Exhibit 10.15

 

 

 

 

 

 

 

 

 

 

 

THE PRINCIPAL FINANCIAL GROUP

NONQUALIFIED DEFINED BENEFIT PLAN

FOR EMPLOYEES

 

 

(Amended and Restated Effective January 1, 2019)

 

 

 

 

TABLE OF CONTENTS

 

 

 

INTRODUCTION

1

 

 

ARTICLE I  DEFINITIONS

1

 

 

SECTION 1.01 — FORMAT.

1

SECTION 1.02 — DEFINITIONS.

1

 

 

ARTICLE II  PARTICIPATION

5

 

 

SECTION 2.01 — ELIGIBLE GROUP.

5

SECTION 2.02 — NOTICE OF ELIGIBILITY.

6

SECTION 2.03 — INITIAL ENROLLMENT.

6

SECTION 2.04 — END OF ELIGIBILITY AND PARTICIPATION.

6

SECTION 2.05 — REENROLLMENT FOLLOWING A SEPARATION FROM SERVICE.

7

SECTION 2.06 – TRANSFER FROM THE PRINCIPAL FINANCIAL GROUP NONQUALIFIED

 

DEFINED BENEFIT PLAN FOR INDIVIDUAL FIELD.

7

 

 

ARTICLE IIl  DETERMINATION OF BENEFITS

7

 

 

SECTION 3.01 — SUPPLEMENTAL BENEFIT.

7

SECTION 3.02 — CASH BALANCE BENEFIT ENTITLEMENT.

12

SECTION 3.03 — TRADITIONAL BENEFIT ENTITLEMENT.

12

SECTION 3.04 — REEMPLOYED PARTICIPANTS.

12

 

 

ARTICLE IV  VESTING

14

 

 

SECTION 4.01 — VESTING.

14

SECTION 4.02 — FORFEITURE.

14

 

 

ARTICLE V  DISTRIBUTION EVENTS

14

 

 

SECTION 5.01 — DISTRIBUTION EVENTS.

14

SECTION 5.02 — ACCELERATION UPON CHANGE OF CONTROL.

15

SECTION 5.03 — CASH-OUT OF SMALL BENEFITS.

15

 

 

ARTICLE VI  DISTRIBUTION OPTIONS

16

 

 

SECTION 6.01 — FORM OF DISTRIBUTION.

16

SECTION 6.02 — CALCULATION OF LUMP-SUM PAYMENTS.

16

SECTION 6.03 — CALCULATION OF ANNUITY PAYMENTS.

17

SECTION 6.04 — SURVIVOR BENEFITS PRIOR TO BENEFIT COMMENCEMENT DATE.

17

SECTION 6.05 — DISTRIBUTION ELECTION PROCEDURES.

18

SECTION 6.06 — DEFAULT ELECTION.

18

SECTION 6.07 — SURVIVOR BENEFITS IN EVENT OF DEATH AFTER ANNUITY COMMENCMENT.

18

 

 

ARTICLE VII  TIMING OF DISTRIBUTION

19

 

 

SECTION 7.01 — TIME OF DISTRIBUTION.

19

SECTION 7.02 — SPECIFIED EMPLOYEE.

19

SECTION 7.03 — DISTRIBUTIONS PURSUANT TO A DOMESTIC RELATIONS ORDER.

19

SECTION 7.04 — RIGHT OF OFFSET.

20

SECTION 7.05 — DELAY OF PAYMENT UNDER CERTAIN CIRCUMSTANCES.

20

SECTION 7.06 — PAYMENT OF EMPLOYMENT TAXES.

20

 

 

ARTICLE VIII  ADMINISTRATION OF PLAN

21

 

 

SECTION 8.01 — ADMINISTRATION.

21

SECTION 8.02 — CORRECTION OF ERRORS AND DUTY TO REVIEW INFORMATION.

21

SECTION 8.03 — CLAIMS PROCEDURES.

22

SECTION 8.04 — INDEMNIFICATION.

23

SECTION 8.05 — EXERCISE OF AUTHORITY.

23

SECTION 8.06 — TELEPHONIC OR ELECTRONIC NOTICES AND TRANSACTIONS.

23

SECTION 8.07 — REIMBURSEMENT OF LEGAL FEES.

23

SECTION 8.08 – TRUSTEE CONTROL UPON COMMENCEMENT OF BENEFIT PAYMENTS.

23

 

 

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ARTICLE IX  CONTRACTUAL OBLIGATIONS AND FUNDING

24

 

 

SECTION 9.01 — CONTRACTUAL OBLIGATIONS.

24

SECTION 9.02 — FUNDING.

25

 

 

ARTICLE X  GENERAL PROVISIONS

25

 

 

SECTION 10.01 — AMENDMENT AND TERMINATION.

25

SECTION 10.02 — MODIFICATION BY EMPLOYMENT OR SIMILAR AGREEMENT.

26

SECTION 10.03 — EMPLOYMENT STATUS.

26

SECTION 10.04 — RIGHTS TO PLAN ASSETS; TAX CONSEQUENCES.

26

SECTION 10.05 — BENEFICIARIES.

27

SECTION 10.06 — STATEMENTS.

27

SECTION 10.07 — NONALIENATION OF BENEFITS.

27

SECTION 10.08 — CONSTRUCTION.

27

SECTION 10.09 — WORD USAGE.

27

 

 

ATTACHMENT A  PARTICIPATING CONTROLLED GROUP MEMBERS

29

 

 

 

 

 

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INTRODUCTION

 

Principal Life Insurance Company (“Principal Life”) previously established and
maintained THE PRINCIPAL FINANCIAL GROUP NONQUALIFIED DEFINED BENEFIT PLAN FOR
EMPLOYEES to provide select eligible employees with additional benefits,
including what they would have received under the Associated Plan but for the
limits imposed on the compensation that can be taken into account under such
plan (Code § 401(a)(17)) and the limit imposed on the benefits accrued and
payable under such plan (Code § 415(b)).

 

Principal Life established this Plan on January 1, 1982.  The Plan was amended
from time to time and was last restated on June 1, 2014.  Effective January 1,
2011, the Field Managers were moved to this Plan from The Principal Supplemental
Executive Retirement Plan for Individual Field.  This Plan covers Employees,
including Field Managers. Benefits and liabilities accrued under The Principal
Supplemental Executive Retirement Plan for Individual Field before January 1,
2011, in regard to the Field Managers, were transferred into this Plan as of
January 1, 2011.

 

Effective November 24, 2014 Principal Life transferred sponsorship of the Plan
to Principal Financial Group, Inc. (“Company”), and with the restated Plan, the
Company assumed sponsorship and adopted the Plan as of November 24, 2014.

 

The Plan covers common-law employees and is designed and intended to be a
“top-hat” plan – that is, an unfunded plan maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3) and
401(a)(1), and therefore is exempt from Parts 2, 3 and 4 of Title I of
ERISA.  The Plan is intended to be a nonqualified plan for purposes of Code §
401.  The Plan also is intended to be a nonqualified deferred compensation plan
that meets the requirements of paragraphs (2), (3) and (4) of Code § 409A(a),
and the terms and provisions of the Plan should be interpreted and applied in a
manner consistent with such requirements, including final Treasury Regulations
and other guidance issued under Code § 409A.

 

This amendment and restatement is effective January 1, 2019 and replaces the
prior Plan document.

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01 — FORMAT.

 

Words and phrases defined in the DEFINITIONS SECTION of this Article will have
the defined meaning when used in this Plan, unless the context clearly indicates
otherwise.  These words and phrases will have an initial capital letter to aid
in identifying them as defined terms.

 

Words and phrases with an initial capital letter that are not defined in the
DEFINITIONS SECTION of this Article will have the meaning assigned to such word
or phrase under the Associated Plan, unless the context clearly indicates
otherwise.

 

SECTION 1.02 — DEFINITIONS.

 

Accrued Traditional Benefit means the single life annuity that would be payable
under the Associated Plan to the Participant using the formula described in the
TRADITIONAL BENEFIT SECTION of Article IV of the Associated Plan starting as of
his Normal Retirement Date (or as of the last day of the month following his
Separation from Service if that occurs after his Normal Retirement Date).

 

Active Participant means an Employee in the Eligible Group who has enrolled in
the Plan.

 

Actuarial Equivalent will have the meaning assigned under the Associated Plan
with the following modification:

 

Cash Balance Account.  In determining a lump-sum payment, such payment will be
in the amount equal to the greater of:

 

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(A)  The balance of the Cash Balance Account as of the Benefit Commencement
Date; or

(B)  The Actuarial Equivalent present value as of the Benefit Commencement Date
of the Participant’s Cash Balance Accrued Benefit based on the Applicable
Interest Rate, the Applicable Mortality Table, and the Cost of Living Adjustment
Assumption, if applicable.

 

Administrator means Principal Life Insurance Company.  The Administrator has
authority to control and manage the operation and administration of the Plan and
make all decisions and determinations incident thereto.

 

Aggregated Plan means any other deferred compensation plan maintained by the
Company or a Controlled Group Member that is subject to Code § 409A and that is
aggregated with this Plan under Treasury Regulation § 1.409A-1(c)(2).

 

Associated Plan means The Principal Pension Plan.

 

Beneficiary means the person or persons designated as such pursuant to the
BENEFICIARIES SECTION of Article X.

 

Benefit Commencement Date means the first day of the period for which an amount
is payable as an annuity to the Participant or, if the Participant has elected
to have his Supplemental Benefit paid in the form of a lump-sum payment (or if
the Supplemental Benefit is automatically paid in the form of a lump-sum payment
under the terms of the Plan), the date on which the lump-sum payment is paid to
the Participant.

 

Board means the Board of Directors of Principal Financial Group, Inc.

 

Cash Balance Account means the Participant’s Cash Balance Account under the
Associated Plan.

 

Cash Balance Benefit Supplement means the Supplemental Benefit payable to the
Participant under the conditions specified in the CASH BALANCE BENEFIT
ENTITLEMENT SECTION of Article III when expressed as a single lump-sum payable
as of the date of determination.

 

Change of Control means the date of occurrence of any of the following, to the
extent such occurrence constitutes a change of control event (as defined in
Treasury Regulation § 1.409A-3(i)(5)(i)) with respect to Principal Financial
Group:

 

(a)         a change in the ownership of Principal Financial Group occurs when
any one person or a group of persons acquires stock in Principal Financial Group
that is more than fifty percent (50%) of the total fair market value or total
voting power of the stock of Principal Financial Group;

 

(b)         a change in the effective control of Principal Financial Group
occurs when any one person or a group of persons acquires within a twelve
(12)-month period, stock in Principal Financial Group possessing thirty percent
(30%) or more of the total voting power of the stock of Principal Financial
Group; or when a majority of the board of directors of Principal Financial Group
is replaced during a twelve (12)-month period by directors whose appointment or
election is not endorsed by a majority of the board of directors of Principal
Financial Group; or

 

(c)         a change in the ownership of a substantial portion of the assets of
Principal Financial Group occurs when any one person or group of persons
acquires or has acquired during a twelve (12)-month period, assets from
Principal Financial Group that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value of all of the
assets of Principal Financial Group immediately prior to such acquisition.

