Document:

exv10w4

 

Exhibit 10.4

Performance Award

2003 Equity Incentive Plan

3-Year Performance Award – May 2007

Dear [Full Name]:

     You have been granted a Performance Award as of May 17, 2007 by Centex Corporation (the
“Company”) of [number] Performance Units under the Amended and Restated Centex Corporation 2003
Equity Incentive Plan (as such plan may be amended from time to time, the “Plan”), subject to the
terms and conditions of this Performance Award Agreement (this “Award” or this “Agreement”). A
copy of the Plan is available to you upon request to the Law Department.

     This Award is subject to adjustment and other provisions as set forth on Exhibit A hereto (the
“Terms and Conditions”). Depending on the Company’s achievement of the performance goals specified
in the Terms and Conditions during the period beginning April 1, 2007 and ending March 31, 2010
(the “Performance Period”), you shall be entitled to a cash payment equal to the value of your
adjusted number of Performance Units as of the last business day of the Performance Period
determined under the Terms and Conditions, less deductions for taxes and withholdings required by
law, except as otherwise provided herein.

     The Company may cancel and revoke this Award and/or replace it with a revised award at any
time if the Company determines, in its good faith judgment, that this Award was granted in error or
that this Award contains an error. In the event of such determination by the Company, and written
notice thereof to you at your business or home address, all of your rights and all of the Company’s
obligations as to any unvested portion of this Award shall immediately terminate. If the Company
replaces this Award with a revised award, then you will have all of the benefits conferred under
the revised award, effective as of such time as the revised award goes into effect.

     For purposes of the Plan, (a) this Award is a Qualified Performance Award (but not a Stock
Award) that may be settled only in cash and (b) amounts payable hereunder (i) will not bear
interest or be entitled to dividends payable on Common Stock and (ii) may not be deferred. This
Award is given to you as part of your compensation, but is neither voluntary nor contributory by
you. This Award is subject to the Plan in all respects, and the Plan will govern where there is
any inconsistency between the Plan and this Award. The provisions of the Plan are also provisions
of this Award, and all terms, provisions and definitions set forth in the Plan are incorporated in
this Award and made a part of this Award for all purposes. Capitalized terms used but not defined
in this Award will have the meanings assigned to such terms in the Plan. This Award is subject to
the Company’s Policy on Recoupment in Restatement Situations, and you agree that you will comply
with the terms of that Policy.

     This Performance Award has been signed the Company and delivered to you, and (when signed by
you) has been accepted by you.

	 	 	 
	ACCEPTED

	 	CENTEX CORPORATION
	as of                    , 2007
	 	 
	 
	 	 
	 

	 	 
	[Full Name]

	 	[Name]

[Title]

 

 

Exhibit A to Performance Award — Terms and Conditions of Award

1. Award.

     (a) The amount that may be paid to you with respect to the Performance Units shall be based
upon the Company’s achievement of the following performance goals (“Performance Goals”) over the
Performance Period as determined by the Compensation and Management Development Committee of the
Board of Directors of the Company (or any successor thereto) (the “Committee”): (i) Relative
Earnings Per Share Growth (as defined in Section 4), and (ii) Relative Return on Equity (as
defined in Section 4), in accordance with the following matrix:

	 	 	 	 	 	 	 
	Relative EPS Growth
	Performance Level Compared to Peer Group	 	 	Performance Percentage (%)
	1st Place
	 	Maximum Payout	 	 	200	%
	2nd Place
	 	 	 	 	175	%
	3rd Place
	 	 	 	 	150	%
	4th Place
	 	 	 	 	125	%
	5th Place
	 	Target Payout	 	 	100	%
	6th Place
	 	 	 	 	75	%
	7th Place
	 	 	 	 	50	%
	8th Place
	 	 	 	 	25	%
	9th Place
	 	Minimum Payout	 	 	0	%

