Document:

exv10w5

 

EXHIBIT 10.5

Zimmer Holdings, Inc.

2006 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD GRANTED TO

AWARD RECIPIENT: [   ]

RESTRICTED STOCK UNIT AWARD SHARES: [   ]

AWARD DATE: [   ]

Compensation and Management Development Committee:

Gentlemen:

     You have advised me that I have been granted the above restricted stock unit (“RSU”) award
subject to the terms, restrictions and conditions set forth in this agreement, including the
provision that receipt of the shares of the stock award is contingent upon my remaining in the
continuous employ of Zimmer Holdings, Inc. or a subsidiary for period of five years from the Award
Date. I understand that some or all of such RSUs may be forfeited if I leave the Company prior to
that time, and it is expected that I will retain the stock I receive upon the lapse of the
restrictions consistent with the Company’s retention guidelines in effect at the time the
restrictions lapse.

     My signature below indicates my agreement to all the terms, restrictions and conditions herein
set forth.

	 	 	 
	 	 	 
	 
	 	 
	Date
	 	Signature

 

ZIMMER HOLDINGS, INC.

2006 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD FOR NON-US EMPLOYEES

     1. RSU AWARD

     Under the terms of the Zimmer Holdings, Inc. 2006 Stock Incentive Plan (the “Plan”) the
Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings,
Inc. (the “Committee”) has granted to the Award Recipient on the Award Date an award of RSUs over
Zimmer Holdings, Inc. Common Stock, par value $0.01 per share (“Common Stock”), as designated
herein subject to the terms, conditions, and restrictions set forth in this agreement (this “RSU
Award”). The purposes of such RSU Award are to motivate and retain the Award Recipient as an
employee of Zimmer Holdings, Inc. (the “Company”) or a subsidiary of the Company, to encourage the
Award Recipient to continue to give best efforts for the Company’s future success, and to further
the opportunity for stock ownership by the Award Recipient in order to increase the Award
Recipient’s proprietary interest in the Company. Each RSU represents an unfunded, unsecured
promise by the Company to deliver one share of Common Stock, subject to certain restrictions and
the terms and conditions contained in this agreement. Except as may be required by law, the Award
Recipient is not required to make any payment (other than payments for taxes pursuant to Section 7
hereof) or provide any consideration other than the rendering of future services to the Company or
a subsidiary of the Company.

 

 

     2. NO SHAREHOLDER RIGHTS

     The grant of RSUs does not entitle the Award Recipient to any rights of a shareholder of
Common Stock, including dividends or voting rights. The rights of the Award Recipient with respect
to the RSUs shall remain forfeitable at all time prior to the lapse of the Restriction Period, as
defined in Section 4 below.

     3. TRANSFER RESTRICTIONS

     Neither the RSUs nor any interest thereto may be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, and
any such purported sale, assignment, transfer, pledge, hypothecation or other disposition shall be
void and unenforceable against the Company.

     4. RESTRICTIONS AND FORFEITURES

     Except as otherwise provided in this Section 4, this RSU Award shall be subject to the
restrictions and conditions set forth herein during the period from the Award Date until such RSUs
become vested and nonforfeitable (the “Restriction Period”).

     (a) Except as set forth in this Section 4, one third of this RSU Award shall become vested and
nonforfeitable on the third anniversary of the Award Date provided the Award Recipient has been
continuously employed by the Company or a subsidiary of the Company since the Award Date; an
additional third of this RSU Award shall become vested and nonforfeitable on the fourth anniversary
of the Award Date provided the Award Recipient shall have been continuously employed by the Company
or a subsidiary of the Company since the Award Date; and the final third of this RSU Award shall
become vested and nonforfeitable on the fifth anniversary of the Award Date provided the Award
Recipient shall have been continuously employed by the Company or a subsidiary of the Company since
the Award Date.

     (b) Certificates for shares of Common Stock covered by this RSU Award shall be delivered to
the Award Recipient only after the Restriction Period shall have expired.