 

Code means the Internal Revenue Code of 1986, as amended.

 

Company means Principal Financial Group, Inc. and any successors thereto.

 

Compensation means income as reported in the “Wages, Tips, and Other
Compensation” box on Form W-2 attributable to services performed for the Company
or a Participating Controlled Group Member.  Compensation also includes any
elective deferral (as defined in Code § 402(g)(3)) to the Principal Select
Savings Plan

 

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for Employees, and any amount which is deferred at the election of the Employee
under the Principal Select Savings Excess Plan for Employees or any other
nonqualified plan maintained by the Company or Participating Controlled Group
Member, and any amount which is contributed or deferred at the election of the
Employee which is not includible in the gross income of the Employee by reason
of Code §§ 125, 132(f)(4) or 457.

 

Compensation will exclude the following:

 

(a)          expense reimbursements or other expense allowances, fringe benefits
(cash and non-cash), moving expenses, deferred compensation (other than elective
contributions as stated above), and welfare benefits (except short-term
disability);

 

(b)          Annual Incentive Pay earned with respect to service while
classified by the Company’s or Participating Controlled Group Member’s payroll
system as “investment” or “industry variant”;

 

(c)          any bonus or incentive pay paid by the Company or a Controlled
Group Member, other than Annual Incentive Pay not otherwise excluded by (b)
above or unless otherwise designated by the Administrator,  including but not
limited to:

 

(i)           any amount paid under The Principal Long-Term Incentive
Compensation Plan or other long-term incentive compensation plan or any stock
incentive plan;

 

(ii)          any sign-on bonus or stay bonus;

 

(iii)         any bonus to share in the proceeds or any stay bonus paid to an
Employee as a result of the acquisition of Old Northwest Agents Limited
Partnership;

 

(d)          amounts earned as a result of an Employee’s Separation from
Service;

 

(d)          any lump-sum payout under the Principal Personal Time Off Policy;

 

(f)           any income from restricted stock or stock units or the exercise of
statutory or non-statutory stock options under any plan maintained by the
Company or Participating Controlled Group Member, except as specifically
provided in a written agreement or other writing of the Company or Participating
Controlled Group Member in effect prior to the start of the applicable Plan
Year: and

 

(g)          any amounts paid after an Employee’s Separation from Service,
except for amounts   earned for service attributable to the final payroll period
that includes the date of the Employee’s Separation from Service.

 

Controlled Group Member means any corporation or other business entity that is a
member of the same controlled group as, or is under common control with, the
Company as determined under Code § 414(b) or (c) (and for purposes of
determining whether a Separation from Service has occurred, a standard of “at
least 80 percent” will be used to identify a controlled group member under Code
§ 414(b) and (c) notwithstanding the default standard of “at least 50 percent”
found in Treasury Regulation § 1.409A-1(h)(3)).

 

Disability or Disabled means that a Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months.

 

Eligible Group means the group of Employees who are eligible to participate in
the Plan, as determined under the ELIGIBLE GROUP SECTION of Article II.

 

Employee means any common-law employee of the Company or a Controlled Group
Member (while it is a Controlled Group Member).  For purposes of this Plan, the
term Employee also includes Field Managers.

 

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

 

 

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Field Manager means a person who holds a current manager base contract with a DD
713 addendum, or any successor full-time contract, with the Company or a
Participating Controlled Group Member or is designated as such by the Company or
a Participating Controlled Group Member.

 

Grandfathered Choice Participant means a Participant who was offered a benefit
formula election under the terms of the Associated Plan and who elected to
continue to have his benefit under the Associated Plan calculated under the
benefit formula in effect as of December 31, 2005 rather than under the new
benefit formula that first became effective January 1, 2006.  A Participant who
would have been eligible for such election during 2005 but for the fact that he
was on disability leave also will be considered a Grandfathered Choice
Participant unless and until such time as he returns to active employment with
the Company or Participating Controlled Group Member and files an election to
participate in the new benefit formula under the Plan.

 

Normal Retirement Date means the last day of the month on or after the date the
Participant reaches age sixty-five (65).

 

Participant means any Active Participant, or any current or former Employee who
is not an Active Participant but who has benefits due him under the Plan.

 

Participating Controlled Group Member means any Controlled Group Member that has
adopted the Plan and that employs one or more Participants, as listed in
Attachment A (a Participating Controlled Group Member will automatically cease
to participate if it ceases to be a Controlled Group Member).

 

Plan means The Principal Financial Group Nonqualified Defined Benefit Plan for
Employees.

 

Plan Year means the calendar year.

 

Present Value for the pre-retirement period means the Cash Balance Interest Rate
with no mortality as determined by the Associated Plan.  Present Value for the
post-retirement period means the Applicable Interest Rate and Applicable
Mortality Table based on 417(e),  as determined under the Associated Plan (COLA
applied where applicable).

 

Principal Financial Group means Principal Financial Group, Inc., a Delaware
corporation, together with all successors thereto.

 

Principal Life means Principal Life Insurance Company, the Administrator of the
Plan.

 

Separation from Service means a “separation from service” within the meaning of
Code § 409A.  Generally, this means that the Participant’s employer and the
Participant reasonably anticipate that no further services will be performed for
the Company or any Controlled Group Member after a certain date or that the
level of services the Participant will perform after such date (whether as an
Employee or independent contractor) will permanently decrease to twenty percent
(20%) or less of the average level of bona fide services performed over the
immediately preceding thirty-six (36) month period (or the full period of
services if the Participant has been providing services for less than thirty-six
(36) months).

 

In the case of a leave of absence by a Participant where there is a reasonable
expectation that the Participant will return to service with the employer after
such leave of absence, a Separation from Service will be deemed to have occurred
on the date that is six (6) months (or in the case of a disability leave,
twenty-nine (29) months if the Participant was Disabled prior to January 1,
2010) following the start of such leave; provided that, if the Participant has a
statutory or contractual right to return to active employment that extends
beyond the end of such leave period, the Separation from Service will be deemed
to have occurred upon the expiration of such statutory or contractual right; and
if such Employee has a Termination of Employment during such leave period, the
Separation from Service will be deemed to have occurred on such Termination of
Employment.  A “disability” leave for this purpose means an absence during which
the individual is unable to perform the duties of his position of employment or
any substantially similar position of employment due to any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than six
(6) months.

 

 

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In the case of a sale or other disposition of stock or substantial assets,
whether a Separation from Service has occurred may be affected by the provisions
of the CONTRACTUAL OBLIGATIONS SECTION of Article IX.

 

Specified Employee means an Employee who at any time during the twelve (12)
month period ending on the identification date (defined below) was a “key
employee” as defined under Code § 416(i) (applied in accordance with the
regulations thereunder, but without regard to paragraph (5) thereof).  The
Administrator or the Company may adopt a Specified Employee Identification
Policy that specifies the identification date, the effective date of any change
in the key employee group, compensation definition and other variables that are
relevant in identifying Specified Employees, and which may include an
alternative method of identifying Specified Employees consistent with the
regulations under Code § 409A.  In the absence of any such policy or policy
provision, for purposes of the above, the “identification date” is each December
31st, and an Employee who satisfies the above conditions will be considered to
be a “Specified Employee” from April 1st following the identification date to
March 31st of the following year, and the compensation and other variables, and
special rules for corporate events and special rules relating to nonresident
aliens, that are necessary in identifying Specified Employees will be determined
and applied in accordance with the defaults specified in the regulations under
Code § 409A.  Any Specified Employee Identification Policy will apply uniformly
to all nonqualified deferred compensation plans subject to Code § 409A that are
maintained by the Company or a Controlled Group Member.

 

Supplemental Benefit means the benefit payable to a Participant in the form of a
lump-sum payment or an annuity under the provisions of the Plan, as determined
in Article III.

 

Termination of Employment means that the common-law employer-employee
relationship has ended between the Employee and the Company and Controlled Group
Members, as determined under the employment policies and practices of Principal
Life (including by reason of voluntary or involuntary termination, retirement,
death, expiration of and failure to return from a recognized leave of absence,
or otherwise).  A Termination of Employment does not occur merely as a result of
transfer of employment from one Controlled Group Member to another Controlled
Group Member or from the Company to a Controlled Group Member or from a
Controlled Group Member to the Company.  In the case of an Employee working for
a Controlled Group Member, a Termination of Employment will not occur merely
because his employer no longer satisfies the definition of a Controlled Group
Member by reason of a stock sale or similar corporate transaction (assuming the
individual continues in the employ of that employer or a new affiliate of that
employer after the sale).

 

Traditional Benefit Supplement means the Supplemental Benefit payable to the
Participant under the conditions specified in the TRADITIONAL BENEFIT
ENTITLEMENT SECTION of Article III when expressed as a single life annuity
starting as of the Participant’s Normal Retirement Date (or as of the last day
of the month following his Separation from Service if that occurs after his
Normal Retirement Date).

 

Vested means that a Participant is entitled to a Supplemental Benefit under the
Plan as determined under Article IV.

 

Vesting Service means Vesting Service as determined under the Associated Plan.

 

ARTICLE II

 

PARTICIPATION

 

SECTION 2.01 — ELIGIBLE GROUP.

 

All Employees who are in the Eligible Group will be eligible to participate in
the Plan.   An Employee is in the Eligible Group if:

 

(a)          He is employed with the Company or a Participating Controlled Group
Member (while it is a Participating Controlled Group Member);

 

(b)          He is participating in the Associated Plan;

 

 

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(c)          His Compensation for the Plan Year is in excess of the dollar limit
in effect for the Plan Year under Code § 401(a)(17); and

 

(d)         The Corporate Management Committee, which is described in the
ADMINISTRATION SECTION of Article VIII, has selected the individual for
participation and has directed the Administrator to notify the individual in
writing that he is eligible to participate in the Plan.

 

The Corporate Management Committee (or, in the case of a Senior Vice President
or above, the Human Resources Committee of the Board) in its sole and absolute
discretion may determine that an Employee who satisfies the conditions of
paragraph (c) above will not be eligible to participate in the Plan.  The Plan
is intended to cover only those Employees who are in a select group of
management or highly compensated employees within the meaning of ERISA §§
201(2), 301(a)(3) and 401(a)(1); and, accordingly, if any interpretation is
issued by the Department of Labor that would exclude any Employee from
satisfying that requirement, such Employee immediately will cease to be in the
Eligible Group.

