Document:

Exhibit 10.7

 

Hallmark
Channel

 

Advertising
Sales

 

2008
Commission Proposal

 

October 11,
2007

 

 

2008
Advertising Sales Commission Plan

 

·                 Objective - Develop a compensation plan based on
individual, account by account spending targets by quarter.  Include a
Strategic Initiative Component that rewards creative selling and aggressive
deal-making in the scatter marketplace.

 

·                 4 Components:

 

·                  Quarterly Commission

 

·                  Quarterly Performance Bonus Pool

 

·                  Hallmark Movie Channel Straight Commission

 

·                  Year-end Corporate Bonus

 

·                 Rationale:

 

·                  Drive revenue and focus by heightening individual
accountability and responsibility.  Award strategic thinking in the sales
process.

 

2008 Sales
Commission Plan Benefits

 

·                 Provide additional motivation for sales team
on a Quarter-to-Quarter basis

 

·                 Encourage Split communication and cooperation

 

·                  More thorough client coverage will help
establish Channel’s value

 

·                 Ensure focus in order to meet targets

 

·                 Increase
sales focus on [*]

 

·                 Ultimately, will drive sales revenue higher

 

2008 Ad
Sales Annual Commission Plan

 

·                 Year-end Commission is paid as Corporate
Goals is achieved:

 

	
   

  	
   

  	
  [% of Annual Base Salary]

  
	
  [*]%
  of Goal

  	
   

  	
  5

  	
  %*

  
	
  At Corporate
  Goal ($[*])

  	
   

  	
  [*]

  	
  %

  
	
  [*]%
  of Goal

  	
   

  	
  [*]

  	
  %

  
	
  [*]%
  of Goal

  	
   

  	
  [*]

  	
  %

  
	
  [*]%
  of Goal

  	
   

  	
  [*]

  	
  %

  
	
  [*]%
  of Goal

  	
   

  	
  [*]

  	
  %

  
	
  [*]%
  of Goal

  	
   

  	
  20

  	
  %

  

 

*Percentage
applicable to William Abbott.

**Redacted,
and omitted portion filed with the Commission.Exhibit 10.16.1

 

AMENDED AND RESTATED

 

EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (the “Agreement”) dated as of May 1, 2008 (“Agreement
Date”) is by and between Principal Financial Group, Inc., a Delaware
corporation, (together with all successors thereto “PFGI”), Principal
Financial Services, Inc., an Iowa corporation, and Principal Life
Insurance Company, an Iowa corporation (together with all successors thereto, “Life”)
(each of the foregoing referred to individually as a “Company” or
collectively as “Companies”, and Larry D. Zimpleman (“Executive”),
a resident of Iowa.  The parties
previously entered into an Employment Agreement dated June 1, 2006 (“Prior
Agreement”), and have determined that the Prior Agreement should be modified.  This Agreement shall supersede the Prior
Agreement in its entirety.

 

Article I.

 

DEFINITIONS

 

The terms set forth below have the following meanings
(such meanings to be applicable to both the singular and plural forms, except
where otherwise expressly indicated):

 

1.1           “Accrued
Annual Bonus” means the amount of any Annual Bonus earned but not yet paid
with respect to any Fiscal Year ended prior to the Date of Termination.

 

1.2           “Accrued
Base Salary” means the amount of Executive’s Base Salary, which is accrued
but not yet paid as of the Date of Termination.

 

1.3           “Affiliate”
means any Person that directly or indirectly controls, is controlled by, is
under common control with, a Company. 
For the purposes of this definition, the term “control” when used with
respect to any Person, means (a) the power to direct or cause the
direction of management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
or (b) for purposes of Section 1.11 and Article VII, the power
substantially to influence the direction of strategic management policies of
such Person, and provided a Company has a direct or indirect commercial
relationship with such Person, all as determined by the Human Resources Committee
of the Board or its successor.

 

1.4           “Agreement”
– see the introductory paragraph of this Agreement.

 

1.5           “Agreement
Date” – see the introductory paragraph in this Agreement.

 

1.6           “Anniversary
Date” – means any annual anniversary of the Agreement Date.

 

1.7           “Annual
Bonus” – see Section 4.2.

 

1.8           “Base
Salary” – see Section 4.1.

 

1.9           “Beneficiary”
– see Section 9.6.

 

1.10         “Board”
means the Board of Directors of PFGI unless the context indicates otherwise.

 

1.11         “Cause”
means any of the following:

 

 

(a)           Executive’s conviction
of, plea of guilty to, or plea of nolo contendere to a felony or misdemeanor
(other than a traffic-related felony or misdemeanor) that involves fraud,
dishonesty or moral turpitude,

 

(b)           any willful action by
Executive resulting in any criminal conviction or civil or internal Company
sanction or judgment under (i) any Federal or State workplace harassment
or discrimination laws or (ii) any internal Company workplace harassment,
discrimination or other workplace policy under which such action could be or
could reasonably be expected to be grounds for immediate termination of a
member of Senior Management (other than mere failure to meet performance goals,
objectives, or measures),

 

(c)           Executive’s habitual
abuse of or addiction to alcohol or controlled substances, which interferes
with the performance of Executive’s duties,

 

(d)           Executive’s willful and
intentional material breach of this Agreement, including, but not limited to,
the restrictive covenants contained in Article VII,

 

(e)           Executive’s habitual
neglect of duties (other than resulting from Executive’s incapacity due to
physical or mental illness), which results in substantial financial detriment
to any of the Companies or any Affiliate,

 

(f)            Executive’s personally
engaging in such conduct that results or is likely to result in (i) substantial
damage to the reputation of any of the Companies or any Affiliate, as a
respectable business, or (ii) substantial financial detriment (whether
immediately or over time) to any of the Companies or Affiliates,

 

(g)           Executive’s willful and
intentional material misconduct in the performance of or gross negligence of
his duties under this Agreement that results in substantial financial detriment
to a Company or any Affiliate,

 

(h)           Executive’s intentional
failure (including a failure caused by gross negligence) to cause any of the
Companies to comply with applicable law and regulations material to the
business of such Company which results in substantial financial detriment to
any of the Companies or any Affiliate, or

 

(i)            Executive’s willful or
intentional failure to comply in all material respects with a specific written
direction of the Board that is consistent with normal business practice and not
inconsistent with this Agreement and Executive’s responsibilities hereunder.

 

For purposes of clauses
(d), (e), (f), (g) and (h) of the preceding sentence, Cause shall not
mean the mere existence or occurrence of any one or more of the following, and
for purposes of clause (i) of the preceding sentence, Cause shall not mean
the mere existence or occurrence of item (iv) below:

 

(i)            bad judgment,

 

(ii)           negligence, other than
Executive’s habitual neglect of duties or gross negligence,

 

(iii)          any act or omission that
Executive believed in good faith to have been in the interest of the Company
(without intent of Executive to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled), or

 

(iv)          failure to meet
performance goals, objectives or measures;

 

provided, that for
purposes of clauses (c), (d), (e), (f), (g), (h) and (i), any act or
omission that is curable shall not constitute Cause unless the Company gives
Executive written notice of such act or omission that specifically refers to
this Section and, within 10 days after such notice is received by
Executive, Executive fails to cure such act or omission.  Notwithstanding anything to the contrary
herein, any act or omission of which any member of the Board who is not a party
to such act or omission has had actual knowledge for at least six months shall
not constitute “Cause” under any clause of this Section.

