Document:

exv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program Documents contained
herein, each such document dated as of this 15th day of July, 2005, relating to the
issuance by Principal Life Income Fundings Trust 2005-70 (the “Trust”) of Notes 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 March 5, 2004, 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 March 5, 2004 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
Intentionally Left 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 March 5, 2004, 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
or Pricing Supplement, 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 Intentionally Left 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 Intentionally Left 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 March 5, 2004, 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 Intentionally Left 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 agents named therein, including the
Purchasing Agent have entered into that certain Distribution Agreement dated
March 5, 2004 (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 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 2.05 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 2.06 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 or Pricing
Supplement, as indicated herein.

     Section 2.07 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 Intentionally Left 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 Agent (as defined in the Distribution 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 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) 361-2458
	

	 	Facsimile: (212) 809-5459 and (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) 816-5527

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: (515) 235-9353
	 
	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: (515) 235-9353
	 
	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: (515) 235-9353
	 
	To Bankers Trust Company, N.A:
	 	 
	 
	

	 	Bankers Trust Company, N.A.
	

	 	665 Locust Street
	

	 	Des Moines, Iowa 50309-3702
	

	 	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 Intentionally Left Blank.]

E-5

 

MISCELLANEOUS AND EXECUTION PAGES

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

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

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

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

 	 
	 	By:  	/s/ Christopher P. Freese
 	 
	 	 	Name:  	Christopher P. Freese 	 
	 	 	Title:  	Officer 	 
	 

	 	 	 	 	 
	 	PRINCIPAL FINANCIAL GROUP, INC. (in executing below
agrees and becomes a party to (i) the Terms Agreement
set forth in Section D herein and (ii) the Coordination
Agreement set forth in Section E herein)

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

	 	 	 	 	 
	 	PRINCIPAL FINANCIAL SERVICES, INC. (in executing below
agrees and becomes a party to (i) the License Agreement
set forth in Section B herein and (ii) the Coordination
Agreement set forth in Section E herein)

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

[Execution Page 1 of 3]

 

 

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

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

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

	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION (in executing
below agrees and becomes a party to the Trust Agreement
set forth in Section A herein), as Trustee

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

	 	 	 	 	 
	 	GSS HOLDINGS II, INC. (in executing below agrees and
becomes a party to the Trust Agreement set forth in
Section A herein), as Trust Beneficial Owner

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

[Execution Page 2 of 3]

 

 

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

 	 
	 	By:  	/s/ Patty Ashbaugh
 	 
	 	 	Name:  	Patty Ashbaugh 	 
	 	 	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 4.6 to Principal Life Insurance Company’s and Principal
Financial Group, Inc.’s Registration Statement on Form S-3
(Registration Nos. 333-110499 and 333-110499-01).
	 
	 	 
	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 and Principal
Financial Group, Inc.’s Registration Statement on Form S-3
(Registration Nos. 333-110499 and 333-110499-01).
	 
	 	 
	Exhibit D

	 	Pricing Supplement – Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2005-70, filed on July 18, 2005, with the Securities and
Exchange Commission pursuant to Rule 424(b)(5) 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
	 
	 	 
	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.
333-110499 and 333-110499-01) (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 • day of •, 200•.

	 	 	 
	

	[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. 333-110499 and 333-110499-01 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 • day of •, 200•.

	 	 	 
	

	 	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

 

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. All capitalized terms used herein and not otherwise defined herein
will have the meanings set forth in the Distribution Agreement.exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”), effective as of July 11, 2005 (“Effective Date”) is
entered by and between James Kupferschmid (“Executive”) and Kitty Hawk, Inc. (“Company”). As used
in this Agreement, the term Company also includes its affiliates.

     WHEREAS, the Company and Executive wish to enter into an Employment Agreement which replaces
and supercedes any existing contractual arrangement.

     WHEREAS, the Company desires to establish its right to the continued services of the
Executive, in the capacity described below, on the terms and conditions and subject to the rights
of termination hereinafter set forth, and the Executive is willing to accept such employment on
such terms and conditions.

