-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CvhK6SohK7Q1zBChWznXe8o245NPni+se/0QlOcVCRqyGrWG009Rq0AiDozfITo3 /zojcQQwppX2m7rXsii7lg== 0000950137-08-005820.txt : 20080423 0000950137-08-005820.hdr.sgml : 20080423 20080423150319 ACCESSION NUMBER: 0000950137-08-005820 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20080423 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080423 DATE AS OF CHANGE: 20080423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINCIPAL LIFE INSURANCE CO CENTRAL INDEX KEY: 0000009712 IRS NUMBER: 420127290 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32109 FILM NUMBER: 08771558 BUSINESS ADDRESS: STREET 1: 711 HIGH STREET STREET 2: C/O THE PRINCIPAL FINANCIAL GROUP CITY: DES MOINES STATE: IA ZIP: 50392-0300 BUSINESS PHONE: 515-248-38 MAIL ADDRESS: STREET 1: 711 HIGH STREET CITY: DES MOINES STATE: IA ZIP: 50392 FORMER COMPANY: FORMER CONFORMED NAME: PRINCIPAL MUTUAL LIFE INSURANCE CO DATE OF NAME CHANGE: 19920929 FORMER COMPANY: FORMER CONFORMED NAME: BANKERS LIFE CO DATE OF NAME CHANGE: 19600201 FORMER COMPANY: FORMER CONFORMED NAME: BANKERS LIFE ASSOCIATION DATE OF NAME CHANGE: 19600201 8-K 1 c25996e8vk.htm CURRENT REPORT e8vk
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 2008
 
Principal Life Insurance Company
(Exact name of registrant as specified in its charter)
 
         
Iowa
(State or other jurisdiction
of incorporation)
  001-32109
(Commission
File Number)
  42-0127290
(IRS Employer
Identification No.)
     
711 High Street, Des Moines, Iowa
(Address of principal executive offices)
  50392-0001
(Zip Code)
Registrant’s telephone number, including area code: (515) 247-1111
Not Applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 9.01. Financial Statements and Exhibits
The following documents are filed with reference to and are hereby incorporated by reference into the Registration Statement on Form S-3 (File Nos. 333-147181 and 333-147181-01), as amended, of Principal Life Insurance Company and Principal Financial Group, Inc., filed with the Securities and Exchange Commission on November 6, 2007 and amended on November 20, 2007.
     (c) Exhibits
     
Exhibit 4.1  
Omnibus Instrument, dated as of April 18, 2008, relating to Principal Life Income Fundings Trust 2008-025.
   
 
Exhibit 4.2  
Notes issued by the Trust, dated as of April 23, 2008.
   
 
Exhibit 5.1  
Opinion of Michael D. Roughton, internal counsel for Principal Life Insurance Company.
   
 
Exhibit 5.2  
Opinion of Sidley Austin LLP, counsel to Principal Life Insurance Company and Principal Financial Group, Inc.
   
 
Exhibit 8  
Opinion of John D. Schmidt, internal counsel for Principal Life Insurance Company (re: tax matters).
   
 
Exhibit 10.1  
Funding Agreement issued by Principal Life Insurance Company to the Trust, dated as of April 23, 2008.
   
 
Exhibit 10.2  
Guarantee issued by Principal Financial Group, Inc., dated as of April 23, 2008.
   
 
Exhibit 23.1  
Consent of Michael D. Roughton, internal counsel to Principal Life Insurance Company (included in Exhibit 5.1).
   
 
Exhibit 23.2  
Consent of Sidley Austin LLP (included in Exhibit 5.2).
   
 
Exhibit 23.3  
Consent of John D. Schmidt, internal counsel for Principal Life Insurance Company (included in Exhibit 8).

2


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  PRINCIPAL LIFE INSURANCE COMPANY
(Registrant)
 
 
Date: April 23, 2008  By:   /s/ Karen A. Pearston    
    Name:   Karen A. Pearston   
    Title:   Assistant General Counsel   

3


 

         
EXHIBIT INDEX
     
Exhibit 4.1  
Omnibus Instrument, dated as of April 18, 2008, relating to Principal Life Income Fundings Trust 2008-025.
   
 
Exhibit 4.2  
Notes issued by the Trust, dated as of April 23, 2008.
   
 
Exhibit 5.1  
Opinion of Michael D. Roughton, internal counsel for Principal Life Insurance Company.
   
 
Exhibit 5.2  
Opinion of Sidley Austin LLP, counsel to Principal Life Insurance Company and Principal Financial Group, Inc.
   
 
Exhibit 8  
Opinion of John D. Schmidt, internal counsel for Principal Life Insurance Company (re: tax matters).
   
 
Exhibit 10.1  
Funding Agreement issued by Principal Life Insurance Company to the Trust, dated as of April 23, 2008.
   
 
Exhibit 10.2  
Guarantee issued by Principal Financial Group, Inc., dated as of April 23, 2008.
   
 
Exhibit 23.1  
Consent of Michael D. Roughton, internal counsel to Principal Life Insurance Company (included in Exhibit 5.1).
   
 
Exhibit 23.2  
Consent of Sidley Austin LLP (included in Exhibit 5.2).
   
 
Exhibit 23.3  
Consent of John D. Schmidt, internal counsel for Principal Life Insurance Company (included in Exhibit 8).

4

EX-4.1 2 c25996exv4w1.htm OMNIBUS INSTRUMENT exv4w1
 

OMNIBUS INSTRUMENT
     WHEREAS, the parties named herein desire to enter into certain Program Documents, by executing this Omnibus Instrument dated as of April 18, 2008, relating to the issuance by Principal Life Income Fundings Trust 2008-025 (the “Trust”) of Notes with a principal amount of $8,626,000 to investors under Principal Life’s secured notes program;
     WHEREAS, the Trust is a trust and will be organized under and its activities will be governed by the provisions of the Trust Agreement (set forth in Section A of this Omnibus Instrument), dated as of the date specified herein, by and between the parties thereto indicated in Section F herein;
     WHEREAS, certain expense and indemnification arrangements between Principal Life and the Trustee, on behalf of itself and on behalf of the Trust, are governed pursuant to the provisions of the Expense and Indemnity Agreement dated as of November 21, 2007, by and between Principal Life and the Trustee;
     WHEREAS, certain licensing arrangements between the Trust and Principal Financial Services, Inc. will be governed pursuant to the provisions of the License Agreement (set forth in Section B of this Omnibus Instrument), dated as of the date specified herein, by and between the parties thereto indicated in Section F herein;
     WHEREAS, certain custodial arrangements of the Funding Agreement and the Guarantee will be governed pursuant to the provisions of the Custodial Agreement (the “Custodial Agreement”) dated as of November 21, 2007 by and among Bankers Trust Company, N.A., acting as custodian (the “Custodian”), the Indenture Trustee and the Trustee, on behalf of the Trust;
     WHEREAS, the Notes will be issued pursuant to the Indenture (set forth in Section C of this Omnibus Instrument), dated as of the date specified herein, by and between the parties thereto indicated in Section F herein;
     WHEREAS, the sale of the Notes will be governed by the Terms Agreement (set forth in Section D of this Omnibus Instrument), dated as of the date specified herein, by and among the parties thereto indicated in Section F herein; and
     WHEREAS, certain agreements relating to the Notes, the Funding Agreement and the Guarantee are set forth in the Coordination Agreement (set forth in Section E of this Omnibus Instrument), dated as of the date specified herein, by and among the parties thereto indicated in Section F herein.
     All capitalized terms used herein and not otherwise defined will have the meanings set forth in the Indenture.
[Remainder of Page Left Intentionally Blank.]

 


 

SECTION A
TRUST AGREEMENT
     This TRUST AGREEMENT (this “Trust Agreement”), dated as of the date of the Omnibus Instrument, is entered into by and between GSS Holdings II, Inc., a Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”), and U.S. Bank Trust National Association, a national banking association, as Trustee (the “Trustee”).
WITNESSETH:
     WHEREAS, the Trust Beneficial Owner and the Trustee desire to authorize the issuance of a Trust Beneficial Interest and a series of Notes in connection with the entry into this Trust Agreement;
     WHEREAS, all things necessary to make this Trust Agreement a valid and legally binding agreement of the Trustee and the Trust Beneficial Owner, enforceable in accordance with its terms, have been done;
     WHEREAS, the parties intend to provide for, among other things, (i) the issuance and sale of the Notes (pursuant to the Indenture, the Distribution Agreement and the related Terms Agreement) and the Trust Beneficial Interest, (ii) the use of the proceeds of the sale of the Notes and Trust Beneficial Interest to acquire the Funding Agreement, the payment obligations of which will be fully and unconditionally guaranteed by the Guarantee, and (iii) all other actions deemed necessary or desirable in connection with the transactions contemplated by this Trust Agreement; and
     WHEREAS, the parties hereto desire to incorporate by reference those certain Standard Trust Terms, dated as of November 21, 2007, and attached to the Omnibus Instrument as Exhibit A (the “Standard Trust Terms”) and all capitalized terms not otherwise defined herein (including the recitals hereof) shall have the meanings set forth in the Standard Trust Terms (the Standard Trust Terms and this Trust Agreement, collectively, the “Trust Agreement”).
     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which are hereby acknowledged, each party hereby agrees as follows:
ARTICLE 1
     Section 1.01 Incorporation by Reference. All terms, provisions and agreements set forth in the Standard Trust Terms (except to the extent expressly modified herein) are hereby incorporated herein by reference with the same force and effect as though fully set forth herein. To the extent that the terms set forth in Article 2 of this Trust Agreement are inconsistent with the terms of the Standard Trust Terms, the terms set forth in Article 2 herein shall apply.

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 (attached to this Omnibus Instrument as Exhibit D) (the “Pricing Supplement”) or the Distribution Agreement as indicated herein.

A-2


 

     Section 2.07 Governing Law. The Trust Agreement will be governed by, and construed in accordance with, the laws of the State of New York.
     Section 2.08 Counterparts. The Trust Agreement, through the Omnibus Instrument, may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument.
[Remainder of Page Left Intentionally Blank.]

A-3


 

SECTION B
LICENSE AGREEMENT
     This LICENSE AGREEMENT (this “License Agreement”), dated as of the date of the Pricing Supplement, is entered into by and between Principal Financial Services, Inc., an Iowa corporation with its principal place of business at 711 High Street, Des Moines, Iowa 50392 (the “Licensor”), and the Principal Life Income Fundings Trust specified in the Omnibus Instrument (the “Licensee”).
WITNESSETH:
     WHEREAS, the Licensor is the owner of certain trademarks and service marks and registrations and pending applications therefor, and may acquire additional trademarks and service marks in the future, all as described more fully below;
     WHEREAS, the Licensee desires to use certain of the Licensor’s trademarks and service marks in connection with the Licensee’s activities, as described more fully below;
     WHEREAS, the Licensor and the Licensee wish to formalize the agreement between them regarding the Licensee’s use of the Licensor’s marks; and
     WHEREAS, the parties hereto desire to incorporate by reference those certain Standard License Agreement Terms, dated March 5, 2004, and attached to the Omnibus Instrument as Exhibit B (the “Standard License Agreement Terms”) and all capitalized terms not otherwise defined herein (including the recitals hereof) shall have the meanings set forth in the Standard License Agreement Terms (the Standard License Agreement Terms and this License Agreement, collectively, the “License Agreement”).
     NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each party hereby agrees as follows:
ARTICLE 1
     Section 1.01 Incorporation by Reference. All terms, provisions and agreements set forth in the Standard License Agreement Terms (except to the extent expressly modified herein) are hereby incorporated herein by reference with the same force and effect as though fully set forth herein. To the extent that the terms set forth in Article 2 of this License Agreement are inconsistent with the terms of the Standard License Agreement Terms, the terms set forth in Article 2 herein shall apply.
ARTICLE 2
     Section 2.01 Additional Terms.
     None.

B-1


 

     Section 2.02 Omnibus Instrument; Execution and Incorporation of Terms.
     The parties to the License Agreement will enter into the License Agreement by executing the Omnibus Instrument.
     By executing the Omnibus Instrument, the Licensor and the Licensee hereby agree that the License Agreement will constitute a legal, valid and binding agreement between the Licensor and the Licensee.
     All terms relating to the Trust or the Notes not otherwise included in the License Agreement will be as specified in the Omnibus Instrument or Pricing Supplement, as indicated herein.
     Section 2.03 Counterparts. The License Agreement, through the Omnibus Instrument, may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument.
[Remainder of Page Left Intentionally Blank.]

B-2


 

SECTION C
INDENTURE
     This INDENTURE (this “Indenture”) is entered into as of the Original Issue Date by and between the Principal Life Income Fundings Trust specified in the Omnibus Instrument (the “Trust”) and Citibank, N.A., as indenture trustee (the “Indenture Trustee”).
     Citibank, N.A., in its capacity as indenture trustee, hereby accepts its role as Registrar, Paying Agent, Transfer Agent and Calculation Agent hereunder.
     References herein to “Indenture Trustee,” “Registrar,” “Transfer Agent,” “Paying Agent” or “Calculation Agent” shall include the permitted successors and assigns of any such entity from time to time.
WITNESSETH:
     WHEREAS, the Trust has duly authorized the execution and delivery of this Indenture to provide for the issuance of Notes;
     WHEREAS, all things necessary to make this Indenture a valid and legally binding agreement of the Trust and the other parties to this Indenture, enforceable in accordance with its terms, have been done, and the Trust proposes to do all things necessary to make the Notes, when executed by the Trust and authenticated and delivered pursuant hereto, valid and legally binding obligations of the Trust as hereinafter provided; and
     WHEREAS, the parties hereto desire to incorporate by reference those certain Standard Indenture Terms, dated as of November 21, 2007, and attached to the Omnibus Instrument as Exhibit C (the “Standard Indenture Terms”) and all capitalized terms not otherwise defined herein (including the recitals hereof) shall have the meanings set forth in the Standard Indenture Terms (the Standard Indenture Terms and this Indenture, collectively, the “Indenture”).
     NOW, THEREFORE, for and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed by each of the parties hereto as follows:
ARTICLE 1
     Section 1.01 Incorporation by Reference. All terms, provisions and agreements set forth in the Standard Indenture Terms (except to the extent expressly modified herein) are hereby incorporated herein by reference (with the same force and effect as though fully set forth herein). To the extent that the terms set forth in Article 2 of this Indenture are inconsistent with the terms of the Standard Indenture Terms, the terms set forth in Article 2 herein shall apply.

C-1


 

ARTICLE 2
     Section 2.01 Agreement to be Bound. Each of the Trust, the Indenture Trustee, the Registrar, the Transfer Agent, the Paying Agent and the Calculation Agent hereby agrees to be bound by all of the terms, provisions and agreements set forth in the Indenture, with respect to all matters contemplated in the Indenture, including, without limitation, those relating to the issuance of the below-referenced Notes.
     Section 2.02 Designation of the Trust, the Notes, the Funding Agreement and the Guarantee. The Trust created by the Trust Agreement and referred to in the Indenture is the Principal Life Income Fundings Trust specified in the Omnibus Instrument. The Notes issued by the Trust and governed by the Indenture shall be the Notes specified in the Pricing Supplement. The Funding Agreement designated hereby is the Funding Agreement designated in the Pricing Supplement dated as of the Original Issue Date between the Trust and Principal Life. The Guarantee designated hereby is the Guarantee dated as of the Original Issue Date of PFG.
     Section 2.03 Additional Terms.
     None.
     Section 2.04 Omnibus Instrument; Execution and Incorporation of Terms.
     The parties to the Indenture will enter into the Indenture by executing the Omnibus Instrument.
     By executing the Omnibus Instrument, the Indenture Trustee, the Registrar, the Transfer Agent, the Paying Agent, the Calculation Agent and the Trust hereby agree that the Indenture will constitute a legal, valid and binding agreement between the Indenture Trustee, the Registrar, the Transfer Agent, the Paying Agent, the Calculation Agent and the Trust.
     All terms relating to the Trust or the Notes not otherwise included in the Indenture will be as specified in the Omnibus Instrument or Pricing Supplement, as indicated herein.
     Section 2.05 Counterparts. The Indenture, through the Omnibus Instrument, may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute one and the same instrument.
[Remainder of Page Left Intentionally Blank.]

C-2


 

SECTION D
TERMS AGREEMENT
     This TERMS AGREEMENT (this “Terms Agreement”) is entered into as of the date of the Omnibus Instrument by and among Principal Life Insurance Company (“Principal Life”), Principal Financial Group, Inc. (“PFG”), the Principal Life Income Fundings Trust specified in the Omnibus Instrument (the “Trust”) and the Purchasing Agent(s) specified in the Pricing Supplement (the “Purchasing Agent”).
WITNESSETH:
     WHEREAS, Principal Life, PFG and the agents named therein, including the Purchasing Agent have entered into that certain Distribution Agreement dated November 21, 2007 (the “Distribution Agreement”).
     NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the parties hereby agrees as follows:
ARTICLE 1
     Section 1.01 Incorporation by Reference. The provisions of the Distribution Agreement and the related definitions (unless otherwise specified herein) are incorporated by reference herein and shall be deemed to have the same force and effect as if set forth in full herein.
ARTICLE 2
     Section 2.01 Addition of Trust as Party to Distribution Agreement.
     Pursuant to Section 1 of the Distribution Agreement, each of the undersigned parties hereby acknowledges and agrees that the Trust, upon execution hereof by the Trust and the other parties to the Distribution Agreement (other than any other trusts organized in connection with the Registration Statement that are party thereto as of the date hereof), shall become a Trust for purposes of the Distribution Agreement in accordance with the terms thereof, in respect of the Notes, with all the authority, rights, powers, duties and obligations of a Trust under the Distribution Agreement. The Trust confirms that any agreement, covenant, acknowledgment, representation or warranty under the Distribution Agreement applicable to the Trust is made by the Trust at the date hereof, unless another time or times are specified in the Distribution Agreement, in which case such agreement, covenant, acknowledgment, representation or warranty shall be deemed to be confirmed by the Trust at such specified time or times.
     Section 2.02 Purchase of Notes as Principal.
     (a) Subject in all respects to the terms and conditions of the Distribution Agreement, the Trust hereby agrees to sell to the Purchasing Agent and the Purchasing Agent hereby agrees to purchase the Notes having the terms specified in the Pricing Supplement relating to such Notes.

