exv4w2



 




Exhibit 4.2



THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE (HEREINAFTER DEFINED) AND IS
REGISTERED IN THE NAME OF A DEPOSITARY (AS DEFINED IN THE INDENTURE) OR A NOMINEE OF A DEPOSITARY.
THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE
OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.



UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO THE TRUST (HEREINAFTER DEFINED) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND UNLESS ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.



 




			
	CUSIP No.: 74254PUP5
	 	Principal Amount: U.S. $250,000,000





PRINCIPAL LIFE INCOME
FUNDINGS TRUST 33




SECURED MEDIUM-TERM NOTES






	 	 	 	 	 	 	 
	Original Issue Date:
October 12, 2007
	Issue Price: 99.94281%
	Stated Maturity Date:

October 9, 2009
	Settlement Date:
October 12, 2007
	Securities Exchange Listing: o Yes þ No. If yes,
	 

	 	 	 	indicate name(s) of Securities Exchange(s):	 	 
	 
	 	 	 	 	. 	 
	 

	 	 	 	 	 	 
	Depositary: The Depository Trust Company
	Authorized
Denominations: $2,000
	Collateral held in the Trust: Principal Life Insurance
	 	 	Company Funding
Agreement No. 5-20011, the related Principal Financial Group, Inc.
Guarantee which fully and unconditionally guarantees the payment obligations of Principal Life
Insurance Company under the Funding Agreement, all proceeds of the Funding Agreement and the
related Guarantee and all rights and books and records pertaining to the foregoing.	 	 
	Additional Amounts to be Paid: o Yes þ No









	 	 	 	 	 	 	 
	Floating Rate Note: þ Yes o No. If yes,
	 	 	Regular Floating Rate Notes þ
	 	 	Inverse Floating Rate Notes o
	 	 	Floating Rate/Fixed Rate Notes: o
	 	 	Interest Rate: Federal
Funds Rate + .50%
	 	 	Interest Rate Basis(es): see below
	 	 	LIBOR
o
	 	 	 	 	oLIBOR Reuters Screen LIBOR01 Page
	 	 	 	 	oLIBOR
Moneyline Telerate Page: 3750
	 	 	 	 	LIBOR Currency: U.S.
Dollars
	 	 	EURIBOR o
	 	 	CMT Rate o
	 	 	 	 	Designated CMT Telerate Page:
	 

	 	 	 	 	 	If Telerate Page 7052:
	 

	 	 	 	 	 	o Weekly Average
	 

	 	 	 	 	 	o Monthly Average











1









 







	 	 	 	 	 
	Interest Rate or
Formula: Federal Funds Rate + .50%
	Fixed Rate Note: o Yes þ No. If yes,
	 

	 	 
	 	Interest Rate: 
	 

	 	 	 	Interest Payment Frequency: 
	 

	 	 	 	Interest Payment Dates:

	 

	 	 	 	Day Count Convention: 
	 

	 	 	 	Additional/Other Terms: 
	Amortizing Note: o Yes þ No. If yes,
	 

	 	 	 	Amortization schedule or formula:
	 

	 	 	 	Additional/Other Terms:
	Discount Note: o Yes þ No. If yes,
	 

	 	 	 	Total Amount of Discount:
	 

	 	 	 	Initial Accrual Period of Discount:
	 

	 	 	 	Interest Payment Dates:
	 

	 	 	 	Additional/Other Terms:
	Redemption Provisions:
o Yes þ No. If yes,
	 

	 	 	 	Initial Redemption Date:
 
	 
	 	 	 	Initial Redemption Percentage:  
	 
	 	 	 	Annual Redemption Percentage
Reduction, if any:  
	 

	 	 	 	Additional/Other Terms:

	Repayment Provisions: o Yes þ No. If yes,
	 

	 	 	 	Repayment Date(s):
	 

	 	 	 	Repayment Price:
	 

	 	 	 	Additional/Other Terms:









	 	 	 	 	 	 	 
	 	 	Designated CMT Maturity Index:
	 	 	CD Rate o
	 	 	Commercial Paper Rate o
	 	 	Constant Maturity Swap Rate o
	 	 	Eleventh District Cost of Funds Rate o
	 	 	Federal Funds Open Rate o
	 	 	Federal Funds Rate
þ
	 	 	Prime Rate o
	 	 	Treasury Rate o
	 	 	Index Maturity:
	 	 	Spread and/or Spread
Multiplier: + .50%
	 	 	Initial Interest Rate,
if any: Federal Funds Rate + .50%
	 	 	Initial Interest Reset
Date: January 9, 2008
	 	 	Interest Reset Dates:
Each business day
	 	 	Interest Determination
Date(s): the first business day preceding the related Interest Reset Date
	 	 	Interest Payment Dates:
January 9, April 9, July 9, and October 9 of each year
	 	 	Maximum Interest Rate, if any: Not Applicable
	 	 	Minimum Interest Rate, if any: Not Applicable
	 	 	Fixed Rate Commencement Date, if any: Not Applicable
	 	 	Floating Rate Commencement Date, if any: Not Applicable
	 	 	Fixed Interest Rate, if any: Not Applicable
	 	 	Day Count Convention: Actual/360
	 	 	Additional/Other Terms: Not Applicable
	 	 	Regular Record Date(s): The date that is fifteen (15) calendar days preceding
the applicable Interest Payment Date
	 	 	Sinking Fund: Not Applicable
	 	 	Specified Currency: U.S. Dollars
	 	 	Exchange Rate Agent: Not Applicable
	 	 	Calculation Agent: Citibank, N.A.
	 	 	Additional/Other Terms: Notwithstanding anything in the Prospectus Supplement to the contrary,
“Federal Funds Rate” means the rate for an Interest Reset Date will be the rate set forth in
H.15(519) for that day under the caption “EFFECT,” as such rate is displayed on the Reuters Screen
FEDFUNDS1 Page. If by 5:00 p.m., New York City time, on the day that is one business day following
the Interest Reset Date, such rate for the Interest Reset Date does not appear on the Reuters
Screen FEDFUNDS1 Page or is not yet published in H.15(519), the rate for that Interest Reset Date
will be the rate set forth in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying such rate, for that day opposite the caption “Federal funds
(effective)”. If by 5:00 p.m., New York City time, on the day that is one business day following
the Interest Reset Date, such rate for the Interest Reset Date does not appear on the Reuters
Screen FEDFUNDS1 Page or is not yet published in H.15(519), H.15 Daily Update or another recognized
electronic source, the rate for that Interest Reset Date will be the rate for the first preceding
day for which such rate is set forth in H.15(519) opposite the
caption “Federal funds (effective)”,
as such rate is displayed on the Reuters Screen FEDFUNDS1 Page.











     The Principal Life Income Fundings Trust designated above (the “Trust”), for value
received, hereby promises to pay to Cede & Co., or its registered assigns, the Principal Amount
specified above on the Stated Maturity Date specified above and, if so specified above, to pay
interest thereon from the Original Issue Date specified above or from the most recent Interest
Payment Date specified above to which interest has been paid or duly provided for at the rate per
annum determined in accordance with the provisions on the reverse hereof and as specified



2











 




above, until the principal hereof is paid or made available for payment. Unless otherwise
specified above, payments of principal, premium, if any, and interest hereon will be made in the
lawful currency of the United States of America (“U.S. Dollars” or “United States dollars”). If
the Specified Currency specified above is other than U.S. Dollars, the Holder (as defined in the
Indenture) shall receive such payments in such Foreign Currency (as hereinafter defined). The
“Principal Amount” of this Note at any time means (1) if this Note is a Discount Note (as
hereinafter defined), the Amortized Face Amount (as hereinafter defined) at such time (as defined
in Section 3(c) on the reverse hereof) and (2) in all other cases, the Principal Amount
hereof. Capitalized terms not otherwise defined herein shall have their meanings set forth in the
Indenture, dated as of the date of the Pricing Supplement (the “Indenture”), between Citibank,
N.A., as the indenture trustee (the “Indenture Trustee”), and the Trust, or on the face hereof.




     This Note will mature on the Stated Maturity Date, unless its principal (or any installment of
its principal) becomes due and payable prior to the Stated Maturity Date, whether, as applicable,
by the declaration of acceleration of maturity, notice of redemption by the Trust or otherwise (the
Stated Maturity Date or any date prior to the Stated Maturity Date on which this Note becomes due
and payable, as the case may be, is referred to as the “Maturity Date”).



     A “Discount Note” is any Note that has an Issue Price that is less than 100% of the Principal
Amount thereof by a percentage that is equal to or greater than 0.25% multiplied by the product of
the principal amount of the Notes and the number of full years to the Stated Maturity Date.



