Document:

exv4w16

 

Exhibit 4.16

SECOND AMENDMENT TO LEASE

     SECOND AMENDMENT TO LEASE dated as of this 6 day of September, 2005, by and between BOSTON
PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and IONA TECHNOLOGIES,
INC., a Delaware corporation (“Tenant”).

RECITALS

     By Lease dated March 2, 1999 (the “Original Lease,” and as amended by the Letter Agreement and First
Amendment to Lease described below, the “Lease”), Landlord did lease to Tenant and Tenant did lease
from Landlord 60,718 square feet of rentable floor area (the “Rentable Floor Area of the Initial
Premises”) on the third and fourth floors of Phase II of the building (the “Building”) known as and
numbered 200 West Street, Waltham, Massachusetts (referred to in the Lease as the “Premises” or
“Tenant’s Space” and hereinafter sometimes referred to as the “Initial Premises”).

     By letter agreement dated May 14, 1999 (the “Letter Agreement”) the Tenant Allowance (as that term
is defined in the Original Lease) for the Initial Premises was reduced by $62,749.00 as Landlord
was required to install the sprinkler system in the Initial Premises in order to obtain a
certificate of occupancy (the calculation of the Tenant Allowance having been based in part on
Tenant installing the sprinkler system for the Premises). In addition, the Tenant Allowance for the
Expansion Premises (as hereinafter defined) was also reduced by an amount equal to the product of
(i) $1.00 (being the approximate cost on a square foot basis for installing the sprinkler system)
and (ii) the actual rentable floor area of the Expansion Premises (as determined pursuant to
Section 2.1.3 of the Original Lease).

     By First Amendment to Lease dated as of November 1, 2000 (the “First Amendment”) Tenant leased from
Landlord as required by Section 2.1.3 of the Original Lease, an additional 4,762 square feet of
rentable floor area (the “Rentable Floor Area of the Expansion Premises”) located on the first
floor of Phase II of the Building, which space is shown on Exhibit A-l attached to such First
Amendment (the “Expansion Premises”) upon the terms and conditions contained in the First
Amendment. The Initial Premises as increased by the Expansion Premises is hereinafter sometimes
collectively referred to as the “Existing Premises.”

     Landlord and Tenant have agreed to extend the Term of the Lease for one (1) period of five (5)
years and to provide Tenant with an additional option to extend the Term of the Lease, upon the
terms and conditions contained in the Lease except as set forth in this Second Amendment to Lease
(“the Second Amendment”).

     Landlord and Tenant have also agreed to reduce the size of the Existing Premises by subtracting
therefrom the 35,119 square feet of rentable floor area (the “Rentable Floor Area of the
Relinquished Premises”) consisting of 4,732 square feet of rentable floor area located on the first
floor of the Building and 30,387 square feet of rentable floor area located on the third floor of
the Building and shown on Exhibit A attached hereto (the “Relinquished Premises”).

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        Landlord and Tenant are entering into this instrument to set forth said agreements and to
amend the Lease.

        NOW THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration in
hand this date paid by each of the parties to the other, the receipt and sufficiency of which are
hereby severally acknowledged, and in further consideration of the mutual promises herein
contained, Landlord and Tenant hereby agree to and with each other as follows:

	1.	 	Effective on July 31, 2006 (the “Reduction Date”) the Relinquished Premises shall be
deleted from the space demised from Landlord to Tenant under the Lease, so that the remaining space
(the “Remaining Premises”) demised under the Lease shall consist of the 30,331 square feet of
rentable floor area located on the fourth floor of the Building (the “Rentable Floor Area of the
Remaining Premises”) shown on Exhibit A as the “Remaining Premises” and the terms “Premises” and
“Tenant’s Space” as defined and used in the Lease shall be deemed to refer to the Remaining
Premises. By way of example, the option to extend the Term of the Lease contained in Section 5
hereof shall apply to the Remaining Premises only and not to the Relinquished Premises.
	 
	2.	 	On or prior to the Reduction Date, Tenant shall quit and vacate the Relinquished
Premises and surrender the same in the condition required by the Lease upon the expiration or
earlier termination of the Lease Term.
	 
	3.	 	The Term of the Lease, which but for this Second Amendment is scheduled to expire on
July 31, 2006, is hereby extended for one (1) period of five (5) years commencing on August 1, 2006
and expiring on July 31, 2011 (the “First Extended Term”), unless extended or sooner terminated in
accordance with the provisions of the Lease, upon all of the same terms and conditions contained in
the Lease as herein amended.
	 
	4.	 	Section 2.4.1 of the Lease is hereby deleted in its entirety and Landlord and Tenant
agree that Tenant’s only option to extend shall be as provided in Section 5 hereinbelow.
	 
