Document:

exv4w11

 

Exhibit 4.11

CLOSING INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this • day of • (the “Original Issue Date”), relating to the
issuance by Principal Life Income Fundings Trust • (the “Trust”) of Notes to investors under
Principal Life’s secured notes program;

     WHEREAS, the Trust is a trust organized under, and its activities will be governed by, the
provisions of the Trust Agreement as set forth in the omnibus instrument related to the Trust dated
as of the date of the Pricing Supplement (the “Omnibus Instrument”);

     WHEREAS, certain licensing arrangements between the Trust and Principal Financial Services,
Inc. will be governed pursuant to the provisions of the License Agreement, as set forth in the
Omnibus Instrument;

     WHEREAS, the Notes will be issued pursuant to the Indenture, as set forth in the Omnibus
Instrument (the “Indenture”);

     WHEREAS, the sale of the Notes will be governed by the Terms Agreement, as set forth in the
Omnibus Instrument;

     WHEREAS, certain custodial arrangements of the Funding Agreement and the Guarantee will be
governed pursuant to the provisions of the Custodial Agreement dated as of • by and among Bankers
Trust Company, N.A., acting as custodian (the “Custodian”), the Indenture Trustee and the Trustee,
on behalf of the Trust;

     WHEREAS, certain agreements relating to the Notes, the Funding Agreement and the Guarantee are
set forth in the Coordination Agreement, as set forth in the Omnibus Instrument.

     All capitalized terms used herein and not otherwise defined will have the meanings set forth
in the Indenture.

[Remainder of Page Intentionally Left Blank]

 

 

Part I

Instructions of the Trust

     As of the Original Issue Date, the Trust herewith delivers to the Indenture Trustee, or has
caused to be delivered to the Indenture Trustee, the Notes specified in the Pricing Supplement,
having the principal amount/face amount as set forth in the Omnibus Instrument.

     As of the Original Issue Date, the Trust hereby instructs the Indenture Trustee to take all
actions required to be taken with respect to the Notes under Section 2.05(e) of the Standard
Indenture Terms.

     As of the Original Issue Date, Principal Life and the Trust hereby direct the Indenture
Trustee to deposit the amount of $•, the Net Proceeds to the Trust (as specified in the Pricing
Supplement) in respect of the Notes to:

   Bank: Wells Fargo Bank, N.A.

   ABA #:

   Account #:

   Contract #: •

     As of the Original Issue Date, the Purchasing Agent(s) specified in the Pricing Supplement
hereby direct the Indenture Trustee to deliver the Notes as follows:

     [Purchasing Agent] DTC # •

     The Depository Trust Company

[Remainder of Page Intentionally Left Blank]

I-1

 

Part II

Acknowledgment of Indenture Trustee Concerning the Notes

     The Indenture Trustee certifies, as of the Original Issue Date, the following:

     (a) The Indenture Trustee acknowledges receipt of the Notes; and

     (b) The Indenture Trustee (including in its capacity as Registrar) has taken all action
required to be taken with respect to the Notes under Section 2.05(e) of the Standard Indenture
Terms.

[Remainder of Page Intentionally Left Blank]

II-1

 

Part III

Certificate Regarding Custody of the Funding Agreement and the Guarantee

     In connection with the issuance of the Funding Agreement and the Guarantee, the Assignment of
Funding Agreement and Guarantee (set forth in Part IV of this Closing Instrument), the Custodian
hereby represents that it has received delivery of the Funding Agreement and the Guarantee and is
holding the Funding Agreement and the Guarantee for the benefit of the Indenture Trustee and that
the Funding Agreement and the Guarantee are in the possession of the Custodian at the address
below:

     Bankers Trust Company, N.A.

     453 7th Street

     Des Moines, Iowa 50309-2728

[Remainder of Page Intentionally Left Blank]

III-1

 

Part IV

Assignment of Funding Agreement and Guarantee

     Pursuant to the terms of the Indenture, the Trust hereby grants to the Indenture Trustee, for
the benefit of the Holders of the Notes, a first priority perfected security interest in, and
collaterally assigns to the Indenture Trustee, for the benefit of the Holders of the Notes, the
Trust’s right, title, benefits, remedies and interests in, to and under the Funding Agreement, the
Guarantee and the other Collateral described in the Indenture and all of its rights and privileges
with respect to the Collateral and all income and profits thereon, and all interest, dividends and
other payments and distributions with respect thereto, and all Proceeds of the foregoing.

     Each of the Trust, the Indenture Trustee, Principal Life and PFG hereby agrees that, in
furtherance of the collateral assignment described above, until such time as the Indenture Trustee
notifies the Trust, Principal Life and PFG that all obligations of the Trust pursuant or related to
the Notes have been paid or satisfied in full, the Indenture Trustee shall have and may exercise
the rights and remedies of an Agreement Holder (as defined in the Funding Agreement) under the
Funding Agreement and of the Trust under the Guarantee. Notwithstanding the foregoing (and whether
or not the foregoing notification is given) and Section 5 of the Funding Agreement (which Principal
Life acknowledges and agrees has been complied with) all obligations, representations and
warranties of an Agreement Holder under the Funding Agreement and of the Trust under the Guarantee
shall nevertheless remain obligations, representations and warranties of the Trust, as the case may
be, and shall not be obligations of the Indenture Trustee. Principal Life, PFG and the Trust
hereby agree that, until such time as the Indenture Trustee notifies the Trust, Principal Life and
PFG that all obligations of the Trust pursuant to or related to the Notes have been paid or
satisfied in full, Principal Life and PFG, as applicable, will comply with instructions originated
by the Indenture Trustee with respect to the Funding Agreement and the Guarantee, as applicable,
without further consent by the Trust.

     Principal Life and PFG hereby affirm that they have recorded the collateral assignment and
grant of the security interest on their books and records to reflect the same described above.
Principal Life and PFG each agree, as applicable, that it will comply with all orders of the
Indenture Trustee with respect to the Funding Agreement and the Guarantee, as applicable without
any further consent of the Trust. Each of Principal Life and PFG hereby confirms that it has
received all documents and instruments which it requires pursuant to the terms of the Funding
Agreement and Guarantee, as applicable, in connection with the collateral assignment and grant of
such security interest and/or rights of the Indenture Trustee hereunder.

     Each of Principal Life and PFG hereby also represents that it has not received any notice of
any adverse claim to the Funding Agreement or Guarantee, as applicable, other than the creation and
perfection of a security interest in the Funding Agreement and Guarantee, as applicable, and the
proceeds thereof as described herein.

