Document:

exv10w1

Exhibit 10.1

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

	 	 	 
	Written Agreement among

	 	 
	 

	 	Docket No. 08-014-WA/RB-HC
	CAPITAL CORP OF THE WEST

	 	08-014-WA/RB-SM
	Merced, California
	 	 
	 
	 	 
	COUNTY BANK
	 	 
	Merced, California
	 	 
	 
	 	 
	and
	 	 
	 
	 	 
	FEDERAL RESERVE BANK
	 	 
	OF SAN FRANCISCO
	 	 
	San Francisco, California
	 	 

     WHEREAS, in recognition of their common goal to maintain the financial soundness of Capital
Corp of the West, Merced, California (“Capital Corp”), a registered bank holding company, and its
subsidiary bank, County Bank, Merced, California (the “Bank”), a California state-chartered bank
that is a member of the Federal Reserve System, Capital Corp, the Bank, and the Federal Reserve
Bank of San Francisco (the “Reserve Bank”), have mutually agreed to enter into this Written
Agreement (the “Agreement”); and

     WHEREAS, on July 16, 2008, the boards of directors of Capital Corp and the Bank at duly
constituted meetings adopted resolutions authorizing and directing Curtis Riggs or Jerry Callister
to enter into this Agreement on behalf of Capital Corp and the Bank, respectively, and consenting
to compliance with each and every provision of this Agreement by Capital Corp and the Bank and
their institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the Federal
Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

 

 

     NOW, THEREFORE, Capital Corp, the Bank, and the Reserve Bank, agree as follows:

Board Oversight

     1. Within 120 days of this Agreement, the board of directors of the Bank shall submit to the
Reserve Bank a written plan to improve board oversight of the management and operations of the
Bank. The plan shall, at a minimum, address, consider, and include:

          (a) The actions that the board of directors will take to improve the Bank’s condition and
maintain effective control over and supervision of senior management and major operations and
activities, including, at a minimum:

               (i) the credit risk management program, including loan underwriting, documentation, and
administration;

               (ii) a description of information to be included in the periodic reports that will be reviewed
by the board of directors in its oversight of the operations and management of the Bank; and

               (iii) internal controls over the internal loan grading system and the Bank’s books and
records; and

          (b) procedures to ensure the Bank’s timely response to deficiencies noted in reports of
examination.

     2. Within 120 days of this Agreement, the Bank shall take such steps as are necessary to
employ a qualified, full-time chief executive officer.

     3. (a) In appointing any new director or senior executive officer, or changing the
responsibilities of any senior executive officer so that the officer would assume a different
senior executive officer position, Capital Corp and the Bank shall comply with the notice
provisions of section 32 of the FDI Act (12 U.S.C. § 1831i), Subpart H of Regulation Y of the Board
of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. §§ 225.71
et seq.).

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          (b) Capital Corp and the Bank shall comply with the restrictions on indemnification and
severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the
Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359).

Risk Management

     4. Within 120 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable
written plan that describes the specific actions that the board of directors proposes to take to
strengthen the Bank’s risk management practices. The plan shall, at a minimum, address, consider,
and include:

          (a) Enhanced policies and procedures designed to identify, assess, manage, and monitor risk
exposures, including but not limited to the areas of credit, liquidity, operational, legal, and
reputational risks;

          (b) procedures to identify, monitor, and control risks associated with concentrations of
credit, consistent with Interagency Guidance on Concentrations in Commercial Real Estate Lending,
Sound Risk Management Practices, dated December 12, 2006 (SR 07-1, January 4, 2007);

          (c) measures to strengthen board and senior management oversight of risk management policies
and procedures; and

          (d) management information systems and reporting procedures designed to ensure that managers,
directors, and committees receive timely and accurate reports necessary to effectively manage
risks, monitor compliance with laws, rules, regulations, and Bank policies and procedures, and
correct any weaknesses.