	5.	 	(A) On the conditions (which conditions Landlord may waive by written notice to
Tenant) that both at the time of exercise of the herein described option to extend and as of the
commencement of the extended term (i) there exists no “Event of Default” (defined in Section 7.1 of
the Lease) and there have been no more than three (3) Event of Default occurrences during the Term
of the Lease (ii) the Lease is still in full force and effect, and (iii) Tenant has neither
assigned the Lease nor sublet more than thirty-five percent (35%) of the Rentable Floor Area of the
Premises (except for an assignment or subletting permitted without Landlord’s consent under Section
5.6.1 of the Lease), Tenant shall have the right to extend the Term of the Lease upon all the same
terms, conditions, covenants and agreements contained in the Lease (except for the Annual Fixed
Rent which shall be adjusted during the option period as hereinbelow set forth and except that
there shall be no further option to extend) for either (i) one (1) period of three (3) years or
(ii) one (1) period of five (5) years, as hereinafter set forth. The option period is sometimes
herein referred to as the “Second Extended Term.” Notwithstanding any

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implication to the contrary, Landlord has no obligation to make any additional payment to
Tenant in respect of any construction allowance or the like or to perform any work to the Premises
as a result of the exercise by Tenant of any such option.

(B) If Tenant desires to exercise said option to extend the Term, then Tenant shall give
notice (the “Exercise Notice”) to Landlord, not earlier than twelve (12) months nor later than ten
(10) months prior to the expiration of the First Extended Term exercising such option to extend and
advising Landlord whether Tenant elects to extend for one (1) period of three (3) years or one (1)
period of five (5) years. Promptly after Landlord’s receipt of the Exercise Notice, Landlord shall
provide Landlord’s quotation to Tenant of the annual fair market rent for the Premises for the
Second Extended Term, such quotation to be based on the use of the Premises as first class office
space utilizing properties of a similar character in the Boston West Suburban market (“Landlord’s
Rent Quotation”). If at the expiration of thirty (30) days after the date when Landlord provides
such quotation to Tenant (the “Negotiation Period”), Landlord and Tenant have not reached agreement
on a determination of an annual rental for the Second Extended Term and executed a written
instrument extending the Term of the Lease pursuant to such agreement, then Tenant shall have the
right, for thirty (30) days following the expiration of the Negotiation Period, to make a request
to Landlord (which such request shall be in writing and must be signed by an authorized officer or
representative of Tenant) for a broker determination (the “Broker Determination”) of the Prevailing
Market Rent (as defined in Exhibit G attached to the Original Lease) for the Second Extended Term,
which Broker Determination shall be made in the manner set forth in Exhibit G attached to the
Original Lease.

(C) Upon either the agreement of the parties during the Negotiation Period on an annual fixed
rent for the Second Extended Term or the timely giving of notice by Tenant to Landlord requesting
the Broker Determination, then the Lease and the Lease Term shall automatically be deemed extended,
for the Second Extended Term, without the necessity for the execution of any additional documents,
except that Landlord and Tenant agree to enter into an instrument in writing setting forth the
Annual Fixed Rent for the Second Extended Term as determined in the relevant manner set forth in
this Section 5; and in such event all references to the Lease Term or the term of the Lease shall
be construed as referring to the Lease Term, as so extended, unless the context clearly otherwise
requires, and except that there shall be no further option to extend the Lease Term.
Notwithstanding anything contained herein to the contrary, Tenant shall only have the option to
extend for either a three (3) year period or a five (5) year period and not both and in no event
shall the Lease Term hereof be extended for more than three (3) years or five (5) years (as the
case may be depending on the election made in the Exercise Notice) after the expiration of the
First Extended Term.

In the event that the parties have not agreed upon the annual rental for the Second Extended Term
during the Negotiation Period and Tenant has not timely requested the Broker Determination in
accordance with the provisions of Section 5(B) above, then Tenant shall be deemed to have waived
its right to exercise the extension option and the Term of the Lease shall expire at the end of the
First Extended Term on July 31, 2011.

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	6.	 	(A) The Lease shall be amended to provide that for the period from August 1, 2005
through July 31, 2006, Annual Fixed Rent for the portion of the Premises defined as the Remaining
Premises shall be reduced so that it is payable at the annual rate of $803,771.50 (being the
product of (i) $26.50 and (ii) the Rentable Floor Area of the Remaining Premises (being 30,331
square feet)).

(B) For the period from August 1, 2005 through July 31, 2006, Annual Fixed Rent for the
portion of the Premises defined as the Relinquished Premises shall continue to be payable as
provided in the Lease, at the annual rate of $1,176,486.50 (being the product of (i) $33.50 and
(ii) the Rentable Floor Area of the Relinquished Premises (being 35,119 square feet)).