 

1.12         “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

2

 

1.13         “Company”
– see the introductory paragraph to this Agreement.

 

1.14         “Competitive
Business” means as of any date any corporation or other Person (and any
branch, office or operation thereof) that engages in, or proposes to engage in:

 

(a)           the underwriting,
reinsurance, marketing or sale of (i) any form of insurance of any kind
that any of the Companies as of such date does, or has under active
consideration a proposal to, underwrite, reinsure, market or sell (any such
form of insurance, a “Company Insurance Product”) or (ii) any other
form of insurance that is marketed or sold in competition with any Company
Insurance Product, or

 

(b)           the sale of financial services which involve (i) the management,
for a fee or other remuneration, of an investment account or fund (or portions thereof or a group of
investment accounts or funds), (ii) the giving of advice, for a fee or
other remuneration, with respect to the investment and/or reinvestment of
assets or funds (or any group of assets or funds), or (iii) financial
planning services, or

 

(c)           the design,
implementation and administration of employee benefit plans, including plan
documents, employee communications, reporting, disclosure, financial advice,
investment advice, and fiduciary services, or

 

(d)           any other business that
as of such date is a direct and material competitor of a Company and its
Affiliates to the extent that prior to the Date of Termination any of the
Companies or its Affiliates engaged at any time within 12 months in or had
under active consideration a proposal to engage in such competitive business;

 

and that is located
anywhere in the United States or anywhere outside of the United States where
such Company or its Affiliates is then engaged in, or has under active
consideration a proposal to engage in, any of such activities.

 

1.15         “Date
of Termination” means the date of the receipt of the Notice of Termination
by Executive (if such Notice is given by or on behalf of PFGI) or by PFGI (if
such Notice is given by Executive), or any later date, not more than 15 days
after the giving of such Notice, specified in such notice, as of which
Executive’s employment with the Companies shall be terminated; provided,
however, that:

 

(i)            if Executive’s
employment is terminated by reason of death, the Date of Termination shall be
the date of Executive’s death; and

 

(ii)           if Executive’s
employment is terminated by reason of Disability, the Date of Termination shall
be the 30th day after Executive’s receipt of the physician’s
certification of Disability, unless, before such date, Executive shall have
resumed the full-time performance of Executive’s duties; and

 

(iii)          if Executive terminates
his employment without Good Reason, the Date of Termination shall be the 30th
day after the giving of such Notice; and

 

(iv)          if no Notice of
Termination is given, the Date of Termination shall be the last date on which
Executive is employed by the Companies.

 

Notwithstanding anything
else contained herein to the contrary, where termination of employment is not a
full cessation of Executive’s services for the Companies and each other member
of the same controlled group of corporations as the Companies, for purposes of
determining the timing of any payment or distribution of compensation in
accordance with this Agreement that is deferred compensation for purposes of Section 409A
and that is payable upon or in connection with a termination of employment, the
Date of Termination shall be deemed to be the date on which Executive has
incurred  a separation from service, as
defined in the regulations promulgated under Section 409A of the Code.

 

1.16         “Disability”
means a mental or physical condition which renders Executive unable or
incompetent to carry out the material job responsibilities which such Executive
held or the material duties to which Executive was assigned at the time the
disability was incurred, which has existed for at least six months and which in
the certified opinion of a physician mutually agreed upon by PFGI and Executive
(which agreement neither party shall unreasonably withhold) is expected to be
permanent or to last for an additional duration in excess of six months.

 

3

 

1.17         “Employment
Period”  – see Section 3.1.

 

1.18         “Executive”
– see the introductory paragraph of this Agreement.

 

1.19         “Fiscal
Year” means the fiscal year used in connection with the preparation of the
consolidated financial statements of PFGI.

 

1.20         “Good
Reason” means the occurrence of any one of the following events unless
Executive specifically agrees in writing that such event shall not be Good
Reason:

 

(a)           any material breach of
the Agreement by any of the Companies, including any of the following, each of
which shall be deemed material:

 

(i)            any adverse change in
the title,  responsibilities or
authorities of Executive;

 

(ii)           any failure of
Executive to be nominated, appointed or elected and to continue to be
nominated, re-elected, or re-appointed as President and Chief Executive Officer
of PFGI without Executive’s prior written consent;

 

(iii)          any failure of Executive
to be nominated and to continue to be nominated as a member of the Board of
Directors of PFGI or the Board of Directors of Life;

 

(iv)          causing or requiring
Executive to report to anyone other than the Board of PFGI ;

 

(v)           assignment to Executive
of duties materially inconsistent with his position and duties described in
this Agreement, including offices, or responsibilities as contemplated under Section 2.1
or any other action by any of the Companies which results in an adverse change
in such position, offices, titles or responsibilities;

 

(vi)          any reduction or failure
to pay Executive’s Base Salary in violation of Section 4.1 or his Annual
Bonus in violation of Section 4.2; or

 

(vii)         any failure to grant or pay an LTIP Award or LTIP Bonus required under Section 4.3;

 

provided that the creation, existence or appointment
of a president or chief executive officer other than Executive of any
subsidiary of PFGI shall not be deemed to be Good Reason if such other chief
executive officer or president reports, directly or indirectly, to Executive;
and provided, further, that no act or omission described in clauses (i) through
(vii) of this Section 1.20(a) shall constitute Good Reason
unless Executive gives PFGI written notice of such act or omission within 60
days of becoming aware of such act or omission, the Company fails to cure such
act or omission within 30-days after delivery of such notice and Executive
terminates his employment promptly (but not more than 60 days) after the
expiration of the Company’s opportunity to cure any such act or omission; or

 

(b)           the failure of PFGI to
assign this Agreement to its successor or the failure of a successor of PFGI or
Life to expressly assume and agree to be bound by the Agreement; or

 

(c)           relocation of the Company’s
executive offices or Executive’s own office location to a location that is
outside the United States;

 

In the event of an occurrence or omission described
in this Section 1.20(b) or (c) constituting Good Reason,
Executive shall not be entitled to terminate his employment for Good Reason
unless within 3 months after Executive first obtains actual knowledge of such
an event constituting Good Reason, he notifies PFGI of the events constituting
such Good Reason and of his intention to terminate his employment for Good
Reason by a Notice of Termination.

 

4

 

Notwithstanding any provision in this Section to
the contrary, no reduction in base salary, bonus or incentive (including
without limitation the LTIP) that applies to all members of Senior Management
shall constitute Good Reason pursuant to clauses (a) (vi) or (vii) of
this Section.

 

1.21         “including” means
including without limitation.

 

1.22         “Life” – see introductory
paragraph to this Agreement

 

1.23         “LTIP” means, the
Principal Financial Group Stock Incentive Plan, the Principal Financial Group
2005 Stock Incentive Plan and any other successor long-term incentive plan
(other than the LTPP) established by any of the Companies or the Surviving
Corporation.

 

1.24         “LTIP Award” means
a grant under the LTIP.

 

1.25         “LTIP Bonus” means
the amount paid or earned in respect of an LTIP Award.

 

1.26         “LTIP Performance
Period” means any performance period applicable to an LTIP Award, as
designated in accordance with the LTIP.

 

1.27         “LTPP”. 
means the 1999 Long-Term Performance Plan, as may be amended from time
to time.

 

1.28         “PFGI” – see introductory
paragraph to this Agreement.