Lending and Credit Administration

     5. Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank acceptable
written loan and credit administration policies and procedures that shall, at a minimum, address,
consider and include:

          (a) Underwriting standards that are appropriate for each type of loan product offered by the
Bank, and include and provide for, at a minimum:

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               (i) documented analysis of the borrower’s repayment source, creditworthiness, and debt service
ability; and

               (ii) clear loan-to-value limits;

          (b) revised construction loan policies to address the deficiencies noted by examiners;

          (c) a complete description of required loan documentation and collateral for each specific
type of loan, and procedures to maintain required documentation in loan files and minimize
documentation exceptions;

          (d) revised policies and procedures relating to the extension or renewal of construction
loans;

          (e) procedures for obtaining updated valuations or impairment analyses on a timely basis; and

          (f) procedures to identify non-accrual loans and to record non-accrual loans on the Bank’s
financial statements.

Loan Review

     6. Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable
written loan review program. The program shall be designed to identify, categorize, and monitor
problem credits on a consistent, timely, and accurate basis. The program shall, at a minimum,
address, consider, and include:

          (a) The scope and frequency of the loan review;

          (b) standards and criteria for assessing the credit quality of the loans;

          (c) application of loan grading standards and criteria to the loan portfolio;

          (d) periodic written reports to the board of directors that identify the status of those loans
that are adversely graded and the prospects for full collection or strengthening of the quality of
any such loans; and

          (e) processes for identifying loans that no longer meet the criteria for accrual status and
the recording of such on the Bank’s financial statements.

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Asset Improvement

     7. (a) The Bank shall not, directly or indirectly, extend or renew any credit to or for the
benefit of any borrower, including any related interest of the borrower, whose extension of credit
has been classified, in whole or in part, “loss,” “substandard,” or “doubtful” in the report of the
examination of the Bank conducted by the Reserve Bank that concluded on February 14, 2008 (the
“Report of Examination”) or in any subsequent report of examination, and is uncollected, without
the prior approval of the board of directors, who shall document in writing the reasons for the
extension of credit or renewal, specifically certifying that: (i) the extension of credit is
necessary to protect the Bank’s interest in the ultimate collection of the credit already granted
or (ii) the extension of credit is in full compliance with the Bank’s written loan policy, is
adequately secured, and a thorough credit analysis has been performed indicating that the extension
or renewal is reasonable and justified, all necessary loan documentation has been properly and
accurately prepared and filed, the extension of credit will not impair the Bank’s interest in
obtaining repayment of the already outstanding credit, and the Bank’s board of directors reasonably
believes that the extension of credit or renewal will be repaid according to its terms. The
written certification shall be signed by the secretary of the board of directors and made a part of
the minutes of the board of directors’ meeting, and a copy of the signed certification, together
with the credit analysis and related information that was used in the determination, shall be
retained by the Bank in the borrower’s credit file for subsequent supervisory review.

          (b) For purposes of this Agreement, the term “related interest” is defined as set forth in
section 215.2(n) of Regulation O of the Board of Governors (12 C.F.R. § 215.2(n)).

     8. (a) Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank an
acceptable written plan, approved by the Bank’s loan committee, designed to improve the Bank’s
position through repayment, amortization, liquidation, additional collateral, or other means on
each loan or other asset in excess of $1,000,000, including other real estate owned (“OREO”), that
(i) is past due as to principal or interest more than 90 days as of the date of this

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Agreement; (ii) is on the Bank’s problem loan list; or (iii) was adversely classified in the Report of
Examination.

          (b) Within 30 days of the date that any additional loan or other asset in excess of
$1,000,000, including OREO, becomes past due as to principal or interest for more than 90 days, is
on the Bank’s problem loan list, or is adversely classified in any subsequent report of examination
of the Bank, the Bank shall submit to the Reserve Bank an acceptable
written plan, approved by the Bank’s loan committee, to improve the Bank’s position on such
loan or asset.

          (c) Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a
written progress report to the Reserve Bank to update each asset improvement plan, which shall
include, at a minimum, the carrying value of the loan or other asset and changes in the nature and
value of supporting collateral, along with a copy of the Bank’s current watch list, extension
report, and past due/non-accrual report.

