Document:

exv10w6

 

 Exhibit 10.6

DELL COMPUTER CORPORATION

DEFERRED COMPENSATION PLAN

AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 1, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGE

	Article I.
	 	DEFINITIONS AND CONSTRUCTION	 	 	1	 
	 
	 	1.1                       Definitions	 	 	1	 
	 
	 	1.2                       Number and Gender	 	 	7	 
	 
	 	1.3                       Headings	 	 	7	 
	Article II.
	 	PARTICIPATION	 	 	7	 
	 
	 	2.1                       Participation	 	 	7	 
	 
	 	2.2                       Termination of Participation	 	 	8	 
	 
	 	2.3                       Reemployment of a Participant	 	 	8	 
	Article III.
	 	CONTRIBUTIONS	 	 	8	 
	 
	 	3.1                       Participant Compensation Deferrals	 	 	8	 
	 
	 	3.2                       Company Credits	 	 	10	 
	Article IV.
	 	ALLOCATIONS TO PARTICIPANT ACCOUNTS	 	 	11	 
	 
	 	4.1                       Individual Accounts	 	 	11	 
	 
	 	4.2                       Investment of Accounts	 	 	11	 
	 
	 	4.3                       Allocation of Net Income or Loss and Changes in Value	 	 	11	 
	Article V.
	 	HYPOTHETICAL INVESTMENT OF ACCOUNTS	 	 	11	 
	 
	 	5.1                       Hypothetical Investment of Accounts	 	 	11	 
	 
	 	5.2                       Designation of Investment Funds	 	 	12	 
	Article VI.
	 	VESTED INTEREST	 	 	12	 
	 
	 	6.1                       Vesting of Compensation Deferrals Account	 	 	12	 
	 
	 	6.2                       Vesting of Company Credits Account	 	 	12	 
	 
	 	6.3                       Forfeitures	 	 	13	 
	Article VII.
	 	IN-SERVICE WITHDRAWALS AND LOANS	 	 	13	 
	 
	 	7.1                       In-Service Withdrawals	 	 	13	 
	 
	 	7.2                       Involuntary Distributions	 	 	14	 
	 
	 	7.3                       No Loans	 	 	14	 
	Article VIII.
	 	PLAN BENEFITS	 	 	14	 
	 
	 	8.1                       Plan Benefit	 	 	14	 
	 
	 	8.2                       Events Entitling Payment of Benefit	 	 	14	 
	 
	 	8.3                       Payee and Time of Payment	 	 	15	 
	 
	 	8.4                       Alternative Forms of Benefit Payments	 	 	15	 

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TABLE OF CONTENTS 
 (CONTINUED)

	 	 	 	 	 	 	 
	 	 	 	 	PAGE

	 
	 	8.5                       Designation of Beneficiaries	 	 	16	 
	 
	 	8.6                       Payments Pursuant to a QDRO	 	 	17	 
	 
	 	8.7                       Payer of Benefits	 	 	17	 
	 
	 	8.8                       Unclaimed Benefits	 	 	17	 
	Article IX.
	 	ADMINISTRATION OF PLAN	 	 	17	 
	 
	 	9.1                       Appointment of Committee	 	 	17	 
	 
	 	9.2                       Term, Vacancies, Resignation, and Removal	 	 	18	 
	 
	 	9.3                       Self-Interest of Committee Members	 	 	18	 
	 
	 	9.4                       Committee Powers and Duties	 	 	18	 
	 
	 	9.5                       Claims Review	 	 	19	 
	 
	 	9.6                       Company to Supply Information	 	 	20	 
	 
	 	9.7                       Indemnity	 	 	20	 
	Article X.
	 	PURPOSE AND UNFUNDED NATURE OF THE PLAN	 	 	20	 
	 
	 	10.1                      Purpose of Plan	 	 	20	 
	 
	 	10.2                      Unfunded Nature of Plan	 	 	20	 
	 
	 	10.3                      Funding of Obligation	 	 	20	 
	Article XI.
	 	PARTICIPATING ENTITIES	 	 	22	 
	 
	 	11.1                      Designation of Participating Entities	 	 	22	 
	Article XII.
	 	MISCELLANEOUS	 	 	22	 
	 
	 	12.1                      Not Contract of Employment	 	 	22	 
	 
	 	12.2                      Alienation of Interest Forbidden	 	 	22	 
	 
	 	12.3                      Withholding	 	 	23	 
	 
	 	12.4                      Amendment and Termination	 	 	23	 
	 
	 	12.5                      Severability	 	 	23	 
	 
	 	12.6                      Governing Laws	 	 	23	 

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DELL COMPUTER CORPORATION

DEFERRED COMPENSATION PLAN

     Dell Computer Corporation, a corporation organized and existing under the
laws of the State of Delaware (the “Company”), hereby restates the Dell
Computer Corporation Deferred Compensation Plan (the “Plan”), such restatement
to be effective as of January 1, 2002, except as otherwise provided herein;

W I T N E S S E T H:

     WHEREAS, the Company wishes to promote in certain of its highly
compensated employees, and those of its affiliates, the strongest interest in
the successful operation of the business and increased efficiency in their
work, to align the financial interests of such employees with those of Company
shareholders and to provide an opportunity for accumulation of funds for their
retirement; and

     WHEREAS, the Plan was initially adopted effective May 1, 1991, and
previously has been amended and restated effective as of April 1, 1996, January
1, 1999 and January 1, 2001; and

     WHEREAS, it is intended that the Plan be “unfunded” for purposes of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and not
be construed to provide income to any participant or beneficiary under the
Internal Revenue Code of 1986, as amended (the “Code”) prior to actual receipt
of benefits hereunder;

     NOW THEREFORE, the Plan is hereby restated in its entirety as follows with
no interruption in time, effective as of January 1, 2002, except as otherwise
indicated herein:

ARTICLE I.

DEFINITIONS AND CONSTRUCTION

	1.1	 	Definitions. Where the following words and phrases appear in the Plan,
they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.

	(1)	 	Account(s): A Participant’s Compensation Deferrals Account
and Company Credits Account, if any.
	 
	(2)	 	Affiliate: Each trade or business (whether or not
incorporated), which together with Dell Computer Corporation would
be deemed to be a “single employer” within the meaning of Code
Section 414(b), (c), (m), or (o).

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	(3)	 	Base Salary: A Participant’s gross base salary payable in
the ordinary course of business under the Company’s payroll system
and not any periodic bonuses.
	 
	(4)	 	Base Salary Deferrals: Base Salary deferred by a Participant
pursuant to Section 3.1.
	 
	(5)	 	Bonus: The Annual Incentive Compensation Bonus, if any, paid
in cash by the Company to or for the benefit of a Participant for
services rendered or labor performed while a Participant. For
purposes of this Plan, the term Bonus expressly excludes any bonuses
received under any other compensation or bonus plan sponsored by the
Company.
	 
	(6)	 	Bonus Deferrals: Bonus deferred by a Participant pursuant to
Section 3.1.
	 
	(7)	 	Bonus Year: The period ending on the last day of each fiscal
year; provided, however, that the Bonus Year may be changed by the
Committee to reflect the twelve month period used by the Company
under the Annual Incentive Compensation Bonus program for each group
of Eligible Employees hereunder, if any.
	 
	(8)	 	Change of Control: The earliest to occur of any of the
following:

	(a)	 	The acquisition by any person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934 (“Exchange Act”)) of 20%
or more of either (i) the then outstanding shares of stock or
(ii) the combined voting power of the then outstanding voting
securities of Dell Computer Corporation; provided, however,
that for purposes of this Paragraph (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from Dell Computer Corporation, (ii)
any acquisition by Dell Computer Corporation, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Dell Computer Corporation or any
corporation controlled by Dell Computer Corporation, (iv) any
acquisition by Mr. Michael S. Dell, his “affiliates” (as
defined in Rule 12b-2 promulgated under the Exchange Act) or
“associates” (as defined in Rule 12b-2 promulgated under the
Exchange Act), his heirs, or any trust or foundation to which
he has transferred or may transfer stock (collectively,
“Michael Dell”), or (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1),
(2), and (3) of Paragraph (c) of this Section 1.1(6); or
	 
	(b)	 	Individuals who constitute the Incumbent Board
(as later defined) cease for any reason to constitute at least
a majority of the Directors; or
	 
	(c)	 	Approval by the stockholders of Dell Computer
Corporation of a reorganization, merger, or consolidation, or
sale or other disposition of all or substantially all of the
assets of Dell Computer Corporation, or the acquisition of
assets of another corporation (a “Business Combination”),
unless following such Business Combination (i) all or
substantially all of the persons who were the beneficial
owners, respectively, of the outstanding

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	 	 	stock and outstanding voting securities of Dell Computer
Corporation immediately prior to such Business Combination
beneficially own, directly or indirectly, immediately
following such Business Combination more than 60% of the then
outstanding shares of common stock and more than 60% of the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns Dell Computer
Corporation or all or substantially all of Dell Computer
Corporation’s assets either directly or through one or more
subsidiaries), (ii) no person (excluding any employee benefit
plan (or related trust) of Dell Computer Corporation, such
corporation resulting from such Business Combination, and
Michael Dell) beneficially owns, directly or indirectly, 20%
or more of the then outstanding shares of common stock of the
corporation resulting from such Business Combination or 20%
or more of the combined voting power of the then outstanding
voting securities of such corporation except to the extent
that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board (as
later defined) at the time of the execution of the initial
agreement, or of the action of the Directors, providing for
such Business Combination; or
	 
	(d)	 	Approval by the stockholders of Dell Computer
Corporation of a complete liquidation or dissolution of Dell
Computer Corporation.

	 	 	For purposes of this Section, “Incumbent Board” shall mean the
individuals who, as of the Effective Date, constitute the
Directors; provided, however, that any individual becoming a
Director, subsequent to such date whose election, or nomination for
election by Dell Computer Corporation’s stockholders, was approved
by a vote of at least a majority of the Directors then comprising
the Incumbent Board shall be considered a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of Directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the Directors.

	(9)	 	Code: The Internal Revenue Code of 1986, as amended from
time to time.
	 
	(10)	 	Committee: The administrative committee appointed by the
Directors to administer the Plan.
	 
	(11)	 	Company: Dell Computer Corporation, a corporation organized
and existing under the laws of the State of Delaware, or its
successor or successors
	 
	(12)	 	Company Credits: The amount, if any, credited to a
Participant’s Company Credits Account pursuant to Section 3.2.

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	(13)	 	Company Credits Account: A hypothetical account for each
Participant to which is credited his Company Credits pursuant to
Section 3.2, and which is credited with (or debited for) such
account’s allocation of net income (or net loss) as provided in
Section 4.3.
	 