(C) For the period from August 1, 2006 through July 31, 2007, Annual Fixed Rent for the
Remaining Premises shall be payable at the annual rate of $834,102.50 (being the product of (i)
$27.50 and (ii) the Rentable Floor Area of the Remaining Premises (being 30,331 square feet)).

(D) For the period from August 1, 2007 through July 31, 2008, Annual Fixed Rent for the
Remaining Premises shall be payable at the annual rate of $864,433.50 (being the product of (i)
$28.50 and (ii) the Rentable Floor Area of the Remaining Premises).

(E) For the period from August 1, 2008 through July 31, 2009, Annual Fixed Rent for the
Remaining Premises shall be payable at the annual rate of $894,764.50 (being the product of (i)
$29.50 and (ii) the Rentable Floor Area of the Remaining Premises).

(F) For the period from August 1, 2009 through July 31, 2010, Annual Fixed Rent for the
Remaining Premises shall be payable at the annual rate of $925,095.50 (being the product of (i)
$30.50 and (ii) the Rentable Floor Area of the Remaining Premises).

(G) For the period from August 1, 2010 through the remainder of the First Extended Term,
Annual Fixed Rent for the Remaining Premises shall be payable at the annual rate of $955,426.50
(being the product of (i) $31.50 and (ii) the Rentable Floor Area of the Remaining Premises).

(H) For the extension option period provided in Section 5 of this Second Amendment (if
exercised), Annual Fixed Rent shall be payable as provided in such Section 5.

	7.	 	For the purposes of computing Tenant’s payments for operating expenses pursuant to
Section 2.6 of the
Original Lease (as amended by Section 4 of the First Amendment), Tenant’s payments for real estate
taxes pursuant to Section 2.7 of the Original Lease (as amended by Section 4 of the First
Amendment) and Tenant’s payments for electricity (as determined pursuant to Sections 1.1, 2.5, and
2.8 of the Original Lease and as amended by Section 4 of the First Amendment), for the portion of
the Lease Term on and after the Reduction Date, the “Rentable Floor Area of the Premises” shall be
reduced by the

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Rentable Floor Area of the Relinquished Premises (being 35,119 square feet) to become the Rentable
Floor Area of the Remaining Premises (being 30,331 square feet), with Tenant’s Share, from and
after the Reduction Date, being 12.21%. For the portion of the Lease Term prior to the Reduction
Date, the “Rentable Floor Area of the Premises” shall continue to be as provided in the Lease as
amended for such purposes.

	8.	 	(A) For the purposes of computing Tenant’s payments for operating expenses
pursuant to Section 2.6 of the Lease for the portion of the Lease Term on and after the Reduction
Date, the $5.50 per square foot operating expense base referred to in Section 2.6 of the Lease
shall be changed to be equal to the quotient of (a) “Landlord’s Operating Expenses” (as defined in
Section 2.6 of the Lease) for calendar year 2006 (that is the period beginning on January 1, 2006
and ending on December 31, 2006) divided by (b) the “Total Rentable Floor Area of the Building” (as
defined in Section 1.1 of the Lease) (“Base Operating Expenses”).

For the portion of the Lease Term prior to the Reduction Date, such operating expense base shall
remain unchanged for such purposes.

(B) For the purposes of computing Tenant’s payments for real estate taxes pursuant to Section
2.7 of the Lease for the portion of the Lease Term on and after the Reduction Date, the definition
of “Base Taxes” contained in said Section 2.7(v) of the Lease shall be deleted in its entirety and
replaced with the following:

“Base Taxes” means Landlord’s Tax Expenses (hereinbefore defined) for fiscal tax year 2007, (that
is the period beginning on July 1, 2006 and ending on June 30, 2007).

For the portion of the Lease Term prior to the Reduction Date, such definition shall remain
unchanged for such purposes.

	9.	 	Landlord shall provide to Tenant a special allowance equal to the product of (i) $7.00
and (ii) the Rentable Floor Area of the Remaining Premises (being $212,317.00) (the “Second
Amendment Tenant Allowance”). The Second Amendment Tenant Allowance shall be used and applied by
Tenant solely on account of the cost of work performed in the Remaining Premises (“Remaining
Premises Work”) by Tenant or, at Tenant’s request, by Landlord, in accordance with the terms of the
Lease, including without limitation alterations, upgrades, installations, replacements, renovations
and other improvements to the Remaining Premises (and specifically including communications room
air conditioning and gas fire suppression system). Provided that the Tenant (i) in the event Tenant
performed the Remaining Premises Work, has completed all of such work in accordance with the terms
of this Lease, has paid for all of such Remaining Premises Work in full and has delivered to
Landlord lien waivers from all persons who might have a lien as a result of such work, in
recordable forms reasonably acceptable to Landlord, (ii) in the event Tenant performed the
Remaining Premises Work, has delivered to Landlord its certificate specifying the cost of such
Remaining Premises Work and all contractors, subcontractors and supplies involved with Remaining
Premises