     Unless otherwise specified above, the interest payable on each Interest Payment Date or the
Maturity Date will be the amount of interest accrued from and including the Original Issue Date or
from and including the last Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, to, but excluding, such Interest Payment Date or the Maturity Date, as the
case may be.



     Unless otherwise specified above, the interest payable on any Interest Payment Date will be
paid to the Holder on the Regular Record Date for such Interest Payment Date, which Regular Record
Date shall be the fifteenth (15th) calendar day, whether or not a Business Day,
immediately preceding the related Interest Payment Date; provided that, notwithstanding any
provision of the Indenture to the contrary, interest payable on any Maturity Date shall be payable
to the Person to whom principal shall be payable; and provided, further, that unless otherwise
specified above, in the case of a Note initially issued between a Regular Record Date and the
Interest Payment Date relating to such Regular Record Date, interest for the period beginning on
the Original Issue Date and ending on such Interest Payment Date shall be paid on the Interest
Payment Date following the next succeeding Regular Record Date to the Holder on such next
succeeding Regular Record Date.



     Payments of principal of, and premium, if any, and interest and other amounts due and owing,
if any, will be made through the Indenture Trustee to the account of DTC or its nominee and will be
made in accordance with depositary arrangements with DTC.



     Unless otherwise specified on the face hereof, the Holder hereof will not be obligated to pay
any administrative costs imposed by banks in making payments in immediately available



3









 







funds by the Trust. Unless otherwise specified on the face hereof, any tax assessment or
governmental charge imposed upon payments hereunder, including, without limitation, any withholding
tax, will be borne by the Holder hereof.



     REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE
HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT
THIS PLACE.



     Unless the certificate of authentication hereon shall have been executed by the Indenture
Trustee pursuant to the Indenture, this Note shall not be entitled to any benefit under such
Indenture or be valid or obligatory for any purpose.



4









 





     IN WITNESS WHEREOF, the Trust has caused this instrument to be duly executed, by manual or
facsimile signature.



	 	 	 	 	 
	 	THE PRINCIPAL LIFE INCOME FUNDINGS TRUST	 
	 	 	 	SPECIFIED ON THE FACE OF THIS NOTE

 	 
	Dated:    Original Issue Date	By:  	U.S. Bank Trust National Association, not in its  	 
	 	individual capacity but solely as Trustee. 	 
	 
	 	 	 
	 	By:  	/s/ Janet O’Hara	 
	 	Authorized Officer 	 
	 	 	 	 
	 



CERTIFICATE OF AUTHENTICATION





     This is one of the Notes of the Principal Life Income Fundings Trust specified on the face of
this Note referred to in the within-mentioned Indenture.



	 	 	 	 	 
	 	CITIBANK, N.A.

As Indenture Trustee

 	 
	Dated:    Original Issue Date	 	 	 
	 	 	 	 
	 	By:  	/s/
Jennifer McCourt	 
	 	 	 	Authorized Signatory 	 
	 	 	 	 



5









 






	 	 	 	 	 



[REVERSE FORM OF NOTE]



Section 1. General. This Note is one of a duly authorized issue of Notes of the Trust.
The Notes are issued pursuant to the Indenture.



Section 2. Currency.





     (a) Unless specified otherwise on the face hereof, this Note is denominated in, and payments
of principal, premium, if any, and/or interest, if any, will be made in U.S. Dollars. If specified
as the Specified Currency, this Note may be denominated in, and payments of principal, premium, if
any, and/or interest, if any, may be made in a single currency other than U.S. Dollars (a “Foreign
Currency”). If this Note is denominated in a Foreign Currency, the Holder of this Note is required
to pay for this Note in the Specified Currency.



     (b) Unless specified otherwise on the face hereof, if this Note is denominated in a Foreign
Currency, the Trust is obligated to make payments of principal of, and premium, if any, and
interest, if any, on, this Note in the Specified Currency. Any amounts so payable by the Trust in
the Specified Currency will be converted by the Exchange Rate Agent into U.S. Dollars for payment
to the Holder hereof unless otherwise specified on the face of this Note or the Holder elects, in
the manner described below, to receive these amounts in the Specified Currency. If this Note is
denominated in a Foreign Currency, any U.S. Dollar amount to be received by the Holder hereof will
be based on the highest bid quotation in The City of New York received by the Exchange Rate Agent
at approximately 11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date from three recognized foreign exchange dealers (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Trust for the purchase
by the quoting dealer of the Specified Currency for U.S. Dollars for settlement on that payment
date in the aggregate amount of the Specified Currency payable to all Holders of the Notes
scheduled to receive U.S. Dollar payments and at which the applicable dealer commits to execute a
contract. All currency exchange costs will be borne by the Holders of the Notes by deductions from
any payments. If three bid quotations are not available, payments will be made in the Specified
Currency. If this Note is denominated in a Foreign Currency, the Holder of this Note may elect to
receive all or a specified portion of any payment of principal, premium, if any, and/or interest,
if any, in the Specified Currency by submitting a written request to the Indenture Trustee at its
Corporate Trust Office in The City of New York on or prior to the applicable Regular Record Date or
at least 15 calendar days prior to the Maturity Date, as the case may be. This written request may
be mailed or hand delivered or sent by cable, telex or other form of facsimile transmission. This
election will remain in effect until revoked by written notice delivered to the Indenture Trustee
on or prior to a Regular Record Date or at least 15 calendar days prior to the Maturity Date, as
the case may be. The Holder of a Note denominated in a Foreign Currency to be held in the name of
a broker or nominee should contact their broker or nominee to determine whether and how an election
to receive payments in the Specified Currency may be made. Unless specified otherwise on the face
hereof, if the Specified Currency is other than U.S. Dollars, a beneficial owner of a Note
represented by a global security which elects to receive payments of principal, premium, if any,
and/or interest, if any, in the Specified Currency must notify the participant through which it
owns its interest on or prior to the applicable Regular Record Date or at least 15



6









 







calendar days prior to the Maturity Date, as the case may be, of its election. The applicable
participant must notify DTC of its election on or prior to the third Business Day after the
applicable Regular Record Date or at least 12 calendar days prior to the Maturity Date, as the case
may be, and DTC will notify the Indenture Trustee of that election on or prior to the fifth
Business Day after the applicable Regular Record Date or at least ten calendar days prior the
Maturity Date, as the case may be. If complete instructions are received by the participant from
the applicable beneficial owner and forwarded by the participant to DTC, and by DTC to the
Indenture Trustee, on or prior to such dates, then the applicable beneficial owner will receive
payments in the Specified Currency.



     (c) The Trust will indemnify the Holder hereof against any loss incurred as a result of any
judgment or order being given or made for any amount due under this Note and that judgment or order
requiring payment in a currency (the “Judgment Currency”) other than the Specified Currency, and as
a result of any variation between: (i) the rate of exchange at which the Specified Currency amount
is converted into the Judgment Currency for the purpose of that judgment or order; and (ii) the
rate of exchange at which the Holder, on the date of payment of that judgment or order, is able to
purchase the Specified Currency with the amount of the Judgment Currency actually received.



     (d) Unless otherwise specified on the face hereof, if payment hereon is required to be made
in a Foreign Currency and such currency is unavailable due to the imposition of exchange controls
or other circumstances beyond the Trust’s control, then the Trust will be entitled to make payments
with respect hereto in U.S. Dollars on the basis of the Market Exchange Rate (as hereinafter
defined), computed by the Exchange Rate Agent, on the second Business Day prior to the particular
payment or, if the Market Exchange Rate is not then available, on the basis of the most recently
available Market Exchange Rate.



     (e) The “Market Exchange Rate” for the Foreign Currency shall mean the noon dollar buying
rate in The City of New York for cable transfers for the Foreign Currency as certified for customs
purposes (or, if not so certified, as otherwise determined) by the Federal Reserve Bank of New
York.



     (f) All determinations made by the Exchange Rate Agent shall be at its sole discretion and
shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder
hereof.



     (g) All costs of exchange in respect of this Note, if denominated in a Foreign Currency, will
be borne by the Holder hereof.


Section 3. Determination of Interest Rate and Certain Other Terms.





	 	(a)	 	Fixed Rate Notes. If this Note is specified on the face hereof as a
“Fixed Rate Note”:






(i) This Note will bear interest at the rate per annum specified on the face hereof.
Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day
months.



7









 






(ii) Unless otherwise specified on the face hereof, the Interest Payment Dates for this
Note will be as follows:



	 	 	 
	Interest Payment Frequency	 	Interest Payment Dates
	Monthly

	 	Fifteenth day of each calendar month,
beginning in the first calendar month
following the month this Note was issued.
	 
	 	 
	Quarterly

	 	Fifteenth day of every third calendar
month, beginning in the third calendar
month following the month this Note was
issued.
	 