     The collateral assignment and grant of the security interest and this instrument shall be
governed by, and shall be construed and enforced in accordance with, the laws of the State of New
York, without regard to conflicts of laws principles thereof, and shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and assigns.

     This instrument may not be amended, modified or waived without the consent of the Indenture
Trustee, the Trust, Principal Life and PFG.

     The Custodian hereby acknowledges the terms of this Assignment of Funding Agreement and
Guarantee.

IV-1

 

Part V

Acknowledgement of Funding Agreement and Guarantee Assignment

     Simultaneously herewith, Principal Life has issued the Funding Agreement to the Trust and PFG
has issued the Guarantee to the Trust. By this instrument, the receipt of which Principal Life and
PFG hereby acknowledge, the Trust has informed Principal Life and PFG that it has conveyed and
assigned (for security purposes) all of its right, title, benefits, remedies and interests in, to
and under the Funding Agreement and the Guarantee to the Indenture Trustee pursuant to the
Indenture.

     Principal Life and PFG hereby consent to the aforementioned assignment of the Funding
Agreement and the Guarantee, as applicable, with respect to the assignment thereof to the Indenture
Trustee under the Indenture. Principal Life and PFG affirm that they have changed their books and
records to reflect such assignment and agree to make payments in accordance with the terms of the
Funding Agreement and the Guarantee, as applicable, to the Indenture Trustee. Principal Life and
PFG also agree that all of the covenants made in the Funding Agreement and the Guarantee, as
applicable, are also for the benefit of the Indenture Trustee, and further agree that Principal
Life and PFG shall deliver to the Indenture Trustee duplicate original copies of all notices,
statements, communications and instruments delivered by Principal Life and PFG, as applicable, to
the Trust pursuant to the Funding Agreement and the Guarantee, as applicable.

     Principal Life and PFG agree to execute and deliver to the Trust and the Indenture Trustee
such documents and take such other action as the Trust and the Indenture Trustee may reasonably
request in order to ensure that the consent granted by Principal Life and PFG pursuant to the
preceding paragraph shall remain continuously effective until the termination of the Funding
Agreement and the Guarantee, as applicable. The consent contained in the preceding paragraph is
coupled with an interest and shall be irrevocable.

     This acknowledgment of collateral assignment and grant of security interest and this
instrument shall be governed by, and shall be construed and enforced in accordance with, the laws
of the State of New York, without regard to conflicts of laws principles thereof, and shall be
binding upon, and shall inure to the benefit of, the parties hereto and their respective successors
and assigns.

     This instrument may not be amended, modified or waived without the consent of the Indenture
Trustee, the Trust, Principal Life and PFG.

     The Custodian hereby acknowledges the terms of this Acknowledgment of Funding Agreement and
Guarantee Assignment.

[Remainder of Page Intentionally Left Blank]

V-1

 

Part VI

Notice of Security Interest

     Pursuant to the Indenture, the Trust has collaterally assigned the Funding Agreement and
Guarantee to the Indenture Trustee pursuant to the Indenture.

     Notice is hereby given that the Indenture Trustee, on behalf of the Holders of the Notes, has
a security interest in the Collateral, including, but not limited to, any and all payments to be
made by Principal Life to the Trust pursuant to the Funding Agreement and any and all payments to
be made by PFG to the Trust pursuant to the Guarantee. Each of Principal Life and PFG, by
executing this instrument, hereby (x) consents to the security interest granted by the Trust, to
the Indenture Trustee in the payments under the Funding Agreement and Guarantee, as applicable, (y)
agrees to make all payments due under the Funding Agreement and Guarantee, as applicable, to the
Collection Account or any other account designated in writing to Principal Life or PFG, as
applicable, by the Indenture Trustee and (z) agrees to comply with all orders of the Indenture
Trustee with respect to the Funding Agreement and Guarantee, as applicable, without any further
consent from the Trust.

     This notice of security interest shall be governed by, and shall be construed and enforced in
accordance with, the laws of the State of New York, without regard to conflicts of laws principles
thereof, and shall be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.

     This instrument may not be amended, modified or waived without the consent of the Indenture
Trustee, the Trust, Principal Life and PFG.

     The Custodian hereby acknowledges the terms of this Notice of Security Interest.

[Remainder of Page Intentionally Left Blank]

VI-1

 

Part VII

Principal Life Officer’s Certificate

     The undersigned, an authorized officer of Principal Life, does hereby certify to each agent
that is a party to the Terms Agreement (as defined in the Omnibus Instrument) relating to the
Notes, in such capacity and on behalf of Principal Life, pursuant to the Distribution Agreement,
that:

     1. Since the respective dates as of which information is given in the Prospectus (as defined
in the Distribution Agreement), as of the date hereof, there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or business prospects
of Principal Life and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business;

     2. The representations and warranties of Principal Life contained in the Distribution
Agreement are true and correct with the same force and effect as though expressly made at and as of
the date hereof;

     3. Principal Life has complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to the date hereof; and

     4. No stop order suspending the effectiveness of the Registration Statement (as defined in the
Distribution Agreement) has been issued and no proceedings for that purpose have been instituted or
are pending or, to the best of such person’s knowledge, are threatened by the Commission (as
defined in the Distribution Agreement).

     5. Since the date of the Prospectus, there has occurred no event required to be set forth in
an amendment or supplement to the Registration Statement or Prospectus, and there has been no
document required to be filed under the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations (all as defined in the Distribution Agreement) which, upon filing, would be
deemed to be incorporated by reference in the Prospectus which has not been so filed.

[Remainder of Page Intentionally Left Blank]

VII-1

 

Part VIII

PFG Officer’s Certificate

     The undersigned, an authorized officer of PFG, does hereby certify to each Purchasing Agent
that is a party to the Terms Agreement (as defined in the Omnibus Instrument) relating to the
Notes, in such capacity and on behalf of PFG, pursuant to the Distribution Agreement, that:

     1. Since the respective dates as of which information is given in the Prospectus (as defined
in the Distribution Agreement), as of the date hereof, there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or business prospects
of PFG and its subsidiaries considered as one enterprise, whether or not arising in the ordinary
course of business;

     2. The representations and warranties of PFG contained in the Distribution Agreement are true
and correct with the same force and effect as though expressly made at and as of the date hereof;

     3. PFG has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date hereof; and

     4. No stop order suspending the effectiveness of the Registration Statement (as defined in the
Distribution Agreement) has been issued and no proceedings for that purpose have been instituted or
are pending or, to the best of such person’s knowledge, are threatened by the Commission (as
defined in the Distribution Agreement).