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Work, together with evidence of such cost in the form of paid invoices, receipts and the like,
(iii) has satisfied the requirements of (i) and (ii) above and made request for such payment or has
instructed Landlord to apply such monies (as the case may be) on or before July 31, 2007, (iv) is
not otherwise in default under the Lease (unless Tenant shall cure the same in connection with its
request for application of the applicable portion of the Second Amendment Tenant Allowance), and
(v) there are no liens (unless bonded to the reasonable satisfaction of Landlord) against Tenant’s
interest in the Lease or against the Building or the Site arising out of Remaining Premises Work or
any litigation relating thereto in which Tenant is a party, then within thirty (30) days after the
satisfaction of the foregoing conditions, the Landlord shall (i) in the case where Tenant has
performed the Remaining Premises Work, pay to the Tenant the lesser of the amount of such costs so
certified or the amount of the Second Amendment Tenant Allowance or (ii) in the case where Landlord
performed the Remaining Premises Work at Tenant’s request, apply the same to the cost of such work.
For the purposes hereof, the cost to be so reimbursed by Landlord shall include the cost of
leasehold improvements, architects’ fees and reasonable construction supervision fees payable to
Landlord but not the cost of any of Tenant’s personal property, trade fixtures or trade equipment,
moving expenses or any so-called soft costs.

Notwithstanding the foregoing, Landlord shall be under no obligation to apply any portion of the
Second Amendment Tenant Allowance for any purposes other than as provided in this Section 9, nor
shall Landlord be deemed to have assumed any obligations, in whole or in part, of Tenant to any
contractors, subcontractors, suppliers, workers or materialmen. Further, in no event shall Landlord
be required to make application of any portion of the Second Amendment Tenant Allowance on account
of any supervisory fees (except to Landlord as stated hereinabove), overhead, management fees or
other payments to Tenant, or any partner or affiliate of Tenant. In the event that the Second
Amendment Tenant Allowance has not been utilized by July 31, 2007, Tenant may by notice to Landlord
given no later than July 31, 2007, elect to apply the remainder of such Second Amendment Tenant
Allowance up to $50,000.00 towards Annual Fixed Rent and Additional Rent next due and owing by
Tenant under this Lease. Any portion of the Second Amendment Tenant Allowance in excess of
$50,000.00 then remaining shall be forfeited by Tenant. Landlord shall be entitled to deduct from
the Second Amendment Tenant Allowance an amount equal to $150.00 per hour for senior staff and
$100.00 per hour for junior staff, plus third party expenses incurred by Landlord to review
Tenant’s plans and Remaining Premises Work, provided such deductions shall not exceed $2,500.00 in
the aggregate.

	10.	 	Sections 2.1.1, 2.1.2 and 8.21 of the Lease are hereby deleted in their entirety and of
no further force and effect.
	 
	11.	 	The definition of “Tenant’ s Generator” set forth in Section 2.2.2 of the Original Lease
is hereby amended to mean the two (2) existing emergency generators installed by or on behalf of
Tenant and currently serving the Premises as of the date hereof.
	 
	12.	 	Tenant acknowledges and agrees that it has utilized all of the Tenant Allowance provided

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	 	 	for in Section 3.2(C) of the Original Lease and accordingly Landlord shall have no further
obligations with respect to the same.
	 
	13.	 	All of Tenant’s existing signage in the Building is hereby approved by Landlord.
	 
	14.	 	(A) It is acknowledged and agreed that Landlord is currently holding a security
deposit in the amount of Four Hundred Thousand and 00/100 Dollars ($400,000.00) in the form of a
Letter of Credit, pursuant to and in accordance with the terms and provisions of Section 8.20 of
the Original Lease. Subject to the provisions of said Section 8.20 (as modified by this Section
14), Landlord shall continue to hold the Letter of Credit as security for the performance by Tenant
of its obligations under the Lease during the First Extended Term and the extension option period
(if exercised).