Allowance for Loan and Lease Losses

     9. (a) The Bank shall maintain, in accordance with generally accepted accounting principles
(“GAAP”) and supervisory guidance, an adequate valuation reserve for loan and lease losses (the
“ALLL”). The adequacy of the ALLL shall be determined in accordance with relevant supervisory
guidance, including the Interagency Policy Statements on the Allowance for Loan and Lease Losses,
dated July 2, 2001 and December 13, 2006. The elements of supervisory guidance to be considered
shall include, but are not limited to, the reliability of the Bank’s loan grading system, the
volume of criticized loans, the current level of past due and nonperforming loans, past loan loss
experience, evaluation of probable losses in the Bank’s loan portfolio, including the potential for
the existence of unidentified losses in loans adversely classified, the imprecision of loss
estimates, and examiners’ criticisms noted in the Report of Examination.

          (b) Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank a description
of the methodology used to determine the Bank’s ALLL. Thereafter, the Bank shall conduct, at least
on a quarterly calendar basis, an assessment of its ALLL and, within

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30 days of the end of each calendar quarter, shall submit to the Reserve Bank the quarterly
assessment, including the methodology used in determining the amount of ALLL for that quarter. The
Bank shall maintain for subsequent supervisory review documentation to support the methodology used
for each quarterly assessment.

Capital Plan

     10. Within 60 days of this Agreement, Capital Corp and the Bank shall submit to the Reserve
Bank an acceptable joint written capital plan (the “Capital Plan”) that will, at a minimum, ensure
that Capital Corp, on a consolidated basis, and the Bank, as a separate legal entity on a
standalone basis, each maintain acceptable leverage, tier one, and total risk-based capital ratios.
The plan shall, at a minimum, address, consider, and include:

          (a) the Bank’s current and future capital requirements, including compliance with the Capital
Adequacy Guidelines for State Member Banks: Risk-Based Measures and Tier 1 Leverage Measures,
Appendices A and B of Regulation H of the Board of Governors (12 C.F.R. Part 208, App. A and B);

          (b) the volume of the Bank’s adversely classified assets, concentrations of credit, adequacy
of the loan loss reserve, projected growth of assets, and projected retained earnings; and

          (c) the source and timing of additional funds that may be needed to fulfill the consolidated
organization’s and the Bank’s future capital requirements.

Dividend Payment and Distributions

     11. (a) The Bank shall not declare or pay any dividends without the prior written approval of
the Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the
Board of Governors (the “Director”). All requests for prior approval shall be received by the
Reserve Bank at least 30 days prior to the proposed dividend declaration date and shall contain,
but not be limited to, current and projected information on earnings, cash flow, capital, asset
quality, and loan loss reserve needs of the Bank.

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          (b) Capital Corp shall not declare or pay any dividends unless such declaration or payment is
consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State
Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory
Service, 4-877 at page 4-323). During the term of this Agreement, Capital Corp shall also not
declare or pay any dividends without the prior written approval of the Reserve Bank and the
Director.

          (c) Capital Corp and its non-bank subsidiaries shall not make any distributions of interest,
principal or other sums on subordinated debentures or trust preferred securities without the prior
written approval of the Reserve Bank and the Director (see, Capital Adequacy Guidelines for Bank
Holding Companies: Risk-Based Measure, Appendix A of Regulation Y of the Board of Governors (12
C.F.R. Part 225 App. A, section II.A.1.c.iv)).

          (d) All requests for prior approval shall be received at least 30 days prior to the proposed
dividend declaration date, proposed distribution on subordinated debentures, and required notice of
deferral on trust preferred securities. All requests shall contain, but not be limited to, current
and projected information on consolidated earnings; cash flow, capital, asset quality and allowance
for loan and lease loss needs of the Bank; and identification of the sources of funds for the
proposed payment or distribution. The Reserve Bank and the Director will determine whether to
approve a request to pay dividends or distributions pursuant to Federal Reserve policy, including
but not limited to, the proposed payment’s impact on Capital Corp’s continued ability to serve as a
source of financial strength to the Bank.

Debt and Stock Redemption

     12. (a) Capital Corp shall not, directly or indirectly, incur, increase or guarantee any debt
without the prior written approval of the Reserve Bank. All requests for prior written approval
shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of
the debt, the planned source(s) for debt repayment, and an analysis of the cash flow resources
available to meet such debt repayment.

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          (b) Capital Corp shall not, directly or indirectly, purchase or redeem any shares of its stock
without the prior written approval of the Reserve Bank.