     (c) Except as set forth below, if during the Restriction Period the Award Recipient terminates
employment with the Company or a subsidiary for any reason other than retirement, death or
disability, the RSUs that are not already vested shall be forfeited. If during the Restriction
Period and after the Award Recipient has been continuously employed for one year or more from Award
Date, the Award Recipient terminates employment with the Company or a subsidiary on account of
retirement, death or disability, the restrictions with respect to this RSU Award shall be waived
and the RSUs will be deemed fully vested. In the event of the termination of an Award Recipient’s
employment by the Company, other than for cause, retirement, death or disability, after one year of
continuous employment with the Company after the Award Date, a pro rata portion of this RSU Award
shall be deemed vested as shown in Schedule A to this agreement. Such pro rata portion shall
include the portion, if any, of this RSU Award already vested under the terms of this agreement.
“Retirement” shall mean the Award Recipient’s termination of employment with the Company or a
subsidiary on or after (i) the Award Recipient’s 65th birthday, (ii) the Award Recipient’s 55th
birthday after having completed 10 years of service with the Company or any of its subsidiaries, or
(iii) the date the sum of the Award Recipient’s age plus years of service, when rounded up to the
next highest number, equals at least 70 and the Award Recipient has completed ten years of service
with the Company or any of its subsidiaries and the Award Recipient’s employment terminates for any
reason other than death, disability, resignation, willful misconduct, or activity deemed
detrimental to the interest of the Company and, where applicable, the Award Recipient has executed
a general release and/or a covenant not to solicit as required by the Company. “Disability” shall
mean qualifying and receiving payments under a disability pay plan of the Company. “Cause” shall
mean termination by the Company of the Award Recipient’s employment upon the willful and continued
failure by the Award Recipient to substantially perform the Award Recipient’s duties with the
Company (other than any such a failure resulting from the Award Recipient’s incapacity due to
physical or mental illness) for a period of at least 30 days after a written demand for substantial
performance is delivered to the Award Recipient, which demand specifically identifies the manner in
which the Award Recipient has not substantially performed the Award Recipient’s duties, or the
willful engaging by the Award Recipient in conduct which is demonstrably and materially injurious
to the Company or its subsidiaries, monetarily or otherwise. No act, or failure to act, on the
Award Recipient’s part shall be deemed willful unless done, or omitted to be done, by the Award
Recipient not in good faith and without reasonable belief that the Award Recipient’s act, or
failure to act, was in the best interest of the Company. In the event of special circumstances as
determined by the Committee, the Committee may, in its sole discretion where it finds that a waiver
would be in the best interests of the Company, waive any restrictions then remaining with respect
to all or part of this RSU Award and accelerate the vesting with regard to such RSU Award or part
thereof. For the purposes of this RSU Award, service with Bristol-Myers Squibb Company and its
subsidiaries and affiliates before the effective date of the Plan shall be included as service with
the Company.

     (d) In the event that the Award Recipient fails promptly to pay or make satisfactory
arrangements as to the Withholding Tax Obligation as provided in Section 7, all unvested RSUs shall
be forfeited by the Award Recipient.

2

 

     (e) (i) A transfer of an Award Recipient’s employment from the Company to a subsidiary, or
vice versa, or from one subsidiary to another, (ii) a leave of absence, duly authorized in writing
by the Company, for military service or sickness or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days, and (iii) a leave of absence in
excess of ninety (90) days, duly authorized in writing, by the Company, provided the Award
Recipient’s right to reemployment is guaranteed either by a statute or by contract, shall not be
deemed a termination of employment. However, failure of the Award Recipient to return to the
employ of the Company at the end of an approved leave of absence shall be deemed a termination.
During a leave of absence as defined in (ii) or (iii), the Award Recipient will be considered to
have been continuously employed by the Company but such period shall not be counted in determining
the period of employment for vesting purposes of this Section 4.

     (f) (i) The Award Recipient agrees that, during the Restriction Period and for the
Non-Competition Period set forth below, except with the prior written consent of the Company, the
Award Recipient shall not in any way, directly or indirectly, own, manage, operate, control, accept
employment or a consulting position with or otherwise advise or assist or be actively connected
with or have any financial interest in, directly or indirectly, any enterprise which engages in, or
otherwise carries on, any business activity in competition with the business of the Company in any
geographic area (including, without limitation, the United States and each county in the State of
California in which the Company from time to time sells or offers its products for sale) in which
it engages in such business. The Award Recipient recognizes that the Company’s business is
worldwide in scope in that it directly advertises and solicits business from customers wherever
they may be found. Wherever “Company” is used in this sub-section (f), it shall include all
subsidiaries and affiliates of the Company. The Award Recipient further agrees that during the
periods referenced above the Award Recipient shall not take any action which might divert from the
Company or any of its affiliates, successors or assigns any opportunity which would be within the
scope of its or their respective present or future operations or business. It is understood that
ownership of not more than one percent (1%) of the equity securities of a public company shall in
no way be prohibited pursuant to the foregoing provisions.

          (ii) For purposes of this sub-section (f), the Non-Competition Period shall be a period of
one year commencing on the date of the Award Recipient’s termination of employment for any reason.