     THEREFORE, in consideration of the mutual agreements hereinafter set forth, the Executive and
the Company have agreed and do hereby agree as follows:

     1. EMPLOYMENT as Vice President and Chief Financial Officer for Kitty Hawk, Inc., reporting to
the President and Chief Executive Officer. The Company does hereby agree to employ Executive as
Vice President and Chief Financial Officer and the Executive does hereby agree to accept employment
with the Company as Vice President and Chief Financial Officer on the terms and conditions set
forth herein. Executive shall have those powers and duties normally associated with the position
of Vice President and Chief Financial Officer of entities comparable to the Company and such other
duties and responsibilities as may be assigned to Executive from time to time. The Executive shall
use his best efforts and devote substantially all of his business time (other than absences due to
illness or vacation) to the performance of his duties for the Company. Notwithstanding the above,
Executive shall be permitted, to the extent that such activities do not interfere with performance
of Executive’s duties and responsibilities hereunder, to: (i) manage Executive’s personal,
financial and legal affairs, (ii) to serve on civic or charitable boards or committees, it being
expressly understood and agreed Executive may continue serving on any such boards and/or committees
on which Executive is serving or with which Executive is associated as of the Effective Date as set
forth on Appendix 1 hereto, and (iii) to give lectures and be involved in speaking engagements
associated with Executive’s community service or service to civic or charitable boards or
committees.

          (a) PLACE OF PERFORMANCE. Unless relocated, the principal place of employment of Executive
shall be at the Company’s principle executive offices in the Dallas/Fort Worth, Texas metropolitan
area.

     2. TERM OF AGREEMENT. The term of Executive’s employment under this Agreement shall commence
on July 11, 2005 (the “Commencement Date”) and shall continue for a period of two (2) years (the
“Term”); provided, that, on the second anniversary of the Commencement Date and on
each annual anniversary thereafter, the Term and Executive’s employment hereunder shall
automatically be extended for successive one (1) year periods unless either party gives written
notice not to extend the term of this Agreement ninety (90) days in advance of the expiration of
the Term or any extension thereof.

     3. COMPENSATION.

          (a) BASE SALARY. The Company shall pay the Executive, and the Executive agrees to accept from
the Company for payment of his services to the Company, a base salary at the rate of One Hundred
and Eighty Five Thousand Dollars ($185,000) per year (“Base Salary”), during the initial
Term, payable in equal semi-monthly installments or at such other time or times as the Executive
and the Company shall agree. Thereafter, Executive’s Base Salary shall be reviewed on a calendar
year basis, by the Compensation Committee of the Board of Directors of the Company (the
“Committee”), and may be increased as determined by the Committee and approved

 

 

by the Board in its sole and absolute discretion. Such increased Base Salary shall be used
for all purposes under this Agreement. Executive’s Base Salary shall not be decreased during the
Term.

          (b) PERFORMANCE BONUS. Pursuant to the terms of any plan then existing, Executive shall be
eligible to receive an annual cash performance bonus based on the achievement of annual performance
goals to be established by the Committee (the “Bonus”). Such Bonus, if any, shall be paid when
annual performance bonuses are customarily paid, but in no event later than 30 days following the
finalization of audited financial statements and filing of the Company’s 10k (the “Payment Date”).

          (c) INCENTIVE COMPENSATION. To the extent that the Company maintains or establishes any
incentive compensation plans applicable to senior executive officers and that are adopted by the
Board of Directors, Executive shall participate in any such plans or programs pursuant to the terms
and conditions contained in such plans.

          (d) STOCK OPTION GRANTS. Upon the Effective Date Executive shall be granted a stock option to
purchase 150,000 shares of common stock of the Company in accordance with the terms and conditions
of the Kitty Hawk 2003 Long Term Equity Incentive Plan (“Initial Options”). The Initial Options
shall have an exercise price equal to the closing price of the Company’s common stock on the
American Stock Exchange on the Effective Date. The Initial Options shall vest in three equal
installments on the anniversary of the Effective Date, starting with the one year anniversary of
the Effective Date. Executive shall not be eligible for additional option or equity grants until
November 2006.

     4. BENEFITS.

          (a) FRINGE BENEFITS. Executive shall be entitled to participate in any benefit programs
adopted from time to time by the Company for the benefit of its executive officers, and Executive
shall be entitled to receive such other fringe benefits as may be granted to him from time to time
by the Company’s Board of Directors.