     5. Since the date of the Prospectus, there has occurred no event required to be set forth in
an amendment or supplement to the Registration Statement or Prospectus, and there has been no
document required to be filed under the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations (all as defined in the Distribution Agreement) which, upon filing, would be
deemed to be incorporated by reference in the Prospectus which has not been so filed.

[Remainder of Page Intentionally Left Blank]

VIII-1

 

Part IX

Trust Certificates

     A. Trust Certificate pursuant to the Distribution Agreement

     The Trust does hereby certify to each Purchasing Agent that is a party to the Terms Agreement
(as defined in the Omnibus Instrument) relating to the Notes, in such capacity and on behalf of the
Trust, pursuant to the Distribution Agreement and Terms Agreement, as applicable, that:

     1. Since the respective dates as of which information is given in the Prospectus (as defined
in the Distribution Agreement), as of the date hereof, there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or business prospects
of the Trust, whether or not arising in the ordinary course of business;

     2. The representations and warranties of the Trust contained in the Distribution Agreement are
true and correct with the same force and effect as though expressly made at and as of the date
hereof; and

     3. The Trust has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date hereof.

     B. Trust Certificate pursuant to Section 314(c) of the Trust Indenture Act

     The undersigned, a Responsible Officer of the Trustee, on behalf of the Trust and pursuant to
Section 1.02 of the Standard Indenture Terms, does hereby certify to the Indenture Trustee as
follows:

     1. I am familiar with the Indenture and have read the covenants, conditions and definitions
contained therein related to the issuance, authentication and delivery of the Notes;

     2. As to the matters set forth herein, I either have personal knowledge thereof or have
obtained knowledge thereof from officers or employees of the Trust, Principal Life or PFG in whom I
have confidence and whose duties require them to have personal knowledge thereof. In my opinion, I
have made such examination and investigation as has been necessary to enable me to express an
informed opinion as to whether or not the covenants or conditions contained in the Indenture have
been complied with; and

     3. All conditions precedent provided for in the Indenture to the authentication and delivery
of the Notes have been complied with.

     It is expressly understood that: (i) this Certificate is executed by U.S. Bank Trust National
Association, not in its individual capacity but solely as Trustee of the Trust, in the exercise of
the power and authority conferred and vested in it as such Trustee and (ii) each of the
representations made herein by the Trustee are not personal representations, undertakings and
agreements of U.S. Bank Trust National Association, or its officers, but are binding solely on the
Trust.

IX-1

 

Part X

Principal Life Certification

     Principal Life certifies, as of the Original Issue Date, that the Principal Life Officer’s
Certificate, a copy of which is attached as Exhibit A to this Closing Instrument, is true
and correct and remains in full force and effect.

[Remainder of Page Intentionally Left Blank]

X-1

 

Part XI

PFG Certification

     PFG certifies, as of the Original Issue Date, that the PFG Officer’s Certificate, a copy of
which is attached as Exhibit B to this Closing Instrument, is true and correct and remains
in full force and effect.

[Remainder of Page Intentionally Left Blank]

X1-1

 

Part XII

Indenture Trustee Certification

     The Indenture Trustee certifies, as of the Original Issue Date, that the Indenture Trustee
Officer’s Certificate, a copy of which is attached as Exhibit C to this Closing Instrument,
is true and correct and remains in full force and effect.

[Remainder of Page Intentionally Left Blank]

XII-1

 

Part XIII

Trustee Certification

     The Trustee certifies, as of the Original Issue Date, that the Trustee Officer’s Certificate,
a copy of which is attached as Exhibit D to this Closing Instrument, is true and correct
and remains in full force and effect.

[Remainder of Page Intentionally Left Blank]

XIII-1

 

Part XIV

Purchasing Agent(s) Certification

     On the date hereof, the Trust will issue Notes in accordance with the terms of the
Distribution Agreement. Each Purchasing Agent hereby certifies to Principal Life, PFG and the
Trust as follows:

     (i) that such Purchasing Agent has anti-money laundering policies and procedures in place in
accordance with the requirements imposed by the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Pub.
L, 107-56, 115 Stat. 280 (October 26, 2001), or any rules or regulations promulgated thereunder,
and the Foreign Assets Control Regulations issued by the Office of Foreign Assets Control of the
United States Department of Treasury (31 CFR Part 500), in each case to the extent applicable to
such Purchasing Agent; and

     (ii) that such Purchasing Agent has implemented an anti-money laundering compliance program
pursuant to NASD Rule 3011, to the extent applicable to such Purchasing Agent.

[Remainder of Page Intentionally Left Blank]

XIV-1

 

Part XV

Cross-Receipt

     The Trust hereby acknowledges receipt of the Net Proceeds to the Trust (as specified in the
Pricing Supplement) from the Indenture Trustee and herewith delivers to the Indenture Trustee, or
has caused to be delivered to the Indenture Trustee, the Notes, duly executed by the Trust pursuant
to the Indenture.

     The Trust hereby acknowledges receipt of funds for the Trust Beneficial Interest from or at
the direction of the Trust Beneficial Owner and has caused to be registered in the name of the
Trust Beneficial Owner the Trust Beneficial Interest pursuant to the Trust Agreement.

     Principal Life hereby acknowledges receipt of the Net Proceeds to the Trust and, for purposes
of the Funding Agreement, the receipt of the Net Proceeds to the Trust shall be deemed to be
receipt by Principal Life in full of the Net Deposit (as specified in the Funding Agreement).
Principal Life herewith delivers to the Indenture Trustee, or has caused to be delivered to the
Indenture Trustee, the Funding Agreement, duly executed by Principal Life.

     The Custodian, on behalf of the Indenture Trustee, hereby acknowledges receipt from Principal
Life of the Funding Agreement.

     The Custodian, on behalf of the Indenture Trustee, hereby acknowledges receipt from PFG of the
Guarantee.

     The Trust Beneficial Owner hereby acknowledges ownership of the Trust Beneficial Interest.

     PFG and the Indenture Trustee hereby acknowledge the terms of this Cross-Receipt.

[Remainder of Page Intentionally Left Blank]

XV-1

 

Part XVI

Miscellaneous and Execution Pages

     This Closing Instrument may be executed by each of the parties hereto in any number of
counterparts, and by each of the parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

     Each signatory, by its execution hereof, does hereby become a party to each of the agreements
or instruments identified for such party as of the Original Issue Date.

