equipment                        41,006              40,055
- --------------------------------------------------------------------------
                                             118,147             120,000
  Accumulated depreciation                    76,823              68,693
- --------------------------------------------------------------------------
                                             $41,324             $51,307
==========================================================================

Separate Accounts

The assets and liabilities related to separate accounts in which the Company does not bear the investment risk are valued at market and reported separately as assets and liabilities related to separate accounts in the accompanying consolidated financial statements.

Stable Value Contracts Account Balances

The Company markets guaranteed investment contracts (GICs) to 401(k) and other qualified retirement savings plans, and fixed and floating rate funding agreements to the trustees of municipal bond proceeds, institutional investors, bank trust departments, and money market funds. GICs and funding agreements are generally contracts that specify a return on deposits for a specified period and often provide flexibility for withdrawals at book value in keeping with the benefits provided by the plan. Stable value contract account balances include GICs and funding agreements issued by the Company as well as the obligations of consolidated special purpose trusts or entities formed to purchase funding agreements issued by the Company. At December 31, 2002 and 2001 the Company had $2.2 billion and $1.7 billion of stable value contract account balances marketed through structured programs. Most GICs and funding agreements written by the Company have maturities of three to five years. At December 31, 2002, maturities of stable value contracts were $1.1 billion in 2003, $1.6 billion in 2004–2005, $1.3 billion in 2006–2007, and $59.2 million after 2007.

Revenues and Benefits Expense

Traditional Life, Health, and Credit Insurance Products. Traditional life insurance products consist principally of those products with fixed and guaranteed premiums and benefits, and they include whole life insurance policies, term and term-like life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies. Life insurance and immediate annuity premiums are recognized as revenue when due. Health and credit insurance premiums are recognized as revenue over the terms of the policies. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contracts. This is accomplished by means of the provision for liabilities for future policy benefits and the amortization of deferred policy acquisition costs. Gross premiums in excess of net premiums related to immediate annuities are deferred and recognized over the life of the policy.

Liabilities for future policy benefits on traditional life insurance products have been computed using a net level method including assumptions as to investment yields, mortality, persistency, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Reserve investment yield assumptions are graded and range from 2.5% to 7.0%. The liability for future policy benefits and claims on traditional life, health, and credit insurance products includes estimated unpaid claims that have been reported to the Company and claims incurred but not yet reported. Policy claims are charged to expense in the period in which the claims are incurred.

Activity in the liability for unpaid claims is summarized as follows:

                                                      2002               2001                2000
- ----------------------------------------------------------------------------------------------------
  Balance beginning of year                         $100,023           $110,064           $122,346
       Less reinsurance                               33,723             25,830             47,661
- ----------------------------------------------------------------------------------------------------
  Net balance beginning of year                       66,300             84,234             74,685
- ----------------------------------------------------------------------------------------------------
  Incurred related to:
  Current year                                       258,612            383,371            323,222
  Prior year                                            (338)            (1,080)            (4,880)
- ----------------------------------------------------------------------------------------------------
  Total incurred                                     258,274            382,291            318,342
- ----------------------------------------------------------------------------------------------------
  Paid related to:
  Current year                                       243,206            312,748            252,209
  Prior year                                          22,528             81,220             61,925
- ----------------------------------------------------------------------------------------------------
  Total paid                                         265,734            393,968            314,134
- ----------------------------------------------------------------------------------------------------
  Other changes:
  Acquisitions and reserve transfers                   2,609             (6,257)             5,341
- ----------------------------------------------------------------------------------------------------
  Net balance end of year                             61,449             66,300             84,234
       Plus reinsurance                               54,765             33,723             25,830
- ----------------------------------------------------------------------------------------------------
  Balance end of year                               $116,214           $100,023           $110,064
====================================================================================================

Universal Life and Investment Products. Universal life and investment products include universal life insurance, guaranteed investment contracts, deferred annuities, and annuities without life contingencies. Premiums and policy fees for universal life and investment products consist of fees that have been assessed against policy account balances for the costs of insurance, policy administration, and surrenders. Such fees are recognized when assessed and earned. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. Interest rates credited to universal life and investment products ranged from 3.0% to 9.4% in 2002.

The Company’s accounting policies with respect to variable universal life and variable annuities are identical except that policy account balances (excluding account balances that earn a fixed rate) are valued at market and reported as components of assets and liabilities related to separate accounts.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Income tax provisions are generally based on income reported for financial statement purposes. Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Such temporary differences are principally related to the deferral of policy acquisition costs and the provision for future policy benefits and expenses.

Discontinued Operations

On December 31, 2001, the Company completed the sale to Fortis, Inc. of substantially all of its Dental Benefits Division (Dental Division) and discontinued other remaining Dental Division related operations, primarily other health insurance lines.

The operating results and charges related to the sale of the Dental Division and discontinuance of other related operations at December 31 are as follows:

                                                                                    2002         2001          2000
- -----------------------------------------------------------------------------------------------------------------------
  Total revenues                                                                  $15,809      $350,916      $369,239
- -----------------------------------------------------------------------------------------------------------------------
  Income (loss) before income taxes from discontinued operations                       $0     $(12,797)       $27,718
  Income tax (expense) benefit                                                          0         2,820       (11,596)
- -----------------------------------------------------------------------------------------------------------------------
  Income (loss) from discontinued operations                                           $0      $(9,977)       $16,122
- -----------------------------------------------------------------------------------------------------------------------
  Gain from sale of discontinued operations before income tax                                   $22,927
  Income tax expense related to sale                                                           (43,472)
- -----------------------------------------------------------------------------------------------------------------------
  Loss from sale of discontinued operations                                                   $(20,545)
- -----------------------------------------------------------------------------------------------------------------------
  Income (loss) from discontinued operations - per share (diluted and basic)            0        $(.14)          $.24
  Loss from sale of discontinued operations - per share (diluted and basic)                      $(.29)
- -----------------------------------------------------------------------------------------------------------------------

Assets and liabilities related to the discontinued lines of business of approximately $5.1 million and $6.7 million, respectively, remain at December 31, 2002.

Net Income Per Share

Net income per share – basic is net income divided by the average number of shares of Common Stock outstanding including shares that are issuable under various deferred compensation plans.

Net income per share – diluted is adjusted net income divided by the average number of shares outstanding including all diluted, potentially issuable shares that are issuable under various stock-based compensation plans and stock purchase contracts.

Net income and a reconciliation of basic and diluted average shares outstanding for the years ended December 31 is summarized as follows:

                                                                            2002             2001             2000
- ----------------------------------------------------------------------------------------------------------------------
  Net income                                                              $177,355         $102,943         $153,476
  Average shares issued and outstanding                                 68,659,881       68,037,410       64,544,140
  Stock held in trust                                                      (67,566)         (47,759)         (41,797)
  Issuable under various deferred compensation plans                     1,331,640        1,420,874        1,330,006
- ----------------------------------------------------------------------------------------------------------------------
  Average shares outstanding - basic                                    69,923,955       69,410,525       65,832,349
  Stock held in trust                                                       67,566           47,759           41,797
  Stock appreciation rights                                                220,500          266,132          131,443
  Issuable under various other stock-based compensation plans              250,776          225,757          275,539
- ----------------------------------------------------------------------------------------------------------------------
  Average shares outstanding - diluted                                  70,462,797       69,950,173       66,281,128
- ----------------------------------------------------------------------------------------------------------------------

Supplemental Cash Flow Information

The following table sets forth supplemental cash flow information for the years ended December 31:

                                                                             2002            2001            2000
- ----------------------------------------------------------------------------------------------------------------------
  Cash paid during the year:
       Interest on debt                                                    $33,043          $36,095          $37,660
       Income taxes                                                        132,039           31,795           55,798
- ----------------------------------------------------------------------------------------------------------------------
  Noncash investing and financing activities:
  Reissuance of treasury stock to ESOP                                         $59             $879             $255
  Change in unallocated stock in ESOP                                          540              369              357
  Stock-based compensation                                                   3,239            3,589           33,655
  Redemption of FELINE PRIDES (See Note 4)                                                  113,414
  Acquisitions and related reinsurance transactions:
       Assets acquired                                                    $358,897       $2,554,202         $533,869
       Liabilities assumed                                                (489,412)      (2,430,175)        (371,456)
- -----------------------------------------------------------------------------------------------------------------------
  Net                                                                    $(130,515)        $124,027         $162,413
========================================================================================================================

Reclassifications

Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income, total assets, or share-owners’ equity.

2. Investment Operations

Major categories of net investment income for the years ended December 31 are summarized as follows:

                                                        2002                  2001               2000
- ---------------------------------------------------------------------------------------------------------
  Fixed maturities                                    $680,825             $615,089            $536,550
  Equity securities                                      3,500                3,550               2,955
  Mortgage loans                                       218,165              208,830             177,917
  Investment real estate                                 2,437                4,632               3,132
  Policy loans                                          37,463               31,763              14,977
  Short-term investments and other                     105,688               37,281              12,113
- ---------------------------------------------------------------------------------------------------------
                                                     1,048,078              901,145             747,644
  Investment expenses                                   16,874               17,104              17,495
- ---------------------------------------------------------------------------------------------------------
                                                    $1,031,204             $884,041            $730,149
=========================================================================================================

Realized investment gains (losses) for all other investments for the years ended December 31 are summarized as follows:

                                                          2002                 2001                2000
- ---------------------------------------------------------------------------------------------------------
  Fixed maturities                                      $2,674              $(7,311)           $(14,793)
  Equity securities                                         65                2,462               1,685
  Mortgage loans and other investments                  (1,829)              (3,891)             (2,948)
- ---------------------------------------------------------------------------------------------------------
                                                          $910              $(8,740)           $(16,056)
=========================================================================================================

In 2002, gross gains on the sale of investments available for sale (fixed maturities, equity securities, and short-term investments) were $73.0 million, and gross losses were $72.5 million. In 2001, gross gains were $27.5 million, and gross losses were $32.5 million. In 2000, gross gains were $8.7 million, and gross losses were $28.4 million.

Each quarter the Company reviews investments with material unrealized losses and tests for other-than-temporary impairments. The Company analyzes various factors to determine if any specific other than temporary asset impairments exist. Once a determination has been made that a specific other-than-temporary impairment exists, a realized loss is incurred and the cost basis of the impaired asset is adjusted to its fair value. During 2002 and 2001, the Company recorded other-than-temporary impairments in its investments of $30.2 million and $12.6 million, respectively. The Company did not record any other-than-temporary impairments in its investments in 2000.