          (b) BENEFIT PLANS. Executive shall be entitled to participate in any benefit plans relating to
stock options, stock purchases, pension, thrift, profit sharing, life and disability insurance,
medical coverage, executive medical coverage, education, or other retirement or employee benefits
available to other executive employees of the Company, subject to any and all terms and conditions
contained in such plans.

          (c) VACATION. Executive shall be entitled to the number of weeks of paid vacation per year in
accordance with the Company’s regular vacation policy. Unused vacation shall carry forward to the
extent allowed by the Company’s regular vacation policy.

          (d) PERSONAL RELOCATION EXPENSES. Executive shall receive the personal relocation expenses
attached hereto as Attachment A.

     5. BUSINESS EXPENSES. The Company shall reimburse the Executive for any and all necessary,
customary, and usual business related expenses, properly documented in accordance with Company
policies.

     6. CORPORATE RELOCATION. Should the Company relocate its principal executive offices to a
location outside of the Dallas/Fort Worth, Texas, metroplex area, and Executive is required to
relocate to such area, the Company will reimburse the Executive for all of his reasonable and
customary relocation expenses pursuant to the Company’s regular relocation policy then in effect.

     7. CONFIDENTIAL INFORMATION.

          Executive recognizes that by reason of his employment by and service to the Company he will
occupy a position of trust with respect to the business and its employees and technical and other
information of a secret or confidential nature (“Confidential Information”) which is the property
of the Company which the Company hereby agrees to provide Executive and which may also be imparted
to him from time to time in the course of the performance of his duties hereunder. Executive
acknowledges that such information is a valuable and unique asset of the Company and agrees that he
shall not, during or after the Term of this Agreement, directly or indirectly use or

 

 

disclose any Confidential Information of the Company to any person, except that Executive may
use and disclose to authorized personnel of the Company such Confidential Information as is
reasonably appropriate in the course of the performance of his duties hereunder. Confidential
Information of the Company shall include all information and knowledge of any nature and in any
form relating to the Company and its subsidiaries and affiliates including but not limited to,
business plans; development projects; computer software and related documentation and materials;
designs, practices, processes, methods, know-how and other facts relating to the business of the
Company and its subsidiaries and its affiliates; advertising, promotions, financial matters, sales
and profit figures, employee hiring, training, evaluations and retention practices and customers or
customer lists. Confidential Information shall not include any information that is or shall become
publicly known through no fault of the Executive and any information received in good faith on a
non-confidential basis from a third party who has the right to disclose such information and who
has not received such information, either directly or indirectly, from the Company. If Executive
is required to disclose Confidential Information by any court or governmental tribunal, Executive
shall, to the extent practical under the circumstances, first give notice to the Company in order
that it may have an opportunity to seek a protective order. The Company and Executive shall
cooperate with each other, should either decide to seek a protective order with all costs and
expenses being borne by the party seeking such order. Executive shall abide by the final order,
judgment, or decree of any court of competent jurisdiction, administration or regulatory body
regarding such application for a protective order.

     8. TERMINATION OF EXECUTIVE’S EMPLOYMENT.

          (a) DEATH. If the Executive dies while employed by the Company, his employment shall
immediately terminate. Upon Executive’s death, the Company shall pay or provide to Executive’s
estate or his beneficiaries within thirty (30) business days following such death or such other
time set forth herein: (i) his earned, but unpaid Base Salary through the date of his termination
of employment, (ii) any earned, but unpaid Bonus for the year prior to the year of termination of
employment to be paid on the Payment Date with respect to that Bonus, (iii) his earned, but unused
vacation pay to the extent provided for under the Company’s vacation policy; (iv) properly
documented unreimbursed business expenses, and (v) any other benefits in accordance with the
Company’s retirement, insurance, and other applicable benefit programs and plans then in effect
(the “Accrued Benefits”). If Executive’s death occurs during a year, Executive’s beneficiaries or
estate shall also be paid on the Payment Date, a pro-rated Bonus, if any, for the year equal to the
product of (A) and (B) where (A) is the amount payable to Executive as a Bonus for such year had he
been employed through the last day of the year, and (B) is a fraction, the numerator of which is
the number of days the Executive was employed by the Company during such year and the denominator
is 365 (“Pro-Rated Bonus”).