 

1.29         “Notice of Termination”
means a written notice of termination of Executive’s employment given in
accordance with Section 9.12 by PFGI on behalf of the Companies, or by
Executive, as the case may be, which sets forth (a) the specific
termination provision in this Agreement relied upon by the party giving such
notice, (b) in reasonable detail the specific facts and circumstances
claimed to provide a basis for such Termination of Employment, and (c) if
the Date of Termination is other than the date of receipt of such Notice of
Termination, the Date of Termination.

 

1.30         “Person” means any
individual, sole proprietorship, partnership, joint venture, limited liability
company, trust, unincorporated organization, corporation, institution, public
benefit corporation, entity or government instrumentality, division, agency,
body or department.

 

1.31         “Prorata Annual Bonus”
means the product of (i) the Target Annual Bonus (provided that no effect
shall be given to any reduction in such Target Annual Bonus that would qualify
as Good Reason if Executive were to terminate his employment on account
thereof) multiplied by (ii) a fraction of which the numerator is the
number of days which have elapsed in such Fiscal Year through the Date of
Termination and the denominator of which is 365.

 

1.32         “Retirement” means
any Termination of Employment after Executive reaches age 57, other than for
Cause and other than for Good Reason.

 

1.33         “Senior Management”
means Executive Vice President or higher-level officers of PFGI in the United
States.

 

1.34         “Target Annual Bonus”
– see Section 4.2.

 

1.35         “Target Annual Goals”
– see Section 4.2.

 

5

 

1.36                           “Tax Gross-Up Payment”
means an amount payable to Executive such that after payment of Taxes on such
amount there remains a balance sufficient to pay the Taxes being reimbursed.

 

1.37                           “Taxes” means the
incremental federal, state, local and foreign income, employment, excise and
other taxes payable by Executive with respect to any applicable item of income.

 

1.38                           “Termination For Good
Reason” means a Termination of Employment by Executive for a Good Reason.

 

1.39                           “Termination of
Employment” means a termination by the Companies or Executive of Executive’s
employment with the Companies and their Affiliates.

 

1.40                           “Termination Without
Cause” means a Termination of Employment by the Companies for any reason
other than Cause or Executive’s death or Disability.

 

Article II.

 

DUTIES

 

2.1                                 Duties.  PFGI shall employ Executive during the
Employment Period as its President and Chief Executive Officer, and Executive
shall have the authority, duties, and responsibilities as are commensurate and
consistent with such position and title, and as provided in, PFGI’s
by-laws.  Executive shall also serve as
President and Chief Executive Officer of Life. 
It is contemplated that the stockholders of PFGI and of Life,
respectively, will elect Executive to their respective Boards.  Executive shall report solely to the Board of
PFGI.  During the Employment Period, Executive shall have broad discretion and
authority to manage and direct the day-to-day affairs and operations of the
Companies in compliance with applicable law, including the sole authority to
direct the strategic direction of the Companies, except to the extent required
in connection with the exercise by the Board of its corporate governance duties
and responsibilities under PFGI’s by-laws and other applicable law.  During the Employment Period, Executive shall
follow the directives of the Board and shall meet with the Board on a periodic
basis sufficient to enable the Board to fulfill its corporate governance
responsibilities.  All operating, staff,
other executives, and divisions of the Companies shall report solely to
Executive, either directly or indirectly through subordinates of Executive who
report to Executive.  During the Employment
Period, Executive shall perform the duties assigned to him hereunder, and,
subject to Section 2.2, shall devote his full business time, attention and
effort, excluding any periods of disability, vacation, or sick leave to which
Executive is entitled, to the affairs of the Companies and shall use his best
efforts to promote the interests of the Companies.  The Executive acknowledges that his business
time is not limited to a fixed number of hours per week.

 

2.2                                 Other Activities.  Executive may serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking engagements
or teach at educational institutions, and manage personal investments; provided
that such activities do not individually or in the aggregate significantly
interfere with the performance of Executive’s duties under this Agreement.

 

Article III.

 

EMPLOYMENT PERIOD

 

3.1                                 Employment Period.  Subject to the termination provisions
hereinafter provided, the term of Executive’s employment under this Agreement
(the “Employment Period”) shall begin on the Agreement Date and end on
the Anniversary Date which is one year after such date to which the Employment
Period is extended pursuant to the following sentence unless terminated sooner
pursuant to Article VI.  At the
expiration of the initial term of this Agreement, as set forth in the
immediately preceding sentence, or the term of this Agreement as the same may 

 

6

 

previously have been extended in
accordance with this sentence, the Employment Period shall be automatically
extended for a period of one additional year unless PFGI or Executive delivers
written notice to the other party not later than ninety (90) days prior to the
date on which the Agreement is scheduled to expire that it or he is electing
not to extend the Employment Period.

 

Notwithstanding anything to the contrary set forth
in this Section 3.1, the Employment Period shall automatically end on
Executive’s 65th birthday unless PFGI delivers written notice to
Executive not less than ninety (90) days prior to such date that it desires the
Agreement not so expire in which case the Employment Period shall continue as
set forth above.

 

Article IV.

 

COMPENSATION

 

4.1                                 Salary.  Executive shall be paid in accordance with
normal payroll practices (but not less frequently than monthly) an annual
salary at a rate of $800,000 per year (“Base Salary”).  During the Employment Period, the Base Salary
may be reviewed periodically and may be increased from time to time as shall be
determined by the Board, in accordance with normal Company administrative
practices for Senior Management.  After
any such increase, the term “Base Salary” shall thereafter refer to the
increased amount.  Any increase in Base
Salary shall not limit or reduce any other obligation of the Company to
Executive under this Agreement.  Base Salary
shall not be reduced at any time without the express written consent of
Executive; provided that the Board may, in its discretion and prior to the
commencement of the calendar year with respect to which the related services
are to be performed, restructure or alter the time of payment of Base Salary in
order to enhance the deductibility thereof, provided (i) there is no
economic detriment to the Executive and that the Board and Executive shall
cooperate in good faith in such restructuring or alteration and (ii) any
delayed payment of such Base Salary that is treated as deferred compensation
under Section 409A of the Code is 
made upon the occurrence of a permissible distribution date or event
under such Section 409A.

 

4.2                                 Annual Bonus.

 

(a)                                  Executive shall be
eligible to receive an annual bonus (“Annual Bonus”) in accordance with
the terms hereof for each Fiscal Year that begins or ends during the Employment
Period.  Executive shall be eligible for
an Annual Bonus based upon target performance goals (the “Target Annual
Goals”), which goals shall be determined by the Board on an annual basis
consistent  (unless the Board otherwise
determines) with the requirements of Section 162(m) of the Code to
ensure full deductibility by the Company, in accordance with normal Company
administrative practices for Senior Management, and which provides for a
payment opportunity of 125% of Executive’s Base Salary (“Target Annual Bonus”)
upon achievement of the Target Annual Goals. 
The parties agree that the Annual Bonus shall be administered and shall
be subject to the same terms and conditions as are generally applicable to
other members of Senior Management in the applicable year.

 

(b)                                 The entire Annual Bonus
that is payable to Executive with respect to a Fiscal Year shall be paid in
cash, or such other medium as is generally applicable to members of Senior
Management, as soon as practicable after the appropriate Board has determined
whether and the degree to which Target Annual Goals have been achieved
following the close of such Fiscal Year, but in no event later than the March 15
following the end of such Fiscal Year. 
In any event, the entire Annual Bonus that is payable to Executive with
respect to a Fiscal Year shall be paid at the same time as the Annual Bonus is
paid to the other members of Senior Management, but in any event no later than
75 days after the end of the Fiscal Year.