	(14)	 	Compensation: A Participant’s Compensation shall include all
the items in Section 14(a) below and exclude all the items in
Section 14(b) below:

	(a)	 	All of the following items shall be included:

	•	 	The total of all wages, salaries,
fees for professional services, and other amounts
received by a Participant in cash or in kind for
services actually rendered in the course of employment
with the Employer while a Participant and an Employee to
the extent such amounts are includable in gross income
(but determined without regard to the exclusions from
gross income under sections 931 and 933 of the Code);
	 
	•	 	In the case of a Participant who is
an employee within the meaning of section 401(c)(1) of
the Code and the Treasury regulations thereunder, the
Employee’s earned income (as described in section
401(c)(2) of the Code and the Treasury regulations
thereunder) determined without regard to the exclusions
from gross income under sections 931 and 933 of the
Code;
	 
	•	 	Foreign earned income (as defined in
section 911(b) of the Code) whether or not excludable
from gross income;
	 
	•	 	Amounts described in sections
104(a)(3), 105(a), and 105(h) of the Code, but only to
the extent these amounts are includable in the gross
income of the Participant;
	 
	•	 	The value of a non-qualified stock
option granted to the Participant by the Employer, but
only to the extent that the value of the option is
includable in the gross income of the Participant for
the taxable year in which it is granted;
	 
	•	 	The amount includable in the gross
income of the Participant upon making an election
described in section 83(b);
	 
	•	 	Elective contributions made on a
Participant’s behalf by the Employer that are not
includable in income under section 125, section
402(e)(3), section 402(h), section 403(b), or 457 of the
Code; and
	 
	•	 	Any amounts that are not includable
in the gross income of a Participant under a salary
reduction agreement by reason of the application of
section 132(f) of the Code.

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	(b)	 	All of the following items shall be excluded to
the extent they would otherwise be included:

	•	 	Reimbursements and other expense allowances;
	 
	•	 	Cash and noncash fringe benefits;
	 
	•	 	Moving expenses;
	 
	•	 	Deferred compensation under any plan
or program other than as specifically included in
Section 1.1(i)(1)(vii);
	 
	•	 	Welfare benefits;
	 
	•	 	Employer contributions to or payments
from this or any other deferred compensation program,
whether such program is qualified under section 401(a)
of the Code or nonqualified;
	 
	•	 	Amounts realized from the exercise of
a stock option that is not an incentive stock option
within the meaning of section 422 of the Code;
	 
	•	 	Amounts realized at the time
restricted stock or property is freely transferable or
no longer subject to a substantial risk of forfeiture in
accordance with section 83 of the Code;
	 
	•	 	Amounts realized from the sale,
exchange, disqualifying disposition or other disposition
of stock acquired under an incentive stock option; and
	 
	•	 	Any other amounts that receive
special tax benefits under the Code, such as premiums
for group life insurance (but only to the extent such
premiums are not includable in the gross income of the
Participant).

	(15)	 	Compensation Deferrals: Base Salary Deferrals and Bonus
Deferrals.
	 
	(16)	 	Compensation Deferrals Account: A hypothetical account for
each Participant to which is credited his Compensation Deferrals
pursuant to Section 3.1, and which is credited with (or debited for)
such account’s allocation of net income (or net loss) as provided in
Section 4.3.
	 
	(17)	 	Directors: The Board of Directors of Dell Computer
Corporation.
	 
	(18)	 	Disability: A physical or mental condition which, as
determined in the sole discretion of the Committee, totally and
presumably permanently prevents a Participant from engaging in any
substantial or gainful employment; provided, however, that an
individual shall be deemed to be disabled if he is determined to be
disabled under the terms of the Dell Computer Corporation 401(k)
Plan.
	 
	(19)	 	Effective Date: January 1, 2001, except as otherwise
provided herein.

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	(20)	 	Election Date: (i) With respect to Base Salary,
January 1st
of each Plan Year, or such earlier date as may be designated by the
Committee, and (ii) with respect to Bonuses, two weeks prior to the
last day of the Company’s third fiscal quarter, or such earlier date
as may be designated by the Committee.
	 
	(21)	 	Employee: Any individual on the payroll of an Employer (i)
whose wages from the Employer are subject to withholding for
purposes of Federal income taxes and for purposes of the Federal
Insurance Contributions Act, (ii) who is included within a “select
group of management or highly compensated employees,” as such term
is used in ERISA Section 401(a)(1), and (iii) who is designated by
the Committee as eligible to participate in this Plan.
	 
	(22)	 	Employer or Participating Employer: The Company and any
Affiliate of the Company to the extent that (i) an Employee of such
Affiliate is a Participant hereunder and (ii) the Affiliate has
adopted the Plan in accordance with the provisions of Article XI.
	 
	(23)	 	ERISA: Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
	 
	(24)	 	Investment Fund(s): The investment fund(s) designated by the
Committee from time to time for the hypothetical investment of a
Participant’s Accounts pursuant to Article V.
	 
	(25)	 	Participant: An Employee participating in the Plan in
accordance with the provisions of Section 2.1.
	 
	(26)	 	Plan: The Dell Computer Corporation Deferred Compensation
Plan, as amended from time to time.
	 
	(27)	 	Plan Year: The twelve-consecutive month period commencing
January 1 of each year.
	 
	(28)	 	Retirement Date: The date upon which a Participant attains
sixty-five years of age.
	 
	(29)	 	Trust or Trust Fund: The fund consisting of funds,
investments and properties, if any, held pursuant to the provisions
of the Trust Agreement, together with all income, profit, and
increments thereto.
	 
	(30)	 	Trust Agreement: The Dell Computer Corporation Deferred
Compensation Trust, entered into between the Company and the Trustee
pursuant to Section 10.3, as such agreement may be amended from time
to time.
	 
	(31)	 	Trustee: The corporation, individual or individuals
appointed by the Directors to administer the Trust Fund in
accordance with the terms of the Trust Agreement.
	 
	(32)	 	Unforeseeable Financial Emergency: An unexpected need of the
Participant for cash, which (i) arises from an illness, casualty
loss, sudden financial reversal, or such other unforeseeable
occurrence that is caused by an event beyond the control of the

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	 	 	Participant, (ii) would result in severe financial hardship to the
Participant if his Compensation Deferral election was not canceled
pursuant to Section 3.1(c) or if a withdrawal pursuant to Section
7.1 was not permitted, and (iii) is not reasonably satisfiable from
other resources of the Participant. Cash needs arising from
foreseeable events, such as the purchase of a house or education
expenses for children, shall not be considered to be the result of
an Unforeseeable Financial Emergency.
	 
	(33)	 	Valuation Dates: Each day the New York Stock Exchange is
open for business.
	 
	(34)	 	Vested Interest: The percentage of a Participant’s Accounts
that, pursuant to Article VI, is vested.
	 
	(35)	 	Vesting Service: With respect to each Participant, “Vesting
Service” as defined and credited under the Dell Computer Corporation
401(k) Plan.

	1.2	 	Number and Gender. Wherever appropriate herein, words used in the
singular shall be considered to include the plural, and words used in the
plural shall be considered to include the singular. The masculine gender,
where appearing in the Plan, shall be deemed to include the feminine
gender.
	 
	1.3	 	Headings. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings
and the text of the Plan, the text shall control.

ARTICLE II.

PARTICIPATION

	2.1	 	Participation.

	(a)	 	Prior to the first day of each Plan Year, the Committee, in
its sole discretion, shall select and notify those Employees who are
newly eligible to become Participants as of such date. Any such
eligible Employee may become a Participant on such date or on the
first day of any subsequent Plan Year (with respect to Base Salary
deferrals) or as of the first day of any Bonus Year (with respect to
Bonus deferrals) by executing and filing with the Committee, prior
to the applicable Election Date, the enrollment form prescribed by
the Committee.
	 
	(b)	 	Notwithstanding Subsection (a) above, if an individual is
designated by the Committee as an Employee following the first day
of a Plan Year (with respect to Base Salary deferrals) or prior to
the Election Date for a Bonus Year (with respect to Bonus
deferrals), such eligible Employee may elect to become a Participant
as follows:

	(1)	 	with respect to Base Salary deferrals, by filing
an election with the Committee during the thirty (30)-day
period commencing on the date of such selection or prior to
the Election Date for any subsequent Plan Year; and

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	 	 	(2)	 	with respect to Bonus deferrals, by filing an
election with the Committee during the thirty (30)-day period
commencing on the date of such selection or prior to the
Election Date for any subsequent Bonus Year, provided,
however, that an individual designated as an Employee after
the first day of the fourth fiscal quarter of the Company
shall not be permitted to file an election for such Bonus
Year.
	 
	(c)	 	Once an individual has been designated as an Employee and
commences Plan participation, he shall remain a Participant eligible
to participate in the Plan each Plan Year or Bonus Year until his
participation is terminated in accordance with Section 2.2 or the
Committee terminates his designation as an Employee under this Plan.

	2.2	 	Termination of Participation. Notwithstanding any provision herein to
the contrary, an individual who has become or is entitled to become a
Participant of the Plan shall cease to be or be entitled to be a
Participant effective as of the earliest to occur of (1) the date the
Participant is no longer employed by the Company or (2) any earlier date
designated by the Committee and communicated to the affected individual
prior to the effective date of such action.
	 
	2.3	 	Reemployment of a Participant. A Participant who terminates employment
with the Company and is subsequently rehired by the Company shall not be
entitled to commence or continue participation in the Plan unless and
until he is again eligible to become a Participant in accordance with
Section 2.1. In the case of such a rehired Participant, his
recommencement of Plan participation, if any, shall be considered as his
initial commencement of participation for purposes of the Plan.

ARTICLE III.

CONTRIBUTIONS

	3.1	 	Participant Compensation Deferrals. Each Participant may elect to defer
a portion of his Compensation in accordance with this Section.
Compensation not deferred by a Participant pursuant to this Section shall,
for purposes of this Plan, be received by such Participant in cash.

	(a)	 	Base Salary Deferrals.

	(1)	 	Each Participant may elect to defer receipt of an
integral percentage of from 1% to 50% of his Base Salary for
any Plan Year under the Plan as Base Salary deferrals.
Notwithstanding the preceding, the Committee may, by
resolution, provide that the maximum deferral limit for
certain groups of Participants shall be less than fifty
percent (50%). Such election must be made in the form and
within the time period required by the Committee.
	 
	(2)	 	A Participant’s election to defer Base Salary for
any Plan Year under the Plan must be made on or prior to the
Election Date for Base Salary deferrals.
	 
	(3)	 	If an Employee becomes initially eligible under
the Plan following an Election Date, he may make an election
to defer Base Salary for the

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	 	 	remaining portion of the Plan Year by filing an election
within the thirty (30) day period following the date of his
initial eligibility.
	 
	(4)	 	A Participant’s election to make Base Salary
deferrals shall become effective as of the Election Date
coincident with or next following the date such Participant
executes and files with the Committee the form described in
Paragraph (1) above. Notwithstanding the foregoing, if a
Participant is selected as initially eligible under the Plan
following an Election Date, such Participant’s election to
make Base Salary deferrals shall become effective as soon as
administratively feasible following the date such election is
received by the Committee; provided, however, that such
election shall apply no earlier than the first day of the
payroll period coincident with or next such date.
	 
	(5)	 	The reduction of a Participant’s Base Salary
pursuant to this election shall be effected by Base Salary
reductions as of each payroll period within the election
period.
	 
	(6)	 	A Participant shall be deemed to have elected the
same Base Salary deferral percentage pursuant to this
Subsection for a Plan Year that was in effect for the
immediately preceding Plan Year unless such Participant elects
a new deferral percentage for the Plan Year in accordance with
Paragraph (1) or cancels his Base Salary deferrals for the
Plan Year in accordance with Subsection (c) below.