          (b) DISABILITY. If, as a result of Executive’s mental or physical incapacity, Executive shall
be substantially unable to perform the services for the Company contemplated by this Agreement for
sixty (60) consecutive days or ninety (90) days in any twelve (12) month period (“Disability”),
Executive’s employment may be terminated by the Company for Disability. During any period prior to
such termination during which Executive is absent from the full-time performance of his duties with
the Company due to Disability, the Company shall continue to pay Executive the amounts contemplated
under this Agreement; provided, that, such payments made to the Executive shall be reduced by
amounts received from disability insurance obtained or provided by the Company. Subsequent to the
termination provided for in this Section 8(b), the Company shall pay or provide Executive the
Accrued Benefits at the times set forth in Section 8(a) above and a Pro-Rated Bonus.

          (c) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON OR DUE TO EXECUTIVE NOT RENEWING THE TERM.
Executive may terminate his employment without Good Reason (as defined below) at any time prior to
expiration of the Term. For purposes of this clause (c), if Executive provides the notice not to
renew the Term, such termination shall be treated in the same fashion as a termination by Executive
without Good Reason. Upon such termination of employment, the Company shall pay Executive his
Accrued Benefits at the times set forth in 8(a) above; provided, however, the benefits described in
8(a)(ii) shall only be paid if such termination occurs after the finalization of the Company’s
audited financial statements for the year prior to the year of termination.

          (d) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Executive’s employment
under this Agreement for “Cause.” For the purposes of this Agreement, the term “Cause” shall mean
Executive’s:

 

 

          (i) conviction by a court of competent jurisdiction of a felony or serious misdemeanor
involving moral turpitude;

          (ii) willful disregard of any written directive of the Company, provided the written
directive is not inconsistent with the Certificate of Incorporation or Bylaws of the Company
or applicable law;

          (iii) breach of his or her fiduciary duty or duty of loyalty under circumstances that
involve personal profit;

          (iv) breach of a material term of this employment agreement; or

          (v) neglect of his duties that has a material adverse effect on the Company.

     In the event of termination for Cause, the Company shall pay Executive his Accrued Benefits
excluding benefits described in Section 8(a)(ii) at the times set forth in 8(a) above.

          (e) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company shall have the right to terminate
this Agreement prior to the expiration of the Term, at any time, without Cause. In the event the
Company shall so elect to terminate this Agreement, the Executive shall receive compensation
pursuant to the provisions of Section 10 or Section 14 of this Agreement, as the case may be.

          (f) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive shall have the right to
terminate this Agreement for Good Reason. In the event Executive so elects to terminate this
Agreement, the Executive shall receive compensation pursuant to the provisions of Section 10 or
Section 14 of this Agreement, as the case may be. For purposes of this Agreement, “Good Reason”
shall mean the occurrence, without the Executive’s prior written consent, of any one or more of the
following events:

                    (i) The Company’s material breach of any of the provisions of this Agreement; or

                    (ii) A reduction in Executive’s Base Salary; or

                    (iii) The relocation of the Company’s principal executive offices to a location outside of the
Dallas/Fort Worth metropolitan area without providing the Executive with relocation expenses in
accordance with Section 6 of this Agreement; or

                    (iv) The failure of the Company to provide in all material respects the indemnification set
forth in this Agreement and the Company’s by-laws.

The Executive agrees to provide the Company thirty (30) days’ prior written notice of any
termination for Good Reason, during which 30-day period the Company shall have the right to cure,
if curable, the circumstances giving rise to the Good Reason stated in such notice.

          (g) Following a termination governed by this Section 8, except as specifically provided in
this Agreement, the Executive shall not be entitled to any other compensation or benefits, except
as may be separately negotiated by the parties and approved by the Board of Directors of the
Company in writing.

     9. TERMINATION PROCEDURE. Any termination of Executive’s employment by the Company or by
Executive during the Term (other than termination pursuant to Section 8(a)) shall be communicated
by written Notice of Termination to the other party hereto in accordance with Section 15. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon.