     IN WITNESS WHEREOF, the undersigned have executed this Closing Instrument with respect to the
Trust, dated as of the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	PRINCIPAL LIFE INSURANCE COMPANY (in executing
below agrees and becomes a party to (i) the
Instructions of the Trust set forth in Part I
herein, (ii) the Assignment of Funding Agreement
and Guarantee set forth in Part IV herein, (iii)
the Acknowledgement of Funding Agreement and
Guarantee Assignment set forth in Part V herein,
(iv) the Notice of Security Interest set forth
in Part VI herein, (v) the Principal Life
Certification set forth in Part X herein and
(vi) the Cross-Receipt set forth in Part XV
herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	PRINCIPAL FINANCIAL GROUP, INC. (in executing
below agrees and becomes a party to (i) the
Assignment of Funding Agreement and Guarantee
set forth in Part IV herein, (ii) the
Acknowledgement of Funding Agreement and
Guarantee Assignment set forth in Part V herein,
(iii) the Notice of Security Interest set forth
in Part VI herein, (iv) the PFG Certification
set forth in Part XI herein and (v) the Cross
Receipt set forth in Part XV herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

Closing Instrument Page 1 of 5

 

 

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 THE PRINCIPAL LIFE INCOME FUNDINGS TRUST
DESIGNATED IN THIS CLOSING INSTRUMENT (in
executing below agrees and becomes party to
(i) the Instructions of the Trust set forth in
Part I herein, (ii) the Assignment of Funding
Agreement and Guarantee set forth in Part IV
herein, (iii) the Acknowledgement of Funding
Agreement and Guarantee Assignment set forth
in Part V herein, (iv) the Notice of Security
Interest set forth in Part VI herein, (v) the
Trust Certificate set forth in Part IX herein
and (vi) the Cross-Receipt set forth in Part
XV herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	CITIBANK, N.A., in its capacity as Indenture
Trustee, Registrar, Transfer Agent, Paying Agent
and Calculation Agent (in executing below agrees
and becomes party to (i) the Instructions of the
Trust set forth in Part I herein, (ii) the
Acknowledgement of Indenture Trustee Concerning
the Notes set forth in Part II herein, (iii) the
Assignment of Funding Agreement and Guarantee
set forth in Part IV herein, (iv) the
Acknowledgement of Funding Agreement and
Guarantee Assignment set forth in Part V herein,
(v) the Notice of Security Interest set forth in
Part VI herein, (vi) the Indenture Trustee
Certification set forth in Part XII herein and
(vii) the Cross Receipt set forth in Part XV
herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

Closing Instrument Page 2 of 5

 

 

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 U.S. BANK TRUST NATIONAL ASSOCIATION, in
its capacity as Trustee (in executing below
agrees and becomes a party to the Trustee
Certification set forth in Part XIII herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	GSS HOLDINGS II, INC., in its capacity as Trust
Beneficial Owner (in executing below agrees and
becomes a party to the Cross-Receipt set forth
in Part XV herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	BANKERS TRUST COMPANY, N.A., in its capacity as
custodian (in executing below agrees and becomes
a party to (i) the Certificate Regarding Custody
of the Funding Agreement and the Guarantee set
forth in Part III herein, (ii) the Assignment of
Funding Agreement and Guarantee set forth in
Part IV herein, (iii) the Acknowledgment of
Funding Agreement and Guarantee Assignment set
forth in Part V herein, (iv) the Notice of
Security Interest set forth in Part VI herein
and (v) the Cross Receipt set forth in Part XV
herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

Closing Instrument Page 3 of 5

 

 

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	[Name], in his/her capacity as an
authorized officer of Principal Life (in
executing below agrees and becomes a party to
the Principal Life Officer’s Certificate set
forth in Part VII herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	[Name], in his/her capacity as an authorized
officer of PFG (in executing below agrees and
becomes a party to the PFG Officer’s Certificate
set forth in Part VIII herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

Closing Instrument Page 4 of 5

 

 

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 [Purchasing Agent]

(in executing below agrees and becomes a
party to (i) the Instructions of the Trust set
forth in Part I herein and (ii) the Purchasing
Agent Certification set forth in Part XIV
herein)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

Closing Instrument Page 5 of 5exv4w12

 

Exhibit 4.12

CUSTODIAL AGREEMENT

          This Custodial Agreement (this “Custodial Agreement”) is entered into as of
                    , 2007 among Bankers Trust Company, N.A., a national banking association, acting as
custodian (the “Custodian”), Citibank, N.A. in its capacity as indenture trustee (the “Indenture
Trustee”) for the holders of the notes (the “Notes”) to be issued by each trust (each a “Trust”)
organized in connection with the Principal Life Insurance Company Secured Notes Program (the
“Program”), and U.S. Bank Trust National Association, as trustee (the “Trustee”) on behalf of each
Trust organized in connection with the Program.

          Whereas, in connection with the issuance and sale of the Notes by each Trust, the
Trustee, on behalf of each Trust, will purchase from Principal Life Insurance Company (“Principal
Life”) a funding agreement (a “Funding Agreement”), the payment obligations of which are fully and
unconditionally guaranteed by Principal Financial Group, Inc. (“PFG”) pursuant to a guarantee
issued to such Trust (the “Guarantee”);

          Whereas, the parties desire that each Funding Agreement and Guarantee be held in the
State of Iowa at all times prior to the occurrence and continuance of an Event of Default (as
defined in each such Funding Agreement) or a breach of PFG’s obligations under the terms of the
Guarantee;

          Whereas, the parties desire that the Custodian be appointed as custodian for the
Indenture Trustee, to hold in safe custody for the benefit of the Indenture Trustee, on the terms
and conditions provided in this Custodial Agreement, each Funding Agreement and Guarantee; and

          Whereas, the Custodian has the power and ability sufficient to undertake and to
discharge the duties accepted by it under this Custodial Agreement;

          Now, Therefore, in consideration of the foregoing premises and the covenants
contained herein, and for other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto covenant and agree as follows:

ARTICLE 1

Definitions

          SECTION 1.1. Incorporation of Definitions by Reference. All capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the Standard Indenture Terms
filed as Exhibit 4.1 to Registration Statement on Form S-3 (File Nos. 332-                     and
332-                    ) filed with the Securities and Exchange Commission by Principal Life and Principal
Financial Group, Inc. on                     , 2007, as may be amended.

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ARTICLE 2

Appointment of Custodian

          SECTION 2.1. Appointment of Custodian. The Indenture Trustee hereby appoints the Custodian
and the Custodian hereby acknowledges that it will act as custodian for the Indenture Trustee with
respect to each Funding Agreement and Guarantee that is collaterally assigned to the Indenture
Trustee pursuant to the Indenture and with respect to each Funding Agreement and each Guarantee in
which a security interest is granted to the Indenture Trustee pursuant to the Indenture, and that
comes into the physical custody or possession of the Custodian under this Custodial Agreement,
until the earlier of (a) such time when the Indenture Trustee notifies the Custodian in writing to
the contrary, whereupon such physical custody and possession of each Funding Agreement and
Guarantee specified in such notice will be transferred to the Indenture Trustee or another Person
in the manner directed by the Indenture Trustee or (b) the termination of this Custodial Agreement.
Acceptance by the Custodian of this appointment is conclusively evidenced by its execution of this
Custodial Agreement.