	(b)	 	Bonus Deferrals.

	(1)	 	Effective as of January 1, 2000, each Participant
may elect to defer receipt of an integral percentage of from
1% to 100% of his Bonus for any Bonus Year under the Plan as
Bonus deferrals. Such election must be made in the form and
within the time period required by the Committee.
Notwithstanding any provision hereof, the portion of a
Participant’s Bonus which is deferred pursuant to this
Subsection shall be subject to withholding for applicable
payroll taxes (i.e., amounts required to be withheld under
Code Section 3121(v)) and such taxes shall be netted from the
portion of his Bonus deferred hereunder.
	 
	(2)	 	A Participant’s election to defer Bonus under the
Plan must be made on or prior to the Election Date for Bonus
deferrals, and such election shall be irrevocable for such
Bonus Year.
	 
	(3)	 	If an Employee becomes initially eligible under
the Plan following an Election Date, he may make an election
to defer a designated portion of his Bonus for the entire
Bonus Year by filing an election within the thirty (30)-day
period following the date of his initial eligibility, and such
election shall be irrevocable for such Bonus Year.
Notwithstanding the preceding, an Employee who becomes
initially eligible to participate in the Plan after the first
day of the fourth quarter of the Company’s fiscal year shall
not be

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	 	 	permitted to make a deferral election with respect to any
portion of the Bonus received during such Bonus Year.
	 
	(4)	 	The reduction of a Participant’s Bonus pursuant
to this election shall be effected at the time such Bonus is
paid to such Participant in one lump sum deferral.
	 
	(5)	 	A Participant’s election to defer a Bonus during
a Bonus Year shall not apply to a Bonus paid during any
subsequent Bonus Year.

	(b)	 	Cancellation of Base Salary Deferral Election.

	(1)	 	A Participant may cancel his Base Salary Deferral
election effective as of the first day of any subsequent
payroll period by executing and filing with the Committee the
form prescribed by the Committee within the minimum time
period prescribed by the Committee. Notwithstanding the
preceding, the Committee shall have the right, in its sole
discretion, to decline to accept the termination of a
Participant’s Base Salary Deferral election. An individual
described in the preceding sentence may again elect to make
Base Salary Deferrals hereunder in accordance with Subsection
(a)(1) above.
	 
	(2)	 	Upon application by the Participant, in the event
that the Committee determines that the Participant has
suffered an Unforeseeable Financial Emergency, all the
Participant’s Compensation Deferral election(s) then in effect
shall be canceled as soon as administratively practicable
after such determination. If the Participant’s Compensation
Deferral election is so canceled, the Participant may again
elect to defer a percentage of his Compensation effective as
of any subsequent Election Date that is at least twelve (12)
months after the effective date of such cancellation by
complying with the procedural requirements set forth in
Subsection (a)(1) or (b)(1), as applicable.

	(c)	 	Ongoing Election. A Participant’s election to make Base
Salary Deferrals shall remain in force and effect while he is a
Participant unless and until such deferrals cease in accordance with
the provisions of Subsection (c) above or such Participant
terminates participation in the Plan pursuant to Section 2.2.
	 
	(d)	 	Crediting of Deferrals. Compensation Deferrals made by a
Participant shall be credited to such Participant’s Compensation
Deferrals Account as of a date determined in accordance with
procedures established from time to time by the Committee.
	 
	(e)	 	Committee Limitation on Compensation Deferrals.
Notwithstanding the preceding, the Committee may, in its sole
discretion, limit (i.e., reduce or terminate) the Compensation
Deferral election or Bonus Deferral election for any Participant or
group of Participants.

	3.2	 	Company Credits. As of any date or dates selected by the Company, the
Company may credit a Participant’s Company Credits Account with an amount,
if any, as the Company in

-10-

 

	 	 	its sole discretion shall determine. Such credits may be made on behalf
of some Participants but not others, and such credits may vary in amount
among individual Participants.

ARTICLE IV.

ALLOCATIONS TO PARTICIPANT ACCOUNTS

	4.1	 	Individual Accounts. The Committee shall create and maintain adequate
records to disclose the interest hereunder of each Participant, former
Participant and Beneficiary. Such records shall be in the form of
individual accounts and credits and debits shall be made to such accounts
in the manner herein described.
	 
	4.2	 	Investment of Accounts. The Committee shall allocate earnings and losses
to each Participant’s Accounts according to the hypothetical investments
made by a Participant pursuant to the terms of Article V.
	 
	4.3	 	Allocation of Net Income or Loss and Changes in Value.

	(a)	 	As of each Valuation Date, the Committee shall determine the
fair market value and the net income (or net loss) of each
Investment Fund for the period elapsed since the next preceding
Valuation Date. The net income (or net loss) of each Investment
Fund since the next preceding Valuation Date shall be ascertained by
the Committee in such manner as it deems appropriate, which may
include expenses, if any, of administering the Investment Fund, the
Trust, and the Plan.
	 
	(b)	 	For purposes of allocations of net income (or net loss), each
Participant’s Accounts shall be divided into subaccounts to reflect
the hypothetical investment of such Participant’s Accounts in a
particular Investment Fund or Investment Funds pursuant to Article
V. As of each Valuation Date, the net income (or net loss) of each
Investment Fund, separately and respectively, shall be allocated
among the corresponding subaccounts of the Participants who had such
corresponding subaccounts invested in such Investment Fund since the
next preceding Valuation Date, and each such corresponding
subaccount shall be credited with (or debited for) that portion of
such net income (or net loss) that the value of each such
corresponding subaccount on such next preceding Valuation Date was
of the value of all such corresponding subaccounts on such date;
provided, however, that the value of such subaccounts as of the next
preceding Valuation Date shall be reduced by the amount of any
distributions made therefrom since the next preceding Valuation
Date.
	 
	(c)	 	So long as there is any balance in any Account, such Account
shall continue to receive allocations pursuant to this Section.

ARTICLE V.

HYPOTHETICAL INVESTMENT OF ACCOUNTS

	5.1	 	Hypothetical Investment of Accounts. The Committee shall from time to
time select, add, and/or delete Investment Funds for purposes of the
hypothetical investment of Participants’ Accounts. For purposes of
allocating earnings and losses and valuation of each Participant’s
Accounts, each Participant’s Accounts shall be deemed to be invested in
the Investment Funds. The Committee shall designate which Investment Fund
or Funds the Participant’s

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	 	 	Accounts shall be deemed to be invested. The preceding
notwithstanding, the Committee may, in its discretion,
permit one or more Participants, or any group of
Participants, to direct the hypothetical investment of
all or any portion of their Accounts in accordance with
Section 5.2.
	 
	5.2	 	Designation of Investment Funds.

	(a)	 	Each Participant shall designate, in accordance with the
procedures established from time to time by the Committee, the
manner in which the amounts credited to his Accounts over which he
has been given investment discretion by the Committee shall be
deemed to be invested from among the Investment Funds. Such
Participant may designate one of such Investment Funds for the
hypothetical investment of all the amounts credited to such
Accounts, or he may split the hypothetical investment of the amounts
credited to such Accounts between such Investment Funds in such
increments as the Committee may prescribe. If a Participant fails
to make a proper designation, then his Accounts shall be deemed to
be invested in the Investment Fund or Investment Funds designated by
the Committee from time to time.
	 
	(b)	 	A Participant may change his hypothetical investment
designation for future amounts to be credited to the portion of his
Accounts over which he has been given investment discretion by the
Committee. Any such change shall be made in accordance with the
procedures established by the Committee, and the frequency of such
changes may be limited by the Committee.
	 
	(c)	 	If the Committee elects to establish a hypothetical
investment fund that holds shares of the Company’s common stock, a
Participant may elect to invest his Accounts in such fund. The
Committee may in its sole discretion refuse to recognize Participant
elections that it determines may cause the Participant’s Accounts to
become subject to the short-swing profit provisions of Section 16b
of the Securities Exchange Act of 1934 and establish special
election procedures for Participants subject to Section 16 of such
Act.
	 
	(d)	 	A Participant’s hypothetical investment selections pursuant
to the immediately preceding paragraph shall be made solely for
purposes of crediting earnings and/or losses to his Accounts under
Section 4.3 of this Plan. The Committee shall not, in any way, be
bound to actually invest any amounts set aside pursuant to Article X
below to satisfy its obligations under this Plan in accordance with
such selections.

ARTICLE VI.

VESTED INTEREST

	6.1	 	Vesting of Compensation Deferrals Account. A Participant shall have a
100% Vested Interest in his Compensation Deferrals Account at all times.
	 
	6.2	 	Vesting of Company Credits Account.

	(a)	 	A Participant shall acquire a Vested Interest in his Company
Credits Account as such Participant completes years of Vesting
Service in accordance with the following schedule:

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	YEARS OF VESTING SERVICE
	 	VESTED INTEREST

	Less than 1 year
	 	 	0	%
	1 year
	 	 	20	%
	2 years
	 	 	40	%
	3 years
	 	 	60	%
	4 years
	 	 	80	%
	5 years or more
	 	 	100	%

	(b)	 	Notwithstanding Subsection (a) above, a Participant shall
have a 100% Vested Interest in his Company Credits Account upon the
earliest to occur of (i) the attainment of such Participant’s
Retirement Date while employed by the Company, (ii) the death of
such Participant while employed by the Company, (iii) the date such
Participant becomes Disabled, or (iv) any earlier date designated by
the Committee in its sole discretion.

	6.3	 	Forfeitures. A Participant who terminates employment with the Company
and its Affiliates with a Vested Interest in his Company Credits Account
that is less than 100% shall forfeit to the Company the nonvested portion
of such Account as of the date of such termination.

ARTICLE VII.

IN-SERVICE WITHDRAWALS AND LOANS

	7.1	 	In-Service Withdrawals.

	(a)	 	Except as provided in Subsections (b) through (d) below, no
in-service withdrawals shall be permitted under the Plan, and
Participants shall not be permitted to make withdrawals from the
Plan prior to a termination of employment with the Company and its
Affiliates.
	 
	(b)	 	In the event that the Committee, upon written petition of the
Participant, determines in its sole discretion that the Participant
has suffered an Unforeseeable Financial Emergency, the Participant
shall be entitled to withdrawal from his Compensation Deferrals
Account an amount not to exceed the lesser of (i) the amount
determined by the Committee as necessary to meet the Participant’s
needs created by the Unforeseeable Financial Emergency or (ii) the
Vested Interest in the Participant’s Accounts. Such benefit shall
be paid in a single lump sum payment as soon as administratively
practicable after the Committee has made its determination with
respect to the availability and amount of such withdrawal. If the
Participant’s Accounts are deemed to be invested in more than one
Investment Fund, such withdrawal shall be made pro rata from each
Investment Fund in which such Accounts are deemed to be invested.
This Subsection shall not be applicable to the Participant following
his termination of employment with the Company and its Affiliates,
and in the event of such termination the amounts credited to the
Participant’s Accounts shall be payable to him only in accordance
with Article VIII.
	 