     10. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE EXECUTIVE FOR
GOOD REASON. If the Executive’s employment shall be terminated (i) by act of

 

 

the Company other than for Cause, or (ii) by the Executive for Good Reason, the Executive
shall be entitled to the following benefits:

          (a) the Accrued Benefits which shall be paid at the times set forth in Section 8(a) above and
the Pro-Rated Bonus.

          (b) Executive shall be paid a severance amount in 12 equal semi-monthly installments, which in
the aggregate equals fifty percent (50%) of Executive’s annual rate of Base Salary in effect on the
date of termination (not taking into account any reductions in Base Salary not agreed to by
Executive in writing) (the “Severance Payment”).

          (c) Notwithstanding the terms and conditions of the 2003 Long-Term Equity Incentive Plan or
any agreements entered into thereunder and any other plan or program which may be in effect from
time to time (and for the purpose of this Agreement any such plans and agreements will be deemed to
be amended to reflect the foregoing), with respect to Executive’s initial Incentive Stock Option
Agreement under the 2003 Equity Incentive Plan, Executive’s service with the Company will be deemed
to continue for 12 months following his separation date for purposes of vesting such that the
portion of the option that would have vested during such 12-month period will become immediately
vested and exercisable as of the separation date. With respect to any other equity based awards
granted to Executive from time to time, including, without limitation, stock options, restricted
stock, performance awards and stock appreciation rights, (“Awards”), all such Awards, if any, will
become immediately 100% vested and, if applicable, exercisable upon Executive’s separation.

          (d) The Company shall continue to provide the Executive with life and disability insurance,
medical, vision and dental coverage, executive medical and other health and welfare benefits for 6
months following Executive’s separation of service or until Executive becomes an eligible
participant in substantially similar or better heath and welfare plans which do not exclude
pre-existing conditions which were covered by the Company’s plans, whichever is earlier.

          (e) Following a termination governed by this Section 10, except as specifically provided in
this Agreement, the Executive shall not be entitled to any other compensation or benefits, except
as may be separately negotiated by the parties and approved by the Board of Directors of the
Company in writing.

     11. COMPENSATION UPON THE COMPANY’S NOT RENEWING THE AGREEMENT PURSUANT TO PARAGRAPH 2. If,
pursuant to Section 2, the Executive’s employment is terminated as a result of the Company’s
providing written notice of intent not to renew, the Executive shall be entitled to the following
benefits:

          (a) The Accrued Benefits which shall be paid at the time set forth in Section 8(a) above and
the Pro-Rated Bonus.

          (b) The Severance Payment; provided, that, such Severance Payment shall be offset and reduced
by remuneration earned by Executive during such 6 month Severance Payment period whether as an
employee, consultant, advisor, contractor, partner, agent or in another similar capacity.

          (c) Notwithstanding the terms and conditions of the Company’s 2003 Equity Incentive Plan or
any agreements entered into thereunder and any other plan or program which may be in effect from
time to time (and for purposes of this Agreement any such plans and agreements will be deemed to be
amended to reflect the foregoing), for purposes of vesting of any Awards, Executive’s service with
the Company will be deemed to continue for 12 months following his separation date such that upon
such separation date, all Awards that would have vested during such 12-month period shall
immediately vest as of the separation date. Exercise of any vested Awards will be pursuant to
terms of such plans upon termination of service, provided, however, if within 90 days following the
termination of service, Executive is restricted from exercising any Awards as a result of any
Company or Securities Exchange Commission imposed black-out periods, the number of days in the
black-out period shall be added to the exercise period.

 

 

          (d) The Company shall continue to provide the Executive with life and disability insurance,
medical, vision and dental coverage, executive medical and other health and welfare benefits for 6
months following Executive’s separation from service or until Executive becomes an eligible
participant in substantially similar or better heath and welfare plans which do not exclude
pre-existing conditions which were covered by the Company’s plans, whichever is earlier.

          (e) Executive shall be paid the Severance Payment in the manner set forth in Section 10(b)
above.

          (f) Following a termination governed by this Section 11, except as specifically provided in
this Agreement, the Executive shall not be entitled to any other compensation or benefits, except
as may be separately negotiated by the parties and approved by the Board of Directors of the
Company in writing.