D-1


 

     (b) In connection with any purchase of Notes from the Trust by the Purchasing Agent as principal, the parties agree that the items specified on Schedule I of the Omnibus Instrument will be delivered as of the Settlement Date.
     Section 2.03 Termination. Upon the termination of this Terms Agreement pursuant to Section 13(b) of the Distribution Agreement the undersigned parties hereby agree to that the expenses reasonably incurred prior to or in connection with such termination will be borne by Principal Life and PFG.
     Section 2.04 Applicable Time. For purposes of the Distribution Agreement, the Applicable Time shall be 10:00 am Central Standard Time on April 18, 2008.
     Section 2.05 Free Writing Prospectus. For purposes of the Distribution Agreement, each free writing prospectus (attached to this Omnibus Instrument as Exhibit G) constitutes a part of the Time of Sale Prospectus.
     Section 2.06 Governing Law. This Terms Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws thereof.
     Section 2.07 Notices. For purposes of Section 14 of the Distribution Agreement, the Trust’s communications details are as set forth in Section E of the Omnibus Instrument.
     Section 2.08 Omnibus Instrument; Execution and Incorporation of Terms.
     The parties to this Terms Agreement will enter into this Terms Agreement by executing the Omnibus Instrument.
     By executing the Omnibus Instrument, each party hereto agrees that this Terms Agreement will constitute a legal, valid and binding agreement by and among such parties.
     All terms relating to the Trust or the Notes not otherwise included in this Terms Agreement will be as specified in the Omnibus Instrument, the Pricing Supplement or the Distribution Agreement as indicated herein.
     Section 2.09 Counterparts. This Terms Agreement, through the Omnibus Instrument, may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument.
[Remainder of Page Left Intentionally Blank.]

D-1


 

SECTION E
COORDINATION AGREEMENT
     This COORDINATION AGREEMENT (this “Coordination Agreement”), dated as of the date of the Omnibus Instrument, is entered into by and among Principal Life Insurance Company (“Principal Life”), Principal Financial Group, Inc. (“PFG”), the Principal Life Income Fundings Trust specified in the Omnibus Instrument (the “Trust”), Bankers Trust Company, N.A. and Citibank, N.A., as indenture trustee (the “Indenture Trustee”).
WITNESSETH
     WHEREAS, the Trust will enter into the Funding Agreement with Principal Life dated as of the Original Issue Date specified in the Pricing Supplement;
     WHEREAS, PFG will issue a Guarantee to the Trust as of the Original Issue Date specified in the Pricing Supplement, which will fully and unconditionally guarantee the payment obligations of Principal Life under the Funding Agreement;
     WHEREAS, the Purchasing Agent (as defined in the Terms Agreement) has agreed to sell the Notes in accordance with the Registration Statement;
     WHEREAS, the Trust intends to issue the Notes in accordance with the Indenture, to collaterally assign to, and grant a security interest in, the Funding Agreement and the Guarantee to and in favor of the Indenture Trustee in accordance with the Indenture to secure payment of the Notes; and
     WHEREAS, the Custodian will hold the Funding Agreement and the Guarantee on behalf of the Indenture Trustee pursuant to the terms of the Custodial Agreement.
     NOW, THEREFORE, to give effect to the agreements and arrangements established under the Terms Agreement included in the Omnibus Instrument, as applicable, the Trust Agreement, the Indenture and the Notes, and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which are hereby acknowledged, each party hereby agrees as follows:
ARTICLE 1
     Section 1.01 Delivery of the Funding Agreement and the Guarantee. The Trust hereby authorizes the Custodian, on behalf of the Indenture Trustee, to receive the Funding Agreement from Principal Life and the Guarantee from PFG pursuant to the assignment of the Funding Agreement and Guarantee (the “Assignment”), to be entered into on the Original Issue Date, included in the closing instrument dated as of the Original Issue Date (the “Closing Instrument”).

E-1


 

     Section 1.02 Issuance and Purchase of the Notes.
     (a) Delivery of the Funding Agreement and the Guarantee to the Custodian, on behalf of the Indenture Trustee, pursuant to the Assignment or execution of the cross receipt contained in the Closing Instrument shall be confirmation of payment by the Trust for the Funding Agreement.
     (b) The Trust hereby directs the Indenture Trustee, upon receipt by the Custodian, on behalf of the Indenture Trustee, of the Funding Agreement pursuant to the Assignment and upon receipt by the Custodian, on behalf of the Indenture Trustee, of the Guarantee, (i) to authenticate the certificates representing the Notes (the “Notes Certificates”) in accordance with the Indenture and (ii) to (A) deliver each relevant Notes Certificate to the clearing system or systems identified in each such Notes Certificate, or to the nominee of such clearing system, or the custodian thereof, for credit to such accounts as the Purchasing Agent may direct, or (B) deliver each relevant Notes Certificate to the purchasers thereof as identified by the Purchasing Agent.
ARTICLE 2
     Section 2.01 Directions Regarding Periodic Payments. As registered owner of the Funding Agreement and the Guarantee as collateral securing payments on the Notes, the Indenture Trustee will receive payments on the Funding Agreement and the Guarantee on behalf of the Trust. The Trust hereby directs the Indenture Trustee to use such funds to make payments on behalf of the Trust pursuant to the Trust Agreement and the Indenture.
     Section 2.02 Maturity of the Funding Agreement. Upon the maturity of the Funding Agreement and the return of funds thereunder, the Trust hereby directs the Indenture Trustee to set aside from such funds an amount sufficient for the repayment of the outstanding principal on the Notes and Trust Beneficial Interest when due.
ARTICLE 3
     Section 3.01 Certificates. Principal Life hereby agrees to deliver an Officer’s Certificate, a copy of which is attached hereto as Exhibit E, on a quarterly basis to any rating agency currently rating the Program. The Trust hereby agrees to deliver an Officer’s Certificate, a copy of which is attached hereto as Exhibit F, on a quarterly basis to any rating agency currently rating the Program.
     Section 3.02 Filings. Principal Life hereby covenants, as sponsor and depositor, to file, or cause to be filed, in a timely manner on behalf of the Trust all reports, certifications or similar filings required under the Securities Exchange Act of 1934, as amended.
ARTICLE 4
     Section 4.01 No Additional Liability. Nothing in this Coordination Agreement shall impose any liability or obligation on the part of any party to this Coordination Agreement to make any payment or disbursement in addition to any liability or obligation such party has under the Program Documents, except to the extent that a party has actually received funds which it is obligated to disburse pursuant to this Coordination Agreement.

E-2


 

     Section 4.02 No Conflict. This Coordination Agreement is intended to be in furtherance of the agreements reflected in the documents related to the Program Documents, and not in conflict. To the extent that a provision of this Coordination Agreement conflicts with the provisions of one or more Program Documents, the provisions of such Program Documents shall govern.
     Section 4.03 Governing Law. This Coordination Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws thereof.
     Section 4.04 Severability. If any provision in this Coordination Agreement shall be invalid, illegal or unenforceable, such provision shall be deemed severable from the remaining provisions of this Coordination Agreement and shall in no way affect the validity or enforceability of such other provisions of this Coordination Agreement.
     Section 4.05 Notices. All demands, notices and communications under this Coordination Agreement shall be in writing and shall be deemed to have been duly given upon receipt at the addresses set forth below:
     To the Trust:
Principal Life Income Fundings Trust (followed by the number set forth in the Omnibus Instrument)
c/o U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Corporate Trust Administration
Telephone: (212) 361-2184
Facsimile: (212) 509-3384
     To the Indenture Trustee:
Citibank, N.A.
Citibank Agency & Trust
388 Greenwich Street, 14th Floor
New York, New York 10013
Attention: Jennifer H. McCourt
Telephone: (212) 816-5680
Facsimile: (212) 816-5527
     To Principal Life:
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392
Attention: General Counsel
Telephone: (515) 247-5111
Facsimile: (515) 248-3011

E-3


 

With a copy to:
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392
Attention: Jim Fifield
Telephone: (515) 248-9196
Facsimile: (866) 496-6527
     To PFG:
Principal Financial Group, Inc.
711 High Street
Des Moines, Iowa 50392
Attention: General Counsel
Telephone: (515) 247-5111
Facsimile: (515) 248-3011
With a copy to:
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392
Attention: Jim Fifield
Telephone: (515) 248-9196
Facsimile: (866) 496-6527
     To Bankers Trust Company, N.A.:
Bankers Trust Company, N.A.
453 7th Street
Des Moines, Iowa 50309-2728
Attention: Diana L. Cook
Telephone: (515) 245-2418
Facsimile: (515) 247-2101
or at such other address as shall be designated by any such party in a written notice to the other parties.
ARTICLE 5
     Section 5.01 Omnibus Instrument; Execution and Incorporation of Terms.
     The parties to this Coordination Agreement will enter into this Coordination Agreement by executing the Omnibus Instrument.

E-4


 

     By executing the Omnibus Instrument, each party hereto agrees that this Coordination Agreement will constitute a legal, valid and binding agreement by and among the Trust, Principal Life, PFG, the Custodian and the Indenture Trustee.
     All terms relating to the Trust or the Notes not otherwise included in this Coordination Agreement will be as specified in the Omnibus Instrument or Pricing Supplement, as indicated herein.
     Section 5.02 Acknowledgment. Principal Life hereby acknowledges Section 2.10 of the Indenture and Section 6.1 of the Custodial Agreement. The Trust hereby acknowledges and agrees to the terms of the Custodial Agreement.
     Section 5.03 Counterparts. This Coordination Agreement, through the Omnibus Instrument, may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument.
     Section 5.04 Capitalized Terms. All capitalized terms used herein and not otherwise defined in this Coordination Agreement will have the meanings set forth in the Indenture.
[Remainder of Page Left Intentionally Blank.]

E-5


 

SECTION F
MISCELLANEOUS AND EXECUTION PAGES
     This Omnibus Instrument may be executed by each of the parties hereto in any number of counterparts, and by each of the parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
     Each signatory, by its execution hereof, does hereby become a party to each of the agreements or indenture identified for such party as of the date specified in such agreements or indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Omnibus Instrument with respect to the Notes as of the date first specified above.
         
  PRINCIPAL LIFE INSURANCE COMPANY
(in executing below agrees and becomes a party to (i) the Terms Agreement set forth in Section D herein and (ii) the Coordination Agreement set forth in Section E herein)
 
 
  By:   /s/ Michael Garvin    
    Name:   Michael Garvin   
    Title:   Associate Actuary   
 
  PRINCIPAL FINANCIAL GROUP, INC.
(in executing below agrees and becomes a party to (i) the Terms Agreement set forth in Section D herein and (ii) the Coordination Agreement set forth in Section E herein)
 
 
  By:   /s/ Elizabeth D. Swanson    
    Name:   Elizabeth D. Swanson   
    Title:   Counsel   
 
  PRINCIPAL FINANCIAL SERVICES, INC.
(in executing below agrees and becomes a party to the License Agreement set forth in Section B herein)
 
 
  By:   /s/ Elizabeth D. Swanson    
    Name:   Elizabeth D. Swanson   
    Title:   Counsel   
 
Omnibus Instrument Execution Page 1 of 3

 


 

         
  THE PRINCIPAL LIFE INCOME FUNDINGS TRUST DESIGNATED IN THIS OMNIBUS INSTRUMENT
(in executing below agrees and becomes a party to (i) the License Agreement set forth in Section B herein, (ii) the Indenture set forth in Section C herein, (iii) the Terms Agreement set forth in Section D herein and (iv) the Coordination Agreement set forth in Section E herein)
 
 
  By:   U.S. Bank Trust National Association, not in its individual capacity but solely in its capacity as trustee of the Trust    
 
     
  By:   /s/ Janet O’Hara    
    Name:   Janet 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 O'Hara    
    Name:   Janet 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/ Bernard J. Angelo    
    Name:   Bernard J. Angelo   
    Title:   Vice President   
 
  CITIBANK, N.A.
(in executing below agrees and becomes a party to (i) the Indenture set forth in Section C herein, as Indenture Trustee, Registrar, Transfer Agent, Paying Agent and Calculation Agent and (ii) the Coordination Agreement set forth in Section E herein), as Indenture Trustee, Registrar, Transfer Agent, Paying Agent and Calculation Agent
 
 
  By:   /s/ Jennifer McCourt    
    Name:   Jennifer McCourt   
    Title:   Vice President   
 
Omnibus Instrument Execution Page 2 of 3

 


 

         
  BANKERS TRUST COMPANY, N.A.
(in executing below agrees and becomes a party to the Coordination Agreement set forth in Section E herein)
 
 
  By:   /s/ Rick Greene    
    Name:   Rick Greene   
    Title:   Vice President   
 
  MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
(in executing below agrees and becomes a party to the Terms Agreement set forth in Section D herein)
 
 
  By:   /s/ Diane Kenna    
    Name:   Diane Kenna   
    Title:   Authorized Signatory   
 
Omnibus Instrument Execution Page 3 of 3
         

 


 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT
     
Exhibit A  
Standard Trust Terms — Incorporated herein by reference to Exhibit 4.2 to Principal Life Insurance Company’s Current Report on Form 8-K filed on December 5, 2007.
   
 
Exhibit B  
Standard License Agreement Terms — Incorporated herein by reference to Exhibit 99.1 to Principal Life Insurance Company’s Current Report on Form 8-K, filed on March 29, 2004.
   
 
Exhibit C  
Standard Indenture Terms — Incorporated herein by reference to Exhibit 4.1 to Principal Life Insurance Company’s Current Report on Form 8-K, filed on December 5, 2007.
   
 
Exhibit D  
Pricing Supplement — Incorporated herein by reference to the Pricing Supplement with respect to Principal Life Income Fundings Trust 2008-025, filed on April 14, 2008, with the Securities and Exchange Commission pursuant to Rule 424(b)(2) under the Securities Act of 1933, as amended.
   
 
Exhibit E  
Principal Life Insurance Company Officer’s Certificate
   
 
Exhibit F  
Principal Life Income Fundings Trusts Trustee Officer’s Certificate
   
 
Exhibit G  
Free Writing Prospectus(es)
   
 
Schedule I  
Terms Agreement Specifications

I-1


 

EXHIBIT E
Principal Life Insurance Company
Officer’s Certificate
     The undersigned, an officer of Principal Life Insurance Company, an Iowa stock life insurance company (“Principal Life”), does hereby certify to Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and Moody’s Investors Service, Inc., in such capacity and on behalf of Principal Life, to the knowledge of the undersigned and after reasonable inquiry, that:
  1.   each of the representations and warranties of Principal Life contained in each Expense and Indemnity Agreement entered into in connection with the Registration Statement (defined below), and each Funding Agreement issued in connection with the Program (the “Specified Agreements”) (other than any representation or warranty expressly made as of a date prior to the date hereof) are true and correct on and as of the date hereof, with the same effect as though such representation or warranty had been made on and as of the date hereof;
 
  2.   no default under any of the Specified Agreements and no event or any condition which, with notice or lapse of time or both, would become a default, has occurred and is continuing as of the date hereof;
 
  3.   Principal Life has performed and complied with, respectively, in all material respects, all of the agreements, covenants, obligations and conditions applicable to Principal Life required by the Specified Agreements to be performed or complied with by Principal Life on or before the date hereof;
 
  4.   the Registration Statement filed on Form S-3 (File Nos. 333-147181 and 333-147181-01) (the “Registration Statement”) by Principal Life and Principal Financial Group, Inc. has been declared effective by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”) and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been commenced by or are pending before or contemplated by the Commission;
 
  5.   all filings, if any, required by Rule 424 and Rule 430A under the Act have been made in a timely manner;
 
  6.   since ___, the Trusts organized in connection with the program contemplated by the Registration Statement have issued the following series of Notes:
      [List each series of Notes.] [(collectively, the “Designated Notes”)]; and
 
  7.   the Funding Agreements issued in connection with the Designated Notes have been executed and delivered by Principal Life in accordance with the terms and conditions of the Program Documents.

E-1


 

     Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Standard Indenture Terms 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. 333-147181 and 333-147181-01 filed on Form S-3 (the “Registration Statement”) by Principal Life Insurance Company and Principal Financial Group, Inc. with the Securities and Exchange Commission, does hereby certify to Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and Moody’s Investors Service, Inc., in such capacity and on behalf of each Trust, to the knowledge of the Trustee, that:
  1.   each of the representations and warranties of each Trust contained in the Notes issued in connection with the Program, each Indenture entered into in connection with the Registration Statement and the Expense and Indemnity Agreement concerning the Trusts (the “Specified Agreements”) (other than any representation or warranty expressly made as of a date prior to the date hereof) are true and correct on and as of the date hereof, with the same effect as though such representation or warranty had been made on and as of the date hereof;
 
  2.   no default under any of the Specified Agreements and no event or any condition which, with notice or lapse of time or both, would become a default, has occurred and is continuing as of the date hereof;
 
  3.   each Trust has performed and complied with, respectively, in all material respects, all of the agreements, covenants, obligations and conditions applicable to such Trust required by the Specified Agreements to be performed or complied with by such Trust on or before the date hereof;
 
  4.   the Notes issued in connection with the Program, have been issued, in all material respects, in accordance with the terms and conditions of the Program Documents; and
 
  5.   each Funding Agreement has been executed and delivered by the related Trust in accordance with the terms and conditions of the Program Documents.
     Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Standard Indenture Terms, dated as of November 21, 2007. In no event shall U.S. Bank Trust National Association in its personal corporate capacity have any liability for any of the certifications or statements contained in this Trustee Officer’s Certificate, such liability being solely that of each Trust.