	(c)	 	A Participant may at any time make an irrevocable election,
effective as of the first day of the next Plan Year, to have all or
a portion of the Vested Interest in his

-13-

 

	 	 	Accounts, determined as of the date his election is made, paid to
him on a fixed date specified in such election, which shall be at
least two (2) years following the date that such election is
submitted to the Committee in writing. The amount of the payment
pursuant to this irrevocable election shall be stated in the
election and shall be a fixed dollar amount, and shall not be
adjusted for earnings or losses following such election date. Once
an in-service distribution election has been filed with the
Committee, it may be extended to provide that the distribution
shall be made on a date which is subsequent to the original
distribution date; provided, however, that a Participant may not
elect to extend his distribution date during the two (2) year
period immediately preceding the designated distribution date. A
Participant may have only one election hereunder outstanding at any
time. Notwithstanding the preceding, if the Participant terminates
employment prior to the designated payment date, his election shall
be terminated and his Accounts shall be distributed as provided in
Section 8.4 below.
	 
	(d)	 	In the event that the Committee, upon written petition of the
Participant, determines in its sole discretion that the Participant
has a Disability, the Participant shall be entitled to a
distribution in accordance with Article VIII.

	7.2	 	Involuntary Distributions. Notwithstanding anything contained in the
Plan to the contrary, if at any time any Participant is finally determined
by the Internal Revenue Service or the U.S. Department of Labor not to
qualify as a member of a select group of “management or highly compensated
employees” as such term is used in ERISA Section 401(a)(1), the Committee
may, in its sole discretion, immediately distribute in one lump sum to
such Participant his vested account under the Plan. A final determination
of the Internal Revenue Service or the U.S. Department of Labor shall be a
decision rendered by the Internal Revenue Service or the U.S. Department
of Labor which is no longer subject to administrative appeal within such
agency. In addition, the Committee may, in its exclusive and sole
discretion, cause the Plan to make a distribution to a Participant during
a Plan Year in order to cause the Participant to have sufficient taxable
compensation to satisfy the annual addition requirements of Code Section
415 with respect to any qualified retirement plans maintained by the
Company during such Plan Year.

	7.3	 	No Loans. Participants shall not, at any time, be permitted to borrow
from the Plan or Trust Fund.

ARTICLE VIII.

PLAN BENEFITS

	8.1	 	Plan Benefit. A Participant’s Plan benefit shall be the value of his
Accounts determined as of the Valuation Date immediately preceding the
time of payment of such Accounts in accordance with Section 8.3.
	 
	8.2	 	Events Entitling Payment of Benefit. A Participant’s benefit shall
become payable upon the earliest to occur of the following events:

	(a)	 	A termination of the Participant’s employment with the
Company and its Affiliates for any reason;

-14-

 

	(b)	 	The death of the Participant;
	 
	(c)	 	A determination by the Committee that the Participant has a
Disability; or
	 
	(d)	 	A Change of Control.

	 	 	A Participant’s benefit shall equal the Participant’s Vested Interest in
his Accounts as of the Valuation Date next preceding the date the payment
of such benefit is to be paid or commence pursuant to Section 8.3.

	8.3	 	Payee and Time of Payment. Payment of a Participant’s benefit shall be
paid or commence as soon as administratively practicable following the
Section 8.2 event triggering payment. The Participant’s benefit shall be
paid to the Participant, unless the Section 8.2 triggering event is the
death of the Participant, in which case the Participant’s benefit shall be
paid to the Participant’s designated beneficiary as provided in Section
8.5.
	 
	8.4	 	Alternative Forms of Benefit Payments.

	(a)	 	A Participant’s benefit under the Plan shall be paid in cash
in one of the following forms:

	(1)	 	A single lump sum payment; or
	 
	(2)	 	Monthly, quarterly or annual installment payments
for a term certain not to exceed ten years payable to such
Participant or, in the event of such Participant’s death prior
to the end of such term certain, to his designated beneficiary
as provided in Section 8.5.

	(b)	 	A Participant must elect one of the forms of payment listed
in Subsection 8.4(a) above on or before the date he first becomes a
Participant of the Plan pursuant to Article II. Except as provided
in Subsection 8.4(c) below, such election shall be irrevocable by
the Participant and shall remain in effect for all periods of a
Participant’s participation in the Plan. In the event a Participant
fails to elect timely the form in which his benefit payments are to
be made, such benefit payments shall be deemed to have been elected
by such Participant to be in the form of a single lump sum payment.
	 
	(c)	 	A Participant may shall be entitled to change his elected
form of benefit payment under Subsection 8.4(a) above with respect
to all amounts allocated to his Accounts (i.e., both existing and
future allocations) as of each January 1st. Such change shall be
made prior to each such January 1st and shall be effective as of the
subsequent January 1st. If a triggering event described in Section
8.2 occurs during the Plan Year following the Committee’s receipt of
an election to change distribution forms, such election shall be
deemed to be null and void and the immediately preceding election
shall apply to the Participant’s distribution. A Participant who
does not elect to change his current elected (or deemed elected)
form of benefit payment with respect to future allocations to such
Participant’s Accounts as of any such January 1 shall not be
entitled to change his elected form of benefit until the subsequent
January 1st. If a Participant elected to receive his benefit
payment in one or more

-15-

 

	 	 	different forms of payment prior to January 1, 2000, such
Participant shall receive his distribution pursuant to the most
recent form of distribution elected by the Participant; provided,
however, if no such election is on file with the Committee, his
distribution shall be made in the form elected of a single lump sum
payment, unless such Participant elects to file a new election
under Subsection (a) above.
	 
	(d)	 	If a Participant dies prior to the date the payment of his
benefit begins or is completed, such benefit shall be paid to such
Participant’s beneficiary designated in accordance with Section 8.5
in a single lump payment, notwithstanding any other form of payment
elected by such Participant.
	 
	(e)	 	The preceding Subsections notwithstanding, if the Section 8.2
event triggering payment of a Participant’s benefit is a Change of
Control, such benefit shall be paid to such Participant in a single
lump sum cash payment as soon as administratively practicable after
such Change of Control.
	 
	(f)	 	Notwithstanding any provision of the Plan to the contrary,
the Committee may, in its sole and absolute discretion, distribute a
Participant’s benefit in the form of a single lump sum payment
notwithstanding any other form of distribution elected by the
Participant.

	8.5	 	Designation of Beneficiaries.

	(a)	 	Each Participant shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in
the event of his death. Each such designation shall be made by
executing the beneficiary designation form prescribed by the
Committee and filing such form with the Committee during the life of
such Participant. Any such beneficiary designation may be changed
at any time by execution and filing of a new designation in
accordance with this Subsection. The preceding notwithstanding, (i)
if a Participant has designated his spouse as his beneficiary, such
designation shall be void and of no effect upon the divorce of the
Participant and such spouse, unless the Participant notifies the
Committee to the contrary in writing after the date of such divorce,
and (ii) if a Participant who is married on the date of his death
has designated an individual or entity other than his surviving
spouse as his beneficiary, such designation shall not be valid
unless (a) such surviving spouse has consented thereto in writing,
and such consent (1) acknowledges the effect of such specific
designation, (2) either consents to the specific designated
beneficiary (which designation may not subsequently be changed by
the Participant without spousal consent) or expressly permits such
designation by the Participant without the requirement of further
consent by such spouse, and (3) is witnessed by a Plan
representative (other than the Participant) or a notary public or
(b) the consent of such spouse cannot be obtained because such
spouse cannot be located or because of other circumstances that the
Committee in its discretion determines warrants a waiver of such
consent. Any such consent by such surviving spouse shall be
irrevocable.
	 
	(b)	 	If at the time of the death of the Participant no designated
beneficiary is on file with the Committee, or such beneficiary
designation is not valid or effective for any

-16-

 

	 	 	reason as determined by the Committee, then the designated
beneficiary or beneficiaries to receive such benefit shall be as
follows:

	(1)	 	If a Participant has a surviving spouse at the
time of such Participant’s death, his designated beneficiary
shall be such surviving spouse;
	 
	(2)	 	If a Participant has no surviving spouse at the
time of such Participant’s death, his designated beneficiary
shall be such Participant’s executor or administrator or, if
there is no administration of such Participant’s estate, his
heirs at law.

	8.6	 	Payments Pursuant to a QDRO. To the extent that a Participant’s benefits
are divided pursuant to Section 12.2 hereof, the “alternate payee’s”
benefits shall be paid in a single lump sum as soon as administratively
practicable following the later of (i) the date the qualified domestic
relations order is approved by the Committee, or (ii) the date the
alternate payee’s right to receive a distribution of his or her Company
Credits Account is fully vested as provided in Section 7.2 above. In the
event that an alternate payee dies prior to the date that his or her
benefits are eligible for distribution hereunder, his or her benefits
shall be fully vested and shall be paid to the alternate payee’s
designated beneficiary as soon as administratively feasible following his
or her date of death. Payments made to an alternate payee shall not be
eligible for distribution as installment payments.
	 
	8.7	 	Payer of Benefits. To the extent the Trust Fund has sufficient assets,
the Trustee shall pay benefits to Participants or their beneficiaries,
except to the extent the Company pays the benefits directly. To the
extent the Trustee does not or cannot pay benefits out of the Trust Fund,
the benefits shall be paid by the Company. Any benefit payments made to a
Participant or for his benefit pursuant to any provision of the Plan shall
be debited to such Participant’s Accounts. All benefit payments shall be
made in cash.
	 
	8.8	 	Unclaimed Benefits. In the case of a benefit payable to or on behalf of
a Participant, if the Committee after a reasonable search is unable to
locate the Participant or beneficiary to whom such benefit is payable,
upon the Committee’s determination thereof, such benefit shall be
forfeited to the Company. The Committee shall adopt procedures concerning
the process that will be followed to locate a Participant or beneficiary
under this Section. Notwithstanding the foregoing, if subsequent to any
such forfeiture the Participant or beneficiary to whom such benefit is
payable makes a valid claim for such benefit within a reasonable (as
determined by and in the discretion of the Committee) period of time
following the date such benefit became payable, such forfeited benefit
shall be payable pursuant to the Plan provisions.

ARTICLE IX.

ADMINISTRATION OF PLAN

	9.1	 	Appointment of Committee. The general administration of the Plan shall
be vested in the Committee, which shall be appointed by the Directors and
shall consist of one or more persons. Any individual, whether or not an
employee of the Company, is eligible to become a member of the Committee.

-17-

 

	9.2	 	Term, Vacancies, Resignation, and Removal. Each member of the Committee
shall serve until he resigns, dies, or is removed by the Directors. At
any time during his term of office, a member of the Committee may resign
by giving written notice to the Directors and the Committee, such
resignation to become effective upon the appointment of a substitute
member or, if earlier, the lapse of thirty days after such notice is given
as herein provided. At any time during his term of office, and for any
reason, a member of the Committee may be removed by the Directors with or
without cause, and the Directors may in their discretion fill any vacancy
that may result therefrom. Any member of the Committee who is an employee
of the Company shall automatically cease to be a member of the Committee
as of the date he ceases to be employed by the Company and its Affiliates.

	9.3	 	Self-Interest of Committee Members. No member of the Committee shall
have any right to vote or decide upon any matter relating solely to
himself under the Plan (including, without limitation, Committee decisions
under Article II) or to vote in any case in which his individual right to
claim any benefit under the Plan is particularly involved. In any case in
which a Committee member is so disqualified to act and the remaining
members cannot agree, the Directors shall appoint a temporary substitute
member to exercise all the powers of the disqualified member concerning
the matter in which he is disqualified.
	 