Realized investment gains (losses) for derivative financial instruments for the years ended December 31 are summarized as follows:

                                                        2002              2001               2000
- ----------------------------------------------------------------------------------------------------
  Derivative financial instruments                     $5,236          $(11,431)            $9,013
- ----------------------------------------------------------------------------------------------------

The amortized cost and estimated market value of the Company’s investments classified as available for sale at December 31 are as follows:

                                                                                  GROSS         GROSS        ESTIMATED
                                                                   AMORTIZED    UNREALIZED    UNREALIZED       MARKET
                                                                     COST         GAINS         LOSSES         VALUE
- -------------------------------------------------------------------------------------------------------------------------
  2002
  FIXED MATURITIES:
      Bonds:
        Mortgage-backed securities                               $4,168,026     $199,316       $28,311       $4,339,031
        United States Government and authorities                     90,647        5,752             0           96,399
        States, municipalities, and political subdivisions           27,005        2,349             0           29,354
        Public utilities                                          1,153,710       61,831        42,139        1,173,402
        Convertibles and bonds with warrants                        115,728        2,656         5,872          112,512
        All other corporate bonds                                 5,664,549      348,809       101,818        5,911,540
      Redeemable preferred stocks                                     1,700          127             0            1,827
- -------------------------------------------------------------------------------------------------------------------------
                                                                 11,221,365      620,840       178,140       11,664,065
  Equity securities                                                  66,820        2,408         4,705           64,523
  Short-term investments                                            448,399            0             0          448,399
- -------------------------------------------------------------------------------------------------------------------------
                                                                $11,736,584     $623,248      $182,845      $12,176,987
=========================================================================================================================


  2001
  Fixed maturities:
      Bonds:
        Mortgage-backed securities                               $3,709,118      $84,965       $33,759       $3,760,324
        United States Government and authorities                     98,967        4,088             0          103,055
        States, municipalities, and political subdivisions           94,022        4,009             0           98,031
        Public utilities                                            807,773       19,763         4,860          822,676
        Convertibles and bonds with warrants                         96,951        7,423         6,184           98,190
        All other corporate bonds                                 4,936,614      117,092        99,500        4,954,206
      Redeemable preferred stocks                                     1,612            0             3            1,609
- -------------------------------------------------------------------------------------------------------------------------
                                                                  9,745,057      237,340       144,306        9,838,091
  Equity securities                                                  78,332        3,565         5,123           76,774
  Short-term investments                                            237,155            0             0          237,155
- -------------------------------------------------------------------------------------------------------------------------
                                                                $10,060,544     $240,905      $149,429      $10,152,020
=========================================================================================================================

The amortized cost and estimated market value of fixed maturities at December 31, 2002, by expected maturity, are shown as follows. Expected maturities are derived from rates of prepayment that may differ from actual rates of prepayment.

                                         Estimated          Estimated
                                         Amortized            Market
                                            Cost              Value
- ----------------------------------------------------------------------
  Due in one year or less                 $844,795          $845,577
  Due after one year through
        five years                       2,685,779         2,749,260
  Due after five years
        through ten years                2,602,883         2,767,627
  Due after ten years                    5,087,908         5,301,601
- ----------------------------------------------------------------------
                                       $11,221,365       $11,664,065
======================================================================

At December 31, 2002 and 2001, the Company had bonds which were rated less than investment grade of $869.2 million and $447.3 million, respectively, having an amortized cost of $969.4 million and $524.1 million, respectively. At December 31, 2002, approximately $70.9 million of the bonds rated less than investment grade were securities issued in Company-sponsored commercial mortgage loan securitizations. Approximately $1,968.1 million of bonds are not publicly traded.

The change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities for the years ended December 31 is summarized as follows:

                                     2002          2001               2000
- ------------------------------------------------------------------------------
  Fixed maturities                $227,283       $108,307           $109,626
  Equity securities                   (480)           715               (820)
- ------------------------------------------------------------------------------

At December 31, 2002, all of the Company’s mortgage loans were commercial loans of which 76% were retail, 8% were apartments, 7% were office buildings, 7% were warehouses, and 1% were other. The Company specializes in making mortgage loans on either credit-oriented or credit-anchored commercial properties. No single tenant’s leased space represents more than 3.1% of mortgage loans. Approximately 75% of the mortgage loans are on properties located in the following states listed in decreasing order of significance: Texas, Tennessee, Georgia, North Carolina, South Carolina, Alabama, Florida, Virginia, California, Mississippi, Pennsylvania, Washington, and Ohio.

Many of the mortgage loans have call provisions between 3 and 10 years. Assuming the loans are called at their next call dates, approximately $86.7 million would become due in 2003, $399.6 million in 2004 to 2007, $355.0 million in 2008 to 2012, and $27.2 million thereafter.

At December 31, 2002, the average mortgage loan was $2.1 million, and the weighted average interest rate was 7.5%. The largest single mortgage loan was $24.8 million.

For several years the Company has offered a type of commercial mortgage loan under which the Company will permit a slightly higher loan-to-value ratio in exchange for a participating interest in the cash flows from the underlying real estate. As of December 31, 2002 and 2001, approximately $475.5 million and $548.4 million respectively, of the Company’s mortgage loans have this participation feature.

At December 31, 2002 and 2001, the Company’s problem mortgage loans (over ninety days past due) and foreclosed properties totaled $20.6 million and $29.6 million, respectively. Since the Company’s mortgage loans are collateralized by real estate, any assessment of impairment is based upon the estimated fair value of the real estate. Based on the Company’s evaluation of its mortgage loan portfolio, the Company does not expect any material losses on its mortgage loans.

At December 31, 2002 and 2001, the Company had investments related to retained beneficial interests of mortgage loan securitizations of $295.7 million and $286.4 million, respectively.

Certain investments with a carrying value of $87.6 million were non-income producing for the twelve months ended December 31, 2002.

Policy loan interest rates generally range from 4.5% to 8.0%.

On December 31, 2001, Protective Life Insurance Company had $117.0 million of securities sold under repurchase agreements with an interest rate of 2.0%. The agreement-to-repurchase liability is recorded as securities sold under repurchase agreements.

3. Income Taxes

The Company’s effective income tax rate related to continuing operations varied from the maximum federal income tax rate as follows:

                                               2002              2001                2000
 ------------------------------------------------------------------------------------------
  Statutory federal income tax
        rate applied to pretax income          35.0%             35.0%               35.0%
  Amortization of nondeductible
        goodwill                                0.0               0.1                 0.1
  State income taxes                            0.8               0.7                 0.6
  Dividends received deduction
        and tax-exempt interest                (2.1)             (1.8)               (0.4)
  Low-income housing credit                    (0.4)             (0.5)               (0.3)
  Other                                        (0.2)             (0.8)                0.1
- -------------------------------------------------------------------------------------------
                                               33.1%             32.7%               35.1%
===========================================================================================

The provision for federal income tax differs from amounts currently payable due to certain items reported for financial statement purposes in periods which differ from those in which they are reported for income tax purposes.

Details of the deferred income tax provision for the years ended December 31 are as follows:

                                          2002                    2001                   2000
- -------------------------------------------------------------------------------------------------
  Deferred policy acquisition
        costs                           $19,378                 $81,947                 $30,250
  Benefit and other policy
        liability changes                40,104                 (75,422)                 34,986
  Temporary differences of
        investment income               (30,933)                  6,285                  (2,590)
  Other items                             7,892                  (8,939)                   (272)
- -------------------------------------------------------------------------------------------------
                                        $36,441                  $3,871                 $62,374
=================================================================================================

The components of the Company’s net deferred income tax liability as of December 31 were as follows:

                                                  2002                     2001
- ------------------------------------------------------------------------------------
  Deferred income tax assets:
       Policy and policyholder
          liability reserves                    $244,814                $276,071
       Other                                       7,489                  15,381
- ------------------------------------------------------------------------------------
                                                 252,303                 291,452
- ------------------------------------------------------------------------------------
  Deferred income tax liabilities:
       Deferred policy acquisition
          costs                                  398,450                 379,072
       Unrealized gains (losses)
          on investments                          96,446                  39,610
- ------------------------------------------------------------------------------------
                                                 494,896                 418,682
- ------------------------------------------------------------------------------------
  Net deferred income tax
       liability                                $242,593                $127,230
====================================================================================

Under pre-1984 life insurance company income tax laws, a portion of the Company’s gain from operations which was not subject to current income taxation was accumulated for income tax purposes in a memorandum account designated as Policyholders’ Surplus. The aggregate accumulation in this account at December 31, 2002, was approximately $70.5 million. Should the accumulation in the Policyholders’ Surplus account of the life insurance subsidiaries exceed certain stated maximums, or should distributions including cash dividends be made to Protective Life Corporation in excess of approximately $1.1 billion, such excess would be subject to federal income taxes at rates then effective. Deferred income taxes have not been provided on amounts designated as Policyholders’ Surplus. Under current income tax laws, the Company does not anticipate paying income tax on amounts in the Policyholders’ Surplus accounts.

4. Long-Term Debt and Guaranteed Preferred Beneficial Interests

Long-term debt at December 31 is summarized as follows:

                                                           2002                  2001
- ---------------------------------------------------------------------------------------
  Long-term debt (year of issue):
  Notes payable to banks, due 2005                       $30,000
  Floating Rate Senior Notes
       (2001), due 2003                                  100,000             $100,000
  7.95% Senior Notes (1994),
       due 2004                                           75,000               75,000
  7.45% Medium-Term Notes
       (1996), due 2011                                    9,852                9,852
  8.00% Senior Notes (2000),
       due 2010, callable 2003                            49,858               49,873
  8.10% Senior Notes (2000),
       due 2015, callable 2003                            39,843               39,853
  8.25% Senior Notes (2000),
       due 2030, callable 2005                            34,699               34,719
  7.50% Senior Notes (2000),
  due 2016, callable 2004                                 59,914               59,944
  Mortgage notes on
       investment real estate                              6,944                6,970
- ---------------------------------------------------------------------------------------
                                                        $406,110             $376,211
=======================================================================================

Under revolving line of credit arrangements with several banks, the Company can borrow up to $200 million on an unsecured basis. No compensating balances are required to maintain the line of credit. At December 31, 2002, the Company had $30.0 million outstanding under these credit arrangements at an interest rate of 1.92%. The amounts outstanding under the line of credit are due in 2005. At December 31, 2001, the Company had no borrowings outstanding under these credit arrangements.

The aforementioned revolving line of credit arrangements contain, among other provisions, requirements for maintaining certain financial ratios and restrictions on indebtedness incurred by the Company and its subsidiaries. Additionally, the Company, on a consolidated basis, cannot incur debt in excess of 40% of its total capital.

Except for the 7.95% Senior Notes, limited amounts of the Senior and Medium-Term Notes may be redeemed upon the death of the beneficial owner of the notes.

At December 31, 2002, future maturities of long-term debt are $100.0 million in 2003, $75.0 million in 2004, $30.0 million in 2005, and $201.1 million in years after 2006.