 

An Employee will cease to be in the Eligible Group upon his Separation from
Service or as of such earlier date on which he ceases to satisfy the eligibility
requirements specified above.

 

An Employee who ceases to be in the Eligible Group will cease to be an Active
Participant as of the date provided in the END OF ELIGIBILITY AND PARTICIPATION
SECTION of this Article.

 

SECTION 2.02 — NOTICE OF ELIGIBILITY.

 

The Administrator will notify an Employee in writing of his eligibility to
participate in the Plan and an individual will not be eligible until he receives
such notice.

 

SECTION 2.03 — INITIAL ENROLLMENT.

 

An Employee in the Eligible Group will be automatically enrolled.  If he has not
already been a participant in any Aggregated Plan he will be allowed to make a
distribution election under the Plan during the thirty (30) day period following
the date he is notified of his eligibility to participate in the Plan.  A
distribution election will be irrevocable at the end of the thirty (30) day
period.

 

Distribution elections must be made in such manner and in accordance with such
rules as may be prescribed for this purpose by the Administrator.

 

SECTION 2.04 — END OF ELIGIBILITY AND PARTICIPATION.

 

An Active Participant will continue as an Active Participant until the earliest
of

 

(a)         The date of his Separation from Service;

 

(b)         The date on which the Plan is terminated in a liquidation
termination described in the AMENDMENT AND TERMINATION SECTION of Article X; or

 

(c)         The last day of the Plan Year in which he ceases to be in the
Eligible Group (other than as a result of a Separation from Service) or in which
the Plan is terminated other than in a liquidation termination described in the
AMENDMENT AND TERMINATION SECTION of Article X.

 

A Participant will continue as a Participant until he has received a full
distribution of the benefit due under the Plan.

 

In the event a Participant’s eligibility under this Plan ceases as the result of
a change in workforce classification and as a result the Participant becomes
eligible and enrolls in The Principal Financial Group Nonqualified Defined
Benefit Plan for Individual Field, his benefits and liabilities will transfer to
The Principal Financial Group Nonqualified Defined Benefit Plan for Individual
Field.

 

 

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SECTION 2.05 — REENROLLMENT FOLLOWING A SEPARATION FROM SERVICE.

 

In the case of an individual who ceases to be in the Eligible Group and who
later reenters the Eligible Group:

 

(a)         If he reenters the Eligible Group twenty-four (24) months or more
after he both ceases to be an Active Participant and ceases to be eligible under
all Aggregated Plans, he will be enrolled in accordance with the INITIAL
ENROLLMENT SECTION of this Article.  The distribution elections made upon
reenrollment or subsequent changes to such elections will not affect the form of
benefit payment or timing of a  benefit payment the individual will receive or
is receiving as a result of a previous distribution event.

 

(b)         If he reenters the Eligible Group within twenty-four (24) months
after he both ceases to be an Active Participant and ceases to be eligible under
all Aggregated Plans, he will remain enrolled and the distribution elections
that were in effect when he ceased to be in the Eligible Group will be
reinstated when he reenters the Eligible Group.  However, the timing of a
 benefit payment the individual will receive or is receiving as a result of a
previous distribution event will not be affected.

 

SECTION 2.06 – TRANSFER FROM THE PRINCIPAL FINANCIAL GROUP NONQUALIFIED DEFINED
BENEFIT PLAN FOR INDIVIDUAL FIELD.

 

In the case of an individual who transfers from The Principal Financial Group
Nonqualified Defined Benefit Plan for Individual Field to the Plan:

 

(a)         Such individual’s benefit and liability from The Principal Financial
Group Nonqualified Defined Benefit Plan for Individual Field will transfer to
the Plan.

 

(b)         Any distribution election made by the individual under The Principal
Financial Group Nonqualified Defined Benefit Plan for Individual Field, or if no
election was made, such default distribution form and time, shall continue to
apply to his benefit under the Plan, subject to additional distribution
elections allowed under Section 6.05, and the other terms of the Plan.

 

(c)         The beneficiary designated under The Principal Financial Group
Nonqualified Defined Benefit Plan for Individual Field shall be the Beneficiary
designated for purposes of the Plan, until otherwise revised consistent with
Section 10.05 and the terms of the Plan.

 

ARTICLE IIl

 

DETERMINATION OF BENEFITS

 

SECTION 3.01 — SUPPLEMENTAL BENEFIT.

 

To determine a Participant’s Supplemental Benefit, a comparison first will be
made of the single lump-sum amounts derived under A and under B, where:

 

“A” =      A1 minus A2, where:

 

“A1” =    The balance that would have been credited to the Participant’s Cash
Balance Account if credits and benefits were determined without regard to:

 

(i)            The limit on compensation taken into account under the Associated
Plan under Code § 401(a)(17); and

 

(ii)           The limit on the benefit accrued and payable under the Associate
Plan under Code § 415(b).

 

“A2” =    The actual balance of the Participant’s Cash Balance Account; provided
that, if the Participant receives a distribution under the Associated Plan prior
to distribution of the

 

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Supplemental Benefit, the balance determined hereunder will equal the balance
that would have been in the Participant’s Cash Balance Account as if no
distribution from the Associated Plan had taken place, or

 

“B”  =     With respect to a Participant who has an Accrued Traditional Benefit
attributable to the period on or after January 1, 2002, equals B1 minus B2,
where:

 

“B1” =    The following amount, as applicable:

 

For Grandfathered Choice Participants:  In the case of a Grandfathered Choice
Participant, “B1” equals the Present Value of the greater of B1a or B1b (subject
to the adjustment described below if the date of determination is prior to the
Participant’s Normal Retirement Date), where:

 

“B1a” =  The Participant’s Accrued Traditional Benefit; or

 

“B1b” =  The Participant’s top-hat formula benefit.

 

A Participant’s “top-hat formula benefit” for this purpose is the single life
annuity payable starting as of the Participant’s Normal Retirement Date (or as
of the last day of the month following his Separation from Service if that
occurs after his Normal Retirement Date) in an amount equal to 1 + 2 - 3, where:

 

“1” =       70.5% of the Participant’s Average Compensation multiplied by his
Accrued Benefit Adjustment (Pre-89) (Traditional Benefit).

 

“2” =      65% of the Participant’s Average Compensation multiplied by his
Accrued Benefit Adjustment (Traditional Benefit).

 

“3” =      The Participant’s Social Security Benefit multiplied by the sum of
his Accrued Benefit Adjustment (Pre-89) (Traditional Benefit) and his Accrued
Benefit Adjustment (Traditional Benefit).

 

For purposes of determining a top-hat formula benefit, a Participant’s “Average
Compensation”, “Accrued Benefit Adjustment (Pre-89) (Traditional Benefit)”,
“Accrued Benefit Adjustment (Traditional Benefit)” and related definitions and
variables will be determined in accordance with the Associated Plan.  A
Participant’s “Social Security Benefit” means the monthly payment of primary
insurance benefits determined for a Participant by applying a salary scale,
projected backwards, to the Participant’s pay as of any date of determination
(the salary scale used will be the actual change in the average wages from year
to year as determined by the Social Security Administration).

 

B1a and B1b will be determined without regard to:

 

(i)            The limit on compensation taken into account under the Associated
Plan under Code § 401(a) (17); and

 

(ii)           The limit on the benefit accrued and payable under the Associate
Plan under Code § 415(b).

 

If the Participant’s Separation from Service occurs on or after the date he
attains age fifty-seven (57), or if the Supplemental Benefit is being determined
before the Participant’s Separation from Service, but on or after the date he
attains age fifty-seven (57), and the date of determination is before the
Participant’s Normal Retirement Date, the single life annuity in B1a or B1b, as
applicable, will be adjusted to equal the following percent of the single life
annuity payable at the Participant’s Normal Retirement Date to derive an
immediate commencement single life annuity:

 

 

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Age at Date

 

of Determination

Adjustment Percentage

 

 

64

100%

63

100%

62

100%

61

95%

60

90%

59

85%

58

80%

57

75%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above, or the Present Value of the
deferred commencement single life annuity payable at the Participant’s Normal
Retirement Date.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).

 

If the Participant’s Separation from Service occurs before the date the
Participant attains age fifty-seven (57), and the date of determination is on or
after the date he attains age fifty-seven (57) but before his Normal Retirement
Date, the single life annuity in B1a or B1b, as applicable, will be adjusted to
equal the following percent of the single life annuity payable at the
Participant’s Normal Retirement Date to derive an immediate commencement single
life annuity:

 

Age at Date

 

of Determination

Adjustment Percentage

 

 

64

92.87%

63

86.45%

62

80.65%

61

75.39%

60

70.61%

59

66.25%

58

62.27%

57

58.62%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above, or the Present Value of the
deferred commencement single life annuity payable at the Participant’s Normal
Retirement Date.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).

 

If the date of determination is before the date the Participant attains age
fifty-seven (57), the single life annuity in B1a or B1b, as applicable, will be
the single life annuity payable at the Participant’s Normal Retirement Date, and
“B1” will equal the Present Value of such deferred commencement annuity.

 

If a Participant has elected to defer payment pursuant to the DISTRIBUTION
ELECTION PROCEDURES SECTION of Article VI, resulting in his Supplemental Benefit
commencing after his Normal Retirement Date, the single life annuity above will
be adjusted to equal the following percent of the single life annuity payable at
the Participant’s Normal Retirement Date to derive an immediate commencement
single life annuity:

 

 

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Number of Years

Adjustment Percentage

That Follow Normal Retirement Date

 

 

 

1

106%

2

112%

3

119%

4

126%

5

134%

6

142%

7

150%

8

159%

9

169%

10

179%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).

 

For Other Participants:  In the case of any other Participant, “B1” equals the
Present Value of the sum of B1c and B1d (subject to the adjustment described
below if the date of determination is prior to the Participant’s Normal
Retirement Date), where:

 

“B1c” =  The Participant’s Accrued Traditional Benefit in excess of the benefit
derived under B1d; and

 

“B1d” =  In the case of a Participant who has an Accrued Traditional Benefit as
of December 31, 2005, the greater of 1 or 2, where:

 

“1” =      The Participant’s Accrued Traditional Benefit, calculated as if the
Participant’s Termination of Employment had occurred on December 31, 2005 (or
earlier date of actual Termination of Employment); or

 

“2” =      The Participant’s top-hat formula benefit under B1b, above,
calculated as if the Participant’s Termination of Employment had occurred on
December 31, 2005 (or earlier date of actual Termination of Employment).