	9.4	 	Committee Powers and Duties. The Committee shall administer and enforce
the Plan according to the terms and provisions hereof and shall have all
powers necessary to accomplish these purposes, including, but not by way
of limitation, the complete and absolute discretion to construe all
provisions of the Plan and make all factual determinations and the right,
power, authority, and duty:

	(a)	 	To make rules, regulations, and bylaws for the administration
of the Plan that are not inconsistent with the terms and provisions
hereof, and to enforce the terms of the Plan and the rules and
regulations promulgated thereunder by the Committee;
	 
	(b)	 	To construe in its sole discretion all terms, provisions,
conditions, and limitations of the Plan;
	 
	(c)	 	To correct any defect or to supply any omission or to
reconcile any inconsistency that may appear in the Plan in such
manner and to such extent as it shall deem in its discretion
expedient to effectuate the purposes of the Plan;
	 
	(d)	 	To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent
contractors as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan;
	 
	(e)	 	To determine in its sole discretion all questions relating to
eligibility;
	 
	(f)	 	To establish or designate Investment Funds as provided in
Article V;
	 
	(g)	 	To determine whether and when there has been a termination of
a Participant’s employment with the Company and its Affiliates, and
the reason for such termination;

-18-

 

	(h)	 	To make a determination in its sole discretion as to the
right of any person to a benefit under the Plan and to prescribe
procedures to be followed by distributees in obtaining benefits
hereunder; and
	 
	(i)	 	To receive and review reports from the Trustee as to the
financial condition of the Trust Fund, including its receipts and
disbursements.

	9.5	 	Claims Review.

	(a)	 	In any case in which a claim for Plan benefits of a
Participant or beneficiary is denied or modified, the Committee
shall furnish written notice to the claimant within ninety days (or
within 180 days if additional information requested by the Committee
necessitates an extension of the ninety-day period and, in which
case, the claimant shall be informed of such extension prior to the
end of the initial ninety-day period), which notice shall:

	(1)	 	State the specific reason or reasons for the
denial or modification;
	 
	(2)	 	Provide specific reference to pertinent Plan
provisions on which the denial or modification is based;
	 
	(3)	 	Provide a description of any additional material
or information necessary for the Participant, his beneficiary,
or representative to perfect the claim and an explanation of
why such material or information is necessary; and
	 
	(4)	 	Explain the Plan’s claim review procedure as
contained herein.

	(b)	 	In the event a claim for Plan benefits is denied or modified,
if the Participant, his beneficiary, or a representative of such
Participant or beneficiary desires to have such denial or
modification reviewed, he must, within sixty days following receipt
of the notice of such denial or modification, submit a written
request for review by the Committee of its initial decision. In
connection with such request, the Participant, his beneficiary, or
the representative of such Participant or beneficiary may review any
pertinent documents upon which such denial or modification was based
and may submit issues and comments in writing. Within sixty days
following such request for review the Committee shall, after
providing a full and fair review, render its final decision in
writing to the Participant, his beneficiary, or the representative
of such Participant or beneficiary stating specific reasons for such
decision and making specific references to pertinent Plan provisions
upon which the decision is based. If special circumstances require
an extension of such sixty-day period, the Committee’s decision
shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If an extension of time
for review is required, written notice of the extension shall be
furnished to the Participant, beneficiary, or the representative of
such Participant or beneficiary prior to the commencement of the
extension period.
	 
	(c)	 	Compliance with the claims review procedures set forth in
this Section shall be a condition precedent to the filing of a
lawsuit by a Participant, his beneficiary, or any person claiming
through a participant or beneficiary in connection with a Plan

-19-

 

	 	 	benefit, and a failure to timely exhaust the administrative
remedies set forth herein shall bar any such proceeding in federal
or state court.

	9.6	 	Company to Supply Information. The Company shall supply full and timely
information to the Committee, including, but not limited to, information
relating to each Participant’s Compensation, age, retirement, death, or
other cause of termination of employment and such other pertinent facts as
the Committee may require. When making a determination in connection with
the Plan, the Committee shall be entitled to rely upon the aforesaid
information furnished by the Company or any Affiliate.
	 
	9.7	 	Indemnity. To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each member of the Committee and other
employee of the Company or an Affiliate to whom Plan administrative
functions have been delegated by the Committee against any and all
expenses and liabilities arising out of such individual’s administrative
functions or fiduciary responsibilities under or incident to the Plan,
including any expenses and liabilities that are caused by or result from
an act or omission constituting the negligence of such individual in the
performance of such functions or responsibilities, but excluding expenses
and liabilities that are caused by or result from such individual’s own
gross negligence or willful misconduct. Expenses against which such
individual shall be indemnified hereunder shall include, without
limitation, the amounts of any settlement or judgment, costs, counsel
fees, and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought or settlement thereof.

ARTICLE X.

PURPOSE AND UNFUNDED NATURE OF THE PLAN

	10.1	 	Purpose of Plan. The Company intends and desires by the adoption and
maintenance of the Plan to recognize the value to the Company of the past
and present services of employees covered by the Plan and to encourage and
ensure their continued service with the Company by making more adequate
provision for their future retirement security.
	 
	10.2	 	Unfunded Nature of Plan. The Plan is intended to constitute an unfunded,
unsecured plan of deferred compensation for a select group of management
or highly compensated employees of the Company. Further, it is the
intention of the Company that the Plan be “unfunded” for purposes of the
Code and Title I of ERISA. The Plan constitutes a mere promise by the
Company to make benefit payments in the future. Plan benefits herein
provided are to be paid out of the Company’s general assets, and
Participants shall have the status of general unsecured creditors of the
Company.
	 
	10.3	 	Funding of Obligation.

	(a)	 	The adoption of this Plan and any setting aside of amounts by
the Employers with which to discharge their obligations hereunder
shall not be deemed to create a trust; legal and equitable title to
any funds so set aside shall remain with the Employers, and any
recipient of benefits hereunder shall have no security or other
interest in such funds. Any and all funds so set aside shall remain
subject to the claims of the general creditors of the Employers,
present and future. This provision shall not require the

-20-

 

	 	 	Employers to set aside any funds, but the Employers may set aside
funds if they choose to do so.
	 
	(b)	 	The Company, in its sole discretion, may establish the Trust
and enter into the Trust Agreement. Any such Trust, and any assets
held by such Trust, to assist the Employers in meeting its
obligations under the Plan shall be a “rabbi trust.” The Employers
may transfer money or other property to the Trustee, and the Trustee
shall pay Plan benefits to Participants and their beneficiaries out
of the Trust Fund unless otherwise paid by the Company. In such
event, the Company shall remain the owner of all assets in the Trust
Fund, and the assets held in the Trust Fund shall be subject to the
claims of Company creditors if the Company becomes “insolvent” as
described in Subsection (c) below. No Participant or beneficiary
shall have any preferred claim to, or any beneficial ownership
interest in, any assets of the Trust Fund.
	 
	(c)	 	The Company shall be considered “insolvent” if (i) the
Company is unable to pay its debts as they become due or (ii) the
Company is subject to a pending proceeding as a debtor under the
United Sates Bankruptcy Code (or any successor federal statute).
	 
	(d)	 	The chief executive officer of the Company and the Directors
shall each have the duty to inform the Trustee in writing if the
Company becomes insolvent. Such notice given under the preceding
sentence by any one party shall satisfy each party’s duty to give
notice. When so informed, the Trustee shall suspend payments to the
Participants and beneficiaries and hold the assets for the benefit
of the Company’s general creditors. If the Trustee receives a
written allegation that the Company is insolvent, the Trustee shall
suspend payments to the Participants and beneficiaries and hold the
Trust Fund for the benefit of the Company’s general creditors and
shall determine within the period specified in the Trust Agreement,
or, in the absence of a specified period, within a reasonable period
of time, whether the Company is insolvent. If the Trustee
determines that the Company is not insolvent, the Trustee shall
resume payments to the Participants and beneficiaries. In the case
of insolvency of the Company or any Affiliate designated to
participate in the Plan pursuant to Section 11.1, only the assets
contributed to the Trust, if any, by the Company or such Affiliate,
whichever is insolvent, shall be subject to the claims of such
insolvent entity.
	 
	(e)	 	All expenses incident to the administration of the Plan and
Trust, including but not limited to, legal, accounting, Trustee
fees, and expenses of the Committee, may be paid by the Company and,
if not so paid, shall be paid by the Trustee from the Trust Fund, if
any.
	 
	(f)	 	All income, profits, recoveries, contributions, forfeitures
and any and all moneys, securities, and properties of any kind at
any time received or held by the Trustee, if any, shall be held for
investment purposes as a commingled Trust Fund pursuant to the terms
of the Trust Agreement. The Committee shall maintain Accounts in
the name of each Participant, but the maintenance of Accounts
designated as Accounts of a Participant shall not mean that such
Participant shall have a greater or lesser interest than that due
him under the terms of the Plan and shall not be considered as

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	 	 	segregating any funds or property from any other funds or property
contained in the commingled fund.

ARTICLE XI.

PARTICIPATING ENTITIES

	11.1	 	Designation of Participating Entities.

	(a)	 	The Committee may designate any Employer as eligible to
participate in the Plan by written instrument delivered to the
Company and the designated entity. Such written instrument shall
specify the effective date of such designated participation, may
incorporate specific provisions relating to the operation of the
Plan that apply to the designated entity only, and shall become, as
to such designated entity and its employees, a part of the Plan.
Each designated Employer shall be conclusively presumed to have
consented to its designation and to have agreed to be bound by the
terms of the Plan and any and all amendments thereto upon its
submission of information to the Committee required by the terms of
or with respect to the Plan; provided, however, that the terms of
the Plan may be amended so as to increase the obligations of an
entity only with the consent of such entity, which consent shall be
conclusively presumed to have been given by such entity upon its
submission, after receipt of notice of any such amendment, of any
information to the Committee required by the terms of or with
respect to the Plan.
	 
	(b)	 	Except as modified by the Committee in the written instrument
described in Subsection (a) above, the provisions of this Plan shall
be applicable with respect to each participating entity separately,
and amounts payable hereunder for or on behalf of a Participant
shall be paid by the participating entity that employs such
Participant.
	 
	(c)	 	Any participating entity may, by appropriate action of its
officers without the need for approval of its board of directors or
noncorporate counterpart or the Committee, the Company, or the
Directors, terminate its participation in the Plan. Moreover, the
Committee may, in its discretion, terminate a participating entity’s
Plan participation at any time by giving written notice to such
participating entity and the Company.

ARTICLE XII.

MISCELLANEOUS

	12.1	 	Not Contract of Employment. The adoption and maintenance of the Plan
shall not be deemed to be a contract between the Company and any person or
to be consideration for the employment of any person. Nothing herein
contained shall be deemed to give any person the right to be retained in
the employ of the Company or to restrict the right of the Company to
discharge any person at any time, nor shall the Plan be deemed to give the
Company the right to require any person to remain in the employ of the
Company or to restrict any person’s right to terminate his employment at
any time.
	 