	 	 	 	 	 	 	 
	Relative ROE 
	Performance Level Compared to Peer Group	 	 	Performance Percentage (%)
	1st Place
	 	Maximum Payout	 	 	200	%
	2nd Place
	 	 	 	 	175	%
	3rd Place
	 	 	 	 	150	%
	4th Place
	 	 	 	 	125	%
	5th Place
	 	Target Payout	 	 	100	%
	6th Place
	 	 	 	 	75	%
	7th Place
	 	 	 	 	50	%
	8th Place
	 	 	 	 	25	%
	9th Place
	 	Minimum Payout	 	 	0	%

The Committee shall have the right to adjust the results of performance and/or the performance
percentage on an individual or Peer Group basis to recognize special or non-recurring situations,
such as acquisitions, divestitures or mergers, stock splits or stock dividends or other similar
material circumstances affecting or with respect to the Company or any other member of the Peer
Group for any years during the Performance Period with a goal of fairly comparing the Company’s
performance with the other companies in the Peer Group over the Performance Period. If one or more
members of the Peer Group ceases to be a publicly traded entity during the Performance Period, the
results for that company will be extrapolated throughout the remainder of the Performance Period
(based on the average performance of all other Peer Group companies from the end of the last
quarter for which data is available through the end of the Performance Period, and the affected
Peer Group company will be included in the final rankings based on these adjusted

(i)

 

results). However,
none of these adjustments shall be permitted if it would result in the loss of the otherwise
available exemption of the Award under Section 162(m) of the Code. In addition, in the event of
any occurrence which would result in an adjustment under Section 15 of the Plan, the Committee
shall cause equitable adjustments to be made in the number of Performance Units subject to this
Award.

     (b) After adjustment for forfeitures as provided in Section 2, the number of Performance Units
granted to you will be adjusted based on Relative EPS Growth and Relative ROE as provided in this
Section. The adjusted number of Performance Units to which you will be entitled shall be equal to
the number of Performance Units granted hereunder multiplied by the product of (i) 0.5 and (ii) the
sum of the Performance Percentages set forth in Section 1(a) for the level of achievement of each
of the performance goals therein. Notwithstanding the foregoing, the maximum number of Performance
Units you can earn will be an aggregate of 200% of the original number granted to you, and the
minimum number of Performance Units that will be awarded is zero. By way of example, assuming an
initial grant of 100 Performance Units, if the Company reached 1st place in Relative EPS
Growth and 3rd place in Relative ROE, the sum of the performance percentages would be
350% and the adjusted number of your Performance Units would be 175 ((350% x 0.5) x 100). If
Relative EPS Growth reached 3rd place and Relative ROE reached 5th place, the
sum of the performance percentages would be 250% and the adjusted number of your Performance Units
would be 125 ((250% x 0.5) x 100). If Relative EPS Growth reached 6th place and
Relative ROE reached 7th place, the sum of the performance percentages would be 125% and
the adjusted number of your Performance Units would be 62.5 ((125% x 0.5) x 100).

     (c) The adjusted number of Performance Units, determined as provided in Section 1(b), will be
multiplied by the Fair Market Value of the Company’s Common Stock on the last business day of the
Performance Period (unless another date is specified in Section 2). Except as provided in Section
2, payment of amounts due under this Award shall be made to you on the last payroll date in May,
2010, or, if later, as soon as practicable but no later than 20 days following certification by the
Committee as set forth below (the “Payout Date”). In the event of your death prior to the Payout
Date, any amount payable to you under the Award will be paid to your designated beneficiary or, if
none, to your estate. Any amount paid in respect of this Award shall be payable solely in cash, by
way of an addition to your normal paycheck (if you are then employed; otherwise, by Company check),
or, at the Company’s option, by way of an addition to your account with the Company’s Stock Plan
Administrator, and in no case shall this Award be payable in Common Stock or other securities of
the Company. Prior to any payments under this Award, the Committee shall certify in writing, by
resolution or otherwise, that the performance goals and any other material terms of the Award were
in fact satisfied and the amount to be paid in respect of the Performance Units as a result of the
achievement of the performance goals. The Committee shall not increase the amount payable to you
to an amount that is higher than the amount payable under the formula described herein.