          SECTION 2.2. Custodian Not Subject to Direction of Any Trust. In no event shall the
Custodian, in such custodial role, be construed to be subject to the direction of the Trustee, on
behalf of any Trust, or deliver any such Funding Agreement or Guarantee to the Trustee, on behalf
of any Trust, without the express written consent of the Indenture Trustee.

ARTICLE 3

Delivery of Funding Agreements and Guarantees

          SECTION 3.1. Delivery of Funding Agreements and Guarantees. The Indenture Trustee shall, for
safekeeping, deposit each Funding Agreement and Guarantee with and deliver each Funding Agreement
and Guarantee into, or cause each Funding Agreement and Guarantee to be deposited with and
delivered into, the actual, exclusive and continuous possession and control of the Custodian as
custodian for the Indenture Trustee.

          SECTION 3.2. Limited Interest of Each Trust. Each Trust shall retain and reserve only such
interests, claims or rights in the Funding Agreements and Guarantees as are set forth herein, in
the Indenture or other such documents as are used (i) to effect the applicable Trust’s collateral
assignment of the applicable Funding Agreement and applicable Guarantee to the Indenture Trustee
and to record Principal Life’s acknowledgement thereof and (ii) to grant a security interest in the
applicable Funding Agreement and applicable Guarantee to the Indenture Trustee and to record PFG’s
and Principal Life’s, respectively, acknowledgement thereof.

          SECTION 3.3. Security Interest of Indenture Trustee. Delivery of any Funding Agreement or
Guarantee to the Custodian shall, without any further act or condition, constitute conclusive
evidence against the applicable Trust and all third parties of the Indenture Trustee’s security
interest therein.

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          SECTION 3.4. Indenture Trustee Covenant to Abide by Custodial Agreement. The Indenture
Trustee hereby covenants that, at all times prior to an Event of Default or a breach of PFG’s
obligation under the Guarantee and so long as it retains a security interest or other ownership
interest in a Funding Agreement or Guarantee, it will take no action to terminate or to cause the
termination of this Custodial Agreement, and it will abide by the requirement herein that the
physical custody and possession of each such Funding Agreement and each such Guarantee be at the
location provided in Section 9.5 or at such other location within the State of Iowa designated by
the Custodian.

ARTICLE 4

Inspection of Funding Agreements, Guarantees, Books and Records

          SECTION 4.1. Inspection of Funding Agreements and Guarantees. So long as any Notes are
Outstanding, the Indenture Trustee and the Trustee, on behalf of the applicable Trust, by or
through their attorneys, agents or employees, shall each be entitled, but shall be under no
obligation, at any mutually agreeable time, during normal business hours, at the expense of the
applicable Trust, upon two Business Days’ notice to the Custodian, to examine and audit each
Funding Agreement and Guarantee held by the Custodian.

          SECTION 4.2. Inspection of Books and Records. The Custodian shall maintain appropriate books
and records relating to services performed by it with respect to each Funding Agreement and
Guarantee and, so long as any Notes are Outstanding, the Indenture Trustee and the Trustee, on
behalf of the applicable Trust, by or through their attorneys, agents or employees, shall each be
entitled, but shall be under no obligation, at any mutually agreeable time, during normal business
hours, at the expense of the applicable Trust, upon two Business Days’ notice to the Custodian, to
examine such books and records.

ARTICLE 5

Duties of Custodian

          SECTION 5.1. General. The Custodian shall:

	 	(a)	 	on behalf of the Indenture Trustee, accept and hold each Funding Agreement
and Guarantee in the State of Iowa at its address indicated in Section 9.5 as
custodian for the Indenture Trustee, subject to the provisions of this Custodial
Agreement, the Indenture and each such Funding Agreement and Guarantee;
	 
	 	(b)	 	have and maintain open, continuous and exclusive possession, dominion and
control over each Funding Agreement and Guarantee delivered to it under this Custodial
Agreement, subject only to the rights and interest of the Indenture Trustee and the
applicable Trust;

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	 	(c)	 	from time to time, certify the receipt of each Funding Agreement and
Guarantee as may be reasonably requested by the Indenture Trustee or the Trustee, on
behalf of the applicable Trust;
	 
	 	(d)	 	from time to time upon request by (i) the Indenture Trustee, or (ii) the
Trustee, on behalf of the applicable Trust, and the Indenture Trustee, submit such
information and take such action as may be reasonably required by the Trustee, on
behalf of the applicable Trust or the Indenture Trustee to assure that each Funding
Agreement and Guarantee is maintained in a proper and secure condition;
	 
	 	(e)	 	upon receipt of any Funding Agreement or Guarantee, issue to the Indenture
Trustee and the applicable Trust a certificate relating to the applicable Funding
Agreement and related Guarantee in substantially the form attached as Exhibit
A attached hereto, which is made a part hereof;
	 
	 	(f)	 	upon its receipt of written notice from the Indenture Trustee that an Event
of Default has occurred with respect to any Funding Agreement or a breach of the
obligations of PFG under any Guarantee has occurred and at the written direction of
the Indenture Trustee, deliver each such Funding Agreement and related Guarantee to
the Indenture Trustee;
	 
	 	(g)	 	at its own expense, maintain at all times during the term of this Custodial
Agreement and keep in full force and effect (i) fidelity insurance, (ii) theft of
documents insurance and (iii) forgery insurance; provided, that such insurance shall
be in amounts, with standard coverage and subject to deductibles, as are customary for
similar insurance typically maintained by financial institutions that act as
custodians in similar transactions;
	 
	 	(h)	 	unless otherwise specified herein, in providing services hereunder with
respect to any Funding Agreement or Guarantee, follow the written instructions
received from the Indenture Trustee;
	 
	 	(i)	 	exercise reasonable care and diligence, consistent with customary standards
for such custody, in the possession, retention and protection of each Funding
Agreement and Guarantee delivered to it under this Custodial Agreement;
	 
	 	(j)	 	except as otherwise required by applicable law, maintain the confidentiality
of the information provided hereunder and in each Funding Agreement and Guarantee, and
not disclose or in any way communicate such information to third parties without the
express written consent of the Trustee, on behalf of the applicable Trust (provided,
however, that notwithstanding anything herein to the contrary and except as reasonably
necessary to comply with any applicable federal and state securities laws, the
Custodian (and each employee, representative or other agent of the Custodian) may
disclose to any and all persons, without limitation of any kind, the U.S. federal and