	12.2	 	Alienation of Interest Forbidden. The interest of a Participant or his
beneficiary or beneficiaries hereunder may not be sold, transferred,
assigned, or encumbered in any manner, either voluntarily or
involuntarily, and any attempt so to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge the same shall be null and void, nor
shall the

-22-

 

	 	 	benefits hereunder be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any person to whom such benefits or
funds are payable, nor shall they be an asset in bankruptcy or subject to
garnishment, attachment, or other legal or equitable proceedings. The
preceding notwithstanding, the Committee shall comply with the terms and
provisions of a “qualified domestic relations order” as defined in ERISA
Section 206(d).
	 
	12.3	 	Withholding. All Compensation Deferrals, Company Credits, and benefit
payments provided for hereunder shall be subject to applicable withholding
and other deductions as shall be required of the Company under any
applicable local, state, or federal law as such laws are interpreted by
the Company.
	 
	12.4	 	Amendment and Termination. The Directors have the absolute and
unconditional right to amend the Plan at any time and may from time to
time, in their discretion, amend, in whole or in part, any or all of the
provisions of the Plan; provided, however, that any amendments to the
Plan that do not have a significant cost impact on the Company, whether or
not retroactive, may be made by the Committee; and provided, further,
that no amendment may be made that would reduce a Participant’s Vested
Interest in the amounts credited to his Accounts as of the date of
adoption of such amendment. The Directors have the absolute and
unconditional right to terminate the Plan at any time on behalf of the
Company and each participating entity. In the event that the Plan is
terminated, notwithstanding any other form of benefit elected by the
Participant, the balance of each Participant’s Accounts shall be paid to
such Participant or his designated beneficiary in the manner selected by
the Committee in its discretion (notwithstanding any other form of benefit
elected by such Participant), which may include the payment of a single
lump sum cash payment, in full satisfaction of all of such Participant’s
or beneficiary’s benefits hereunder.
	 
	12.5	 	Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully
severable, and the Plan shall be construed and enforced as if said illegal
or invalid provision had never been included herein.
	 
	12.6	 	Governing Laws. All provisions of the Plan shall be construed in
accordance with the laws of the State of Texas except to the extent
preempted by federal law.

Executed this 10th day of December, 2002.

	 	 	 	 	 
	 	DELL COMPUTER CORPORATION

 	 
	 	By:  	/s/ KATHLEEN O. ANGEL
 	 
	 	Name:  	Kathleen O. Angel 	 
	 	Title:  	Director Of Global Benfits 	 
	 

-23-exv4w1

 

EXHIBIT 4.1

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program
Documents contained herein, each such document dated as of this 1st day of
April, 2004, relating to the issuance by Principal Life Income Fundings Trust 2
(the “Trust”) of Notes to investors under Principal Life’s secured notes
program;

     WHEREAS, the Trust is a trust and will be organized under and its
activities will be governed by the provisions of the Trust Agreement (set forth
in Section A of this Omnibus Instrument), dated as of the date of the Pricing
Supplement (attached to this Omnibus Instrument as Exhibit D) (the “Pricing
Supplement”), by and between the parties thereto indicated in Section F herein;

     WHEREAS, certain expense and indemnification arrangements between
Principal Life and the Trustee, on behalf of itself and on behalf of the Trust,
are governed pursuant to the provisions of the Expense and Indemnity Agreement
dated as of March 5, 2004, by and between Principal Life and the Trustee;

     WHEREAS, certain licensing arrangements between the Trust and Principal
Financial Services, Inc. will be governed pursuant to the provisions of the
License Agreement (set forth in Section B of this Omnibus Instrument), dated as
of the date of the Pricing Supplement, by and between the parties thereto
indicated in Section F herein;

     WHEREAS, certain custodial arrangements of the Funding Agreement and the
Guarantee will be governed pursuant to the provisions of the Custodial
Agreement (the “Custodial Agreement”) dated as of March 5, 2004 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, the Notes will be issued pursuant to the Indenture (set forth in
Section C of this Omnibus Instrument), dated as of the Original Issue Date, by
and between the parties thereto indicated in Section F herein;

     WHEREAS, the sale of the Notes will be governed by the Terms Agreement
(set forth in Section D of this Omnibus Instrument), dated the date of the
Pricing Supplement, by and among the parties thereto indicated in Section F
herein; and

     WHEREAS, certain agreements relating to the Notes, the Funding Agreement
and the Guarantee are set forth in the Coordination Agreement (set forth in
Section E of this Omnibus Instrument), dated as of the date of the Pricing
Supplement, by and among the parties thereto indicated in Section F herein.

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

[Remainder of Page Left Intentionally Blank.]

 

 

SECTION A

TRUST AGREEMENT

     This TRUST AGREEMENT (this “Trust Agreement”), dated as of the date of the
Pricing Supplement, is entered into by and between GSS Holdings II, Inc., a
Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”),
and U.S. Bank Trust National Association, a national banking association, as
Trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Trust Beneficial Owner and the Trustee desire to authorize
the issuance of a Trust Beneficial Interest and a series of Notes in connection
with the entry into this Trust Agreement;

     WHEREAS, all things necessary to make this Trust Agreement a valid and
legally binding agreement of the Trustee and the Trust Beneficial Owner,
enforceable in accordance with its terms, have been done;

     WHEREAS, the parties intend to provide for, among other things, (i) the
issuance and sale of the Notes (pursuant to the Indenture, the Distribution
Agreement and the related Terms Agreement) and the Trust Beneficial Interest,
(ii) the use of the proceeds of the sale of the Notes and Trust Beneficial
Interest to acquire the Funding Agreement, the payment obligations of which
will be fully and unconditionally guaranteed by the Guarantee, and (iii) all
other actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Trust Terms, dated as of March 5, 2004, and attached to the
Omnibus Instrument as Exhibit A (the “Standard Trust Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Trust Terms (the Standard
Trust Terms and this Trust Agreement, collectively, the “Trust Agreement”).

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Trust Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference with the
same force and effect as though fully set forth herein. To the extent that the
terms set forth in Article 2 of this Trust Agreement are inconsistent with the
terms of the Standard Trust Terms, the terms set forth in Article 2 herein
shall apply.

A-1

 

ARTICLE 2

     Section 2.01 Name. The Trust created and governed by the Trust Agreement
shall be the trust specified in the Omnibus Instrument. The name of the Trust
shall be the name specified in the first paragraph of the Omnibus Instrument,
as such name may be modified from time to time by the Trustee following written
notice to the Trust Beneficial Owner.

     Section 2.02 Jurisdiction. The Trust is hereby organized in, and formed
under and pursuant to, the laws of the State of New York.

     Section 2.03 Initial Capital Contribution and Ownership. The Trust
Beneficial Owner has paid or has caused to be paid to, or to an account at the
direction of, the Trustee, on the date hereof, the sum of $15 (or, in the case
of Notes issued with original issue discount, such amount multiplied by the
issue price of the Notes). The Trustee hereby acknowledges receipt in trust
from the Trust Beneficial Owner, as of the date hereof, of the foregoing
contribution, which shall be used along with the proceeds from the sale of the
series of Notes to purchase the Funding Agreement. Upon the creation of the
Trust and the registration of the Trust Beneficial Interest in the Securities
Register (as defined in the Trust Agreement) by the Registrar in the name of
the Trust Beneficial Owner, the Trust Beneficial Owner shall be the sole
beneficial owner of the Trust.

     Section 2.04 Acknowledgment. The Trustee, on behalf of the Trust,
expressly acknowledges its duties and obligations set forth in the Standard
Trust Terms incorporated herein.

     Section 2.05 Additional Terms.

     None

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Trust Agreement will enter into the Trust Agreement by
executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Trustee and the Trust Beneficial
Owner hereby agree that the Trust Agreement will constitute a legal, valid and
binding agreement between the Trustee and the Trust Beneficial Owner.

     All terms relating to the Trust or the series of Notes not otherwise
included in the Trust Agreement will be as specified in the Omnibus Instrument
or Pricing Supplement, as indicated herein.

A-2

 

     Section 2.07 Governing Law. The Trust Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.

     Section 2.08 Counterparts. The Trust Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

A-3

 

SECTION B

LICENSE AGREEMENT

     This LICENSE AGREEMENT (this “License Agreement”), dated as of the date of
the Pricing Supplement, is entered into by and between Principal Financial
Services, Inc., an Iowa corporation with its principal place of business at 711
High Street, Des Moines, Iowa 50392 (the “Licensor”), and the Principal Life
Income Fundings Trust specified in the Omnibus Instrument (the “Licensee”).

W I T N E S S E T H:

     WHEREAS, the Licensor is the owner of certain trademarks and service marks
and registrations and pending applications therefor, and may acquire additional
trademarks and service marks in the future, all as described more fully below;

     WHEREAS, the Licensee desires to use certain of the Licensor’s trademarks
and service marks in connection with the Licensee’s activities, as described
more fully below;

     WHEREAS, the Licensor and the Licensee wish to formalize the agreement
between them regarding the Licensee’s use of the Licensor’s marks; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard License Agreement Terms, dated March 5, 2004, and attached to
the Omnibus Instrument as Exhibit B (the “Standard License Agreement Terms”)
and all capitalized terms not otherwise defined herein (including the recitals
hereof) shall have the meanings set forth in the Standard License Agreement
Terms (the Standard License Agreement Terms and this License Agreement,
collectively, the “License Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and for other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard License Agreement Terms (except to the
extent expressly modified herein) are hereby incorporated herein by reference
with the same force and effect as though fully set forth herein. To the extent
that the terms set forth in Article 2 of this License Agreement are
inconsistent with the terms of the Standard License Agreement Terms, the terms
set forth in Article 2 herein shall apply.

ARTICLE 2

     Section 2.01 Additional Terms.

     None

B-1

 

     Section 2.02 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the License Agreement will enter into the License Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Licensor and the Licensee hereby
agree that the License Agreement will constitute a legal, valid and binding
agreement between the Licensor and the Licensee.

     All terms relating to the Trust or the Notes not otherwise included in the
License Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.03 Counterparts. The License Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

B-2

 

SECTION C

INDENTURE

     This INDENTURE (this “Indenture”) is entered into as of the Original Issue
Date by and between the Principal Life Income Fundings Trust specified in the
Omnibus Instrument (the “Trust”) and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”).

     Citibank, N.A., in its capacity as indenture trustee, hereby accepts its
role as Registrar, Paying Agent, Transfer Agent and Calculation Agent
hereunder.

     References herein to “Indenture Trustee,” “Registrar,” “Transfer Agent,”
“Paying Agent” or “Calculation Agent” shall include the permitted successors
and assigns of any such entity from time to time.

W I T N E S S E T H:

     WHEREAS, the Trust has duly authorized the execution and delivery of this
Indenture to provide for the issuance of Notes;

     WHEREAS, all things necessary to make this Indenture a valid and legally
binding agreement of the Trust and the other parties to this Indenture,
enforceable in accordance with its terms, have been done, and the Trust
proposes to do all things necessary to make the Notes, when executed by the
Trust and authenticated and delivered pursuant hereto, valid and legally
binding obligations of the Trust as hereinafter provided; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Indenture Terms, dated as of March 5, 2004, and attached to
the Omnibus Instrument as Exhibit C (the “Standard Indenture Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Indenture Terms (the Standard
Indenture Terms and this Indenture, collectively, the “Indenture”).