2. Early Termination; Change in Control.

     (a) Except as otherwise provided in this Section 2, you will forfeit this Award in all
respects if you cease for any reason to be actively employed by at least one of the employers in
the group of employers consisting of the Company and its Affiliates before the last day of the
Performance Period.

     (b) If your employment is terminated for cause (as determined by the Committee) or as a result
of your voluntary termination (other than Retirement, as defined in Section 4) before the last day
of the Performance Period, this Award shall terminate in full immediately and all of your
Performance Units shall be forfeited.

     (c) Except as otherwise provided in this subsection, if your employment is involuntarily
terminated (other than for cause) before the last day of the Performance Period and as a result you
cease to be employed by at least one of the employers in the group of employers consisting of the
Company and its Affiliates, you will forfeit this Award in all respects. However, if you are
awarded severance benefits under the Centex Corporation Executive Severance Policy in connection
with the involuntary termination, or if the Committee otherwise so provides by policy or other
approval, then if the number of months of accelerated vesting to which you are entitled upon your
termination, plus the number of months that have elapsed between the
beginning of the Performance Period and the effective
date of the termination, would equal or exceed 36 months, you shall be entitled to payout of this
award as follows: the number of Performance Units awarded to you shall be adjusted upward or
downward by the applicable Performance Percentage based on the Company’s most recent quarterly
estimate of the Company’s achievement of the Performance Goals. The value of the adjusted number
of Performance Units, using the Fair Market Value as of the effective date of the termination of
employment, shall be paid

(ii)

 

as soon as administratively practicable after such
termination and determination; provided, however, that if you are an executive officer of the
Company, and if required by law or the Committee, the Company may delay the payment until the
Committee has reviewed and approved the adjustments and any proposed payment.

     (d) If your employment terminates before the last day of the Performance Period as a result of
your death or Disability (as determined by the Committee in its sole discretion), then you shall
forfeit as of the date of your termination a number of Performance Units determined by multiplying
the number of Performance Units granted to you by a fraction, (x) the numerator of which is the
number of whole months following the date of death or Disability to the end of the Performance
Period and (y) the denominator of which is thirty-six (36). The value of the resulting number of
Performance Units, using the Target Payout levels and the original grant value share price, shall
be paid as soon as administratively practicable after proof of death is provided to the Company.

     (e) If your employment terminates before the last day of the Performance Period as a result of
your Retirement, which has been approved by the Company’s Senior Vice President – Human Resources
or his or her designee, then you shall forfeit as of the date of your Retirement a number of
Performance Units determined by multiplying the number of Performance Units granted to you by a
fraction, (x) the numerator of which is the number of whole months following the date of
termination to the end of the Performance Period and (y) the denominator of which is thirty-six
(36). The resulting number of Performance Units shall be adjusted upward or downward by the
applicable Performance Percentage based on the Company’s most recent quarterly estimate of the
Company’s achievement of the Performance Goals, and the value of the adjusted number of Performance
Units, using the Fair Market Value as of the date of the Retirement, shall be paid as soon as
administratively practicable after such Retirement and determination; provided, however, that if
you are an executive officer of the Company, and if required by law or the Committee, the Company
may delay the payment until the Committee has reviewed and approved the adjustments and any
proposed payment.

     (f) If you are an Employee Director on the date of this Award, or on any subsequent day prior
to the expiration of the Performance Period, and if your employment terminates before the last day
of the Performance Period as a result of your involuntary termination or Retirement, then, unless
otherwise provided herein, none of your Performance Units shall be forfeited and this Award shall
be paid in accordance with its terms on the Payout Date.

     (g) The Committee or its designee shall determine the number of Performance Units forfeited
pursuant to the applicable subparagraph of this Section and the amount to be paid to you or your
beneficiary in accordance with this Section. Except as provided in Section 2, amounts payable
hereunder will be paid on the Payout Date.