	 	 
	Semi-annual

	 	Fifteenth day of every sixth calendar
month, beginning in the sixth calendar
month following the month this Note was
issued.
	 
	 	 
	Annual

	 	Fifteenth day of every twelfth calendar
month, beginning in the twelfth calendar
month following the month this Note was
issued.







(iii) If any Interest Payment Date or the Maturity Date of this Note falls
on a day that is not a Business Day, the Trust will make the required payment of
principal, premium, if any, and/or interest or other amounts on the next succeeding
Business Day, and no additional interest will accrue in respect of the payment made on
that next succeeding Business Day.




	 	(b)	 	Floating Rate Notes. If this Note is specified on the face hereof as a
“Floating Rate Note”:






(i) Interest Rate Basis. Interest on this Note will be determined by reference
to the applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include the CD Rate, the CMT Rate, the Commercial Paper Rate, the Constant
Maturity Swap Rate; the Eleventh District Cost of Funds Rate, the Federal Funds Open
Rate, the Federal Funds Rate, LIBOR, EURIBOR, the Prime Rate or the Treasury Rate (each
as defined below).




(ii) Effective Rate. The rate derived from the applicable Interest Rate Basis
or Interest Rate Bases will be determined in accordance with the related provisions
below. The interest rate in effect on each day will be based on: (1) if that day is an
Interest Reset Date, the rate determined as of the Interest Determination Date
immediately preceding that Interest Reset Date; or (2) if that day is not an Interest
Reset Date, the rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.




(iii) Spread; Spread Multiplier; Index Maturity. The “Spread” is the number of
basis points (one one-hundredth of a percentage point) specified on the face hereof



8









 







to be added to or subtracted from the related Interest Rate Basis or Interest Rate
Bases applicable to this Note. The “Spread Multiplier” is the percentage specified on
the face hereof of the related Interest Rate Basis or Interest Rate Bases applicable to
this Note by which the Interest Rate Basis or Interest Rate Bases will be multiplied to
determine the applicable interest rate. The “Index Maturity” is the period to maturity
of the instrument or obligation with respect to which the related Interest Rate Basis
or Interest Rate Bases will be calculated.




(iv) Regular Floating Rate Note. Unless this Note is specified on the face
hereof as a Floating Rate/Fixed Rate Note or an Inverse Floating Rate Note, this Note
(a “Regular Floating Rate Note”) will bear interest at the rate determined by reference
to the applicable Interest Rate Basis or Interest Rate Bases: (1) plus or minus the
applicable Spread, if any; and/or (2) multiplied by the applicable Spread Multiplier,
if any. Commencing on the first Interest Reset Date, the rate at which interest on
this Regular Floating Rate Note is payable will be reset as of each Interest Reset
Date; provided, however, that the interest rate in effect for the period, if any, from
the Original Issue Date to the first Interest Reset Date will be the Initial Interest
Rate.




(v) Floating Rate/Fixed Rate Notes. If this Note is specified on the face
hereof as a “Floating Rate/Fixed Rate Note”, this Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Interest Rate Bases:
(1) plus or minus the applicable Spread, if any; and/or (2) multiplied by the
applicable Spread Multiplier, if any. Commencing on the first Interest Reset Date, the
rate at which this Floating Rate/Fixed Rate Note is payable will be reset as of each
Interest Reset Date; provided, however, that: (A) the interest rate in effect for the
period, if any, from the Original Issue Date to the first Interest Reset Date will be
the Initial Interest Rate specified on the face hereof; and (B) the interest rate in
effect commencing on the Fixed Rate Commencement Date will be the Fixed Interest Rate,
if specified on the face hereof, or, if not so specified, the interest rate in effect
on the day immediately preceding the Fixed Rate Commencement Date.




(vi) Inverse Floating Rate Notes. If this Note is specified on the face hereof
as an “Inverse Floating Rate Note”, this Note will bear interest at the Fixed Interest
Rate minus the rate determined by reference to the applicable Interest Rate Basis or
Interest Rate Bases: (1) plus or minus the applicable Spread, if any; and/or (2)
multiplied by the applicable Spread Multiplier, if any; provided, however, that
interest on this Inverse Floating Rate Note will not be less than zero. Commencing on
the first Interest Reset Date, the rate at which interest on this Inverse Floating Rate
Note is payable will be reset as of each Interest Reset Date; provided, however, that
the interest rate in effect for the period, if any, from the Original Issue Date to the
first Interest Reset Date will be the Initial Interest Rate.




(vii) Interest Reset Dates. The period between Interest Reset Dates will be the
“Interest Reset Period.” Unless otherwise specified on the face hereof, the Interest
Reset Dates will be, in the case of this Floating Rate Note if by its terms it resets:
(1) daily—each business day; (2) weekly—the Wednesday of each week, with the



9









 







exception of any weekly reset Floating Rate Note as to which the Treasury Rate is an
applicable Interest Rate Basis, which will reset the Tuesday of each week; (3)
monthly—the fifteenth day of each calendar month, with the exception of any monthly
reset Floating Rate Note as to which the Eleventh District Cost of Funds Rate is an
applicable Interest Rate Basis, which will reset on the first calendar day of the
month; (4) quarterly—the fifteenth day of March, June, September and December of each
year; (5) semi-annually—the fifteenth day of the two months of each year specified on
the face hereof; and (6) annually—the fifteenth day of the month of each year
specified on the face hereof; provided, however, that, with respect to a Floating
Rate/Fixed Rate Note, the rate of interest thereon will not reset after the particular
Fixed Rate Commencement Date. If any Interest Reset Date for this Floating Rate Note
would otherwise be a day that is not a Business Day, the particular Interest Reset Date
will be postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and that
Business Day falls in the next succeeding calendar month, the particular Interest Reset
Date will be the immediately preceding Business Day.




(viii)
Interest Determination Dates. Unless otherwise specified on
the face hereof, the interest rate applicable to a Floating
Rate Note for an Interest Reset Period commencing on the related Interest Reset Date
will be determined by reference to the applicable Interest Rate Basis as of the
particular “Interest Determination Date”, which will be: (1) with respect to the
Federal Funds Open Rate—the related Interest Reset Date; (2) with respect to the
Commercial Paper Rate, Federal Funds Rate and the Prime Rate—the Business Day
immediately preceding the related Interest Reset Date; (3) with respect to the CD Rate
and the CMT Rate—the second Business Day preceding the related Interest Reset Date;
(4) with respect to the Constant Maturity Swap Rate—the second U.S. Government
Securities business day preceding the related Interest Reset Date, provided, however,
that if after attempting to determine the Constant Maturity Swap Rate, such rate is not
determinable for a particular Interest Determination Date, then such Interest
Determination Date shall be the first U.S. Government Securities business day preceding
the original interest determination date for which the Constant Maturity Swap Rate can
be determined; (5) with respect to the Eleventh District Cost of Funds Rate—the last
working day of the month immediately preceding the related Interest Reset Date on which
the Federal Home Loan Bank of San Francisco publishes the Eleventh District Index (as
defined below); (6) with respect to LIBOR and EURIBOR—the second London Banking Day
(as defined below) preceding the related Interest Reset Date; and (7) with respect to
the Treasury Rate—the day of the week in which the related Interest Reset Date falls
on which day Treasury Bills (as defined below) are normally auctioned (i.e., Treasury
Bills are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday, except
that the auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the related Interest Reset Date,
the Interest Determination Date will be the preceding Friday. The Interest
Determination Date pertaining to a Floating Rate Note, the interest rate of which is
determined with reference to two or more Interest Rate Bases, will be the latest
Business Day which



10









 







is at least two Business Days before the related Interest Reset Date for the applicable
Floating Rate Note on which each Interest Reset Basis is determinable. “London Banking
Day” means a day on which commercial banks are open for business (including dealings in
the LIBOR Currency) in London.




(ix) Calculation Dates. The interest rate applicable to each Interest Reset
Period will be determined by the Calculation Agent on or prior to the Calculation Date
(as defined below), except with respect to LIBOR, EURIBOR and the Eleventh District
Cost of Funds Rate, which will be determined on the particular Interest Determination
Date. Upon request of the Holder of a Floating Rate Note, the Calculation Agent will
disclose the interest rate then in effect and, if determined, the interest rate that
will become effective as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Floating Rate Note. Unless
otherwise specified on the face hereof, the “Calculation Date”, if
applicable, pertaining to any Interest Determination Date will be the earlier of: (1)
the tenth calendar day after the particular Interest Determination Date or, if such day
is not a Business Day, the next succeeding Business Day; or (2) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity Date, as the
case may be.