F-1


 

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the l day of l, 200l.
         
  U.S. Bank Trust National Association, not in its
capacity but solely in its capacity as Trustee acting
on behalf of each Trust
 
 
  By:      
    Name:      
    Title:      
 

F-2


 

EXHIBIT G
Free Writing Prospectus(es)
None.

G-1


 

SCHEDULE I
Terms Agreement Specifications
     In connection with Section 3(a)(iv) of the Distribution Agreement, the Institutional Program under which the Notes are issued is rated Aa2 by Moody’s Investors Service, Inc. (“Moody’s”) and AA by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”). Principal Life and PFG expect that the Notes will be rated Aa2 by Moody’s. The Company’s financial strength rating is Aa2 by Moody’s and AA by S&P.
     All capitalized terms used herein and not otherwise defined herein will have the meanings set forth in the Distribution Agreement.

I-1

EX-4.2 3 c25996exv4w2.htm NOTES ISSUED BY THE TRUST exv4w2
 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE (HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF A DEPOSITARY (AS DEFINED IN THE INDENTURE) OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE TRUST (HEREINAFTER DEFINED) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND UNLESS ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
     
CUSIP No.: 74254PWL2   Principal Amount: U.S. $8,626,000
PRINCIPAL LIFE INCOME FUNDINGS TRUST 2008-025
PRINCIPAL® LIFE CORENOTES®
Original Issue Date: April 23, 2008
Issue Price: 100%
Stated Maturity Date: April 17, 2017
Settlement Date: April 23, 2008
Securities Exchange Listing: o Yes     þ No. If yes, indicate name(s) of Securities Exchange(s): ________________________.
Depositary: The Depository Trust Company
Authorized Denominations: $1,000
Collateral held in the Trust: Principal Life Insurance Company Funding Agreement No. 6-15252, the related Principal Financial Group, Inc. Guarantee which fully and unconditionally guarantees the payment obligations of Principal Life Insurance Company under the Funding Agreement, all proceeds of the Funding Agreement and the related Guarantee and all rights and books and records pertaining to the foregoing.
Interest Rate or Formula:
Fixed Rate Note: þ Yes     o No. If yes,
Interest Rate: 5.50%
Interest Payment Frequency: Semi-annual
Interest Payment Dates: The 15th day of every sixth month commencing on October 15, 2008
Day Count Convention: 30/360
Additional/Other Terms: Not Applicable
Discount Note: o Yes     þ No. If yes,

 


 

Total Amount of Discount:
Initial Accrual Period of Discount:
Interest Payment Dates:
Additional/Other Terms:
Redemption Provisions: o Yes     þ No. If yes,
Initial Redemption Date: None Additional/Other Terms: In whole only and not in part; any redemption date will be an Interest
Payment Date falling on or after the Initial Redemption Date.
Repayment Provisions: o Yes     þ No. If yes,
Repayment Date(s):
Repayment Price:
Additional/Other Terms:
Floating Rate Note: o Yes     þ No. If yes,
Regular Floating Rate Notes o
Floating Rate/ Fixed Rate Notes: o
Interest Rate:
Interest Rate Basis(es):
LIBOR o
o LIBOR Reuters Page:
LIBOR Currency:
CMT Rate o
Designated Reuters Page:
If FEDCMT
o Weekly Average
o Monthly Average
Designated CMT Maturity Index:
CD Rate o
Commercial Paper Rate o
Constant Maturity Swap Rate o
Federal Funds Open Rate o
Federal Funds Rate o
Prime Rate o
Treasury Rate o
Index Maturity:
Spread and/or Spread Multiplier:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Determination Date(s):
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Floating Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Additional/Other Terms:
Regular Record Date(s): 15 calendar days prior to the Interest Payment Date
Sinking Fund: Not Applicable
Calculation Agent: Citibank, N.A.
Additional/Other Terms:
Survivor’s Option: þ Yes     o No.
If yes, the attached Survivor’s Option Rider is incorporated into this Note.
Trust Put Limitation: 2.00%
     The Principal Life Income Fundings Trust designated above (the “Trust”), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the Principal Amount specified above on the Stated Maturity Date specified above and, if so specified above, to pay interest thereon from the Original Issue Date specified above or from the most recent Interest Payment Date specified above to which interest has been paid or duly provided for at the rate per annum determined in accordance with the provisions on the reverse hereof and as specified above, until the principal hereof is paid or made available for payment. Payments of principal, premium, if any, and interest hereon will be made in the lawful currency of the United States of America (“U.S. Dollars” or “United States dollars”). The “Principal Amount” of this Note at any time means (1) if this Note is a Discount Note (as hereinafter defined), the Amortized Face Amount (as hereinafter defined) at such time (as defined in Section 3(c) on the reverse hereof) and (2) in

2


 

all other cases, the Principal Amount hereof. Capitalized terms not otherwise defined herein shall have their meanings set forth in the Indenture, dated as of the date of the Pricing Supplement (the “Indenture”), between Citibank, N.A., as the indenture trustee (the “Indenture Trustee”), and the Trust, or on the face hereof.
     This Note will mature on the Stated Maturity Date, unless its principal (or any installment of its principal) becomes due and payable prior to the Stated Maturity Date, whether, as applicable, by the declaration of acceleration of maturity, notice of redemption by the Trust or otherwise (the Stated Maturity Date or any date prior to the Stated Maturity Date on which this Note becomes due and payable, as the case may be, is referred to as the “Maturity Date”).
     A “Discount Note” is any Note that has an Issue Price that is less than 100% of the Principal Amount thereof by a percentage that is equal to or greater than 0.25% multiplied by the product of the principal amount of the Notes and the number of full years to the Stated Maturity Date.
     Unless otherwise specified above, the interest payable on each Interest Payment Date or the Maturity Date will be the amount of interest accrued from and including the Original Issue Date or from and including the last Interest Payment Date to which interest has been paid or duly provided for, as the case may be, to, but excluding, such Interest Payment Date or the Maturity Date, as the case may be.
     Unless otherwise specified above, the interest payable on any Interest Payment Date will be paid to the Holder on the Regular Record Date for such Interest Payment Date, which Regular Record Date shall be the fifteenth (15th) calendar day, whether or not a Business Day, immediately preceding the related Interest Payment Date; provided that, notwithstanding any provision of the Indenture to the contrary, interest payable on any Maturity Date shall be payable to the Person to whom principal shall be payable; and provided, further, that unless otherwise specified above, in the case of a Note initially issued between a Regular Record Date and the Interest Payment Date relating to such Regular Record Date, interest for the period beginning on the Original Issue Date and ending on such Interest Payment Date shall be paid on the Interest Payment Date following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date.
     Payments of principal of, and premium, if any, and interest and other amounts due and owing, if any, will be made through the Indenture Trustee to the account of DTC or its nominee and will be made in accordance with depositary arrangements with DTC.
     Unless otherwise specified on the face hereof, the Holder hereof will not be obligated to pay any administrative costs imposed by banks in making payments in immediately available funds by the Trust. Unless otherwise specified on the face hereof, any tax assessment or governmental charge imposed upon payments hereunder, including, without limitation, any withholding tax, will be borne by the Holder hereof.
     REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

A-3


 

     Unless the certificate of authentication hereon shall have been executed by the Indenture Trustee pursuant to the Indenture, this Note shall not be entitled to any benefit under such Indenture or be valid or obligatory for any purpose.
     IN WITNESS WHEREOF, the Trust has caused this instrument to be duly executed, by manual or facsimile signature.
         
  THE PRINCIPAL LIFE INCOME FUNDINGS
TRUST SPECIFIED ON THE FACE OF THIS NOTE  
 
Dated: Original Issue Date  By:   U.S. Bank Trust National Association, not in its individual capacity but solely as Trustee.    
     
  By:   /s/ Janet O’Hara    
    Authorized Officer   
       
 
CERTIFICATE OF AUTHENTICATION
     This is one of the Notes of the Principal Life Income Fundings Trust specified on the face of this Note referred to in the within-mentioned Indenture.
         
  CITIBANK, N.A.
As Indenture Trustee
 
 
Dated: Original Issue Date       
  By:   /s/ Jennifer McCourt    
    Authorized Signatory   
       
 

A-4


 

[REVERSE FORM OF NOTE]
Section 1. General. This Note is one of a duly authorized issue of Notes of the Trust. The Notes are issued pursuant to the Indenture.
Section 2. Currency. This Note is denominated in, and payments of principal, premium, if any, and/or interest, if any, will be made in U.S. Dollars.
Section 3. Determination of Interest Rate and Certain Other Terms.
  (a)   Fixed Rate Notes. If this Note is specified on the face hereof as a “Fixed Rate Note”:
(i) This Note will bear interest at the rate per annum specified on the face hereof. Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months.
(ii) Unless otherwise specified on the face hereof, the Interest Payment Dates for this Note will be as follows:
     
Interest Payment    
Frequency   Interest Payment Dates
 
   
Monthly
  Fifteenth day of each calendar month, beginning in the first calendar month following the month this Note was issued.
 
   
Quarterly
  Fifteenth day of every third calendar month, beginning in the third calendar month following the month this Note was issued.
 
   
Semi-annual
  Fifteenth day of every sixth calendar month, beginning in the sixth calendar month following the month this Note was issued.
 
   
Annual
  Fifteenth day of every twelfth calendar month, beginning in the twelfth calendar month following the month this Note was issued.
(iii) If any Interest Payment Date or the Maturity Date of this Note falls on a day that is not a Business Day, the Trust will make the required payment of principal, premium, if any, and/or interest or other amounts on the next succeeding Business Day, and no additional interest will accrue in respect of the payment made on that next succeeding Business Day.
  (b)   Floating Rate Notes. If this Note is specified on the face hereof as a “Floating Rate Note”:
(i) Interest Rate Basis. Interest on this Note will be determined by reference to the applicable Interest Rate Basis or Interest Rate Bases, which may, as described below, include the CD Rate, the CMT Rate, the Commercial Paper Rate, the Constant Maturity Swap Rate, the Federal Funds Open Rate, the Federal Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each as defined below).

5


 

(ii) Effective Rate. The rate derived from the applicable Interest Rate Basis or Interest Rate Bases will be determined in accordance with the related provisions below. The interest rate in effect on each day will be based on: (1) if that day is an Interest Reset Date, the rate determined as of the Interest Determination Date immediately preceding that Interest Reset Date; or (2) if that day is not an Interest Reset Date, the rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date.
(iii) Spread; Spread Multiplier; Index Maturity. The “Spread” is the number of basis points (one one-hundredth of a percentage point) specified on the face hereof to be added to or subtracted from the related Interest Rate Basis or Interest Rate Bases applicable to this Note. The “Spread Multiplier” is the percentage specified on the face hereof of the related Interest Rate Basis or Interest Rate Bases applicable to this Note by which the Interest Rate Basis or Interest Rate Bases will be multiplied to determine the applicable interest rate. The “Index Maturity” is the period to maturity of the instrument or obligation with respect to which the related Interest Rate Basis or Interest Rate Bases will be calculated.
(iv) Regular Floating Rate Note. Unless this Note is specified on the face hereof as a Floating Rate/Fixed Rate Note, this Note (a “Regular Floating Rate Note”) will bear interest at the rate determined by reference to the applicable Interest Rate Basis or Interest Rate Bases:(1) plus or minus the applicable Spread, if any; and/or (2) multiplied by the applicable Spread Multiplier, if any. Commencing on the first Interest Reset Date, the rate at which interest on this Regular Floating Rate Note is payable will be reset as of each Interest Reset Date; provided, however, that the interest rate in effect for the period, if any, from the Original Issue Date to the first Interest Reset Date will be the Initial Interest Rate.
(v) Floating Rate/Fixed Rate Notes. If this Note is specified on the face hereof as a “Floating Rate/Fixed Rate Note”, this Note will bear interest at the rate determined by reference to the applicable Interest Rate Basis or Interest Rate Bases: (1) plus or minus the applicable Spread, if any; and/or (2) multiplied by the applicable Spread Multiplier, if any. Commencing on the first Interest Reset Date, the rate at which this Floating Rate/Fixed Rate Note is payable will be reset as of each Interest Reset Date; provided, however, that: (A) the interest rate in effect for the period, if any, from the Original Issue Date to the first Interest Reset Date will be the Initial Interest Rate specified on the face hereof; and (B) the interest rate in effect commencing on the Fixed Rate Commencement Date will be the Fixed Interest Rate, if specified on the face hereof, or, if not so specified, the interest rate in effect on the day immediately preceding the Fixed Rate Commencement Date.
(vi) Interest Reset Dates. The period between Interest Reset Dates will be the “Interest Reset Period.” Unless otherwise specified on the face hereof, the Interest Reset Dates will be, in the case of this Floating Rate Note if by its terms it resets: (1) daily—each business day; (2) weekly—the Wednesday of each week, with the exception of any weekly reset Floating Rate Note as to which the Treasury Rate is an applicable Interest

6


 

Rate Basis, which will reset the Tuesday of each week; (3) monthly—the fifteenth day of each calendar month; (4) quarterly—the fifteenth day of March, June, September and December of each year; (5) semi-annually—the fifteenth day of the two months of each year specified on the face hereof; and (6) annually—the fifteenth day of the month of each year specified on the face hereof; provided, however, that, with respect to a Floating Rate/Fixed Rate Note, the rate of interest thereon will not reset after the particular Fixed Rate Commencement Date. If any Interest Reset Date for this Floating Rate Note would otherwise be a day that is not a Business Day, the particular Interest Reset Date will be postponed to the next succeeding Business Day, except that in the case of a Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and that Business Day falls in the next succeeding calendar month, the particular Interest Reset Date will be the immediately preceding Business Day.
(vii) Interest Determination Dates. The interest rate applicable to a Floating Rate Note for an Interest Reset Period commencing on the related Interest Reset Date will be determined by reference to the applicable Interest Rate Basis as of the particular “Interest Determination Date”, which will be: (1) with respect to the Federal Funds Open Rate—the related Interest Reset Date; (2) with respect to the Federal Funds Rate and the Prime Rate—the Business Day immediately preceding the related Interest Reset Date; (3) with respect to the CD Rate, the Commercial Paper Rate and the CMT Rate—the second Business Day preceding the related Interest Reset Date; (4) with respect to the Constant Maturity Swap Rate—the second U.S. Government Securities business day preceding the related Interest Reset Date, provided, however, that if after attempting to determine the Constant Maturity Swap Rate, such rate is not determinable for a particular Interest Determination Date, then such Interest Determination Date shall be the first U.S. Government Securities business day preceding the original interest determination date for which the Constant Maturity Swap Rate can be determined; (5) with respect to LIBOR—the second London Banking Day (as defined below) preceding the related Interest Reset Date; and (6) with respect to the Treasury Rate—the day of the week in which the related Interest Reset Date falls on which day Treasury Bills (as defined below) are normally auctioned (i.e., Treasury Bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that the auction may be held on the preceding Friday); provided, however, that if an auction is held on the Friday of the week preceding the related Interest Reset Date, the Interest Determination Date will be the preceding Friday. The Interest Determination Date pertaining to a Floating Rate Note, the interest rate of which is determined with reference to two or more Interest Rate Bases, will be the latest Business Day which is at least two Business Days before the related Interest Reset Date for the applicable Floating Rate Note on which each Interest Reset Basis is determinable. “London Banking Day” means a day on which commercial banks are open for business (including dealings in the LIBOR Currency) in London.
(viii) Calculation Dates. The interest rate applicable to each Interest Reset Period will be determined by the Calculation Agent on or prior to the Calculation Date (as defined below), except with respect to LIBOR, which will be determined on the particular Interest Determination Date. Upon request of the Holder of a Floating Rate Note, the

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Calculation Agent will disclose the interest rate then in effect and, if determined, the interest rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date with respect to such Floating Rate Note. The “Calculation Date”, if applicable, pertaining to any Interest Determination Date will be the earlier of: (1) the tenth calendar day after the particular Interest Determination Date or, if such day is not a Business Day, the next succeeding Business Day; or (2) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be.
(ix) Maximum or Minimum Interest Rate. If specified on the face hereof, this Note may have either or both of a Maximum Interest Rate or a Minimum Interest Rate. If a Maximum Interest Rate is so designated, the interest rate for a Floating Rate Note cannot ever exceed such Maximum Interest Rate and in the event that the interest rate on any Interest Reset Date would exceed such Maximum Interest Rate (as if no Maximum Interest Rate were in effect) then the interest rate on such Interest Reset Date shall be the Maximum Interest Rate. If a Minimum Interest Rate is so designated, the interest rate for a Floating Rate Note cannot ever be less than such Minimum Interest Rate and in the event that the interest rate on any Interest Reset Date would be less than such Minimum Interest Rate (as if no Minimum Interest Rate were in effect) then the interest rate on such Interest Reset Date shall be the Minimum Interest Rate. Notwithstanding anything to the contrary contained herein, the interest rate on a Floating Rate Note shall not exceed the maximum interest rate permitted by applicable law.
(x) Interest Payments. Unless otherwise specified on the face hereof, the Interest Payment Dates will be, in the case of a Floating Rate Note which resets: (1) daily, weekly or monthly—the fifteenth day of each calendar month or on the fifteenth day of March, June, September and December of each year, as specified on the face hereof; (2) quarterly—the fifteenth day of March, June, September and December of each year; (3) semi-annually—the fifteenth day of the two months of each year specified on the face hereof; and (4) annually—the fifteenth day of the month of each year as specified on the face hereof. In addition, the Maturity Date will also be an Interest Payment Date. If any Interest Payment Date other than the Maturity Date for this Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day, except that in the case of a Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and that Business Day falls in the next succeeding calendar month, the particular Interest Payment Date will be the immediately preceding Business Day. If the Maturity Date of a Floating Rate Note falls on a day that is not a Business Day, the Trust will make the required payment of principal, premium, if any, and interest or other amounts on the next succeeding Business Day, and no additional interest will accrue in respect of the payment made on that next succeeding Business Day.
(xi) Rounding. Unless otherwise specified on the face hereof, all percentages resulting from any calculation on this Floating Rate Note will be rounded to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point