 

4.3                                 Long-Term Incentive Plan
Bonus and Other Incentive Compensation.  Executive
shall have the opportunity to participate in the LTIP (if such plan exists) and
any other incentive compensation plan or program

 

7

 

available to Senior
Management.  Executive’s target award
opportunity under the LTIP will be a percentage of his Base Salary as determined
by the Board, with the value of such award opportunity to be determined in
accordance with the otherwise applicable compensation practices of the
Companies.  The appropriate Board may
structure or establish  the time of
payment of amounts under the LTIP or other incentive compensation plan or
program in order to enhance the deductibility thereof, provided (i) there
is no economic detriment to the Executive and (ii) any delayed payment of
any such award that is treated as deferred compensation under Section 409A
of the Code is made upon the occurrence of a permissible distribution date or
event under such Section 409A. The Board and Executive shall cooperate in
good faith in such structuring the payment of such awards.

 

4.4                                 Savings and Retirement
Plans.  Executive shall be eligible to participate
during the Employment Period in any Company’s savings and retirement plans,
practices, policies and programs, in accordance with the terms thereof, if any,
applicable from time to time to members of Senior Management, including any
supplemental executive retirement plan.

 

Article V.

 

OTHER
BENEFITS

 

5.1                                 Welfare Benefits.  During the Employment Period, Executive and
his family shall be eligible to participate in, and shall receive all benefits
under, any Company’s welfare benefit plans, practices, policies and programs
provided or made generally available by the Company to Senior Management
(including medical, dental, vision, short and long term disability, group-term
life,  accidental death and dismemberment
(AD&D) insurance plans and programs), in accordance with their terms as in
effect from time to time.

 

5.2                                 Fringe Benefits.  During the Employment Period, Executive shall
be entitled to fringe benefits generally applicable to Senior Management in
accordance with their terms as in effect from time to time.

 

5.3                                 Vacation .  During the Employment Period, Executive shall
be entitled to paid time under the plans, practices, policies and programs
generally applicable to members of Senior Management in accordance with their
terms as in effect from time to time.

 

5.4                                 Expenses.  Executive shall be promptly reimbursed for
all actual and reasonable employment-related business expenses he incurs during
the Employment Period in accordance with any Company’s practices, policies, and
procedures generally applicable to members of Senior Management in accordance
with their terms as in effect from time to time, including the timely
submission of required receipts and accountings.  Any
expenses to be reimbursed to Executive pursuant to this Section 5.4 shall
be paid to Executive not later than the end of the calendar year following the
calendar year in which such expenses were incurred.

 

Article VI.

 

TERMINATION
BENEFITS

 

6.1                                 Termination for Cause or
Other than for Good Reason, etc.

 

(a)                                  If PFGI terminates
Executive’s employment with the Companies for Cause or Executive terminates his
employment other than for Good Reason, death or Disability, the Executive shall
be entitled to receive immediately after the Date of Termination a lump sum
amount equal to the sum of Executive’s Accrued Base Salary and Accrued Annual
Bonus, and Executive shall not be entitled to receive any severance or other
payment, other than compensation and benefits which relate to or derive from
Executive’s employment with the Companies on or prior to the Date of
Termination (including, without limitation, any deferrals under the LTIP) and
which are otherwise payable in case of termination for Cause 

 

8

 

or other than for Good Reason, death or Disability, as
applicable

 

(b)                                 Executive’s employment may
be terminated for Cause only if  (i) PFGI
provides Executive (before the Date of Termination) with written notice of the
Board meeting referred to in clause (ii) of this Section 6.1(b) at
least twenty days prior to such meeting and specifies in detail in writing the
basis of a claim of Cause and provides Executive, with or without counsel, at
Executive’s election, an opportunity to be heard and present arguments and
evidence on Executive’s behalf at such meeting, (ii) the PFGI Board, by
affirmative vote of not less than 2/3 of the entire membership of the PFGI
Board (excluding the Executive’s vote from any such determination) decides that
the acts or omissions constitute Cause which Executive failed to cure after
being given an opportunity to cure if required by Section 1.11, and to the
effect that Executive’s employment should be terminated for Cause and (iii) PFGI
thereafter provides Executive a Notice of Termination which specifies in detail
the basis of such Termination of Employment for Cause.  Nothing in this Section 6.1(b) shall
preclude the Board, by majority vote, from suspending Executive from his
duties, with pay at any time.

 

6.2                                 Termination for
Retirement, Death or Disability.  If, before the end
of the Employment Period, Executive’s employment terminates due to his
Retirement, death or Disability, Executive or his Beneficiaries, as the case
may be, shall be entitled to receive immediately after the Date of Termination,
a lump sum amount which is equal to the sum of Executive’s Accrued Base Salary,
Accrued Annual Bonus, and, subject to compliance with Section 162(m) of
the Code, Prorata Annual Bonus.  All of
Executive’s rights under any non-qualified retirement plan (including any
non-qualified defined contribution plan) shall become fully vested (to the
extent not previously vested) on the Date of Termination.  In calculating the amount payable under any
nonqualified defined benefit plan, Executive shall be treated as though he had
attained age 57 on the Date of Termination and shall be credited under such
plan with additional service in an amount equal to that he would have completed
had he continued to work until age 57. 
Any accrued benefit that is forfeited by Executive due to his death,
Disability or Retirement under a qualified plan which is supplemented by a
nonqualified plan shall be paid from the applicable supplemental non-qualified
plan.

 

6.3                                 Termination Without Cause
or for Good Reason.  In the event of a Termination
Without Cause or a Termination for Good Reason (in either case occurring during
the Employment Period), Executive shall be entitled to receive the following:

 

(a)                                  promptly after the Date of
Termination (but in no event later than ten 
business days after the Date of Termination) a lump sum amount equal to
the sum of Executive’s Accrued Base Salary, Accrued Annual Bonus and, subject
to compliance with Section 162(m) of the Code, Prorata Annual Bonus;

 

(b)                                 six months after the Date
of Termination a lump sum amount equal to the product of (i) the sum of
Base Salary plus Target Annual Bonus for the Fiscal Year during which the Date
of Termination occurs (provided that no effect shall be given to any reduction
in Target Annual Bonus that would qualify as Good Reason if Executive were to
terminate his employment on account thereof), and multiplied by (ii) 2;

 

(c)                                  until the earlier of (i) the
18 month anniversary of the Date of Termination or (ii) the date Executive
becomes eligible to participate in any plan, program or arrangement providing
benefits of a similar nature by reason of his employment or other provision of
services, the life insurance benefit specified in Section 5.1 to which
Executive is entitled as of Date of Termination, subject to the terms of
applicable plans, programs or policies; provided
that the Executive shall pay the same amount for such benefits as covered
members of Senior Management who are actively employed would pay;

 

(d)                                 if the Date of Termination
occurs prior to the Executive’s 57th birthday, (1) for the
six-month period following the Date of Termination, the Companies shall provide
Executive and his eligible 

 

9

 

dependants the same medical benefits (on the same terms and
conditions) as would have applied had Executive continued to be an employee of
the Companies for such period, and (2) monthly after such six month
period, for the remainder of the life of Executive, benefits equivalent to
those payable under the Principal Welfare Benefit Plan for Employees calculated
under the terms of such plan as if the Date of Termination occurred after
Executive’s 57th birthday, reduced by amounts actually payable under
such plan, provided that, if either Executive or the Company reasonably believes
it is likely that the  benefits under
subclause (2) cannot be provided on a tax-favored basis, the Company shall
pay the cost of the insurance premium for such benefits on the same monthly
basis as such benefits would have been provided;

 

(e)                                  if the Date of Termination
occurs prior to Executive’s 57th birthday, for purposes of
calculating the retirement benefits payable to Executive under the Supplemental
Executive Retirement Plan for Employees, Executive will be treated as though
the Date of Termination occurred after Executive’s 57th birthday;

 

(f)                                    key executive level
outplacement services, the provider of which shall be selected by Executive, up
to a maximum of $10,000; provided that in no event shall any amount be payable
to Executive in lieu of his receipt of such services.