     5. STOCK CERTIFICATES

     The stock certificate(s), if any, evidencing the shares issued upon vesting of this RSU Award
shall be registered on the Company’s books in the name of the Award Recipient after the lapse of
the Restriction Period.

     The Company shall not be required to issue or deliver any certificate or certificates for
shares of its Common Stock upon the end of the Restriction Period prior to (i) the admission of
such shares to listing on any stock exchange on which the stock may then be listed, (ii) the
completion of any registration or other qualification of such shares under any state or federal law
or rulings or regulations of any governmental regulatory body, or (iii) the obtaining of any
consent or approval or other clearance from any governmental agency, which the Company shall, in
its sole discretion, determine to be necessary or advisable.

     6. DEATH OF AWARD RECIPIENT

     In the event of the Award Recipient’s death prior to the delivery of shares issuable pursuant
to vested RSUs, such shares shall be delivered to the Award Recipient’s estate, upon presentation
to the Committee of letters testamentary or other documentation satisfactory to the Committee.

     7. RESPONSIBILITY FOR TAXES

          Regardless of any action the Company or the Award Recipient’s actual employer (the “Employer”)
takes with respect to any or all income tax (including federal, state and local taxes), social
insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”),
the Award Recipient acknowledges that the ultimate liability for all Tax-Related Items legally due
by the Award Recipient is and remains the Award Recipient’s responsibility and that the Company
and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the
vesting of the RSUs, the conversion of the RSUs into shares of Common Stock, the subsequent sale of
any shares acquired at vesting and the receipt of any dividends or dividend equivalents; and (ii)
do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate
the Award Recipient’s liability for Tax-Related Items.

          Prior to the issuance of shares of Common Stock pursuant to this RSU Award, the Award
Recipient shall pay, or make adequate arrangements satisfactory to the Company or to the Employer
(in their sole discretion) to satisfy all withholding and payment on account obligations of the
Company and/or Employer. In this regard and, if permissible under local law, the Award Recipient
authorizes the Company and/or the Employer, at their discretion, to satisfy the obligations with
regard to all Tax-Related Items legally Payable by the Award Recipient in one or any combination of
the forms specified below:

3

 

     (a) by requiring the Award Recipient to pay an amount necessary to pay the Tax-Related Items
directly to the Company (or the Employer) in the form of cash, check or other cash equivalent;

     (b) by the deduction of such amount from wages or other cash compensation payable to the Award
Recipient by the Company and/or the Employer;

     (c) by withholding a net number of shares otherwise issuable having a then current fair market
value not exceeding the amount necessary to satisfy the withholding obligation of the Company or
the Employer based on the minimum applicable statutory withholding rates; or

     (d) by arranging for the sale of shares to be issued upon vesting of the RSUs (on the Award
Recipient’s behalf and at the Award Recipient’s direction pursuant to this authorization).

          If the Company satisfies the obligation for Tax-Related Items by withholding a number of whole
shares as described in clause (c) above, the Award Recipient is deemed to have been issued the full
number of shares subject to the RSU Award, notwithstanding that a number of the shares is held back
solely for the purpose of paying the Tax-Related Items due as a result of the vesting of the RSUs.
The Award Recipient shall pay to the Company or to the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of the Award Recipient’s
receipt of this Award, the vesting of the RSUs, or the conversion of the vested RSUs into shares
that cannot be satisfied by the means previously described. The Company may refuse to deliver
shares to the Award Recipient if the Award Recipient fails to comply with the Award Recipient’s
obligation in connection with the Tax-Related Items as described herein.

     8. NATURE OF GRANT

     In accepting the RSUs, the Award Recipient acknowledges that:

          (a) the Plan is established voluntarily by the Company, it is discretionary in nature and may
be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan;

          (b) the award of RSUs is voluntary and occasional and does not create any contractual or other
right to receive future awards of RSUs, or benefits in lieu of RSUs even if RSUs have been awarded
repeatedly in the past;

          (c) all decisions with respect to future RSUs, if any, will be at the sole discretion of the
Company;

          (d) the Award Recipient’s participation in the Plan is voluntary;

          (e) the RSU Award is an extraordinary item that does not constitute compensation of any kind
for services of any kind rendered to the Company or to the Employer, and the RSUs are outside the
scope of the Award Recipient’s employment contract, if any;

          (f) the RSUs are not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments;

          (g) neither the RSU Award nor any provision of this agreement nor the Plan confer upon the
Award Recipient any right with respect to employment or continuation of current employment, and in
the event that the Award Recipient is not an employee of the Company, the RSUs shall not be
interpreted to form an employment contract or relationship with the Company;