(x) Maximum or Minimum Interest Rate. If specified on the face hereof, this
Note may have either or both of a Maximum Interest Rate or a Minimum Interest Rate. If
a Maximum Interest Rate is so designated, the interest rate for a Floating Rate Note
cannot ever exceed such Maximum Interest Rate and in the event that the interest rate
on any Interest Reset Date would exceed such Maximum Interest Rate (as if no Maximum
Interest Rate were in effect) then the interest rate on such Interest Reset Date shall
be the Maximum Interest Rate. If a Minimum Interest Rate is so designated, the
interest rate for a Floating Rate Note cannot ever be less than such Minimum Interest
Rate and in the event that the interest rate on any Interest Reset Date would be less
than such Minimum Interest Rate (as if no Minimum Interest Rate were in effect) then
the interest rate on such Interest Reset Date shall be the Minimum Interest Rate.
Notwithstanding anything to the contrary contained herein, the interest rate on a
Floating Rate Note shall not exceed the maximum interest rate permitted by applicable
law.




(xi) Interest Payments. Unless otherwise specified on the face hereof, the
Interest Payment Dates will be, in the case of a Floating Rate Note which resets: (1)
daily, weekly or monthly—the fifteenth day of each calendar month or on the fifteenth
day of March, June, September and December of each year, as specified on the face
hereof; (2) quarterly—the fifteenth day of March, June, September and December of each
year; (3) semi-annually—the fifteenth day of the two months of each year specified on
the face hereof; and (4) annually—the fifteenth day of the month of each year as
specified on the face hereof. In addition, the Maturity Date will also be an Interest
Payment Date. If any Interest Payment Date other than the Maturity Date for this
Floating Rate Note would otherwise be a day that is not a Business Day, such Interest
Payment Date will be postponed to the next succeeding Business Day, except that in the
case of a Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
that Business Day falls in the next succeeding calendar



11









 







month, the particular Interest Payment Date will be the immediately preceding Business
Day. If the Maturity Date of a Floating Rate Note falls on a day that is not a Business
Day, the Trust will make the required payment of principal, premium, if any, and
interest or other amounts on the next succeeding Business Day, and no additional
interest will accrue in respect of the payment made on that next succeeding Business
Day.




(xii) Rounding. Unless otherwise specified on the face hereof, all percentages
resulting from any calculation on this Floating Rate Note will be rounded to the
nearest one hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upwards. All dollar amounts used in or resulting from any
calculation on this Floating Rate Note will be rounded, in the case of U.S. Dollars, to
the nearest cent or, in the case of a Foreign Currency, to the nearest unit (with
one-half cent or unit being rounded upwards).




(xiii) Interest Factor. With respect to this Floating Rate Note, accrued
interest is calculated by multiplying the principal amount of such Note by an accrued
interest factor. The accrued interest factor is computed by adding the interest factor
calculated for each day in the particular Interest Reset Period. The interest factor
for each day will be computed by dividing the interest rate applicable to such day by
360, in the case of a Floating Rate Note as to which the CD Rate, the Commercial Paper
Rate, the Eleventh District Cost of Funds Rate, the Federal Funds Open Rate, the
Federal Funds Rate, LIBOR, EURIBOR or the Prime Rate is an applicable Interest Rate
Basis, or by the actual number of days in the year, in the case of a Floating Rate Note
as to which the CMT Rate or the Treasury Rate is an applicable Interest Rate Basis. In
the case of a series of Notes that bear interest at floating rates as to which the
Constant Maturity Swap Rate is the Interest Rate Basis, the interest factor for each
day will be computed by dividing the number of days in the interest period by 360 (the
number of days to be calculated on the base is of a year of 360 days with twelve 30-day
months (unless (i) the last day of the interest period is the 31st day of a
month but the first day of the interest period is a day other than the 30th
or 31st day of a month, in which case the month that includes that last day
shall not be considered to be shortened to a 30-day month, or (ii) the last day of the
interest period is the last day of the month of February, in which case the month of
February shall not be considered to be lengthened to a 30-day month)). The interest
factor for a Floating Rate Note as to which the interest rate is calculated with
reference to two or more Interest Rate Bases will be calculated in each period in the
same manner as if only the applicable Interest Rate Basis specified above applied.




(xiv) Determination of Interest Rate Basis. The Calculation Agent shall
determine the rate derived from each Interest Rate Basis in accordance with the
following provisions.




(A) CD Rate Notes. If the Interest Rate Basis is the CD Rate, this Note
shall be deemed a “CD Rate Note.” Unless otherwise specified on the face hereof,
“CD Rate” means: (1) the rate on the particular Interest Determination Date for
negotiable United States dollar certificates of deposit having the Index Maturity



12









 







specified on the face hereof as published in H.15(519) (as defined below) under the
caption “CDs (secondary market)”; or (2) if the rate referred to in clause (1) is
not so published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on the particular Interest Determination Date for negotiable United States
dollar certificates of deposit of the particular Index Maturity as published in H.15
Daily Update (as defined below), or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption “CDs (secondary
market)”; or (3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on that Interest Determination Date, of three leading non-bank dealers in
negotiable United States dollar certificates of deposit in The City of New York
(which may include the purchasing agent or its affiliates) selected by the
Calculation Agent for negotiable United States dollar certificates of deposit of
major United States money market banks for negotiable United States certificates of
deposit with a remaining maturity closest to the particular Index Maturity in an
amount that is representative for a single transaction in that market at that time;
or (4) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (3), the CD Rate in effect on the particular Interest
Determination Date. “H.15(519)” means the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of the
Federal Reserve System. “H.15 Daily Update” means the daily update of H.15(519),
available through the world-wide-web site of the Board of Governors of the Federal
Reserve System at http://www.federalreserve.gov/releases/H15/ update, or any
successor site or publication.




(B) CMT Rate Notes. If the Interest Rate Basis is the CMT Rate, this Note
shall be deemed a “CMT Rate Note.” Unless otherwise specified on the face hereof,
“CMT Rate” means:




(1)if CMT Moneyline Telerate Page 7051 is specified on the face hereof:




	 	i.	 	the percentage equal to the yield for
United States Treasury securities at “constant maturity” having the
Index Maturity specified on the face hereof as published in
H.15(519) under the caption “Treasury Constant Maturities”, as the
yield is displayed on Moneyline Telerate (or any successor service)
on page 7051 (or any other page as may replace the specified page on
that service) (“Moneyline Telerate Page 7051”), for the particular
Interest Determination Date; or
	 
	 	ii.	 	if the rate referred to in clause (i)
does not so appear on Moneyline Telerate Page 7051, the percentage
equal to the yield for United States Treasury securities at
“constant maturity” having the particular Index Maturity and for the
particular Interest
Determination Date as published in H.15(519) under the caption
“Treasury Constant Maturities”; or





13









 






	 	iii.	 	if the rate referred to in clause (ii)
does not so appear in H.15(519), the rate on the particular Interest
Determination Date for the period of the particular Index Maturity
as may then be published by either the Federal Reserve System Board
of Governors or the United States Department of the Treasury that
the Calculation Agent determines to be comparable to the rate which
would otherwise have been published in H.15(519); or
	 
	 	iv.	 	if the rate referred to in clause (iii)
is not so published, the rate on the particular Interest
Determination Date calculated by the Calculation Agent as a yield to
maturity based on the arithmetic mean of the secondary market bid
prices at approximately 3:30 P.M., New York City time, on that
Interest Determination Date of three leading primary United States
government securities dealers in The City of New York (which may
include the purchasing agent or its affiliates) (each, a “Reference
Dealer”) selected by the Calculation Agent from five Reference
Dealers selected by the Calculation Agent and eliminating the
highest quotation, or, in the event of equality, one of the highest,
and the lowest quotation or, in the event of equality, one of the
lowest, for United States Treasury securities with an original
maturity equal to the particular Index Maturity, a remaining term to
maturity no more than one year shorter than that Index Maturity and
in a principal amount that is representative for a single
transaction in the securities in that market at that time; or
	 
	 	v.	 	if fewer than five but more than two of
the prices referred to in clause (iv) are provided as requested, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations
shall be eliminated; or
	 
	 	vi.	 	if fewer than three prices referred to in
clause (iv) are provided as requested, the rate on the particular
Interest Determination Date calculated by the Calculation Agent as a
yield to maturity based on the arithmetic mean of the secondary
market bid prices as of approximately 3:30 P.M., New York City time,
on that Interest Determination Date of three Reference Dealers
selected by the Calculation Agent from five Reference Dealers
selected by the Calculation Agent and eliminating the highest
quotation or, in the event of equality, one of the highest and the
lowest quotation or, in the event of equality, one of the lowest,
for United States Treasury securities with an original maturity
greater than the