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rounded upwards. All dollar amounts used in or resulting from any calculation on this Floating Rate Note will be rounded to the nearest cent.
(xii) Interest Factor. With respect to this Floating Rate Note, accrued interest is calculated by multiplying the principal amount of such Note by an accrued interest factor. The accrued interest factor is computed by adding the interest factor calculated for each day in the particular Interest Reset Period. The interest factor for each day will be computed by dividing the interest rate applicable to such day by 360, in the case of a Floating Rate Note as to which the CD Rate, the Commercial Paper Rate, the Federal Funds Open Rate, the Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis, or by the actual number of days in the year, in the case of a Floating Rate Note as to which the CMT Rate or the Treasury Rate is an applicable Interest Rate Basis. In the case of a series of Notes that bear interest at floating rates as to which the Constant Maturity Swap Rate is the Interest Rate Basis, the interest factor for each day will be computed by dividing the number of days in the interest period by 360 (the number of days to be calculated on the base is of a year of 360 days with twelve 30-day months (unless (i) the last day of the interest period is the 31st day of a month but the first day of the interest period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the interest period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)). The interest factor for a Floating Rate Note as to which the interest rate is calculated with reference to two or more Interest Rate Bases will be calculated in each period in the same manner as if only the applicable Interest Rate Basis specified above applied.
(xiii) Determination of Interest Rate Basis. The Calculation Agent shall determine the rate derived from each Interest Rate Basis in accordance with the following provisions.
(A) CD Rate Notes. If the Interest Rate Basis is the CD Rate, this Note shall be deemed a “CD Rate Note.” Unless otherwise specified on the face hereof, “CD Rate” means: (1) the rate on the particular Interest Determination Date for negotiable United States dollar certificates of deposit having the Index Maturity specified on the face hereof as published in H.15(519) (as defined below) under the caption “CDs (secondary market)”; or (2) if the rate referred to in clause (1) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date for negotiable United States dollar certificates of deposit of the particular Index Maturity as published in H.15 Daily Update (as defined below), or other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “CDs (secondary market)”; or (3) if the rate referred to in clause (2) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on that Interest Determination Date, of three leading non-bank dealers in negotiable United States dollar certificates of deposit in The City of New York (which may include the

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purchasing agent or its affiliates) selected by the Calculation Agent for negotiable United States dollar certificates of deposit of major United States money market banks for negotiable United States certificates of deposit with a remaining maturity closest to the particular Index Maturity in an amount that is representative for a single transaction in that market at that time; or (4) if the dealers so selected by the Calculation Agent are not quoting as mentioned in clause (3), the CD Rate in effect on the particular Interest Determination Date. “H.15(519)” means the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System. “H.15 Daily Update” means the daily update of H.15(519), available through the world-wide-web site of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/H15/ update, or any successor site or publication.
(B) CMT Rate Notes. If the Interest Rate Basis is the CMT Rate, this Note shall be deemed a “CMT Rate Note.” Unless otherwise specified on the face hereof, “CMT Rate” means:
  (1)   if Reuters Page FRBCMT is specified on the face hereof:
  i.   the percentage equal to the yield for United States Treasury securities at “constant maturity” having the Index Maturity specified on the face hereof as published in H.15(519) under the caption “Treasury Constant Maturities”, as the yield is displayed on Reuters Service (or any successor service) on page FRBCMT (or any other page as may replace the specified page on that service) (“Reuters Page FRBCMT”), for the particular Interest Determination Date; or
 
  ii.   if the rate referred to in clause (i) does not so appear on Reuters Page FRBCMT, the percentage equal to the yield for United States Treasury securities at “constant maturity” having the particular Index Maturity and for the particular Interest Determination Date as published in H.15(519) under the caption “Treasury Constant Maturities”; or
 
  iii.   if the rate referred to in clause (ii) does not so appear in H.15(519), the rate on the particular Interest Determination Date for the period of the particular Index Maturity as may then be published by either the Federal Reserve System Board of Governors or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate which would otherwise have been published in H.15(519); or
 
  iv.   if the rate referred to in clause (iii) is not so published, the rate on the particular Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices at approximately 3:30 P.M., New York City time, on that Interest Determination Date of three leading primary United States

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      government securities dealers in The City of New York (which may include the purchasing agent or its affiliates) (each, a “Reference Dealer”) selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation, or, in the event of equality, one of the highest, and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity equal to the particular Index Maturity, a remaining term to maturity no more than one year shorter than that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time; or
 
  v.   if fewer than five but more than two of the prices referred to in clause (iv) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations shall be eliminated; or
 
  vi.   if fewer than three prices referred to in clause (iv) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30 P.M., New York City time, on that Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation or, in the event of equality, one of the highest and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity greater than the particular Index Maturity, a remaining term to maturity closest to that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time; or
 
  vii.   if fewer than five but more than two prices referred to in clause (vi) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations will be eliminated; or
 
  viii.   if fewer than three prices referred to in clause (vi) are provided as requested, the CMT Rate in effect on the particular Interest Determination Date; or
  (2)   if Reuters Page FEDCMT is specified on the face hereof:
  i.   the percentage equal to the one-week or one-month, as specified on the face hereof, average yield for United States Treasury securities at “constant maturity” having the Index Maturity specified on the face hereof

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      as published in H.15(519) opposite the caption “Treasury Constant Maturities”, as the yield is displayed on Reuters Service (or any successor service) (on page FEDCMT or any other page as may replace the specified page on that service) (“Reuters Page FEDCMT”), for the week or month, as applicable, ended immediately preceding the week or month, as applicable, in which the particular Interest Determination Date falls; or
 
  ii.   if the rate referred to in clause (i) does not so appear on Reuters Page FEDCMT, the percentage equal to the one-week or one-month, as specified on the face hereof, average yield for United States Treasury securities at “constant maturity” having the particular Index Maturity and for the week or month, as applicable, preceding the particular Interest Determination Date as published in H.15(519) opposite the caption “Treasury Constant Maturities”; or
 
  iii.   if the rate referred to in clause (ii) does not so appear in H.15(519), the one-week or one-month, as specified on the face hereof, average yield for United States Treasury securities at “constant maturity” having the particular Index Maturity as otherwise announced by the Federal Reserve Bank of New York for the week or month, as applicable, ended immediately preceding the week or month, as applicable, in which the particular Interest Determination Date falls; or
 
  iv.   if the rate referred to in clause (iii) is not so published, the rate on the particular Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic mean of the secondary market bid prices at approximately 3:30 P.M., New York City time, on that Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation, or, in the event of equality, one of the highest, and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity equal to the particular Index Maturity, a remaining term to maturity no more than one year shorter than that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at that time; or
 
  v.   if fewer than five but more than two of the prices referred to in clause (iv) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations shall be eliminated; or
 
  vi.   if fewer than three prices referred to in clause (iv) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent as a yield to maturity based on the arithmetic

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      mean of the secondary market bid prices as of approximately 3:30 P.M., New York City time, on that Interest Determination Date of three Reference Dealers selected by the Calculation Agent from five Reference Dealers selected by the Calculation Agent and eliminating the highest quotation or, in the event of equality, one of the highest and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an original maturity greater than the particular Index Maturity, a remaining term to maturity closest to that Index Maturity and in a principal amount that is representative for a single transaction in the securities in that market at the time; or
 
  vii.   if fewer than five but more than two prices referred to in clause (vi) are provided as requested, the rate on the particular Interest Determination Date calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained and neither the highest nor the lowest of the quotations will be eliminated; or
 
  viii.   if fewer than three prices referred to in clause (vi) are provided as requested, the CMT Rate in effect on that Interest Determination Date.
      If two United States Treasury securities with an original maturity greater than the Index Maturity specified on the face hereof have remaining terms to maturity equally close to the particular Index Maturity, the quotes for the United States Treasury security with the shorter original remaining term to maturity will be used.
(C) Commercial Paper Rate Notes. If the Interest Rate Basis is the Commercial Paper Rate, this Note shall be deemed a “Commercial Paper Rate Note.” Unless otherwise specified on the face hereof, “Commercial Paper Rate” means: (1) the Money Market Yield (as defined below) on the particular Interest Determination Date of the rate for commercial paper having the Index Maturity specified on the face hereof as published in H.15(519) under the caption “Commercial Paper—Nonfinancial”; or (2) if the rate referred to in clause (1) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the Money Market Yield of the rate on the particular Interest Determination Date for commercial paper having the particular Index Maturity as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “Commercial Paper—Nonfinancial”; or (3) if the rate referred to in clause (2) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the Money Market Yield of the arithmetic mean of the offered rates at approximately 11:00 A.M., New York City time, on that Interest Determination Date of three leading dealers of United States dollar commercial paper in The City of New York (which may include the purchasing agent or its affiliates) selected by the Calculation Agent for commercial paper having the particular Index Maturity placed for industrial issuers whose bond rating is “Aa”, or the equivalent, from a nationally recognized statistical rating organization; or (4) if the dealers so selected by the Calculation Agent are not quoting as mentioned in clause (3), the Commercial Paper Rate

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in effect on the particular Interest Determination Date. “Money Market Yield” means a yield (expressed as a percentage) calculated in accordance with the following formula:
             
 
  Money Market Yield =   D x 360   x 100
 
      360 – (D x M)    
where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and “M” refers to the actual number of days in the applicable Interest Reset Period.
(D) Constant Maturity Swap Rate Notes. If the Interest Rate Basis is the Constant Maturity Swap Rate, this Note shall be deemed a “Constant Maturity Swap Rate Note.” Unless otherwise specified on the face hereof, “Constant Maturity Swap Rate” means: (1) the rate for U.S. dollar swaps with the designated maturity specified in the applicable pricing supplement, expressed as a percentage, which appears on the Reuters Screen (or any successor service) TGM42276 Page as of 11:00 A.M., New York City time, on the particular Interest Determination Date; or (2) if the rate referred to in clause (1) does not appear on the Reuters Screen (or any successor service) TGM42276 Page by 2:00 P.M., New York City time, on such Interest Determination Date, a percentage determined on the basis of the mid-market semiannual swap rate quotations provided by the reference banks (as defined below) as of approximately 11:00 A.M., New York City time, on such Interest Determination Date, and, for this purpose, the semi-annual swap rate means the mean of the bid and offered rates for the semi-annual fixed leg, calculated on a 30/360 day count basis, of a fixed-for-floating U.S. dollar interest rate swap transaction with a term equal to the designated maturity specified in the applicable pricing supplement commencing on the Interest Reset Date and in a representative amount (as defined below) with an acknowledged dealer of good credit in the swap market, where the floating leg, calculated on an actual/360 day count basis, is equivalent to USD-LIBOR-BBA with a designated maturity specified in the applicable pricing supplement. The Calculation Agent will request the principal New York City office of each of the reference banks to provide a quotation of its rate. If at least three quotations are provided, the rate for that Interest Determination Date will be the arithmetic mean of the quotations, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest); or (3) if at least three quotations are not received by the Calculation Agent as mentioned in clause (2), the Constant Maturity Swap Rate in effect on the particular Interest Determination Date. “U.S. Government Securities business day” means any day except for Saturday, Sunday, or a day on which The Bond Market Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. “Representative amount” means an amount that is representative for a single transaction in the relevant market at the relevant time. “Reference banks” mean five leading swap dealers in the New York City interbank market, selected by the Calculation Agent, after consultation with us.
(E) Federal Funds Open Rate Notes. If the Interest Rate Basis is the Federal Funds Open Rate, this Note shall be deemed a “Federal Funds Open Rate Note.” Unless otherwise specified on the face hereof, “Federal Funds Open Rate” means the rate set forth on Reuters Service (or

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any successor service) on page 5 (or any other page as may replace the specified page on that service) for an Interest Determination Date underneath the caption “FEDERAL FUNDS” in the row titled “OPEN”. If the rate is not available for an Interest Determination Date, the rate for that Interest Determination Date shall be the Federal Funds Rate as determined below.
(F) Federal Funds Rate Notes. If the Interest Rate Basis is the Federal Funds Rate, this Note shall be deemed a “Federal Funds Rate Note.” Unless otherwise specified on the face hereof, “Federal Funds Rate” means: (1) the rate as of the particular Interest Determination Date for United States dollar federal funds as published in H.15(519) under the caption “Federal Funds (Effective)” and displayed on Reuters Service (or any successor service) on page FEDFUNDS1 (or any other page as may replace the specified page on that service) (“Reuters Page FEDFUNDS1”); or (2) if the rate referred to in clause (1) does not so appear on Reuters Page FEDFUNDS1 or is not so published by 5:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date for United States dollar federal funds as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “Federal Funds (Effective)”; or (3) if such rate does not appear on Reuters Page FEDFUNDS1 or is not so published by 5:00 P.M., New York City time, on the related Calculation Date, the rate will be the rate for the first preceding day for which such rate is set forth in H.15(519) under the caption “Federal Funds (Effective)”, as such rate is displayed on the Reuters Page FEDFUNDS1.
(G) LIBOR Notes. If the Interest Rate Basis is LIBOR, this Note shall be deemed a “LIBOR Note.” Unless otherwise specified on the face hereof, “LIBOR” means: (1) whether “LIBOR Reuters” is or is not specified on the face hereof as the method for calculating LIBOR, the rate for deposits in the LIBOR Currency (as defined below) having the Index Maturity specified on the face hereof, commencing on the related Interest Reset Date, that appears on the LIBOR Page (as defined below) as of 11:00 A.M., London time, on the particular Interest Determination Date; or (2) if no rate appears on the particular Interest Determination Date on the LIBOR Page as specified in clause (1), the rate calculated by the Calculation Agent as the arithmetic mean of at least two offered quotations obtained by the Calculation Agent after requesting the principal London offices of each of four major reference banks (which may include affiliates of the Agents), in the London interbank market selected by the Calculation Agent to provide the Calculation Agent with its offered quotation for deposits in the LIBOR Currency for the period of the particular Index Maturity, commencing on the related Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 A.M., London time, on that Interest Determination Date and in a principal amount that is representative for a single transaction in the LIBOR Currency in that market at that time; or (3) if fewer than two offered quotations referred to in clause (2) are provided as requested, the rate calculated by the Calculation Agent as the arithmetic mean of the rates quoted at approximately 11:00 A.M., in the applicable Principal Financial Center, on the particular Interest Determination Date by three major banks (which may include affiliates of the Agents), in that principal financial center selected by the Calculation Agent for loans in the LIBOR Currency to leading European banks, having the particular Index Maturity and in a principal amount that is representative for a single transaction in the LIBOR Currency in that market at that time; or (4) if the banks so selected by the Calculation Agent are not quoting as

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mentioned in clause (3), LIBOR in effect on the particular Interest Determination Date. “LIBOR Currency” means the currency specified on the face hereof as to which LIBOR shall be calculated or, if no currency is specified on the face hereof, United States dollars. “LIBOR Page” means the display on Reuters Service (or any successor service) on the page specified on the face hereof (or any other page as may replace that page on that service) for the purpose of displaying the London interbank rates of major banks for the LIBOR Currency.
(H) Prime Rate Notes. If the Interest Rate Basis is the Prime Rate, this Note shall be deemed a “Prime Rate Note.” Unless otherwise specified on the face hereof, “Prime Rate” means: (1) the rate on the particular Interest Determination Date as published in H.15(519) under the caption “Bank Prime Loan”; or (2) if the rate referred to in clause (1) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date as published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rate, under the caption “Bank Prime Loan”, or (3) if the rate referred to in clause (2) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME 1 Page (as defined below) as the applicable bank’s prime rate or base lending rate as of 11:00 A.M., New York City time, on that Interest Determination Date; or (4) if fewer than four rates referred to in clause (3) are so published by 3:00 p.m., New York City time, on the related Calculation Date, the rate calculated by the Calculation Agent as the particular Interest Determination Date calculated by the Calculation Agent as the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on that Interest Determination Date by three major banks (which may include affiliates of the purchasing agent) in The City of New York selected by the Calculation Agent; or (5) if the banks so selected by the Calculation Agent are not quoting as mentioned in clause (4), the Prime Rate in effect on the particular Interest Determination Date. “Reuters Screen US PRIME 1 Page” means the display on the Reuter Monitor Money Rates Service (or any successor service) on the “US PRIME 1” page (or any other page as may replace that page on that service) for the purpose of displaying prime rates or base lending rates of major United States banks.
(I) Treasury Rate Notes. If the Interest Rate Basis is the Treasury Rate, this Note shall be deemed a “Treasury Rate Note.” Unless otherwise specified on the face hereof, “Treasury Rate” means: (1) the rate from the auction held on the Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having the Index Maturity specified on the face hereof under the caption “INVESTMENT RATE” on the display on Reuters Service (or any successor service) on page USAUCTION 10 (or any other page as may replace that page on that service) (“Reuters USAUCTION 10”) or page USAUCTION 11 (or any other page as may replace that page on that service) (“Reuters USAUCTION 11”); or (2) if the rate referred to in clause (1) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the Bond Equivalent Yield (as defined below) of the rate for the applicable Treasury Bills as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Auction High”; or (3) if the