          (h) the future value of the shares underlying the RSUs is unknown and cannot be predicted with
certainty;

          (i) if the Award Recipient receives shares, the value of such shares acquired on vesting of
the RSUs may increase or decrease in value;

          (j) no claim or entitlement to compensation or damages arises from termination of the RSUs,
and no claim or entitlement to compensation or damages shall arise from any diminution in value of
the shares received upon vesting of the RSUs resulting from termination of the Award Recipient’s
employment by the Employer (for any reason whatsoever and whether or not in breach of local labor
laws) and the Award Recipient irrevocably releases the Company and the Employer from any such claim
that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Agreement, the Award Recipient shall be deemed
irrevocably to have waived his or her entitlement to pursue such claim;

4

 

          (k) the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding the Award Recipient’s participation in the Plan, or his or her
acquisition or sale of the underlying shares; and

          (l) the Award Recipient is hereby advised to consult with his or her own personal tax, legal
and financial advisors regarding his or her participation in the Plan before taking any action
related to the Plan.

     9. DATA PRIVACY

     The Award Recipient hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of the Award Recipient’s personal data as described in this
agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company
and its subsidiaries for the exclusive purpose of implementing, administering and managing the
Award Recipient ‘s participation in the Plan.

     The Award Recipient understands that the Company and the Employer may hold certain personal
information about the Award Recipient, including, but not limited to, the Award Recipient’s name,
home address and telephone number, date of birth, social insurance number or other identification
number, salary, nationality, job title, any shares of stock or directorships held in the Company,
details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised,
vested, unvested or outstanding in the Award Recipient’s favor, for the exclusive purpose of
implementing, administering and managing the Plan (“Data”).

     The Award Recipient understands that Data will be transferred to The Bank of New York or such
other stock plan service provider as may be selected by the Company in the future, which is
assisting the Company with the implementation, administration and management of the Plan. The
Award Recipient understands that the recipients of the Data may be located in the United States or
elsewhere, and that the recipients’ country (e.g., the United States) may have different data
privacy laws and protections than the Award Recipient’s country. The Award Recipient understands
that the Award Recipient may request a list with the names and addresses of any potential
recipients of the Data by contacting the Award Recipient’s local human resources representative.
The Award Recipient authorizes the Company, The Bank of New York and any other possible recipients
which may assist the Company (presently or in the future) with implementing, administering and
managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the sole purpose of implementing, administering and managing the Award Recipient’s
participation in the Plan. The Award Recipient understands that Data will be held only as long as
is necessary to implement, administer and manage the Award Recipient’s participation in the Plan.
The Award Recipient understands that he/she may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting in writing the
Award Recipient’s local human resources representative. The Award Recipient understands, however,
that refusing or withdrawing his/her consent may affect the Award Recipient’s ability to
participate in the Plan. For more information on the consequences of the Award Recipient’s refusal
to consent or withdrawal of consent, the Award Recipient understands that he/she may contact
his/her local human resources representative.

     10. CHANGES IN CAPITALIZATION

     If prior to the expiration of the Restriction Period changes occur in the outstanding Common
Stock by reason of stock dividends, recapitalization, mergers, consolidations, stock splits,
combinations or exchanges of shares and the like, the number and class of shares subject to this
RSU Award shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. If as a result of any adjustment under this paragraph any Award Recipient should
become entitled to a fractional share of stock, the Award Recipient shall have the right only to
the adjusted number of full shares and no payment or other adjustment will be made with respect to
the fractional share so disregarded.

     11. NOTICE

     Until the Award Recipient is advised otherwise by the Committee, all notices and other
correspondence with respect to this RSU Award will be effective upon receipt at the following
address:

Compensation and Management Development Committee of the Board of Directors of Zimmer Holdings, Inc.

Zimmer Holdings, Inc.

345 East Main Street

Post Office Box 708

Warsaw, Indiana 46581-0708

5

 

     12. BREACH OF RESTRICTIVE COVENANTS

     The Award Recipient understands and agrees that if he or she violates the covenant not to
compete contained in Section 4(f) of this agreement or any other restrictive covenant in favor of
the Company that he or she is a party to, the Committee may require the Award Recipient to forfeit
his or her right to any unvested portion of the RSU Award and, to the extent that any portion of
the RSU Award has previously vested, the Committee may require the Award Recipient to return to the
Company the shares covered by the RSU Award or any cash proceeds received by the Award Recipient
upon the sale of such shares.