In 1997, a special purpose finance subsidiary, PLC Capital Trust I, issued $75 million of 8.25% Trust Originated Preferred Securities (TOPrSSM). The 8.25% TOPrS were guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 8.25% TOPrS, constituted a full and unconditional guarantee by the Company of PLC Capital Trust I’s obligations with respect to the 8.25% TOPrS.

PLC Capital Trust I was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust I were $77.3 million of Protective Life Corporation 8.25% Subordinated Debentures due 2027, Series B.

On October 25, 2002, the Company caused PLC Capital Trust I to redeem the 8.25% TOPrS. In a related transaction the Company redeemed its subordinated debentures which were held by PLC Capital Trust I. The redemption of the subordinated debentures resulted in an extraordinary loss of $1.4 million ($0.02 per share on both a diluted and basic basis) due to early extinguishment of debt. The loss is comprised primarily of unamortized deferred debt issue costs, net of an income tax benefit of $0.8 million.

Also in 1997, another special purpose finance subsidiary, PLC Capital Trust II, issued $115 million of FELINE PRIDESSM which are comprised of stock purchase contracts and a beneficial ownership of 6.5% TOPrS. The sole assets of PLC Capital Trust II were $118.6 million of Protective Life Corporation 6.5% Subordinated Debentures due 2003, Series C. In February 2001, the Company issued 3,918,843 shares of its Common Stock under the stock purchase contracts. In the transaction, substantially all of the 6.5% TOPrS and the underlying subordinated debt was redeemed. The dividend rate on the TOPrS that remained outstanding after February 2001 was reset to 6.77% under a formula specified in the agreement. The remaining outstanding TOPrS and underlying subordinated debt were redeemed in April 2001.

In August 2001, a special purpose finance subsidiary of the Company, PLC Capital Trust III, issued $100 million of 7.5% TOPrS. The 7.5% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 7.5% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust III’s obligations with respect to the 7.5% TOPrS.

PLC Capital Trust III was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust III are $103.1 million of Protective Life Corporation 7.5% Subordinated Debentures due 2031, Series D. The Company has the right under the subordinated debentures to extend interest payment periods up to five consecutive years, and, as a consequence, dividends on the 7.5% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust III during any such extended interest payment period. The 7.5% TOPrS are redeemable by PLC Capital Trust III at any time on or after August 22, 2006.

On September 25, 2002, a special purpose finance subsidiary of the Company, PLC Capital Trust IV, issued $115 million of 7.25% TOPrSSM. The 7.25% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 7.25% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust IV’s obligations with respect to the 7.25% TOPrS.

PLC Capital Trust IV was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust IV are $118.6 million of Protective Life Corporation 7.25% Subordinated Debentures due 2032, Series E. The Company has the right under the subordinated debentures to extend interest payment periods up to five consecutive years, and, as a consequence, dividends on the 7.25% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust IV during any such extended interest payment period. The 7.25% TOPrS are redeemable by PLC Capital Trust IV at any time on or after September 25, 2007.

The TOPrS are reported in the accompanying balance sheets as “guaranteed preferred beneficial interests.”

The Company uses interest rate swap agreements to convert a portion of its debt and preferred securities from a fixed interest or dividend rate to a floating rate. Interest expense on all debt, including dividends on preferred securities and the effect of interest rate swap agreements, totaled $25.8 million, $32.9 million, and $34.2 million in 2002, 2001, and 2000, respectively.

5. Recent Acquisitions

In January 2001, the Company coinsured a block of individual life policies from Standard Insurance Company.

In October 2001, the Company completed the acquisition of the stock of Inter-State Assurance Company (Inter-State) and First Variable Life Insurance Company (First Variable) from ILona Financial Group, Inc., a subsidiary of Irish Life & Permanent plc of Dublin, Ireland. The purchase price was approximately $250 million. The assets acquired included $166.1 million of present value of future profits.

In June 2002, the Company coinsured a block of traditional life and interest-sensitive life insurance policies from Conseco Variable Insurance Company.

These transactions have been accounted for as purchases, and the results of the transactions have been included in the accompanying financial statements since their respective effective dates.

Summarized below are the consolidated results of operations for 2002 and 2001, on an unaudited pro forma basis, as if the Inter-State, First Variable, and Conseco transactions had occurred as of January 1, 2001. The pro forma information is based on the Company’s consolidated results of operations for 2002 and 2001, and on data provided by the acquired companies, after giving effect to certain pro forma adjustments. The pro forma financial information does not purport to be indicative of results of operations that would have occurred had the transaction occurred on the basis assumed above nor are they indicative of results of the future operations of the combined enterprises.

  (unaudited)                                     2002                     2001
- ------------------------------------------------------------------------------------
  Total revenues                              $1,961,148                $1,764,476
  Net income                                     179,981                   116,970
  Net income per share - basic                      2.57                      1.69
  Net income per share - diluted                    2.55                      1.67
- ------------------------------------------------------------------------------------

6. Commitments and Contingent Liabilities

The Company is contingently liable to obtain a $20 million letter of credit under indemnity agreements with its directors. Such agreements provide insurance protection in excess of the directors’ and officers’ liability insurance in force at the time up to $20 million. Should certain events occur constituting a change in control of the Company, the Company must obtain the letter of credit upon which directors may draw for defense or settlement of any claim relating to performance of their duties as directors. The Company has similar agreements with certain of its officers providing up to $10 million in indemnification that are not secured by the obligation to obtain a letter of credit.

The Company leases administrative and marketing office space in approximately 60 cities including Birmingham, with most leases being for periods of three to ten years. The aggregate annualized rent is approximately $11.0 million.

In February 2000, the Company entered into an arrangement related to the construction of a building contiguous to its existing home office complex. In connection with the arrangement the Company established a special purpose vehicle (SPV) that owns the building and leases it to the Company. The lease is accounted for as an operating lease under SFAS No. 13 “Accounting For Leases”. The SPV is funded and its equity is held by outside investors, and as a result, neither the debt nor the building owned by the SPV are included in the Company’s consolidated financial statements. Lease payments commence upon completion, which occurred January 31, 2003, and is based on then current LIBOR interest rates and the cost of the building. At the end of the lease term, February 1, 2007, the Company may purchase the building for the original building cost of approximately $75 million. Based upon current interest rates, annual lease payments are estimated to be $1.6 million. Were the Company not to purchase the building, a payment of approximately $66.8 million would be due at the end of the lease term.

Under insurance guaranty fund laws, in most states insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength.

A number of civil jury verdicts have been returned against insurers and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives’ relationships with agents or persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very little appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial service companies, in the ordinary course of business, is involved in such litigation or, alternatively, in arbitration. The Company is currently in arbitration with one reinsurer with respect to amounts overpaid, and the reinsured has indicated the intent to raise defenses and possible counterclaims. Although the outcome of any such litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.

7. Share-Owners' Equity and Restrictions and Stock-based Compensation

Activity in the Company’s issued and outstanding common stock is summarized as follows:

                                                           ISSUED             TREASURY           OUTSTANDING
                                                           SHARES              SHARES              SHARES
- -------------------------------------------------------------------------------------------------------------
  Balance, December 31, 1999                             69,333,117          4,831,025           64,502,092
  Reissuance of treasury stock                                                 (55,475)              55,475
- -------------------------------------------------------------------------------------------------------------
  Balance, December 31, 2000                             69,333,117          4,775,550           64,557,567
  Reissuance of treasury stock                                                (180,606)             180,606
  Repurchase of treasury stock                                                 101,844             (101,844)
  Redemption of FELINE PRIDES                             3,918,843                               3,918,843
- -------------------------------------------------------------------------------------------------------------
  Balance, December 31, 2001                             73,251,960          4,696,788           68,555,172
  Reissuance of treasury stock                                                (150,177)             150,177
  Repurchase of treasury stock                                                  29,455              (29,455)
- -------------------------------------------------------------------------------------------------------------
  Balance, December 31, 2002                             73,251,960          4,576,066           68,675,894
=============================================================================================================

The Company has a Rights Agreement that provides rights to owners of the Company’s Common Stock to purchase Series A Junior Participating Cumulative Preferred Stock, or in certain circumstances, either Common Stock or common stock of an acquiring company at one-half the market price of such Common Stock or common stock, as the case may be. The rights will become exercisable if certain events occur with respect to the Company, including the acquisition by a person or group of 15% or more of the Company’s Common Stock. The Company can redeem the rights at $.01 per right in certain circumstances, including redemption until 10 business days following a public announcement that 15% or more of the Company’s Common Stock has been acquired by a person or group.

Share owners have authorized 4,000,000 shares of Preferred Stock, $1.00 par value. Other terms, including preferences, voting, and conversion rights, may be established by the Board of Directors. In connection with the Rights Agreement, 400,000 of these shares have been designated as Series A Junior Participating Cumulative Preferred Stock, $1.00 par value, and were unissued at December 31, 2002. The remaining 3,600,000 shares of Preferred Stock, $1.00 par value, were also unissued at December 31, 2002.

The Company sponsors a deferred compensation plan for certain of its agents. A trust was established to aid the Company in meeting its obligations under the plan. Company Common Stock owned by the trust is accounted for as treasury stock.

The Company has an Employee Stock Ownership Plan (ESOP). The stock is used to match employee contributions to the Company’s 401(k) and Stock Ownership Plan (401(k) Plan) and to provide other employee benefits. The stock held by the ESOP that has not yet been used is the unallocated stock shown as a reduction to share-owners’ equity. The ESOP shares are dividend-paying and are considered outstanding for earnings per share calculations. Dividends on the shares are used to pay the ESOP’s note to Protective Life. If certain events associated with a change in control of the Company occur, any unallocated shares held by the ESOP will become allocable to employee 401(k) accounts.

The Company may, from time to time, reissue treasury shares or buy in the open market additional shares of Common Stock to complete its 401(k) obligations. Accordingly, in 2001, the Company reissued from treasury 30,721 shares of Common Stock to the 401(k) Plan and reissued from treasury another 2,960 shares during 2002.

Since 1973, the Company has had stock-based incentive plans to motivate management to focus on the Company’s long-range performance through the awarding of stock-based compensation. Under plans approved by share owners in 1997 and 1998, up to 5,000,000 shares may be issued in payment of awards.

The criteria for payment of performance awards is based primarily upon a comparison of the Company’s average return on average equity and total rate of return over a four-year award period (earlier upon the death, disability, or retirement of the executive, or in certain circumstances, of a change in control of the Company) to that of a comparison group of publicly held life and multiline insurance companies. If the Company’s results are below the median of the comparison group, no portion of the award is earned. If the Company’s results are at or above the 90th percentile, the award maximum is earned. Awards are paid in shares of Company Common Stock.