14









 






	 	 	 	particular Index Maturity, a remaining term to maturity closest to
that Index Maturity and in a principal amount that is representative
for a single transaction in the securities in that market at that
time; or
	 
	 	vii.	 	if fewer than five but more than two
prices referred to in clause (vi) are provided as requested, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations
will be eliminated; or
	 
	 	viii.	 	if fewer than three prices referred to
in clause (vi) are provided as requested, the CMT Rate in effect on
the particular Interest Determination Date; or






(2) if CMT Moneyline Telerate Page 7052 is
specified on the face hereof:




	 	i.	 	the percentage equal to the one-week or
one-month, as specified on the face hereof, average yield for United
States Treasury securities at “constant maturity” having the Index
Maturity specified on the face hereof as published in H.15(519)
opposite the caption “Treasury Constant Maturities”, as the yield is
displayed on Moneyline Telerate (or any successor service) (on page
7052 or any other page as may replace the specified page on that
service) (“Moneyline Telerate Page 7052”), for the week or month, as
applicable, ended immediately preceding the week or month, as
applicable, in which the particular Interest Determination Date
falls; or
	 
	 	ii.	 	if the rate referred to in clause (i)
does not so appear on Moneyline Telerate Page 7052, the percentage
equal to the one-week or one-month, as specified on the face hereof,
average yield for United States Treasury securities at “constant
maturity” having the particular Index Maturity and for the week or
month, as applicable, preceding the particular Interest
Determination Date as published in H.15(519) opposite the caption
“Treasury Constant Maturities”; or
	 
	 	iii.	 	if the rate referred to in clause (ii)
does not so appear in H.15(519), the one-week or one-month, as
specified on the face hereof, average yield for United States
Treasury securities at “constant maturity” having the particular
Index Maturity as otherwise announced by the Federal Reserve Bank of
New York for the week or month, as applicable, ended immediately
preceding the week or month, as applicable, in which the particular
Interest Determination Date falls; or





15









 






	 	iv.	 	if the rate referred to in clause (iii)
is not so published, the rate on the particular Interest
Determination Date calculated by the Calculation Agent as a yield to
maturity based on the arithmetic mean of the secondary market bid
prices at approximately 3:30 P.M., New York City time, on that
Interest Determination Date of three Reference Dealers selected by
the Calculation Agent from five Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation, or, in the
event of equality, one of the highest, and the lowest quotation or,
in the event of equality, one of the lowest, for United States
Treasury securities with an original maturity equal to the
particular Index Maturity, a remaining term to maturity no more than
one year shorter than that Index Maturity and in a principal amount
that is representative for a single transaction in the securities in
that market at that time; or
	 
	 	v.	 	if fewer than five but more than two of
the prices referred to in clause (iv) are provided as requested, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations
shall be eliminated; or
	 
	 	vi.	 	if fewer than three prices referred to in
clause (iv) are provided as requested, the rate on the particular
Interest Determination Date calculated by the Calculation Agent as a
yield to maturity based on the arithmetic mean of the secondary
market bid prices as of approximately 3:30 P.M., New York City time,
on that Interest Determination Date of three Reference Dealers
selected by the Calculation Agent from five Reference Dealers
selected by the Calculation Agent and eliminating the highest
quotation or, in the event of equality, one of the highest and the
lowest quotation or, in the event of equality, one of the lowest,
for United States Treasury securities with an original maturity
greater than the particular Index Maturity, a remaining term to
maturity closest to that Index Maturity and in a principal amount
that is representative for a single transaction in the securities in
that market at the time; or
	 
	 	vii.	 	if fewer than five but more than two
prices referred to in clause (vi) are provided as requested, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations
will be eliminated; or





16









 






	 	viii.	 	if fewer than three prices referred to
in clause (vi) are provided as requested, the CMT Rate in effect on
that Interest Determination Date.






If two United States Treasury securities with an original maturity greater
than the Index Maturity specified on the face hereof have remaining terms to
maturity equally close to the particular Index Maturity, the quotes for the
United States Treasury security with the shorter original remaining term to
maturity will be used.




(C) Commercial Paper Rate Notes. If the Interest Rate Basis is the
Commercial Paper Rate, this Note shall be deemed a “Commercial Paper Rate Note.”
Unless otherwise specified on the face hereof, “Commercial Paper Rate” means: (1)
the Money Market Yield (as defined below) on the particular Interest Determination
Date of the rate for commercial paper having the Index Maturity specified on the
face hereof as published in H.15(519) under the caption “Commercial
Paper—Nonfinancial”; or (2) if the rate referred to in clause (1) is not so
published by 3:00 P.M., New York City time, on the related Calculation Date, the
Money Market Yield of the rate on the particular Interest Determination Date for
commercial paper having the particular Index Maturity as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption “Commercial Paper—Nonfinancial”;
or (3) if the rate referred to in clause (2) is not so published by 3:00 P.M., New
York City time, on the related Calculation Date, the rate on the particular Interest
Determination Date calculated by the Calculation Agent as the Money Market Yield of
the arithmetic mean of the offered rates at approximately 11:00 A.M., New York City
time, on that Interest Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York (which may include the purchasing
agent or its affiliates) selected by the Calculation Agent for commercial paper
having the particular Index Maturity placed for industrial issuers whose bond rating
is “Aa”, or the equivalent, from a nationally recognized statistical rating
organization; or (4) if the dealers so selected by the Calculation Agent are not
quoting as mentioned in clause (3), the Commercial Paper Rate in effect on the
particular Interest Determination Date. “Money Market Yield” means a yield
(expressed as a percentage) calculated in accordance with the following formula:



	 	 	 	 	 
	Money Market Yield =

	 	D x 360
	 	x 100
	 
	 	 	 	 
	 
	 	360 — (D x M)	 	 







where “D” refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and “M” refers to the actual
number of days in the applicable Interest Reset Period.




(D) Constant Maturity Swap Rate Notes. If the Interest Rate Basis is the
Constant Maturity Swap Rate, this Note shall be deemed a “Constant Maturity Swap
Rate Note.” Unless otherwise specified on the face hereof, “Constant



17









 







Maturity Swap Rate” means: (1) the rate for U.S. dollar swaps with the designated
maturity specified in the applicable pricing supplement, expressed as a percentage,
which appears on the Reuters Screen (or any successor service) ISDAFIX1 Page as of
11:00 A.M., New York City time, on the particular Interest Determination Date; or
(2) if the rate referred to in clause (1) does not appear on the Reuters Screen (or
any successor service) ISDAFIX1 Page by 2:00 P.M., New York City time, on such
Interest Determination Date, a percentage determined on the basis of the mid-market
semiannual swap rate quotations provided by the reference banks (as defined below)
as of approximately 11:00 A.M., New York City time, on such Interest Determination
Date, and, for this purpose, the semi-annual swap rate means the mean of the bid and
offered rates for the semi-annual fixed leg, calculated on a 30/360 day count basis,
of a fixed-for-floating U.S. dollar interest rate swap transaction with a term equal
to the designated maturity specified in the applicable pricing supplement commencing
on the Interest Reset Date and in a representative amount (as defined below) with an
acknowledged dealer of good credit in the swap market, where the floating leg,
calculated on an actual/360 day count basis, is equivalent to USD-LIBOR-BBA with a
designated maturity specified in the applicable pricing supplement. The Calculation
Agent will request the principal New York City office of each of the reference banks
to provide a quotation of its rate. If at least three quotations are provided, the
rate for that Interest Determination Date will be the arithmetic mean of the
quotations, eliminating the highest quotation (or, in the event of equality, one of
the highest) and the lowest quotation (or, in the event of equality, one of the
lowest); or (3) if at least three quotations are not received by the Calculation
Agent as mentioned in clause (2), the Constant Maturity Swap Rate in effect on the
particular Interest Determination Date. “U.S. Government Securities business day”
means any day except for Saturday, Sunday, or a day on which The Bond Market
Association recommends that the fixed income departments of its members be closed
for the entire day for purposes of trading in U.S. government securities.
“Representative amount” means an amount that is representative for a single
transaction in the relevant market at the relevant time. “Reference banks” mean
five leading swap dealers in the New York City interbank market, selected by the
Calculation Agent, after consultation with us.




