Document:

exv4w3

 

Exhibit 4.3

CUSTODIAL AGREEMENT

                This Custodial Agreement (this “Custodial Agreement”) is entered into as of
June 16, 2006 among Bankers Trust Company, N.A., a national banking association, acting as
custodian (the “Custodian”), Law Debenture Trust Company of New York in its capacity as indenture
trustee (the “Indenture Trustee”) for the holders of the notes (the “Notes”) to be issued by
Principal Life Income Fundings Trust 21 (the “Trust”) organized in connection with the Principal
Life Insurance Company Secured Notes Program (the “Program”), and U.S. Bank Trust National
Association, as trustee (the “Trustee”) on behalf of the Trust organized in connection with the
Program.

                Whereas, in connection with the issuance and sale of the Notes by the Trust, the
Trustee, on behalf of the Trust, will purchase from Principal Life Insurance Company (“Principal
Life”) funding agreement no. 7-08001 (the “Funding Agreement”), the payment obligations of which
are fully and unconditionally guaranteed by Principal Financial Group, Inc. (“PFG”) pursuant to a
guarantee issued to the Trust on the date hereof (the “Guarantee”);

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

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

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

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

ARTICLE 1

Definitions

                SECTION 1.1. Incorporation of Definitions by Reference. All capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the Standard Indenture
Terms filed as an exhibit to the registration statement concerning the Program.

 

 

ARTICLE 2

Appointment of Custodian

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

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

ARTICLE 3

Delivery of Funding Agreement and Guarantee

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

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

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

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

ARTICLE 4

Inspection of Funding Agreement, Guarantee, Books and Records

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

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

ARTICLE 5

Duties of Custodian

                SECTION 5.1. General. The Custodian shall:

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

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

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

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

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

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

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

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

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

                SECTION 5.8. Limitations of Custodian Responsibility.

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

                SECTION 5.9. Other Activities of the Custodian.

	 	(a)	 	Nothing herein shall prevent the Custodian or any of its Affiliates from
engaging in other businesses, or from rendering services of any kind to the Trust, the
Indenture Trustee or any other Person or entity to the extent permitted by applicable
law.
	 
	 	(b)	 	It is understood that the Custodian and any of its Affiliates may engage in
any other business and furnish custodial services to others.

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

ARTICLE 6

Compensation, Expenses and Indemnification

                SECTION 6.1. Compensation, Expenses and Indemnification. The Custodian shall be entitled to
compensation, expenses and indemnification as set forth in that certain Expense and Indemnity
Agreement (the “Expense and Indemnity Agreement”), dated as of February 16, 2006 entered into
between the Custodian and Principal Life.

ARTICLE 7

Representations, Warranties and Covenants of Custodian

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

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

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

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	 	(a)	 	at all times it will maintain physical custody and possession of the Funding
Agreement and the Guarantee deposited with it pursuant to the terms of this Custodial
Agreement within the State of Iowa at the location specified in Section 9.5 or at such
other location within the State of Iowa designated by the Custodian;
	 
	 	(b)	 	each instrument and document required to be executed or delivered by, or on
behalf of, the Custodian, shall be executed and delivered by a duly authorized officer
of the Custodian;
	 
	 	(c)	 	prior to any affiliation with any trust, created under the Program, in the
future, it shall notify the Indenture Trustee of any such contemplated affiliation;
and
	 
	 	(d)	 	it shall not institute, or join any other Person in instituting, against any
trust, created under the Program, including without limitation the Trust, any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings or other proceedings under federal or state bankruptcy or similar laws
until at least one year and one day (or, if longer, the applicable preference period
then in effect) after the payment in full of all Notes issued by any such trust,
including without limitation the Trust, in connection with the Program.

ARTICLE 8

Termination

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

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

                SECTION 8.2. Termination by Custodian. This Custodial Agreement may be terminated by the
Custodian, at any time, and the Custodian may resign, upon 30 days’ prior written notice to the
Trustee, on behalf of the Trust and the Indenture Trustee; provided, however, that no termination
or resignation pursuant to this Section 8.2 shall be

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effective until the date as of which a
successor Custodian shall be appointed in accordance with Section 8.6 and shall have agreed in
writing to assume all of the Custodian’s duties and obligations under this Custodial Agreement.

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

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

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

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

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

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

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

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                SECTION 8.8. Actions Upon Termination.