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rate referred to in clause (2) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the Bond Equivalent Yield of the auction rate of the applicable Treasury Bills as announced by the United States Department of the Treasury; or (4) if the rate referred to in clause (3) is not so announced by the United States Department of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15(519) under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”; or (5) if the rate referred to in clause (4) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date of the applicable Treasury Bills as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”; or (6) if the rate referred to in clause (5) is not so published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on the particular Interest Determination Date calculated by the Calculation Agent as the Bond Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on that Interest Determination Date, of three primary United States government securities dealers (which may include the purchasing agent or its affiliates) selected by the Calculation Agent, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified on the face hereof; or (7) if the dealers so selected by the Calculation Agent are not quoting as mentioned in clause (6), the Treasury Rate in effect on the particular Interest Determination Date. “Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance with the following formula:
             
 
  Bond Equivalent Yield =   D x N   x 100
 
      360 – (D x M)    
where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the applicable Interest Reset Period.
(c) Discount Notes. If this Note is specified on the face hereof as a “Discount Note”:
(i) Principal and Interest. This Note will bear interest in the same manner as set forth in Section 3(a) above, and payments of principal and interest shall be made as set forth on the face hereof. Discount Notes may not bear any interest currently or may bear interest at a rate that is below market rates at the time of issuance. The difference between the Issue Price of a Discount Note and par is referred to as the “Discount”.
(ii) Redemption; Repayment; Acceleration. In the event a Discount Note is redeemed, repaid or accelerated, the amount payable to the Holder of such Discount Note will be equal to the sum of: (A) the Issue Price (increased by any accruals of Discount); and (B) any unpaid interest accrued on such Discount Note to the Maturity Date (“Amortized Face Amount”). Unless otherwise specified on the face hereof, for purposes of determining the amount of Discount that has accrued as of any date on which a redemption, repayment or acceleration of maturity occurs for a Discount Note, a Discount will be accrued using a

17


 

constant yield method. The constant yield will be calculated using a 30-day month, 360-day year convention, a compounding period that, except for the Initial Period (as defined below), corresponds to the shortest period between Interest Payment Dates for the applicable Discount Note (with ratable accruals within a compounding period), a coupon rate equal to the initial coupon rate applicable to the applicable Discount Note and an assumption that the maturity of such Discount Note will not be accelerated. If the period from the date of issue to the first Interest Payment Date for a Discount Note (the “Initial Period”) is shorter than the compounding period for such Discount Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the Initial Period is longer than the compounding period, then the period will be divided into a regular compounding period and a short period with the short period being treated as provided above.
Section 4. Redemption. If no redemption right is set forth on the face hereof, this Note may not be redeemed prior to the Stated Maturity Date, except as set forth in the Indenture or in Section 10 hereof. In the case of a Note that is not a Discount Note, if a redemption right is set forth on the face of this Note, the Trust shall elect to redeem this Note on the Interest Payment Date after the Initial Redemption Date set forth on the face hereof on which the Funding Agreement is to be redeemed in whole or in part by Principal Life Insurance Company (“Principal Life”) (each, a “Redemption Date”), in which case this Note must be redeemed on such Redemption Date in whole or in part, as applicable, prior to the Stated Maturity Date, in increments of $1,000 at the applicable Redemption Price (as defined below), together with unpaid interest, if any, accrued thereon to, but excluding, the applicable Redemption Date. “Redemption Price” shall mean the unpaid Principal Amount of this Note to be redeemed. The unpaid Principal Amount of this Note to be redeemed shall be determined by multiplying (1) the Outstanding Principal Amount of this Note by (2) the quotient derived by dividing (A) the outstanding principal amount of the Funding Agreement to be redeemed by Principal Life by (B) the outstanding principal amount of the Funding Agreement. Notice must be given not more than sixty (60) nor less than thirty (30) calendar days prior to the proposed Redemption Date. In the event of redemption of this Note in part only, a new Note for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the surrender hereof. If less than all of this Note is redeemed, the Indenture Trustee will select by lot or, in its discretion, on a pro rata basis, the amount of the interest of each direct participant in the Trust to be redeemed.
Section 5. Sinking Funds. Unless specified on the face hereof, this Note will not be subject to, or entitled to the benefit of, any sinking fund.
Section 6. Repayment. If no repayment right is set forth on the face hereof, this Note may not be repaid at the option of the Holder hereof prior to the Stated Maturity Date. If a repayment right is granted on the face of this Note, this Note may be subject to repayment at the option of the Holder on any Interest Payment Date on and after the date, if any, indicated on the face hereof (each, a “Repayment Date”). On any Repayment Date, unless otherwise specified on the face hereof, this Note shall be repayable in whole or in part in increments of $1,000 at the option of the Holder hereof at a repayment price equal to 100% of the Principal Amount to be repaid, together with interest thereon payable to the Repayment Date. For this Note to be repaid in whole or in part at the option of the Holder hereof, this Note must be received by the Indenture

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Trustee, with the form entitled “Option to Elect Repayment”, below, duly completed by the Indenture Trustee. Exercise of such repayment option by the Holder hereof shall be irrevocable. In the event of a repayment of this Note in part only, a new Note for the portion hereof not repaid shall be issued in the name of the Holder hereof upon the surrender hereof.
Section 7. Modifications and Waivers. The Indenture contains provisions permitting the Trust and the Indenture Trustee (1) at any time and from time to time without notice to, or the consent of, the Holders of any Notes issued under the Indenture to enter into one or more supplemental indentures for certain enumerated purposes and (2) with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Notes affected thereby, to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture or of modifying in any manner the rights of Holders of Notes under the Indenture; provided, that, with respect to certain enumerated provisions, no such supplemental indenture shall be entered into without the consent of the Holder of each Note affected thereby. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note or such other Notes.
Section 8. Obligations Unconditional. No reference herein to the Indenture and no provisions of this Note or of the Indenture shall impair the right of each Holder of any Note, which is absolute and unconditional, to receive payment of the principal of, and any interest on, and premium, if any, on, such Note on the respective Stated Maturity Date or redemption date thereof and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 9. Events of Default. If an Event of Default with respect to this Note shall occur and be continuing, the principal of, and all other amounts payable on, the Notes may be declared due and payable, or may be automatically accelerated, as the case may be, in the manner and with the effect provided in the Indenture. In the event that this Note is a Discount Note, the amount of principal of this Note that becomes due and payable upon such acceleration shall be equal to the amount calculated as set forth in Section 3(c) hereof.
Section 10. Withholding; No Additional Amounts; Tax Event and Redemption. All amounts due on this Note will be made without any applicable withholding or deduction for or on account of any present or future taxes, duties, levies, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of any governmental authority, unless such withholding or deduction is required by law. Unless otherwise specified on the face hereof, the Trust will not pay any additional amounts to the Holder of this Note in respect of such withholding or deduction, any such withholding or deduction will not give rise to an event of default or any independent right or obligation to redeem this Note and the Holder will be deemed for all purposes to have received cash in an amount equal to the portion of such withholding or deduction that is attributable to such Holder’s interest in this Note as equitably determined by the Trust.
     If (1) a Tax Event (defined below) as to the Funding Agreement occurs and (2) Principal Life redeems the Funding Agreement in whole or in part, the Trust will redeem the Notes, subject to

19


 

the terms and conditions of Section 2.04 of the Standard Indenture Terms, at the Tax Event Redemption Price (defined below) together with unpaid interest accrued thereon to the applicable redemption date. “Tax Event” means that Principal Life shall have received an opinion of independent legal counsel stating in effect that as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any governmental authority in the United States, which amendment or change is enacted, promulgated, issued or announced on or after the effective date of the Funding Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within ninety (90) days of the date thereof, subject to U.S. federal income tax with respect to interest accrued or received on the Funding Agreement or (ii) the Trust is, or will be within ninety (90) days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges. “Tax Event Redemption Price” means an amount equal to the unpaid principal amount of this Note to be redeemed, which shall be determined by multiplying (1) the Outstanding Principal Amount of this Note by (2) the quotient derived by dividing (A) the outstanding principal amount to be redeemed by Principal Life of the Funding Agreement by (B) the outstanding principal amount of the Funding Agreement.
Section 11. Listing. Unless otherwise specified on the face hereof, this Note will not be listed on any securities exchange.
Section 12. Collateral. The Collateral for this Note includes the Funding Agreement and the Guarantee specified on the face hereof.
Section 13. No Recourse Against Certain Persons. No recourse shall be had for the payment of any principal, interest or any other sums at any time owing under the terms of this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against the Nonrecourse Parties, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such personal liability being, by the acceptance hereof and as part of the consideration for issue hereof, expressly waived and released.
Section 14. Miscellaneous.
     (a) This Note is issuable only as a registered Note without coupons in denominations of $1,000 and any integral multiple in excess thereof unless otherwise specified on the face of this Note.
     (b) Prior to due presentment for registration of transfer of this Note, the Trust, the Indenture Trustee, the Registrar, the Paying Agent, any Agent, and any other agent of the Trust or the Indenture Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note shall be overdue, and none of the Trust, the Indenture Trustee, the Registrar, the Paying Agent, any Agent, or any other agent of the Trust or the Indenture Trustee shall be affected by notice to the contrary.

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     (c) The Notes are being issued by means of a book-entry-only system with no physical distribution of certificates to be made except as provided in the Indenture. The book-entry system maintained by DTC will evidence ownership of the Notes, with transfers of ownership effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. The Trust and the Indenture Trustee will recognize Cede & Co., as nominee of DTC, as the registered owner of the Notes, as the Holder of the Notes for all purposes, including payment of principal, premium (if any) and interest, notices and voting. Transfer of principal, premium (if any) and interest to participants of DTC will be the responsibility of DTC, and transfer of principal, premium (if any) and interest to beneficial holders of the Notes by participants of DTC will be the responsibility of such participants and other nominees of such beneficial holders. So long as the book-entry system is in effect, the selection of any Notes to be redeemed or repaid will be determined by DTC pursuant to rules and procedures established by DTC and its participants. Neither the Trust nor the Indenture Trustee shall be responsible or liable for such transfers or payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants.
     (d) This Note or portion hereof may not be exchanged for Definitive Notes, except in the limited circumstances provided for in the Indenture. The transfer or exchange of Definitive Notes shall be subject to the terms of the Indenture. No service charge will be made for any registration of transfer or exchange, but the Trust may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Section 15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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OPTION TO ELECT REPAYMENT
     The undersigned hereby irrevocably request(s) and instruct(s) the Trust to repay this Note (or portion hereof specified below) pursuant to its terms at a price equal to the Principal Amount hereof together with interest to the repayment date, to the undersigned, at:
 
 
(Please print or typewrite name and address of the undersigned).
     For this Note to be repaid, the Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee) must receive at its Corporate Trust Office, or at such other place or places of which the Trust shall from time to time notify the Holder of this Note, not more than sixty (60) nor less than thirty (30) days prior to a Repayment Date, if any, shown on the face of this Note, this Note with this “Option to Elect Repayment” form duly completed.
     If less than the entire Principal Amount of this Note is to be repaid, specify the portion hereof (which shall be in increments of $1,000) which the Holder elects to have repaid and specify the denomination or denominations (which shall be $___or an integral multiple of $1,000 in excess of $___) of the Notes to be issued to the Holder for the portion of this Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid).
             
$
           
         
 
           
 
           
 
           
DATE:       NOTICE: The signature on this Option to Elect Repayment must
 
           
 
(Principal Amount to be repaid, if amount to be repaid is less than the Principal Amount of this Note (Principal Amount remaining must be an authorized denomination)
  correspond with the name as written upon the face of this Note in every particular, without alteration or enlargement or any change whatever. Fill in for registration of Notes if to be issued otherwise than to the registered Holder:
 
           
 
      Name:    
 
           
$
      Address:    
 
           
 
           
         
        (Please print name and address including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER:

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SURVIVOR’S OPTION RIDER
     (a) Unless this Note, on its face, has been declared due and payable prior to the Maturity Date by reason of any Event of Default under the Indenture, or has been previously redeemed or otherwise repaid, the authorized Representative (as defined below) of a deceased Beneficial Owner (as defined below) of this Note shall have the option to elect repayment by the Trust in whole or in part prior to the Maturity Date following the death of the Beneficial Owner (a “Survivor’s Option”). The Survivor’s Option may not be exercised unless the deceased Beneficial Owner purchased the Notes either within ninety (90) days of their issuance or acquired the Notes at least six (6) months before the date of death of such deceased Beneficial Owner. “Beneficial Owner” as used in this Survivor’s Option Rider means, with respect to this Note, the person who has the right, immediately prior to such person’s death, to receive the proceeds from the disposition of this Note, as well as the right to receive payments on this Note.
     (b) Upon (1) the valid exercise of the Survivor’s Option and the proper tender of this Note by or on behalf of a person that has authority to act on behalf of the deceased Beneficial Owner of this Note under the laws of the appropriate jurisdiction (including, without limitation, the personal representative or executor of the deceased Beneficial Owner or the surviving joint owner of the deceased Beneficial Owner) (the “Representative”) and (2) the tender and acceptance of that portion of the Funding Agreement equal to the amount of the portion of this Note to be redeemed, the Trust shall repay this Note (or portion thereof) at a price equal to 100% of the unpaid Principal Amount of the deceased Beneficial Owner’s beneficial interest in this Note plus accrued and unpaid interest to, but excluding, the date of such repayment. However, the Trust shall not be obligated to repay:
(i) beneficial ownership interests in Notes exceeding the greater of $2,000,000 or 2% (or such other amounts, as specified in the Pricing Supplement) in aggregate principal amount for all notes then outstanding under the Principal® Life CoreNotes® Program and the Secured Medium-Term Notes Retail Program as of the end of the most recent calendar year (the “Annual Put Limitation”);
(ii) on behalf of an individual deceased Beneficial Owner, any beneficial ownership interest in all notes issued under the Principal® Life CoreNotes® Program and the Secured Medium-Term Notes Retail Program that exceeds $250,000 (or such other amounts, as specified in the Pricing Supplement) in any calendar year (the “Individual Put Limitation”); or
(iii) beneficial ownership interests in Notes exceeding the amount specified on the face hereof and in the Pricing Supplement (the “Trust Put Limitation”), as of the later of the end of the most recent calendar year or the issuance date of the Notes.
     (c) The Trust shall not make principal repayments pursuant to exercise of the Survivor’s Option in amounts that are less than $1,000, and, in the event that the limitations described in the preceding sentence would result in the partial repayment of this Note, the Principal Amount remaining Outstanding after repayment must be at least $1,000 (the minimum authorized denomination of the Notes).

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     (d) An otherwise valid election to exercise the Survivor’s Option may not be withdrawn.
     (e) Election to exercise the Survivor’s Option will be accepted in the order that elections are received by the Trustee, except for any Notes (or portion thereof) the acceptance of which would contravene (1) the Annual Put Limitation, (2) the Individual Put Limitation or (3) the Trust Put Limitation. Any Note (or portion thereof) accepted for repayment pursuant to exercise of the Survivor’s Option shall be repaid on the first Interest Payment Date that occurs 20 or more calendar days after the date of such acceptance. If, as of the end of any calendar year, the aggregate principal amount of all notes (or portions thereof) issued under the Principal® Life CoreNotes® Program and the Secured Medium-Term Notes Retail Program that have been tendered pursuant to the valid exercise of the Survivor’s Option during such year has exceeded the Annual Put Limitation or the Individual Put Limitation, for such year, any exercise(s) of the Survivor’s Option with respect to Notes (or portions thereof) not accepted during such calendar year, because such acceptance would have contravened any such limitation, shall be deemed to be tendered on the first day of the following calendar year in the order all such Notes (or portions thereof) were originally tendered. If, as of the end of any calendar year, the aggregate principal amount of all Notes (or portions thereof) that have been tendered pursuant to the valid exercise of the Survivor’s Option during such year has exceeded the Trust Put Limitation, for such year, any exercise(s) of the Survivor’s Option with respect to Notes (or portions thereof) not accepted during such calendar year, because such acceptance would have contravened any such limitation, shall be deemed to be tendered on the first day of the following calendar year in the order all such Notes (or portions thereof) were originally tendered. In the event that this Note (or any portion hereof) tendered for repayment pursuant to valid exercise of the Survivor’s Option is not accepted or is to be delayed, the Trustee shall deliver a notice by first-class mail to the Depositary that states the reason such Note (or portion thereof) has not been accepted for payment or is to be delayed.
     (f) In order to obtain repayment through exercise of the Survivor’s Option with respect to this Note (or portion hereof), the Representative must provide the following items to the broker or other entity through which the beneficial interest in this Note is held by the deceased Beneficial Owner: (1) a written instruction to such broker or other entity in the form of Annex A attached hereto to notify the Depositary of the Representative’s desire to obtain repayment through the exercise of the Survivor’s Option; (2) appropriate evidence satisfactory to the Trustee that (i) the deceased Beneficial Owner purchased the Notes either within ninety (90) days of their issuance or acquired the Notes at least six (6) months before the date of death of such deceased Beneficial Owner, (ii) the death of such Beneficial Owner has occurred, and the date of such death, and (iii) the Representative has authority to act on behalf of the deceased Beneficial Owner; (3) if the interest in this Note is held by a nominee of the deceased Beneficial Owner, a certificate satisfactory to the Trustee from such nominee attesting to the deceased’s beneficial ownership of this Note; (4) a written request for repayment signed by the Representative, with the signature guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States; (5) if applicable, a properly executed assignment or endorsement; (6) tax waivers and such other instruments or documents that the Trustee reasonably requires in order to establish the validity of the beneficial ownership of this Note and the claimant’s entitlement to payment; and (7) any additional information the Trustee reasonably

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requires to evidence satisfaction of any conditions to the exercise of such Survivor’s Option or to document beneficial ownership or authority to make the election and to cause the repayment of this Note. Such broker or other entity shall then deliver each of these items to the direct participant of the Depositary, such direct participant being the entity that holds the beneficial interest in this Note on behalf of the deceased Beneficial Owner, together with evidence satisfactory to the Indenture Trustee from the broker or other entity stating that it represents the deceased Beneficial Owner. Such direct participant shall then deliver such items to the Indenture Trustee. The Indenture Trustee will then deliver these items to the Trustee and will provide the Trustee with any additional information (after receipt from such direct participant) the Trustee may request in connection with such exercise. Such direct participant shall be responsible for disbursing any payments it receives from the Depositary pursuant to exercise of the Survivor’s Option to the appropriate Representative. All questions, other than with respect to the right to limit the aggregate Principal Amount of Notes as to which exercises of the Survivor’s Option shall be accepted in any one calendar year or as to the Notes, regarding the eligibility or validity of any exercise of the Survivor’s Option will be determined by the Trustee, in its sole discretion, which determination shall be final and binding on all parties.
     (g) The death of a person holding a beneficial interest in this Note as a joint tenant or tenant by the entirety with another person, or as a tenant in common with the deceased owner’s spouse, will be deemed the death of the Beneficial Owner of this Note, and the entire Principal Amount of this Note so held shall be subject to repayment by the Trust upon request in accordance with the terms and provisions hereof. However, the death of a person holding a beneficial interest in this Note as tenant in common with a person other than such deceased owner’s spouse will be deemed the death of a Beneficial Owner only with respect to such deceased person’s ownership interest in this Note.
     (h) The death of a person who was a lifetime beneficiary of a trust holding a beneficial interest in this Note will be treated as the death of the Beneficial Owner of this Note to the extent of that person’s interest in the trust. The death of a person who was a tenant by the entirety or joint tenant in a tenancy which is the beneficiary of a trust holding a beneficial interest in this Note will be treated as the death of the Beneficial Owner of this Note. The death of an individual who was a tenant in common in a tenancy which is the beneficiary of a trust holding a beneficial interest in this Note will be treated as the death of the Beneficial Owner of this Note only with respect to the deceased person’s beneficial interest in this Note, unless a husband and wife are the tenants in common, in which case the death of either will be treated as the death of the owner of this Note.
     (i) The death of a person who, during his or her lifetime, was entitled to substantially all of the beneficial ownership interests in this Note will be deemed the death of the Beneficial Owner of this Note for purposes of the Survivor’s Option, regardless of whether that Beneficial Owner was the registered holder of this Note, if such beneficial ownership interest can be established to the satisfaction of the Trustee. A beneficial ownership interest will be deemed to exist in typical cases of nominee ownership, such as ownership under the Uniform Transfers of Gifts to Minors Act, community property or other joint ownership arrangements between a husband and wife and lifetime custodial and trust arrangements.