     12. NON-COMPETITION PROVISIONS.

          (a) RIGHT TO COMPANY MATERIALS. Executive agrees that all styles, designs, lists, materials,
books, files, reports, correspondence, records, electronically stored data or software and other
documents and all Confidential Information (“Company Materials”) used, prepared, or made available
to Executive, shall be and shall remain the property of the Company. Upon the termination of
employment or the expiration of this Agreement, all Company Materials and all other property of the
Company shall be returned immediately to the Company, and Executive shall not make or retain any
copies of Company Materials or its property following his termination of employment.

          (b) ANTI-SOLICITATION. Executive promises and agrees that during the Term and for the twelve
(12) month period commencing on the termination of his employment (the “Restricted Period”), he
will not influence or attempt to influence customers or suppliers of the Company or any of its
present or future subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then in competition with
the business of the Company, or any subsidiary or affiliate of the Company.

          (c) NON-COMPETITION. Executive promises and agrees that during the Restricted Period, he will
not within the United States, without the prior written consent of the Company, directly or
indirectly, become interested in any capacity (whether as proprietor, director, partner, employee,
agent, independent contractor, consultant, trustee or in any other capacity) or be paid by or
otherwise receive compensation or consideration from any bulk air cargo or bulk air freight
business that is competitive with the specific products or services sold or maintained by the
Company. This shall not prevent Executive from owning securities in any such competitive business
(but without otherwise participating in the activities of such enterprise) if (i) such securities
are listed on any national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934, and (ii) the Executive does not beneficially own (as
defined by Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in excess of 5% of the
outstanding capital stock of such enterprise.

          (d) SOLICITING EMPLOYEES. During the Restricted Period commencing on the termination of his
employment, Executive promises and agrees that he will not directly or indirectly solicit or engage
in any of the Company’s employees or former employees who worked for the Company at any time during
the six (6) months preceding the termination of Executive’s employment, to work for any business,
individual, partnership, firm, corporation, or other entity then in competition with the Company or
any subsidiary or affiliate of the Company.

     13. NON-DISPARAGEMENT. The Executive agrees that subsequent to Executive’s employment
hereunder, the Executive will refrain from initiating or engaging in any communication with any
then current or former employee, officer, director, shareholder, customer, vendor or competitor of
Company or any third party other than Executive’s spouse or legal counsel, which could reasonably
be interpreted as derogatory or disparaging to the reputation of the Company and its business
practices, employees, officers, directors and agents.

     14. CHANGE IN CONTROL.

 

 

          (a) For purposes of this Agreement, “Change in Control” shall mean: (i) the consummation of a
merger, consolidation, share exchange or any other corporate transaction involving the Company, as
a result of which, the members of the Board, elected by the shareholders of the Company immediately
prior to such transaction fail to constitute at least a majority of the Board of Directors of the
surviving entity resulting from such transaction, or (ii) a sale of all or substantially all of the
assets of the Company to another corporation, individual or entity, as a result of which, the
members of the Board, elected by the shareholders of the Company immediately prior to such
transaction fail to constitute at least a majority of the Board of Directors of the entity
purchasing the assets of the Company; or (iii) any “person” (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Commencement Date a “beneficial
owner” (as defined in Rule 13d3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 40% or more (a “40% Shareholder”) of the combined voting power of the
Company’s then outstanding securities eligible to vote for the election of the Board (the “Company
Voting Securities”); provided, however, that an event described in this paragraph
(iii) shall not be deemed to be a Change in Control if any of following becomes such a beneficial
owner: (A) the Company or any majority-owned subsidiary (provided, that this exclusion applies
solely to the ownership levels of the Company or the majority-owned subsidiary), (B) any employee
benefit plan of the Company or any of its majority-owned subsidiaries, (C) any entity holding
voting securities of the Company for or pursuant to the terms of any such plan or (D) Everest
Capital, Resurgence Asset Management LLC or Stockton LLC or any of their affiliates.

          (b) Upon a Change in Control, the Term of this Agreement shall continue for the longer of (a)
the period remaining in the Term or (b) twelve months (such 12 month period, even if the remaining
Term is a longer period, shall be the “Change in Control Period”). Following the expiration of the
Term (as it may be extended pursuant to this paragraph so it is at least twelve (12) months upon a
Change in Control), the Agreement shall renew in accordance with Section 2 of the Agreement unless
either party gives written notice not to extend pursuant to Section 2.