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

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

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

ARTICLE 9

General Provisions

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

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

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

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

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

Principal Life Income Fundings Trust

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

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Adam Berman

Facsimile: 212-509-3384

if to the Indenture Trustee, to:

Law Debenture Trust Company of New York

767 Third Avenue, 31st Floor

New York, NY 10017

Attention: Boris Treyger

Facsimile: (212) 750-1361

if to the Trustee, to:

U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Thomas E. Tabor

Facsimile: 212-809-5459

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

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

Attention: Angela C. Brick

Facsimile: 515-247-2101

12

 

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

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

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

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

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

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

13

 

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

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A., as Custodian

 	 
	 	By:  	/s/ Diana L. Cook	 
	 	 	Name:  	Diana L. Cook	 
	 	 	Title:  	Vice President 	 
	 
	 	THE LAW DEBENTURE TRUST COMPANY OF NEW YORK, as Indenture Trustee for the benefit of the holders of the Notes

 	 
	 	By:  	/s/ Boris Treyger	 
	 	 	Name:  	Boris Treyger	 
	 	 	Title:  	Assistant Vice President	 
	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, on behalf of the Trust organized in connection with the Program

 	 
	 	By:  	/s/ Thomas E. Tabor	 
	 	 	Name:  	Thomas E. Tabor	 
	 	 	Title:  	Vice President	 

14

 

	 	 	 	 	 

Exhibit A

Certificate Regarding Custody of the 

Funding Agreement and the Guarantee

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

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

A-1exv10w1

 

Exhibit 10.1

MTN GLOBAL FUNDING AGREEMENT

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392-0001

(515) 247-5111

In consideration of the payment made by, or at the direction of,

Principal Life Income Fundings Trust 21

(the “Agreement Holder”)

of the Net Deposit, as described below, Principal Life Insurance Company (“Principal Life”) agrees
to make payments to the person or persons entitled to them, subject to the provisions of this
funding agreement (this “Agreement”).

This Agreement is delivered in and subject to the laws of the State of Iowa.

This Agreement is issued and accepted subject to all the terms set out in it.

This Agreement is executed by Principal Life at its Corporate Center to take effect as of the
16th day of June, 2006, which is referred to as the Effective Date, subject to the
receipt by Principal Life or its designee of the Net Deposit (as set forth in Section 1).

	 	 	 
	/s/ Joyce N. Hoffman
	 	/s/ J. Barry Griswell
	 	 	 
	Senior Vice President and
	 	Chairman, President and Chief
	Corporate Secretary
	 	Executive Officer

/s/
Sarah O’Brien

 

Registrar

June 16,
2006

 

Date

FUNDING AGREEMENT NO. 7-08001

RESTRICTIONS REGARDING THE TRANSFER OR SALE OF

THIS FUNDING AGREEMENT OR ANY INTEREST HEREIN ARE SET FORTH HEREIN

 

 

			
	FUNDING AGREEMENT
	 	No. 7-08001

     This Agreement is issued in connection with the issuance by the Trust (specified in the Annex)
of Secured Notes (the “Notes”) which are identified in the annex hereto (the “Annex”) and which are
being issued by the Trust pursuant to the Prospectus dated February 16, 2006, the Prospectus
Supplement dated February 16, 2006, as from time to time amended or supplemented, and the Pricing
Supplement applicable to the Notes (the “Pricing Supplement”). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Notes. Where used in this
Agreement, the term “Notes” shall mean the Notes secured by this Agreement as the same exist on the
Effective Date, without giving effect to any amendments or modifications to said Notes effected or
made after any such Effective Date unless such amendments or modifications to said Notes have been
consented to in writing by Principal Life.

	1.	 	Deposit
	 
	 	 	Principal Life agrees to accept, and the Agreement Holder agrees to pay or cause to be paid
to Principal Life, for value on the Effective Date, the Net Deposit (as specified in the
Annex). All funds received by Principal Life under this Agreement shall become the exclusive
property of Principal Life and remain a part of Principal Life’s general account without any
duty or requirement of segregation or separate investment.
	 
	 	 	This Agreement shall become effective only upon the receipt by Principal Life or its
designee of the Net Deposit.
	 
	2.	 	Fund
	 
	 	 	Upon receipt of the Net Deposit, Principal Life will establish, under this Agreement, a
bookkeeping account in the name of the Agreement Holder, which will evidence Principal
Life’s obligations under this Agreement.
	 