(B) Landlord shall exchange the Letter of Credit for a Letter of Credit delivered by
Tenant which reduces the amount secured by the Letter of Credit by Two Hundred Thousand
and 00/100 Dollars ($200,000.00) so that the remaining amount secured by the Letter of
Credit shall be Two Hundred Thousand and 00/100 Dollars ($200,000.00) on August 1, 2006
(the “Scheduled Reduction Date”), provided that as of such date (x) no Event of Default is
then existing and no monetary default (beyond any applicable notice and cure period
provided in Section 7.1 of the Original Lease) has occurred within the twelve (12) month
period prior to the Scheduled Reduction Date (regardless of whether Tenant subsequently
pays the amounts owed after the expiration of any cure period), (y) Tenant has restored
any amounts previously applied by Landlord to Landlord’s damages arising from any default
on the part of Tenant and (z) Tenant has satisfied the “Financial Qualifications” (as
hereinafter defined). The remaining Two Hundred Thousand and 00/100 Dollars ($200,000.00)
shall continue to be held by Landlord as security for performance by Tenant of its
obligations under the Lease during the First Extended Term and the extension option period
(if exercised).

In the event that, as of the Scheduled Reduction Date, Tenant had defaulted in any monetary
obligation (beyond any applicable notice and cure period provided in Section 7.1 of the Original
Lease) within the twelve (12) month period prior to the Scheduled Reduction Date, the reduction of
the Letter of Credit shall be deferred for twelve (12) months from the original scheduled reduction
(provided that Tenant has subsequently cured such monetary default and that all other conditions to
the reduction of the Letter of Credit have been met as of the deferred reduction date).
Furthermore, in the event that, as of the Scheduled Reduction Date, Tenant was unable to satisfy
the Financial Qualifications, the reduction of the Letter of Credit shall be deferred until such
time as Tenant shall be able to satisfy the same (provided that all other conditions to the
reduction of the Letter of Credit have been met as of the deferred reduction date).

For the purposes hereof, the “Financial Qualifications” shall mean that:

	 	(i)	 	Tenant shall have a liquidity (defined as the sum of cash, cash equivalents and
marketable securities as reported on Tenant’s most recent quarterly

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	 	 	 	financial statement filed with the Securities and Exchange Commission prior to the Scheduled
Reduction Date) of at least $35,000,000.00; and
	 
	 	(ii)	 	Tenant shall have demonstrated profitability (defined as
positive net income as shown on Tenant’s quarterly financial statements filed with the Securities and Exchange
Commission, exclusive of stock option expenses) for the four consecutive quarters immediately
preceding the Scheduled Reduction Date (beginning June 30, 2005 and ending June 30, 2006, assuming
that all other conditions have been satisfied in order for the Scheduled Reduction Date to occur on
August 1, 2006).

(C) If Tenant believes that it has satisfied all the conditions precedent to a reduction
in the amount of the security deposit, then it shall request such reduction in writing to
Landlord, which request shall certify to Landlord that all such conditions have been
satisfied. If Landlord determines that all of the aforesaid conditions are met, the
security deposit shall be so reduced in accordance with this Section 14. No Letter of
Credit shall automatically reduce, but any reduction in the amount thereof shall require
Landlord’s prior written notice to the issuer of the Letter of Credit of the reduced
amount. Promptly after Landlord’s receipt of Tenant’s request for a reduction as described
above, Landlord shall determine whether such a reduction is permitted in accordance with
this Section 14, and if it is, Landlord shall notify the issuer of the Letter of Credit of
the amount to which the Letter of Credit shall be reduced.

	15.	 	(A) As of the date hereof, the space on a portion of the first (1st) floor
of the Building shown on Exhibit B attached hereto (such space being hereinafter referred to as the
“Offer Space”) is leased to PAREXEL International LLC (the “Existing Tenant”) and Tenant (it being
acknowledged and agreed that such portion of the Offer Space as is currently occupied by Tenant is
being vacated by Tenant as part of the Relinquished Premises in accordance with Section 1 above).
Such lease with the Existing Tenant and the term thereof, including, but not limited to, the
original term thereof, options to extend the term thereof, any expansion options and any amendments
thereto is hereinafter called the “Existing Lease.”
	 
	 	 	Subject to (x) the Existing Lease and the rights of the Existing Tenant thereunder, (y) the right
of Landlord to enter into an initial lease or leases with third parties with respect to that
portion of the Offer Space that is to be vacated by Tenant as part of the Relinquished Premises and
(z) the right of Landlord to negotiate direct leases for all or any portion of the Offer Space with
any current or future subtenants of the Offer Space (which rights in subsections (x), (y) and (z)
are prior to the rights of Tenant under this Section 15, notwithstanding that amendments to the
Existing Lease and/or new leases with third parties for the portion of the Offer Space being
vacated by Tenant as part of the Relinquished Premises and/or direct leases with any current or
future subtenants of the Offer Space may be executed subsequent to the date of this Second
Amendment), Landlord agrees not to enter into a lease or leases for all or any portion of the Offer
Space during the period commencing on the date hereof and ending on
September 30, 2009 without first
giving to Tenant an opportunity to lease such space as hereinafter set forth,

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provided that at any time such portion of the Offer Space becomes so available hereunder for
reletting (i) there exists no Event of Default, (ii) this Lease is still in full force and effect
and (iii) Tenant continues to directly lease and occupy at least 30,000 square feet of rentable
floor area in the Building. Landlord shall use reasonable efforts to keep Tenant informed of the
possibility of such space becoming so available.

