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| The purpose of this letter is to amend the Participation Agreement among Massachusetts Financial Services |
| Company ("MFS"), MFS Variable Insurance Trust ("VIT) and Principal Life Insurance Company (the |
| "Company"), made and entered into as of March 26, 2002 (the "Agreement"). The amendments would enable |
| VIT (i) to sell its shares to additional qualified parties, including funds-of-funds operated by certain insurance |
| companies ("Funds-of-Funds"); and (ii) to make in-kind redemptions. |
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| The Agreement currently permits VIT shares to be sold only to insurance companies and their separate accounts |
| and qualified pension and retirement plans (as well as MFS and its affiliates). MFS and VIT intend to amend the |
| Agreement to allow sales of VIT shares to any other person or plan to the extent such sales would not cause any |
| Participating Insurance Company to violate the diversification requirements of Section 817(h) of the Internal |
| Revenue Code of 1986, as amended. Such an amendment would be sufficiently broad to permit sales of VIT |
| shares to Funds-of-Funds. As such, Article I, Section 1.3 of the Agreement is amended to read as follows: |
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| 1.3 |
The Trust and MFS agree that the Shares will be sold only to insurance companies which have |
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entered into participation agreements with the Trust and MFS (the "Participating Insurance |
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Companies") and their separate accounts, qualified pension and retirement plans, MFS or its |
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affiliates, and any other person or plan permitted to hold shares of the Trust pursuant to Treasury |
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Regulation 1.817-5 without impairing the ability of the Company, on behalf of its separate |
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accounts, to consider the Shares as constituting investments of the separate accounts for the |
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purpose of satisfying the diversification requirements of Section 817(h). The Trust and MFS will |
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not sell Trust shares to any insurance company or separate account unless an agreement |
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containing provisions substantially the same as Articles 111and VII of this Agreement is in effect |
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to govern such sales. The Company will not resell the Shares except to the Trust or its agents. |
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| Currently, the Agreement provides only for cash redemptions. This amendment to the Agreement will permit VIT |
| to make in-kind redemptions in addition to cash redemptions, to the extent permitted by law and as described in |
| the VIT Prospectus. The amendment is principally intended to permit in-kind redemptions in the event of large- |
| scale redemptions, such as those in connection with xxxxxxxxxxxxx.Xx such, Article I, Section 1.4 of the Agreement |
| is amended to read as follows: |
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| 1.4. |
The Trust agrees to redeem for cash or, to the extent permitted by applicable law, in-kind, on the |
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Company's request, any full or fractional Shares held by the Accounts (based on orders placed |
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by Policy owners prior to the close of regular trading on the NYSE on that Business Day), |
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executing such requests on a daily basis at the net asset value next computed after receipt by the |
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Trust or its designee of the request for redemption. For purposes of this Section 1.4, the |
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Company shall be the designee of the Trust for receipt of requests for redemption from Policy |
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owners and receipt by such designee shall constitute receipt by the Trust; provided that the Trust |