	 	 	The Deposit deemed received (as specified in the Annex), (i) less any withdrawals to make
payments hereunder (other than Additional Amounts (as defined in the Annex) and if
applicable) and (ii) plus any interest accrued and premium, if any, pursuant to Section 7,
will be referred to as the “Fund”.
	 
	 	 	Principal Life is neither a trustee nor a fiduciary with respect to the Fund.
	 
	3.	 	Purchase of Notes By Principal Life.
	 
	 	 	Principal Life may purchase some or all of the Notes in the open market or otherwise at any
time, and from time to time. Simultaneously, upon such purchase, (1) the purchased Notes
shall, by their terms become mandatorily redeemable by the Trust as specified in the related
Pricing Supplement, Prospectus Supplement and/or Prospectus and (2) the Fund under this
Agreement shall be permanently reduced by the same percentage as the principal amount of the
Notes so redeemed bears to the sum of (i) the aggregate principal amount of all Notes issued
and outstanding immediately prior to such redemption and

2

 

	 	 	(ii) the principal amount of the Trust Beneficial Interest related to such Notes. If Principal
Life, in its sole discretion, engages in such open market or other purchases, then the
Trust, the Indenture Trustee in respect of such Notes, and Principal Life shall take such
actions (including, in the case of Principal Life, making the payment(s) necessary to effect
the Trust’s redemption of such Notes) as may be necessary or desirable to effect the
cancellation of such Notes by the Trust.

	4.	 	Entire Agreement
	 
	 	 	This Agreement and the Annex attached hereto constitute the entire Agreement.
	 
	5.	 	Representations

	 	(a)	 	Each party hereto represents and warrants to the other that as of the date
hereof:

	 	(i)	 	it has the power to enter into this Agreement and to consummate
the transactions contemplated hereby;
	 
	 	(ii)	 	this Agreement has been duly authorized, executed and
delivered, this Agreement constitutes a legal, valid and binding obligation of
each party hereto, and this Agreement is enforceable in accordance with the
terms hereof, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights, and subject as to enforceability to general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law; and
	 
	 	(iii)	 	the execution and delivery of this Agreement and the
performance of obligations hereunder do not and will not constitute or result
in a default, breach or violation of the terms or provisions of its
certificate, articles or charter of incorporation, declaration of trust,
by-laws or any agreement, instrument, mortgage, judgment, injunction or order
applicable to it or any of its property.

	 	(b)	 	The Trust further represents and warrants to Principal Life that:

	 	(i)	 	it is a person other than a natural person and is purchasing
this Agreement for the purpose of providing collateral security for securities
registered with the United States Securities and Exchange Commission;
	 
	 	(ii)	 	it has been informed and understands that transfer is
restricted by the terms of this Agreement; and
	 
	 	(iii)	 	it (a) is solely responsible for determining whether this
Agreement is suitable for the purpose intended; (b) has carefully read this
Agreement (including the Annex) before signing this Agreement; (c) has had a
reasonable opportunity to make such inquiries as it deemed necessary prior to
signing this Agreement; and (d) has received or had access to such

3

 

	 	 	 	additional information as it deemed necessary in connection with its
decision to sign this Agreement.

	 	 	In performing its obligations hereunder Principal Life is not acting as a fiduciary, agent
or other representative for the Agreement Holder or anyone else. All representations and
warranties made by the Agreement Holder and Principal Life in this Agreement shall be
considered to have been relied upon by the other in connection with the execution hereof.
	 
	6.	 	Assignment of Agreement
	 
	 	 	The following conditions must be satisfied in order to effectuate any assignment of this
Agreement:

	 	(i)	 	This Agreement may only be transferred through a book entry system maintained
by Principal Life, or an agent designated by it, within the meaning of Temporary
Treasury Regulations Section 5f.103-1(c) and Treasury Regulations Section
1.871-14(c)(1)(i).
	 
	 	(ii)	 	The Agreement Holder, and any assignee, must comply with applicable securities
laws.
	 
	 	(iii)	 	Principal Life has consented in writing to the proposed assignment, such
consent not to be unreasonably withheld.
	 
	 	(iv)	 	Principal Life shall have received from the proposed assignee a duly executed
certificate containing, in substance, the information, representations, warranties,
acknowledgments and agreements set forth in this Agreement.