(E) Eleventh District Cost of Funds Rate Notes. If the Interest Rate Basis
is the Eleventh District Cost of Funds Rate, this Note shall be deemed an “Eleventh
District Cost of Funds Rate Note.” Unless otherwise specified on the face hereof,
“Eleventh District Cost of Funds Rate” means: (1) the rate equal to the monthly
weighted average cost of funds for the calendar month immediately preceding the
month in which the particular Interest Determination Date falls as set forth under
the caption “11th District” on the display on Moneyline Telerate (or any successor
service) on page 7058 (or any other page as may replace the specified page on that
service) (“Moneyline Telerate Page 7058”) as of 11:00 A.M., San Francisco time, on
that Interest Determination Date; or (2) if the rate referred to in clause (1) does
not so appear on Moneyline Telerate Page 7058, the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank District
that was most recently announced (the “Eleventh District



18









 







Index”) by the Federal Home Loan Bank of San Francisco as the cost of funds for the
calendar month immediately preceding that Interest Determination Date; or (3) if
the Federal Home Loan Bank of San Francisco fails to announce the Eleventh District
Index on or prior to the particular Interest Determination Date for the calendar
month immediately preceding that Interest Determination Date, the Eleventh District
Cost of Funds Rate in effect on the particular Interest Determination Date.




(F) Federal Funds Open Rate Notes. If the Interest Rate Basis is the
Federal Funds Open Rate, this Note shall be deemed a “Federal Funds Open Rate Note.”
Unless otherwise specified on the face hereof, “Federal Funds Open Rate” means the
rate set forth on Moneyline Telerate (or any successor service) on page 5 (or any
other page as may replace the specified page on that service) for an Interest
Determination Date underneath the caption “FEDERAL FUNDS” in the row titled “OPEN”.
If the rate is not available for an Interest Determination Date, the rate for that
Interest Determination Date shall be the Federal Funds Rate as determined below.




(G) Federal Funds Rate Notes. If the Interest Rate Basis is the Federal
Funds Rate, this Note shall be deemed a “Federal Funds Rate Note.” Unless otherwise
specified on the face hereof, “Federal Funds Rate” means: (1) the rate on the
particular Interest Determination Date for United States dollar federal funds as
published in H.15(519) under the caption “Federal Funds (Effective)” and displayed
on Moneyline Telerate (or any successor service) on page 120 (or any other page as
may replace the specified page on that service) (“Moneyline Telerate Page 120”); or
(2) if the rate referred to in clause (1) does not so appear on Moneyline Telerate
Page 120 or is not so published by 3:00 P.M., New York City time, on the related
Calculation Date, the rate on the particular Interest Determination Date for United
States dollar federal funds as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying the applicable rate,
under the caption “Federal Funds (Effective)”; or (3) if the rate referred to in
clause (2) is not so published by 3:00 P.M., New York City time, on the related
Calculation Date, the rate on the particular Interest Determination Date calculated
by the Calculation Agent as the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of United States dollar federal funds transactions in The City of
New York (which may include the purchasing agent or its affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on that Interest
Determination Date; or (4) if the brokers so selected by the Calculation Agent are
not quoting as mentioned in clause (3), the Federal Funds Rate in effect on the
particular Interest Determination Date.




(H) LIBOR Notes. If the Interest Rate Basis is LIBOR, this Note shall be
deemed a “LIBOR Note.” Unless otherwise specified on the face hereof, “LIBOR”
means: (1) if “LIBOR Moneyline Telerate” is specified on the face hereof or if
neither “LIBOR Reuters” nor “LIBOR Moneyline Telerate” is specified on the face
hereof as the method for calculating LIBOR, the rate for



19









 







deposits in the LIBOR Currency (as defined below) having the Index Maturity
specified on the face hereof, commencing on the related Interest Reset Date, that
appears on the LIBOR Page (as defined below) as of 11:00 A.M., London time, on the
particular Interest Determination Date; or (2) if “LIBOR Reuters” is specified on
the face hereof, the arithmetic mean of the offered rates, calculated by the
Calculation Agent, or the offered rate, if the LIBOR Page by its terms provides only
for a single rate, for deposits in the LIBOR Currency having the particular Index
Maturity, commencing on the related Interest Reset Date, that appear or appears, as
the case may be, on the LIBOR Page as of 11:00 A.M., London time, on the particular
Interest Determination Date; or (3) if fewer than two offered rates appear, or no
rate appears, as the case may be, on the particular Interest Determination Date on
the LIBOR Page as specified in clause (1) or (2), as applicable, the rate calculated
by the Calculation Agent of at least two offered quotations obtained by the
Calculation Agent after requesting the principal London offices of each of four
major reference banks (which may include affiliates of the purchasing agent) in the
London interbank market to provide the Calculation Agent with its offered quotation
for deposits in the LIBOR Currency for the period of the particular Index Maturity,
commencing on the related Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on that Interest
Determination Date and in a principal amount that is representative for a single
transaction in the LIBOR Currency in that market at that time; or (4) if fewer than
two offered quotations referred to in clause (3) are provided as requested, the rate
calculated by the Calculation Agent as the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial Center, on the
particular Interest Determination Date by three major banks (which may include
affiliates of the purchasing agent) in that principal financial center selected by
the Calculation Agent for loans in the LIBOR Currency to leading European banks,
having the particular Index Maturity and in a principal amount that is
representative for a single transaction in the LIBOR Currency in that market at that
time; or (5) if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4), LIBOR in effect on the particular Interest Determination
Date. “LIBOR Currency” means the currency specified on the face hereof as to which
LIBOR shall be calculated or, if no currency is specified on the face hereof, United
States dollars. “LIBOR Page” means either: (1) if “LIBOR Reuters” is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified on the face hereof (or any other page as
may replace that page on that service) for the purpose of displaying the London
interbank rates of major banks for the LIBOR Currency; or (2) if “LIBOR Moneyline
Telerate” is specified on the face hereof or neither “LIBOR Reuters” nor “LIBOR
Moneyline Telerate” is specified on the face hereof as the method for calculating
LIBOR, the display on Moneyline Telerate (or any successor service) on the page
specified on the face hereof (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of major banks for
the LIBOR Currency.



20









 






(I) EURIBOR Notes. If the Interest Rate Basis is EURIBOR, this Note shall
be deemed a “EURIBOR Note.” Unless otherwise specified on the face hereof,
“EURIBOR” means: (1) with respect to any Interest Determination Date relating to
this EURIBOR Note (a “EURIBOR Interest Determination Date”), the rate for deposits
in euros as sponsored, calculated and published jointly by the European Banking
Federation and ACI — The Financial Market Association, or any company established
by the joint sponsors for purposes of compiling and publishing those rates, having
the Index Maturity specified on the face hereof, commencing on the applicable
Interest Reset Date, as the rate appears on Moneyline Telerate or any successor
service, on page 248 (or any other page as may replace that specified page on the
service) (“Moneyline Telerate Page 248”) as of 11:00 A.M., Brussels time, on the
applicable EURIBOR Interest Determination Date; or (2) if such rate does not appear
on Moneyline Telerate Page 248, or is not so published by 11:00 A.M., Brussels time,
on the applicable EURIBOR Interest Determination Date, such rate will be calculated
by the Calculation Agent and will be the arithmetic mean of at least two quotations
obtained by the Calculation Agent after requesting the principal Euro-zone (as
defined below) offices of four major banks in the Euro-zone interbank market to
provide the Calculation Agent with its offered quotation for deposits in euros for
the period of the Index Maturity specified on the face hereof, commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone interbank market at
approximately 11:00 A.M., Brussels time, on the applicable EURIBOR Interest
Determination Date and in a principal amount not less than the equivalent of $1
million in euros that is representative for a single transaction in euro in the
market at that time; or (3) if fewer than two such quotations are so provided, the
rate on the applicable EURIBOR Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., Brussels time, on such EURIBOR Interest Determination Date
by four major banks in the Euro-zone for loans in euro to leading European banks,
having the Index Maturity specified on the face hereof, commencing on the applicable
Interest Reset Date and in a principal amount not less than the equivalent of $1
million in euros that is representative for a single transaction in euros in the
market at that time; or (4) if the banks so selected by the Calculation Agent are
not quoting as mentioned above, EURIBOR will be EURIBOR in effect on the applicable
EURIBOR Interest Determination Date. “Euro-zone” means the region comprised of
member states of the European Union that have adopted the single currency in
accordance with the treaty establishing the European Community, as amended by the
treaty on European Union.