 

B1c and B1d will be determined without regard to:

 

(i)            The limit on compensation taken into account under the Associated
Plan under Code § 401(a) (17); and

 

(ii)           The limit on the benefit accrued and payable under the Associate
Plan under Code § 415(b).

 

If the Participant’s Separation from Service occurs on or after the date he
attains age fifty-seven (57), or if the Supplemental Benefit is being determined
before the Participant’s Separation from Service, but on or after the date he
attains age fifty-seven (57), and the date of determination is before the
Participant’s Normal Retirement Date, the single life annuity above will be
adjusted to equal the following percent of the single life annuity payable at
the Participant’s Normal Retirement Date to derive an immediate commencement
single life annuity:

 

Age at Date

Adjustment Percentage

Adjustment Percentage

of Determination

For Benefit Under B1d

For Benefit Under B1c

 

 

 

64

100%

97%

63

100%

94%

 

 

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62

100%

91%

61

95%

88%

60

90%

85%

59

85%

82%

58

80%

79%

57

75%

75%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above, or the Present Value of the
deferred commencement single life annuity payable at the Participant’s Normal
Retirement Date.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).

 

If the Participant’s Separation from Service occurs before the date the
Participant attains age fifty-seven (57), and the date of determination is on or
after the date the Participant attains age fifty-seven (57) but before his
Normal Retirement Date, the single life annuity above will be adjusted to equal
the following percent of the single life annuity payable at the Participant’s
Normal Retirement Date to derive an immediate commencement single life annuity:

 

Age at Date

 

of Determination

Adjustment Percentage

 

 

64

92.87%

63

86.45%

62

80.65%

61

75.39%

60

70.61%

59

66.25%

58

62.27%

57

58.62%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above, or the Present Value of the
deferred commencement single life annuity payable at the Participant’s Normal
Retirement Date.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).

 

If the date of determination is before the date the Participant attains age
fifty-seven (57), the single life annuity in B1a or B1b, as applicable, will be
the single life annuity payable at the Participant’s Normal Retirement Date, and
“B1” will equal the Present Value of such deferred commencement annuity.

 

If a Participant has elected to defer payment pursuant to the DISTRIBUTION
ELECTION PROCEDURES SECTION of Article VI, resulting in his Supplemental Benefit
commencing after his Normal Retirement Date, the single life annuity above will
be adjusted to equal the following percent of the single life annuity payable at
the Participant’s Normal Retirement Date to derive an immediate commencement
single life annuity:

 

 

Number of Years

Adjustment Percentage

That Follow Normal Retirement Date

 

 

 

1

106%

2

112%

3

119%

4

126%

5

134%

 

 

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6

142%

7

150%

8

159%

9

169%

10

179%

 

“B1” will then equal the greater of the Present Value of the immediate
commencement annuity determined as adjusted above.

 

The above adjustment percentages shall be prorated for a partial year (to four
decimal places and counting a partial month as a complete month).  Adjustment
percentages for numbers of years beyond 10 shall be determined using a
consistently applied equivalent method by expanding the table above

 

“B2” = The following amount, as applicable:

 

For Grandfathered Choice Participants:  In the case of a Grandfathered Choice
Participant, “B2” equals the Present Value of B1a, above (subject to adjustment
as described above if the date of determination is prior to the Participant’s
Normal Retirement Date) but determined after taking into account the limits
specified in (i) and (ii) above.

 

For Other Participants:  In the case of any other Participant, “B2” equal the
Present Value of the sum of B1c and “1” under B1d, above (subject to adjustment
as described above if the date of determination is prior to the Participant’s
Normal Retirement Date), but determined after taking into account the limits
specified in (i) and (ii) above

 

“B” will never be less than B1 minus B2 determined as if the Participant’s
Termination of Employment had occurred on December 31, 2005 (or earlier date of
actual Termination of Employment), reduced by the portion thereof subsequently
provided under the Associated Plan.

 

For purposes of both B1 and B2, a single life annuity under B1a, B1b and B1d
(but not B1c) used to derive a Present Value will be deemed to include an annual
cost-of-living adjustment described in the Cost of Living Adjustment Assumption
of the Associated Plan.

 

SECTION 3.02 — CASH BALANCE BENEFIT ENTITLEMENT.

 

A Participant will be entitled to a Cash Balance Benefit Supplement if the
lump-sum amount described in “A” under the SUPPLEMENTAL BENEFIT SECTION of this
Article is greater than the lump-sum amount described in “B” (or if “B” does not
apply to the Participant).

 

A Participant who is entitled to a Cash Balance Benefit Supplement may receive
his Supplemental Benefit upon the occurrence of a distribution event described
in the DISTRIBUTION EVENTS SECTION of Article V and in accordance with the
DISTRIBUTION ELECTION PROCEDURES SECTION of Article VI.

 

SECTION 3.03 — TRADITIONAL BENEFIT ENTITLEMENT.

 

A Participant will be entitled to a Traditional Benefit Supplement if the
lump-sum amount described in “B” under the SUPPLEMENTAL BENEFIT SECTION of this
Article is greater than the lump-sum amount described in “A”.

 

A Participant who is entitled to a Traditional Benefit Supplement may receive
his Supplemental Benefit upon the occurrence of a distribution event described
in the DISTRIBUTION EVENTS SECTION of Article V and in accordance with the
DISTRIBUTION ELECTION PROCEDURES SECTION of Article VI.

 

SECTION 3.04 — REEMPLOYED PARTICIPANTS.

 

If a Participant has a Separation from Service and subsequently is reemployed
with the Company or a Participating Controlled Group Member and again becomes an
Active Participant in this Plan, his Supplemental Benefit for the period after
he again becomes an Active Participant will be determined under “A” of the

 

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SUPPLEMENTAL BENEFIT SECTION of this Article, and any Supplemental Benefit
attributable to his prior period of participation will be determined and paid as
a separate benefit under the Plan.

 

 

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ARTICLE IV

 

VESTING

 

SECTION 4.01 — VESTING.

 

A Participant will be entitled to a Supplemental Benefit under this Plan only
when he is Vested.  A Participant is Vested on the later of the date on which he
has:

 

(a)          Completed three (3) years of Vesting Service; or

 

(b)          Been an Active Participant in this Plan for at least twelve (12)
months.

 

SECTION 4.02 — FORFEITURE.

 

If a Participant has a Separation from Service before he is Vested, he will
forfeit his Supplemental Benefit. However, if a Participant is subsequently
rehired by the Company or a Participating Controlled Group Member and again
becomes an Active Participant in the Plan, his Supplemental Benefit may be
reinstated if that is the result under the Associated Plan and subject to the
REEMPLOYED PARTICIPANTS SECTION of Article III.

 

ARTICLE V

 

DISTRIBUTION EVENTS

 

SECTION 5.01 — DISTRIBUTION EVENTS.

 

A Participant’s Cash Balance Benefit Supplement or Traditional Benefit
Supplement will be distributed upon the first of the following distribution
events to occur:

 

(a)          Fixed Date Distribution.  A Participant’s Supplemental Benefit will
be payable as follows:

 

(i)            A Field Manager may specify a date upon which his entire
Supplemental Benefit becomes payable; provided that, the date specified must be
after he attains age sixty (60) but prior to the date on which he attains age
sixty-five (65).

 

(ii)           A Participant who is not a Field Manager, and became eligible for
the Plan prior to January 1, 2010, may specify a date upon which his entire
Supplemental Benefit becomes payable; provided that, the date specified must be
after he attains age sixty (60) but prior to the date on which he attains age
sixty-five (65).  This distribution event is not available to a Participant who
is not a Field Manager and who becomes eligible for the Plan on or after January
1, 2010.

 

(b)          Mandatory Distribution.  A Participant’s Supplemental Benefit will
be payable as follows:

 

(i)            A Field Manager’s Supplemental Benefit becomes payable on the
date he attains age sixty-five (65).

 

(ii)           A Participant who is not a Field Manager’s Supplemental Benefit
becomes payable on the date he attains age sixty-five (65).  This distribution
event is not available to a Participant who is not a Field Manager who becomes
eligible for the Plan on or after January 1, 2010.

 

(c)          Separation from Service Distribution.  A Participant’s Supplemental
Benefit becomes payable on the date he incurs a Separation from Service.

 

(d)          Disability Distribution.  In the event of  a Disability that occurs
prior to January 1, 2010, a Participant’s Supplemental Benefit will be payable
as follows:

 

 

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(i)           If the Participant was hired prior to January 1, 2002 and has ten
(10) or more years of Vesting Service on the date he became Disabled, the
Supplemental Benefit will be payable on the date the Participant’s attains age
sixty-five (65).

 

(ii)         If the Participant was hired or rehired after January 1, 2002 or
has less than 10 years of Vesting Service on the date he became Disabled, the
Supplemental Benefit will be payable on the date that is twenty-nine (29) months
following the date he becomes Disabled.

 

Disability will not be a distribution event if a Participant becomes Disabled on
or after January 1, 2010.

 

(e)          Death Distribution.  A Participant’s Supplemental Benefit becomes
payable after death as provided in the SURVIVOR BENEFITS PRIOR TO BENEFIT
COMMENCEMENT DATE SECTION of Article VI.

 

(f)           Change of Control Distribution.  A Participant’s Supplemental
Benefit becomes payable on the last day of the month on or after the date of a
Change of Control.

 

If a Participant is not Vested as of a distribution date specified in paragraph
(a) or (b), payment will not be made unless and until the Participant is
Vested.  Also, a distribution to a Participant who is a Specified Employee upon
a distribution event specified in paragraph (c) will be delayed as provided in
the SPECIFIED EMPLOYEE SECTION of Article VII.

 

If a Participant remains an Active Participant in the Plan after a distribution
is made (or has started) under a date specified in paragraph (a), (b) or (f),
any subsequent accruals after such date will be accumulated and paid as of the
next distribution event to occur in accordance with the elections made by the
Participant with respect to his Supplemental Benefit and the terms of the Plan,
reduced by what was previously paid under paragraph (a), (b) or (f), as
applicable.

 

SECTION 5.02 — ACCELERATION UPON CHANGE OF CONTROL.

 

If a Change of Control occurs while a Participant is receiving annuity payments
(or is scheduled to commence such payments) and the Participant had elected a
more rapid payment schedule to apply in the event of a Change of Control (for
example, a lump-sum payment), the more rapid payment schedule will apply
following the Change of Control.  A  lump-sum payment of the remaining payments
due under an annuity following a Change of Control will equal the present value
of the payments remaining due under the annuity payment form being paid, with
present value determined using the following actuarial assumptions:  Interest –
the average of (a) and (b), where: a) 50% allocation to S & P 500 returns
(geometric average over 50 years) pulled from Wilshire Compass Service and (b)
50% allocation to the single effective rate for IRC 417(e)(3)(D) segment rates
for an age 65 life annuity that are applicable for the plan year of distribution
(Average monthly segment rates for September – November of the calendar year
prior to the calendar year of distribution). Mortality Assumption – IRC
417(e)(3)(B) mortality table used under the Associated Plan  An accelerated
annuity payable following a Change in Control will be the Actuarial Equivalent
of the remaining payments due in the annuity payment form then being paid.