	 	 	Any attempted sale, transfer, anticipation, assignment, hypothecation, or alienation not in
accordance with this Section 6 shall be void and of no effect. Until such time, if any, as
Principal Life has consented in writing to a proposed assignment, Principal Life shall not
be obligated to make any payments to or at the direction of anyone other than the person
shown on Principal Life’s books and records as the Agreement Holder. Once the foregoing
conditions have been satisfied with respect to an assignment, the assignee or its successor
shall be deemed to be the sole Agreement Holder for all purposes of this Agreement and
Principal Life shall promptly amend its records to reflect the assignee’s status as
Agreement Holder.
	 
	7.	 	Payments to the Agreement Holder
	 
	 	 	Principal Life shall pay to, or at the direction of, the Agreement Holder by the date (the
“Due Date”) on which any payment becomes due in respect of the Notes secured by this
Agreement (and in any event such period of time prior to the Due Date as shall be necessary
to ensure that the Trust can fulfill its obligation to make payment in full of all amounts
due and payable under the Notes on the Due Date), an amount in the currency or currencies in
which the Notes are denominated as specified in the Notes equal to the sum of (i) the amount
of principal and/or (as the case may be) interest and/or (as the case may be) premium
falling due in respect of the Notes on such Due Date (the “Notes

4

 

	 	 	Component”) and (ii) the amount of any payments owed by the Trust in respect of the Trust
Beneficial Interest falling due on such date (the “Beneficial Interest Component”). In the
event that Principal Life fails to make payment of any such amount on or prior to the Due
Date, Principal Life shall pay to or at the direction of the Agreement Holder, on demand by
the Agreement Holder, (i) if the failure relates to the Notes Component, an amount in the
currency specified in the Notes equal to the amount of default interest (or other amount)
which becomes due and payable by the Trust in accordance with the Notes as a consequence of
any delay in the Trust making the relevant payment of principal, interest or premium (as the
case may be) to the holders of the Notes and (ii) if the failure relates to the Beneficial
Interest Component, such amount or default interest, if any, determined in the same manner
as default interest on the Notes Component.

	 	 	Interest shall accrue on the Fund in the same amount and pursuant to the same terms as
interest accrues on the Notes secured by this Agreement and on the Trust Beneficial Interest
related to the Notes.
	 
	 	 	If any amount is withdrawn from the Fund in order to make a payment under this Section 7,
interest will cease to be credited with regard to such amount as of the end of the day
immediately preceding the date on which such withdrawal is made.
	 
	 	 	All payments made by Principal Life to the Agreement Holder hereunder shall be paid in
same-day, freely transferable funds to such account as has been specified for such purpose
by the Agreement Holder.
	 
	 	 	Notwithstanding anything to the contrary in this Section 7, if Principal Life shall, with
respect to any scheduled amount due and payable under any of the Notes, comply in all
respects with the requirements of this Section 7, but an event of default has occurred with
respect to the Notes and as a result payments with respect to the Notes have been
accelerated, otherwise than by reason of any default under this Agreement by Principal Life,
no Event of Default (as defined below) under this Funding Agreement shall be deemed to have
occurred, no payments with respect to this Agreement shall be accelerated and Principal Life
will remain obligated to make payments under this Agreement as if no event of default had
occurred with respect to the Notes.
	 
	8.	 	Termination of Agreement
	 
	 	 	Subject to the provisions of the following paragraph and the Annex, this Agreement shall
terminate and cease to be of any further force or effect on the day and at the time upon
which all amounts have been withdrawn from the Fund pursuant to this Agreement.
	 
	 	 	Upon the occurrence of any of the following events (each, an “Event of Default”) and
following a written demand by the Agreement Holder, Principal Life shall pay to, or at the
direction of, the Agreement Holder all amounts that the Trust is required to pay in such
event under the Notes and the Trust Beneficial Interest:

	 	(i)	 	Principal Life’s failure to make any payment of interest, premium (if
applicable), installment payments (if applicable) or Additional Amounts (if and as
specified in the Annex) in accordance with this Agreement, if such failure to pay is
not

5

 

	 	 	 	corrected within seven (7) Business Days after such payment becomes due and payable;
or
	 
	 	(ii)	 	Principal Life’s failure to make any payment of principal (other than any
installment payment) in accordance with this Agreement, if such failure to pay is not
corrected within one (1) Business Day after such payment becomes due and payable; or