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	 	 	 	state income tax treatment and tax structure of the transaction and all materials
of any kind (including opinions or other tax analyses) that are provided to the
Custodian relating to such U.S. federal and state income tax treatment and tax
structure, where “tax structure” is any fact that may be relevant to understanding
the U.S. federal or state income tax treatment of the transaction);
	 
	 	(k)	 	request written direction from the Indenture Trustee and rely upon such
written direction in the event that (i) any dispute shall arise between the parties
with respect to the disposition of any Funding Agreement or Guarantee held hereunder
or (ii) the Custodian shall be uncertain as to how to proceed in a situation not
explicitly addressed by the terms of this Custodial Agreement whether because of
conflicting demands by the other parties hereto or otherwise; and
	 
	 	(l)	 	have only those duties as are specifically provided herein, which shall be
deemed purely ministerial in nature, and shall under no circumstance be deemed a
fiduciary for any of the parties to this Custodial Agreement.

          SECTION 5.2. Merger, Conversion or Consolidation of Custodian. Notwithstanding anything
herein to the contrary, any banking association or corporation into which the Custodian may be
merged, converted or with which the Custodian may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Custodian shall be a party, or any
banking association or corporation to which all or substantially all of the corporate trust
business of the Custodian shall be transferred, shall succeed to all the Custodian’s rights,
obligations and immunities hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto.

          SECTION 5.3. Compliance with Writs, Orders or Decrees. In the event that any Funding
Agreement or Guarantee shall be attached, garnished or levied upon by any court order, or the
delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or
decree shall be made or entered by any court order affecting the property deposited under this
Custodial Agreement, the Custodian is hereby expressly authorized, in its sole discretion, to obey
and comply with all writs, orders or decrees so entered or issued, which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without jurisdiction, and in the
event the Custodian obeys or complies with any such writ, order or decree it shall not be liable to
any of the parties hereto or to any other Person, firm or corporation by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside
or vacated.

          SECTION 5.4. Delegation of Duties. The Custodian shall not employ any third party institution
to carry out any of the services to be provided hereunder without the express written consent of
the Indenture Trustee, which consent shall not be unreasonably withheld.

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          SECTION 5.5. No Constructive Knowledge. The Custodian shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default unless the Custodian receives a written notice
of such Default or Event of Default from the Indenture Trustee or the Trustee, on behalf of the
applicable Trust.

          SECTION 5.6. Reliance. In performance of its duties under this Custodial Agreement, the
Custodian shall be permitted to rely on any certificate, instrument, document or communication
believed by it to be genuine, correct and signed by the proper Person or Persons. The Trustee, on
behalf of the applicable Trust, and the Indenture Trustee shall each execute and deliver to the
Custodian a certificate of incumbency for the purpose of establishing the identity of the
representatives of the Trustee, on behalf of the applicable Trust, and the Indenture Trustee,
respectively, entitled to issue instructions or directions to the Custodian on behalf of each such
party. In the event of any change in the identity of such representatives, a new certificate of
incumbency shall be executed and delivered to the Custodian by the appropriate party. Until such
time as the Custodian shall receive a new incumbency certificate, the Custodian shall be fully
protected in relying without inquiry on any then current incumbency certificate on file with the
Custodian.

          SECTION 5.7. Release of Funding Agreements and Guarantees. Except as consented to by the
Indenture Trustee or as otherwise provided in the Indenture and this Custodial Agreement, the
Custodian shall not release any Funding Agreement or Guarantee from its possession without
receiving a prior written request duly executed on behalf of the Indenture Trustee.

          SECTION 5.8. Limitations of Custodian Responsibility.

	 	(a)	 	The Custodian assumes no responsibility under this Custodial Agreement other
than to render the services contemplated hereunder.
	 
	 	(b)	 	The Custodian assumes no responsibility for the effectiveness, genuineness,
validity or enforceability of any Funding Agreement or Guarantee in its custody or for
making any inquiry into any such Funding Agreement or Guarantee.
	 
	 	(c)	 	The Custodian shall not be liable or deemed to be in default for any failure
or delay in performance of any duty in whole or in part arising out of or caused by
any of the following: a major external flood; earthquake; “act of God;” failure of
public utility; act of war; act of terrorism; or rebellion or revolution in the United
States.

          SECTION 5.9. Other Activities of the Custodian.

	 	(a)	 	Nothing herein shall prevent the Custodian or any of its Affiliates from
engaging in other businesses, or from rendering services of any kind to any Trust, the
Indenture Trustee or any other Person or entity to the extent permitted by applicable
law.

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	 	(b)	 	It is understood that the Custodian and any of its Affiliates may engage in
any other business and furnish custodial services to others.
	 
	 	(c)	 	The Custodian will be free, in its sole discretion, to effect transactions on
behalf of itself or for others, which may be the same as or different from those
effected under this Custodial Agreement.
	 
	 	(d)	 	The Custodian shall have the right, but not the obligation to consult with
counsel of its choice and shall not be liable for action taken or omitted to be taken
by the Custodian either in accordance with the advice of such counsel or in accordance
with any opinion of counsel to any Trust addressed and delivered to the Custodian.

ARTICLE 6

Compensation, Expenses and Indemnification

          SECTION 6.1. Compensation, Expenses and Indemnification. The Custodian shall be entitled to
compensation, expenses and indemnification as set forth in that certain Expense and Indemnity
Agreement (the “Expense and Indemnity Agreement”), dated as of                     , 2007 entered into between
the Custodian and Principal Life.

ARTICLE 7

Representations, Warranties and Covenants of Custodian

          SECTION 7.1. Representations and Warranties of Custodian. The Custodian hereby represents and
warrants to the Indenture Trustee and the Trustee, for the benefit of each Trust, that:

	 	(a)	 	it is a national banking association duly organized and validly existing and
in good standing under the laws of the State of Iowa and has full power and authority
to own its assets and to transact the business in which it is currently engaged and is
duly qualified and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires, or the
performance of this Custodial Agreement would require, such qualification;
	 
	 	(b)	 	it, and each Person acting on its behalf, has full power and authority to
execute and deliver this Custodial Agreement and to perform all of its obligations
under this Custodial Agreement; and
	 
	 	(c)	 	this Custodial Agreement, and each instrument and document required hereunder
that was executed and delivered by, or on behalf of, the
Custodian, has been executed and delivered by a duly authorized officer of the
Custodian.