 

SECTION 5.03 — CASH-OUT OF SMALL BENEFITS.

 

If the present value of the Participant’s Supplemental Benefit does not exceed
the applicable dollar amount then in effect under Code § 402(g)(1)(B) at his
Benefit Commencement Date, then the Participant will be paid such present value
in a single lump-sum distribution in full settlement of all obligations under
the Plan.  Also, if the present value of the Participant’s Supplemental Benefit
under this Plan, together with his benefits under all other Aggregated Plans
maintained by the Company or a Controlled Group Member does not exceed the
applicable dollar amount then in effect under Code § 402(g)(1)(B) as of his
Benefit Commencement Date or any later date, then the Administrator may in its
sole and absolute discretion direct that the Participant be paid such present
value, plus his entire interest under all Aggregated Plans, in a single-sum
distribution in full settlement of all obligations under the Plan and such other
plans.  The Administrator may in its sole and absolute discretion direct that
such present value will be paid in a single-sum distribution in full settlement
of all obligations under the Plan.  For this purpose, present value will be
determined using the following actuarial assumptions:  Interest – the average of
(a) and (b), where: a) 50% allocation to S & P 500 returns (geometric

 

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average over 50 years) pulled from Wilshire Compass Service and (b) 50%
allocation to the single effective rate for IRC 417(e)(3)(D) segment rates for
an age 65 life annuity that are applicable for the plan year of distribution
(Average monthly segment rates for September – November of the calendar year
prior to the calendar year of distribution). Mortality Assumption – IRC
417(e)(3)(B) mortality table used under the Associated Plan

 

ARTICLE VI

 

DISTRIBUTION OPTIONS

 

SECTION 6.01 — FORM OF DISTRIBUTION.

 

A Participant may elect to receive a distribution in any of the following forms
(subject to the CASH-OUT OF SMALL BENEFITS SECTION of Article V):

 

(a)          A single lump-sum payment; or

 

(b)          An annuity, the form of which will be elected before the Benefit
Commencement Date from among one of the following actuarially equivalent payment
forms:

 

(i)          A single life annuity;

 

(ii)         A single life annuity with a term-certain period of sixty (60),
one-hundred and twenty (120) or one-hundred and eighty (180) months, as elected
by the Participant; or

 

(iii)        A joint and survivor annuity and with a survivor percentage of
fifty percent (50%), sixty-six and two-thirds percent (66-2/3%) or one-hundred
percent (100%), as elected by the Participant.

 

If an annuity is elected, the Benefit Commencement Date will be the later of age
57 or the date of the distribution event under the DISTRIBUTION EVENTS SECTION
of Article V.

 

If an annuity is elected, and at the Benefit Commencement Date the Participant
fails to elect the form of annuity, the distribution shall be paid in a form of
annuity determined as follows:

 

(a)          If the Participant is married on the Benefit Commencement Date, the
form of annuity shall be  a joint and survivor annuity with a survivor
percentage of fifty percent (50%).

 

(b)          If the Participant is single on the Benefit Commencement Date, the
form of annuity shall be a single life annuity.

 

SECTION 6.02 — CALCULATION OF LUMP-SUM PAYMENTS.

 

In the case of a Participant who is entitled to a Cash Balance Benefit
Supplement, a single lump-sum payment under paragraph (a) of the FORM OF
DISTRIBUTION SECTION of this Article will equal ”A”, as determined under the
SUPPLEMENTAL BENEFIT SECTION of Article III.

 

In the case of a Participant who is entitled to a Traditional Benefit
Supplement,  a single lump-sum payment under paragraph (a) of the FORM OF
DISTRIBUTION SECTION of this Article will equal the amount determined in
paragraph (a) or (b) below, as applicable; provided that, in no event will the
lump-sum payment be less than A1 minus A2, as determined under the SUPPLEMENTAL
BENEFIT SECTION of Article III:

 

(a)          If the date of determination is on or after the Participant attains
age fifty-seven (57), the single lump-sum payment will equal the present value
of the immediate single life annuity that would be payable as of such date as
provided in the CALCULATION OF ANNUITY PAYMENTS SECTION of this Article; or

 

(b)          If the date of determination is before the Participant attains age
fifty-seven (57), the single lump-sum payment will equal the present value of a
deferred single life annuity payable as of the last day of the

 

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month on or after which the Participant will attain age fifty-seven (57) with
monthly payments equal to 58.62% of the single life annuity payable at the
Participant’s Normal Retirement Date, as determined in “B” of the SUPPLEMENTAL
BENEFIT SECTION of Article III.

 

For this purpose, present value will be determined using the following actuarial
assumptions:  Interest – the average of (a) and (b), where:  a) 50% allocation
to S & P 500 returns (geometric average over 50 years) pulled from Wilshire
Compass Service and (b) 50% allocation to the single effective rate for IRC
417(e)(3)(D) segment rates for an age 65 life annuity that are applicable for
the plan year of distribution (Average monthly segment rates for September –
November of the calendar year prior to the calendar year of distribution).
Mortality Assumption – IRC 417(e)(3)(B) mortality table used under the
Associated Plan.

 

A single life annuity under B1a, B1b and B1d (but not B1c) of the SUPPLEMENTAL
BENEFIT SECTION of Article III used to derive a present value will be deemed to
include an annual cost-of-living adjustment equal to 75% of the difference in
yields between 20-year Treasury Inflation Protected Securities (TIPS) and
20-year Treasury constant maturities (using the average for September, October
and November of the calendar year prior to distribution).

 

SECTION 6.03 — CALCULATION OF ANNUITY PAYMENTS.

 

In the case of a Participant who is entitled to a Cash Balance Benefit
Supplement, an annuity under paragraphs (b)(i), (b)(ii) or (b)(iii) of the FORM
OF DISTRIBUTION SECTION of this Article will be the Actuarial Equivalent of the
single lump-sum payment under paragraph (a) of the FORM OF DISTRIBUTION SECTION
of this Article.

 

In the case of a Participant who is entitled to a Traditional Benefit
Supplement,  the single life annuity payable under paragraph (b) of the FORM OF
DISTRIBUTION SECTION of this Article will be determined as follows:

 

(a)          If the date of determination is on or after the Participant’s
Normal Retirement Date, the single life annuity will be determined as provided
in “B” of the SUPPLEMENTAL BENEFIT SECTION of Article III (without adjustment
for early commencement).

 

(b)          If the date of determination is on or after the Participant attains
age fifty-seven (57), but before his Normal Retirement Date, the single life
annuity will be determined as provided in “B” of the SUPPLEMENTAL BENEFIT
SECTION of Article III, adjusted to an immediate commencement annuity using the
applicable factors specified therein.

 

In the case of a Participant who is entitled to a Traditional Benefit
Supplement, an annuity under paragraphs (b)(ii) or (b)(iii) of the FORM OF
DISTRIBUTION SECTION of this Article will be the Actuarial Equivalent of the
single life annuity calculated above.

 

A annuity under B1a, B1b and B1d (but not B1c) of the SUPPLEMENTAL BENEFIT
SECTION of Article III will include a cost-of-living adjustment in the same
manner as provided under the Associated Plan.

 

An annuity payment stream will be treated as a single payment (made at the first
scheduled payment date) for purposes of Code § 409A.

 

SECTION 6.04 — SURVIVOR BENEFITS PRIOR TO BENEFIT COMMENCEMENT DATE.

 

If a Participant is Vested and dies prior to his Benefit Commencement Date, his
Beneficiary will be entitled to a survivor benefit under the Plan in an amount
determined as follows:

 

(a)          If the Participant is entitled to a Cash Balance Benefit
Supplement,  and elected a single lump sum payment, the survivor benefit payable
to the Beneficiary will be the single lump-sum payment amount described in
paragraph (a) of the FORM OF DISTRIBUTION SECTION of this Article.   If the
Participant elected an annuity, the single sum lump payment will be converted to
an annuity as described in Section 3.02.  The Beneficiary will begin receiving
the annuity on the later of 1) the date the Participant’s would have attained
age 57 or 2) the date of the Participant’s death.

 

 

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(b)         If the Participant is entitled to a Traditional Benefit Supplement,
the survivor benefit will be the survivor annuity benefit that would have been
payable if the Participant had started his Traditional Benefit Supplement in the
form of joint and survivor annuity with a survivor percentage of fifty percent
(50%) immediately prior to his death, and then died after the start of such
annuity; however, the survivor benefit shall never be less than the survivor
benefit that would have been paid under paragraph (a) of this SURVIVOR BENEFITS
PRIOR TO BENEFIT COMMENCEMENT DATE SECTION.

 

The survivor benefit will be paid or commence to the Beneficiary on the death of
the Participant consistent with the TIME OF DISTRIBUTION SECTION of Article
VII.  Notwithstanding the above, an annuity under (a) or (b) is an available
payment form only if the commencement date of survivor benefit is at or after
the date the Participant would have attained age fifty-seven (57).  If the
Participant would have not yet attained age fifty-seven (57) and an annuity was
elected as the payment form, the survivor will begin receiving the annuity on
the date the Participant would have attained age fifty-seven (57).

 

SECTION 6.05 — DISTRIBUTION ELECTION PROCEDURES.

 

An election regarding the form of payment under the Plan must be made in such
manner and in accordance with such rules as may be prescribed for this purpose
by the Administrator.  A distribution election will be effective only if it is
received in properly completed form by the Administrator as part of the
Participant’s first enrollment in the Plan, and will be irrevocable after the
expiration of the initial enrollment period; except that, a Participant who has
elected (or is defaulted to) an annuity may elect an annuity form of payment
prior to the Benefit Commencement Date.

 

A Participant will be allowed a separate payment form election to apply in the
case of each event specified in the DISTRIBUTION EVENTS SECTION of Article
V.  Further, with respect to each event specified in the DISTRIBUTION EVENTS
SECTION of Article V (other than a Fixed Date Distribution), a Participant will
be allowed to specify a different payment form that will apply if the event
occurs before or after an age specified by the Participant as part of his
election.

 

In accordance with the requirements and procedures prescribed by the
Administrator, a Participant may elect to defer payment (one time only with
respect to each distribution event specified in the DISTRIBUTION EVENTS SECTION
of Article V), provided that:

 

(a)          The election to defer must be received in properly completed form
by the Administrator at least twelve (12) months prior to the distribution
event; and

 

(b)          The deferral must be for at least five (5) years from the
originally scheduled payment date, provided that this requirement will not apply
to an election to defer payment upon death.