 

Notwithstanding anything herein to the contrary, the
benefits provided in Section 6.3 shall be provided only upon Executive’s
execution of a release and waiver as described in Section 6.5.  For the avoidance of doubt, Executive’s
rights and entitlements with respect to any equity-based or other long-term
incentive compensation awards (including any LTIP Award) outstanding as of the
Date of Termination shall be determined in accordance with the terms of such
awards and the governing plan documents and shall not be enhanced or otherwise
modified by the terms of this Agreement.

 

6.4                                 Other Rights.  This Agreement shall not prevent or limit
Executive’s continuing or future participation in any benefit, bonus, incentive
or other plan, program or policy provided by the Company and for which
Executive may qualify, and shall not impair the Company’s rights to amend or
terminate any benefit, bonus, incentive or other plan program or policy;
provided however that no such amendment or termination shall treat Executive
less favorably than other Senior Management and Executive’s benefits, bonus and
incentives in the aggregate shall not be reduced.  Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan, program or policy
and any other payment or benefit required by law at or after the Date of
Termination shall be payable in accordance with such plan, program or policy or
applicable law except as expressly modified by this Agreement.

 

6.5                                 Waiver and Release.  Notwithstanding anything herein to the
contrary, upon any Termination of Employment (other than due to death)

 

(a)                                  the Executive shall
execute a release and waiver in form mutually agreed by Executive and the Board
of PFGI (which agreement neither party shall unreasonably withhold) which
releases, waives, and forever discharges the Companies, their Affiliates, and
their respective subsidiaries, affiliates, employees, officers, shareholders,
members, partners, directors, agents, attorneys, predecessors, successors and
assigns, from and against any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys’ fees, damages and obligations of every kind
and nature in law, equity, or otherwise, known and unknown suspected and unsuspected,
disclosed and undisclosed, including but not limited to any and all such claims
and demands directly or indirectly arising out of or in any way connected with
the Executive’s employment with and services as a director of the Companies and
their Affiliates; claims or demands related to compensation or other amounts
under any compensatory arrangement, stock, stock options, or any other
ownership interests in any of the Companies or any Affiliate, vacation pay,
fringe benefits, expense reimbursements, severance benefits, or any other form
of compensation or equity; claims pursuant to any federal, state, local law,
statute of cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Age Discrimination in Employment
Act of 1967, as amended; the federal Americans with 

 

10

 

Disabilities Act of 1990; tort law, contract law; wrongful
discharge, discrimination; defamation; harassment; or emotional distress; provided
that Executive’s waiver and release shall not relieve the Companies from any of
the following obligations, to the extent they are to be performed after the
date of the release and waiver:  (i) payment
of amounts due under Sections 6.1, 6.2 or 6.3, as applicable, (ii) any
obligations under the second sentence of Section 6.4, and (iii) payment
of any gross-up amount due under Article VIII; and provided further that (x) neither
party shall release the other from his or its obligations under Article IX
of this agreement, to the extent such obligations are to be performed after the
Date of Termination, and (y) Executive shall not be precluded from
defending against Cause Claims (as defined in Section 6.5(b)); and

 

(b)                                 the Company shall execute
a release and waiver in form mutually agreed by Executive and the Board of PFGI
(which agreement neither party shall unreasonably withhold) which releases,
waives, and forever discharges the Executive and his executors, administrators,
successors and assigns, from and against any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys’ fees, damages and
obligations of every kind and nature in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, including but
not limited to any and all such claims and demands directly or indirectly
arising out of or in any way connected with the Executive’s employment with and
services as a director of the Companies and their Affiliates, but excluding any
such claims liabilities, demands, causes of action, costs, expenses, attorneys’
fees, damages or obligations arising out of or in any way connected with
events, acts or conduct giving rise to or in any way connected with Executive’s
Termination of Employment for Cause (“Cause Claims”), provided, however, that (i) neither
party shall release the other from his or its obligations under Article IX
of this agreement, to the extent such obligations are to be preformed after the
Date of Termination, (ii) the Company shall not release Executive from his
obligation under Article VII and (iii) Executive shall not be
precluded from defending against Cause Claims.

 

(c)                                  Executive hereby agrees
that the execution of this Agreement is adequate consideration for the
execution of such a release, and hereby acknowledges that the Companies would
not have executed this Agreement had Executive not agreed to execute such a
release.

 

Article VII.

 

RESTRICTIVE COVENTANTS

 

7.1                                 Non-Competition.                                                 Executive shall not at any
time during the period beginning on the Agreement Date and ending 18 months
following the Date of Termination (whether or not during the Term), regardless
of the reasons for such termination, directly or indirectly, in any capacity:

 

(a)                                  engage or participate in,
become employed by, serve as a director of, or render advisory or consulting or
other services in connection with, any Competitive Business; provided, however,
that after the Date of Termination this Section 7.1(a) shall not
preclude Executive from being an employee of, or consultant to, any business
unit of a Competitive Business if (i) such business unit does not qualify
as a Competitive Business in its own right and (ii) Executive does not
have any direct or indirect involvement in, or responsibility for, any
operations of such Competitive Business that cause it to qualify as a
Competitive Business; or

 

(b)                                 make or retain any
financial investment, whether in the form of equity or debt, or own any
interest, in any Competitive Business; provided, however, that nothing in this
subsection shall restrict Executive from making an investment in any
Competitive Business if such investment (i) represents no more than 1% of
the aggregate market value of the outstanding capital stock or debt (as
applicable) of such Competitive Business, (ii) does not give Executive any
right or ability, directly or indirectly, to control or 

 

11

 

influence the policy decisions or management of such
Competitive Business, and (iii) does not create a conflict of interest
between Executive’s duties under this Agreement and his interest in such
investment.

 

7.2                                 Non-Solicitation.  Executive shall not at any time during the
period beginning on the Agreement Date and ending 18 months following the Date
of Termination (whether or not during the Term), regardless of the reasons for
such termination, directly or indirectly:

 

(a)                                  other than in connection
with the good-faith performance of his duties as an officer of any of the
Companies, encourage any employee or agent of the Companies or any Affiliate to
terminate his relationship with any of the Companies or any Affiliate;

 

(b)                                 solicit the employment of
or the engagement as a consultant or advisor of, any employee or agent of any
of the Companies or any Affiliate (other than by the Company or an Affiliate),
or cause or encourage any Person to do any of the foregoing;

 

(c)                                  establish (or take
preliminary steps to establish) a business with, or encourage others to
establish (or take preliminary steps to establish) a business with, any
employee or agent of the Company or any Affiliate; or

 

(d)                                 interfere with the
relationship of any of the Companies with, or endeavor to entice away from any
of the Companies, any Person who or which at any time during the period
commencing one year prior to the Agreement Date was or is a material client or
material supplier of, or maintained a material business relationship with, any
of the Companies or an Affiliate.