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          SECTION 7.2. Covenants of Custodian. The Custodian hereby covenants to the Indenture Trustee
and the Trustee, for the benefit of each Trust, that:

	 	(a)	 	at all times it will maintain physical custody and possession of each Funding
Agreement and Guarantee deposited with it pursuant to the terms of this Custodial
Agreement within the State of Iowa at the location specified in Section 9.5 or at such
other location within the State of Iowa designated by the Custodian;
	 
	 	(b)	 	each instrument and document required to be executed or delivered by, or on
behalf of, the Custodian, shall be executed and delivered by a duly authorized officer
of the Custodian;
	 
	 	(c)	 	prior to any affiliation with any Trust in the future, it shall notify the
Indenture Trustee of any such contemplated affiliation; and
	 
	 	(d)	 	it shall not institute, or join any other Person in instituting, against any
Trust any bankruptcy, reorganization, arrangement, insolvency, moratorium or
liquidation proceedings or other proceedings under federal or state bankruptcy or
similar laws until at least one year and one day (or, if longer, the applicable
preference period then in effect) after the payment in full of all Notes issued by any
Trust in connection with the Program.

ARTICLE 8

Termination

          SECTION 8.1. General. This Custodial Agreement and the duties and responsibilities of the
Custodian hereunder shall remain in effect until the occurrence of one or more of the following
events:

	 	(a)	 	delivery to the Custodian by the Indenture Trustee of a written certification
signed by the Indenture Trustee that each Trust organized in connection with the
Program has paid and discharged all obligations with respect to the Notes issued by
each such Trust and that the Program has been terminated;
	 
	 	(b)	 	termination of each Indenture entered into by each Trust organized in
connection with the Program, and delivery by the Custodian of each Funding Agreement
and Guarantee in its possession hereunder to the Indenture Trustee or as the Indenture
Trustee shall direct in writing and certification by the Indenture Trustee that the
Program has been terminated; or
	 
	 	(c)	 	termination of this Custodial Agreement pursuant to Section 8.2, 8.3 or 8.4.

          SECTION 8.2. Termination by Custodian. This Custodial Agreement may be terminated by the
Custodian, at any time, and the Custodian may resign, upon 30 days’ prior written notice to the
Trustee, on behalf of each Trust and the Indenture Trustee;

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provided, however, that no termination
or resignation pursuant to this Section 8.2 shall be effective until the date as of which a
successor Custodian shall be appointed in accordance with Section 8.6 and shall have agreed in
writing to assume all of the Custodian’s duties and obligations under this Custodial Agreement.

          SECTION 8.3. Termination by Indenture Trustee Without Cause. This Custodial Agreement may be
terminated at any time by the Indenture Trustee, without cause, and the Indenture Trustee may
remove the Custodian, upon 30 days’ prior written notice to the Custodian and each Trust (or such
shorter notice as is acceptable to the Custodian and each Trust); provided, however, that no
termination or removal pursuant to this Section 8.3 shall be effective until the date as of which a
successor Custodian shall be appointed in accordance with Section 8.6 and shall have agreed in
writing to assume all of the Custodian’s duties and obligations under this Custodial Agreement.

          SECTION 8.4. Termination by Indenture Trustee for Cause. This Custodial Agreement may be
terminated at any time by the Indenture Trustee, for cause, and the Indenture Trustee may remove
the Custodian, upon 10 days’ prior written notice to the Custodian; provided, however, that no
termination or removal pursuant to this Section 8.4 shall be effective until the date as of which a
successor Custodian shall be appointed in accordance with Section 8.6 and shall have agreed in
writing to assume all of the Custodian’s duties and obligations under this Custodial Agreement.
For purposes of determining “cause” with respect to any such termination of this Custodial
Agreement, such term shall mean any one of the following events:

	 	(a)	 	the Custodian willfully violates, or takes any action that it knows
materially breaches, any provision of this Custodial Agreement;
	 
	 	(b)	 	the Custodian materially breaches in any respect any provision of this
Custodial Agreement (other than as specified in paragraph (a) of this Section 8.4) and
fails to cure such breach within 30 days of its becoming aware, or its receiving
notice from the Indenture Trustee, of such breach;
	 
	 	(c)	 	the Custodian is wound up or dissolved or there is appointed over it, or a
substantial portion of its assets, a receiver, administrator, administrative receiver,
trustee or similar officer;
	 
	 	(d)	 	the Custodian (i) ceases to be able to, or admits in writing its inability
to, pay its debts as they become due and payable, or makes a general assignment for
the benefit of, or enters into any composition or arrangement with, its creditors
generally; (ii) applies for or consents to the appointment of a receiver, trustee,
assignee, custodian, liquidator or sequestrator (or other similar official) of the
Custodian or of any substantial part of its properties or assets, or authorizes such
an application or consent, or proceedings seeking such appointment are commenced
without such
authorization, consent or application against the Custodian and continue
undismissed for 60 days; (iii) authorizes or files a voluntary petition in
bankruptcy, or applies for or consents to the application of any bankruptcy,

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	 	 	 	reorganization, arrangement, readjustment of debt, insolvency or dissolution, or
authorizes such application or consent, or proceedings to such end are instituted
against the Custodian without such authorization, application or consent and are
approved as properly instituted and remain undismissed for 60 days or result in
adjudication of bankruptcy or insolvency; (iv) permits or suffers all or any
substantial part of its properties or assets to be sequestered or attached by court
order and such order remains undismissed for 60 days; or (v) engages in any
activity analogous to the activities set forth in clauses (i) through (iv) of this
Section 8.4(d) in any applicable jurisdiction; or
	 
	 	(e)	 	the occurrence of an act by the Custodian that constitutes fraud or criminal
activity in the performance of its obligations under this Custodial Agreement, or the
Custodian being convicted of a criminal offense materially related to its primary
businesses.

          SECTION 8.5. Liabilities After Termination. If this Custodial Agreement is terminated as
provided herein, none of the parties hereto shall have any further liability or obligation to the
other parties hereto, except as provided in Sections 5.1(j), 8.6, 8.7 and 8.8 of this Custodial
Agreement.

          SECTION 8.6. Appointment of Successor Custodian. Any removal or resignation of the Custodian
while any Notes are Outstanding will be effective only upon the appointment by the Indenture
Trustee (and the acceptance in writing by such successor Custodian) of a successor Custodian that
is an established institution in the State of Iowa which (a) has demonstrated an ability to
professionally and competently perform duties similar to those imposed upon the Custodian hereunder
and (b) is legally qualified and has the capacity to act as Custodian hereunder in the assumption
of all of the responsibilities, duties and obligations of the Custodian hereunder. The Trustee, on
behalf of each Trust, the Indenture Trustee, the Custodian and the successor Custodian shall take
such action (or cause the removed or resigning Custodian to take such action) consistent with this
Custodial Agreement as shall be necessary to effectuate any such succession.