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ANNEX A
REPAYMENT ELECTION FORM
Principal Life Insurance Company
Principal® Life CoreNotes®
Cusip Number ________
To: [Name of Issuing Trust] (the “TRUST”)
The undersigned financial institution (the “FINANCIAL INSTITUTION’’) represents the following:
    The Financial Institution has received a request for repayment from the executor or other authorized representative (the “AUTHORIZED REPRESENTATIVE’’) of the deceased beneficial owner listed below (the “DECEASED BENEFICIAL OWNER’’) of Principal® Life CoreNotes® (CUSIP No. ___) (the “NOTES’’).
 
    At the time of his or her death, the Deceased Beneficial Owner owned Notes in the principal amount listed below.
 
    The Deceased Beneficial Owner purchased the Notes either within ninety (90) days of their issuance or acquired the Notes at least six (6) months before the date of death of such Deceased Beneficial Owner.
 
    The Financial Institution currently holds such notes as a direct or indirect participant in The Depository Trust Company (the “DEPOSITARY’’).
 
    The Financial Institution agrees to the following terms:
 
    The Financial Institution shall follow the instructions (the “INSTRUCTIONS’’) accompanying this Repayment Election Form (this “FORM’’).
 
    The Financial Institution shall make all records specified in the Instructions supporting the above representations available to U.S. Bank Trust National Association (the “TRUSTEE’’) or the [Name of Issuing Trust] (the “TRUST’’) for inspection and review within five business days of the Trustee’s or the Trust’s request.
 
    If the Financial Institution, the Trustee or the Trust, in any such party’s reasonable discretion, deems any of the records specified in the Instructions supporting the above representations unsatisfactory to substantiate a claim for repayment, the Financial Institution shall not be obligated to submit this Form, and the Trustee or Trust may deny repayment. If the Financial Institution cannot substantiate a claim for repayment, it shall notify the Trustee immediately.
 
    Repayment elections may not be withdrawn.
 
    The Financial Institution agrees to indemnify and hold harmless the Trustee and the Trust against and from any and all claims, liabilities, costs, losses, expenses, suits and damages resulting from the Financial Institution’s above representations and request for repayment on behalf of the Authorized Representative.

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    The Notes will be repaid on the first Interest Payment Date to occur at least 20 calendar days after the date of acceptance of the notes for repayment, unless such date is not a business day, in which case the date of repayment shall be the next succeeding business day.
 
    Subject to the Trust’s rights to limit the aggregate principal amount of Notes as to which exercises of the Survivor’s Option shall be accepted in any one calendar year, all questions as to the eligibility or validity of any exercise of the Survivor’s Option will be determined by the Trustee, in its sole discretion, which determination shall be final and binding on all parties.
 
“Principal®” is a registered service mark of Principal Financial Services, Inc. and is used under license.
“CoreNotes®” is a registered service mark of Merrill Lynch & Co.

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REPAYMENT ELECTION FORM
(1)    
 
Name of Deceased Beneficial Owner
(2)    
 
Date of Death
(3)    
 
Name of Authorized Representative Requesting Repayment
(4)    
 
Name of Financial Institution Requesting Repayment
(5)    
 
Signature of Authorized Representative of Financial Institution Requesting Repayment
(6)    
 
Principal Amount of Requested Repayment
(7)    
 
Date of Election
                 
(8)
  Financial Institution     (9 )   Wire instructions for payment:
 
  Representative Name:           Bank Name:
 
  Phone Number:           ABA Number:
 
  Fax Number:           Account Name:
 
  Mailing Address (no P.O. Boxes):           Account Number:
 
              Reference (optional):
TO BE COMPLETED BY THE TRUSTEE:
(A)   Election Number*:
 
(B)   Delivery and Payment Date:
 
(C)   Principal Amount:
 
(D)   Accrued Interest:
 
(E)   Date of Receipt of Form by the Trustee:
 
(F)   Date of Acknowledgment by the Trustee:
 
*   To be assigned by the Trustee upon receipt of this Form. An acknowledgement, in the form of a copy of this document with the assigned Election Number, will be returned to the party and location designated in item (8) above.

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INSTRUCTIONS FOR COMPLETING REPAYMENT ELECTION FORM AND EXERCISING
REPAYMENT OPTION
     Capitalized terms used and not defined herein have the meanings defined in the accompanying Repayment Election Form.
1.   Collect and retain for a period of at least three years (1) satisfactory evidence of the authority of the Authorized Representative, (2) satisfactory evidence of death of the Deceased Beneficial Owner, (3) satisfactory evidence that the Deceased Beneficial Owner beneficially owned, at the time of his or her death, the notes being submitted for repayment, (4) satisfactory evidence that the notes being submitted for repayment either were purchased within ninety (90) days of their issuance or were acquired by the Deceased Beneficial Owner at least six (6) months before the date of the death of such Deceased Beneficial Owner, and (5) any necessary tax waivers. For purposes of determining whether the notes will be deemed beneficially owned by an individual at any given time, the following rules shall apply:
    If a note (or a portion thereof) is beneficially owned by tenants by the entirety or joint tenants, the note (or relevant portion thereof) will be regarded as beneficially owned by a single owner. Accordingly, the death of a tenant by the entirety or joint tenant will be deemed the death of the beneficial owner and the entire principal amount so owned will become eligible for repayment.
 
    The death of a person beneficially owning a note (or a portion thereof) by tenancy in common will be deemed the death of the beneficial owner only with respect to the deceased owner’s interest in the note (or relevant portion thereof) so owned, unless a husband and wife are the tenants in common, in which case the death of either will be deemed the death of the beneficial owner and the entire principal amount so owned will be eligible for repayment.
 
    A note (or a portion thereof) beneficially owned by a trust will be regarded as beneficially owned by each beneficiary of the trust to the extent of that beneficiary’s interest in the trust (however, a trust’s beneficiaries collectively cannot be beneficial owners of more notes than are owned by the trust). The death of a beneficiary of a trust will be deemed the death of the beneficial owner of the notes (or relevant portion thereof) beneficially owned by the trust to the extent of that beneficiary’s interest in the trust. The death of an individual who was a tenant by the entirety or joint tenant in a tenancy which is the beneficiary of a trust will be deemed the death of the beneficiary of the trust. The death of an individual who was a tenant in common in a tenancy which is the beneficiary of a trust will be deemed the death of the beneficiary of the trust only with respect to the deceased holder’s beneficial interest in the note, unless a husband and wife are the tenants in common, in which case the death of either will be deemed the death of the beneficiary of the trust.
 
    The death of a person who, during his or her lifetime, was entitled to substantially all of the beneficial interest in a note (or a portion thereof) will be deemed the death of the beneficial owner of that note (or relevant portion thereof), regardless of the registration of ownership, if such beneficial interest can be established to the satisfaction of the Trustee. Such beneficial interest will exist in many cases of street name or nominee ownership, custodial arrangements, ownership by a trustee, ownership under the Uniform Transfers of Gifts to Minors Act and community property or other joint ownership arrangements between spouses. Beneficial interest will be evidenced by such factors as the power to sell or otherwise dispose of a note, the right to receive the proceeds of sale or disposition and the right to receive interest and principal payments on a note.
2.   Indicate the name of the Deceased Beneficial Owner on line (1).
 
3.   Indicate the date of death of the Deceased Beneficial Owner on line (2).

A-4


 

4.   Indicate the name of the Authorized Representative requesting repayment on line (3).
 
5.   Indicate the name of the Financial Institution requesting repayment on line (4).
 
6.   Affix the authorized signature of the Financial Institution’s representative on line (5). THE SIGNATURE MUST BE MEDALLION SIGNATURE GUARANTEED.
 
7.   Indicate the principal amount of notes to be repaid on line (6).
 
8.   Indicate the date this Form was completed on line (7).
 
9.   Indicate the name, mailing address (no P.O. boxes, please), telephone number and facsimile-transmission number of the party to whom the acknowledgment of this election may be sent in item (8).
 
10.   Indicate the wire instruction for payment on line (9).
 
11.   Leave lines (A), (B), (C), (D), (E) and (F) blank.
 
12.   Mail or otherwise deliver an original copy of the completed Form to:
Citibank, N.A.
Citibank Agency & Trust
388 Greenwich Street, 14th Floor
New York, New York 10013
13.   FACSIMILE TRANSMISSIONS OF THE REPAYMENT ELECTION FORM WILL NOT BE ACCEPTED.
 
14.   If the acknowledgement of the Trustee’s receipt of this Form, including the assigned Election Number, is not received within ten days of the date such information is sent to Citibank, N.A., contact the Trustee at 100 Wall Street, 16th Floor, New York, New York 10005, attention: Corporate Trust Administration, telephone number: (212) 361-2458.
 
15.   For assistance with this Form or any questions relating thereto, please contact U.S. Bank Trust National Association at 100 Wall Street, 16th Floor, New York, New York 10005, attention: Corporate Trust Administration, telephone number: (212) 361-2458.

A-5

EX-5.1 4 c25996exv5w1.htm OPINION OF MICHAEL D. ROUGHTON exv5w1
 

(PRINCIPAL FINANCIAL GROUP LOGO)
April 23, 2008
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392
Principal Financial Group, Inc.
711 High Street
Des Moines, Iowa 50392
         
 
  Re:   Principal Life Income Fundings Trusts — Principal® Life CoreNotes® Program
Ladies and Gentlemen:
     I am Vice President and Associate General Counsel of Principal Life Insurance Company (“Principal Life”). I or other attorneys in the Law Department of Principal Life acting at my request have reviewed the documents relating to the establishment of a program pursuant to which newly formed common law trusts formed under the laws of the State of New York will issue notes, with each trust’s notes to be secured by a funding agreement (in the form filed as an exhibit to the Registration Statement (as defined below)) to be entered into between Principal Life and the relevant Trust, and a guarantee issued by Principal Financial Group, Inc. (“PFG”) which fully and unconditionally guarantees the payment obligations of Principal Life. Principal Life and PFG filed a Registration Statement on Form S-3 (File Nos. 333-147181 and 333-147181-01) with the Securities and Exchange Commission (the “Commission”) on November 6, 2007, as amended by Amendment No. 1 filed with the Commission on November 20, 2007 (the “Registration Statement”), under the Securities Act of 1933, as amended, including a prospectus relating to the notes, a prospectus supplement relating to secured medium-term notes to be issued by the trusts, a prospectus supplement relating to Principal® Life CoreNotes® to be issued by the trusts and a prospectus supplement relating to secured medium-term retail notes to be issued by the trusts. This opinion letter is delivered to you in connection with the issuance by Principal Life Income Fundings Trust 2008-025 (the “Trust”) of $8,626,000 aggregate principal amount of the Trust’s 5.50% Principal® Life CoreNotes® due 2017 (the “Notes”) and the delivery of Funding Agreement No. 6-15252 by Principal Life (the “Funding Agreement”).
     I or other attorneys in the Law Department of Principal Life have also examined such other records, documents, certificates and other instruments that were necessary or appropriate to enable me to render the opinion expressed below. In rendering the opinion expressed below, I

 


 

Page 2
have assumed the due authorization, execution and delivery of the Funding Agreement by the parties thereto, other than as to the authorization, execution and delivery by Principal Life.
     On the basis of and subject to the foregoing, and in reliance thereon, and subject to the limitations, qualifications and exceptions set forth below, I am of the opinion that:
  1.   The Funding Agreement constitutes the valid and binding obligation of Principal Life enforceable against it in accordance with its terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability relating to or affecting the enforcement of creditors’ rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
     I express no opinion herein other than as to the law of the State of Iowa. This opinion is rendered as of the date hereof and I assume no obligation to update or supplement this letter to reflect any circumstances which may hereafter come to my attention with respect to the opinion and statements set forth above, including any changes in applicable law which may hereafter occur.
     I hereby consent to the filing of this letter as an exhibit to the Current Report on Form 8-K filed by Principal Life in connection with the issuance and sale of the Notes, incorporated by reference in the Registration Statement. In giving such consent, I do not thereby concede that I am within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Michael D. Roughton
Michael D. Roughton
Vice President and Associate General Counsel

2

EX-5.2 5 c25996exv5w2.htm OPINION OF SIDLEY AUSTIN LLP exv5w2
 

               
(SIDLEY LOGO)
  SIDLEY AUSTIN Llp     BEIJING   LOS ANGELES
  ONE SOUTH DEARBORN     BRUSSELS   NEW YORK
  CHICAGO, IL 60603     CHICAGO   SAN FRANCISCO
  (312) 853 7000     DALLAS   SHANGHAI
 
  (312) 853 7036 FAX     FRANKFURT   SINGAPORE
 
        GENEVA   SYDNEY
 
        HONG KONG   TOKYO
 
        LONDON   WASHINGTON, D.C.
 
             
 
        FOUNDED 1866    
April 23, 2008
     
Principal Life Insurance Company
  Principal Life Financial Group, Inc.
711 High Street
  711 High Street
Des Moines, Iowa 50392
  Des Moines, Iowa 50392
         
 
  Re:   Principal Life Income Fundings Trusts 2008-025— $8,626,000
5.50% Principal® Life CoreNotes® due 2017
Ladies and Gentlemen:
     We have acted as special counsel to Principal Life Insurance Company, an Iowa life insurance company (“Principal Life”) and Principal Financial Group, Inc., a Delaware corporation (“PFG”), in connection with the preparation and filing with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), by Principal Life and PFG, of a Registration Statement on Form S-3 (File Nos. 333-147181 and 333-147181-01) on November 6, 2007, as amended by Amendment No. 1 filed with the Commission on November 20, 2007 (the “Registration Statement”), including a prospectus (the “Prospectus”) relating to secured notes to be issued by newly formed common law trusts formed under the laws of the State of New York, a prospectus supplement relating to secured medium-term notes to be issued by the trusts (the “Institutional Prospectus Supplement”), a prospectus supplement relating to Principal Life® CoreNotes® to be issued by the trusts (the “CoreNotes® Prospectus Supplement”) and a prospectus supplement relating to secured medium-term retail notes to be issued by the Trusts (the “Retail Prospectus Supplement”). The Registration Statement provides for: (i) the registration of up to $5,000,000,000 or the equivalent amount in one or more foreign currencies, aggregate principal amount of notes to be issued by trusts, (ii) the registration of up to $5,000,000,000, or the equivalent amount in one or more foreign countries, of Principal Life’s funding agreements to be sold to the trusts in connection with the sale of notes; and (iii) the registration of the guarantees to be issued by PFG to each trust which fully and unconditionally guarantee the payment obligations of Principal Life under the funding agreements. This opinion letter is delivered to you in connection with the issuance by Principal Life Income Fundings Trust 2008-025 (the “Trust”) of $8,626,000 aggregate principal amount of the Trust’s 5.50% Principal® Life CoreNotes® due 2017 (the “Notes”).
Sidley Austin Llp is a limited liability partnership practicing in affiliation with other Sidley Austin partnerships

 


 

(SIDLEY LOGO)
April 23, 2008
Page 2
     In furnishing this opinion, we have reviewed: (i) the Registration Statement, the Prospectus, the Institutional Prospectus Supplement, the CoreNotes® Prospectus Supplement, the Retail Prospectus Supplement and the pricing supplement related to the Notes, as may be amended (the “Pricing Supplement”), (ii) the trust agreement, dated as of the date of the Omnibus Instrument (the “ Trust Agreement”), which adopts and incorporates the standard trust terms dated November 21, 2007, between U.S. Bank Trust National Association, as trustee (the “Trustee”), and GSS Holdings II, Inc., as trust beneficial owner (the “Trust Beneficial Owner”), (iii) the indenture (the “Indenture”), which adopts and incorporates the standard indenture terms dated November 21, 2007 between Citibank, N.A., as indenture trustee (the “Indenture Trustee”) and Trust, (iv) the Distribution Agreement, dated November 21, 2007 (the “Distribution Agreement”) entered into by and among Principal Life, PFG, and the agents named therein, acknowledged and agreed to by the Trust pursuant to the terms agreement dated as of the date of the Omnibus Instrument (the “Terms Agreement”) executed by the Trust through the execution of the Omnibus Instrument, (v) the Omnibus Instrument, dated April 18, 2008 that includes the Trust Agreement and the Indenture executed in connection with the creation of the Trust and the issuance by the Trust of Notes, (vi) the Closing Instrument, dated April 23, 2008 (vii) the Notes, (viii) Funding Agreement No. 6-15252 (the “Funding Agreement”), executed by Principal Life, and (ix) the Guarantee, dated as of the Effective Date (as defined in the Funding Agreement) (the “Guarantee”), executed by PFG.
     We have also reviewed the corporate action of PFG and the trust action of the Trust in connection with the issuance of the Guarantee and the Notes, respectively, and have examined, and have relied as to matters of fact upon, originals or copies certified or otherwise identified to our satisfaction, of such records, agreements, documents, and other instruments and such certificates or comparable documents of public officials and of officers and representatives of PFG and the Trust, as applicable, and have made such other further investigations as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In such examination, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of all natural persons and the conformity with the original documents of any copies submitted to us for our examination. We have relied as to factual matters upon, and have assumed the accuracy of, representations, statements and certificates of or from public officials and of or from officers and representations of all persons whom we have deemed appropriate. We have assumed that the Indenture Trustee has the power and authority to authenticate the Notes.
     Based upon the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion:
     1. Upon the execution, issuance, authentication and delivery of the Notes, the Notes will be the valid and binding obligations of the Trust, enforceable against the Trust in accordance with their terms.