(B) When any portion of the Offer Space becomes available for reletting prior to
marketing the same to any other party (specifically excluding any rights of Landlord to
lease or market such space as provided in Section 15(A) hereinabove), Landlord shall
notify Tenant in writing of the availability of such portion of the Offer Space and shall
advise Tenant of the business terms upon which Landlord is willing so to lease such space
which terms shall be based on Landlord’s good faith determination of the annual market
rent for such space. If Tenant wishes to exercise Tenant’s right of first offer or to
negotiate the business terms upon which such portion of the Offer Space is to be leased,
Tenant shall do so by giving Landlord notice of Tenant’s desire to lease such space on
such terms, or to negotiate the business terms, within ten (10) business days after
Landlord’s written notice to Tenant of the availability of such space and of such terms.
If Tenant shall give such notice of its desire to lease such space on such terms, the same
shall constitute an agreement to enter into an amendment to this Lease to incorporate the
applicable portion of the Offer Space into the Premises upon the terms set forth in
Landlord’s notice. If Tenant shall not so exercise such right within such ten (10)
business day period, or if Tenant shall exercise its right to negotiate with Landlord and
Landlord and Tenant shall be unable to negotiate in good faith the terms upon which the
applicable portion of the Offer Space is to be leased within twelve (12) business days
following receipt by Landlord of Tenant’s notice, time being of the essence in respect of
either such time period, Landlord shall be free at any time thereafter to enter into a
lease of such portion of the Offer Space and Tenant shall have no further rights with
respect to such previously-offered portion of the Offer Space. It is understood and agreed
that the provisions of this Section 15 shall be null and void and of no further force and
effect after September 30, 2009 (Landlord having no further obligation to offer any portion
of the Offer Space to Tenant after such date).

(C) If Tenant shall exercise any such right of first offer and if, thereafter, the then
occupant of the premises with respect to which Tenant shall have so exercised such right
wrongfully fails to deliver possession of such premises at the time when its tenancy is
scheduled to expire, Landlord shall use all reasonable efforts and due diligence (which
shall be limited to the commencement and prosecution thereafter of eviction proceedings
and to the payment of legal fees and other expenses reasonably associated with such
proceedings but which shall not require the taking of any appeal) to evict such occupant
from the applicable portion of the Offer Space and to deliver possession of the applicable
portion of the Offer Space to Tenant as soon as may be practicable. Commencement of the
term of Tenant’s occupancy and lease of such additional space shall, in the event of such
holding over by such occupant, be deferred until possession of the additional space is
delivered to Tenant. The failure of the then occupant of such premises to so vacate shall
not give Tenant any right to terminate the Lease or to deduct from, offset against or
withhold Annual Fixed Rent, additional rent or other charges due under the Lease (or any

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	 	 	portions thereof), provided that the obligation to pay rent with respect to such portion of
Offer Space shall not commence until the delivery of such space.
	 
	16.	 	In no event shall Tenant have the right to terminate or cancel the Lease or to
withhold rent or to set-off any claim or damages against rent as a result of any default
by Landlord or breach by Landlord of its covenants or warranties or promises under the
Lease, except as otherwise expressly provided in the Lease to the contrary and except in
the case of a wrongful eviction of Tenant from the demised premises (constructive or
actual) by Landlord continuing after notice to Landlord thereof and a reasonable
opportunity for Landlord to cure the same. Further, except as otherwise expressly provided
in the Lease to the contrary, the Tenant shall not assert any right to deduct the cost of
repairs or any monetary claim against the Landlord from rent thereafter due and payable,
but shall look solely to the Landlord for satisfaction of such claim.
	 