     (h) If there is a Change in Control (as defined in the Plan) during the Performance Period,
you shall be deemed to have achieved the target level (100%) for the Performance Goals in
accordance with the terms of the Plan, with the target level of your Performance Units being
multiplied by the Fair Market Value of the Company’s common stock on the day immediately prior to
the Change in Control. Payments of the amount due to you under this Award shall be made to you as
soon as administratively practicable following the Change in Control, but in no event later than 21/2
months following the end of the calendar year in which such Change in Control occurs.

3. Miscellaneous.

     (a) You understand and acknowledge that you are one of a limited number of employees of the
Company who have been selected to receive Performance Awards and that this grant is considered
confidential information. You hereby covenant and agree not to disclose the award to you of this
Award to any other person except (i) your immediate family and legal or financial advisors who
agree to maintain the confidentiality of this Award, (ii) as required in connection with the
administration of this Award and the Plan as it relates to this Award or under applicable law, or
(iii) to the extent the terms of this Award had been publicly disclosed by the Company.

     (b) The Company shall be entitled to make all lawful deductions from any payment it is
required to make to you under this Award in respective applicable federal, state, local or
employment taxes, Social Security and Medicare.

     (c) The authority to manage and control the operation and administration of this Award shall
be vested in the Committee, and the Committee shall have all powers with respect to this Award as
it has with respect to the Plan.

(iii)

 

Any interpretation of this Award by the Committee and any decision made by it with respect to this
Award shall be final and binding on all persons.

     (d) This Award shall be construed and interpreted to comply with or be exempt from Section
409A of the Code. The Company reserves the right, without your prior consent, to modify or amend
this Award to the extent it reasonably determines is necessary in order to (i) preserve the
intended tax consequences of the Performance Units in light of Section 409A of the Code and any
regulations or other guidance promulgated thereunder, or (ii) correct, with the consent of the
Committee, unintentional design errors. In addition, the Committee reserves the right, without
your prior consent, to reduce the amount payable under this Award to the extent it deems necessary
taking into account competitive performance and other factors. Such modifications or amendments
may limit or eliminate certain rights otherwise available to you under the Plan or this Agreement.
Neither the Company nor members of the Committee shall be liable for any determination or action
taken or made with respect to this Award or the Performance Units granted hereunder.

     (e) Neither this Award nor your rights hereunder shall be transferable during your life other
than by will, pursuant to the applicable laws of descent and distribution or as provided in your
beneficiary designation form, unless otherwise provided in the Plan. None of your rights or
privileges in connection with this Award shall be transferred, assigned, pledged or hypothecated by
you or by any other person in any way, whether by operation of law, or otherwise, and shall not be
subject to execution, attachment, garnishment or similar process. In the event of any such
occurrence, this Award shall automatically be terminated and shall thereafter be null and void.

     (f) Nothing in this Award shall confer upon you any right to continued employment with the
Company or any of its subsidiaries, or to interfere in any way with the right of the Company to
terminate your employment relationship with the Company or any of its subsidiaries at any time.

     (g) If any term or provision of this Award shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, you and the Company intend for any court
construing this Award to modify or limit such provision so as to render it valid and enforceable to
the fullest extent allowed by law. Any such provision that is not susceptible of such reformation
shall be ignored so as not to affect any other term or provision hereof, and the remainder of this
Award, or the application of such term or provision to persons or circumstances other than those as
to which it has held invalid, illegal or unenforceable, shall not be affected thereby and each term
and provision of this Award shall be valid and enforced to the fullest extent permitted by law.

     (h) The Company’s obligation under the plan and this Award is an unsecured and unfunded
promise to pay benefits that may be earned in the future. The Company shall have no obligation to
set aside, earmark or invest any fund or money with which to pay its obligations under this Award.
You or any successor in interest shall be and remain a general creditor of the Company in the same
manner as any other creditor having a general claim from matured and unpaid compensation.