Performance shares and performance-based stock appreciation rights (P-SARs) awarded in 2002, 2001, and 2000, and the estimated fair value of the awards at grant date are as follows:

   YEAR                       PERFORMANCE                        ESTIMATED
  AWARDED                       SHARES         P-SARS            FAIR VALUE
- -----------------------------------------------------------------------------
   2002                         192,360                            $5,700
   2001                         153,490         40,000              4,900
   2000                           3,330        513,618              3,700

A performance share is equivalent in value to one share of Company Common Stock. Each P-SAR will convert to the equivalent of one stock appreciation right (SAR) if earned. Of the 2000 P-SARs awarded, 68,392 have been canceled and 100,072 have been converted to SARs. The remaining 345,154 P-SARs will convert to SARs in 2004 if earned. The 40,000 P-SARs awarded in 2001 were not earned and have been canceled. The P-SARs, if earned and converted to SARs, expire 10 years after the grant date. At December 31, 2002, the total outstanding performance shares and P-SARs related to these performance-based plans measured at maximum payouts were 589,029 and 540,689, respectively.

Between 1996 and 2002 SARs were granted (in addition to the P-SARs discussed above) to certain officers of the Company to provide long-term incentive compensation based solely on the performance of the Company’s Common Stock. The SARs are exercisable after five years (earlier upon the death, disability, or retirement of the officer, or in certain circumstances, of a change in control of the Company) and expire after ten years or upon termination of employment. The SARs activity as well as weighted average base price for 2000, 2001, and 2002 is as follows:

                                                  WTD. AVG.           NO. OF
                                                 BASE PRICE            SARS
- ------------------------------------------------------------------------------
  Balance at December 31, 1999                    $17.44             675,000
  SARs Granted                                     22.31             217,500
  SARs Cancelled                                   18.14             (17,500)
- ------------------------------------------------------------------------------
  Balance at December 31, 2000                    $18.64             875,000
  SARs Granted                                     26.34             138,751
  P-SARs Converted                                 22.31             100,072
- ------------------------------------------------------------------------------
  Balance at December 31, 2001                    $19.92           1,113,823
  SARs Granted                                     32.00             480,000
  SARs Exercised                                   32.60             (80,000)
  SARs Cancelled                                   22.31             (15,000)
- ------------------------------------------------------------------------------
  Balance at December 31, 2002                    $23.90           1,498,823
==============================================================================

The outstanding SARs at December 31, 2002, were at the following base prices:

                         SARS            REMAINING            CURRENTLY
  BASE PRICE          OUTSTANDING      LIFE IN YEARS         EXERCISABLE
- --------------------------------------------------------------------------
  $17.44                580,000                3               580,000
   22.31                376,323                7               183,823
   31.26                 50,000                8                     0
   31.29                 12,500                8                 2,500
   32.00                480,000                9                     0

The SARs issued in 2000, 2001, and 2002 had estimated fair values at grant date of $1.5 million, $0.6 million, and $3.7 million, respectively. The fair value of the 2002 SARs was estimated using a Black-Scholes option pricing model. Assumptions used in the model were as follows: expected volatility of 24.6% (approximately equal to that of the S&P Life and Health Insurance Index), a risk-free interest rate of 3.4%, a dividend rate of 2.0%, and an expected exercise date of 2008.

The Company will pay an amount equal to the difference between the specified base price of the Company’s Common Stock and the market value at the exercise date for each SAR.

The expense recorded by the Company for its stock-based compensation plans was $5.2 million, $5.6 million, and $4.1 million in 2002, 2001, and 2000, respectively. The Company’s obligations of its stock-based compensation plans that are expected to be settled in shares of the Company’s Common Stock are reported as a component of share-owners’ equity.

The Company has established deferred compensation plans for directors, officers, and others. Compensation deferred is credited to the participants in cash, Common Stock equivalents, or a combination thereof. The Company may, from time to time, reissue treasury shares or buy in the open market shares of Common Stock to fulfill its obligation under the plans. At December 31, 2002, the plans had 1,366,437 shares of Common Stock equivalents credited to participants.

At December 31, 2002, approximately $543.6 million of consolidated share-owners’ equity, excluding net unrealized gains on investments, represented net assets of the Company’s insurance subsidiaries that cannot be transferred to Protective Life Corporation. In addition, the Company’s insurance subsidiaries are subject to various state statutory and regulatory restrictions on the insurance subsidiaries’ ability to pay dividends to Protective Life Corporation. In general, dividends up to specified levels are considered ordinary and may be paid thirty days after written notice to the insurance commissioner of the state of domicile unless such commissioner objects to the dividend prior to the expiration of such period. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The maximum amount that would qualify as ordinary dividends to the Company by its insurance subsidiaries in 2003 is estimated to be $93.1 million.

8. Related Party Matters

Certain corporations with which the Company’s directors were affiliated paid the Company premiums and policy fees or other amounts for various types of insurance and investment products. Such premiums, policy fees, and other amounts totaled $16.0 million, $19.6 million, and $50.9 million in 2002, 2001, and 2000, respectively. The Company paid commissions, interest on debt and investment products, and fees to these same corporations totaling $1.6 million, $5.9 million, and $28.2 million in 2002, 2001, and 2000, respectively. In addition, the Company has a swap contract with a related party having a notional amount of $386.4 million, which to the Company was in a $48.2 million gain position at December 31, 2002.

9. Reconciliation with Statutory Reporting Practices and Other Regulatory Matters

Financial statements prepared in conformity with accounting principles generally accepted in the United States of America differ in some respects from the statutory accounting practices prescribed or permitted by insurance regulatory authorities. The most significant differences are as follows: (a) acquisition costs of obtaining new business are deferred and amortized over the approximate life of the policies rather than charged to operations as incurred; (b) benefit liabilities are computed using a net level method and are based on realistic estimates of expected mortality, interest, and withdrawals as adjusted to provide for possible unfavorable deviation from such assumptions; (c) deferred income taxes are not subject to statutory limitations as to amounts recognized and are recognized through earnings as opposed to being charged to share-owners’ equity; (d) the Asset Valuation Reserve and Interest Maintenance Reserve are restored to share-owners’ equity; (e) furniture and equipment, agents’ debit balances, and prepaid expenses are reported as assets rather than being charged directly to surplus (referred to as nonadmitted assets); (f) certain items of interest income, such as mortgage and bond discounts, are amortized differently; and (g) bonds are recorded at their market values instead of amortized cost. The National Association of Insurance Commissioners (NAIC) has adopted the Codification of Statutory Accounting Principles (Codification). Codification changed statutory accounting rules in several areas and was effective January 1, 2001. The adoption of Codification did not have a material effect on the Company's insurance subsidiaries' statutory capital.

The reconciliations of net income and share-owners’ equity prepared in conformity with statutory reporting practices to that reported in the accompanying consolidated financial statements are as follows:

                                                         Net Income                          Share-Owners' Equity
                                           ---------------------------------------------------------------------------------
                                               2002        2001          2000        2002            2001          2000
- ----------------------------------------------------------------------------------------------------------------------------
  In conformity with statutory
      reporting practices(1)                 $67,242     $163,181      $69,927      $852,645       $775,138      $628,274
  Additions (deductions)
      by adjustment:
  Deferred policy acquisition costs,
      net of amortization                    195,834      163,243      157,617     1,681,223      1,532,683     1,189,380
  Deferred income tax                        (36,441)      (3,871)     (62,374)     (242,593)      (127,230)      (79,066)
  Asset Valuation Reserve                                                            189,828        108,062       103,853
  Interest Maintenance Reserve                (3,344)     (10,444)      (3,540)       24,015         16,959         9,715
  Nonadmitted items                                                                  385,182        184,310        97,447
  Noninsurance affiliates                    (12,269)     (23,356)      28,100       839,724        819,950       790,975
  Dividends paid on Guaranteed
      Preferred Beneficial Interests          (9,601)      (5,766)      (9,461)
  Discontinued operations                                (193,688)
  Consolidation elimination                                                       (2,227,256)    (2,207,562)   (1,859,279)
  Other valuation and timing
      differences                            (24,066)      13,644      (26,793)      217,934        297,834       232,759
- ----------------------------------------------------------------------------------------------------------------------------
  In conformity with generally
      accepted accounting principles        $177,355     $102,943     $153,476    $1,720,702     $1,400,144    $1,114,058
============================================================================================================================

  (1) Consolidated

As of December 31, 2002, the Company's insurance subsidiaries had on deposit with regulatory authorities, fixed maturity and short-term investments with a market value of approximately $81.4 million.

10. Operating Segments

The Company operates business segments, each having a strategic focus which can be grouped into three general categories: life insurance, retirement savings and investment products, and specialty insurance products. An operating segment is generally distinguished by products and/or channels of distribution. A brief description of each segment follows.

Life Insurance

o The Life Marketing segment markets level premium term and term-like insurance, universal life, and variable universal life products on a national basis primarily through networks of independent insurance agents and brokers, and in the "bank owned life insurance" market.

o The Acquisitions segment focuses on acquiring, converting, and servicing policies acquired from other companies. The segment's primary focus is on life insurance policies sold to individuals.

Retirement Savings and Investment Products

o The Stable Value Contracts segment markets guaranteed investment contracts to 401(k) and other qualified retirement savings plans, and sells funding agreements to special purpose entities that in turn issue notes or certificates in smaller, transferable denominations. The segment also markets fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, institutional investors, bank trust departments, and money market funds.

o The Annuities segment manufactures, sells, and supports fixed and variable annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Life Marketing segment's sales force.

Specialty Insurance Products

o The Asset Protection segment markets credit life and disability insurance products through banks, consumer finance companies, and automobile dealers, and markets vehicle and recreational marine extended service contracts.

Corporate and Other

The Company has an additional business segment herein referred to as Corporate and Other. The Corporate and Other segment primarily consists of net investment income and expenses not attributable to the segments above (including net investment income on unallocated capital and interest on substantially all debt). This segment also includes earnings from several lines of business which the Company is not actively marketing (mostly cancer insurance and group annuities), various investment-related transactions, and the operations of several small subsidiaries.

The Company uses the same accounting policies and procedures to measure operating segment income and assets as it uses to measure its consolidated net income and assets. Operating segment income is generally income before income tax, adjusted to exclude any pretax minority interest in income of consolidated subsidiaries. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of deferred policy acquisition costs are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner which most appropriately reflects the operations of that segment. Unallocated realized investment gains (losses) are deemed not to be associated with any specific segment.

Assets are allocated based on policy liabilities and deferred policy acquisition costs directly attributable to each segment.

There are no significant intersegment transactions.

The following table sets forth total operating segment income and assets for the periods shown. Adjustments represent the inclusion of unallocated realized investment gains (losses), the recognition of income tax expense, income from discontinued operations, extraordinary loss, and cumulative effect of change in accounting principle. Asset adjustments represent the inclusion of assets related to discontinued operations.