 

Notwithstanding the timing requirements that would otherwise apply above, a
Participant may change his form of payment election from any of the options
specified in the FORM OF DISTRIBUTION SECTION of this Article provided that the
Participant makes a new payment election by December 31, 2008.  Any election
made during the period from January 1, 2008, through December 31, 2008, will
apply only to amounts that would not otherwise be payable in 2008, and will not
apply to the extent that the election change would cause an amount to be paid in
2008 that would not otherwise be payable in 2008.

 

SECTION 6.06 — DEFAULT ELECTION.

 

If a Participant fails to file a distribution election, the distribution will be
made in the form of an annuity under the FORM OF DISTRIBUTION SECTION of this
Article.

 

SECTION 6.07 — SURVIVOR BENEFITS IN EVENT OF DEATH AFTER ANNUITY COMMENCMENT.

 

If a Participant elects an annuity with a survivor component as an optional form
of payment and dies after commencement of such annuity, payments will continue
consistent with the form of payment being received by the Participant.  If the
annuity elected by the Participant does not have a survivor component (e.g., a
single life annuity), then no survivor benefits are payable to anyone if the
Participant dies after payment or commencement of his Supplemental Benefit.

 

 

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ARTICLE VII

 

TIMING OF DISTRIBUTION

 

SECTION 7.01 — TIME OF DISTRIBUTION.

 

The Administrator, in its sole discretion, if it deems it necessary or
appropriate for administrative reasons, may defer any payment to a date later
than the scheduled payment date within the calendar year or, if later, to the
fifteenth (15th) day of the third calendar month following the scheduled payment
date, without adjustment for deferred payment of any installment or annuity.

 

SECTION 7.02 — SPECIFIED EMPLOYEE.

 

A distribution made due to a Separation from Service of a Participant who is a
Specified Employee on the Separation from Service date will not under any
circumstances be made prior to the first business day that is six (6) months and
one (1) day following the Participant’s Separation from Service, except in the
case of an intervening death of the Participant as provided in Article
VI.  However, this delayed payment requirement does not apply to any
distribution event other than Separation from Service.  In the event of a
delayed payment to a Specified Employee, the last day of the calendar month
following the Participant’s Separation from Service will be treated as the
“scheduled payment date or “date of determination” for purposes of calculating
any Supplemental Benefit under this Plan, and the first payment made as of the
first business day that is six (6) months and one (1) day following the
Participant’s Separation from Service will include any catch-up payment of all
monthly payments, if applicable, that would have been made to the Participant
(without any adjustment for interest or earnings) from the first day of the
calendar month following the Participant’s Separation from Service.

 

SECTION 7.03 — DISTRIBUTIONS PURSUANT TO A DOMESTIC RELATIONS ORDER.

 

The Plan permits the benefits actually payable to a Participant to be divided
with a spouse or former spouse of the Participant who meets the definition of
alternate payee under ERISA § 206(d) provided that the Administrator determines
that the domestic relations order meets the criteria of a qualified domestic
relations order, as defined in ERISA § 206(d).  Such domestic relations order
may provide for a distribution to an alternate payee prior to payment (or
commencement) of a benefit to a Participant, in the form of a single lump sum
payment.  The Administrator’s determination that a domestic relations order
meets the requirements of ERISA § 206(d) will result in a distribution event and
lump sum payment for the alternate payee and the timing requirements of Section
7.01 will apply.  However, once an annuity form of benefit has commenced, the
alternate payee shall not be able to receive a separate interest and will have a
shared interest in the Participant’s benefit as provided by the domestic
relations order, consistent with the form of measuring life used for the
annuity.

 

The Administrator will establish reasonable procedures to determine whether a
domestic relations order meets the criteria of ERISA § 206(d).  Upon receiving a
domestic relations order, the Administrator promptly will notify the Participant
and an alternate payee named in the order, in writing, of the receipt of the
order and the Plan's procedures for determining the status of the order.  Within
a reasonable period of time after receiving the domestic relations order, the
Administrator will determine the status of the order and will notify the
Participant and each alternate payee, in writing, of its determination.  The
Administrator will provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order.

 

If any portion of the Participant's benefit under this Plan is payable during
the period the Administrator is making its determination of the status of the
domestic relations order, a separate accounting will be made of the amount
payable.  If the Administrator determines the order is a domestic relations
order within the criteria of ERISA § 206(d) within the calendar year in which
amounts are first payable following receipt of the order or, if later, before
the fifteenth (15th) day of the third calendar month following the scheduled
payment date, the payable amounts will be distributed in accordance with the
order.  If the Administrator does not make its determination of the status of
the order within such period, the payable amounts will be distributed in the
manner the Plan would distribute if the order did not exist and the order will
apply prospectively if the Administrator later determines the order meets the
criteria of ERISA § 206(d).

 

 

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The Plan will make payments or distributions required under this section by
separate benefit checks or other separate distribution to the alternate payee
and report the payments accordingly, provided however, that the Administrator
may report distributions as income to the Participant for federal income tax
and/or Social Security or other withholding purposes as it determines to be
consistent with the requirements of the Code.

 

SECTION 7.04 — RIGHT OF OFFSET.

 

Notwithstanding any other provisions of this Plan, the Company reserves the
right to withhold and setoff from any distribution or payment that is due and
payable to a Participant or Beneficiary under the Plan any amount owed to the
Company or any Controlled Group Member by the Participant, whether such
obligation is matured or unmatured and however arising, at the time of (and with
priority over) any such distribution or payment to the extent that the retention
or exercise of such right does not have adverse tax consequences to the
Participant or Beneficiary under Code § 409A.  Further, the Company reserves the
right to withhold and setoff from the actuarial value of the Participant’s
Supplemental Benefit (even if a payment or distribution is not then due and
payable) any amount owed to the Company or any Controlled Group Member by the
Participant as satisfaction of such obligation of the Participant, where such
obligation is incurred in the ordinary course of the service relationship
between the Participant and the Company or Controlled Group Member, the amount
of reduction in any of the Company’s or Controlled Group Member’s taxable years
does not exceed five-thousand dollars ($5,000), and the entire reduction is made
at the same time and in the same amount as the obligation otherwise would have
been due and collected from the Participant.

 

The Administrator may exercise the Company’s rights under this section.

 

SECTION 7.05 — DELAY OF PAYMENT UNDER CERTAIN CIRCUMSTANCES.

 

Any payment due under the Plan as of a distribution event specified in the
DISTRIBUTION EVENTS SECTION of Article V may be delayed at the discretion of the
Administrator to the extent that the Administrator reasonably anticipates that
if the payment were made as scheduled:

 

(a)         a deduction with respect to such payment would not be permitted to
Principal Financial Group due to the application of Code § 162(m).  The payment
will be made during the taxable year in which the Administrator reasonably
anticipates or should reasonably anticipate that if the payment is made during
such year, the deduction of such payment will be deductible under Code § 162(m);
or

 

(b)         the making of the payment will violate federal securities laws or
other applicable law.  The payment will be made at the earliest date at which
the Administrator reasonably anticipates that the making of the payment will not
cause such violation.

 

Any payment so delayed will be deemed to have been paid in accordance with this
Article (including any delay specified therein in the case of a Specified
Employee).

 

SECTION 7.06 — PAYMENT OF EMPLOYMENT TAXES.

 

Notwithstanding any other provision of the Plan, the time or schedule of a
payment may be accelerated, or a payment may be made under the Plan, to pay the
Federal Insurance Contribution Act (FICA) tax imposed under Code §§ 3101,
3121(a), and 3121(v)(2), where applicable, on compensation deferred under the
Plan (“FICA Amount”).  Additionally, the time or schedule of a payment may be
accelerated, or a payment may be made under the Plan, to pay the income tax at
source on wages imposed under Code § 3401 or the corresponding withholding
provisions of applicable state, local, or foreign tax laws as a result of the
payment of the FICA Amount, and to pay the additional income tax at source on
wages attributable to the pyramiding Code § 3401 wages and taxes.  However, the
total payment under this provision must not exceed the aggregate of the FICA
Amount, and the income tax withholding related to such FICA Amount.

 

 

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ARTICLE VIII

 

ADMINISTRATION OF PLAN

 

SECTION 8.01 — ADMINISTRATION.

 

The Administrator of the Plan has authority to control and manage the operation
and administration of the Plan and make all decisions and determinations
incident thereto.  Other parties responsible for duties with respect to this
Plan include the following:

 

(a)         Board or its Human Resources Committee. The Board or its Human
Resources Committee is responsible for overseeing, generally, and performing
nondiscretionary functions with respect to the Plan, except to the extent such
authority has been delegated to a Company committee.  The Human Resources
Committee is responsible for recommending to the Board the amendment of the
Plan, except that appropriate officers of the Company or Principal Life are
authorized to make amendments to the Plan on an ongoing basis as they deem
advisable to facilitate the administration of the Plan without substantially
altering the level of benefits provided or the cost of the Plan to the Company,
or to conform the Plan to applicable laws or regulations; provided such
amendments are reviewed by the Corporate Management Committee.

 

(b)         Corporate Management Committee.  The Corporate Management Committee
is responsible for receiving reports and reviewing the recommendations of
Principal Life’s Human Resources Department staff and recommending amendments of
the Plan.  The Corporate Management Committee is responsible for acting as
required by the Plan and reporting such actions to the Administrator and to the
Human Resources Committee, as required by either.

 

(c)         Benefit Plans Investment Committee.  The Benefit Plans Investment
Committee of Principal Life is responsible for all investment matters relating
to the Plan, including the investment of assets that may (but are not required
to be) set aside to hedge liabilities resulting from the Plan, and actual
investment of the rabbi trust, including the selection and monitoring of
investment providers (including the Trustee) with respect to the Plan.  Members
of the Benefit Plans Investment Committee will be appointed by the Chief
Executive Officer of Principal Life.

 

Day-to-day administrative duties with respect to the Plan will be performed by
the Human Resources Department of Principal Life.

 

SECTION 8.02 — CORRECTION OF ERRORS AND DUTY TO REVIEW INFORMATION.

 

Errors may occur in the operation and administration of the Plan.  The
Administrator reserves the right to cause such equitable adjustments to be made
to correct for such errors as it considers appropriate (including adjustments to
Participant or Beneficiary benefits), which will be final and binding on the
Participant or Beneficiary.