     NOW, THEREFORE, for and in consideration of the premises and the purchase
of the Notes by the Holders thereof, it is mutually covenanted and agreed by
each of the parties hereto as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Indenture Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference (with
the same force and effect as though fully set forth herein). To the extent
that the terms set forth in Article 2 of this Indenture are inconsistent with
the terms of the Standard Indenture Terms, the terms set forth in Article 2
herein shall apply.

C-1

 

ARTICLE 2

     Section 2.01 Agreement to be Bound. Each of the Trust, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent and the
Calculation Agent hereby agrees to be bound by all of the terms, provisions and
agreements set forth in the Indenture, with respect to all matters contemplated
in the Indenture, including, without limitation, those relating to the issuance
of the below-referenced Notes.

     Section 2.02 Designation of the Trust, the Notes, the Funding Agreement
and the Guarantee. The Trust created by the Trust Agreement and referred to in
the Indenture is the Principal Life Income Fundings Trust specified in the
Omnibus Instrument. The Notes issued by the Trust and governed by the
Indenture shall be the Notes specified in the Pricing Supplement. The Funding
Agreement designated hereby is the Funding Agreement designated in the Pricing
Supplement dated as of the Original Issue Date between the Trust and Principal
Life. The Guarantee designated hereby is the Guarantee dated as of the Original
Issue Date of PFG.

     Section 2.03 Additional Terms.

     None

     Section 2.04 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Indenture will enter into the Indenture by executing
the Omnibus Instrument.

     By executing the Omnibus Instrument, the Indenture Trustee, the Registrar,
the Transfer Agent, the Paying Agent, the Calculation Agent and the Trust
hereby agree that the Indenture will constitute a legal, valid and binding
agreement between the Indenture Trustee, the Registrar, the Transfer Agent, the
Paying Agent, the Calculation Agent and the Trust.

     All terms relating to the Trust or the Notes not otherwise included in the
Indenture will be as specified in the Omnibus Instrument or Pricing Supplement,
as indicated herein.

     Section 2.05 Counterparts. The Indenture, through the Omnibus Instrument,
may be executed in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute one
and the same instrument.

[Remainder of Page Left Intentionally Blank.]

C-2

 

SECTION D

TERMS AGREEMENT

     This TERMS AGREEMENT (this “Terms Agreement”) is entered into as of the
Original Issue Date by and among Principal Life Insurance Company (“Principal
Life”), Principal Financial Group, Inc. (“PFG”), the Principal Life Income
Fundings Trust specified in the Omnibus Instrument (the “Trust”) and the
Purchasing Agents specified in the Pricing Supplement (the “Purchasing
Agents”).

W I T N E S S E T H:

     WHEREAS, Principal Life, PFG and the agents named therein, including the
Purchasing Agents, have entered into that certain Distribution Agreement dated
March 5, 2004 (the “Distribution Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, each of the parties hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. The provisions of the
Distribution Agreement and the related definitions (unless otherwise specified
herein) are incorporated by reference herein and shall be deemed to have the
same force and effect as if set forth in full herein.

ARTICLE 2

     Section 2.01 Addition of Trust as Party to Distribution Agreement.

     Pursuant to Section 1 of the Distribution Agreement, each of the
undersigned parties hereby acknowledges and agrees that the Trust, upon
execution hereof by the Trust and the other parties to the Distribution
Agreement (other than any other trusts organized in connection with the
Registration Statement that are party thereto as of the date hereof), shall
become a Trust for purposes of the Distribution Agreement in accordance with
the terms thereof, in respect of the Notes, with all the authority, rights,
powers, duties and obligations of a Trust under the Distribution Agreement.
The Trust confirms that any agreement, covenant, acknowledgment, representation
or warranty under the Distribution Agreement applicable to the Trust is made by
the Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.

     Section 2.02 Purchase of Notes as Principal.

     (a) Subject in all respects to the terms and conditions of the
Distribution Agreement, the Trust hereby agrees to sell to each Purchasing
Agent and each Purchasing Agent hereby agrees to purchase, severally and not
jointly, the Notes having the terms specified in the Pricing Supplement
relating to such Notes.

D-1

 

     (b) In connection with any purchase of Notes from the Trust by the
Purchasing Agent(s) as principal, the parties agrees that the items specified
on Schedule I of the Omnibus Instrument will be delivered as of the Settlement
Date.

     Section 2.03 Termination. Upon the termination of this Terms Agreement
pursuant to Section 13(b) of the Distribution Agreement the undersigned parties
hereby agree that the expenses reasonably incurred prior to or in connection
with such termination will be borne by Principal Life and PFG.

     Section 2.04 Governing Law. This Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of laws thereof.

     Section 2.05 Notices. For purposes of Section 14 of the Distribution
Agreement, the Trust’s communications details are as set forth in Section E of
the Omnibus Instrument.

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Terms Agreement will enter into this Terms Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Terms Agreement will constitute a legal, valid and binding agreement by and
among such parties.

     All terms relating to the Trust or the Notes not otherwise included in
this Terms Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.07 Counterparts. This Terms Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

D-2

 

SECTION E

COORDINATION AGREEMENT

     This COORDINATION AGREEMENT (this “Coordination Agreement”), dated as of
the date of the Pricing Supplement, is entered into by and among Principal Life
Insurance Company (“Principal Life”), Principal Financial Group, Inc. (“PFG”),
the Principal Life Income Fundings Trust specified in the Omnibus Instrument
(the “Trust”), Principal Financial Services, Inc. (“PFSI”), Bankers Trust
Company, N.A. and Citibank, N.A., as indenture trustee (the “Indenture
Trustee”).

W I T N E S S E T H

     WHEREAS, the Trust will enter into the Funding Agreement with Principal
Life dated as of the Original Issue Date specified in the Pricing Supplement;

     WHEREAS, PFG will issue a Guarantee to the Trust as of the Original Issue
Date specified in the Pricing Supplement, which will fully and unconditionally
guarantee the payment obligations of Principal Life under the Funding
Agreement;

     WHEREAS, the Purchasing Agents (as defined in the Distribution Agreement)
have agreed to sell the Notes in accordance with the Registration Statement;

     WHEREAS, the Trust intends to issue the Notes in accordance with the
Indenture, to collaterally assign to, and grant a security interest in, the
Funding Agreement and the Guarantee to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes;

     WHEREAS, the Custodian will hold the Funding Agreement and the Guarantee
on behalf of the Indenture Trustee pursuant to the terms of the Custodial
Agreement; and

     WHEREAS, certain licensing arrangements between the Trust and PFSI will be
governed pursuant to the provisions of the License Agreement.

     NOW, THEREFORE, to give effect to the agreements and arrangements
established under the Terms Agreement included in the Omnibus Instrument, as
applicable, the Trust Agreement, the Indenture and the Notes, and in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Delivery of the Funding Agreement and the Guarantee. The
Trust hereby authorizes the Custodian, on behalf of the Indenture Trustee, to
receive the Funding Agreement from Principal Life and the Guarantee from PFG
pursuant to the assignment of the Funding Agreement and Guarantee (the
“Assignment”), to be entered into on the Original Issue Date, included in the
closing instrument dated as of the Original Issue Date (the “Closing
Instrument”).

E-1

 

     Section 1.02 Issuance and Purchase of the Notes.

     (a) Delivery of the Funding Agreement and the Guarantee to the Custodian,
on behalf of the Indenture Trustee, pursuant to the Assignment or execution of
the cross receipt contained in the Closing Instrument shall be confirmation of
payment by the Trust for the Funding Agreement.

     (b) The Trust hereby directs the Indenture Trustee, upon receipt by the
Custodian, on behalf of the Indenture Trustee, of the Funding Agreement
pursuant to the Assignment and upon receipt by the Custodian, on behalf of the
Indenture Trustee, of the Guarantee, (i) to authenticate the certificates
representing the Notes (the “Notes Certificates”) in accordance with the
Indenture and (ii) to (A) deliver each relevant Notes Certificate to the
clearing system or systems identified in each such Notes Certificate, or to the
nominee of such clearing system, or the custodian thereof, for credit to such
accounts as the Purchasing Agent(s) may direct, or (B) deliver each relevant
Notes Certificate to the purchasers thereof as identified by the Purchasing
Agent(s).

ARTICLE 2

     Section 2.01 Directions Regarding Periodic Payments. As registered owner
of the Funding Agreement and the Guarantee as collateral securing payments on
the Notes, the Indenture Trustee will receive payments on the Funding Agreement
and the Guarantee on behalf of the Trust. The Trust hereby directs the
Indenture Trustee to use such funds to make payments on behalf of the Trust
pursuant to the Trust Agreement and the Indenture.

     Section 2.02 Maturity of the Funding Agreement. Upon the maturity of the
Funding Agreement and the return of funds thereunder, the Trust hereby directs
the Indenture Trustee to set aside from such funds an amount sufficient for the
repayment of the outstanding principal on the Notes and Trust Beneficial
Interest when due.

ARTICLE 3

     Section 3.01 Certificates. Principal Life hereby agrees to deliver an
Officer’s Certificate, a copy of which is attached hereto as Exhibit E, on a
quarterly basis to any rating agency currently rating the Program. The Trust
hereby agrees to deliver an Officer’s Certificate, a copy of which is attached
hereto as Exhibit F, on a quarterly basis to any rating agency currently rating
the Program.

     Section 3.02 Filings. Principal Life hereby covenants to file, or cause
to be filed, in a timely manner on behalf of the Trust all reports,
certifications or similar filings required under the Securities Exchange Act of
1934, as amended.

ARTICLE 4

     Section 4.01 No Additional Liability. Nothing in this Coordination
Agreement shall impose any liability or obligation on the part of any party to
this Coordination Agreement to make any payment or disbursement in addition to
any liability or obligation such party has under the Program Documents, except
to the extent that a party has actually received funds which it is obligated to
disburse pursuant to this Coordination Agreement.

E-2

 

     Section 4.02 No Conflict. This Coordination Agreement is intended to be
in furtherance of the agreements reflected in the documents related to the
Program Documents, and not in conflict. To the extent that a provision of this
Coordination Agreement conflicts with the provisions of one or more Program
Documents, the provisions of such Program Documents shall govern.

     Section 4.03 Governing Law. This Coordination Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof.

     Section 4.04 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.05 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.06 Notices. All demands, notices and communications under this
Coordination Agreement shall be in writing and shall be deemed to have been
duly given upon receipt at the addresses set forth below:

	 	 	 
	To the Trust:
	 	 
	 
	
	 	Principal Life Income Fundings Trust (followed by the number set forth in the Omnibus Instrument)
	

	 	c/o U.S. Bank Trust National Association
	

	 	100 Wall Street, 16th Floor
	

	 	New York, New York 10005
	

	 	Attention: Corporate Trust Administration
	

	 	Telephone: (212) 361-2458
	

	 	Facsimile: (212) 809-5459 and (212) 509-3384
	 
	To the Indenture Trustee:
	 	 
	 
	

	 	Citibank, N.A.
	