Earnings Plan and Budget

     13. (a) Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank a 2008
earnings plan and budget that shall, at a minimum, address, consider, and include:

               (i) the responsibilities of the board of directors regarding the definition, approval,
implementation, and monitoring of the earnings plan and budget;

               (ii) an identification of the major areas in, and means by which, the board of directors and
management shall seek to improve the Bank’s earnings and operating performance; and

               (iii) a comprehensive budget that includes the operating assumptions that form the basis for,
and adequately support, major projected income and expense components.

          (b) A Bank business plan and budget for each calendar year subsequent to 2008 shall be
submitted to the Reserve Bank at least 30 days prior to the beginning of that calendar year.

Liquidity/Funds Management

     14. (a) Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank an
acceptable written liquidity/funds management policy designed to improve management of the Bank’s
liquidity position and funds management practices. The revised policy shall, at a minimum,
address, consider, and include:

               (i) Appropriate measures to monitor the Bank’s liquidity position;

               (ii) formal tools to estimate liquidity needs on an ongoing basis;

               (iii) specific liquidity targets and parameters, and the maintenance of sufficient liquidity
to meet contractual obligations and unanticipated demands; and

               (iv) the deficiencies related to liquidity and funds management noted in the Report of
Examination.

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          (b) Within 90 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable
contingency funding plan that, at a minimum, identifies available sources of liquidity and includes
adverse scenario planning.

Compliance with Agreement

     15. Within 10 days of this Agreement, the boards of directors of Capital Corp and the Bank
shall appoint a joint committee (the “Compliance Committee”) to monitor and coordinate Capital
Corp’s and the Bank’s compliance with the provisions of this Agreement. The Compliance Committee
shall be comprised of three or more outside directors who are not executive officers or principal
shareholders of Capital Corp or the Bank, as defined in section 215.2 (e)(1) of the Board of
Governors’ Regulation O (12 C.F.R. § 215.2(3)). At a minimum, the Compliance Committee shall keep
detailed minutes of each meeting and shall report its findings to the board of directors on a
monthly basis.

Approval, Implementation, and Progress Reports

     16. (a) Capital Corp and the Bank, as applicable, shall submit written plans, policies,
procedures, and programs, that are acceptable to the Reserve Bank within the applicable time
periods set forth in 4, 5, 6, 8, 10, and 14 of this Agreement.

          (b) Within 10 days of approval by the Reserve Bank, Capital Corp and the Bank, as applicable,
shall adopt the approved plans, policies, procedures and programs. Upon adoption, Capital Corp and
the Bank, as applicable, shall implement the approved plans and program and thereafter fully comply
with them.

          (c) During the term of this Agreement, the approved plans, policies, procedures and programs
shall not be amended or rescinded without the prior written approval of the Reserve Bank.

     17. Within 20 days after the end of each month following the date of this Agreement, Capital
Corp and the Bank, as applicable, shall submit to the Reserve Bank written progress reports
detailing the form and manner of all actions taken to secure compliance with the

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provisions of this Agreement and results thereof. The Reserve Bank may, in writing, modify
the reporting schedule or discontinue the requirement for progress reports.

Communications

     18. All communications regarding this Agreement shall be sent to:

	 	 	 	 	 
	 

	 	(a)
	 	Mr. Joe A. Lozano
	 

	 	 	 	Examining Officer
	 

	 	 	 	Federal Reserve Bank of San Francisco
	 

	 	 	 	101 Market Street, Mail Stop 920
	 

	 	 	 	San Francisco, California 94105
	 
	 	 	 	 
	 

	 	(b)
	 	Mr. Jerry E. Callister
	 

	 	 	 	Chairman of the Board
	 

	 	 	 	Capital Corp of the West
	 

	 	 	 	County Bank
	 

	 	 	 	550 West Main Street
	 

	 	 	 	Merced, CA 95340

Miscellaneous

     19. Notwithstanding any provision of this Agreement to the contrary, the Reserve Bank may, in
its sole discretion, grant written extensions of time to Capital Corp and the Bank to comply with
any provision of this Agreement.

     20. The provisions of this Agreement shall be binding upon Capital Corp and the Bank and their
institution-affiliated parties, in their capacities as such, and their successors and assigns.