	 	(iii)	 	if Principal Life (a) is dissolved (other than pursuant to a consolidation,
amalgamation or merger in which the resulting entity assumes its obligations); (b)
becomes insolvent or is unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due; (c) makes a general
assignment, arrangement or composition with or for the benefit of its creditors; (d)
institutes or has instituted against it an administrative or legal proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any supervision,
rehabilitation, liquidation, bankruptcy or insolvency law or other similar law
affecting creditors’ rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (1) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the making of an order
for its rehabilitation, winding-up or liquidation or (2) is not dismissed, discharged,
stayed or restrained in each case within 60 days of the institution or presentation
thereof; (e) has a resolution passed for its rehabilitation, winding-up, official
management or liquidation (other than pursuant to a consolidation, amalgamation or
merger in which the resulting entity assumes the obligations of Principal Life); (f)
seeks or becomes subject to the appointment of an administrator, supervisor,
rehabilitator, provisional liquidator, conservator, receiver, trustee, custodian or
other similar official for it or for all or substantially all its assets; (g) has a
secured party take possession of all or substantially all its assets or has a distress,
execution, attachment, sequestration or other legal process levied, enforced or sued on
or against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or restrained, in
each case within 60 days thereafter; (h) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (a) to (g) (inclusive); or (i) takes any action
in furtherance of, or indicating its consent to, approval of, or acquiescence in, any
of the foregoing acts.

	 	 	Notwithstanding anything to the contrary in this Section 8, if an event described in clause
(iii) above occurs, this Agreement will automatically terminate and the amount of the Fund
will be immediately due and payable by Principal Life to the Agreement Holder, or the
account specified by the Agreement Holder.
	 
	 	 	Principal Life will promptly notify the Agreement Holder and the Rating Agencies in writing
of the occurrence of any of (i) through (iii) above.

6

 

	9.	 	Withholding; Additional Amounts
	 
	 	 	All amounts due in respect of this Agreement will be made without withholding or deduction
for or on account of any present or future taxes, duties, levies, assessments or other
governmental charges of whatever nature imposed or levied by or on behalf of any
governmental authority in the United States unless the withholding or deduction is required
by law, regulation or official interpretation thereof. Unless otherwise specified in the
Annex, Principal Life will not pay any additional amounts to the Agreement Holder in the
event that any withholding or deduction is so required by law, regulation or official
interpretation thereof, and the imposition of a requirement to make any such withholding or
deduction will not give rise to an Event of Default or any independent right or obligation
to redeem this Agreement.
	 
	10.	 	Currency
	 
	 	 	Except as may be specifically noted in the Annex, the Net Deposit and all payments under
Section 7 of this Agreement shall be made using the currency or currencies as specified in
the Notes.
	 
	11.	 	Tax Treatment
	 
	 	 	Principal Life and the Agreement Holder agree that this Agreement shall be disregarded for
U.S. Federal income tax purposes. Principal Life and the Agreement Holder further agree
that if this Agreement is not so disregarded, it will and is intended to be treated as a
debt obligation of Principal Life issued in registered form within the meaning of Treasury
Regulations Section 1.871-14(c)(1)(i), except to the extent provided in Treasury Regulations
Section 1.163-5T (or any subsequent similar regulation).
	 
	12.	 	Amendment and Modification
	 
	 	 	This Agreement may be amended or modified in whole or in part, at any time and from time to
time, for any period or periods (a) by mutual written agreement by such officers of
Principal Life, the Agreement Holder and, where such Agreement Holder is the Indenture
Trustee upon an assignment by way of security of this Agreement by the Trust, the Trust and
(b) without the consent of any other person affected thereby.
	 
	13.	 	Notice
	 
	 	 	Except as otherwise provided herein, all notices given pursuant to this Agreement shall be
in writing, and shall either be delivered, mailed or telecopied to the locations listed
below or at such other address or to the attention of such other persons as such party shall
have designated for such purpose in a written notice complying as to delivery with the terms
of this Section 13. Each such notice shall be effective (i) if given by telecopy, when
transmitted to the applicable number so specified in this Section 13 (if required herein,
such notice shall also be sent by mail, with first class postage prepaid), (ii) if given by
mail, three days after deposit in the mails with first class postage prepaid, or (iii) if
given by any other means, when actually delivered at such address.