 


 

(SIDLEY LOGO)
April 23, 2008
Page 3
     2. Upon the execution and delivery of the Guarantee, the Guarantee issued by PFG will be a valid and binding obligation of PFG, enforceable against PFG in accordance with its terms.
     The above opinions with regard to the enforceability of the Notes and the Guarantee: (i) are qualified by the effects of bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally and general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law), and (ii) are subject to the further qualification that, to the extent that the Notes or the Guarantee are denominated in a currency other than United States dollars, a claim thereunder (or foreign currency judgment in respect to such claim) would be converted into United States dollars at a rate of exchange prevailing on a date determined pursuant to applicable law.
     We express no opinion as to the laws of any jurisdiction other than the General Corporation Law of the State of Delaware and the laws of the State of New York, as currently in effect. This opinion is rendered as of the date hereof based upon the facts and law in existence on the date hereof. We assume no obligation to update or supplement this letter to reflect any circumstances which may hereafter come to our attention with respect to the opinion and statements set forth above, including any changes in applicable law which may hereafter occur.
     We hereby consent to the filing of this letter as an exhibit to the Current Report on Form 8-K filed by Principal Life in connection with the issuance and sale of the Notes, incorporated by reference in the Registration Statement. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
         
  Very truly yours,
 
 
  /s/ Sidley Austin LLP    
     
     

 

EX-8 6 c25996exv8.htm OPINION OF JOHN D. SCHMIDT exv8
 

         
(PRINCIPAL FINANCIAL GROUP LOGO)
April 23, 2008
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392
Principal Financial Group, Inc.
711 High Street
Des Moines, Iowa 50392
         
 
  Re:   Principal Life Income Fundings Trust 2008-025 — $8,626,000 5.50%
Principal® Life CoreNotes® due 2017
Ladies and Gentlemen:
     I am Vice President and Associate General Counsel of Principal Life Insurance Company (“Principal Life”). I or other attorneys in the Law Department of Principal Life, under my supervision, have reviewed the documents relating to the establishment of a program pursuant to which newly formed common law trusts formed under the laws of the State of New York will issue notes, with each trust’s notes to be secured by a funding agreement (in the form filed as an exhibit to the Registration Statement (as defined below)) to be entered into between Principal Life and the relevant Trust, and a guarantee issued by Principal Financial Group, Inc. (“PFG”) which fully and unconditionally guarantees the payment obligations of Principal Life. Principal Life and PFG filed a Registration Statement on Form S-3 (File Nos. 333-147181 and 333-147181-01) with the Securities and Exchange Commission (the “Commission”) on November 6, 2007, as amended by Amendment No. 1 filed with the Commission on November 20, 2007, (the “Registration Statement”), under the Securities Act of 1933, as amended, including a prospectus relating to the notes (the “Prospectus”), a prospectus supplement relating to secured medium-term notes to be issued by the trusts (the “Institutional Prospectus Supplement”), a prospectus supplement relating to Principal® Life CoreNotes® to be issued by the trusts (the “CoreNotes Prospectus Supplement”) and a prospectus supplement relating to secured medium-term retail notes to be issued by the trust (the “Generic Retail Prospectus Supplement”). This opinion letter is delivered to you in connection with the issuance by Principal Life Income Fundings Trust 2008-025 (the “Trust”) of $8,626,000 aggregate principal amount of the Trust’s 5.50% Principal® Life CoreNotes® due 2017 (the “Notes”) and the delivery of Funding Agreement No. 6-15252 by Principal Life (the “Funding Agreement”).

 


 

Page 2
     In furnishing this opinion, we have reviewed: (i) the Registration Statement, the Prospectus, the CoreNotes Prospectus Supplement and the pricing supplement dated April 14, 2008 (the “Pricing Supplement”), (ii) the trust agreement, dated as of the date of the Omnibus Instrument (the “Trust Agreement”), which adopts and incorporates the standard trust terms dated November 21, 2007, between U.S. Bank Trust National Association, as trustee, and GSS Holdings II, Inc., as trust beneficial owner, (iii) the indenture (the “Indenture”), which adopts and incorporates the standard indenture terms dated November 21, 2007, between Citibank, N.A., as indenture trustee and the Trust, (iv) the Distribution Agreement, dated November 21, 2007 entered into by and among Principal Life, PFG and the agents named therein, acknowledged and agreed to by the Trust pursuant to the terms agreement dated as of the date of the Omnibus Instrument executed by the Trust through the execution of the Omnibus Instrument, (v) the Omnibus Instrument, dated as of April 18, 2008, that includes the Trust Agreement and the Indenture executed in connection with the creation of the Trust and the issuance by the Trust of the Notes, (vi) the Closing Instrument, dated April 23, 2008, (vii) the Notes, (viii) the Funding Agreement, and (ix) the Guarantee, dated as of the Effective Date (as defined in the Funding Agreement), executed by PFG.
     Based on the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, the discussion set forth in the CoreNotes Prospectus Supplement under the heading “Material United States Federal Income Tax Considerations,” to the extent describing matters of United States federal income tax law or legal conclusions with respect thereto, is my opinion.
     In rendering the opinion set forth above, I have considered the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated thereunder by the United States Treasury Department (the “Regulations”), pertinent judicial authorities, rulings and other administrative interpretations of the Internal Revenue Service and such other authorities as we have considered relevant. It should be noted that the Code, the Regulations and such judicial authorities, rulings, and administrative interpretations and other authorities are subject to change at any time and, in some circumstances, with retroactive effect; and any such change could affect the opinion stated herein.
     This opinion is rendered as of the date hereof based upon the facts and law in existence on the date hereof. I assume no obligation to update or supplement this letter to reflect any circumstances which may hereafter come to my attention with respect to the opinion and statements set forth above, including any changes in applicable law which may hereafter occur.

 


 

Page 3
     I hereby consent to the filing of this letter as an exhibit to the Current Report on Form 8-K filed by Principal Life in connection with the issuance and sale of the Notes, incorporated by reference in the Registration Statement. In giving such consent, I do not thereby concede that I am within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
         
  Very truly yours,
 
 
  /s/ John D. Schmidt    
 
  John D. Schmidt   
     
 

 

EX-10.1 7 c25996exv10w1.htm FUNDING AGREEMENT exv10w1
 

MTN GLOBAL FUNDING AGREEMENT
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
(515) 247-5111
In consideration of the payment made by, or at the direction of,
Principal Life Income Fundings Trust 2008-025
(the “Agreement Holder”)
of the Net Deposit, as described below, Principal Life Insurance Company (“Principal Life”) agrees to make payments to the person or persons entitled to them, subject to the provisions of this funding agreement (this “Agreement”).
This Agreement is delivered in and subject to the laws of the State of Iowa.
This Agreement is issued and accepted subject to all the terms set out in it.
This Agreement is executed by Principal Life at its Corporate Center to take effect as of the 23rd day of April, 2008, which is referred to as the Effective Date, subject to the receipt by Principal Life or its designee of the Net Deposit (as set forth in Section 1).
     
(-s- Signature)   (-s- Signature)
Senior Vice President and
Corporate Secretary
  President and
Chief Operating Officer
/s/ Bret Taber
 
Registrar
April 21, 2008
 
Date
FUNDING AGREEMENT NO. 6-15252
RESTRICTIONS REGARDING THE TRANSFER OR SALE OF
THIS FUNDING AGREEMENT OR ANY INTEREST HEREIN ARE SET FORTH
HEREIN
GPA 5999

 


 

FUNDING AGREEMENT No.   6-15252
     This Agreement is issued in connection with the issuance by the Trust (specified in the Annex) of secured medium-term notes (the “Notes”) which comprise a Series of Notes which are identified in the annex hereto (the “Annex”) and which are being issued by the Trust pursuant to the Prospectus dated November 21, 2007, the Prospectus Supplement dated November 21, 2007, as from time to time amended or supplemented, and the Pricing Supplement applicable to such Notes (the “Pricing Supplement”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Notes. Where used in this Agreement, the term “Notes” and “Series of Notes” shall mean the Notes and the Series of Notes secured by this Agreement as the same exist on the Effective Date, without giving effect to any amendments or modifications to said Notes or Series of Notes effected or made after any such Effective Date unless such amendments or modifications to said Notes or Series of Notes have been consented to in writing by Principal Life.
1.   Deposit
 
    Principal Life agrees to accept, and the Agreement Holder agrees to pay or cause to be paid to Principal Life, for value on the Effective Date, the Net Deposit (as specified in the Annex). All funds received by Principal Life under this Agreement shall become the exclusive property of Principal Life and remain a part of Principal Life’s general account without any duty or requirement of segregation or separate investment.
 
    This Agreement shall become effective only upon the receipt by Principal Life or its designee of the Net Deposit.
 
2.   Fund
 
    Upon receipt of the Net Deposit, Principal Life will establish, under this Agreement, a bookkeeping account in the name of the Agreement Holder, which will evidence Principal Life’s obligations under this Agreement.
 
    The Deposit deemed received (as specified in the Annex), (i) less any withdrawals to make payments hereunder (other than Additional Amounts (as defined in the Annex), if applicable) and (ii) plus any interest accrued and premium, if any, pursuant to Section 7, will be referred to as the “Fund”.
 
    Principal Life is neither a trustee nor a fiduciary with respect to the Fund.
 
3.   Purchase of Notes By Principal Life
 
    Principal Life may purchase some or all of the Notes in the open market or otherwise at any time, and from time to time. Simultaneously, upon such purchase, (1) the purchased Notes shall, by their terms become mandatorily redeemable by the Trust as specified in the related Pricing Supplement, Prospectus Supplement and/or Prospectus and (2) the Fund under this Agreement shall be permanently reduced by the same percentage as the principal amount of the Notes so redeemed bears to the sum of (i) the aggregate principal amount of all Notes issued and outstanding immediately prior to such redemption and

 


 

    the principal amount of the Trust Beneficial Interest related to such series of Notes. If Principal Life, in its sole discretion, engages in such open market or other purchases, then the Trust, the Indenture Trustee in respect of such Notes, and Principal Life shall take such actions (including, in the case of Principal Life, making the payment(s) necessary to effect the Trust’s redemption of such Notes) as may be necessary or desirable to effect the cancellation of such Notes by the Trust.
 
4.   Entire Agreement
 
    This Agreement and the Annex attached hereto constitute the entire Agreement.
 
5.   Representations
  (a)   Each party hereto represents and warrants to the other that as of the date hereof:
  (i)   it has the power to enter into this Agreement and to consummate the transactions contemplated hereby;
 
  (ii)   this Agreement has been duly authorized, executed and delivered, this Agreement constitutes a legal, valid and binding obligation of each party hereto, and this Agreement is enforceable in accordance with the terms hereof, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights, and subject as to enforceability to general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law; and
 
  (iii)   the execution and delivery of this Agreement and the performance of obligations hereunder do not and will not constitute or result in a default, breach or violation of the terms or provisions of its certificate, articles or charter of incorporation, declaration of trust, by-laws or any agreement, instrument, mortgage, judgment, injunction or order applicable to it or any of its property.
  (b)   The Trust further represents and warrants to Principal Life that:
  (i)   it is a person other than a natural person and is purchasing this Agreement for the purpose of providing collateral security for securities registered with the United States Securities and Exchange Commission;
 
  (ii)   it has been informed and understands that transfer is restricted by the terms of this Agreement; and
 
  (iii)   it (a) is solely responsible for determining whether this Agreement is suitable for the purpose intended; (b) has carefully read this Agreement (including the Annex) before signing this Agreement; (c) has had a reasonable opportunity to make such inquiries as it deemed necessary prior to signing this Agreement; and (d) has received or had access to such

3


 

      additional information as it deemed necessary in connection with its decision to sign this Agreement.
    In performing its obligations hereunder Principal Life is not acting as a fiduciary, agent or other representative for the Agreement Holder or anyone else. All representations and warranties made by the Agreement Holder and Principal Life in this Agreement shall be considered to have been relied upon by the other in connection with the execution hereof.
 
6.   Assignment of Agreement
 
    The following conditions must be satisfied in order to effectuate any assignment of this Agreement:
  (i)   This Agreement may only be transferred through a book entry system maintained by Principal Life, or an agent designated by it, within the meaning of Temporary Treasury Regulations Section 5f.103-1(c) and Treasury Regulations Section 1.871-14(c)(1)(i).
 
  (ii)   The Agreement Holder, and any assignee, must comply with applicable securities laws.
 
  (iii)   Principal Life has consented in writing to the proposed assignment, such consent not to be unreasonably withheld.
 
  (iv)   Principal Life shall have received from the proposed assignee a duly executed certificate containing, in substance, the information, representations, warranties, acknowledgments and agreements set forth in this Agreement.
    Any attempted sale, transfer, anticipation, assignment, hypothecation, or alienation not in accordance with this Section 6 shall be void and of no effect. Until such time, if any, as Principal Life has consented in writing to a proposed assignment, Principal Life shall not be obligated to make any payments to or at the direction of anyone other than the person shown on Principal Life’s books and records as the Agreement Holder. Once the foregoing conditions have been satisfied with respect to an assignment, the assignee or its successor shall be deemed to be the sole Agreement Holder for all purposes of this Agreement and Principal Life shall promptly amend its records to reflect the assignee’s status as Agreement Holder.
 
7.   Payments to the Agreement Holder
 
    Principal Life shall pay to, or at the direction of, the Agreement Holder by the date (the “Due Date”) on which any payment becomes due in respect of the Notes secured by this Agreement (and in any event such period of time prior to the Due Date as shall be necessary to ensure that the Trust can fulfill its obligation to make payment in full of all amounts due and payable under such Notes on the Due Date), an amount in the currency or currencies in which the Notes are denominated as specified in the Notes equal to the sum of (i) the amount of principal and/or (as the case may be) interest and/or (as the case may be) premium falling due in respect of such Notes on such Due Date (the “Notes

4


 

    Component”) and (ii) the amount of any payments owed by the Trust in respect of the Trust Beneficial Interest (issued in connection with the Series of Notes secured by this Agreement) falling due on such date (the “Beneficial Component”). In the event that Principal Life fails to make payment of any such amount on or prior to the Due Date, Principal Life shall pay to or at the direction of the Agreement Holder, on demand by the Agreement Holder, (i) if the failure relates to the Notes Component, an amount in the currency specified in the Notes equal to the amount of default interest (or other amount) which becomes due and payable by the Trust in accordance with the Notes as a consequence of any delay in the Trust making the relevant payment of principal, interest or premium (as the case may be) to the holders of such Notes and (ii) if the failure relates to the Beneficial Component, such amount of default interest, if any, determined in the same manner as default interest on the Notes Component.
 
    Interest shall accrue on the Fund in the same amount and pursuant to the same terms as interest accrues on the Notes secured by this Agreement and on the Trust Beneficial Interest related to the Notes.
 
    If any amount is withdrawn from the Fund in order to make a payment under this Section 7, interest will cease to be credited with regard to such amount as of the end of the day immediately preceding the date on which such withdrawal is made.
 
    All payments made by Principal Life to the Agreement Holder hereunder shall be paid in same-day, freely transferable funds to such account as has been specified for such purpose by the Agreement Holder.
 
    Notwithstanding anything to the contrary in this Section 7, if Principal Life shall, with respect to any scheduled amount due and payable under any of the Notes, comply in all respects with the requirements of this Section 7, but an event of default has occurred with respect to the Notes and as a result payments with respect to the Notes have been accelerated, otherwise than by reason of any default under this Agreement by Principal Life, no Event of Default (as defined below) under this Funding Agreement shall be deemed to have occurred, no payments with respect to this Agreement shall be accelerated and Principal Life will remain obligated to make payments under this Agreement as if no event of default had occurred with respect to the Notes.
 
8.   Termination of Agreement
 
    Subject to the provisions of the following paragraph and the Annex, this Agreement shall terminate and cease to be of any further force or effect on the day and at the time upon which all amounts have been withdrawn from the Fund pursuant to this Agreement.
 