     21. Each provision of this Agreement shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Reserve Bank.

     22. The provisions of this Agreement shall not bar, estop or otherwise prevent the Board of
Governors, the Reserve Bank, or any other federal or state agency from taking any other action
affecting Capital Corp and the Bank or any of their current or former institution-affiliated
parties and their successors and assigns.

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     23. Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this written Agreement is
enforceable by the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of this 17th day
of July 2008.

	 	 	 	 	 	 	 	 	 
	Capital Corp of the West	 	 	 	Federal Reserve Bank of San Francisco	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Curtis Riggs
 

	 	By:
	 	/s/ Steve Hoffman
 

	 	 
	 
	 	 	 	 	 	 	 	 
	County Bank	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	Curtis Riggs	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

12exv4w1

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents, by executing
this Omnibus Instrument dated as of July 18, 2008, relating to the issuance by Principal Life
Income Fundings Trust 2008-64 (the “Trust”) of Notes with a principal amount of $2,514,000 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 specified herein, 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 November 21, 2007, 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 specified herein, 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 November 21, 2007 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 date specified herein, 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 as of the date specified herein, 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 specified herein, 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 Omnibus Instrument,
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”).

WITNESSETH:

     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 November 21, 2007, 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.

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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 (attached to this
Omnibus Instrument as Exhibit D) (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”).

WITNESSETH:

     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.

WITNESSETH:

     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 May 2, 2008, 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 date of the Omnibus
Instrument 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(s) specified in the Pricing Supplement (the “Purchasing
Agent”).

WITNESSETH:

     WHEREAS, Principal Life, PFG and the agents named therein, including the Purchasing Agent have
entered into that certain Distribution Agreement dated November 21, 2007 (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 agree 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 July 18, 2008.

     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-1

 

SECTION E

COORDINATION AGREEMENT

     This COORDINATION AGREEMENT (this “Coordination Agreement”), dated as of the date of the
Omnibus Instrument, 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”), Bankers Trust Company, N.A. and Citibank, N.A., as
indenture trustee (the “Indenture Trustee”).

WITNESSETH

     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 Agent (as defined in the Terms Agreement) has 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; and

     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.

     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 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: Jennifer H. McCourt

Telephone: (212) 816-5680

Facsimile: (212) 816-5527

     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

E-3

 

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
Bankers Trust Company, N.A.:

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

Attention: Diana L. Cook

Telephone: (515) 245-2418

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.

E-4

 

     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,
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 specified 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/ Michael Garvin
 	 
	 	 	Name:  	Michael Garvin 	 
	 	 	Title:  	Associate Actuary 	 
	 
	 	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 the License Agreement set
forth in Section B herein)

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

Omnibus Instrument 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/ David J. Kolibachuk
 	 
	 	 	Name:  	David J. Kolibachuk 	 
	 	 	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/ David J. Kolibachuk
 	 
	 	 	Name:  	David J. Kolibachuk 	 
	 	 	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/ Bernard J. Angelo
 	 
	 	 	Name:  	Bernard J. Angelo 	 
	 	 	Title:  	Vice 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/ Jennifer McCourt
 	 
	 	 	Name:  	Jennifer McCourt 	 
	 	 	Title:  	Vice President 	 
	 

Omnibus Instrument 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/ Rick Greene
 	 
	 	 	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 	 
	 

Omnibus Instrument Execution Page 3 of 3

 

 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

	 	Standard Trust Terms — Incorporated herein by reference to
Exhibit 4.2 to Principal Life Insurance Company’s Current Report
on Form 8-K filed on December 5, 2007.
	 
	 	 
	Exhibit B

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

	 	Standard Indenture Terms — Incorporated herein by reference to
Exhibit 4.1 to Principal Life Insurance Company’s Current Report
on Form 8-K, filed on May 2, 2008.
	 
	 	 
	Exhibit D

	 	Pricing Supplement — Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2008-64, filed on July 14, 2008, 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

I-1

 

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. and Moody’s Investors Service, 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. 333-147181 and
333-147181-01) (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 dated May 2, 2008.

     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.
333-147181 and 333-147181-01 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. and Moody’s Investors Service, 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, dated as of May 2, 2008. 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 Institutional 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.

     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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