7

 

	 	 	If to Principal Life:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392-0001

Attention: General Counsel

Telephone: (515) 247-5111

Telecopy: (515) 248-3011

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392-0001

Attention: Jim Fifield, Counsel

Telephone: (515) 248-9196

Telecopy: (866) 496-6527

	 	 	If to the Agreement Holder:

Principal Life Income Fundings Trust 21

c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, NY 10005

Attention: Thomas E. Tabor

Telephone: (212) 361-6184

Facsimile: (212) 809-5459

	 	 	with copies to:

Law Debenture Trust Company of New York

767 Third Avenue, 31st Floor

New York, NY 10017

Attention: Boris Treyger

Telephone: (212) 750-6474

Facsimile: (212) 750-1361

Citibank, N.A.

Citibank Agency and Trust

388 Greenwich Street, 14th Floor

New York, NY 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

Telecopy: (212) 816-5527

	14.	 	Business Day
	 
	 	 	For purposes of this Agreement, “Business Day” means any day that is a Business Day as
specified in the Notes or the Indenture.

8

 

	15.	 	Business Day Convention
	 
	 	 	If the date on which any payment is due to be made under this Agreement shall occur on a day
on which is not a Business Day, such payment shall be made in accordance with the Business
Day Convention as specified in the Notes or the Indenture.
	 
	16.	 	Jurisdiction
	 
	 	 	The parties to this Agreement hereby consent to the non-exclusive jurisdiction of any State
or Federal Court of competent jurisdiction located within the State of New York, in the
Borough of Manhattan, in connection with any actions or proceedings arising directly or
indirectly from this Agreement.
	 
	17.	 	Waiver
	 
	 	 	The obligations of Principal Life or the Agreement Holder under this Agreement may be waived
only in writing by the party to this Agreement whose interests are adversely affected by
such waiver. No failure or delay, on the part of the party adversely affected, in
exercising any right or remedy hereunder shall operate as a waiver thereof.
	 
	18.	 	Tax Redemption.
	 
	 	 	If a Tax Event (defined below) occurs, Principal Life will have the right to redeem this
Agreement by giving not less than 30 and no more than 60 days prior written notice to the
Agreement Holder and by paying to the Agreement Holder an amount equal to the Fund. The
term “Tax Event” means that Principal Life shall have received an opinion of independent
legal counsel stating in effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or therein or (b)
any amendment to, or change in, an interpretation or application of any such laws or
regulations by any governmental authority in the United States, which amendment or change is
enacted, promulgated, issued or announced on or after the Effective Date of this Agreement,
there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date thereof, subject to U.S. federal income tax with respect to interest accrued or
received on this Agreement or (ii) the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of taxes, duties or other governmental
charges.

9

 

ANNEX

This Annex will become effective as of the Effective Date, subject to the requirements of Section 1.

	 	 	 
	Trust:

	 	Principal Life Income Fundings Trust 21
	 
	 	 
	Net Deposit:

	 	The Net Deposit is $149,556,000.00.
	 
	 	 
	Deposit:

	 	Regardless of the amount of the Net Deposit, the Deposit
is deemed to be $150,000,015.00.
	 
	 	 
	Bank and Account:

	 	Bank: Wells Fargo Bank, N.A.

ABA No.: XXXXXXXXXXX

For credit to Principal Life Insurance Company

Account #XXXXXXXXXXXX
	 
	 	 
	Title of Notes:

	 	Principal Life Income Fundings Trust 21 Secured
Medium-Term Notes Due June 16, 2016

A-1

 

PRINCIPAL LIFE INSURANCE COMPANY

	 	 
	By:

	/s/ Roger L. Lay 
		 
	 
	 	 
	Name:  

	Roger L. Lay 
		 
	 
	 	 
	Title: 

	Officer 
		 

PRINCIPAL LIFE INCOME FUNDINGS TRUST 21

	 	 	 	 	 
	By:	 	U.S. Bank Trust
National Association,
not in its individual capacity, but solely
in its
capacity as trustee
	 
	 	 	 	 
	 
	 	By:	 	Bankers Trust Company, N.A.,
under Limited Power of Attorney, dated February 16, 2006

	 	 	 	 
	 

	By:
	/s/ Diana L. Cook

	 	 	 
	 
	 	 	 	 
	 	Name:  
	Diana L. Cook

	 	 	 
	 
	 	 	 	 
	 	Title:
	Vice President

	 	 	 

A-2

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