    Upon the occurrence of any of the following events (each, an “Event of Default”) and following a written demand by the Agreement Holder, Principal Life shall pay to, or at the direction of, the Agreement Holder all amounts that the Trust is required to pay in such event under the Notes and the Trust Beneficial Interest:
  (i)   Principal Life’s failure to make any payment of interest, premium (if applicable), installment payments (if applicable) or Additional Amounts (if and as specified in

5


 

      the Annex) in accordance with this Agreement, if such failure to pay is not corrected within seven (7) Business Days after such payment becomes due and payable; or
 
  (ii)   Principal Life’s failure to make any payment of principal (other than any installment payment) in accordance with this Agreement, if such failure to pay is not corrected within one (1) Business Day after such payment becomes due and payable; or
 
  (iii)   if Principal Life (a) is dissolved (other than pursuant to a consolidation, amalgamation or merger in which the resulting entity assumes its obligations); (b) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (c) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (d) institutes or has instituted against it an administrative or legal proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any supervision, rehabilitation, liquidation, bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (1) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its rehabilitation, winding-up or liquidation or (2) is not dismissed, discharged, stayed or restrained in each case within 60 days of the institution or presentation thereof; (e) has a resolution passed for its rehabilitation, winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger in which the resulting entity assumes the obligations of Principal Life); (f) seeks or becomes subject to the appointment of an administrator, supervisor, rehabilitator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (g) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 60 days thereafter; (h) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (a) to (g) (inclusive); or (i) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
    Notwithstanding anything to the contrary in this Section 8, if an event described in clause (iii) above occurs, this Agreement will automatically terminate and the amount of the Fund will be immediately due and payable by Principal Life to the Agreement Holder, or the account specified by the Agreement Holder.
 
    Principal Life will promptly notify the Agreement Holder and the Rating Agencies in writing of the occurrence of any of (i) through (iii) above.

6


 

9.   Withholding; Additional Amounts
 
    All amounts due in respect of this Agreement will be made without withholding or deduction for or on account of any present or future taxes, duties, levies, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of any governmental authority in the United States unless the withholding or deduction is required by law. Unless otherwise specified in the Annex, Principal Life will not pay any additional amounts to the Agreement Holder in the event that any withholding or deduction is so required by law, regulation or official interpretation thereof, and the imposition of a requirement to make any such withholding or deduction will not give rise to an Event of Default or any independent right or obligation to redeem this Agreement.
 
10.   Currency
 
    Except as may be specifically noted in the Annex, the Net Deposit and all payments under Section 7 of this Agreement shall be made using the currency or currencies as specified in the Notes.
 
11.   Tax Treatment
 
    Principal Life and the Agreement Holder agree that this Agreement shall be disregarded for U.S. Federal income tax purposes. Principal Life and the Agreement Holder further agree that if this Agreement is not so disregarded, it will and is intended to be treated as a debt obligation of Principal Life issued in registered form within the meaning of Treasury Regulations Section 1.871-14(c)(1)(i), except to the extent provided in Treasury Regulations Section 1.163-5T (or any subsequent similar regulation).
 
12.   Amendment and Modification
 
    This Agreement may be amended or modified in whole or in part, at any time and from time to time, for any period or periods (a) by mutual written agreement by such officers of Principal Life, the Agreement Holder and, where such Agreement Holder is the Indenture Trustee upon an assignment by way of security of this Agreement by the Trust, the Trust and (b) without the consent of any other person affected thereby.
 
13.   Notice
 
    Except as otherwise provided herein, all notices given pursuant to this Agreement shall be in writing, and shall either be delivered, mailed or telecopied to the locations listed below or at such other address or to the attention of such other persons as such party shall have designated for such purpose in a written notice complying as to delivery with the terms of this Section 13. Each such notice shall be effective (i) if given by telecopy, when transmitted to the applicable number so specified in this Section 13 (if required herein, such notice shall also be sent by mail, with first class postage prepaid), (ii) if given by mail, three days after deposit in the mails with first class postage prepaid, or (iii) if given by any other means, when actually delivered at such address.

7


 

    If to Principal Life:
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
Attention:   General Counsel
Telephone:   (515) 247-5111
Telecopy:     (515) 248-3011
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
Attention:   Jim Fifield, Counsel
Telephone:   (515) 248-9196
Telecopy:     (866) 496-6527
    If to the Agreement Holder:
Principal Life Income Fundings Trust 2008-025
c/o U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, NY 10005
Attention: Janet P. O’Hara
Telephone: (212) 361-2527
Facsimile: (212) 809-5459
    with a copy to:
Citibank, N.A.
Corporate and Investment Banking
388 Greenwich Street, 14th Floor
New York, NY 10013
Attention: Jennifer H. McCourt
Telephone: (212) 816-5680
Telecopy: (212) 816-5527
14.   Business Day
 
    For purposes of this Agreement, “Business Day” means any day that is a Business Day as specified in the Notes or the Indenture.
 
15.   Business Day Convention
 
    If the date on which any payment is due to be made under this Agreement shall occur on a day on which is not a Business Day, such payment shall be made in accordance with the Business Day Convention as specified in the Notes.

 


 

15.   Business Day Convention
 
    If the date on which any payment is due to be made under this Agreement shall occur on a day on which is not a Business Day, such payment shall be made in accordance with the Business Day Convention as specified in the Notes.
 
16.   Jurisdiction
 
    The parties to this Agreement hereby consent to the non-exclusive jurisdiction of any State or Federal Court of competent jurisdiction located within the State of New York, in the Borough of Manhattan, in connection with any actions or proceedings arising directly or indirectly from this Agreement.
 
17.   Waiver
 
    The obligations of Principal Life or the Agreement Holder under this Agreement may be waived only in writing by the party to this Agreement whose interests are adversely affected by such waiver. No failure or delay, on the part of the party adversely affected, in exercising any right or remedy hereunder shall operate as a waiver thereof.
 
18.   Tax Redemption.
 
    If a Tax Event (defined below) occurs, Principal Life will have the right to redeem this Agreement by giving not less than 30 and no more than 60 days prior written notice to the Agreement Holder and by paying to the Agreement Holder an amount equal to the Fund. The term “Tax Event” means that Principal Life shall have received an opinion of independent legal counsel stating in effect that as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of any such laws or regulations by any governmental authority in the United States, which amendment or change is enacted, promulgated, issued or announced on or after the Effective Date of this Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date thereof, subject to U.S. federal income tax with respect to interest accrued or received on this Agreement or (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges.

9


 

ANNEX
This Annex will become effective as of the Effective Date, subject to the requirements of Section 1.
     
Trust:
  Principal Life Income Fundings Trust 2008-025
 
   
Net Deposit:
  The Net Deposit is $8,505,236.
 
   
Deposit:
  Regardless of the amount of the Net Deposit, the Deposit is deemed to be $8,626,015.
 
   
Bank and Account:
  Wells Fargo Bank Iowa, N.A.
ABA No.: XXXXXXXXX
For credit to Principal Life Insurance Company
Account #XXXXXXXXXX
 
   
Series of Notes:
  Principal Life Income Fundings Trust 2008-025 5.50% Principal® Life CoreNotes® Due 2017
 
   
Survivor’s Option:
  Unless this Agreement has been declared due and payable prior to the Maturity Date of the related Notes by reason of any Event of Default, or has been previously redeemed or otherwise repaid, the Agreement Holder may request repayment of this Agreement upon the valid exercise of the Survivor’s Option in the Notes by the Representative (defined in the Notes) of the deceased Beneficial Owner of such Notes (a “Survivor’s Option”).
 
   
 
  Except as provided below, upon the tender to and acceptance by Principal Life of this Agreement (or portion thereof) securing the Notes as to which the Survivor’s Option has been exercised, Principal Life shall repay to the Agreement Holder the amount of the Fund equal to (i) 100% of the principal amount of the Notes as to which the Survivor’s Option has been validly exercised and accepted, plus accrued and unpaid interest on such amount to the date of repayment, or (ii) in the case of Discount Notes, the Issue Price of the Notes as to which the Survivor’s Option has been validly exercised and accepted, plus accrued discount and any accrued and unpaid interest on such amount to the date of repayment. However, Principal Life shall not be obligated to repay in any calendar year:
 
   
 
 
•  more than the greater of $2,000,000 or 2% of the aggregate deposit for all funding agreement contracts securing all outstanding notes issued under the Principal® Life CoreNotes ® Program and Secured Medium-Term Notes Retail Program as of the end of the most recent calendar year;

 


 

      Program and Secured Medium-Term Notes Retail Program as of the end of the most recent calendar year;
 
    more than $250,000 in aggregate deposit of funding agreement contracts securing outstanding notes issued under the Principal® Life CoreNotes® Program and Secured Medium-Term Notes Retail Program as to which the Survivor’s Option has been exercised on behalf of any single beneficial owner in any calendar year; or
 
    more than 2% of the Deposit under this Agreement which secures the related Notes, as of the later of the end of the most recent calendar year or the issuance date of such Series of Notes.
      Principal Life shall not make repayments pursuant to the Agreement Holder’s request for repayment upon exercise of the Survivor’s Option in amounts that are less than $1,000, and, in the event that the limitations described in the preceding sentence would result in the partial repayment of this Agreement, the principal amount of this Agreement remaining outstanding after repayment must be at least $1,000 (the minimum authorized denomination of this Agreement). A request for repayment by the Agreement Holder upon an otherwise valid election to exercise the Survivor’s Option may not be withdrawn.
 
      This Agreement (or portion thereof) accepted for repayment shall be repaid on the first Interest Payment Date for the related Series of Notes that occurs 20 or more calendar days after the date of such acceptance.
 
      In order to obtain repayment of this Agreement (or portion thereof) upon exercise of the Survivor’s Option, the Agreement Holder must provide to Principal Life (i) a written request for repayment signed by the Agreement Holder, and (ii) any additional information Principal Life requires to evidence satisfaction of any conditions to the repayment of this Agreement (or portion thereof).

A-2


 

         
PRINCIPAL LIFE INSURANCE COMPANY
 
   
By:   /s/ Michael Garvin      
  Name:   Michael Garvin     
  Title:   Associate Actuary     
 
PRINCIPAL LIFE INCOME FUNDINGS TRUST 2008-025
         
By:   U.S. Bank Trust National Association,
not in its individual capacity, but solely in its
capacity as trustee
   
     
By:   Bankers Trust Company, N.A.,
under Limited Power of Attorney, dated November 21, 2007.  
   
 
     
By:   /s/ Rick Greene      
  Name:   Rick Greene     
  Title:   Vice President     
 

 

EX-10.2 8 c25996exv10w2.htm GUARANTEE exv10w2
 

GUARANTEE
     FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in connection with that certain funding agreement (the “Funding Agreement”), entered into by and between Principal Life Insurance Company, an Iowa insurance company (“Principal Life”), and Principal Life Income Fundings Trust 2008-025, a New York common law trust (the “Trust”), relating to the notes (the “Notes”) issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and the indirect parent company of Principal Life (the “Guarantor”), hereby furnishes to the Trust its full and unconditional guarantee of the Guaranteed Amounts (as hereinafter defined) as follows:
     1. Guarantee.
          (a) The Guarantor hereby fully, irrevocably, absolutely and unconditionally guarantees, as a guarantee of payment and not merely as a guarantee of collection, immediate payment when due to the Trust any payments required to be made by Principal Life to the Trust under the Funding Agreement which shall become due and payable regardless of whether such payment is due at maturity, on an interest payment date or as a result of redemption or otherwise (the “Scheduled Payments”) but shall be unpaid by Principal Life (the “Guaranteed Amounts”). Notwithstanding anything to the contrary contained herein, in no event shall the Guaranteed Amounts exceed the Deposit (as defined in the Funding Agreement) of the Funding Agreement, plus accrued but unpaid interest and any other amounts due and owing under the Funding Agreement, less any amounts paid by Principal Life to the Trust.
          (b) In the event that Principal Life fails to make a Scheduled Payment in full when due (the “Payment Notice Date”), then the Trust or Citibank, N.A., as indenture trustee for the benefit of the holders of the Notes (the “Indenture Trustee”), pursuant to the indenture (the “Indenture”) between the Trust and the Indenture Trustee, may present the Guarantor with notice (each, a “Payment Notice”) of such failure in writing on or after the Payment Notice Date. The Payment Notice shall identify (1) the Funding Agreement, (2) the Trust, (3) the Payment Notice Date and (4) the amount of the Scheduled Payments not paid by Principal Life to the Trust as of the Payment Notice Date. Upon receipt of such Payment Notice, the Guarantor will immediately pay the Guaranteed Amounts pursuant to Section 7.
          (c) In the event that, after receipt of a Payment Notice from the Trust, the Guarantor fails to make immediate payment to the Trust or the Indenture Trustee of the Guaranteed Amounts, then the Trust and the Indenture Trustee may enforce the obligations of the Guarantor under this Guarantee, including by immediately bringing suit directly against the Guarantor (without first bringing suit against Principal Life) for the Guaranteed Amounts not paid to the Trust as of the Payment Notice Date.
          (d) This Guarantee is an unsecured, unsubordinated and contingent obligation of the Guarantor and ranks equally with all other unsecured and unsubordinated obligations of the Guarantor.

1


 

     2. Termination. This Guarantee is a continuing and irrevocable guarantee of the Guaranteed Amounts now or hereafter existing and shall terminate and be of no further force and effect with respect to the Funding Agreement and the Notes upon the full payment of the Scheduled Payments or upon the earlier extinguishment of the obligations of Principal Life under the Funding Agreement.
     3. Amendments. Subject to the trust agreement relating to the Trust and the Indenture, no provision of this Guarantee may be waived, amended, supplemented or modified, except by a written instrument executed by the Trust and the Guarantor.
     4. Assignment; Governing Law. This Guarantee shall inure to the benefit of the Trust and its successors, assigns and pledgees. This Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflict of law principles.
     5. Notices. All notices given pursuant to this Guarantee shall be in writing, and shall either be delivered, mailed or telecopied to the locations listed below or at such other address or to the attention of such other persons as such party shall have designated for such purpose in a written notice complying as to delivery with the terms of this Section 5. Each such notice shall be effective (i) if given by telecopy, when transmitted to the applicable number so specified in this Section 5 (such notice shall also be sent by mail, with first class postage prepaid), (ii) if given by mail, three days after deposit in the mails with first class postage prepaid, or (iii) if given by any other means, when actually delivered at such address.
If to the Guarantor:
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
If to the Trust:
Principal Life Income Fundings Trust (followed by the number of the Trust specified in this Guarantee)

2


 

c/o U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, New York 10005
Attention: Janet P. O’Hara
Telephone: (212) 361-2527
Facsimile: (212) 809-5459
With a copy to:
Citibank, N.A.
Corporate and Investment Banking
388 Greenwich Street, 14th Floor
New York, New York 10013
Attention: Jennifer H. McCourt
Telephone: (212) 816-5680
Facsimile: (212) 816-5527
     6. Representations and Warranties. The Guarantor represents and warrants that: (i) it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to make and perform this Guarantee, and all necessary authority has been obtained; (ii) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights and general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law; (iii) the making and performance of this Guarantee does not and will not violate the provisions of any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default under, any material agreement, instrument or document to which it is a party or by which it or any of its property may be bound or affected, except to the extent disclosed in the registration statement registering the issuance of this Guarantee and the Funding Agreement, as amended, supplemented or modified from time to time (the “Registration Statement”), and to the extent that any such violation, breach or default does not result in a material adverse effect on the Guarantor; and (iv) all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority required under applicable law and regulations for the making and performance of this Guarantee have been obtained or made and are in full force and effect, except to the extent disclosed in the Registration Statement and to the extent that the failure to acquire any such consent, approval, license, authorization, filing or registration does not result in a material adverse effect on the Guarantor.
     7. Notice of, and Consent to, Security Interest. The Trust hereby notifies the Guarantor that it has granted to the Indenture Trustee, on behalf of the holders of the Notes, a security interest in the Collateral (as defined in the Indenture), including, but not limited to, any and all payment to be made by the Guarantor to the Trust under this Guarantee. The Trust hereby notifies the Guarantor that it has collaterally assigned to the Indenture Trustee, for the benefit of the holders of the Notes, this Guarantee. The Guarantor, by executing this Guarantee, hereby (i) affirms that it has made or simultaneously will make changes to its books and records to reflect such security interest and collateral assignment, (ii) consents to the security interest

3


 

granted, and collateral assignment made, by the Trust to the Indenture Trustee of this Guarantee, (iii) agrees to make all payments due under this Guarantee to the Collection Account (as defined in the Indenture) or any other account designated in writing to the Guarantor by the Indenture Trustee and (iv) agrees to comply with all orders of the Indenture Trustee with respect to this Guarantee without any further consent from the Trust.
     8. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING OUT OF THIS GUARANTEE. THIS GUARANTEE REPRESENTS THE FINAL AGREEMENT BETWEEN THE GUARANTOR AND THE TRUST AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS AMONG SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
         
  PRINCIPAL FINANCIAL GROUP, INC.
 
 
  By:   /s/ Elizabeth D. Swanson    
    Name:   Elizabeth D. Swanson   
    Title:   Counsel   
    Date:   The Effective Date (as defined in the Funding Agreement)
 
Acknowledged and Agreed:
THE PRINCIPAL LIFE INCOME FUNDINGS
TRUST DESIGNATED IN THIS GUARANTEE
         
By:   U.S. Bank Trust National Association,
not in its individual capacity, but solely in its capacity as trustee  
   
       
By:   Bankers Trust Company, N.A.,
under Limited Power of Attorney, dated November 21, 2007
   
       
       
By:   /s/ Rick Greene      
  Name:   Rick Greene     
  Title:   Vice President     
  Date:   The Effective Date (as defined in the Funding Agreement)    
 

4

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