In December 2001, the Company sold substantially all of its Dental Division and discontinued other Dental related operations. Additionally, other adjustments were made to combine its life insurance marketing operations into a single segment, and to reclassify certain smaller businesses. Prior period segment results have been restated to reflect these changes.

                                                              RETIREMENT       SPECIALTY
                                                              SAVINGS AND      INSURANCE
                                    LIFE INSURANCE        INVESTMENT PRODUCTS  PRODUCTS
                                -----------------------------------------------------------
                                                            STABLE
                                    LIFE                    VALUE                 ASSET       CORPORATE                  TOTAL
                                  MARKETING  ACQUISITIONS CONTRACTS  ANNUITIES  PROTECTION    AND OTHER ADJUSTMENTS(1)CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Segment Income
2002
Premiums and policy fees          $642,852    $315,347                $25,826    $503,968      $55,357               $1,543,350
Reinsurance ceded                 (422,668)    (76,333)                          (241,957)     (19,260)                (760,218)
- -----------------------------------------------------------------------------------------------------------------------------------
    Net of reinsurance ceded       220,184     239,014                 25,826     262,011       36,097                  783,132
Net investment income              209,002     252,147   $246,098     220,447      44,296       59,214                1,031,204
Realized investment gains (losses)                         (7,061)      2,277                                $10,930      6,146
Other income                        56,372       1,636       -          8,876      30,867        2,445                  100,196
- -----------------------------------------------------------------------------------------------------------------------------------
    Total revenues                 485,558     492,797    239,037     257,426     337,174       97,756                1,920,678
- -----------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses   228,224     315,930    196,576     186,107     200,958       34,436                1,162,231
Amortization of deferred policy
    acquisition costs              117,836      35,245      2,304      24,669      57,957        1,479                  239,490
Other operating expenses            13,948      46,525      4,946      30,660     101,637       54,038                  251,754
- -----------------------------------------------------------------------------------------------------------------------------------
    Total benefits and expenses    360,008     397,700    203,826     241,436     360,552       89,953                1,653,475
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing
    operations before income tax   125,550      95,097     35,211      15,990     (23,378)       7,803                  267,203
Income tax expense                                                                                           88,444      88,444
Extraordinary loss, net of
    income tax                                                                                               (1,404)     (1,404)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                             $177,355
===================================================================================================================================


2001
Premiums and policy fees          $542,406    $243,915                $28,145    $524,281     $ 51,073               $1,389,820
Reinsurance ceded                 (421,411)    (61,482)                          (274,220)     (14,038)                (771,151)
- -----------------------------------------------------------------------------------------------------------------------------------
    Net of reinsurance ceded       120,995     182,433                 28,145     250,061       37,035                  618,669
Net investment income              179,346     187,535   $261,079     167,905      48,940       39,236                  884,041
Realized investment gains (losses)                          7,218       1,139                               $(28,528)   (20,171)
Other income                        59,882         682                 10,547      46,636        2,900                  120,647
- -----------------------------------------------------------------------------------------------------------------------------------
    Total revenues                 360,223     370,650    268,297     207,736     345,637       79,171                1,603,186
- -----------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses   190,538     238,877    222,306     137,204     154,893       28,806                  972,624
Amortization of deferred policy
    acquisition costs and goodwill  41,868      20,501      1,662      24,021      60,756        1,805                  150,613
Other operating expenses            38,243      43,232      3,961      29,434      96,028       59,455                  270,353
- -----------------------------------------------------------------------------------------------------------------------------------
    Total benefits and expenses    270,649     302,610    227,929     190,659     311,677       90,066                1,393,590
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing
    operations before income tax    89,574      68,040     40,368      17,077      33,960      (10,895)                 209,596
Income tax expense                                                                                           68,538      68,538
Discontinued operations,
    net of income tax                                                                                       (30,522)    (30,522)
Change in Accounting Principle,
    net of income tax                                                                                        (7,593)     (7,593)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                             $102,943
===================================================================================================================================


(1) Adjustments to net income represent the inclusion of unallocated realized investment gains (losses), and the recognition of income
tax expense, income from discontinued operations, extraordinary loss, and cumulative effect of change in Accounting Principle.

                                                                    RETIREMENT        SPECIALTY
                                                                   SAVINGS AND        INSURANCE
                                        LIFE INSURANCE         INVESTMENT PRODUCTS    PRODUCTS
                                   ---------------------------------------------------------------
                                     LIFE                  STABLE VALUE                ASSET        CORPORATE                   TOTAL
                                   MARKETING  ACQUISITIONS  CONTRACTS    ANNUITIES   PROTECTION     AND OTHER ADJUSTMENTS(1) CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------------
2000
Premiums and policy fees           $487,720    $134,099                   $30,127     $479,352       $44,600                 $1,175,898
Reinsurance ceded                  (387,907)    (31,102)                              (258,931)       (8,168)                  (686,108)
- -----------------------------------------------------------------------------------------------------------------------------------------
    Net of reinsurance ceded         99,813     102,997                    30,127      220,421        36,432                    489,790
Net investment income               152,511     116,940     $243,132      132,314       47,029        38,223                    730,149
Realized investment gains (losses)                            (6,556)         410                                 $(897)         (7,043)
Other income                         70,335          (4)                   11,486       41,325        28,691                    151,833
- -----------------------------------------------------------------------------------------------------------------------------------------
    Total revenues                  322,659     219,933      236,576      174,337      308,775       103,346                  1,364,729
- -----------------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses    149,430     125,151      207,143      109,607      135,494        33,953                    760,778
Amortization of deferred policy
    acquisition costs and goodwill   49,111      17,081          900       24,156       52,893         2,152                    146,293
Other operating expenses             47,521      24,939        3,881       25,403       88,197        56,042                    245,983
- -----------------------------------------------------------------------------------------------------------------------------------------
    Total benefits and expenses     246,062     167,171      211,924      159,166      276,584        92,147                  1,153,054
- -----------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
    before income tax                76,597      52,762       24,652       15,171       32,191        11,199                    211,675
Income tax expense                                                                                               74,321          74,321
Discontinued operations,
    net of income tax                                                                                            16,122          16,122
- -----------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                                     $153,476
=========================================================================================================================================

Operating Segment Assets
2002
Investments and other assets     $4,195,265  $4,585,813   $3,930,669   $4,823,710   $1,107,320    $1,455,284   $126,408     $20,224,469
Deferred policy acquisition costs   973,631     437,677        4,908       93,140      164,165         7,702                  1,681,223
Goodwill                             10,354                                             36,527           431                     47,312
- -----------------------------------------------------------------------------------------------------------------------------------------
Total assets                     $5,179,250  $5,023,490   $3,935,577   $4,916,850   $1,308,012    $1,463,417   $126,408     $21,953,004
=========================================================================================================================================

2001
Investments and other assets     $3,433,099  $4,087,470   $3,872,636   $4,507,289   $1,060,967    $1,063,373   $113,145     $18,137,979
Deferred policy acquisition costs   829,021     418,268        6,375      128,488      142,229         8,302                  1,532,683
Goodwill                             10,354                                             37,377           431                     48,162
- -----------------------------------------------------------------------------------------------------------------------------------------
Total assets                     $4,272,474  $4,505,738   $3,879,011   $4,635,777   $1,240,573    $1,072,106   $113,145     $19,718,824
=========================================================================================================================================

(1) Adjustments to net income represent the inclusion of unallocated realized investment gains (losses), and the recognition of income
tax expense, income from discontinued operations, extraordinary loss, and cumulative effect of change in Accounting Principle. Asset
adjustments represent the inclusion of assets related to discontinued operations.

11. Employee Benefit Plans

The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee’s highest thirty-six consecutive months of compensation. The Company’s funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements of ERISA plus such additional amounts as the Company may determine to be appropriate from time to time. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.

The actuarial present value of benefit obligations and the funded status of the plan at December 31 are as follows:

                                                                2002                        2001
- ---------------------------------------------------------------------------------------------------
Projected benefit obligation,
      beginning of the year                                    $50,869                    $45,538
Service cost - benefits earned
      during the year                                            3,723                      3,739
Interest cost - on projected
      benefit obligation                                         4,111                      3,531
Actuarial (gain) loss                                            6,353                       (357)
Plan amendment                                                                              1,162
Divestiture                                                                                (2,165)
Benefits paid                                                   (2,877)                      (579)
- ---------------------------------------------------------------------------------------------------
Projected benefit obligation,
      end of the year                                           62,179                     50,869
- ---------------------------------------------------------------------------------------------------
Fair value of plan assets
      beginning of the year                                     44,024                     40,822
Actual return on plan assets                                    (7,845)                    (1,440)
Employer contribution                                           16,149                      5,221
Benefits paid                                                   (2,878)                      (579)
- ---------------------------------------------------------------------------------------------------
Fair value of plan assets end
      of the year                                               49,450                     44,024
- ---------------------------------------------------------------------------------------------------
Plan assets less than the
      projected benefit obligation                             (12,729)                    (6,845)
Unrecognized net actuarial
      loss from past experience
      different from that assumed                               28,252                     10,213
Unrecognized prior service cost                                  1,886                      2,026
- ---------------------------------------------------------------------------------------------------
Net pension asset (liability)
      recognized in balance sheet                              $17,409                     $5,394
===================================================================================================

Net pension cost of the defined benefit pension plan includes the following components for the years ended December 31:

                                 2002            2001              2000
- --------------------------------------------------------------------------
  Service cost                  $3,723          $3,739            $3,338
  Interest cost                  4,111           3,531             3,195
  Expected return
       on plan assets           (4,265)         (3,669)           (3,049)
  Amortization of
       prior service cost          263             176               176
  Amortization of
       transition asset                                              (17)
  Amortization of
       losses                      302             141
  Cost of divestiture                              186
- --------------------------------------------------------------------------
  Net pension cost              $4,134          $4,104            $3,643
==========================================================================

Assumptions used to determine the benefit obligations as of December 31 were as follows:

                                   2002          2001           2000
- -----------------------------------------------------------------------
  Weighted average
        discount rate              6.75%         7.25%          7.50%
  Rates of increase in
        compensation level         4.50          5.00           5.25
  Expected long-term
        rate of return on
        assets                     8.50          8.50           8.50
- -----------------------------------------------------------------------

At December 31, 2002, approximately $7.7 million of the assets of the pension plan were in a group annuity contract with Protective Life and therefore are included in the general assets of Protective Life. Approximately $41.7 million of the assets of the pension plan are invested in a collective trust managed by Northern Trust Corporation.

Prior to July 1999, upon retirement, the amount of pension plan assets vested in the retiree were used to purchase a single premium annuity from Protective Life in the retiree’s name. Therefore, amounts presented above as plan assets exclude assets relating to such retirees. Beginning July 1999, retiree obligations are being fulfilled from pension plan assets.