     13. CONSENT TO ELECTRONIC DELIVERY

     The Company may, in its sole discretion, decide to deliver any documents related to the RSU
Award granted under and participation in the Plan or future stock awards that may be granted under
the Plan by electronic means or to request the Award Recipient’s consent to participate in the Plan
by electronic means. The Award Recipient hereby consents to receive such documents by electronic
delivery and, if requested, to agree to participate in the Plan through an on-line or electronic
system established and maintained by the Company or a third party designated by the Company.

     14. SECTION 409A COMPLIANCE

     To the extent applicable, it is intended that the Plan and the Agreement comply with the
requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and any related
regulations or other guidance promulgated with respect to such Section by the U.S. Department of
the Treasury or the Internal Revenue Service. Any provision of the Plan or this agreement that
would cause this RSU Award to fail to satisfy Section 409A shall have no force or effect until
amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by
Section 409A.

     15. CONSTRUCTION AND INTERPRETATION

     The Board of Directors of the Company (the “Board”) and the Committee shall have full
authority and discretion, subject only to the express terms of the Plan, to decide all matters
relating to the administration and interpretation of the Plan and this agreement and all such Board
and Committee determinations shall be final, conclusive, and binding upon the Award Recipient and
all interested parties. The terms and conditions set forth in this agreement are subject in all
respects to the terms and conditions of the Plan, as amended from time to time, which shall be
controlling. This agreement contains the entire understanding of the parties and may not be
modified or amended except in writing duly signed by the parties. The waiver of, or failure to
enforce, any provision of this agreement or the Plan by the Company will not constitute a waiver by
the Company of the same provision or right at any other time or a waiver of any other provision or
right. The various provisions of this agreement are severable and any determination of invalidity
or unenforceability of any provision shall have no effect on the remaining provisions. This
agreement will be binding upon and inure to the benefit of the successors, assigns, and heirs of
the respective parties. The validity and construction of this agreement shall be governed by the
laws of the State of Indiana, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the substantive law of another
jurisdiction. If the Award Recipient has received this agreement or any other document related to
the Plan translated into a language other than English and if the meaning of the translated version
is different that the English version, the English version will control.

     16. SEVERABILITY

     In the event any provision of this agreement shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining provisions of this agreement, and this
agreement shall be construed and enforced as if such illegal or invalid provision had not been
included.

	 	 	 	 	 
	 	ZIMMER HOLDINGS, INC.

 	 
	 	By  	 	 
	 	 	 	 
	 	 	 	 

6

 

	 	 	 	 	 

Schedule A

	 	 	 	 	 
	Months Completed After Award Date	 	Percent Vested
	 
	 	 	 	 
	12

	 	 	11.111	%
	13

	 	 	12.037	%
	14

	 	 	12.963	%
	15

	 	 	13.889	%
	16

	 	 	14.815	%
	17

	 	 	15.741	%
	18

	 	 	16.667	%
	19

	 	 	17.593	%
	20

	 	 	18.519	%
	21

	 	 	19.444	%
	22

	 	 	20.370	%
	23

	 	 	21.296	%
	24

	 	 	22.222	%
	25

	 	 	23.148	%
	26

	 	 	24.074	%
	27

	 	 	25.000	%
	28

	 	 	25.926	%
	29

	 	 	26.852	%
	30

	 	 	27.778	%
	31

	 	 	28.704	%
	32

	 	 	29.630	%
	33

	 	 	30.556	%
	34

	 	 	31.481	%
	35

	 	 	32.407	%
	36

	 	 	33.333	%
	37

	 	 	36.111	%
	38

	 	 	38.889	%
	39

	 	 	41.667	%
	40

	 	 	44.444	%
	41

	 	 	47.222	%
	42

	 	 	50.000	%
	43

	 	 	52.778	%
	44

	 	 	55.556	%
	45

	 	 	58.333	%
	46

	 	 	61.111	%
	47

	 	 	63.889	%
	48

	 	 	66.667	%
	49

	 	 	69.444	%
	50

	 	 	72.222	%
	51

	 	 	75.000	%
	52

	 	 	77.778	%
	53

	 	 	80.556	%
	54

	 	 	83.333	%
	55

	 	 	86.111	%
	56

	 	 	88.889	%
	57

	 	 	91.667	%
	58

	 	 	94.444	%
	59

	 	 	97.222	%
	60

	 	 	100.000	%

7exv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this 8th day of December, 2006, relating to the issuance by
Principal Life Income Fundings Trust 2006-89 (the “Trust”) of Notes with a principal amount of
$3,940,000.00 to investors under Principal Life’s secured notes program;