 

Each Participant and Beneficiary has the duty to promptly review any information
that is provided or made available to the Participant or Beneficiary and that
relates in any way to the operation and administration of the Plan or his
elections under the Plan (for example, to review benefit statements to make sure
investment elections are being implemented appropriately, to review Plan
booklets and prospectuses, etc.) and to notify the Administrator of any error
made in the operation or administration of the Plan that affects the Participant
or Beneficiary within a reasonable period of time after such information is
provided or made available to the Participant or Beneficiary (for example, the
date the information is sent by mail or the date the information is provided or
made available electronically).  If the Participant or Beneficiary fails to
review any information or fails to notify the Administrator of any error within
such reasonable period of time, he will not be able to bring any claim seeking
relief or damages based on the error.  If the Administrator is notified of an
alleged error within a reasonable period of time,  the Administrator will
investigate and either correct the error or notify the Participant or
Beneficiary that it believes that no error occurred.  If the Participant or
Beneficiary is not satisfied with the correction (or the decision that no
correction is necessary), he may file a formal claim under the claims procedures
under the CLAIMS PROCEDURES SECTION of this Article.

 

The Administrator may exercise the Company’s rights under this section.

 

 

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SECTION 8.03 — CLAIMS PROCEDURES.

 

If a Participant or Beneficiary does not feel as if he has received full payment
of the benefit due such person under the Plan, the Participant or Beneficiary
may file a written claim with the Administrator setting forth the nature of the
benefit claimed, the amount thereof, and the basis for claiming entitlement to
such benefit.  The Vice President and Chief Operating Officer of the Human
Resources department of Principal Life will ordinarily determine the validity of
and communicate a decision regarding the claim within ninety (90) days after the
date of the claim.  If additional information is necessary to make a
determination on a claim, the claimant will be advised of the need for such
additional information within forty-five (45) days after the date of the
claim.  The claimant will have up to one hundred and eighty (180) days to
supplement the claim information, and the claimant will be advised of the
decision on the claim within forty-five (45) days after the earlier of the date
the supplemental information is supplied or the end of the one hundred and
eighty (180) day period. A claim is considered approved only if its approval is
communicated in writing to the claimant.

 

A claim for benefits which is denied will be denied by written notice setting
forth in a manner calculated to be understood by the claimant:

 

(a)          The specific reason or reasons for the denial, including a specific
reference to any provisions of the Plan (including any internal rules,
guidelines, protocols, criteria, etc.) on which the denial is based;

 

(b)          A description of any additional material or information that is
necessary to process the claim; and

 

(c)          An explanation of the procedure for further reviewing the denial of
the claim and applicable time limit, including a statement of the claimant’s
right to bring a civil action under ERISA § 502(a) following an adverse benefit
determination on review.

 

Within sixty (60) days after the receipt of a denial on a claim, a claimant or
his authorized representative may file a written request for an appeal of such
denial.  Such appeal will be undertaken by the most senior Human Resources
Leader of Principal Life and will be a full and fair review. The claimant will
have the right to review all pertinent documents. If the claimant fails to file
an appeal within 60 days of receipt of the denial on a claim, the claim will be
deemed abandoned and the claimant precluded from reasserting it.

 

The most senior Human Resources Leader of Principal Life will issue a decision
not later than sixty (60) days after receipt of the appeal from a claimant
unless special circumstances, such as the need to hold a hearing, require a
longer period of time, in which case a decision will be rendered as soon as
possible but not later than one hundred and twenty (120) days after receipt of
the claimant’s appeal request .  The decision on appeal will be in writing in a
manner calculated to be understood by the claimant and will clearly set forth:

 

(a)  The specific reason or reasons for the adverse determination, including a
specific reference to any provisions of the Plan (including any internal rules,
guidelines, protocols, criteria, etc.) on which the denial is based.

(b)  a statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to an copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits; and

(c)  a statement describing any voluntary appeal procedures offered by the Plan
and the claimant’s right to obtain the information about such procedures as well
as a statement of the claimant’s right to bring an action under ERISA §502(a).

 

Decisions reached under these claims and appeals procedures shall be binding on
all parties, including any Beneficiary or other person claiming through a
Participant.  Any legal action for benefits under the Plan may not be brought
unless and until the claimant has exhausted his remedies under these
procedures.   In any such legal action, the claimant may be allowed to only
present evidence and theories which the claimant presented during the claims and
appeals process.  Any claims which the claimant does not in good faith pursue
through the appeal stage of the procedure may be treated as having been
irrevocably waived.

 

 

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Any suit or legal action initiated by a claimant under the Plan must be brought
by the claimant no later than one year following a final decision on appeal by
the most senior Human Resources Leader of Principal Life.  The one-year
limitation on suits for benefits will apply in any forum where a claimant
initiates such suit or legal action.

 

The Participant will be solely responsible for taking prompt actions in the
event of disputed payments as necessary to avoid any adverse tax consequences
under Code § 409A, even if action is required to be taken under Code § 409A in a
more timely manner than is required under this CLAIMS PROCEDURES SECTION.

 

Claims for benefits upon a Disability shall be determined in accordance with the
rules for determining disability claims under DOL Regulation §2560.503-1, which
is hereby incorporated by reference.

 

SECTION 8.04 — INDEMNIFICATION.

 

Each officer or employee responsible for the administration or operation of the
Plan and each member of the Benefit Plans Investment Committee shall be
indemnified and held harmless by the Company or Participating Controlled Group
Member against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action taken
or failure to act.

 

SECTION 8.05 — EXERCISE OF AUTHORITY.

 

The Company, the Administrator, the Corporate Management Committee, the Benefit
Plans Investment Committee, and any other person or body who has authority with
respect to the management, administration or investment of the Plan may exercise
that authority in its/his full discretion.  This discretionary authority
includes, but is not limited to, the authority to make any and all factual
determinations and interpret all terms and provisions of this document (or any
other document established for use in the administration of the Plan) relevant
to the issue under consideration.  The exercise of authority will be binding
upon all persons; and it is intended that the exercise of authority be given
deference in all courts of law to the greatest extent allowed under law, and
that it not be overturned or set aside by any court of law unless found to be
arbitrary and capricious.

 

SECTION 8.06 — TELEPHONIC OR ELECTRONIC NOTICES AND TRANSACTIONS.

 

Any notice that is required to be given under the Plan to a Participant or
Beneficiary, and any action that can be taken under the Plan by a Participant or
Beneficiary, may be by means of voice response, Internet, or other electronic
system to the extent so authorized by the Administrator.

 

SECTION 8.07 — REIMBURSEMENT OF LEGAL FEES.

 

If a Participant’s or Beneficiary’s claim for benefits under this Plan is denied
pursuant to the CLAIMS PROCEDURES SECTION of this Article, the Company will be
required to reimburse a Participant or Beneficiary who files a suit against the
Company and prevails.  Any such reimbursement of legal fees shall otherwise be
made no later than the March 15th immediately following the year the Participant
or Beneficiary obtains the right to reimbursement which is no longer subject to
a substantial risk of forfeiture.

 

SECTION 8.08 – TRUSTEE CONTROL UPON COMMENCEMENT OF BENEFIT PAYMENTS.

 

Upon the commencement of a distribution of benefits to any Participant under
this Plan, the Administrator will provide the trustee of a rabbi trust, which
may be used as a funding vehicle for the benefits due under the Plan, with
written directions regarding the time and form of payments due to each
Participant pursuant to this Plan.  Any directions provided by the Administrator
to the trustee will be irrevocable except to the extent the Administrator has
provided the trustee with satisfactory evidence that:

 

(a)          the schedule provided by the Administrator contains an error with
respect to the amount or time of payment to the Participant (in which case the
Administrator will correct the error);

 

 

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(b)          the payment due to the Participant has been paid directly by the
Company or a Controlled Group Member;

 

(c)          the Company has a right of setoff against a scheduled payment under
the RIGHT OF OFFSET SECTION of Article VII which cannot be satisfied from any
other source; or

 

(d)          the Participant has engaged in felony conduct detrimental to the
business of the Company or a Participating Controlled Group Member.

 

The trustee will be obligated to follow a direction on file with it only to the
extent of the assets held in the trust, and the trustee will have no obligation
to seek funding of the trust from the Company or any Controlled Group Member.

 

ARTICLE IX

 

CONTRACTUAL OBLIGATIONS AND FUNDING

 

SECTION 9.01 — CONTRACTUAL OBLIGATIONS.

 

The Plan creates a contractual obligation on the part of the Company and each
Participating Controlled Group Member, other than Principal Life, to provide
benefits as set forth in the Plan with respect to:

 

(a)          Participants who are employed with the Company or that
Participating Controlled Group Member, other than Principal Life;

 

(b)          Participants who were employed with the Company or that
Participating Controlled Group Member, other than Principal Life, prior to
Separation from Service; and

 

(c)          Beneficiaries of the Participants described in (a) and (b).

 

For purposes of this section, employees of Principal Life shall be treated as
employees of the Company.

 

A Participating Controlled Group Member is not responsible for (and has no
contractual obligation with respect to) benefits payable to a Participant who is
or was employed with the Company or another Participating Controlled Group
Member.  If a Participant is employed with two or more employers (the Company
and a Participating Controlled Group Member, or two or more Participating
Controlled Group Members, etc.), either concurrently or at different times, each
will be responsible for the Supplemental Benefit that accrued with respect to
the period while the Participant was employed with that employer.

 

The Company will guarantee and assume secondary liability for the contractual
commitment of each Participating Controlled Group Member, other than Principal
Life, under this section.  Principal Life will guarantee and assume secondary
liability for the contractual commitment of the Company and each Participating
Controlled Group Member.

 

In the event an employer ceases to be a Controlled Group Member with respect to
the Company by reason of a stock sale, merger or similar corporate transaction
involving an unrelated third party, the contractual obligation and liability for
benefits that rested with such employer prior to the transaction will be
retained by such employer (or its successor in interest) after it ceases to be a
Controlled Group Member, unless the employer transfers such contractual
obligation and liability with the consent of the affected Participant.  For any
Participant who remains employed with an employer after it ceases to be a
Controlled Group Member by reason of a sale of stock of such employer or its
direct or indirect parent company, or similar corporate transaction, a
Separation from Service will not have occurred solely as a result of such
transaction

 

In the event of a sale of substantial assets (such as a location or division, or
substantially all assets of a trade or business) of the Company or a Controlled
Group Member to an unrelated buyer, the Company or Controlled Group Member and
the buyer may, with the consent of the Participant, agree to transfer the
contractual obligation and liability for benefits with respect to any
Participant who becomes an employee of the buyer or an affiliate of the buyer
upon the closing or in connection with such transaction.  In such case, if
agreed to by both the Company or Controlled Group Member and the buyer, the
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constitute a Separation from Service and benefits thereafter will be paid in
accordance with the terms of the Plan or a successor plan established by the
buyer or an affiliate in a manner consistent with Code § 409A.

 

SECTION 9.02 — FUNDING.