          SECTION 8.7. Rights and Remedies of Indenture Trustee Regarding Termination. In the event of
removal of the Custodian pursuant to this Custodial Agreement by the Indenture Trustee, the
Indenture Trustee shall have all of the rights and remedies available with respect thereto at law
or equity, and, without limiting the foregoing, the Indenture Trustee may by notice in writing to
the Custodian as provided under this Custodial Agreement terminate all the rights and obligations
of the Custodian under this Custodial Agreement (except those that survive termination pursuant to
Section 8.5). Upon the expiration of any applicable notice period with respect to termination of
this Custodial Agreement, all authority and power of the Custodian under this Custodial Agreement,
whether with respect to each Funding Agreement or Guarantee or otherwise, shall automatically and
without further action by any Person or entity pass to and be vested
in the successor Custodian upon the appointment thereof and the agreement of such successor
Custodian to assume the Custodian’s duties and obligations under this Custodial Agreement.

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          SECTION 8.8. Actions Upon Termination.

	 	(a)	 	Upon the effective date of termination of this Custodial Agreement, the
Custodian shall, as soon as practicable:

	 	(i)	 	deliver to the Indenture Trustee, the successor Custodian or
to such other Person as the Indenture Trustee directs in writing all Funding
Agreements and Guarantees then in the custody of the Custodian; and
	 
	 	(ii)	 	deliver to the Indenture Trustee or successor Custodian an
accounting with respect to the books and records relating to each Funding
Agreement and Guarantee that was delivered to the Custodian.

	 	(b)	 	Notwithstanding any such termination, the Custodian shall remain liable to
the extent set forth herein (but subject to Section 8.6) for its acts or omissions
hereunder arising prior to termination and for any expenses, losses, claims, damages,
judgments, assessments, costs or other liabilities (including reasonable attorneys’
fees) in respect of or arising out of a material breach of the representations,
warranties or covenants made by the Custodian under this Custodial Agreement or from
any failure of the Custodian to comply with the provisions of this Section 8.8.
	 
	 	(c)	 	The Custodian agrees that, notwithstanding any termination, it shall
reasonably cooperate in any proceeding arising in connection with this Custodial
Agreement, the Indenture or any Funding Agreement or Guarantee upon receipt of
appropriate indemnification and expense reimbursement.

ARTICLE 9

General Provisions

          SECTION 9.1. Binding Effect; Successors, Transferees and Assigns. This Custodial Agreement
shall be binding upon the parties hereto, their respective successors, transferees and assigns, and
shall inure the benefit of and be enforceable by all parties hereto and their respective
successors, transferees and permissible assigns.

          SECTION 9.2. Amendments. This Custodial Agreement may not be amended without the express
written consent of the Custodian, the Indenture Trustee and the Trustee acting on behalf of each
Trust.

          SECTION 9.3. Assignment of Funding Agreements and Guarantees. No collateral assignment, grant
of security interest or similar action by, or on behalf of, any Trust of any Funding Agreement or
Guarantee shall be recognized by the Custodian or be effective unless approved in writing by the
Indenture Trustee.

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          SECTION 9.4. Notices. All notices, requests and other communications under this Custodial
Agreement shall be in writing (including bank wire, facsimile or similar writing) and shall be
given to the relevant Person at its address or facsimile number set forth below or such other
address or facsimile number as such Person may hereafter specify for such purpose by not less than
10 Business Days’ prior notice to each other Person specified in this Section 9.4. Each such
notice, request or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified pursuant to this Section 9.4, (b) if
given by mail, 48 hours after such communication is deposited in the mails with first class postage
prepaid, or (c) if given by any other means, when delivered or received at the address specified in
this Section 9.4.

          Such notices, requests and other communications shall be addressed, if to the Trust, to:

Principal Life Income Fundings Trust

c/o U.S. Bank Trust National Association, as Trustee

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Janet O’Hara

Facsimile: 212-509-3384

if to the Indenture Trustee, to:

Citibank, N.A.

Corporate and Investment Banking

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Jennifer H. McCourt

Telephone: (212) 816-5680

Facsimile: (212) 816-5527

if to the Trustee, to:

U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Janet O’Hara

Facsimile: 212-509-3384

          SECTION 9.5. Address of Custodian. The Custodian shall hold each Funding Agreement and
Guarantee at the following address:

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa  50309-2728

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Attention: Diana Cook

Facsimile: 515-247-2101

          SECTION 9.6. Waiver of Certain Rights. The Custodian hereby waives, relinquishes and releases
any rights which it may have by way of contract or law, whether through exercise of a right of
set-off, security interest, counterclaim or otherwise, to obtain any property or payment from,
under or with respect to any Funding Agreement or Guarantee delivered to it hereunder.

          SECTION 9.7. Provisions Separable. Any provision of this Custodial Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity or enforceability or
legality of such provision in any other jurisdiction.

          SECTION 9.8. Governing Law. This Custodial Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its choice of law principles.

          SECTION 9.9. Waiver of Jury Trial. Each of the parties to this Custodial Agreement hereby
irrevocably waives any and all right to a trial by jury with respect to any legal proceeding
arising out of or relating to this or any related transaction.

          SECTION 9.10. Headings Not to Affect Interpretation. The headings contained in this Custodial
Agreement are for convenience only, and they neither form a part of this Custodial Agreement nor
are they to be used in the construction or interpretation hereof.

          SECTION 9.11. Counterparts. This Custodial Agreement may be executed and delivered in any
number of counterparts, each of which, when so executed and delivered, shall be an original;
provided, however, that such counterparts shall together constitute but one and the same
instrument.

13

 

          In Witness Whereof, the parties have caused this Custodial Agreement to be duly
executed by their respective authorized officers, as of the date first above written.

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A., as Custodian

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	CITIBANK, N.A., as Indenture Trustee for the

benefit of the holders of the Notes issued in

connection with the Program

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION,
 as
Trustee, on behalf of each Trust organized in

connection with the Program

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

14

 

Exhibit A

Certificate Regarding Custody of the 

Funding Agreement and the
Guarantee

          In connection with the issuance of the Funding Agreement, the Assignment of Funding Agreement
(set forth in Part IV of the Closing Instrument (as defined in the Omnibus Instrument)) and the
issuance of the Guarantee, the Custodian hereby represents that it has received delivery of the
Funding Agreement and the Guarantee and is holding the Funding Agreement and the Guarantee for the
benefit of the Indenture Trustee and that the Funding Agreement and the Guarantee are in the
possession of the Custodian at the address below:

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

A-1

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