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

     WHEREAS, certain expense and indemnification arrangements between Principal Life and the
Trustee, on behalf of itself and on behalf of the Trust, are governed pursuant to the provisions of
the Expense and Indemnity Agreement dated as of February 16, 2006, by and between Principal Life
and the Trustee;

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

     WHEREAS, certain custodial arrangements of the Funding Agreement and the Guarantee will be
governed pursuant to the provisions of the Custodial Agreement (the “Custodial Agreement”) dated as
of February 16, 2006 by and among Bankers Trust Company, N.A., acting as custodian (the
“Custodian”), the Indenture Trustee and the Trustee, on behalf of the Trust;

     WHEREAS, the Notes will be issued pursuant to the Indenture (set forth in Section C of this
Omnibus Instrument), dated as of the Original Issue Date, by and between the parties thereto
indicated in Section F herein;

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

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

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

[Remainder
of Page Left Intentionally Blank.]

 

SECTION A

TRUST AGREEMENT

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

W I T N E S S E T H:

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

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

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

     WHEREAS, the parties hereto desire to incorporate by reference those certain Standard Trust
Terms, dated as of February 16, 2006, and attached to the Omnibus Instrument as Exhibit A
(the “Standard Trust Terms”) and all capitalized terms not otherwise defined herein (including the
recitals hereof) shall have the meanings set forth in the Standard Trust Terms (the Standard Trust
Terms and this Trust Agreement, collectively, the “Trust Agreement”).

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

ARTICLE 1

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

A-1

 

ARTICLE 2

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

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

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

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

     Section 2.05 Additional Terms.

     None

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

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

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

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

A-2

 

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

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

[Remainder of Page Left Intentionally Blank.]

A-3

 

SECTION B

LICENSE AGREEMENT

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

W I T N E S S E T H:

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

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

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

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

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

ARTICLE 1

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

ARTICLE 2

     Section 2.01 Additional Terms.

     None

B-1

 

     Section 2.02 Omnibus Instrument; Execution and Incorporation of Terms.

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

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

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

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

[Remainder of Page Left Intentionally Blank.]

B-2

 

SECTION C

INDENTURE

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

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

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

W I T N E S S E T H:

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

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

     WHEREAS, the parties hereto desire to incorporate by reference those certain Standard
Indenture Terms, dated as of February 16, 2006, and attached to the Omnibus Instrument as
Exhibit C (the “Standard Indenture Terms”) and all capitalized terms not otherwise defined
herein (including the recitals hereof) shall have the meanings set forth in the Standard Indenture
Terms (the Standard Indenture Terms and this Indenture, collectively, the “Indenture”).

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

ARTICLE 1

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

C-1

 

ARTICLE 2

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

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

     Section 2.03 Additional Terms.

     None

     Section 2.04 Omnibus Instrument; Execution and Incorporation of Terms.

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

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

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

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

[Remainder of Page Left Intentionally Blank.]

C-2

 

SECTION D

TERMS AGREEMENT

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

W I T N E S S E T H:

     WHEREAS, Principal Life, PFG and the agent named therein, including the Purchasing Agent have
entered into that certain Distribution Agreement dated February 16, 2006 (the “Distribution
Agreement”).

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

ARTICLE 1

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

ARTICLE 2

     Section 2.01 Addition of Trust as Party to Distribution Agreement.

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

     Section 2.02 Purchase of Notes as Principal.

     (a) Subject in all respects to the terms and conditions of the Distribution Agreement, the
Trust hereby agrees to sell to the Purchasing Agent and the Purchasing Agent hereby agrees to
purchase the Notes having the terms specified in the Pricing Supplement relating to such Notes.

D-1

 

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

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

     Section 2.04 Applicable Time. For purposes of the Distribution Agreement, the
Applicable Time shall be 10:00 am Central Standard Time on December 8, 2006.

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

     Section 2.06 Governing Law. This Terms Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the principles of conflicts
of laws thereof.

     Section 2.07 Notices. For purposes of Section 14 of the Distribution Agreement, the
Trust’s communications details are as set forth in Section E of the Omnibus Instrument.

     Section 2.08 Omnibus Instrument; Execution and Incorporation of Terms.

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

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

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

     Section 2.09 Counterparts. This Terms Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall constitute but one and the same
instrument.

[Remainder of Page Left Intentionally Blank.]

D-2

 

SECTION E

COORDINATION AGREEMENT

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

W I T N E S S E T H

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

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

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

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

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

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

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

ARTICLE 1

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

E-1

 

     Section 1.02 Issuance and Purchase of the Notes.