          (c) (i) If Executive terminates his employment for Good Reason during the Change in Control
Period; (ii) if Executive’s employment is terminated by the Company without Cause during the Change
in Control Period or (iii) if (A) Executive’s employment is terminated by the Company without Cause
90 days prior to a definitive purchase agreement that results in a Change in Control and (B)
Executive reasonably demonstrates that such termination was at the request of a third party who had
taken steps reasonably calculated to effect a Change in Control and (C) a Change in Control
involving such third party (or a party competing with such third party to effectuate a Change in
Control) does occur, then Executive shall be entitled to the following benefits:

          (i) the Accrued Benefits and the Pro-Rated Bonus at the times set forth in 8(a) above.

          (ii) A lump sum cash payment equal to two (2) times the Severance Payment.

          (iii) The Company shall continue to provide the Executive with life and disability
insurance, medical, vision and dental coverage, executive medical and other health and
welfare benefits for 6 months following his separation from employment or until Executive
becomes an eligible participant in substantially similar or better heath and welfare plans
which do not exclude pre-existing conditions which were covered by the Company’s plans,
whichever is earlier.

          (iv) Following a termination governed by this Section 14, except as specifically
provided in this Agreement, the Executive shall not be entitled to any other compensation or
benefits, except as may be separately negotiated by the parties and approved by the Board of
Directors of the Company in writing.

          (v) Notwithstanding the terms and conditions of the Company’s 2003 Equity Incentive
Plan or any agreements entered into thereunder and any other plan or program which may be in
effect from time to time (and for the purposes of this Agreement any such plans and
agreements will be deemed to be amended to reflect the foregoing), all Awards, if any, will
become immediately 100% vested and, if applicable, exercisable upon such separation.
Executive will have one year from his separation date in which to exercise vested Awards.

 

 

     15. NOTICES. All notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery, facsimile, first class mail, certified or registered with return
receipt requested, or express mail and shall be deemed to have been duly given three (3) days after
mailing or twenty-four (24) hours after transmission of a facsimile to the respective persons named
below:

	 	 	 	 	 	 	 
	 

	 	If to Company:
	 	Kitty Hawk, Inc.	 	 
	 

	 	 	 	Attn: Chief Executive Officer	 	 
	 

	 	 	 	With a copy to: General Counsel	 	 
	 

	 	 	 	1515 W. 20th Street, P.O. Box 612787	 	 
	 

	 	 	 	DFW International Airport, TX 75261	 	 
	 
	 	 	 	 	 	 
	 

	 	With a copy to:
	 	Garrett DeVries, Esq.	 	 
	 

	 	 	 	Haynes and Boone, LLP	 	 
	 

	 	 	 	901 Main Street, Suite 3100	 	 
	 

	 	 	 	Dallas, Texas 75202-3789	 	 
	 
	 	 	 	 	 	 
	 

	 	If to Executive:
	 	James Kupferschmid	 	 
	 
	 	 	 	 	 	 
	 

	 	With a copy to:
	 	                                                            	 	 
	 

	 	 	 	                                                            	 	 
	 

	 	 	 	                                                            	 	 

     Either party may change such party’s address for notices by written notice duly given pursuant
hereto.

     16. TERMINATION OF PRIOR AGREEMENTS. Except as provided for herein, this Agreement terminates
and supersedes any and all prior agreements and understandings between the parties with respect to
employment or with respect to the compensation of the Executive by the Company from and after the
Effective Date.

     17. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder; provided that, in the event of the merger, consolidation, transfer
or sale of all or substantially all of the assets of the Company with or to any other individual or
entity, this Agreement shall, subject to the express provisions hereof, be binding upon and inure
to the benefit of Executive and such successor and such successor shall discharge and perform all
the promises, covenants, duties, and obligations of the Company hereunder.

     18. GOVERNING LAW. This Agreement and the legal relations thus created between the parties
hereto shall be governed by and construed under and in accordance with the laws of the State of
Texas. Executive hereby agrees to exclusive venue in the courts of Tarrant County, Texas.