The Company also sponsors an unfunded excess benefits plan, which is a nonqualified plan that provides defined pension benefits in excess of limits imposed on qualified plans by federal tax law. At December 31, 2002 and 2001, the projected benefit obligation of this plan totaled $17.1 million and $15.9 million, respectively, of which $14.5 million and $13.8 million, respectively, have been recognized in the Company’s financial statements.

Net pension costs of the excess benefits plan includes the following components for the years ended December 31:

                                    2002             2001              2000
- ------------------------------------------------------------------------------
  Service cost                     $  455            $  686           $  736
  Interest cost                     1,178             1,121            1,067
  Amortization of
         prior service cost            16                19               19
  Amortization of
         transition asset                                37               37
  Recognized net
         actuarial loss                71               233              194
  Cost of divestiture
         and special
         termination
         benefits                                     1,807
- ------------------------------------------------------------------------------
  Net pension cost                 $1,720            $3,903           $2,053
==============================================================================

In addition to pension benefits, the Company provides limited healthcare benefits to eligible retired employees until age 65. The postretirement benefit is provided by an unfunded plan. At December 31, 2002 and 2001, the liability for such benefits was approximately $1.2 million. The expense recorded by the Company was approximately $0.1 million in 2002, 2001, and 2000. The Company’s obligation is not materially affected by a 1% change in the healthcare cost trend assumptions used in the calculation of the obligation.

Life insurance benefits for retirees are provided through the purchase of life insurance policies upon retirement from $10,000 up to a maximum of $75,000. This plan is partially funded at a maximum of $50,000 face amount of insurance.

The Company sponsors a defined contribution retirement plan which covers substantially all employees. Employee contributions are made on a before-tax basis as provided by Section 401(k) of the Internal Revenue Code. The Company has established an Employee Stock Ownership Plan (ESOP) to match voluntary employee contributions to the Company’s 401(k) Plan. In 1994, a stock bonus was added to the 401(k) Plan for employees who are not otherwise under a bonus or sales incentive plan. Expense related to the ESOP consists of the cost of the shares allocated to participating employees plus the interest expense on the ESOP’s note payable to the Company less dividends on shares held by the ESOP. All shares held by the ESOP are treated as outstanding for purposes of computing earnings per share. At December 31, 2002, the Company had committed approximately 134,293 shares to be released to fund employee benefits. The expense recorded by the Company for these employee benefits was less than $0.1 million in 2002, 2001, and 2000.

12. Reinsurance

The Company reinsures certain of its risks with, and assumes risks from, other insurers under yearly renewable term, coinsurance, and modified coinsurance agreements. Under yearly renewable term agreements, the Company generally pays specific premiums to the reinsurer and receives specific amounts from the reinsurer as reimbursement for certain expenses. Coinsurance agreements are accounted for by passing a portion of the risk to the reinsurer. Generally, the reinsurer receives a proportionate part of the premiums less commissions and is liable for a corresponding part of all benefit payments. Modified coinsurance is accounted for similarly to coinsurance except that the liability for future policy benefits is held by the original company, and settlements are made on a net basis between the companies. A substantial portion of the Company’s new life insurance and credit insurance sales is being reinsured. The Company reviews the financial condition of its reinsurers and monitors the amount of reinsurance it has with its reinsurers.

The Company has reinsured approximately $216.1 billion, $169.5 billion, and $126.0 billion in face amount of life insurance risks with other insurers representing $546.0 million, $565.1 million, and $496.4 million of premium income for 2002, 2001, and 2000, respectively. The Company has also reinsured accident and health risks representing $61.5 million, $122.7 million, and $125.8 million of premium income for 2002, 2001, and 2000, respectively. In 2002 and 2001, policy and claim reserves relating to insurance ceded of $2,304.9 million and $2,059.0 million, respectively, are included in reinsurance receivables. Should any of the reinsurers be unable to meet its obligation at the time of the claim, obligation to pay such claim would remain with the Company. At December 31, 2002 and 2001, the Company had paid $45.5 million and $46.4 million, respectively, of ceded benefits which are recoverable from reinsurers. In addition, at December 31, 2002, the Company had receivables of $66.1 million related to insurance assumed.

In 2002, the Company discovered that it had overpaid reinsurance premiums to several reinsurance companies of approximately $94.6 million. At December 31, 2002, the Company had recorded cash and receivables totaling $69.7 million, which reflects the amounts received and the Company’s current estimate of amounts to be recovered in the future, based upon the information available. The corresponding increase in premiums and policy fees resulted in $62.5 million of additional amortization of deferred policy acquisition costs in 2002. The amortization of deferred policy acquisition costs takes into account the amortization relating to the increase in premiums and policy fees as well as the additional amortization required should the remainder of the overpayment not be collected. As a result of the foregoing, the Company’s 2002 pretax income increased $7.2 million.

13. Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments at December 31 are as follows:

                                                                 2002                            2001
- ------------------------------------------------------------------------------------------------------------------
                                                                      ESTIMATED                       ESTIMATED
                                                    CARRYING            FAIR          CARRYING          FAIR
                                                     AMOUNTS           VALUES          AMOUNTS          VALUE
- ------------------------------------------------------------------------------------------------------------------
Assets (see Notes 1 and 2):
Investments:
    Fixed maturities                               $11,664,065       $11,664,065      $9,838,091      $9,838,091
    Equity securities                                   64,523            64,523          76,774          76,774
    Mortgage loans on real estate                    2,518,152         2,826,133       2,512,844       2,671,074
    Short-term investments                             448,399           448,399         237,155         237,155
Cash                                                   101,953           101,953         126,558         126,558
Liabilities (see Notes 1 and 4):
Stable value contract account balances               4,018,552         4,124,192       3,716,530       3,821,955
Annuity account balances                             3,744,000         3,795,794       3,248,217       3,166,052
Debt:
    Bank borrowings                                     30,000            30,000
Senior and Medium-Term Notes                           369,166           382,545         369,241         378,418
8.25% Trust Originated Preferred Securities                                               75,000          74,400
7.5% Trust Originated Preferred Securities             100,000           102,200         100,000          96,960
7.25% Trust Originated Preferred Securities            115,000           116,380
Other (see Note 1):
Derivative Financial Instruments                        92,801            92,801         (21,865)        (21,865)
- ------------------------------------------------------------------------------------------------------------------

Except as noted below, fair values were estimated using quoted market prices.

The Company estimates the fair value of its mortgage loans using discounted cash flows from the next call date.

The Company believes the fair value of its short-term investments and notes payable to banks approximates book value due to being either short-term or having a variable rate of interest.

The Company estimates the fair value of its guaranteed investment contracts and annuities using discounted cash flows and surrender values, respectively.

The Company believes it is not practicable to determine the fair value of its policy loans since there is no stated maturity, and policy loans are often repaid by reductions to policy benefits.

The Company estimates the fair value of its derivative financial instruments using market quotes or derivative pricing models. The fair values represent the net amount of cash the Company would have received (or paid) had the contracts been terminated on December 31.

14. Consolidated Quarterly Results - Unaudited

Protective Life Corporation’s unaudited consolidated quarterly operating data for the years ended December 31, 2002 and 2001, are presented below. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of quarterly results have been reflected in the data which follow. It is also management’s opinion, however, that quarterly operating data for insurance enterprises are not indicative of results to be achieved in succeeding quarters or years. In order to obtain a more accurate indication of performance, there should be a review of operating results, changes in share-owners’ equity, and cash flows for a period of several quarters.

                                                          FIRST           SECOND           THIRD        FOURTH
                                                          QUARTER         QUARTER         QUARTER       QUARTER
- ------------------------------------------------------------------------------------------------------------------
2002
Premiums and policy fees                                 $380,981         $385,960        $393,868      $382,541
Reinsurance ceded                                         185,603          212,547         132,081       229,987
- ------------------------------------------------------------------------------------------------------------------
Net of reinsurance ceded                                  195,378          173,413         261,787       152,554
Net investment income                                     245,005          251,690         263,066       271,443
Realized investment gains (losses)                         (3,603)          13,818           1,125        (5,194)
Other income                                               25,804           29,033          23,927        21,432
- ------------------------------------------------------------------------------------------------------------------
Total revenues                                            462,584          467,954         549,905       440,235
Benefits and expenses                                     400,299          386,472         472,269       394,435
- ------------------------------------------------------------------------------------------------------------------
Income from continuing operations
    before income tax                                      62,285           81,482          77,636        45,800
Income tax expense                                         20,679           27,052          26,661        14,052
- ------------------------------------------------------------------------------------------------------------------
Net income from continuing operations                      41,606           54,430          50,975        31,748
Extraordinary Loss                                                                                        (1,404)
- ------------------------------------------------------------------------------------------------------------------
Net income                                                $41,606          $54,430         $50,975       $30,344
==================================================================================================================
Net income from continuing operations
    per share - basic                                        $.60             $.77            $.73          $.46
Net income per share - basic                                 $.60             $.77            $.73          $.44
Average shares outstanding - basic                     69,893,453       69,893,332      69,948,982    69,959,056
Operating income from continuing operations1
    per share - diluted                                      $.63             $.65            $.72          $.50
Net income from continuing operations
    per share - diluted                                      $.59             $.77            $.73          $.45
Net income per share - diluted                               $.59             $.77            $.73          $.43
Average shares outstanding - diluted                   70,383,580       70,486,576      70,491,409    70,488,160
- ------------------------------------------------------------------------------------------------------------------

(1) "Operating income from continuing operations" is a non-GAAP measure consisting of net income from continuing operations excluding
realized investment gains and losses and related amortization, extraordinary loss, and change in Accounting Principle. "Net income
from continuing operations" is a GAAP measure to which "operating income from continuing operations" may be compared.