 

7.3                                 Disparagement.  Executive acknowledges that the Companies’
reputations are important and should not be impaired at any time by
Executive.  Executive agrees not to
disparage the reputation of the Companies.

 

7.4                                 Confidentiality.  The Executive acknowledges that in the course
of performing services for the Companies and Affiliates, he may create,
develop, learn of, receive or contribute non-public information, ideas,
processes, methods, designs, devices, inventions, data, models and other
information relating to the Companies and their Affiliates or their products,
services, businesses, operations, employees or customers, whether in tangible
or intangible form, and that the Companies or their Affiliates desire to
protect and keep secret and confidential, including trade secrets and
information from third parties that the Companies or their Affiliates are
obligated to keep confidential (“Confidential Information”).  Confidential Information shall not
include:  (i) information that is or
becomes generally known through no fault of Executive; (ii) information
received from a third party outside of the Company that was disclosed without a
breach of any confidentiality obligation; or (iii) information approved
for release by written authorization of the Company.  The Executive recognizes that all such
Confidential Information is the sole and exclusive property of the Companies
and their Affiliates, and that disclosure of Confidential Information would
cause damage to the Companies and their Affiliates.  Except (i) as required by the duties of
his employment with any of the Companies or any of their and/or its Affiliates;
(ii)with the consent of PFGI, or (iii) in connection with enforcing the
Executive’s rights under this Agreement or if compelled by a court or
governmental agency(provided that this subclause (iii) shall not apply
unless Executive has provided PFGI with reasonable prior written notice of any
such proposed disclosure in connection with any enforcement action or compelled
testimony), the Executive agrees that he will not willfully disseminate or
otherwise disclose, directly or indirectly, any Confidential Information
obtained during his employment with any of the Companies or their Affiliates,
and will take all necessary precautions to prevent disclosure, to any
unauthorized individual or entity inside or outside the Company, and will not
use the Confidential Information or permit its use for the benefit of Executive
or any other person or entity other than the Companies or the Affiliates.  These obligations shall continue during and
after the termination of Executive’s employment (whether or not during the
Employment Period).

 

7.5                                 Intellectual Property.  During the Employment Period, Executive shall
disclose immediately to the Company all ideas, inventions and business plans
that he makes, conceives, discovers or develops alone or with 

 

12

 

others during the course of his
employment with the Company, including any inventions, modifications,
discoveries, developments, improvements, computer programs, processes, products
or procedures (whether or not protectable upon application by copyright,
patent, trademark, trade secret or other proprietary rights) (“Work Product”)
that: (i) relate to the business of the Company or any customer or
supplier to the Company or any of the products or services being developed,
manufactured, sold or otherwise provided by the Company or that may be used in
relation therewith; or (ii) result from tasks assigned to Executive by the
Company; or (iii) result from the use of the premises or personal property
(whether tangible or intangible) owned, leased or contracted for by the
Company.  Executive agrees that any Work
Product shall be the property of the Company and, if subject to copyright,
shall be considered a “work made for hire” within the meaning of the Copyright
Act of 1976, as amended (the “Act”). 
If and to the extent that any such Work Product is found as a matter of
law not to be a “work made for hire” within the meaning of the Act, Executive
expressly assigns to the Company all right, title and interest in and to the
Work Product, and all copies thereof, and the copyright, patent, trademark,
trade secret and all their proprietary rights in the Work Product, without
further consideration, free from any claim, lien for balance due or rights of
retention thereto on the part of Executive.

 

(a)                                  The Company hereby
notifies Executive that the preceding paragraph does not apply to any
inventions for which no equipment, supplies, facility, or trade secret
information of the Company was used and which was developed entirely on the
Executive’s own time, unless:  (i) the
invention relates (a) to the Company’s business, or (b) to the
Company’s actual or demonstrably anticipated research or development, or (ii) the
invention results form any work performed by the Executive for the Company.

 

(b)                                 Executive agrees that upon
disclosure of Work Product to the Company, Executive will, during his
employment and at any time thereafter, at the request and cost of the Company,
execute all such documents and perform all such acts as the Company or its duly
authorized agents may reasonably require: 
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters patent, copyrights or other
analogous protection in any country throughout the world, and when so obtained
or vested to renew and restore the same; and (ii) to defend any opposition
proceedings in respect of such applications and any opposition proceedings or
petitions or applications for revocation of such letters patent, copyright or
other analogous protection.

 

(c)                                  In the event that the
Company is unable, after reasonable effort, to secure Executive’s signature on
any letters patents, copyright or other analogous protection relating to Work
Product, whether because of Executive’s physical or mental incapacity or for
any other reason whatsoever, Executive hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as his agent
and attorney-in-fact, to act for and on his behalf to executive and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright and other
analogous protection with the same legal force and effect as if personally executed
by Executive.

 

7.6                                 Reasonableness of
Restrictive Covenants.

 

(a)                                  Executive acknowledges
that the covenants contained in Sections 7.1, 7.2, 7.3,  7.4 and 7.5 are reasonable in the scope of
the activities restricted, the geographic area covered by the restrictions, and
the duration of the restrictions, and that such covenants are reasonably
necessary to protect the Companies’ relationships with their employees, clients
and suppliers.  Executive further
acknowledges such covenants are essential elements of this Agreement and that,
but for such covenants, the Companies would not have entered into this
Agreement.

 

(b)                                 The Companies and
Executive have each consulted with their respective legal counsel and have been
advised concerning the reasonableness and propriety of such covenants.  Executive acknowledges that his observance of
the covenants contained in Sections 7.1, 7.2, 7.3, 7.4 and 7.5 will not deprive
him of the ability to earn a livelihood or to support his dependents.

 

13

 

7.7                                 Rights to Injunction;
Survival of Undertakings.

 

(a)                                  In recognition of the
necessity of the limited restrictions imposed by Sections 7.1, 7.2, 7.3, 7.4
and 7.5, the parties agree that it would be impossible to measure solely in money
the damages that any of the Companies would suffer if Executive were to breach
any of his obligations under such Sections. 
Executive acknowledges that any breach of any provision of such Sections
would irreparably injure the Companies. 
Accordingly, Executive agrees that any of the Companies shall be
entitled, in addition to any other remedies to which such Company may be
entitled under this Agreement or otherwise, to an injunction to be issued by a
court of competent jurisdiction, to restrain any actual breach, or threatened
breach, of such provisions, and Executive hereby waives any right to assert any
defense that any of the Companies has an adequate remedy at law for any such
breach.

 

(b)                                 If a court determines that
any of the covenants included in this Article VII are unenforceable in
whole or in part because of such covenant’s duration or geographical or other
scope, such court may modify the duration or scope of such provision, as the
case may be, so as to cause such covenant as so modified to be enforceable.

 

(c)                                  All of the provisions of
this Article VII shall survive any Termination of Employment without
regard to (i) the reasons for such termination or (ii) the expiration of
the Employment Period.

 

(d)                                 No Company shall have any
further obligation to pay or provide severance or benefits under Section 6.3
if a court determines that the Executive has breached any covenant in this Article VII.

 

Article VIII.