     (i) This Award shall not entitle the holder to any dividends, rights upon liquidation, voting
rights or other rights of stockholders of the Company.

4. Definitions and Rules of Construction.

     (a) Definitions. The following terms have the meanings set forth below:

     “Average Equity” for a period of four consecutive quarters means the average of reported
stockholder’s equity at (1) the beginning of the first quarter, (2) the end of the first quarter,
(3) the end of the second quarter, (4) the end of the third quarter, and (5) the end of the fourth
quarter.

     “Annual Net Income” for a period of four consecutive quarters means the sum of quarterly Net
Income during the four quarters.

     “Annual Return on Equity” or “Annual ROE” for a period of four consecutive quarters means the
Annual Net Income for the four quarters divided by the Average Equity for the four quarters.

(iv)

 

     “Baseline Period” means the three-year period beginning April 1, 2004 and ending March 31,
2007. In comparing results of the Company with the performance of the other companies in the Peer
Group, there shall be used the fiscal quarter that corresponds to the same fiscal quarter of the
Company, or if there is not a comparable period, then the fiscal quarter ending most closely before
a fiscal quarter of the Company and, in the case of fiscal year computations, there shall be used
the four fiscal quarters ending at or most closely preceding the fiscal year of the Company.

     “Code” means the Internal Revenue Code of 1986, as amended, and the rulings, regulations and
other guidance thereunder.

     “Cumulative Baseline Period EPS” means the sum of Earnings per Share during the twelve
quarters of the Baseline Period.

     “Cumulative Performance Period EPS” means the sum of Earnings per Share during the twelve
quarters of the Performance Period.

     “Earnings Per Share” means net income per diluted share of common stock as publicly reported,
on a quarterly basis, adjusted to exclude the effect of extraordinary or unusual nonrecurring items
of gain, loss, income or expense, as determined in good faith by the Committee.

     “Earnings per Share Growth” or “EPS Growth” means the difference between the Cumulative
Performance Period EPS and the Cumulative Baseline Period EPS, expressed as a percentage of the
Cumulative Baseline Period EPS.

     “Net Income” means total company reported net income, adjusted to exclude the effect of
extraordinary or unusual nonrecurring items of gain, loss, income or expense, as determined in good
faith by the Committee.

     “Peer Group” means, in addition to the Company, the largest (by U.S. homebuilding revenue)
eight (8) other publicly traded homebuilders at the beginning of the Performance Period. The Peer
Group companies are: Lennar, DR Horton, Pulte Homes, KB Home, Hovnanian, Beazer Homes, MDC
Holdings and Ryland Group.1

     “Performance Period” means the three-year period beginning April 1, 2007 and ending March 31,
2010. In comparing results of the Company with the performance of the other companies in the Peer
Group, there shall be used the fiscal quarter that corresponds to the same fiscal quarter of the
Company, or if there is not a comparable period, then the fiscal quarter ending most closely before
a fiscal quarter of the Company and, in the case of fiscal year computations, there shall be used
the four fiscal quarters ending at or most closely preceding the fiscal year of the Company.

     “Performance Period Return on Equity” or “Performance Period ROE” means the average of (1) the
Annual ROE for the four consecutive quarters ending March 31, 2008, (2) the Annual ROE for the four
consecutive quarters ending March 31, 2009, and (3) the Annual ROE for the four consecutive
quarters ending March 31, 2010. In comparing results of the Company with the performance of the
other companies in the Peer Group, there shall be used the fiscal quarter that corresponds to the
same fiscal quarter of the Company, or if there is not a comparable period, then the fiscal quarter
ending most closely before a fiscal quarter of the Company and, in the case of fiscal year
computations, there shall be used the four fiscal quarters ending at or most closely preceding the
fiscal year of the Company.

     “Relative Earnings Per Share Growth” or “Relative EPS Growth” means the Earnings Per Share
Growth of the Company compared to the other members of the Peer Group, as determined in good faith
by the Committee.