                                                          FIRST           SECOND            THIRD          FOURTH
                                                          QUARTER         QUARTER          QUARTER         QUARTER
- ---------------------------------------------------------------------------------------------------------------------
2001
Premiums and policy fees                                 $311,545         $324,597        $332,739         $420,939
Reinsurance ceded                                        (143,716)        (176,689)       (184,629)        (266,117)
- ---------------------------------------------------------------------------------------------------------------------
 Net of reinsurance ceded                                 167,829          147,908         148,110          154,822
Net investment income                                     206,505          212,970         222,759          241,807
Realized investment gains (losses)                          9,091           (7,520)           (752)         (20,990)
Other income                                               28,412           29,020          31,914           31,301
- ---------------------------------------------------------------------------------------------------------------------
Total revenues                                            411,837          382,378         402,031          406,940
Benefits and expenses                                     348,240          333,625         344,536          367,189
- ---------------------------------------------------------------------------------------------------------------------
Income from continuing operations
 before income tax                                         63,597           48,753          57,495           39,751
Income tax expense                                         21,921           15,751          18,419           12,447
- ---------------------------------------------------------------------------------------------------------------------
Net income from continuing operations                      41,676           33,002          39,076           27,304
Discontinued Operations                                     3,964           (5,855)          3,548          (32,179)
Change in Accounting Principle                            (7,593)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss)                                         $38,047          $27,147         $42,624          $(4,875)
=====================================================================================================================
Net income from continuing operations
 per share - basic                                           $.61             $.47            $.56             $.38
Net income per share - basic                                 $.56             $.39            $.61            $(.08)
Average shares outstanding - basic                     67,824,547       69,978,779      69,954,622       69,855,582
Operating income from continuing operations1
 per share - diluted                                         $.52             $.54            $.56             $.59
Net income from continuing operations
 per share - diluted                                         $.61             $.46            $.56             $.38
Net income per share - diluted                               $.56             $.38            $.61            $(.08)
Average shares outstanding - diluted                   68,315,388       70,507,398      70,459,522       70,488,901
- ---------------------------------------------------------------------------------------------------------------------



(1) "Operating income from continuing operations" is a non-GAAP measure consisting of net income from continuing operations excluding
realized investment gains and losses and related amortization, extraordinary loss, and change in Accounting Principle. "Net income
from continuing operations" is a GAAP measure to which "operating income from continuing operations" may be compared.

Report of independent accountants

To the Board of Directors and Share Owners of Protective Life Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, share-owners’ equity and of cash flows present fairly, in all material respects, the financial position of Protective Life Corporation and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,

on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 of the Notes to the Consolidated Financial Statements, effective January 1, 2002 and 2001, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” and effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No.133, “Accounting for Derivative Instruments and Hedging Activities”.

PricewaterhouseCoopers LLP
Birmingham, Alabama
March 3, 2003

EX-21

Exhibit 21
to
Form 10-K
of
Protective Life Corporation
for
Fiscal Year
Ended December 31, 2002

The following wholly-owned subsidiary of Protective Life Corporation is organized under the laws
of the State of Tennessee and does business under its corporate name:

Protective Life Insurance Company

The following wholly-owned subsidiary of Protective Life Insurance Company is incorporated
under the laws of the State of Nebraska and does business under its corporate name:

West Coast Life Insurance Company

EX-23

Exhibit 23


Consent of Independent Accountants

        We consent to the incorporation by reference in the Registration Statements on Form S-3 (File Nos. 333-86477, 333-80769, 333-39103 and 33-59769) and Form S-8 (File Nos. 333-32420, 33-51887 and 33-61847) of Protective Life Corporation and subsidiaries of our report dated March 3, 2003, relating to the financial statements, which appears in the Annual Report to Share Owners, which is incorporated in the Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 3, 2003 relating to the financial statement schedules, which appears in this Form 10-K.

/S/PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
March 25, 2003

EX-24

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ William J. Cabaniss, Jr.

William J. Cabaniss, Jr.

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/Malcolm Portera

Malcolm Portera

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ John J. McMahon, Jr.

John J. McMahon, Jr.

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ A. W. Dahlberg

A. W. Dahlberg

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ James S. M. French

James S. M. French

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ Robert A. Yellowlees

Robert A. Yellowlees

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ John D. Johns

John D. Johns

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ Donald M. James

Donald M. James

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ J. Gary Cooper

J. Gary Cooper

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ H. Corbin Day

H. Corbin Day

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ W. Michael Warren, Jr.

W. Michael Warren, Jr.

Director

Exhibit 24

DIRECTORS' POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of Protective Life Corporation, a Delaware corporation (the “Company”), by his execution hereof or upon an identical counterpart hereof, does hereby constitute and appoint John D. Johns, Deborah J. Long, Nancy Kane, or Jerry W. DeFoor, and each or any of them, his true and lawful attorneys-in-fact and agents, for him and in his name, place W. Michael Warren, Jr.and stead, to execute and sign the Annual Report on Form 10-K for the year ended December 31, 2002, to be filed by the Company with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934 and, further, to execute and sign any and all amendments to such Annual Report, and to file same, with all exhibits and schedules thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all the acts of said attorneys-in-fact and agents or any of them which they may lawfully do in the premises or cause to be done by virtue hereof.

        IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney and caused it to be witnessed on this 3rd day of March, 2003.

WITNESS:

BY/s/Deborah J. Long

Deborah J. Long

/s/ Susan Molinari

Susan Molinari

Director

EX-99

Exhibit 99(a)
to
Form 10-K
of
Protective Life Corporation
for
Fiscal Year
Ended December 31, 2002



Safe Harbor for Forward-Looking Statements

        The Private Securities Litigation Reform Act of 1995 (the “Act”) encourages companies to make “forward-looking statements” by creating a safe harbor to protect the companies from securities law liability in connection with forward-looking statements. All statements are based on future expectations rather than on historical facts and forward-looking statements. Forward-looking statements can be identified by use of words such as “expect,” “estimate,” “project, ” budget,” “forecast,” “anticipate,” “plan,” and similar expressions. Protective Life Corporation (the “Company”) intends to qualify both its written and oral forward-looking statements for protection under the Act.

        To qualify oral forward-looking statements for protection under the Act, a readily available written document must identify important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company provides the following information to qualify forward-looking statements for the safe harbor protection of the Act.

        The operating results of companies in the insurance industry have historically been subject to significant fluctuations. The factors which could affect the Company’s future results include, but are not limited to, general economic conditions and the known trends and uncertainties which are discussed more fully below.

The Company is exposed to many types of risks that could negatively affect its business.

        There are many types of risks that the Company is exposed to in its businesses. For example, the Company is exposed to the risks of natural disasters, malicious and terrorist acts, computer viruses, and other perils that could adversely affect the Company’s operations. While the Company has obtained insurance, implemented risk management and contingency plans, and taken preventive measures and other precautions, no predictions of specific scenarios can be made nor can assurance be given that there are not scenarios that could have an adverse effect on the Company. A natural disaster or an outbreak of an easily communicable disease could adversely affect the mortality or morbidity experience of the Company or its reinsurers. Similarly, a computer virus could affect the data processing systems of the Company or its business partners, destroying valuable data or making it difficult to conduct their business. Additionally there are scenarios that could have an adverse effect on general economic conditions, and thus on the Company.

The Company operates in a mature, highly competitive industry, which could limit its ability to gain or maintain its position in the industry.

        Life and health insurance is a mature industry. In recent years, the industry has experienced little growth in life insurance sales, though the aging population has increased the demand for retirement savings products. Life and health insurance is a highly competitive industry. The Company encounters significant competition in all lines of business from other insurance companies, many of which have greater financial resources than the Company, as well as competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products.

        The insurance industry is consolidating, with larger, potentially more efficient organizations emerging from consolidation. Participants in certain of the Company’s independent distribution channels are also consolidating into larger organizations. Some mutual insurance companies are converting to stock ownership, which will give them greater access to capital markets. Additionally, commercial banks, insurance companies, and investment banks may now combine, provided certain requirements are satisfied. The ability of banks to increase their securities-related business or to affiliate with insurance companies may materially and adversely affect sales of all of the Company’s products by substantially increasing the number and financial strength of potential competitors.

        The Company’s ability to compete is dependent upon, among other things, its ability to attract and retain distribution channels to market its insurance and investment products, its ability to develop competitive and profitable products, its ability to maintain low unit costs, and its maintenance of strong ratings from rating agencies.

A ratings downgrade could adversely affect the Company’s ability to compete.

        Rating organizations periodically review the financial performance and condition of insurers, including the Company’s subsidiaries. A downgrade in the ratings of the Company’s subsidiaries could adversely affect the Company’s ability to sell its products, retain existing business, and compete for attractive acquisition opportunities.

        Rating organizations assign ratings based upon several factors. While most of the factors relate to the rated company, some of the factors relate to the views of the rating organization, general economic conditions and circumstances outside the rated company’s control. The Company cannot predict what actions the rating organizations may take, or what actions the Company may be required to take in response to the actions of the rating organizations, which could adversely affect the Company.

The Company’s policy claims fluctuate from period to period, and actual results could differ from its expectations.

        The Company’s results may fluctuate from period to period due to fluctuations in policy claims received by the Company. Certain of the Company’s businesses may experience higher claims if the economy is growing slowly or in recession, or equity markets decline.

        Mortality, morbidity, and casualty expectations incorporate assumptions about many factors, including for example, how a product is distributed, persistency and lapses, and future progress in the fields of health and medicine. Actual mortality, morbidity, and casualty claims could differ from expectations if actual results differ from those assumptions.

The Company’s results may be negatively affected should actual experience differ from management’s assumptions and estimates.

        In the conduct of business, the Company makes certain assumptions regarding the mortality, persistency, expenses and interest rates, or other factors appropriate to the type of business it expects to experience in future periods. These assumptions are also used to estimate the amounts of deferred policy acquisition costs, policy liabilities and accruals, and various other components of the Company’s balance sheet. The Company’s actual experience, as well as changes in estimates, is used to prepare the Company’s statements of income.

        The calculations the Company uses to estimate various components of its balance sheet and statements of income are necessarily complex and involve analyzing and interpreting large quantities of data. The Company currently employs various techniques for such calculations and it from time to time will develop and implement more sophisticated administrative systems and procedures capable of facilitating the calculation of more precise estimates.

        Assumptions and estimates involve judgment, and by their nature are imprecise and subject to changes and revision over time. Accordingly, the Company’s results may be affected, positively or negatively, from time to time, by actual results differing from assumptions, by changes in estimates, and by changes resulting from implementing more sophisticated administrative systems and procedures that facilitate the calculation of more precise estimates.

The use of reinsurance introduces variability in the Company’s statement of income.

        The timing of premium payments to, and receipt of expense allowances from, reinsurers may differ from the Company’s receipt of customer premium payments and incurrence of expenses. These timing differences introduce variability in certain components of the Company’s statements of income, and may also introduce variability in the Company’s quarterly results.

The Company could be forced to sell investments at a loss to cover policyholder withdrawals.

        Many of the products offered by the Company and its insurance subsidiaries allow policy-holders and contract holders to withdraw their funds under defined circumstances. The Company and its insurance subsidiaries manage their liabilities and configure their investment portfolios so as to provide and maintain sufficient liquidity to support anticipated withdrawal demands and contract benefits and maturities. While the Company and its life insurance subsidiaries own a significant amount of liquid assets, a certain portion of their assets are relatively illiquid. If the Company or its subsidiaries experience unanticipated withdrawal or surrender activity, the Company or its subsidiaries could exhaust their liquid assets and be forced to liquidate other assets, perhaps on unfavorable terms. If the Company or its subsidiaries are forced to dispose of assets on unfavorable terms, it could have an adverse effect on the Company’s financial condition.