 

CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY

 

8.1                                 Tax Gross-Up Payment.  If at any time or from time to time it shall
be determined that any payment to Executive pursuant to this Agreement or any
other payment or benefit (“Potential Parachute Payment”) hereunder or
otherwise would be subject to the excise tax imposed by Section 4999 of
the Code or any similar tax payable under any United States federal, state,
local, foreign or other law (“Excise Tax”), then Executive shall receive
and PFGI shall pay or cause to be paid a Tax Gross-Up Payment with respect to
all such excise taxes and other Taxes; provided, however, that this Article VIII
shall be subject in its entirety to any Change of Control agreement with
Executive entered after the Agreement Date by the Company.  The Tax Gross-Up Payment is intended to
compensate Executive for all such excise taxes and any federal, state, local,
foreign or other income, employment, or excise taxes or other taxes payable by
Executive with respect to the Tax Gross-Up Payment.  For purposes of this Agreement, a “Tax
Gross-Up Payment” shall mean an amount sufficient to enable the Executive to
pay (a) any Excise Tax imposed on the Executive by reason of receipt of
the Potential Parachute Payments and (b) all incremental federal, state,
local and foreign income, employment, excise and other taxes payable by
Executive by reason of receipt of the Tax Gross-Up payment.  Any Tax Gross-Up Payment to be made hereunder
shall be paid on, or promptly following, the date that the Excise Tax related
to such Tax Gross-Up Payment is due, but in no event later than the end of the
calendar year following the calendar year in which such Excise Tax is incurred.

 

8.2                                 Limitations on Gross-Up
Payments.

 

(a)                                  Notwithstanding any other
provision of this Article VIII, if the aggregate After-Tax Amount (as
defined below) of the Potential Parachute Payments and Tax Gross-Up Payment
that, but for this Section 8.2, would be payable to Executive, does not
exceed 110% of After-Tax Floor Amount (as defined below), then no Tax Gross-Up
Payment shall be made to Executive and the aggregate amount of Potential
Parachute Payments payable to Executive shall be reduced (but not below the
Floor Amount) to the largest amount which would both (i) not cause any
Excise Tax to be payable by Executive and (ii) not cause any Potential
Parachute Payments to be come nondeductible by the Company by reason of Section 280G
of the Code (or any 

 

14

 

successor provision). 
For purposes of the preceding sentence, Executive shall be deemed to be
subject to the highest effective after-tax marginal rate of Taxes.

 

(b)                                 For purposes of this
Agreement:

 

(i)                                     “After-Tax Amount”
means the portion of a specified amount that would remain after payment of all
Taxes paid or payable by Executive in respect of such specified amount; and

 

(ii)                                  “Floor Amount”
means the greatest pre-tax amount of Potential Parachute Payments that could be
paid to Executive without causing Executive to become liable for any Excise
Taxes in connection therewith; and

 

(iii)                               “After-Tax Floor Amount”
means the After-Tax Amount of the Floor Amount.

 

Article IX.

 

MISCELLANEOUS

 

9.1                                 Approvals.  The Companies represent and warrant to
Executive they have taken all corporate action necessary to authorize this
Agreement.

 

9.2                                 No Mitigation.  In no event shall Executive be obligated to
seek other employment or take any other action to mitigate the amounts payable
to Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned as a
result of Executive’s employment by another employer, except that any continued
welfare benefits provided for by Section 6.3(d) shall not duplicate
any benefits that are provided to Executive and his family by such other
employer and shall be secondary to any coverage provided by such other
employer.

 

The Companies’ obligation to make
the payments provided for in this Agreement and otherwise perform the
obligations hereunder shall not (unless Executive is terminated for Cause) be
affected by any circumstances, including set-off, counterclaim, recoupment,
defense or other claim, right or action, which the Companies may have against
Executive.

 

9.3                                 Enforcement.

 

(a)                                  If Executive incurs legal,
accounting, expert witness or other fees, costs or expenses (including
arbitration fees, costs or expenses) in an effort to secure, preserve,
establish entitlement to, or obtain compensation or benefits under this
Agreement, the Company shall promptly reimburse Executive for such fees, costs
and expenses whether or not Executive is successful; provided, however, that no
reimbursement shall be made of such expenses if Executive does not prevail
(after exhaustion of all available judicial remedies) on at least one material
issue or Executive’s assertion of rights was in bad faith and Executive does not
prevail (after exhaustion of all available judicial remedies).

 

(b)                                 If the Companies fail to
pay any amount provided under any provision of this Agreement when due, the
Executive shall be entitled to interest, compounded monthly, on such amount at
a rate equal to the lesser of (i) (A) the highest rate of interest
charged by the relevant Company’s principal lender on its revolving credit
agreements, or (B) in the absence of such a lender, the prime commercial
lending rate announced The Wall Street
Journal in effect from time to time during the period of such
nonpayment, or (ii) the highest legally-permissible interest rate allowed
to be charged under applicable law.

 

9.4                                 Indemnification and
Insurance.  The Executive shall be indemnified and held
harmless by the Companies to the greatest extent permitted under applicable
Iowa law as the same now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits a Company
to 

 

15

 

provide broader indemnification
that was permitted prior to such amendment) and the Companies’ respective
by-laws as such exist on the Agreement Date if the Executive was, is, or is
threatened to be, made a party to any pending, completed or threatened action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative, and whether formal or informal, by reason of the
fact that the Executive is or was, or had agreed to become, a director,
officer, employee, agent, or fiduciary of a Company or any other entity which
the Executive is or was serving at the request of a Company (“Proceeding”),
against all expenses (including all reasonable attorneys’ fees) and all claims,
damages, liabilities and losses incurred or suffered by the Executive or to
which the Executive may become subject for any reason.  A Proceeding shall not include any proceeding
to the extent it concerns or relates to a matter described in Section 9.3(a).  Upon receipt from Executive of (i) a
written request for an advancement of expenses, which Executive reasonably
believes will be subject to indemnification hereunder and (ii) a written
undertaking by Executive to repay any such amounts if it shall ultimately be
determined that Executive is not entitled to indemnification under this
Agreement or otherwise, the Companies shall advance such expenses to Executive
or pay such expenses for Executive, all in advance of the final disposition of
any such matter.  During Executive’s
employment and thereafter, Companies shall provide Executive with coverage
under a director’s and officer’s liability insurance policy in amounts no less
than, and on terms no less favorable than, those provide to senior executive
officers and directors of the Companies on the Agreement Date and in amounts no
less than, and on terms no less favorable than those, as provided to senior
executive officers and directors of the Companies from time to time.

 

9.5                                 Cooperation With Regard to
Litigation.  The Executive agrees to cooperate
with the Companies during his employment with any of the Companies (whether or
not during the Employment Period) and thereafter (including following Executive’s
termination of employment for any reason, whether or not pursuant to this
Agreement) by making himself reasonably available to testify on behalf of the
Companies or their Affiliates, in any action, suit or proceeding, whether
civil, criminal, administrative, or investigative and to assist each Company or
any of its Affiliates in any such action, suit, or proceeding by providing
information and meeting and consulting with the Board of such Company or
Affiliate or counsel or representatives or counsel to the Company or its
Affiliates, as reasonably requested by the Board or such counsel.  The Executive shall be entitled to
reimbursement for any expenses (including legal fees) reasonably incurred by
the Executive in connection with his compliance with the foregoing covenant;
provided, however, that during the Employment Period the Executive shall not be
reimbursed for his time spent in connection with his compliance with the
foregoing covenant.  The Companies agree
to pay Executive a per diem of $3,500 per day for each day of service
(including travel days) performed by Executive in accordance with this Section after
Executive is no longer employed by the Companies.