     “Relative Return on Equity” or “Relative ROE” means the Performance Period ROE of the Company,
compared to the other members of the Peer Group, as determined in good faith by the Committee.

     “Retirement” has the meaning set forth in the Plan; provided, however, that in the absence of
any additional criteria in the Plan, “Retirement” shall mean the date you attain age 65 or such
earlier date as the Committee shall approve.

 

			
	1	 	Note: The Peer Group consciously excludes
Toll Brothers and NVR, regardless of their revenue size, due to significant
differences in their business models as compared to Centex and the other
national homebuilders.

(v)

 

     (b) Rules of Construction. All references to Sections refer to sections in this Agreement.
The titles to sections of this Agreement are for convenience of reference only and, in the case of
conflict, the text of this Agreement, rather than the titles, shall control.

(vi)

 

CENTEX CORPORATION 2003 EQUITY INCENTIVE PLAN

LONG-TERM PERFORMANCE AWARD

BENEFICIARY DESIGNATION FORM

	 	 	 	 	 
	Participant’s Name:
	 	 	 	 
	 

	 	 

	 	 
	Social Security Number:
	 	 	 	 
	 

	 	 	 	 

This Beneficiary Designation (this “Beneficiary Designation”) is subject to all of the terms and
conditions of the Centex Corporation 2003 Equity Incentive Plan (the “Plan”) and the 3-Year
Performance Award – May 2007 granted to me by Centex Corporation (the “Company”) with an effective
date of May 17, 2007 (the “Performance Award”).

By signing this Beneficiary Designation, I hereby declare that upon my death the following
individual(s) (my “Beneficiary(ies)”) shall be entitled to receive the stated percentage of any
amount that may be payable with respect to me following my death under the Performance Award:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Full Name of	 	 	Relationship to	 	 	 	 	 	 	 
	 	Designated Beneficiary	 	 	You	 	 	Social Security/Tax ID Number	 	 	Percentage	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	Address

	 	 	Birth Date (MM/DD/YYYY)
	 	 	Sex	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Full Name of	 	 	Relationship to	 	 	 	 	 	 	 
	 	Designated Beneficiary	 	 	You	 	 	Social Security/Tax ID Number	 	 	Percentage	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 	Address

	 	 	Birth Date (MM/DD/YYYY)
	 	 	Sex	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Total: 100%

I understand that if no Beneficiary is designated then, in the event of my death, the amount
payable under the Performance Award will be made to my estate. If my sole Beneficiary dies, or if
any of my other designated Beneficiaries die prior to the payment of all of the amounts payable
under the Performance Award, then payment of such deceased Beneficiary’s stated percentage will be
made to such deceased Beneficiary’s estate.

I further understand that all prior beneficiary designations for the Performance Award are hereby
revoked and that this Beneficiary Designation may only be revoked in writing on a form provided by
the Company on behalf of the Committee, signed by me (and witnessed) and received by the Committee.
The foregoing Beneficiary Designation shall remain in effect until such time as I file another
such designation with the Company bearing a more recent date except to the extent otherwise
required by law.

	 	 	 
	 

	 	 
	Signature

	 	Witness

	 	 	 
	 

Date of signature

	 	 
	 
	 	 
	 
	 	 

(vii)exv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this 18th day of May, 2007, relating to the issuance by
Principal Life Income Fundings Trust 2007-47 (the “Trust”) of Notes with a principal amount of
$3,642,000.00 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 May 18, 2007.

     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 the License Agreement set
forth in Section B 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:  	Vice President 	 
	 

[Execution Page 2 of 3]

 

 

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

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

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

[Execution Page 3 of 3]

 

 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

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

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

	 	Standard Indenture Terms — Incorporated herein by reference to
Exhibit 4.1 to Principal Life Insurance Company’s Current Report
on Form 8-K, filed on December 6, 2006.
	 
	 	 
	Exhibit D

	 	Pricing Supplement — Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2007-47, filed on May 14, 2007 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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