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

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

ARTICLE 2

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

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

ARTICLE 3

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

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

ARTICLE 4

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

E-2

 

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

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

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

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

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

     To the Trust:

Principal Life Income Fundings Trust (followed by the number set forth in the

   Omnibus Instrument)

c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Corporate Trust Administration

Telephone: (212) 361-2184

Facsimile: (212) 509-3384

     To the Indenture Trustee:

Citibank, N.A.

Citibank Agency & Trust

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

Facsimile: (212) 657-3862

E-3

 

     To Principal Life:

Principal
Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

     With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

     To PFG:

Principal Financial Group, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

     With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

     To Principal Financial Services, Inc.:

Principal Financial Services, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

E-4

 

     With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

     To Bankers Trust Company, N.A:

Bankers Trust Company, N.A.

453 7th Street

Des Moines, Iowa 50309-2728

Attention: Angela C. Brick

Telephone: (515) 245-2820

Facsimile: (515) 247-2101

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

ARTICLE 5

     Section 5.01 Omnibus Instrument; Execution and Incorporation of Terms.

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

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

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

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

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

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

[Remainder of Page Left Intentionally Blank.]

E-5

 

SECTION F

MISCELLANEOUS AND EXECUTION PAGES

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

     Each signatory, by its execution hereof, does hereby become a party to each of the agreements
or indenture identified for such party as of the date specified in such agreements or indenture.

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

	 	 	 	 	 
	 	PRINCIPAL LIFE INSURANCE COMPANY (in executing below
agrees and becomes a party to (i) the Terms Agreement
set forth in Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Christopher P. Freese
 	 
	 	 	Name:  	Christopher P. Freese 	 
	 	 	Title:  	Officer 	 
	 
	 	PRINCIPAL FINANCIAL GROUP, INC. (in executing below
agrees and becomes a party to (i) the Terms Agreement
set forth in Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 
	 	PRINCIPAL FINANCIAL SERVICES, INC. (in executing below
agrees and becomes a party to (i) the License Agreement
set forth in Section B herein and (ii) the Coordination
Agreement set forth in Section E herein)

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

[Execution Page 1 of 3]

 

 

	 	 	 	 	 
	 	THE PRINCIPAL LIFE INCOME FUNDINGS TRUST DESIGNATED IN
THIS OMNIBUS INSTRUMENT (in executing below agrees and
becomes a party to (i) the License Agreement set forth
in Section B herein, (ii) the Indenture set forth in
Section C herein, (iii) the Terms Agreement set forth
in Section D herein and (iv) the Coordination Agreement
set forth in Section E herein)

By: U.S. Bank Trust National Association, not in its
individual capacity but solely in its capacity as
trustee of the Trust

 	 
	 	By:  	/s/ Janet P. O’Hara
 	 
	 	 	Name:  	Janet P. O’Hara 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION (in executing
below agrees and becomes a party to the Trust Agreement
set forth in Section A herein), as Trustee

 	 
	 	By:  	/s/ Janet P. O’Hara
 	 
	 	 	Name:  	Janet P. O’Hara 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	GSS HOLDINGS II, INC. (in executing below agrees and
becomes a party to the Trust Agreement set forth in
Section A herein), as Trust Beneficial Owner

 	 
	 	By:  	/s/ Andrew L. Stidd
 	 
	 	 	Name:  	Andrew L. Stidd 	 
	 	 	Title:  	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:  	Assistant Vice President 	 
	 

[Execution Page 2 of 3]

 

 

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A. (in executing below agrees
and becomes a party to the Coordination Agreement set
forth in Section E herein)

 	 
	 	By:  	/s/ Diana L. Cook
 	 
	 	 	Name:  	Diana L. Cook 	 
	 	 	Title:  	Vice President 	 
	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (in
executing below agrees and becomes a party to the Terms
Agreement set forth in Section D herein)

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

[Execution Page 3 of 3]

 

 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

	 	Standard Trust Terms — Incorporated herein by reference to Exhibit
99.2 to Principal Life Insurance Company’s Current Report on Form
8-K, filed on March 1, 2006.
	 
	 	 
	Exhibit B

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

	 	Standard Indenture Terms — Incorporated herein by reference to
Exhibit 99.1 to Principal Life Insurance Company’s Current Report
on Form 8-K, filed on March 1, 2006.
	 
	 	 
	Exhibit D

	 	Pricing Supplement — Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2006-89, filed on December 4, 2006, with the Securities and
Exchange Commission pursuant to Rule 424(b)(2) under the
Securities Act of 1933, as amended.
	 