	17.	 	(A) As an inducement to Landlord to enter into this Second Amendment, Tenant hereby
represents and warrants that: (i) Tenant is not, nor is it owned or controlled directly or
indirectly by, any person, group, entity or nation named on any list issued by the Office of
Foreign Assets Control of the United States Department of the Treasury (“OFAC”) pursuant to
Executive Order 13224 or any similar list or any law, order, rule or regulation or any Executive
Order of the President of the United States as a terrorist, “Specially Designated National and
Blocked Person” or other banned or blocked person (any such person, group, entity or nation being
hereinafter referred to as a “Prohibited Person”); (ii) Tenant is not (nor is it owned, controlled,
directly or indirectly, by any person, group, entity or nation which is) acting directly or
indirectly for or on behalf of any Prohibited Person; and (iii) Tenant (any person, group, or
entity which Tenant controls, directly or indirectly) has not conducted nor will conduct business
nor has engaged nor will engage in any transaction or dealing with any Prohibited Person, including
without limitation any assignment of the Lease or any subletting of all or any portion of the
Premises or the making or receiving of any contribution or funds, goods or services to or for the
benefit of a Prohibited Person. In connection with the foregoing, it is expressly understood and
agreed that (x) any breach by Tenant of the foregoing representations and warranties shall be
deemed an immediate Event of Default by Tenant under Section 7.1 of the Lease (without the benefit
of notice or grace) and shall be covered by the indemnity provisions of Section 5.7 of the Lease,
and (y) the representations and warranties contained in this subsection shall be continuing in
nature and shall survive the expiration or earlier termination of the Lease. Notwithstanding
anything contained herein to the contrary, for the purposes of this subsection (A) the phrase
“owned or controlled directly or indirectly by any person, group, entity or nation” and all similar
such phrases shall not include (x) any shareholder owning an interest of five percent (5%) or less
in Tenant or (y) any holder of a direct or indirect interest in a publicly traded company whose
shares are listed and traded on a United States national stock exchange.

(B) As an inducement to Tenant to enter into this Second Amendment, Landlord

-10-

 

	 	 	hereby represents and warrants that: (i) Landlord is not, nor is it owned or controlled
directly or indirectly by, any person, group, entity or nation named on any list issued by the
Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) pursuant
to Executive Order 13224 or any similar list or by any law, order, rule or regulation or any
Executive Order of the President of the United States as a terrorist, “Specially Designated
National and Blocked Person” or other banned or blocked person (any such person, group, entity or
nation being hereinafter referred to as a “Prohibited Person”); (ii) Landlord is not (nor is it
owned or controlled, directly or indirectly, by any person, group, entity or nation which is)
acting directly or indirectly for or on behalf of any Prohibited Person; and (iii) neither Landlord
(nor any person, group, entity or nation which owns or controls Landlord, directly or indirectly)
has conducted or will conduct business or has engaged or will engage in any transaction or dealing
with any Prohibited Person, including without limitation the making or receiving of any
contribution of funds, goods or services to or for the benefit of a Prohibited Person. In
connection with the foregoing, is expressly understood and agreed that the representations and
warranties contained in this subsection shall be continuing in nature and shall survive the
expiration or earlier termination of this Lease. Notwithstanding anything contained herein to the
contrary, for the purposes of this subsection (B) the phrase “owned or controlled directly or
indirectly by any person, group, entity or nation” and all similar such phrases shall not include
(x) any shareholder of Boston Properties, Inc., (y) any holder of a direct or indirect interest in
a publicly traded company whose shares are listed and traded on a United States national stock
exchange or (z) any limited partner, unit holder or shareholder owning an interest of five percent
(5%) or less in Boston Properties Limited Partnership or the holder of any direct or indirect
interest in Boston Properties Limited Partnership.
	 
	18.	 	(A) Tenant warrants and represents that Tenant has not dealt with any broker in
connection with the consummation of this Second Amendment other than Cresa Partners (“Cresa”); and
in the event any claim is made against Landlord relative to dealings by Tenant with brokers other
than Cresa, Tenant shall defend the claim against Landlord with counsel of Tenant’s selection first
approved by Landlord (which approval will not be unreasonably withheld) and save harmless and
indemnify Landlord on account of loss, cost or damage which may arise by reason of such claim.

(B) Landlord warrants and represents that Landlord has not dealt with any broker other than
Cresa in connection with the consummation of this Second Amendment; and in the event any claim is
made against Tenant relative to dealings by Landlord with brokers, Landlord shall defend the claim
against Tenant with counsel of Landlord’s selection first approved by Tenant (which approval will
not be unreasonably withheld) and save harmless and indemnify Tenant on account of loss, cost or
damage which may arise by reason of such claim. Landlord shall be responsible for the payment of
the commission owed to Cresa in connection with this Second Amendment.

	19.	 	Except as otherwise expressly provided herein, all capitalized terms used herein without
definition shall have the same meanings as are set forth in the Lease.

-11-

 

	20.	 	Except as herein amended the Lease shall remain unchanged and in full force and
effect. All references to the “Lease” shall be deemed to be references to the Original Lease as
amended by the Letter Agreement, First Amendment and as herein amended.