(J) Prime Rate Notes. If the Interest Rate Basis is the Prime Rate, this
Note shall be deemed a “Prime Rate Note.” Unless otherwise specified on the face
hereof, “Prime Rate” means: (1) the rate on the particular Interest Determination
Date as published in H.15(519) under the caption “Bank Prime Loan”; or (2) if the
rate referred to in clause (1) is not so published by 3:00 P.M., New York City time,
on the related Calculation Date, the rate on the particular Interest Determination
Date as published in H.15 Daily Update, or such other recognized electronic source



21









 







used for the purpose of displaying the applicable rate, under the caption “Bank
Prime Loan”, or (3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME 1 Page (as defined below) as the applicable
bank’s prime rate or base lending rate as of 11:00 A.M., New York City time, on that
Interest Determination Date; or (4) if fewer than four rates referred to in clause
(3) are so published by 3:00 p.m., New York City time, on the related Calculation
Date, the rate calculated by the Calculation Agent as the particular Interest
Determination Date calculated by the Calculation Agent as the arithmetic mean of the
prime rates or base lending rates quoted on the basis of the actual number of days
in the year divided by a 360-day year as of the close of business on that Interest
Determination Date by three major banks (which may include affiliates of the
purchasing agent) in The City of New York selected by the Calculation Agent; or (5)
if the banks so selected by the Calculation Agent are not quoting as mentioned in
clause (4), the Prime Rate in effect on the particular Interest Determination Date.
“Reuters Screen US PRIME 1 Page” means the display on the Reuter Monitor Money Rates
Service (or any successor service) on the “US PRIME 1” page (or any other page as
may replace that page on that service) for the purpose of displaying prime rates or
base lending rates of major United States banks.




(K) Treasury Rate Notes. If the Interest Rate Basis is the Treasury Rate,
this Note shall be deemed a “Treasury Rate Note.” Unless otherwise specified on the
face hereof, “Treasury Rate” means: (1) the rate from the auction held on the
Interest Determination Date (the “Auction”) of direct obligations of the United
States (“Treasury Bills”) having the Index Maturity specified on the face hereof
under the caption “INVESTMENT RATE” on the display on Moneyline Telerate (or any
successor service) on page 56 (or any other page as may replace that page on that
service) (“Moneyline Telerate Page 56”) or page 57 (or any other page as may replace
that page on that service) (“Moneyline Telerate Page 57”); or (2) if the rate
referred to in clause (1) is not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the Bond Equivalent Yield (as defined below) of the
rate for the applicable Treasury Bills as published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying the applicable rate,
under the caption “U.S. Government Securities/Treasury Bills/Auction High”; or (3)
if the rate referred to in clause (2) is not so published by 3:00 P.M., New York
City time, on the related Calculation Date, the Bond Equivalent Yield of the auction
rate of the applicable Treasury Bills as announced by the United States Department
of the Treasury; or (4) if the rate referred to in clause (3) is not so announced by
the United States Department of the Treasury, or if the Auction is not held, the
Bond Equivalent Yield of the rate on the particular Interest Determination Date of
the applicable Treasury Bills as published in H.15(519) under the caption “U.S.
Government Securities/Treasury Bills/Secondary Market”; or (5) if the rate referred
to in clause (4) is not so published by 3:00 P.M., New York City time, on the
related



22









 







Calculation Date, the rate on the particular Interest Determination Date of the
applicable Treasury Bills as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying the applicable rate, under the
caption “U.S. Government Securities/Treasury Bills/Secondary Market”; or (6) if the
rate referred to in clause (5) is not so published by 3:00 P.M., New York City time,
on the related Calculation Date, the rate on the particular Interest Determination
Date calculated by the Calculation Agent as the Bond Equivalent Yield of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M.,
New York City time, on that Interest Determination Date, of three primary United
States government securities dealers (which may include the purchasing agent or its
affiliates) selected by the Calculation Agent, for the issue of Treasury Bills with
a remaining maturity closest to the Index Maturity specified on the face hereof; or
(7) if the dealers so selected by the Calculation Agent are not quoting as mentioned
in clause (6), the Treasury Rate in effect on the particular Interest Determination
Date. “Bond Equivalent Yield” means a yield (expressed as a percentage) calculated
in accordance with the following formula:




	 	 	 	 	 
	Bond Equivalent Yield =
	 	D x N	 	x 100
	 

	 	 	 	 
	 

	 	360 — (D x M)	 	 







where “D” refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis and expressed as a decimal, “N” refers to 365 or 366, as the
case may be, and “M” refers to the actual number of days in the applicable Interest
Reset Period.




	 	(c)	 	Discount Notes. If this Note is specified on the face hereof as a “Discount Note”:






(i) Principal and Interest. This Note will bear interest in the same manner as
set forth in Section 3(a) above, and payments of principal and interest shall be made
as set forth on the face hereof. Discount Notes may not bear any interest currently or
may bear interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of a Discount Note and par is referred to as the
“Discount”.




(ii) Redemption; Repayment; Acceleration. In the event a Discount Note is
redeemed, repaid or accelerated, the amount payable to the Holder of such Discount Note
will be equal to the sum of: (A) the Issue Price (increased by any accruals of
Discount) and, in the event of any redemption of such Discount Note, if applicable,
multiplied by the Initial Redemption Percentage (as adjusted by the Annual Redemption
Percentage Reduction, if applicable); and (B) any unpaid interest accrued on such
Discount Note to the Maturity Date (“Amortized Face Amount”). Unless otherwise
specified on the face hereof, for purposes of determining the amount of Discount that
has accrued as of any date on which a redemption, repayment or acceleration of maturity
occurs for a Discount Note, a Discount will be accrued using a constant yield method.
The constant yield will be calculated using a 30-day month, 360-day year convention, a
compounding period that, except for the



23









 







Initial Period (as defined below), corresponds to the shortest period between Interest
Payment Dates for the applicable Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable to the
applicable Discount Note and an assumption that the maturity of such Discount Note
will not be accelerated. If the period from the date of issue to the first Interest
Payment Date for a Discount Note (the “Initial Period”) is shorter than the compounding
period for such Discount Note, a proportionate amount of the yield for an entire
compounding period will be accrued. If the Initial Period is longer than the
compounding period, then the period will be divided into a regular compounding period
and a short period with the short period being treated as provided above.



     (d) Amortizing Notes. If this Note is specified on the face hereof as an “Amortizing
Note”, this Note will bear interest in the same manner as set forth in Section 3(a) above, and
payments on principal, premium, if any, and interest will be made as set forth on the face hereof
and/or in accordance with Schedule I attached hereto. The Trust will make payments combining
principal, premium (if any) and interest, if applicable, on the dates and in the amounts set forth
in the table appearing in Schedule I, attached to this Note or in accordance with the
formula specified on the face hereof. Payments made hereon will be applied first to interest due
and payable hereon and then to the reduction of the unpaid principal amount hereof.



Section 4. Redemption. If no redemption right is set forth on the face hereof, this Note
may not be redeemed prior to the Stated Maturity Date, except as set forth in the Indenture or in
Section 10 hereof. In the case of a Note that is not a Discount Note, if a redemption right is set
forth on the face of this Note, the Trust shall elect to redeem this Note on the Interest Payment
Date occurring on or after the Initial Redemption Date set forth on the face hereof on which the Funding Agreement
is to be redeemed in whole or in part by Principal Life Insurance Company (“Principal Life”) (each,
a “Redemption Date”), in which case this Note must be redeemed on such Redemption Date in whole or
in part, as applicable, prior to the Stated Maturity Date, in increments of $1,000 at the
applicable Redemption Price (as defined below), together with unpaid interest, if any, accrued
thereon to, but excluding, the applicable Redemption Date. “Redemption Price” shall mean an
amount equal to the Initial Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) multiplied by the unpaid Principal Amount of this Note to be redeemed.
Unless otherwise specified on the face hereof, the Initial Redemption Percentage shall be 100% and the
Annual Redemption Percentage Reduction shall be 0%.
The unpaid Principal Amount of this Note to be redeemed shall be determined by multiplying (1) the
Outstanding Principal Amount of this Note by (2) the quotient derived by dividing (A) the
outstanding principal amount of the Funding Agreement to be redeemed by Principal Life by (B) the
outstanding principal amount of the Funding Agreement. The Initial Redemption Percentage, if any,
applicable to this Note shall decline at each anniversary of the Initial Redemption Date by an
amount equal to the applicable Annual Redemption Percentage Reduction, if any, until the Redemption
Price is equal to 100% of the unpaid amount thereof to be redeemed. Notice must be given not more
than sixty (60) nor less than thirty (30) calendar days prior to the proposed Redemption Date. In
the event of redemption of this Note in part only, a new Note for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the surrender hereof. If less than all of
this Note is redeemed, the Indenture Trustee will select by lot or, in its discretion, on a pro
rata basis, the amount of the interest of each direct participant in the Trust to be redeemed.




24









 







Section 5. Sinking Funds and Amortizing Notes. Unless specified on the face hereof, this
Note will not be subject to, or entitled to the benefit of, any sinking fund. If this Note is an
Amortizing Note, this Note may pay an amount in respect of both interest and principal amortized
over the life of this Note.