	 	Citibank Agency & Trust
	

	 	111 Wall Street, 14th Floor, Zone 3
	

	 	New York, New York 10005
	

	 	Attention: Nancy Forte
	

	 	Telephone: (212) 657-7403
	

	 	Facsimile: (212) 657-3862

E-3

 

	 	 	 
	To Principal Life:
	 	 
	 
	 

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011
	 
	 

	 	With a copy to:
	 
	 

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To PFG:
	 	 
	 
	 
	 	 
	

	 	Principal Financial Group, Inc.
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011
	 
	 

	 	With a copy to:
	 
	 	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To
Principal Financial
Services, Inc.:
	 	 
	 
	 	 
	

	 	Principal Financial Services, Inc.
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011

E-4

 

	 	 	 
	 

	 	With a copy to:
	 
	 	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To
Bankers Trust
Company, N.A:
	 	 
	 
	 	 
	

	 	Bankers Trust Company, N.A.
	

	 	665 Locust Street
	

	 	Des Moines, Iowa 50309-3702
	

	 	Attention: Angela Brick
	

	 	Telephone: (515) 245-2820
	

	 	Facsimile: (515) 247-2101

or at such other address as shall be designated by any such party in a written
notice to the other parties.

ARTICLE 5

     Section 5.01 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Coordination Agreement will enter into this
Coordination Agreement by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Coordination Agreement will constitute a legal, valid and binding agreement by
and among the Trust, Principal Life, PFG, PFSI, the Custodian and the Indenture
Trustee.

     All terms relating to the Trust or the Notes not otherwise included in
this Coordination Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.

     Section 5.02 Acknowledgment. Principal Life hereby acknowledges Section
2.10 of the Indenture and Section 6.1 of the Custodial Agreement. The Trust
hereby acknowledges and agrees to the terms of the Custodial Agreement.

     Section 5.03 Counterparts. This Coordination Agreement, through the
Omnibus Instrument, may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.

     Section 5.04 Capitalized Terms. All capitalized terms used herein and not
otherwise defined in this Coordination Agreement will have the meanings set
forth in the Indenture.

[Remainder of Page Left Intentionally Blank.]

E-5

 

SECTION F

MISCELLANEOUS AND EXECUTION PAGES

     This Omnibus 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 indenture identified for such party as of the date
specified in such agreements or indenture.

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

	 	 	 	 	 
	 	PRINCIPAL LIFE INSURANCE COMPANY (in

executing below agrees and becomes a party

to (i) the Terms Agreement set forth in

Section D herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Officer 	 
	 
	 	PRINCIPAL FINANCIAL GROUP, INC. (in

executing below agrees and becomes a party

to (i) the Terms Agreement set forth in

Section D herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 
	 	PRINCIPAL FINANCIAL SERVICES, INC. (in

executing below agrees and becomes a party

to (i) the License Agreement set forth in

Section B herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 

[Execution Page 1 of 3]

 

 

	 	 	 	 	 
	 	THE PRINCIPAL LIFE INCOME FUNDINGS TRUST

DESIGNATED IN THIS OMNIBUS INSTRUMENT (in

executing below agrees and becomes a party

to (i) the License Agreement set forth in

Section B herein, (ii) the Indenture set

forth in Section C herein, (iii) the Terms

Agreement set forth in Section D herein and

(iv) the Coordination Agreement set forth in

Section E herein)

By U.S. Bank Trust National Association,

not in its individual capacity but solely in

its capacity as trustee of the Trust

 	 
	 	By:  	/s/ Adam Berman
 	 
	 	 	Name:  	Adam Berman 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION (in

executing below agrees and becomes a party

to the Trust Agreement set forth in Section

A herein), as Trustee

 	 
	 	By:  	/s/ Adam Berman
 	 
	 	 	Name:  	Adam Berman 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	GSS HOLDINGS II, INC. (in executing below

agrees and becomes a party to the Trust

Agreement set forth in Section A herein), as

Trust Beneficial Owner

 	 
	 	By:  	/s/ Andrew L. Stidd
 	 
	 	 	Name:  	Andrew L. Stidd 	 
	 	 	Title:  	President 	 
	 
	 	CITIBANK, N.A. (in executing below agrees

and becomes a party to (i) the Indenture set

forth in Section C herein, as Indenture

Trustee, Registrar, Transfer Agent, Paying

Agent and Calculation Agent and (ii) the

Coordination Agreement set forth in Section

E herein), as Indenture Trustee, Registrar,

Transfer Agent, Paying Agent and Calculation

Agent

 	 
	 	By:  	/s/  Nancy Forte
 	 
	 	 	Name:  	Nancy Forte 	 
	 	 	Title:  	Assistant Vice President 	 
	 

[Execution Page 2 of 3]

 

 

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A. (in executing below
agrees and becomes a party to the
Coordination Agreement set forth in Section
E herein)
 	 
	 
	 	By:  	/s/
Patty Ashbaugh
 	 
	 	 	Name:  	Patty Ashbaugh	 
	 	 	Title:  	Vice President 	 
	 
	 	MORGAN STANLEY & CO. INCORPORATED (in
executing below agrees and
becomes a party to the Terms Agreement set
forth in Section D herein)
 	 
	 
	 	By:  	/s/ Michael
Fusco
 	 
	 	 	Name:  	Michael Fusco 	 
	 	 	Title:  	Executive Director 	 
	 

[Execution Page 3 of 3]

 

 

INDEX OF EXHIBITS AND SCHEDULES

TO THE

OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

	 	Standard Trust Terms — Incorporated herein by reference to Exhibit
4.6 to Principal Life Insurance Company and Principal Financial
Group, Inc.’s Registration Statement on Form S-3 (Registration
Nos. 333-110499 and 333-110499-01.
	 
	Exhibit B

	 	Standard License Agreement Terms — Incorporated herein by
reference to Exhibit 99.1 to Principal Life Insurance Company’s
Current Report on Form 8-K, filed on March 29, 2004.
	 
	Exhibit C

	 	Standard Indenture Terms — Incorporated herein by reference to
Exhibit 4.1 to Principal Life Insurance Company and Principal
Financial Group, Inc.’s Registration Statement on Form S-3
(Registration Nos. 333-110499 and 333-110499-01.
	 
	Exhibit D

	 	Pricing Supplement — Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2, filed on April 1, 2004, with the Securities and Exchange
Commission pursuant to Rule 424(b)(5) under the Securities Act of
1933, as amended.
	 
	Exhibit E

	 	Principal Life Insurance Company Officer’s Certificate
	 
	Exhibit F

	 	Principal Life Income Fundings Trusts Trustee Officer’s Certificate
	 
	Schedule I

	 	Terms Agreement Specifications

 

 

EXHIBIT E

Principal Life Insurance Company

Officer’s Certificate

     The undersigned, an officer of Principal Life Insurance Company, an Iowa
stock life insurance company (“Principal Life”), does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of Principal Life, to the knowledge of the
undersigned and after reasonable inquiry, that:

	 	 	 
	1.

	 	
each of the representations and warranties of Principal Life
contained in each Expense and Indemnity Agreement entered into in
connection with the Registration Statement (defined below), and each
Funding Agreement issued in connection with the Program (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.
	 	
Principal Life has performed and complied with, respectively,
in all material respects, all of the agreements, covenants,
obligations and conditions applicable to Principal Life required by
the Specified Agreements to be performed or complied with by
Principal Life on or before the date hereof;
	 
	4.
	 	
the Registration Statement filed on Form S-3 (File Nos.
333-110499 and 333-110499-01) (the “Registration Statement”) by
Principal Life and Principal Financial Group, Inc. has been declared
effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the
“Act”) and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been commenced by or are pending before or contemplated
by the Commission;
	 
	5.
	 	
all filings, if any, required by Rule 424 and Rule 430A under
the Act have been made in a timely manner;
	 
	6.
	 	
since    , the Trusts organized in connection with the
program contemplated by the Registration Statement have issued the
following series of Notes:
	 
	 
	 	
[List each series of Notes.] [(collectively, the “Designated
Notes”)]; and
	 
	7.
	 	
the Funding Agreements issued in connection with the
Designated Notes have been executed and delivered by Principal Life
in accordance with the terms and conditions of the Program
Documents.

E-1

 

          Capitalized terms used herein and not otherwise defined herein shall have the meanings set
forth in the Standard Indenture Terms attached as Exhibit 4.1 to the
Registration Statement.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the • day of •, 200•.

	 	 	 
	

	[Name], [in his/her] capacity as an
authorized officer of Principal Life
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

	 	 	 	 	 

E-2

 

EXHIBIT F

Principal Life Income Fundings Trusts

Trustee Officer’s Certificate

     U.S. Bank Trust National Association, not in its individual capacity but
solely in its capacity as trustee acting on behalf of each common law trust
organized under the laws of the State of New York (in such capacity, the
“Trustee,” and each such common law trust being referred to herein as, a
“Trust”) in connection with the program contemplated by Registration Statement
Nos. 333-110499 and 333-110499-01 filed on Form S-3 (the “Registration
Statement”) by Principal Life Insurance Company and Principal Financial Group,
Inc. with the Securities and Exchange Commission, does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of each Trust, to the knowledge of the
Trustee, that:

	 	 	 
	1.

	 	
each of the representations and warranties of each Trust
contained in the Notes issued in connection with the Program, each
Indenture entered into in connection with the Registration Statement
and the Expense and Indemnity Agreement concerning the Trusts (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.

	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.

	 	each Trust has performed and complied with, respectively, in
all material respects, all of the agreements, covenants, obligations
and conditions applicable to such Trust required by the Specified
Agreements to be performed or complied with by such Trust on or
before the date hereof;
	 
	4.

	 	
the Notes issued in connection with the Program, have been
issued, in all material respects, in accordance with the terms and
conditions of the Program Documents; and
	 
	5.

	 	each Funding Agreement has been executed and delivered by the
related Trust in accordance with the terms and conditions of the
Program Documents.

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in the Standard Indenture Terms attached as Exhibit 4.1
to the Registration Statement. In no event shall U.S. Bank Trust National
Association in its personal corporate capacity have any liability for any of
the certifications or statements contained in this Trustee Officer’s
Certificate, such liability being solely that of each Trust.

F-1

 

     IN WITNESS
WHEREOF, the undersigned has executed this Certificate as of the
• day of •,
200•.

	 	 	 
	

	U.S. Bank Trust National Association,
not in its capacity but solely in its capacity as Trustee acting on behalf of each Trust
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

	 	 	 	 	 

F-2

 

	 	 	 	 	 

SCHEDULE I

Terms Agreement Specifications

In connection with Section 3(a)(iv) of the Distribution Agreement, the Program
under which the Notes are issued is rated Aa3 by Moody’s Investors Service,
Inc. (“Moody’s”) and AA by Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc. (“S&P”). Principal Life and PFG expect that the
Notes will be rated Aa3 by Moody’s. The Company’s financial strength rating is
Aa3 by Moody’s and AA by S&P.

In accordance with Section 2.02(b) of the Terms Agreement and in connection
with the purchase of Notes from the Trust by the Purchasing Agent(s) as
principal, the following items will be delivered on the Settlement Date:

	 	•	 	Opinion of Sidley Austin Brown & Wood LLP regarding the
enforceability of the Guarantee and the Notes.

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

I-1

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