WITNESS the execution hereof under seal as of the day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	LANDLORD:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WITNESS:	 	BOSTON PROPERTIES
LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	/s/
Stacey A. Baker	 	By:	 	BOSTON PROPERTIES, INC.,	 	 
	 	 	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ David C. Provost	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	David C. Provost	 	 
	 

	 	 	 	 	 	Title:
	 	Senior Vice President	 	 
	 

	 	 	 	 	 	 	 	Boston Properties	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	TENANT:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	IONA TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Christopher Mirabile	 	By:	 	/s/ Peter M. Zotto	 	 
	 	 	 	 	 	 	 	 	 
	Name:	 	Christopher Mirabile	 	Name:	 	Peter M. Zotto	 	 
	Title:

	 	Secretary
	 	Title:
	 	 CEO	 	 	 	 
	 	 	 	 	 	 	Hereto duly authorized	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 	 	 
	 	 	 	 	Title:	 	 Treasurer or Assistant Treasurer	 	 
	 	 	 	 	 	 	Hereto duly authorized	 	 

-12-

 

EXHIBIT A

Rentable Area of the Remaining Premises

30,331 RSF

 

 

EXHIBIT B

Right of First Offer Spacesexv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this 13th day of April, 2006, relating to the issuance by
Principal Life Income Fundings Trust 2006-17 (the “Trust”) of Notes with a principal amount of
$806,000.00 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 February 16, 2006, 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 February 16, 2006 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 February 16, 2006, 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, the Pricing Supplement or the
Distribution Agreement 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 February 16, 2006, 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 Agent specified in the Pricing Supplement (the “Purchasing Agent”).

W I T N E S S E T H:

     WHEREAS, Principal Life, PFG and the agent named therein, including the Purchasing Agent have
entered into that certain Distribution Agreement dated February 16, 2006 (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 the Purchasing Agent and the Purchasing Agent hereby agrees to
purchase 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 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 to that the
expenses reasonably incurred prior to or in connection with such termination will be borne by
Principal Life and PFG.

     Section 2.04 Applicable Time. For purposes of the Distribution Agreement, the
Applicable Time shall be 10:00 am Central Standard Time on April 13, 2006.

     Section 2.05 Free Writing Prospectus. For purposes of the Distribution Agreement,
each free writing prospectus (attached to this Omnibus Instrument as Exhibit G) constitutes
a part of the Time of Sale Prospectus.

     Section 2.06 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 2.07 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 2.08 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, the Pricing Supplement or the Distribution
Agreement as indicated herein.

     Section 2.09 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 Terms 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 may direct, or (B) deliver each relevant Notes
Certificate to the purchasers thereof as identified by the Purchasing Agent.

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, as sponsor and depositor, 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) 361-2184

Facsimile: (212) 509-3384

     To the Indenture Trustee:

Citibank, N.A.

Citibank Agency & Trust

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

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: (866) 496-6527

     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: (866) 496-6527

     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: (866) 496-6527

     To Bankers Trust Company, N.A:

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

Attention: Angela C. 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/ Christopher P. Freese
 	 
	 	 	Name:  	Christopher P. Freese 	 
	 	 	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/ Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	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/ Thomas E. Tabor
 	 
	 	 	Name:  	Thomas E. Tabor 	 
	 	 	Title:  	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/ Diana L. Cook
 	 
	 	 	Name:  	Diana L. Cook 	 
	 	 	Title:  	Vice President 	 
	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (in
executing below agrees and becomes a party to the Terms
Agreement set forth in Section D herein)

 	 
	 	By:  	/s/ Diane Kenna
 	 
	 	 	Name:  	Diane Kenna 	 
	 	 	Title:  	Authorized Signatory 	 
	 

[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
99.2 to Principal Life Insurance Company’s Current Report on Form
8-K, filed on March 1, 2006.
	 
	 	 
	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 99.1 to Principal Life Insurance Company’s Current Report
on Form 8-K, filed on March 1, 2006.
	 
	 	 
	Exhibit D

	 	Pricing Supplement — Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2006-17, filed on April 10, 2006, with the Securities and
Exchange Commission pursuant to Rule 424(b)(2) 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
	 
	 	 
	Exhibit G

	 	Free Writing Prospectus(es)
	 
	 	 
	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. 333-129763 and
333-129763-01) (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 l day of
l, 200l.

	 	 	 	 	 
	 	[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.
333-129763 and 333-129763-01 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 l day of
l, 200l.

	 	 	 	 	 
	 	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

 

	 	 	 	 	 

EXHIBIT G

Free Writing Prospectus(es)

None.

G-1

 

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 Aa2 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 Aa2 by Moody’s. The Company’s financial strength rating is
Aa2 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 as principal, the following items will be delivered
on the Settlement Date:

	•	 	Opinion of Sidley Austin 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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