Section 6. Repayment. If no repayment right is set forth on the face hereof, this Note
may not be repaid at the option of the Holder hereof prior to the Stated Maturity Date. If a
repayment right is granted on the face of this Note, this Note may be subject to repayment at the
option of the Holder on any Interest Payment Date on and after the date, if any, indicated on the
face hereof (each, a “Repayment Date”). On any Repayment Date, unless otherwise specified on the
face hereof, this Note shall be repayable in whole or in part in increments of $1,000 at the option
of the Holder hereof at a repayment price equal to 100% of the Principal Amount to be repaid,
together with interest thereon payable to the Repayment Date. For this Note to be repaid in whole
or in part at the option of the Holder hereof, this Note must be received by the Indenture Trustee,
with the form entitled “Option to Elect Repayment”, below, duly completed by the Indenture Trustee.
Exercise of such repayment option by the Holder hereof shall be irrevocable. In the event of a
repayment of this Note in part only, a new Note for the portion hereof not repaid shall be issued
in the name of the Holder hereof upon the surrender hereof.



Section 7. Modifications and Waivers. The Indenture contains provisions permitting the
Trust and the Indenture Trustee (1) at any time and from time to time without notice to, or the
consent of, the Holders of any Notes issued under the Indenture to enter into one or more
supplemental indentures for certain enumerated purposes and (2) with the consent of the Holders of
a majority in aggregate principal amount of the Outstanding Notes affected thereby, to enter into
one or more supplemental indentures for the purpose of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, the Indenture or of modifying in any manner the
rights of Holders of Notes under the Indenture; provided, that, with respect to certain enumerated
provisions, no such supplemental indenture shall be entered into without the consent of the Holder
of each Note affected thereby. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or
not notation of such consent or waiver is made upon this Note or such other Notes.



Section 8. Obligations Unconditional. No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall impair the right of each Holder of any Note,
which is absolute and unconditional, to receive payment of the principal of, and any interest on,
and premium, if any, on, such Note on the respective Stated Maturity Date or redemption date
thereof and to institute suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.



Section 9. Events of Default. If an Event of Default with respect to this Note shall
occur and be continuing, the principal of, and all other amounts payable on, the Notes may be
declared due and payable, or may be automatically accelerated, as the case may be, in the manner
and with the effect provided in the Indenture. In the event that this Note is a Discount Note, the
amount of principal of this Note that becomes due and payable upon such acceleration shall be equal
to the amount calculated as set forth in Section 3(c) hereof.




25









 







Section 10. Withholding; No Additional Amounts; Tax Event and Redemption. All amounts due
on this Note will be made without any applicable withholding or deduction for or on account of any
present or future taxes, duties, levies, assessments or other governmental charges of whatever
nature imposed or levied by or on behalf of any governmental authority, unless such withholding or
deduction is required by law. Unless otherwise specified on the face hereof, the Trust will not
pay any additional amounts to the Holder of this Note in respect of such withholding or deduction,
any such withholding or deduction will not give rise to an event of default or any independent
right or obligation to redeem this Note and the Holder will be deemed for all purposes to have
received cash in an amount equal to the portion of such withholding or deduction that is
attributable to such Holder’s interest in this Note as equitably determined by the Trust.



      If (1) a Tax Event (defined below) as to the Funding Agreement occurs and (2) Principal Life
redeems the Funding Agreement in whole or in part, the Trust will redeem the Notes, subject to the
terms and conditions of Section 2.04 of the Standard Indenture Terms, at the Tax Event
Redemption Price (defined below) together with unpaid interest accrued thereon to the applicable
redemption date. “Tax Event” means that Principal Life shall have received an opinion of
independent legal counsel stating in effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of any such laws or regulations by any
governmental authority in the United States, which amendment or change is enacted, promulgated,
issued or announced on or after the effective date of the Funding Agreement, there is more than an
insubstantial risk that (i) the Trust is, or will be within ninety (90) days of the date thereof,
subject to U.S. federal income tax with respect to interest accrued or received on the Funding
Agreement or (ii) the Trust is, or will be within ninety (90) days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other governmental charges. “Tax Event
Redemption Price” means an amount equal to the unpaid principal amount of this Note to be redeemed,
which shall be determined by multiplying (1) the Outstanding Principal Amount of this Note by (2)
the quotient derived by dividing (A) the outstanding principal amount to be redeemed by Principal
Life of the Funding Agreement by (B) the outstanding principal amount of the Funding Agreement.



Section 11. Listing. Unless otherwise specified on the face hereof, this Note will not be
listed on any securities exchange.



Section 12. Collateral. The Collateral for this Note includes the Funding Agreement and
the Guarantee specified on the face hereof.



Section 13. No Recourse Against Certain Persons. No recourse shall be had for the payment
of any principal, interest or any other sums at any time owing under the terms of this Note, or for
any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture
or any indenture supplemental thereto, against the Nonrecourse Parties, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such personal liability being, by the acceptance hereof and as part of the
consideration for issue hereof, expressly waived and released.




26









 







Section 14. Miscellaneous.




     (a) This Note is issuable only as a registered Note without coupons in denominations of
$1,000 and any integral multiple in excess thereof unless otherwise specified on the face of this
Note.



     (b) Prior to due presentment for registration of transfer of this Note, the Trust, the
Indenture Trustee, the Registrar, the Paying Agent, any Agent, and any other agent of the Trust or
the Indenture Trustee may treat the Person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment as herein provided and for all other purposes, whether
or not this Note shall be overdue, and none of the Trust, the Indenture Trustee, the Registrar, the
Paying Agent, any Agent, or any other agent of the Trust or the Indenture Trustee shall be affected
by notice to the contrary.



     (c) The Notes are being issued by means of a book-entry-only system with no physical
distribution of certificates to be made except as provided in the Indenture. The book-entry system
maintained by DTC will evidence ownership of the Notes, with transfers of ownership effected on the
records of DTC and its participants pursuant to rules and procedures established by DTC and its
participants. The Trust and the Indenture Trustee will recognize Cede & Co., as nominee of DTC, as
the registered owner of the Notes, as the Holder of the Notes for all purposes, including payment
of principal, premium (if any) and interest, notices and voting. Transfer of principal, premium
(if any) and interest to participants of DTC will be the responsibility of DTC, and transfer of
principal, premium (if any) and interest to beneficial holders of the Notes by participants of DTC
will be the responsibility of such participants and other nominees of such beneficial holders. So
long as the book-entry system is in effect, the selection of any Notes to be redeemed or repaid
will be determined by DTC pursuant to rules and procedures established by DTC and its participants.
Neither the Trust nor the Indenture Trustee shall be responsible or liable for such transfers or
payments or for maintaining, supervising or reviewing the records maintained by DTC, its
participants or persons acting through such participants.



     (d) This Note or portion hereof may not be exchanged for Definitive Notes, except in the
limited circumstances provided for in the Indenture. The transfer or exchange of Definitive Notes
shall be subject to the terms of the Indenture. No service charge will be made for any
registration of transfer or exchange, but the Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.


Section 15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.





27








 







OPTION TO ELECT REPAYMENT




     The undersigned hereby irrevocably request(s) and instruct(s) the Trust to repay this Note (or
portion hereof specified below) pursuant to its terms at a price equal to the Principal Amount
hereof together with interest to the repayment date, to the undersigned, at:


 



 




(Please print or typewrite name and address of the undersigned).




     For this Note to be repaid, the Indenture Trustee (or the Paying Agent on behalf of the
Indenture Trustee) must receive at its Corporate Trust Office, or at such other place or places of
which the Trust shall from time to time notify the Holder of this Note, not more than sixty (60)
nor less than thirty (30) days prior to a Repayment Date, if any, shown on the face of this Note,
this Note with this “Option to Elect Repayment” form duly completed.



     If less than the entire Principal Amount of this Note is to be repaid, specify the portion
hereof (which shall be in increments of $1,000) which the Holder elects to have repaid and specify
the denomination or denominations (which shall be $                     or an integral multiple of $1,000 in
excess of $                    ) of the Notes to be issued to the Holder for the portion of this Note not being
repaid (in the absence of any such specification, one such Note will be issued for the portion not
being repaid).



	 	 	 	 	 	 	 	 	 	 	 	 	 
	$
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DATE:	 	 	 	 	NOTICE: The signature on this Option to Elect Repayment must
correspond with the name as written upon the face of this Note in
every particular, without alteration or enlargement or any change
whatever.	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Principal Amount to be repaid, if amount
to be repaid is less than the Principal
Amount of this Note (Principal Amount
remaining must be an authorized
denomination)	 	Fill in for registration of Notes
if to be issued otherwise than
to the registered Holder:	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	$

	 	 	 	 	 	 	 	Address:	 	 	 
	 

	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	(Please print name and
address including zip code)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER:	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 





28









 






SCHEDULE I




Amortization Table or Formula





29