Interest-rate fluctuations could negatively affect the Company’s spread income or otherwise impact its business.

        Significant changes in interest rates expose insurance companies to the risk of not earning anticipated spreads between the interest rate earned on investments and the credited interest rates paid on outstanding policies and contracts. Both rising and declining interest rates can negatively affect the Company’s spread income. While the Company develops and maintains asset/liability management programs and procedures designed to preserve spread income in rising or falling interest rate environments, no assurance can be given that changes in interest rates will not affect such spreads.

        From time to time, the Company has participated in securities repurchase transactions that have contributed to the Company’s investment income. Such transactions involve some degree of risk that the counterparty may fail to perform its obligations to pay amounts owed and the collateral has insufficient value to satisfy the obligation. No assurance can be given that such transactions will continue to be entered into and contribute to the Company’s investment income in the future.

        Changes in interest rates may also impact its business in other ways. Lower interest rates may result in lower sales of certain of the Company’s insurance and investment products. In addition, certain of the Company’s insurance and investment products guarantee a minimum credited interest rate, and the Company could become unable to earn its spread income should interest rates decrease significantly.

        Higher interest rates may create a less favorable environment for the origination of mortgage loans and decrease the investment income the Company receives in the form of prepayment fees, make-whole payments, and mortgage participation income. Higher interest rates may also increase the cost of debt and other obligations having floating rate or rate reset provisions and may result in lower sales of variable products.

        Additionally, the Company’s asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve) and relationships between risk-adjusted and risk-free interest rates, market liquidity, and other factors. The effectiveness of the Company’s asset/liability management programs and procedures may be negatively affected whenever actual results differ from these assumptions.

        In general terms, the Company’s results are improved when the yield curve is positively sloped (i.e., when long-term interest rates are higher than short-term interest rates), and will be adversely affected by a flat or negatively sloped curve.

Equity market volatility could negatively impact the Company’s business.

        The amount of policy fees received from variable products is affected by the performance of the equity markets, increasing or decreasing as markets rise or fall. Equity market volatility can also affect the profitability of variable products in other ways.

        The amortization of deferred policy acquisitions costs relating to variable products and the estimated cost of providing guaranteed minimum death benefits incorporate various assumptions about the overall performance of equity markets over certain time periods. The rate of amortization of deferred policy acquisition costs and the estimated cost of providing guaranteed minimum death benefits could increase if equity market performance is worse than assumed.

A deficiency in the Company’s systems could result in over- or underpayments of amounts owed to or by the Company and/or errors in the Company’s critical assumptions or reported financial results.

        The business of insurance necessarily involves the collection and dissemination of large amounts of data using systems operated by the Company. Examples of data collected and analyzed include policy information, policy rates, expenses, mortality and morbidity experience. To the extent that data input errors, systems errors, or systems failures are not identified and corrected by the Company’s internal controls, the information generated by the systems and used by the Company and/or supplied to business partners, policyholders, and others may be incorrect and may result in an overpayment or underpayment of amounts owed to or by the Company and/or the Company using incorrect assumptions in its business decisions or financial reporting.

        In the second quarter of 2002, the Company discovered that the rates payable on certain life insurance policies were incorrectly entered into its reinsurance administrative system in 1991. As a result, the Company overpaid to several reinsurance companies the reinsurance premiums related to such policies of approximately $94.6 million over a period of 10 years beginning in 1992. Although the recoverability of amounts overpaid cannot be assumed, the Company is seeking recovery of the overpayments and has already received refunds from some of the reinsurance companies.

Insurance companies are highly regulated.

        The Company and its insurance subsidiaries are subject to government regulation in each of the states in which they conduct business. Such regulation is vested in state agencies having broad administrative power dealing with many aspects of the insurance business, which may include premium rates, marketing practices, advertising, policy forms, and capital adequacy, and is concerned primarily with the protection of policyholders rather than share owners. From time to time, regulators raise issues during examinations or audits of the Company’s subsidiaries that could, if determined adversely, have a material impact on the Company, and the Company cannot predict whether or when regulatory actions may be taken that could adversely affect the Company or its operations.

        The Company and its insurance subsidiaries may be subject to regulation by the United States Department of Labor when providing a variety of products and services to employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Severe penalties are imposed for breach of duties under ERISA.

        Labor when providing a variety of products and services to employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Severe penalties are imposed for breach of duties under ERISA.

        Certain policies, contracts, and annuities offered by the Company and its insurance subsidiaries are subject to regulation under the federal securities laws administered by the Securities and Exchange Commission. The federal securities laws contain regulatory restrictions and criminal, administrative, and private remedial provisions.

        Other types of regulation that could affect the Company and its subsidiaries include insurance company investment laws and regulations, state statutory accounting practices, state anti-trust laws, minimum solvency requirements, and because the Company owns and operates real property state, federal, and local environmental laws. The Company cannot predict what form any future changes in these or other areas of regulation affecting the insurance industry might take or what effect, if any, such proposals might have on the Company if enacted into law.

Changes to tax law or interpretations of existing tax law could adversely affect the Company and its ability to compete with non-insurance products or reduce the demand for certain insurance products.

        Under the Internal Revenue Code of 1986, as amended (the “Code”), income tax payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. This favorable tax treatment may give certain of the Company’s products a competitive advantage over other non-insurance products. To the extent that the Code is revised to reduce the tax-deferred status of life insurance and annuity products or to increase the tax-deferred status of competing products, all life insurance companies, including the Company and its subsidiaries, would be adversely affected with respect to their ability to sell such products, and, depending upon grandfathering provisions, would be affected by the surrenders of existing annuity contracts and life insurance policies. For example, changes in laws or regulations could restrict the ability of some companies to purchase certain corporate or bank-owned life insurance products. Additionally, changes in tax law based on recent proposals to reduce or eliminate federal income tax on corporate dividends and to establish new tax advantaged retirement and life savings plans could, if enacted, reduce the tax advantage of investing in certain life insurance or annuity products. In addition, life insurance products are often used to fund estate tax obligations. Legislation has recently been enacted that would, over time, reduce and eventually eliminate the estate tax. If the estate tax is significantly reduced or eliminated, the demand for certain life insurance products could be adversely affected. Additionally, the Company is subject to the federal corporation income tax. The Company cannot predict what changes to tax law or interpretations of existing tax law could adversely affect the Company.

Financial services companies are frequently the targets of litigation, including class action litigation, which could result in substantial judgments.

        A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or other persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages, which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial services companies, in the ordinary course of business is involved in such litigation or, alternatively, arbitration. The Company cannot predict the outcome of any such litigation or arbitration.

The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency of existing business.

        The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency (continuation or renewal) of existing business. A decrease in sales or persistency without a corresponding reduction in expenses may result in higher unit costs.

        Additionally, a decrease in persistency may result in higher or more rapid amortization of deferred policy acquisition costs and thus higher unit costs, and lower reported earnings. Although many of the Company’s products contain surrender charges, the charges decrease over time and may not be sufficient to cover the unamortized deferred policy acquisition costs with respect to the insurance policy or annuity contract being surrendered. Some of the Company’s products do not contain surrender charge features and such products can be surrendered or exchanged without penalty. A decrease in persistency may also result in higher claims.

The Company’s investments are subject to market and credit risks.

        The Company’s invested assets and derivative financial instruments are subject to customary risks of credit defaults and changes in market values. The value of the Company’s commercial mortgage loan portfolio depends in part on the financial condition of the tenants occupying the properties which the Company has financed. Factors that may affect the overall default rate on, and market value of, the Company’s invested assets, derivative financial instruments, and mortgage loans include interest rate levels, financial market performance, and general economic conditions as well as particular circumstances affecting the businesses of individual borrowers and tenants.

The Company may not realize its anticipated financial results from its acquisitions strategy.

        The Company’s acquisitions have increased its earnings in part by allowing the Company to enter new markets and to position itself to realize certain operating efficiencies. There can be no assurance, however, that suitable acquisitions, presenting opportunities for continued growth and operating efficiencies, or capital to fund acquisitions will continue to be available to the Company, or that the Company will realize the anticipated financial results from its acquisitions.

        Additionally, in connection with its acquisitions, the Company assumes or otherwise becomes responsible for the obligations of policies and other liabilities of other insurers. Any regulatory, legal, financial, or other adverse development affecting the other insurer could also have an adverse effect on the Company.

The Company is dependent on the performance of others.

        The Company’s results may be affected by the performance of others because the Company has entered into various arrangements involving other parties. For example, most of the Company’s products are sold through independent distribution channels, and variable annuity deposits are invested in funds managed by third parties. Additionally, the Company’s operations are dependent on various technologies, some of which are provided and/or maintained by other parties.

        Certain of these other parties may act on behalf of the Company or represent the Company in various capacities. Consequently, the Company may be held responsible for obligations that arise from the acts or omissions of these other parties.

        As with all financial services companies, its ability to conduct business is dependent upon consumer confidence in the industry and its products. Actions of competitors and financial difficulties of other companies in the industry could undermine consumer confidence and adversely affect retention of existing business and future sales of the Company’s insurance and investment products.

Our reinsurers could fail to meet assumed obligations, increase rates or be subject to adverse developments that could affect the Company.

        The Company and its insurance subsidiaries cede material amounts of insurance and transfer related assets to other insurance companies through reinsurance. The Company may enter into third-party reinsurance arrangements under which the Company will rely on the third party to collect premiums, pay claims, and/or perform customer service functions. However, the Company remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by it.

        The cost of reinsurance is, in some cases, reflected in the premium rates charged by the Company. Under certain reinsurance agreements, the reinsurer may increase the rate it charges the Company for the reinsurance, though the Company does not anticipate increases to occur. Therefore, if the cost of reinsurance were to increase or if reinsurance were to become unavailable, or if a reinsurer should fail to meet its obligations, the Company could be adversely affected.

        Recently, certain commentators on the insurance industry have speculated that reinsurance might become more costly or less available in the future, which could have a negative effect on the Company’s ability to compete.

        Forward-looking statements express expectations of future events and/or results. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, investors are urged not to place undue reliance on forward-looking statements. In addition, the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to projections over time.

EX-99

[Protective Life Corporation Letterhead]

Exhibit 99(b)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Protective Life Corporation (the “Company”) on Form 10-K for the year ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John D. Johns, Chairman of the Board and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/John D. Johns
John D. Johns
Chairman of the Board and President
March 20, 2003

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

EX-99

[Protective Life Corporation Letterhead]

Exhibit 99(c)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Protective Life Corporation (the “Company”) on Form 10-K for the year ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Allen W. Ritchie, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/Allen W. Ritchie
Allen W. Ritchie
Executive Vice President and
Chief Financial Officer
March 20, 2003

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.