	 	 
	Exhibit E

	 	Principal Life Insurance Company Officer’s Certificate
	 
	 	 
	Exhibit F

	 	Principal Life Income Fundings Trusts Trustee Officer’s Certificate
	 
	 	 
	Exhibit G

	 	Free Writing Prospectus(es)
	 
	 	 
	Schedule I

	 	Terms Agreement Specifications

 

 

EXHIBIT E

Principal Life Insurance Company

Officer’s Certificate

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

	 	1.	 	each of the representations and warranties of Principal Life contained in each
Expense and Indemnity Agreement entered into in connection with the Registration
Statement (defined below), and each Funding Agreement issued in connection with the
Program (the “Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and correct on and as of
the date hereof, with the same effect as though such representation or warranty had
been made on and as of the date hereof;
	 
	 	2.	 	no default under any of the Specified Agreements and no event or any condition
which, with notice or lapse of time or both, would become a default, has occurred and
is continuing as of the date hereof;
	 
	 	3.	 	Principal Life has performed and complied with, respectively, in all material
respects, all of the agreements, covenants, obligations and conditions applicable to
Principal Life required by the Specified Agreements to be performed or complied with by
Principal Life on or before the date hereof;
	 
	 	4.	 	the Registration Statement filed on Form S-3 (File Nos. 333-129763 and
333-129763-01) (the “Registration Statement”) by Principal Life and Principal Financial
Group, Inc. has been declared effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Act”) and no stop
order suspending the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been commenced by or are pending before or
contemplated by the Commission;
	 
	 	5.	 	all filings, if any, required by Rule 424 and Rule 430A under the Act have been
made in a timely manner;
	 
	 	6.	 	since ___, the Trusts organized in connection with the program contemplated
by the Registration Statement have issued the following series of Notes:
	 
	 	 	 	     [List each series of Notes.] [(collectively, the “Designated Notes”)]; and
	 
	 	7.	 	the Funding Agreements issued in connection with the Designated Notes have been
executed and delivered by Principal Life in accordance with the terms and conditions of the
Program Documents.

E-1

 

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

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

	 	 	 	 	 
	 	[Name], [in his/her] capacity as an

authorized officer of Principal Life

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

E-2

 

EXHIBIT F

Principal Life Income Fundings Trusts

Trustee Officer’s Certificate

     U.S. Bank Trust National Association, not in its individual capacity but solely in its
capacity as trustee acting on behalf of each common law trust organized under the laws of the State
of New York (in such capacity, the “Trustee,” and each such common law trust being referred to
herein as, a “Trust”) in connection with the program contemplated by Registration Statement Nos.
333-129763 and 333-129763-01 filed on Form S-3 (the “Registration Statement”) by Principal Life
Insurance Company and Principal Financial Group, Inc. with the Securities and Exchange Commission,
does hereby certify to Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of each Trust, to the knowledge of the Trustee, that:

	 	1.	 	each of the representations and warranties of each Trust contained in the Notes
issued in connection with the Program, each Indenture entered into in connection with
the Registration Statement and the Expense and Indemnity Agreement concerning the
Trusts (the “Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and correct on and as of
the date hereof, with the same effect as though such representation or warranty had
been made on and as of the date hereof;
	 
	 	2.	 	no default under any of the Specified Agreements and no event or any condition
which, with notice or lapse of time or both, would become a default, has occurred and
is continuing as of the date hereof;
	 
	 	3.	 	each Trust has performed and complied with, respectively, in all material
respects, all of the agreements, covenants, obligations and conditions applicable to
such Trust required by the Specified Agreements to be performed or complied with by
such Trust on or before the date hereof;
	 
	 	4.	 	the Notes issued in connection with the Program, have been issued, in all
material respects, in accordance with the terms and conditions of the Program
Documents; and
	 
	 	5.	 	each Funding Agreement has been executed and delivered by the related Trust in
accordance with the terms and conditions of the Program Documents.

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

F-1

 

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

	 	 	 	 	 
	 	U.S. Bank Trust National Association, not in its

capacity but solely in its capacity as Trustee acting

on behalf of each Trust

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

F-2

 

	 	 	 	 	 

EXHIBIT G

Free Writing Prospectus(es)

None.

G-1

 

SCHEDULE I

Terms Agreement Specifications

     In connection with Section 3(a)(iv) of the Distribution Agreement, the Program under which the
Notes are issued is rated Aa2 by Moody’s Investors Service, Inc. (“Moody’s”) and AA by Standard &
Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”). Principal Life and
PFG expect that the Notes will be rated Aa2 by Moody’s. The Company’s financial strength rating is
Aa2 by Moody’s and AA by S&P.

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

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

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

I-1

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