 

9.6                                 Beneficiary.  If Executive dies prior to receiving all of
the amounts payable to him in accordance with the terms and conditions of this
Agreement, such amounts shall be paid to the beneficiary (“Beneficiary”)
designated by Executive in writing to the Company during his lifetime, or if no
such Beneficiary is designated, to Executive’s estate.  Such payments shall be made in a lump sum to
the extent so payable and, to the extent not payable in a lump sum, in
accordance with the terms of this Agreement. 
Such payments shall not be less than the amount payable to Executive as
if Executive had lived to the date of payment and were the payee.  Executive, without the consent of any prior
Beneficiary, may change his designation of Beneficiary or Beneficiaries at any
time or from time to time by submitting to the Company a new designation in
writing.

 

9.7                                 Assignment; Successors.  This Agreement is personal to Executive and
he may not assign his duties or obligations under it.  No Company may assign its respective rights
and obligations under this Agreement without the prior written consent of
Executive, except to a successor to the Company’s business, which expressly
assumes the Company’s obligations hereunder in writing.  This Agreement shall be binding upon and
inure to the benefit of Executive, his estate and Beneficiaries, the Companies
and their successors and permitted assigns. 
Each Company shall require any successor to all or substantially all of
the business and/or assets of such Company, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or otherwise, expressly
to assume and agree to perform this Agreement in the same manner and to the
same extent as such Company would be required to perform if no such succession
had taken place.

 

16

 

9.8                                 Non-alienation.  Except as is otherwise expressly provided
herein, benefits payable under this Agreement shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by Executive, and
any such attempt to dispose of any right to benefits payable hereunder shall be
void.

 

9.9                                 Severability.  If all or any part of this Agreement is
declared to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of this Agreement not declared to be unlawful
or invalid.  Any provision so declared to
be unlawful or invalid shall, if possible, be construed in a manner which will
give effect to the terms of such provision to the fullest extent possible while
remaining lawful and valid.

 

9.10                           Amendment; Waiver.  This Agreement shall not be amended or
modified except by written instrument executed by PFGI and Executive.  A waiver of any term, covenant or condition
contained in this Agreement shall not be deemed a waiver of any other term,
covenant or condition, and any waiver of any default in any such term, covenant
or condition shall not be deemed a waiver of any later default thereof or of
any other term, covenant or condition.

 

9.11                           Arbitration.  Any dispute, controversy or claim arising out
of or in connection with or relating to this Agreement or any breach or alleged
breach thereof shall be submitted to and settled by binding arbitration in Des
Moines, Iowa, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (or at any other place or under any other form
of arbitration mutually acceptable to the parties so involved).  Any dispute, controversy or claim submitted
for resolution shall be submitted to three (3) arbitrators, each of whom
is a nationally recognized executive compensation specialist.  The Company involved in the dispute,
controversy or claim, or PFGI if more than one Company is so involved, shall
select one arbitrator, the Executive shall select one arbitrator and the third
arbitrator shall be selected by the first two arbitrators.  The arbitrators shall be required to render
their award in a written statement setting forth their findings of fact and the
bases for their conclusions.  Any award
rendered shall be final and conclusive upon the parties and a judgment thereon
may be entered in the highest court of a forum, state or federal, having
jurisdiction.  The expenses of the
arbitration shall be borne according to Section 9.3, except that in the
discretion of the arbitrators any award may include the fees and costs of a
party’s attorneys if the arbitrator expressly determines that the party against
whom such award is entered has caused the dispute, controversy or claim to be
submitted to arbitration in bad faith or as a dilatory tactic.  No arbitration shall be commenced after the
date when institution of legal or equitable proceedings based upon such subject
matter would be barred by the applicable statute of limitations.  Notwithstanding anything to the contrary
contained in this Section 9.11 or elsewhere in this Agreement, either
party may bring an action in the Iowa District Court for Polk County, or the
United State District Court for the Southern District of Iowa, if jurisdiction
there lies, in order to maintain the status quo ante of the parties.  The “status quo ante” is defined as the last
peaceable, uncontested status between the parties.  However, neither the party bringing the
action nor the party defending the action thereby waives its right to
arbitration of any dispute, controversy or claim arising out of or in
connection or relating to this Agreement. 
Notwithstanding anything to the contrary contained in this Section 9.11
or elsewhere in this Agreement, either party may seek relief in the form of
specific performance, injunctive or other equitable relief in order to enforce
the decision of the arbitrator.  The
parties agree that in any arbitration commenced pursuant to this Agreement, the
parties shall be entitled to such discovery (including depositions, requests
for the production of documents and interrogatories) as would be available in a
federal district court pursuant to Rules 26 through 37 of the Federal Rules of
Civil Procedure.  In the event that
either party fails to comply with its discovery obligations hereunder, the
arbitrator(s) shall have full power and authority to compel disclosure or
impose sanctions to the full extent of Rule 37, Fed. R. Civ. P.

 

9.12                           Notices.  All notices hereunder shall be in writing and
delivered by hand, by nationally-recognized delivery service that guarantees
overnight delivery, or by first-class, registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

 

17

 

	
  If to a Company, to:

  	
  Principal Financial
  Group, Inc.

  
	
   

  	
  711 High Street

  
	
   

  	
  Des Moines, Iowa 50392

  
	
   

  	
  Attention: Karen E. Shaff

  
	
   

  	
  Executive Vice President and
  General Counsel

  
	
   

  	
  Facsimile No.: (515) 235-9852

  
	
   

  	
   

  
	
  If to Executive, to:

  	
  at his most recent home address
  or facsimile

  
	
   

  	
  number on file with the
  Company.

  

 

Either party may from time to time designate a new
address by notice given in accordance with this Section.  Notice shall be effective when actually
received by the addressee.

 

9.13                           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same instrument.

 

9.14                           Captions.  The captions of this Agreement are not a part
of the provisions hereof and shall have no force or effect.

 

9.15                           Entire Agreement.  This Agreement forms the entire agreement
between the parties hereto with respect to the subject matter contained in the
Agreement and shall supersede all prior agreements, promises and
representations regarding employment, compensation, severance or other payments
contingent upon termination of employment, whether in writing or otherwise.

 

9.16                           Applicable Law.  This Agreement shall be interpreted and construed
in accordance with the laws of the State of Iowa, without regard to its choice
of law principles.

 

9.17                           Survival of Executive’s
Rights.  All of Executive’s rights hereunder,
including his rights to compensation and benefits, and his obligations under Article VIII
hereof, shall survive the termination of Executive’s employment or the
termination of this Agreement.

 

9.18                           Joint and Several
Liability.  The obligations of the Companies to Executive
under this Agreement shall be joint and several.

 

18

 

IN WITNESS WHEREOF, the parties
have executed this Agreement on the date first above written.

 

	
   

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Larry D. Zimpleman

  
	
   

  	
   

  	
   

  	
  Larry D. Zimpleman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PRINCIPAL FINANCIAL GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
  Its:

  	
  Chairman, Human Resources
  Committee of the Board of

  Directors

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PRINCIPAL LIFE INSURANCE
  COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
  Its:

  	
  Chairman, Human Resources
  Committee of the Board of

  Directors

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PRINCIPAL FINANCIAL SERVICES,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William T. Kerr

  
	
   

  	
   

  	
  Its:

  	
  Chairman, Human Resources
  Committee of the Board of

  Directors

  

 

19

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