     19. RESOLUTION OF DIFFERENCES; BREACH OF AGREEMENT. The parties shall use good faith efforts
to resolve any controversy or claim arising out of, or relating to this Agreement or the breach
thereof, first in accordance with the Company’s internal review procedures. If despite their good
faith efforts, the parties are unable to resolve such controversy or claim through the Company’s
internal review procedures, then such controversy or claim shall be resolved by binding arbitration
in Dallas, Texas in accordance with the rules and procedures of the Employment Dispute Resolution
Rules of the American Arbitration Association then in effect. The decision of the arbitrator shall
be final and binding on both parties, and any court of competent jurisdiction may enter judgment
upon the award. The prevailing party in such action shall be entitled to recoup their costs and
attorneys fees from the opposing party. This paragraph shall apply to all controversies, disputes
or claims arising out of or relating to this Agreement, with the sole exception of controversies,
disputes or claims under paragraphs 7, 12 and 13, whereby the Company or Executive, in addition to
and not in lieu of any remedies either may have, may seek equitable and legal relief from any court
of competent jurisdiction for any breach of said paragraphs.

 

 

     20. ENTIRE AGREEMENT; HEADINGS. This Agreement embodies the entire agreement of the parties
respecting the matters within its scope and may be modified only in writing. Section headings in
this Agreement are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     21. WAIVER; MODIFICATION. Failure to insist upon strict compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition,
nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or relinquishment of such
right or power at any other time or times. This Agreement shall not be modified in any respect
except by a writing executed by each party hereto.

     22. SEVERABILITY. In the event that a court of competent jurisdiction determines that any
portion of this Agreement is in violation of any statute or public policy, only the portions of
this Agreement that violate such statute or public policy shall be stricken. All portions of this
Agreement that do not violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of is Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the parties under this
Agreement.

     23. INDEMNIFICATION. The Company shall indemnify and hold Executive harmless to the maximum
extent permitted by law and consistent with the Company’s Articles of Incorporation and Bylaws of
the Company; provided however, that nothing herein shall prevent the Company from amending its
Articles of Incorporation or Bylaws; provided, however notwithstanding any such
amendment, Executive shall have the right to indemnification which is no less favorable than any
other comparable officer of the Company. The Company’s obligations under this Section 23 shall
survive the termination of this Agreement and Executive’s employment for the maximum period
permitted by law.

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

     25. MITIGATION. Executive shall not be required to mitigate amounts payable under this
Agreement by seeking other employment or otherwise, and, except as otherwise provided in Section
10, 11 and 14 of this Agreement, there shall be no offset against amounts or benefits due
Executive under this Agreement on account of subsequent employment and/or eligibility for
benefits.

     26. SURVIVAL. The representations, warranties, agreements, covenants, obligations and other
provisions in paragraphs 7, 12, 13, and 15 through 25 shall survive any termination of this
Agreement or the employment of Executive with Company, in each case, according to their intended
terms and temporal limitations, if any.

 

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized representative, and the Executive has hereunto signed this Agreement, as of the date
first above written.

Kitty Hawk, Inc.

	 	 	 	 	 
	By:

	 	/s/ Robert W. Zoller, Jr.	 	 
	 	 	 	 	 
	 

	 	 Robert W. Zoller, Jr.	 	 
	 

	 	 President and Chief Executive Officer	 	 

Executive

	 	 	 	 	 
	/s/ James Kupferschmid

	 	7/15/05	 	 
	   	 	 
	James Kupferschmid

	 	Date	 	 

 

 

ATTACHMENT A

PERSONAL RELOCATION EXPENSES. Upon the Effective Date of this Agreement, Executive shall be
entitled to relocation expenses for his family and personal household from Houston, Texas to
Dallas, TX to include:

Reimbursement of actual moving expenses (e.g., movers fees, transportation costs, realtor fees) and
temporary living expenses (lodging, rental car, etc.), substantiated by receipts, not to exceed
$40,000.

Should Executive’s employment with the Company be terminated for any reason, prior to the first
anniversary of the Effective Date, Executive must repay $15,000 of any such reimbursement related
to the relocation. The relocation must take place within three months of the Effective Date.

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