 

The Company has established a “rabbi” trust to serve as a funding vehicle for
benefits payable under the Plan.  However, neither the Company nor any
Controlled Group Member will have any obligation to fund such trust.

 

Neither the Company nor any Controlled Group Member will transfer or contribute
any funds to any rabbi trust during any “restricted period,” as defined in Code
§ 409A(b)(3)(B).  If any funds are transferred or contributed during a
restricted period and the Administrator certifies in writing that such transfer
or contribution was disallowed under this provision, the funds will be deemed to
have been transferred or contributed under a mistake of fact and will be
returned to the Company or the Controlled Group Member, along with any earnings
allocable to such funds, regardless of whether the rabbi trust’s terms establish
it as revocable or irrevocable.  Further, the assets of any rabbi trust hereby
established will not be held or transferred outside of the United States, and
the trust will not have any other feature that would result in a transfer of
property being deemed to have occurred under Code § 409A (for example, there
will be no funding obligation or restrictions on assets in connection with a
change in financial health of the Company or any Controlled Group Member).

 

The establishment and funding of the rabbi trust will not affect the contractual
obligations of the Company and Participating Controlled Group Members under the
CONTRACTUAL OBLIGATIONS SECTION of this Article, except that such obligations
with respect to any Participant or Beneficiary will be offset to the extent that
payments are actually made from the trust to such Participant or
Beneficiary.  In the case of any transfer of contractual obligations outside of
the Controlled Group Members (including by sale of the stock of a Controlled
Group Member such that it no longer remains such) under the CONTRACTUAL
OBLIGATIONS SECTION of this Article, the parties may arrange for a transfer of
assets to a rabbi trust maintained by the buyer or an affiliate of the buyer.

 

Any rabbi trust used to fund benefits payable under this Plan may be used to
fund benefits payable under any other non-qualified deferred compensation plan
maintained by the Company or a Participating Controlled Group Member, whether
existing or established in the future.

 

ARTICLE X

 

GENERAL PROVISIONS

 

SECTION 10.01 — AMENDMENT AND TERMINATION.

 

The Company has the right to amend this Plan.  A Participating Controlled Group
Member does not have the right to amend the Plan.  The Plan can be amended or
terminated at any time and for any reason by action of the following:

 

(a)         The Board or the Human Resources Committee of the Board may
terminate the Plan or adopt any amendment to the Plan, and any amendment that
has a material negative cost effect on the Company is reserved to the Board or
its Human Resources Committee.

 

(b)         Appropriate officers of Principal Life are authorized to make
amendments to the Plan on an ongoing basis as they deem advisable to facilitate
the administration of the Plan without substantially altering the level of
benefits provided or the cost of the Plan to the Company, or to conform the Plan
to applicable laws or regulations; provided such amendments are reviewed by the
Corporate Management Committee.

 

No action by any person, body or committee with amendment authority will
constitute an amendment to the Plan unless it is expressly designated as an
amendment to the Plan or except as provided in the MODIFICATION BY EMPLOYMENT OR
SIMILAR AGREEMENT SECTION of this Article.

 

The Board, Human Resources Committee, or the appropriate officers of Principal
Life generally will determine the effective date of any amendment or termination
of the Plan.  However, if Code § 409A requires a delayed

 

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effective date (for example, if an amendment changes a deferral rule in a way
that must be delayed for twelve (12) months), then the amendment will be
effective as of the later of the date determined by the Board, Human Resources
Committee, or the appropriate officers of Principal Life;  or the earliest
effective date allowed under Code § 409A.

 

The Plan may not be amended in a manner that has the effect of reducing the
balance or vested percentage of any Participant’s or Beneficiary’s
benefits.  This will not prohibit an amendment that reduces or eliminates the
benefit accrued and payable under this Plan and shifts the liability for such
benefit to another nonqualified retirement plan maintained by the Company or a
Controlled Group Member, or any successor, or an amendment that is required by
law or for which the failure to adopt the amendment would have adverse tax
consequences to the Participants affected by such amendment (as determined by
the Administrator).

 

The Board or the Human Resources Committee may terminate the Plan and provide
for the acceleration and liquidation of all benefits remaining due under the
Plan pursuant to Treas. Reg. Section 1.409A-3(j)(4)(ix).  If such a termination
and liquidation occurs, all accruals under the Plan will be discontinued (and
all Active Participants will cease to be Active Participants) as of the
termination date established by the Board or Human Resources Committee, and
benefits remaining due will be paid in a lump-sum at the time specified by the
Board or Human Resources Committee as part of the action terminating the Plan
and consistent with Treas. Reg. § 1.409A-3(j)(4)(ix).  The Board or Human
Resources Committee also may terminate the Plan other than pursuant to Treas.
Reg. § 1.409A-3(j)(4)(ix).  In the event of such other termination, all accruals
under the Plan will be discontinued (and all Active Participants will cease to
be Active Participants) as of the end of the Plan Year, but all benefits
remaining payable under the Plan will be paid at the same time and in the same
form as if the termination had not occurred – that is, the termination will not
result in any acceleration of any distribution under the Plan.

 

SECTION 10.02 — MODIFICATION BY EMPLOYMENT OR SIMILAR AGREEMENT.

 

The Company or a Participating Controlled Group Member may be a party to an
employment or similar agreement with a Participant, the terms of which may
enhance or modify in some respect the benefits provided under this Plan,
including, but not necessarily limited to, an enhancement to or modification of
the benefit amount, payment forms and/or other rights and features of the
Plan.  The Plan consists only of this document and other documents contemplated
under this document, but not including such employment or similar agreement.
Accordingly, any contractual rights that a Participant may have to any
enhancement or modification called for under an employment or similar agreement
are rights that derive from such agreement and not directly from the
Plan.  Nonetheless, the Plan will be applied in a manner that takes into account
any enhancements or modifications called for under an enforceable employment or
similar agreement as if such provisions were part of the Plan; provided that, no
change can be made to the Plan by means of an employment or similar agreement
that would not have been allowed by means of an amendment to the Plan (for
example, an amendment inconsistent with Code § 409A).

 

SECTION 10.03 — EMPLOYMENT STATUS.

 

Nothing contained in this Plan gives an Employee in the Eligible Group the right
to be retained in the Company's or Controlled Group Member’s employ or to
interfere with the Company's or Controlled Group Member’s right to discharge any
Employee.

 

SECTION 10.04 — RIGHTS TO PLAN ASSETS; TAX CONSEQUENCES.

 

Neither the Company nor any Controlled Group Member will have any obligation
whatsoever to set aside funds for the Plan or for the benefit of any Participant
or Beneficiary, and no Participant or Beneficiary will have any rights to any
amounts that may be set aside other than the rights of an unsecured general
creditor of the Company or Controlled Group Member that employs (or employed)
the Participant.

 

Neither the Company nor any Controlled Group Member is making any
representations or promises as to the tax consequences of participation in the
Plan.  Each Participant (and Beneficiary) shall be solely responsible for such
consequences.

 

 

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SECTION 10.05 — BENEFICIARIES.

 

A Participant may designate any person (natural or otherwise, including a trust)
as his Beneficiary to receive the survivor benefit (if any) payable when he/she
dies, and may change or revoke a designation previously made without the consent
of any Beneficiary.  If a Beneficiary designation is not on file, or if no
designated Beneficiary survives the Participant, the Beneficiary will be the
person designated by the Participant under the Associated Plan or, in the
absence of a designation, the default Beneficiary under the Associated Plan.  If
a primary Beneficiary becomes entitled to a survivor benefit upon the death of a
Participant but dies prior to complete distribution of such benefit, the
remaining benefit will be paid to any contingent Beneficiary designated by the
Participant, or if there is no surviving contingent Beneficiary, the remaining
benefit will be paid to the estate of the primary Beneficiary.

 

A Beneficiary designation must be made on such form and in accordance with such
rules as may be prescribed for this purpose by the Administrator.  A Beneficiary
designation will be effective (and will revoke all prior designations) if it is
received by the Administrator (or if sent by mail, the post-mark of the mailing
is) prior to the date of death of the Participant.

 

SECTION 10.06 — STATEMENTS.

 

The Administrator may cause benefit statements to be issued from time to time
advising Participants and Beneficiaries of the balance and/or investment of
their Accounts, but it is not required to issue benefits statements.

 

The Administrator may correct errors that appear on benefit statements at any
time, and the issuance of a benefit statement (and any errors that may appear on
a statement) will not in any way alter or affect the rights of a Participant or
Beneficiary with respect to the Plan.  Each Participant or Beneficiary has a
duty to promptly review each benefit statement and to notify the Administrator
of any error that appears on such statement within a reasonable period of time
after such statement is provided or made available to the Participant or
Beneficiary (for example, the date the statement is sent by mail, or the date
the statement is provided or made available electronically).  If a Participant
or Beneficiary fails to review a benefit statement or fails to notify the
Administrator of any error that appears on such statement within such reasonable
period of time, he will not be able to bring any claim seeking relief or damages
based on the error.

 

SECTION 10.07 — NONALIENATION OF BENEFITS.

 

Benefits payable under the Plan are not subject to the claims of any creditor of
any Participant or Beneficiary.  A Participant or Beneficiary does not have any
rights to alienate, anticipate, commute, pledge, encumber or assign any of such
benefits.  The preceding sentences will also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a Participant
according to a domestic relations order, except as provided in the DISTRIBUTION
PURSUANT TO DOMESTIC RELATIONS ORDER SECTION of Article VII.

 

SECTION 10.08 — CONSTRUCTION.

 

The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which the Company has its principal office.  In case
any provision of this Plan is held illegal or invalid for any reason, such
determination will not affect the remaining provisions of this Plan, and the
Plan will be construed and enforced as if the illegal or invalid provision had
never been included.

 

In the event of any conflict between the provisions of the Plan and the terms of
any contract or policy issued hereunder, the provisions of the Plan control the
operation and administration of the Plan.

 

SECTION 10.09 — WORD USAGE.

 

The masculine gender, where used in this Plan, will include the feminine gender
and the singular words as used in this Plan may include the plural, unless the
context indicates otherwise.

 

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This Amended and Restated Principal Financial Group Nonqualified Defined Benefit
Plan for Employees is executed this 20th day of December 2018.

 

PRINCIPAL FINANCIAL GROUP, INC.

 

 

 

 

By:

/s/ Tammy DeHaai

 

 

Tammy DeHaai

 

 

Vice President, Human Resources

 

 

 

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ATTACHMENT A

 

PARTICIPATING CONTROLLED GROUP MEMBERS

 

Principal International, Inc.

May 25, 1990

 

 

Delaware Charter Guarantee & Trust Company

January 1, 1995

 

 

Principal Life Insurance Company

Since inception

 

 

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